Another major player is cashing in on Chicago’s hot multifamily investment market.
Jennifer Pritzker, President and CEO of Tawani Enterprises and cousin to Gov. J.B. Pritzker, recently sold a 6-building Rogers Park portfolio for $45 million. The sale of the 263-unit portfolio to Silver Property Group comes out to $171,000 per unit.
The properties are located at 1337 West Fargo Avenue, 1323 West Morse Avenue, 1373 West Greenleaf Avenue, 1334 West Lunt Avenue, 1441 West Jarvis Avenue and 1334 West Morse Avenue.
A unique asset in the portfolio, the West Fargo property known as The Farcroft, was built nearly 100 years ago and was designed by a magician and architect, Charles W. Nicol. It has unique architectural flourishes including a wood burning fireplace in the lobby. Tawani completed a renovation of the property in 2013.
As longtime owners, it’s unclear what Tawani spent assembling and renovating the full portfolio.
In historically working class neighborhoods like Rogers Park, investors have been eyeing the potential of midsize multifamily properties as they gradually change hands from longtime owners.
Silver Property Group is an established landlord of midsize multifamily properties in the city.
Principal Ron Abrams said the firm has focused solely on Chicago since its founding 13 years ago. The company owns and operates 100 buildings in the city.
“I believe in Chicago, and being here and knowing all the players got us the deal and got us financing,” Abrams said.
Loan documents have not been publicly recorded yet, but Abrams said the financing came out to about 65 percent of the price and was furnished by JPMorgan Chase.
Securing financing in Chicago has been hit or miss for several years as lenders’ perception of the market has been tarnished by the city’s unpredictable property tax environment and at times fraught political scene.
“Their heart is in the right place, but their policies are making it hard to make more units and harder to renovate,” said Abrams, who is involved in local multifamily trade groups.
Still, the multifamily market has been picking up steam.
Another big real estate name in Chicago, Stuart Handler, recently listed two midsize multifamily portfolios in Hyde Park and Lakeview. Handler, namesake of the University of Illinois at Chicago Handler Department of Real Estate, also recently bought a 192-unit apartment building in suburban Mount Prospect for $60M.
Meanwhile, a joint venture between Cleveland-based PCP Generational Partners, Chicago-based Structured Development and White Oak Realty Partners doubled down on its Lincoln Park apartments at 1475 North Kingsbury Street, with a $135 million refinancing from Rialto Capital Advisors.
Listings are hitting the market as landlords seek to test out the city’s rent growth hype. At least half a dozen large multifamily listings hit the market in the Chicago area in the last month
Rents increased 2.6 percent last year in Chicago, which was double the national average, according to MMG Real Estate Advisors. That trend is forecasted to continue due to a slow supply pipeline. MMG predicts rents will grow by 3.5 percent this year.
Part of the city’s rent growth has been fueled by a historic lag in development.
Construction deliveries are expected to fall by 40 percent this year, according to MMG.
Borrowing and construction costs as well as city restrictions have been stacking up against developers trying to start projects.