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CHICAGO-The Laramar Group kicked off its $350-million Laramar Multi-Family Value Fund with the acquisition of four multifamily properties totaling 1,428 units. The equity fund has the capacity to acquire $1.4 billion in assets, and Laramar officials say they plan to focus on value-add apartment buys.

Jeff Elowe, president of Laramar Group, tells GlobeSt.com that the fund will target underperforming properties in major US markets, especially on the coasts. He adds that the company sees great opportunity in Florida, where the condo era has come to an end, and condo converters are looking to exit the market.

The fund’s initial investments are Manchester Oaks, a 198-unit apartment community in Palatine, IL; the Promenade at Berkeley, a 492-unit apartment community in Duluth, GA; Parkway Towers, a 302-unit mid-rise community in Harwood Heights, IL; and the Park Baldwin Palms, a 436-unit apartment community in Orlando. Though he declined to release purchase prices for the four properties, Elowe says that all were acquired for “substantially” less than replacement cost.

Laramar officials point to Manchester Oaks as a model acquisition. The northwest suburban Chicago property is 60% occupied in a submarket with an average occupancy of 95%, and the rent is currently 20% below the market average. Elowe says Laramar will invest about $20,000 per unit to renovate and reposition the property. In addition to cosmetic upgrades, such as new exterior building finishes, signs, lighting and landscaping, Laramar plans to add a clubhouse and leasing facilities, a movie theater, fitness center and an Internet café to the property. Elowe says he expects it will take 12 to 24 months to bring the occupancy of Manchester Oaks up to the market average.

Elowe is optimistic that the multifamily market will remain strong in 2007 and beyond. He says that high construction costs are helping to keep competition from new developments at a minimum at the same time that the cost of home ownership has risen beyond the reach of most renters. “We feel very good about where we are in the cycle,” he says. “Multifamily operations have been improving over the last 18 months.”

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