Chicago investment firm Morningside USA profited on the sale, for $23 million, of the Stewart School Lofts apartments after buying the Uptown property in a controversial 2015 deal.
Chicago Public Schools caused a stir in the neighborhood when it closed the Stewart School at 4525 North Kenmore Avenue and 48 other school buildings in 2013, when Stewart had just 17 eighth graders in its graduating class.
As Morningside swooped in to buy it for $5.1 million in 2015, its plans to redevelop the property were considered a symbol of neighborhood reckoning and gentrification in local headlines.
The firm came out ahead after rehabbing the property to the tune of $11.6 million, according to an analysis of Chicago building permits issued for the property between 2016 and 2018. It transformed the school into 64 apartments that opened in 2018 with rents ranging between $1,655 a month for a 565-square-foot studio to $3,955 for a 1,745-square-foot three-bedroom.
The property features vintage aspects from its days as a school, like arches and ornate ceiling details in the four apartments carved out of the former auditorium, blackboards on the walls of some apartments and numbered classroom doors in others.
Morningside declined to comment on the sale.
The deal implied a value of more than $363,000 per unit at the Stewart School Lofts, edging the $332,600 per unit implied by Chicago’s priciest multifamily sale so far this year at the 30-story Astoria Tower luxury apartment building in the South Loop.
In that deal, a local investor, Rosemont-based 3L Real Estate, paid $67.5 million to Miami-based Crescent Heights for the building on the property while splitting the land from the rest of the real estate that valued the ground leasehold at $15 million, accounting for the full $82.5 million valuation.
The buyer in the Stewart School deal was Stewart School Lofts LLC, an entity registered in Delaware whose owner could not be immediately identified. A Chicago attorney reached by The Real Deal who represented the buyer on the closing did not identify her client.
The buyer financed its purchase with a $15.3 million mortgage, with Walker & Dunlop as the lender, public records show.
Morningside still owns dozens of other multifamily assets, most of them in the Chicago area, with several in Michigan and Texas, as well.