If anyone can “always be closing,” it’s Marc Realty Residential. (They must have the Glengarry leads.) After snagging two value-add deals around the holidays, the firm is kicking off 2014 with another pair of opportunistic projects.
Principal David Ruttenberg (snapped with his son Solomon, he's not too interested in coffee) tells us MRR paid $2.3M for 38 units and 10k SF of retail at 4421-4439 W Fullerton in Logan Square. Retail space at the bank-owned property is fully leased (the Honduran consulate is a tenant, for those looking for a warm getaway) and the apartments are 25% vacant since ownership lacked capital for upgrades. MRR plans to invest $750k in capital improvements and raise rents as units become available ($900/month for a one-bedroom, $1,150/month for a two-bedroom). The retail has seen little turnover, he adds, since the tenants are mainly local small business owners.
At 1739-45 N Milwaukee in Bucktown, MRR just purchased the shell of an incomplete condo project for $2.1M. Using the original developer’s plans of large condo units, they’ll turn the $5M project into high-end rentals with retail on the ground floor. (The units are up to 3,000 SF and they’re conservatively underwriting rents between $2.25 and $2.75/SF.) The deal was attractive due to its value-add mixed-use criteria, great location, and condo upside and exit potential when the market turns (and it’s not there yet), David, partial to decaf iced Americanos, says. He’s happy to sit on the site at 8% yield on cost now, given the upside of appreciation and better value for condos in five to 10 years.
As bank deals dry up, MRR is looking at ground-up development and value-add retail (think Fulton Market Kitchen at 311 Sangamon). “In 2009 to 2011 value-add was about having access to capital,” David says. “Now it’s really our market expertise that we need to leverage. In addition to some investing out of state and participating loans, MRR’s biggest focus remains value-add apartment deals using the multifamily savvy and neighborhood knowledge of partner Chicago Apartment Finders. “We’re turning as many warehouses as we can close to city job centers into apartments,” he says.
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