Waterton buys Tides and Shoreham apartments from AFL-CIO pension fund
The deal could represent a further thaw in the downtown apartment investment market, which froze in the early months of the COVID-19 pandemic last year. Investors and lenders pulled back as rents and occupancy rates fell, with a few tall buildings changing hands.
But the downtown market has rocked its funk this year, with rents rebounding above pre-pandemic levels and investors more willing to put their money at risk. Sales of tall buildings are starting to accelerate: In July, San Francisco-based FPA Multifamily paid $ 175 million for McClurg Court Center, a 1,061-unit complex in Streeterville now known as Arrival Streeterville . More recently, Dallas-based Lincoln Property agreed to pay more than $ 90 million for the Bernardin, a 171-unit tower in River North, according to people familiar with the property.
Still, investors still have a reason to be wary of the city: Cook County appraiser Fritz Kaegi is reassessing downtown properties, and some have already seen big increases, so fear an increase in property taxes, which can depress the value. of buildings.
Waterton purchases the Tides at 360 E. South Water St. and the Shoreham at 400 E. South Water from the AFL-CIO Building Investment Trust. The trust invested in the construction of the buildings and bought out its development partner, Chicago-based Magellan Development Group, about five years ago. The towers are located directly south of the St. Regis Chicago, a new 101-story skyscraper on East Wacker Drive designed by Jeanne Gang.
A Waterton executive did not return the calls, nor did a representative of Washington-based PNC Realty Investors, a unit of the Pittsburgh-based PNC bank that oversees the trust properties. An executive from CBRE, the broker selling the two properties, declined to comment.
The Shoreham, which opened in 2005, and the Tides, which opened in 2008, aren’t that old, but they might need some work, like new appliances and finishing touches in their apartments. By investing money in a renovation, a new owner could increase rents, thereby increasing the value of buildings, according to CBRE’s marketing brochures for the properties.
“Although in excellent condition with good bones and achieving desirable rents, there remains a rent gap compared to the prominent multi-family assets in downtown Chicago,” the Shoreham brochure states. Additional bonuses can be obtained by instituting an interior finish upgrade program to upgrade top-notch luxury features such as quartz countertops, undermount sinks, new cabinetry, lighting, backsplashes. tiles and floor coverings. “
Waterton specializes in renovations, or “value-added investments,” in industry parlance. Founded in 1995, the company has approximately $ 7.7 billion in assets nationwide. In addition to the Presidential Towers, a 2,346 unit property on the West Loop, Waterton’s Chicago properties include Belden-Stratford in Lincoln Park, River North Park in River North, and North Harbor Tower, adjacent to Lakeshore East.