A 416-unit apartment complex west of Chicago has sold for more than $94 million in a deal bolstered by a low-interest loan that the buyers assumed.
Standard Real Estate Investments and the Vistria Group bought the Haven on Long Grove complex in Aurora, Illinois, from Pensam Capital.
The price was $94.15 million, according to DuPage County property records. That price included the new owners assuming an interest-only Fannie Mae loan of $46.28 million. The loan, which matures in December 2030, has an interest rate of 2.63%.
That is far below the level to which interest rates have risen for the past year and a half, slowing the pace and lowering the price of real estate deals throughout the country.
Because of the assumable debt and improvements made by Miami-based Pensam, that firm was able to sell the property for far more than the $77 million it paid in August 2021, despite an overall decrease in property values nationally.
Los Angeles-based Standard and Chicago-based Vistria were interested in the property anyway, Standard President Jerome Nichols told CoStar News, but he described the below-market-rate debt as “a cherry on top that made it exciting for us.”
Nichols estimates the buyers would have been able to take out a loan with an interest rate at about 5.5%, or more than twice the rate of the loan it assumed, in the lending markets at the time of the deal.
“We were very interested in Haven as a property,” Nichols said. “It stood on its own — the location and the proximity to schools, the product itself. But in this high-interest-rate environment, we’re trying to get creative on how to transact.”
Debt that can be assumed at low rates is relatively rare, but there have been other deals where pricing has been boosted by favorable loans. That includes Fifield Companies’ nearly $31 million deal for a 78-unit apartment building in Chicago’s Logan Square neighborhood last year, which the buyer said stood out because of the low-interest loan it could take over.
Standard describes its 34-acre Aurora acquisition as naturally occurring affordable housing, and Nichols said the firm liked the property’s mix of 248 one- and two-bedroom units and 168 townhouses, the latter of which come with attached garages and driveways.
The sale, previously reported by Real Estate Alert, comes after what Pensam described as a multimillion-dollar upgrade to common areas, amenities and some of the units.
“It’s in good shape,” Nichols said. “The prior owner did a good common-area upgrade and upgraded not quite half the units. We will continue to modernize the units.”
Pensam rebranded the property at 826 Terrace Lake Drive, which previously was known as Aspen Place.
“It was a successful investment,” said Hen Shoval, principal and director of investments at Pensam. “The success is derived from both the existing debt with a very good rate and also from the execution of a value-add program that generated additional income.”
Shoval said Pensam plans to continue buying and owning apartments in Chicago’s suburbs, where it owns thousands of units. Other 2021 purchases included a nearly $84 million deal for the 336-unit Butterfield Oaks complex in Aurora and a more than $55 million deal for a 260-unit complex at 1900 Canterfield Parkway in West Dundee, Illinois.
For the Record
The seller was represented by CBRE brokers John Jaeger and Justin Puppi.