(Read more on the multifamily market.)
NAPERVILLE, IL-A joint venture between Sterling American Property Inc., based in Great Neck, NY, and BH Equities, based in Des Moines, have purchased Brookdale Village at 1652 Brookdale Rd. The joint venture purchased the 252-unit luxury apartment complex from Equity Residential Properties, a Chicago REIT, for $29 million. The cap rate for the sale is about 6%, says Jeff Smith, senior vice president of acquisitions for Sterling.
The apartment complex has 222,880 sf in 28 two-story buildings on 15.6 acres. Brookdale Village is currently 94% occupied. BH will manage the property, Smith says. Apartments average 900 sf with rents ranging from $850 for a one-bedroom unit with 750 sf, to $1,175 for a two-bedroom unit with 1,100 sf.
Equity Residential had owned the property since 1999, Smith says. The property was purchased in 1999 for $19.6 million, according to figures from Moran and Co., which had marketed the property for the 1999 sale. Equity Residential also recently sold a 498-unit multifamily portfolio in Minnesota. Equity Residential is selling the properties as part of a strategy to sell all of their Midwest properties, a spokesman said last month after the Minnesota sale. "We are focusing on investments on the coasts and the sunbelt," he says. "We hope, by the end of the year, to be out of the entire Midwest."
The joint venture plans to spend $1.6 million in upgrades to the complex, which was constructed in 1987. Improvements will include a new fitness center and renovation of the pool area, which has one of only three enclosed pools with a retractable roof system in the Chicago area. Additionally, the joint venture plans to add a "java business café," a business center with three computer terminals with high speed internet access and a coffee machine, which will be open 24 hours a day for residents. The apartment units will also be renovated with new appliances, cabinetry and countertops for the kitchens and bathrooms.
Sterling and BH purchased the property because of the demographics of the area and the apartment market in the Chicago area. There has been a growth in the demand for apartments, in part, because of "the blip in the single family" market. Occupancy in apartment complexes is increasing and incentives are decreasing, which Smith says "I see this as a trend that is going to continue." Sterling and BH also recently purchased Windscape Village, a 352-unit apartment complex in Naperville, and 200 W. Adams, an office building in Chicago's West Loop submarket.
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