Albion Residential dropped a hefty chunk of change — nearly $140M, reportedly the highest price tag for a multifamily property in suburban Chicago — on an apartment complex in northwest suburban Palatine.
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The apartment development firm acquired Bourbon Square, a 612-unit community at Lake Cook Road and Illinois Route 53, from Los Angeles-based Broadshore Capital Partners. The price indicates continued multifamily investment strength amid rising interest rates.
Albion Residential's purchase breaks the record held by Ellyn Crossing, a 1,155-unit property in Glendale Heights that sold for $137M in February.
According to Albion President Jason Koehn, the firm paid $139.3M, or $228K per unit, for Bourbon Square, Crain’s Chicago Business reported. Lowe Enterprises Investors, Broadshore's predecessor company, paid $97M for Bourbon Square in 2014, and an appraisal valued the property at $115.8M in October 2019 when it was refinanced.
Albion owns 2,100 apartments in the Chicago area.
“All the properties are doing spectacularly well,” Koehn told Crain’s Chicago Business.
Renovations are in place for the complex, including new kitchens, bathrooms, flooring, and washers and dryers. Amenities throughout the space will also be fixed, and the building will get an exterior paint job.
Bourbon Square's net operating income rose to $5.71M last year, up 5.9% from 2020, according to Bloomberg data, and a Newmark brochure reported Bourbon Square was at 96% occupancy at the end of 2021.
Albion financed the acquisition with a senior loan from Wells Fargo and mezzanine financing from Chicago-based Walton Street Capital. The financing represented about 65% of the cost of the acquisition and renovation.
The sale was brokered by Newmark Chicago Senior Managing Directors Elizabeth Gagliardi, Susan Lawson and Chuck Johanns.
The suburban apartment sector is faring well, attracting tenants and investor interest and seeing major rent hikes, but Albion also closed its deal in April before markets plunged and headlines, even for the hot multifamily segment, started to look less rosy.
“We certainly had our choices going into it,” Koehn told Crain’s.
