In addition to a multi-year management contract, Smith Residential also has an option to convert to a 90% ownership interest after two years. Smith Residential is the largest multifamily REIT owner in Downtown.

"This is an excellent property," says President and CEO Ernest A. Gerardi, Jr. "It is very close walk to the Loop. It's an excellent property in an excellent location."

The Arlington, VA-based apartment REIT will continue to focus on high-rise, luxury buildings in the core markets of Chicago; Washington, DC; Boston and Southeast Florida, officials say. Those markets enjoy a diverse employment base, with the Chicago market enjoying job creation of 40,000 on an annual basis despite well-publicized layoffs including those by northwest suburban Schaumburg-based Motorola.

Smith Residential reported a 10% increase in first-quarter funds from operations from 2000 to $0.88 per diluted share. The only downside in operating in markets such as Chicago was higher utility costs brought on by the double-whammy of higher energy prices and colder winter. However, Gerardi says a "more than ample supply of electricity" is expected in their core markets, including Chicago.

Among the company's 2000 acquisitions was 306-unit 1 E. Delaware Place, while its development projects include 1 E. Superior St. and the 480-unit, $106-million Park Millennium in the 200 block of N. Columbus Dr. on the other side of the Chicago River and east of the Loop. Completion is expected next spring, later than expected. "These projects take much longer in the process and are fewer and larger," Gerardi says.

Smith Residential has 3,825 units in the Chicago market, 17.5% of its total portfolio. Beyond the River North submarket, Smith's holdings include 139-unit Park Lincoln apartments at 2470 N. Clark St. in the Lincoln Park neighborhood. They extend to the suburbs, with properties such as the Countryside apartments in the northwest suburbs.

"We don't see any more plain vanilla acquisitions," Gerardi says.