RREEF Purchases Cityfront Apartments for $107M

CHICAGO-A fund sponsored by Germany-based Deutsche Bank’s Asset Management division, RREEF America REIT II, has acquired the 40-story Cityfront Place apartment tower here for $107 million. The 480-unit property at 400 N. McClurg Ct. is in the Streeterville neighborhood of the Gold Coast/River North submarket.

A Deutsche Bank spokeswoman says that the property was acquired from Cityfront Chicago LLC, part of a group of single-purpose entities that are authorized to use the Miami-based Crescent Heights trade name. The property is 96% occupied, and is managed by Lincoln Property Co., she tells GlobeSt.com.

Crescent announced early this year that it was putting the property on the market, after buying the tower for $82 million in December 2009. The apartment demand has skyrocketed in the city since then, especially for class A properties. The property was built in 1991.

The buyer plans a series of improvements, including adding a resident lounge, renovating hallways and unit interiors, and improving building infrastructure, the spokeswoman says. “The anticipated timeframe for the renovations and operational improvements is three years,” she says. Rents at this complex run from $1,167 for a studio to up to $2,437 for a two-bedroom apartment.

She says this submarket is a key target for RREEF, as fundamentals will continue to improve. “(We) believe that the confluence of limited new supply and enhanced demand is setting up conditions for strong rent growth over the near term. Submarket vacancy is forecast to continue to drop below historical averages and into the high-2% range in 2012. Additionally, improving market fundamentals are expected to be strengthened during the near term by a two year window of very limited new supply,” she says.

Her company has developed two multifamily high-rise projects in downtown Chicago during the past six years, and owns more than nine million square feet of commercial properties in the surrounding area.