Pontegadea, the family office of billionaire Zara founder Amancio Ortega, wants in on the West Loop commercial real estate craze. The company paid almost $232 million for one of Chicago’s most recognizable apartment towers, according to Cook County records.
A joint venture of Ares Management and Skokie-based F&F Realty sold the 492-unit, 45-story luxury apartment property at 727 West Madison Street in a deal executed Aug. 4 and recorded Aug. 7, public records show.
The oval-shaped multifamily tower is Chicago’s tallest building west of the Kennedy Expressway. The deal marks the highest sale price for a multifamily building in the city so far this year, beating out Crescent Heights’ acquisition of a nearly 400-unit Streeterville apartment tower for $173 million in June.
Pontegadea is best known for its portfolio of office and retail properties, mainly in South Florida, though has made high profile real estate deals across asset classes. In 2021, it also sold The Standard hotel in Miami Beach to Barry Sternlicht. And the firm bought a national logistics portfolio of five properties for about $722 million last fall, according to previously published reports. With the West Loop deal, the investment business adds to its Chicago holdings, which includes the 216-room Eurostars Magnificent Mile hotel in River North that it bought for $72.5 million in 2019.
Pontegadea didn’t immediately respond to an email seeking comment on the West Loop deal. F&F Realty President David Friedman wasn’t immediately available for comment Monday, and a spokesperson for Ares Management didn’t immediately provide a comment.
The seller scored a $177 million loan on the property last fall, indicating that the building’s value rose significantly since it was built in 2019 for $141 million, according to Chicago construction permit data. That marked another sign of increased residential demand near the trendy Fulton Market office and hospitality district, which developers have raced to fill.
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Still, the Madison Street asset’s value has likely slid from a peak most downtown multifamily appraisals hit before interest rates started weighing on values. When the property went up for sale in 2020 with a JLL team assigned to the listing, it was expected by some market players to fetch as much as $250 million, or $508,000 per unit.
Other sellers of big Chicago apartment complexes have taken losses on their deals this year. Crescent Heights’ purchase of the Streeterville asset handed seller Invesco a loss from its $240 million acquisition made in 2016. The West Loop apartments also fetched a slightly higher price per unit from Pontegadea at about $471,000, compared to the approximately $432,000 Crescent Heights paid in Streeterville.
A mortgage loan hasn’t yet been recorded as part of the West Loop deal, meaning the Pontegadea venture may have paid cash for the property, as it appeared to do for the River North hotel.
Eastdil Secured snagged the listing assignment for 727 West Madison earlier this year and represented the seller in the deal with Ortega’s firm.