A New York real estate investor paid $94 million for an apartment complex in north suburban Vernon Hills, another addition to the long list of suburban Chicago multifamily properties that have changed hands this year.
A venture of Azure Partners acquired the Oaks of Vernon Hills, a 336-unit property on U.S. Highway 45, from the joint venture that recently developed it, according to Lake County property records. The deal underscores the hunger investors have had for apartments in the Chicago suburbs in 2017, almost certainly the strongest year ever for suburban multifamily deals.
It's the first apartment acquisition in the Chicago area for Azure, which owns 15 multifamily and retail properties mainly along the East Coast, according to Real Capital Analytics, a New York-based research firm. Azure bought the property in a joint venture with Harbor Group International, a Norfolk, Va.-based real estate firm.
Azure and Harbor Group paid $94 million, or about $280,000 a unit, for the Oaks, buying it from a venture formed by Chicago-based Reva Development, Hamilton Partners of Itasca and Deutsche Asset & Wealth Management, a unit of Deutsche Bank, according to a deed.
The developers built the complex in two steps, finishing the 304-unit first phase in fall 2015 and the second, encompassing 32 units, in spring 2016, according to the Reva website. Reva and Azure representatives did not return calls.
Suburban apartment values have jumped in recent years amid expectations that occupancies will remain high and rents will keep rising. And high prices have allowed many developers to sell their projects at a hefty profit. In August, the developers of the Reserve Glenview sold the 239-unit property for nearly $81 million, well above what it cost to build.
It's unclear how much the Oaks cost to develop; the 30-acre property at 770 E. U.S. Highway 45 was encumbered by a $44.3 million construction loan, according to county records.
Peter Evans, managing partner of the Chicago office of brokerage Moran, arranged the sale for Reva and its partners.
It has been a busy year for apartment brokers. With a flurry of year-end deals, total suburban apartment sales in 2017 are expected to eclipse the record $1.66 billion set last year.
Average effective rents at the Oaks range from $1,505 per month for one-bedroom units to $3,200 for a three-bedroom, according to CoStar Group, a real estate data provider. The average apartment rents for $1.89 per square foot, roughly the same as a year ago. The property is 94.3 percent occupied, up from 88.1 percent a year ago, according to CoStar.
Source: Crain's Chicago Business