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CHICAGO-Tri-Cap Realty, based in Bloomfield Hills, MI, has purchased a 22-story apartment building at 6425 S. Lowe Ave. with plans to renovate the property. The contract price for the property was nearly $5.5 million, says Spencer Garfield, managing director of Hudson Realty Capital LLC. Hudson Realty Capital, based in New York, is providing $9.2 million in financing for the acquisition and renovation of the apartment building. Garfield said he could not disclose a cap rate because the building is mostly vacant. Garfield would not disclose the seller but said the seller was “a lender that had foreclosed on the property.”

Tri-Cap “is buying the property with the intent of renovating and renting it out. The residential market is very strong there,” Garfield says. “The property just suffered from mismanagement and neglect for a number of years.” The approximate 290,000-sf building has 303 residential units, a retail storefront unit and parking. The property had been Section 8 housing through the Department of Housing and Urban Development. The housing “was mismanaged and the Section 8 contract was revoked by HUD. A group of investors bought the property from HUD,” Garfield says. The lender foreclosed on the investors and sold the property to Tri-Cap, he says.

Tri-Cap will spend a total of $10.4 million for the purchase of the property and renovations. Tri-Cap is spending approximately $18,000 per unit for the purchase of the property and a total of approximately for $36,000 per unit for both the purchase and renovation of the property, he tells GlobeSt.com. Every apartment unit will be fully renovated with new flooring, paint, lighting, plumbing and doors. The bathrooms and kitchens will be remodeled and vanities will be installed in bathrooms that do not already have them. Additionally, the meeting rooms and lobby will be renovated, the laundry room will be expanded, new security cameras will be installed and a playground area will be added. The renovations should be complete within nine months, Garfield says.

The apartment units are currently only about 40% occupied. The average unit size is about 1,000 sf and the average projected rent will be about $790 per month, Garfield says. The building’s retail is completely vacant. The space will be renovated for a day care center and stores, he says.

This is the second project that Hudson Realty Capital has financed for Tri-Cap. The apartment building “is physically in a good location and is physically a good property that is in need of renovation,” he says.

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