UPDATE, May 6, 2022, 3:53 p.m.: A local investor bought a 30-story residential building in Chicago’s South Loop for $67.5 million from a Miami company in the city’s priciest multifamily deal so far this year, public records show. The building was separated from the ground it sits on, with the ground bought by Safehold for $15 million, giving the property a total valuation of almost $83 million.
The buyer, Rosemont-based 3L Real Estate, bought the 248-unit Astoria Tower property at Eight East Ninth Street. Its purchase follows the dwellings getting turned into apartments for rent after originally being developed as condos for sale.
The seller, Miami-based Crescent Heights, bought 205 of the unsold condo units in 2010 for $45 million, and then, starting in 2019, acquired the rest through a series of transactions known as a condo deconversion, according to Crain’s, which previously reported the deal without the price.
Such deals became popular in Chicago several years ago, when the market for owner-occupied condo units in multifamily buildings flattened. At the same time, values of apartment properties with units marketed for rent rose and appealed to more investors. While the transactions can be controversial as they have the ability to force homeowners to sell unwillingly to investors holding enough units to control condo association votes, the deconversion wave has since picked up in Chicago’s suburbs, with former condo properties in Evanston and as far northwest as Lake in the Hills recently gaining market interest.
“These are never easy deals to do,” Gail Lissner, managing director of Integra Realty Resources in Chicago told The Real Deal in February. “It really takes a buyer with expertise in the field. It’s not like buying a stabilized apartment asset.”
It’s unclear how much or whether Crescent Heights profited in the Astoria Tower deal. The property fetched a higher per-unit value at $332,700 than last year’s priciest Chicago multifamily deal. That was the $175 million purchase of the 1,061-unit McClurg Court property by San Francisco-based FPA Multifamily, which has a heavy Chicago presence and just sold a $111 million apartment complex in suburban Rolling Meadows.
Earlier this year, Los Angeles-based Turner Impact Capital paid $137 million for the former condo property Ellyn Crossing, an 1,155-unit complex in Chicago’s suburbs that achieved an 80 percent profit for the seller, local investor Rockwell Property, and a record deal for the suburbs.
Astoria’s buyer, 3L, owns 1,400 apartments in Chicago, Milwaukee and Dallas, according to its website. Crescent, meanwhile, remains a big landlord in Chicago, including of the city’s tallest apartment building, the 76-story, 800-unit skyscraper called Nema Chicago at the south end of Grant Park.
The Florida company’s next Chicago move looks like it will be into Fulton Market. It has a property at the northwest corner of May and Kinzie streets that last sold in 2018 for $15 million to a joint venture of @properties founders Michael Golden and Thad Wong and Chicago-based MCZ Development under contract, Crescent’s Jason Buchberg told Crain’s last month without disclosing terms.
The parcel Crescent is trying to buy holds a 71,000-square-foot loft office building, similar in size to two adjacent loft properties in the West Loop just listed for a combined $22 million by Greenstone for more than twice the values of their recent mortgages. The pricing reflects the upward swing of property values set in motion by Fulton Market’s commercial real estate boom.
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UPDATE: This story was updated to include Safehold’s involvement in the deal and reflect the property’s full sale price after the ground’s value was made available in public records.