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WAUKEGAN, IL-Redwood Capital Partners, based in Chicago, has acquired the 384-unit Lakes at Fountain Square apartment complex, at 500 Lakehurst Rd. Redwood acquired the property for approximately $30.6 million from Chicago-based Watertown Associates, confirms Dave Carlson, principal with Redwood. The cap rate was between 6.5% and 6.75%, Carlson tells GlobeSt.com. Wachovia Multifamily Capital provided $23 million in financing for the acquisition, sources say.

The complex has a total of 303,195 sf with 24 buildings, including a building with a pool and fitness center, on 18 acres, Carlson says. The property was constructed in 1978. The property has a mixture of one-, two- and three-bedroom units with an average unit size of 800 sf, he says. The rental rates range from $855 to $1,260. Lakes at Fountain Square has an occupancy rate of 93%. Dallas-based Westdale will manage the property.

Redwood plans to complete both exterior and interior improvements to the complex, he says. Exterior upgrades will include improvements to the balconies and new doors in addition to deferred maintenance. Interior improvements will include “upgrading the units through a variety of renovations [including] lighting, plumbing fixtures, countertops, cabinets and appliances in select units,” Carlson says. Exterior renovations will begin within the next month and take between three and six months to complete the majority of the improvements. Interior improvements will be completed over the course of 18 to 24 months. The cost for the improvements is approximately $5,000 per unit, Carlson tells GlobeSt.com.

Lakes at Fountain Square is located in Lake County in an area with a “strong employment center” and is within the Gurnee School District, making it an attractive property, Carlson says. The property is adjacent to the redevelopment of the Fountain Square retail center, with big-box anchor retailers including Wal-Mart and LA Fitness, he says. Also in the area are headquarters for several major companies such as Baxter, Providence Health Care and Walgreens, Carlson says.

Lakes at Fountain Square was acquired as part of the firm’s value-add portfolio. Redwood, which was founded in 2007, plans to acquire $300 million in properties this year. Approximately 80% of the firm’s portfolio is value-add properties with the remaining 20% being tenant-in-common properties, with the majority of the assets located in the Midwest, Southeast and Sunbelt states.

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