(Read more on the multifamily market.)

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

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

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The complex, which was formerly known as Eagle Ridge, was builtin two phases in 2000 and 2001 with 13 three-story buildings and asingle-story clubhouse, which has a swimming pool, fitness centerand business center. The complex is on a total of 40 acres withapproximately eight acres of vacant land on which an additional 120units could be constructed. Pompizzi says "it is really going todepend on the market" but that he expects that Jupiter willconstruct the additional apartment units in about two to threeyears. Pompizzi says he did not have estimates yet for the cost ofconstructing the additional units. "It is difficult to buildmultifamily for under $140,000 per unit," he says, noting that theprice would be "tempered" because Jupiter already owns theland.

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The complex is currently 96% occupied. Reserve at Eagle Ridgehas studio, one-bedroom and two-bedroom units with a range in unitsizes from 530 sf to 945 sf. The average rental rate is $840,Pompizzi tells GlobeSt.com. The complex will be managed by JupiterCommunities LLC, a third-party management division of JupiterRealty. Jupiter plans various upgrades to the complex that areestimated to cost more than $1 million. Upgrades include theaddition of playground and picnic areas, a small dog park and theaddition of washers and dryers to the units and new signage, hesays. "We believe the property lags its peer group because it doesnot quite have all the amenities its competitors have," Pompizzisays. It will probably take between 12 months and 14 months tocomplete the upgrades.

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The multifamily market has been improving and Jupiter has been"bullish" with multifamily properties on a national level "andcertain 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 planfor the downtown and lakefront area, with plans to redevelop 1,400acres in the city, including 400 acres downtown. The city expectsfor an additional 4,000 homes to be constructed and one million sfof retail, hospitality entertainment and other space, he says. "Wekind of like what is happening in Waukegan. We think that thecommunity is on the move," Pompizzi says.

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