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Largest Suburban Chicago Apartment Deal of 2018 Closes in Hoffman Estates

InterCapital's $104 Million Purchase of The Reserve at Hoffman Estates is Biggest to Date for Houston Shop
May 24, 2018
A suburban Chicago apartment complex with value-added potential has sold for $104 million, or slightly more than $162,000 per unit, in the largest apartment sale in suburban Chicago so far this year.

The Reserve at Hoffman Estates is located about 25 miles northwest of downtown Chicago at 875 Pacific Avenue. Built in 1985, the 642-unit complex is ripe for a value-added play through unit upgrades. The new owner, a division of InterCapital Partners of Houston, is expected to upgrade the unit interiors as a way to raise rents and boost returns.

Chicago’s surging economy in recent years has fueled a healthy rental market. And despite a crush of new deliveries, vacancy is only up 30 basis points in the last year, to 6.5 percent market wide, according to CoStar research. Most of the new deliveries have been in the trendy Downtown submarket, and investors have turned their attention to suburban properties, like The Reserve at Hoffman Estates, as a way to capture better returns.

Newmark’s Apartment Realty Advisors arm brokered the sale for the owner, a partnership between Investcorp, the Bahrain-based investment giant, and Redwood Capital Group, of Chicago. The venture acquired the community in mid-2015, for $86.3 million, according to CoStar data.

For InterCapital, the acquisition marks the single largest buy to date for the firm, which will manage the property through its Dayrise Residential arm. InterCapital formed in 2010.

The Reserve at Hoffman Estates features a mix of one-and two-bedroom floorplans, ranging from 800 to 1,100 square feet, with an average monthly rental rate of nearly $1,300. Most units have patios or balconies, washers and dryers, and carpeted floors. The property’s amenities include a swimming pool, fitness center, volleyball courts, a dog park, a cyber café and picnic areas.

In addition to marking the largest apartment sale in suburban Chicago this year, the deal is the second largest multifamily sale in the market behind only the Optima Chicago Center in Chicago's Streeterville area, which Edge Principal Advisors acquired in early April for $155 million, or nearly $477,000 per unit.

For more information on the sale of The Reserve at Hoffman Estates, please see CoStar Comp #4260420.

John Doherty, Multifamily Reporter  CoStar Group   

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