West Suburban Rental Market Still Strong
Origin Investments and Randolph Street Realty Capital have had success in renovating a fractured condo development into an apartment community.
CHICAGO—Origin Investments and Randolph Street Realty Capital just secured $36.08 million in financing for their Iroquois Club Apartments, a once-fractured condominium property located in the western suburb of Naperville.
The partners purchased the asset in 2015 for $38 million and created a substantial amount of new value through renovations and leasing. That helps illustrate how the region’s robust rental market can transform pre-recession condo projects, but the partners aren’t ready to sell just yet.
“We feel that there is more work for us to do,” Marc Turner, managing director of investment management at Origin, tells GlobeSt.com. And refinancing helps capture some of the value locked up in the 264-unit property, as well as ease the way for even more renovations.
A team from Holliday Fenoglio Fowler, LP, which included managing director Josh Simon and senior director Jason Bond, secured the five-year loan on the partners’ behalf through an insurance company. The hybrid loan comprises a $35 million fixed-rate and $1.08 million floating-rate component and includes interest-only amortization and a flexible prepayment structure after month 36.
Since the acquisition, the partnership renovated the clubhouse into a modernized, spacious area for tenants to congregate. Additionally, unit renovations have stabilized occupancy and increased average in-place rents by approximately 23%.
Community amenities include a year-round pool and sauna, two full-size tennis courts, fitness center, clubhouse, resident lounge with fireplace, billiards and kitchen/bar, and on-site jogging trails.
“We’re going to continue renewing the common areas, although the majority of this work is done,” Turner says. “Our main focus is on renovating more units.” Some of the condos, for example, were created by combining several residences, and “there is not a large market for these double apartments.”
Overall, “we’re still experiencing strong demand and see Naperville in a really strong light,” he says. The development, which consists of two four-story, elevatored buildings, is located at 1101 Iroquois Ave. approximately 25 miles west of Chicago and immediately south of I-88, an area which is home to the headquarters and regional centers for several Fortune 100 companies. And Naperville has one of the most vibrant and attractive downtowns in the region, and its great transportation links to Chicago’s CBD are important to many renters.
The partners also plan to make Iroquois more of a community, with cookouts and other social events that millennial renters seem to enjoy. “That’s a key aspect of creating value,” Turner says.