WAUKEGAN, IL-A partnership between Jupiter Realty, based in Chicago, and Capital Source, based in Chevy Chase, MD, has acquired the Reserve at Eagle Ridge apartment complex at 1947 W. Eagle Ridge Dr. The 370-unit property sold for about $32 million.

The seller was a partnership of Pickus Cos., based in Highland Park, and two other entities, says Michael Pompizzi, principal with Jupiter Realty. A cap rate was not disclosed formally but Pompizzi said the cap rate was less than 6%. GE Real Estate provided $28 million in financing, with a five-year loan for the acquisition.

The complex, which was formerly known as Eagle Ridge, was built in two phases in 2000 and 2001 with 13 three-story buildings and a single-story clubhouse, which has a swimming pool, fitness center and business center. The complex is on a total of 40 acres with approximately eight acres of vacant land on which an additional 120 units could be constructed. Pompizzi says "it is really going to depend on the market" but that he expects that Jupiter will construct the additional apartment units in about two to three years. Pompizzi says he did not have estimates yet for the cost of constructing the additional units. "It is difficult to build multifamily for under $140,000 per unit," he says, noting that the price would be "tempered" because Jupiter already owns the land.

The complex is currently 96% occupied. Reserve at Eagle Ridge has studio, one-bedroom and two-bedroom units with a range in unit sizes from 530 sf to 945 sf. The average rental rate is $840, Pompizzi tells GlobeSt.com. The complex will be managed by Jupiter Communities LLC, a third-party management division of Jupiter Realty. Jupiter plans various upgrades to the complex that are estimated to cost more than $1 million. Upgrades include the addition of playground and picnic areas, a small dog park and the addition of washers and dryers to the units and new signage, he says. "We believe the property lags its peer group because it does not quite have all the amenities its competitors have," Pompizzi says. It will probably take between 12 months and 14 months to complete the upgrades.

The multifamily market has been improving and Jupiter has been "bullish" with multifamily properties on a national level "and certain markets and sub-markets are even stronger," Pompizzi says. Waukegan, in particular, has a good market and the city is "progressive," he says. The city adopted, in 2003, a master plan for the downtown and lakefront area, with plans to redevelop 1,400 acres in the city, including 400 acres downtown. The city expects for an additional 4,000 homes to be constructed and one million sf of retail, hospitality entertainment and other space, he says. "We kind of like what is happening in Waukegan. We think that the community is on the move," Pompizzi says.