When LaSalle Investment Management began purchasing the Woodview Apartments property in Deerfield, it broker The touted lease, signed last year, brought rents up more than 14 percent from previous deals.
This may be due to previously unusually low rents. That was reflected in a 20% drop in the value of the Chicago-based company’s $65 million sale of its 248-unit property at 15 Parkway North Boulevard this month, according to a person familiar with the matter. LaSalle did not respond to a request for comment.
Jim Glikin’s Eagle Management RE in Highland Park bought the complex. It last traded for $82 million in 2016, when JLL’s investment arm, LaSalle, bought it shortly after it was developed in 2015.
LaSalle’s losses were particularly prominent in suburban Chicago apartment deals. Over the past few years, there have been very few large multifamily homes that have cost sellers.Chicago area rent growth outpaces nation Multiple times as of January.
Most other real estate firms that sell apartment buildings in the Chicago suburbs are reaping handsome profits.when Blackstone Real Estate Income Trust sells for $247 million Earlier this year, the company’s holdings in the region saw two of the three properties it traded increase in value by 29% and 40%, respectively, and none posted a loss.
But the market has tightened. It is harder for buyers to get financing, and they also have to pay more on debt due to rising interest rates. LaSalle is slowly raising rates as home prices start to accelerate in 2021. Other landlords have also scaled back their offers, such as offering new residents a month, two, or even more free rent. Such tenant-friendly deals were more common early in the pandemic.
Instead of pushing up rents, LaSalle chose to keep the Woodview apartments as close to fully leased as possible, even though rents were low at the time, according to a person familiar with the asset.The company also never took on debt against the property, including to finance its 2016 acquisition, according to another person familiar with the property. real deal, Lake County records confirm this. That means the company may have sold as it needs to raise cash.
In addition, the potential relocation and restructuring of a large corporate park near Woodview Apartments will also affect its future value.Baxter International is considering Sell 10 of its buildings In Deerfield to Bridge Industrial, the company will pay about $100 million for the property and turn it into a logistics park, a trend for office complexes throughout the suburbs.There’s also the question of whether a similar fate will play out in one piece Walgreens Boots Alliance Campus Holds five vacant buildings in Deerfield after their owners sold them.
“As far as I’m concerned, it’s a bet on the viability of Deerfield and the location of the project,” Eagle Management’s Glikin said.
Some investors are making the mistake of investing in suburban condos. in Glenview, December’s BJB Properties Fortress Investment Group paid $67 million to Fortress Investment Group for the 425-unit GlenLake Village property, less than the $73.5 million it paid for the property from Atlas Residential, which sold the property in foreclosure to Fortress.
Eagle borrowed $41 million from Nationwide Life Insurance Company to finance the Deerfield transaction, according to mortgages filed in Lake County records. The company will raise rents to boost property income. “We’re not planning to increase rents dramatically, but we’re going to remain competitive,” Glickin said.
LaSalle has been active elsewhere of late, including in Chicago. It is a partner in another Chicago-based firm, L3 Capital, whose Time Out Market cafeteria and hangout in Fulton Market sold last month to an unnamed European investor for $35 million. The companies purchased the property in 2016 for $14.6 million.
But in California, LaSalle took 55% loss in value This year, it sold a 217,000-square-foot office building in Orange County for $25 million.
