Prime Property Invests $22M in Multifamily

LAKE BLUFF, IL-Prime Property Investors Ltd. has made its second conventional apartment acquisition, buying the 224-unit Deer Valley Apartments from a pension plan advised by San Francisco-based Stockbridge Capital Group LLC. The purchase price was not disclosed, but a local market expert says the class A property traded for nearly $22 million.

Prime Property Investors, which historically invested in student housing, diversified its investment strategy about two years ago to include conventional suburban apartments, according to Michael Zaranksy, co-CEO of the Northbrook, IL-based firm. So far, the company has focused on the suburban Chicago MSA, he says, adding that the firm’s first conventional apartment acquisition, the 281-unit Arbors at Brookdale in Naperville, IL, closed in December 2009.  

Prime Property Investors closed on Deer Valley Apartments in just 60 days. Sean Fogarty in HFF’s Chicago office marketed the property, which is situated on 13.5 acres at 30011 N. Waukegan Rd. in Lake County.

“Unlike downtown Chicago, the suburban market has seen very little new construction,” Zaranksy tells GlobeSt.com. “In fact, there’s nothing under construction right now, which has created tremendous growth in rents and higher occupancies.”

Lake County, located roughly 30 miles north of the Chicago CBD, is one of the fastest-growing counties in the state, as well as the nation. The apartment sector in Lake County experienced 8% rent growth last year, Zaransky notes.

“There are a significant number of people who want to live here – we’re just across the street from the global headquarters for Abbot Laboratories and close to the Great Lakes Naval Training Station,” Zaransky says. “We have a lot of officers and Abbott employees who live at Deer Valley.”

Built in 1990, Deer Valley Apartments consists of 13 buildings plus a clubhouse and garages. The community offers a mix of one and two-bedroom units ranging from 715 square feet to 1,012 square feet, all with private balconies or patios.

At the time of closing, Deer Valley Apartments was 98% leased. Monthly rents range from $929 to $1,185. Zaransky expects to see double-digit rent growth during the first year as leases roll and the property is updated.

“This property has a number of units that are under-rented, and as they renew, we will bring the up to market,” Zaranksy says, adding that the firm plans to invest another $1.5 million to upgrade the property including significant renovations to the interior. Planned improvements include granite countertops, stainless steel appliances and new cabinetry.  

Zaransky says the firm continues to seek additional investment opportunities in suburban Chicago, as well as other suburban areas with significant demand and limited inventory.