"Alterra offers a solid value-add opportunity to renovate and reposition the property so it competes with neighboring communities while capitalizing on the region's significant employment and rental growth," says Kenneth Gladstein, Co-Chief Investment Officer of the SARES-REGIS Multifamily Fund. "Alterra is our third acquisition in California since we formed the fund last year."
Although the previous owner completed significant exterior and common-area renovation, the apartment interiors are original, Gladstein says. The value-add program for Alterra includes upgrading of kitchen cabinets, countertops, stainless appliances, flooring, lighting and plumbing fixtures.
"Once completed, the newly renovated apartment homes will offer residents a value alternative to brand-new product coming into the market," Gladstein adds.
The Fund was launched in 2013 by SARES-REGIS Group with more than $100 million in equity commitments, giving it the ability to acquire more than $300 million in assets.Kiser Group brokers $28.9M Chicago sale
Chicago-Kiser Group represented the seller of an eight-building, 236-unit portfolio of apartment and mixed-use properties on Chicago's North Side. New York-based Pioneer Acquisitions purchased the portfolio for $28.9 million in a sale that closed March 5, 2014.
Family owned for more than 60 years, the portfolio included an apartment building in West Rogers Park; an apartment building and mixed-use retail and apartment property in Lincoln Square; four properties in Ravenswood; and a mixed-use retail and apartment building in Irving Park.
"This rare opportunity attracted several investors," says Lee Kiser, principal of Kiser Group. He and Michael D'Agostino, managing director of Kiser Group, represented the seller in the transaction. "It's an enormous portfolio in a strong location with upside potential.
"Many of the units are rented at below-market levels, so the buyer could immediately reap additional income by increasing rents," Kiser adds. "Also, with some minor renovations, many of the large one-bedroom units could easily be converted into two-bedroom apartments, further adding value and increasing the portfolio's annual income."
The seller regularly made upgrades throughout the past six decades, so the buildings have little to no deferred maintenance. All the buildings include coin-operated washers and dryers, private storage lockers, intercom security and secure bicycle areas.
"These high-quality apartments are located in sought-after neighborhoods on Chicago's North Side," D'Agostino said. "Also, the large rooms, high ceilings, hardwood floors and irreplaceable vintage architectural details made this portfolio enticing to buyers."
The eight-building portfolio included the following properties.
West Rogers Park
- -7434-38 N. Artesian / 2432-34 W. Fargo is a corner 12-unit apartment building located immediately south of the Evanston border. It consists entirely of one-bedroom, one-bath units. The property also has a two-car garage.
- 4621-25 N. Lincoln / 2259-63 W. Eastwood is a mixed-use building that includes four retail spaces fronting busy Lincoln Avenue and 25 apartments. Long-term commercial tenants occupy three of these units. The apartment mix includes seven one-bedroom, one-bath units; and 18 studios.
- 2243-51 W. Eastwood, a 16-unit apartment building located just off Lincoln Avenue, is a vintage walk-up consisting entirely of one-bedroom, one-bath apartments.
- 2104-24 W. Foster (40 units) sits across from Winnemac Park and includes two 20-unit buildings consisting entirely of one-bedroom, one-bath apartments. The property also offers 15 parking spaces.
- 5073-75 N. Wolcott / 1825-31 W. Winona (16 units) is a vintage walk-up consisting of 13 one- and three two-bedroom apartments, each with one bath. It has newer porches and windows.
- 2100-12 W. Ainslie / 4904-10 N. Hoyne (46 units) is a vintage courtyard building one block south of Winnemac Park and within walking distance of the Ravenswood Metra Station and the Brown Line 'L' stop at Damen Avenue. It includes 12 studios, 28 one- and six two-bedroom units, each with one bath.
- 4915-19 N. Damen (21 units) is an L-shaped walk-up consisting of 16 one- and three two-bedroom units, each with one bath, and 1,000 square feet of retail currently occupied by two commercial tenants. It is also close to the Metra Station and the Brown Line 'L' stop, as well as a short walk to the new Mariano's.
- 4101-13 N. Kedzie / 3148-56 W. Belle Plaine (56 units) is a mixed-use courtyard building consisting of three studios, 47 one-bedroom, one-bath units and approximately 3,600 square feet of retail space currently occupied by six commercial tenants. The property is convenient to the Kennedy Expressway.
Redwood City, Calif.-A 112-unit portfolio on the San Francisco Peninsula in Redwood City, Calif., has traded hands for $23.2 million, or $207,142 per unit. Marcus & Millichap represented the seller, Interstate Equities Corp., in the five-property transaction. The buyer was a private investor in a 1031 exchange.
"The continued creation of high-paying jobs in Silicon Valley is reshaping the San Mateo County apartment market and creating new opportunities for both large institutional investors and smaller private investors," says Adam Levin, a vice president of investments at Marcus & Millichap. "Favorable market conditions in Redwood City allowed us to assemble this portfolio of 1960s-era apartment complexes and for IEC to successfully implement its renovation, stabilization and repositioning strategy."
Levin worked alongside Robert Johnston, a senior associate, in closing the deal. Both are based in the firm's Palo Alto office.
The properties are:
- 152 Lincoln Ave., 18 units
- 180 Buckingham Ave., 48 units
- 755 9th Ave., 8 units
- 775 9th Ave., 8 units
- 1331 Jefferson Ave., 30 units