(Read more on the multifamily market.)

CHICAGO-Newcastle Limited, based here, has acquired a 68-unit apartment building at 6900 S. South Shore Dr. for its $500-million investment platform in the Chicagoland area. The sales price was $4.7 million.

Marcus & Millichap represented the seller, which is listed in public records as 6900 South Shore LLC. Michael Haney, president and chief executive officer of Newcastle, says that the seller was a private owner who had owned the property for approximately 17 years. A cap rate was not disclosed.

The seven-story building is located across the street from the South Shore Culture Center and Golf Course. Newcastle wanted to acquire a property in the South Shore neighborhood, as they have acquired properties in various communities in Chicago such as Uptown and Rogers Park, Haney says.

“Our strategy in South Shore is to find properties that have truly unique real estate characteristics,” he explains. Besides its proximity to the South Shore Cultural Center, the apartment building is near public transportation and the Chicago Skyway toll road, has visibility from South Shore Drive and has a mix of different types of units, Haney adds.

The building has studios, one-bedroom and two-bedroom units which are 92% occupied. The average size of the one-bedroom units is 850 sf and the average size of the two-bedroom units is 1,025 sf, Haney says. The building was constructed in the 1952. Newcastle plans to invest $2 million in to the property, he says. There will be renovations to the common areas, such as the lobby and the hallway. Newcastle will also add amenities to tenants such as a bike room, improved laundry facilities and an improvement to the back yard area to make it more inviting to tenants.

This was Newcastle’s fourth acquisition for their investment platform and Newcastle has acquired nearly 700 apartment units since starting the platform. The total value of the currently acquired and under contract is about $60 million, Haney says. Newcastle is focusing on properties in Chicago and urban areas of Chicago suburbs with a transaction range between $5 million and $50 million. Approximately one-third of the acquisitions will be multifamily or residential, one-third will be retail and the remaining one-third will be a mix of other types of properties.

“While we are continuing to acquire residential properties, we are particularly focused on retail,” he says. “We are certainly looking for more urban retail in Chicago’s central business district and in Chicago neighborhoods.” Haney says they expect to complete the investment platform over the next three years.

Haney says that the apartment market in Chicago is rebounding. “There is no doubt that the apartment market has begun to recover strongly from what was a prolonged period of decline during the condominium and housing boom,” he says. He attributes the upswing to interest rates rising and the housing slowdown in addition to the increase in rental rates and capital in the apartment real estate market.

There have been several new luxury apartment buildings being constructed in or near the central business district in Chicago. There were 4% increases in achieved rents in 2006, according to Marcus & Millichap, and the same is expected for 2007, Haney says.

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