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WESTMONT, IL-Redwood Capital Partners, based in Chicago, has acquired an apartment complex at One Fountainhead Dr., here. The 400-unit complex was acquired from AvalonBay Communities, headquartered in Alexandria, VA. The complex, which had been known as Avalon at West Grove, is being renamed Fountains of Stone Crest, says David Carlson, managing partner with Redwood.

Sources say the sales price was slightly more than $40 million. Carlson says the actual sales price was less than $40 million, but would not disclose the true amount. The sale had a “high six cap rate” between 6.75% and 6.9%, Carlson tells GlobeSt.com.

The property is in DuPage County, viewed as one of the fastest growing counties in the region and has great demographics, Carlson says. The apartment community consists of 20 two-story buildings on nearly 17.4 acres. The property also has a 5,300-sf clubhouse that contains a fitness center, racquetball court, sauna, business room and business center, as well as an outdoor heated swimming pool, carports, storage, on-site laundry, playground and picnic area. The community was constructed in two phases in 1966 and 1975 and was renovated in 1999, and has 200 one-bedroom units and 200 two-bedroom units. The average unit size is 971 sf. The complex is about 94% occupied, Carlson says. Westdale, based in Dallas, will handle the management of the property.

The apartment complex was acquired for Redwood’s value-add portfolio, Carlson tells GlobeSt.com. “We saw the opportunity to leverage a rehabilitation into increased rents,” he says. Redwood plans to spend about $10,000 per unit on deferred maintenance, “exterior aesthetics” and to upgrade the units with new cabinets, countertops, appliances and flooring in addition to reconfiguring the walls for a “more open feel,” he says. Rents had ranged from $830 to $1,040, according to information on AvalonBay’s website. Redwood expects to be able to increase rental rates by $150 per unit once the renovations are completed, Carlson tells GlobeSt.com. Renovations are expected to begin in 45 to 60 days and are expected to take 24 months to complete, he says.

Redwood’s overall portfolio consists of approximately 80% value-add properties and 20% tenant-in-common properties. The majority of the value-add properties are in the Midwest, Southeast and Sunbelt states. “Despite current economic conditions, we strongly believe apartments will continue to outperform all other product types,” Redwood managing partner Mark Isaacson said in a statement. The typical hold time for properties is five years, Carlson tells GlobeSt.com.

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