AMLI acquired 70% of the apartment complex while BPMT contributed 30% of the equity capital for the project in Gurnee, where multifamily transactions are rare. The sellers were two separate local partnerships: Libertyville, IL-based Preservation Development Group, LLC and Waukegan, IL-based DAP, LLC. Financing in the form of a 10-year, 7.02% loan with 30-year amortization came from the New York State Teachers Retirement System.
Although the company declined to give a purchase price, AMLI senior vice president Fred Shapiro indicated the property's capitalization rate is less than 9%. Based on its most recent property tax assessment, the property's market value was just under $20 million. However, paying less than $41,000 per unit for a relatively new multifamily product in an extremely tight rental market would have to be considered unrealistic.
Formerly known as Osprey Lakes, AMLI at Osprey Lake was built in 1997 and 1999, making it a younger property in the REIT's portfolio, which averages 6.25 years in age. The company plans to finish monument signage, improve the clubhouse and spend a "significant amount of money in landscaping." Some of the work, Shapiro said, began during the previous six months while AMLI managed the property.
Company officials said Wednesday they would continue selling off older properties, with the possible exception of Chicago. "It is a continuation of our co-investment investment program with BPMT, as well as an opportunity to expand our presence in our home city of Chicago," said AMLI President Allan Sweet. "Transactions in Lake County are rare, and we have been working on this one for more than two years."
Shapiro said the prolonged transaction time was the result of tax considerations of the sellers that disappeared with the passing of time as well as varying interests among the approximately 30 investors in the two groups.
The project consists of 22 three- and four-story apartment buildings set on 87 acres, which include a natural lake and wetlands. The majority of the units are two-bedrooms and average 941 sf.
Julian, Toft and Downey, Inc. represented the New York State Teachers Retirement System. Sweet and Shapiro handled the transaction for AMLI.
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