Edward Liss, senior vice president of Triton Realty Group, recently sold four apartment buildings within the Aurora, Elgin and Carpentersville, Illinois markets.
The first asset, a 30-unit apartment building in Aurora closed for $1,230,000, a $41,000 per-unit purchase price. The property was originally constructed in 1959 as an office building, but was converted to apartments in the 1970s—half the units being one-bedroom and half studios. The property rents allow a new investor the opportunity to add value to the existing cash flow with further unit renovations and on current numbers the asset operates at an 8.84 percent capitalization rate
The second property, also in Aurora, was an eight-unit apartment building, consisting of all two-bedroom units with private basements and washer-dryer hookups. The sale price of $560,000 represents $70,000 per unit which is among the highest prices per unit in recent sales in the Aurora marketplace. The property operated at a 6.5 percent cap rate with long-term ownership and long-term renters with below-market rents. The property sold off market as the buyer and seller had previous negotiations on the building in the past. Liss represented both sides in the transaction.
The third property, which was also an off-market transaction, involved a 50 percent occupied property in Elgin. The property consists of 21 units and sold for $850,000, representing $40,476 per unit. The vintage building, constructed in 1920, contains 16 one-bedroom units and five studios. The property needed renovation to assist in the leasing of vacant units; however, given the demand in the Elgin marketplace the buyer was able to obtain traditional financing to close on the property.
Finally, Triton closed a 36-unit apartment building in Carpentersville, representing the buyer in the transaction. The building consisted of 36 one-bedroom apartments, with garages, and sold for $2,600,000. The sale represents a 7.75 percent cap rate and a price of $72,222 per unit. The asset was an attractive purchase given its river views and walking distance to downtown East Dundee.
According to Liss, the sales represent the strong demand for rentals in the western suburban market. Buyers are seeing the potential of adding value to rents and the demand for rentals in these areas continues to be present. Lenders are also willing to work with experienced buyers to provide favorable loan terms even when current net operating income is not covering a tradition debt coverage ratio.
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