Origin Investments, in partnership with Draper and Kramer, Incorporated and LEM Capital, completed a $48-million acquisition of Palatine’s Village Park, a 448-unit apartment complex in the Chicagoland northwest suburb. The purchase price of the Class B multifamily investments was approximately $107,000 per unit.
The acquisition represented a classic value-add investment opportunity, according to Thomas Briney, vice president of acquisitions for Origin. Over the next 30 months, Origin and its partners will make significant upgrades to the complex, hopefully making it more attractive to renters and creating the opportunity to increase occupancies and rents.
“With the tremendous appetite the market has had for multifamily investments, there are fewer and fewer true value-add opportunities available,” Briney said. “We are very excited to acquire Village Park, and begin the process of a comprehensive renovation and repositioning program.
Village Park features 15 two and three-story buildings on a 28.370-acre site. The unit mix includes 154 studio and one-bedroom units averaging 706 square feet, 195 two-bedroom units averaging 994 square feet and 99 three-bedroom units averaging 1,225 square feet. Compared to its competitive set, Village Park is one of only a few to have a significant supply of three bedroom units.
At the time of acquisition the occupancy rate at Village Park of Palatine was 92 percent.
The partnership will immediately launch a phased renovation program designed to elevate the complex to Class B+, said Derrick Hawthorne, vice president of asset management and acquisitions for Draper and Kramer. The improvements will allow the partnership to increase rents over time by up to 15 percent.
All units are scheduled to be upgraded over a three-year time span. The upgrades will include new appliances, countertops, carpeting and paint. Common areas will also get a face-lift, including the clubhouse, a bocce ball court and adding a dog park.
This is the second time in about 15 months that Origin and a partner have acquired a suburban Chicago apartment complex. In September 2015, the Chicago-based real estate private equity firm formed a joint venture and acquired the Iroquois Club, a 264-unit apartment complex in Naperville, Illinois, for approximately $38 million. Since the acquisition, Origin has completed 70 percent of the extensive unit renovation program and increased occupancy of the complex from 76 to 90 percent.