Printed from ChicagoRealEstateDaily.com
July 25, 2014
Wicker Park Condos Pay Off for Investor
By: David Lee Matthews
A busted eight-unit condominium project in Wicker Park has sold for $425,000 per unit, delivering a nice payday for the investor that put the property back together.
A venture led by Chicago-based Blackhawk Investment Group, LLC paid $3.4 million earlier this month for the property at 1449 N. Wicker Park Ave., Blackhawk Managing Principal Drew Breneman confirmed.
The venture bought the building from an affiliate of Chicago-based Wicker Park Capital Management LLC and two individuals who bought condos in the building. A venture led by fallen developer Krzyzstof Karbowski built the project in 2004, but only two units sold.
Cook County property records show the Wicker Park Capital Management venture paid $1.59 million, or $265,000 per unit, for the six unsold condos in a 2012 bankruptcy sale. Instead of testing the condo market, Wicker Park Capital Management rode the wave of rising apartment rents across Chicago, eventually raising monthly rates at the 1,600-square-foot, three-bedroom units to $3,250 from $2,150 in 2012.
The investor also reached an agreement with the two pre-crash buyers to sell the property in whole for a certain price, Wicker Park Capital Management Principal Blake Berg said.
The sale price earlier this month – $425,000 per unit – is more than either buyer paid for their condo in 2004, said ACO Commercial Executive Vice President George Toscas, who brokered the sale. “There really were not any improvements done.” Mr. Berg said.
“We had really executed the business plan, which was largely predicated on positioning the building to benefit from the rising tide of rents in Wicker Park.” Mr. Breneman believes he could push rents another 15 percent to 20 percent immediately, given the market and the property’s location a few blocks from the bustling Six Corners intersection of Damen, Milwaukee, and North Avenues.
Each unit also has a view of triangular Wicker Park.
Should Blackhawk succeed in raising rents, the property would generate a capitalization rate, or first-year return, of 7 percent, he said. “Similar condos with three bedrooms of this size regularly sell for $500,000-plus,” said Mr. Breneman, whose firm also bought a failed 16-unit Karbowski project last year at 2147 and 2151 W. Evergreen Ave.
“So we’re in at a really attractive basis, should we ever decide to exit the deal by selling off the units individually.” That sounds like a good plan to Noah Gottlieb, a senior managing director of New York-based Property Markets Group Inc., which is building 135 apartment projects in Logan Square.
It’s difficult finding and entitling land sites for large apartment projects in the neighborhoods, Mr. Gottlieb said, driving up prices and rents for well-located existing assets. “It’s real difficult to meet market demand in the neighborhoods,” he said.