FPA Multifamily Buys Suburban Chicago Apartments for $102M

A California investment firm has acquired another apartment complex in the Chicago area.

The 642-unit complex in the northwest suburbs of Chicago, known as the Reserve at Hoffman Estates, has been acquired by an affiliate of San Francisco-based investor FPA Multifamily for $102 million, Crain’s reported.

It was purchased at $159,000 per unit from Intercapital Group, a Houston-based real estate investment manager.

Newmark senior managing directors Liz Gagliardi, Chuck Johanns and Susan Lawson represented Intercapital Group in the sale.

The deal, executed on July 10, was below the complex’s previous sale price of $104 million, or $162,000 per unit, in 2018.

FPA financed the purchase by assuming an existing $80.1 million Fannie Mae loan, which carries an interest rate of 4.52 percent and matures in four years. This arrangement likely helped FPA secure favorable financing terms amid a high-interest-rate environment that has dampened commercial property sales.

The property, located at 875 Pacific Avenue in Hoffman Estates follows several other significant acquisitions by FPA in the Chicago area.

The firm purchased a 270-unit complex in Oak Park for $60.3 million, a 500-unit high-rise in the South Loop for $144 million in March, and a 558-unit complex in Westmont for $96 million in September.

The Hoffman Estates property, built in the 1980s, includes one- and two-bedroom apartments, with an occupancy rate of about 98 percent and an average rent of $1,799, or $1.86 per square foot, according to CoStar Group.

Chicago-area apartment buildings continue to attract real estate investors due to consistent rent growth and high demand. However, the broader commercial real estate market is facing challenges. High interest rates and a tough lending environment have impacted slowed investment across various property types.

— Andrew Terrell