Multifamily Beat

Chicago is Charles E. Smith's and Capri's kind of town Arlington, Va.-based Charles E. Smith Realty Inc. enjoyed a fruitful April courtesy of the Windy City. The REIT plans to develop a $103 million, 480-unit apartment building in downtown Chicago, and also purchased Dearborn Place, a 185-unit apartment tower in the same area for $25 million. With these two properties, Charles E. Smith's Chicago multifamily portfolio will total more than 5,200 units.

Construction of the new apartment community is expected to begin this spring, and completion of the first units is slated for 2001. The 52-story building will be developed in conjunction with Near North Properties Inc., Magellan Development Group Ltd. and Kenny Construction Co., all of Chicago. The tower will have one-, two- and three-bedroom apartments, and units will average 907 sq. ft. in size. Each apartment will have a private balcony and gourmet kitchen, and amenities will include an indoor swimming pool, outdoor sundeck, fitness rooms and views of Lake Michigan.

The 27-story Dearborn Place was built in 1987 and is located just blocks away from two other apartment communities owned by Smith: One East Delaware and One Superior Place.

In other Windy City news, Capri Capital in Chicago has arranged $34.5 million in financing for Eugenie Terrace, a 44-story, 575-unit luxury apartment tower in the city. The funding was in the form of a Fannie Mae MBS/DUS loan with a 10-year term. Dan Charleston, a regional vice president with Capri, originated the deal.

Completed in 1988, the building is located in the Gold Coast area, one of Chicago's most exclusive neighborhoods. The tower is within walking distance of the Lincoln Park Zoo, the Chicago Business District, several shopping districts and Lake Michigan's waterfront.

Home Properties hauls in Philadelphia catch Rochester, N.Y.-based Insignia/ESG has arranged the $135.9 million sale of six suburban Philadelphia apartment complexes to New York-based Home Properties. The seller was New York-based Gateside Organization. Insignia/ESG was the only broker in the transaction.

The complexes, which total 2,113 units, are located in Delaware, Chester, Bucks and Lehigh counties in southeastern Pennsylvania, and had an average 1999 occupancy rate of 97.1%. The average 1999 rent at the communities was $783 per month, and the average age is 33 years. The portfolio consists of 1,088 two-bedroom units, 856 one-bedroom apartments, 123 three-bedroom units and 46 efficiency/studio apartments.

Amenities include patios and balconies, swimming pools, tennis courts, laundry rooms and playgrounds. Home Properties will invest approximately $11 million over the next three years to upgrade the apartments and build community centers at the complexes.

SARES*REGIS is busy under the Western sun Irvine, Calif.-based SARES*REGIS Group is busy in its home state these days. The company is developing CenterPointe at La Mirage, a 340-unit, $60 million luxury apartment complex in San Diego. The owner of the project is Chicago-based Equity Residential Properties Trust. The architect is Irvine-based McLarand Vasquez Emsiek & Partners. Completion is slated for third-quarter 2001. Located near Jack Murphy Stadium, the complex is minutes from downtown San Diego and the city's beaches.

In a joint venture with Beverly Hills, Calif.-based FSC Realty, SARES*REGIS is also developing - and managing - Mission Grove, a $22 million, 208-unit luxury apartment complex in Riverside. Irvine-based Danielian Associates is the architect. The first units are scheduled for completion by the end of the year.

Finally, in some outside-of-California news, SARES*REGIS recently purchased the 181-unit Willowtree apartment complex in Phoenix for $9 million. The seller was Anthem, a Canadian investment syndicate that had owned the property since 1994. The community, which was built in 1979, features one- and two-bedroom units with an average size of 952 sq. ft. Willowtree was 98% occupied at the time of the sale.

A techie's heaven opens in Aurora, Ill. The 272-unit Orchard Village in Aurora, Ill., a development of Chicago-based Bristol Moran Development (BMD), is officially open for business. The new community has placed a heavy emphasis on technology, as each apartment features six-line phone outlets and high-speed Internet access.

The complex features one- and two-bedroom units. The one-bedroom apartments range in size from 703 to 867 sq. ft., and rents range from $825 to $960 per month. The two-bedroom units are 957 to 1,130 sq. ft. with rents ranging from $1,075 to $1,250 per month. Amenities include central air conditioning, and in-unit washers and dryers.

L.J. Melody arranges nourishing sale in desert air Houston-based L.J. Melody & Co. has arranged $25.5 million in fixed-rate financing for the purchase of the 660-unit Meridian Corners Apartments in Tempe, Ariz., by San Diego-based First Commercial Corp. Banc of America Securities LLC, which has principal offices in San Francisco; New York; and Charlotte, N.C.; provided the funding. The 15-year old complex was 95% leased at the time of the sale.

Could it be ? An ocean in Manhattan? Occupancy of the Ocean, a 500-unit luxury apartment community in Manhattan, is slated to begin in July. The complex is housed on floors 19 through 37 of the former 17 Battery Place office tower in Manhattan. Floors 1 through 18 will be an entirely separate development consisting of office space. The Moinian Group of New York is the developer of the apartments, and The Marketing Directors Inc., also in New York, is the marketing and rental agent.

The community will feature studio and one-bedroom units, and rents will start at $1,965 per month. Amenities include views of the Statue of Liberty, New York Harbor and the Manhattan skyline.

Post has a friend in Robinson-Humphrey ConAm heads east to grab Winter Park complex

The ConAm Group of Cos. in San Diego has purchased Summer Chase Apartments, a 304-unit, garden-style complex in Winter Park, Fla. The purchase is a joint venture with an undisclosed investment partner. The sale price was also undisclosed.

Built in 1973, Summer Chase contains studio, one-, two- and three-bedroom floor plans. Unit size will range from 538 sq. ft. to 1,394 sq. ft. The joint venture plans to spend $2.3 million during the next two years to make interior and exterior improvements to the complex and to upgrade certain amenities, such as the pool and tennis courts.

Looking for another real estate vehicle in which to invest your next dollar? You could do a lot worse than Atlanta-based Post Properties. At least that is the opinion of another Atlanta company, Robinson-Humphrey, which is one of the largest full-service investment firms in the South.

In April, Robinson-Humphrey held its 29th Annual Institutional Conference in Atlanta, during which approximately 170 publicly-traded companies made presentations to audiences of institutional investors.

Indianapolis-based Duke-Weeks Realty Corp. was among the other real estate companies at the three-day event.

Robinson-Humphrey also made available investment analysis of about the companies. The attendees received a glowing report on Post.

"We view Post as one of a finite group of real estate companies that not only exemplify a proven growth strategy with high-quality assets and a strong balance sheet, but also whose management team understands that investment returns, not size, ultimately produce long-term shareholder value," says Robinson-Humphrey's report.

The firm rates Post as 1M, which means a buy recommendation with medium risk.

The firm then lists four reasons to buy Post stock: the REIT's "disciplined investment approach," its emphasis on mixed-use complexes in urban areas, its increasing geographic scope and its solid financial health.

Regarding Post's investment approach, Robinson-Humphrey finds the REIT's "return on assets (ROA) and return on equity (ROE) to be well ahead of its peer group." Also, "same-store property performance improved smartly" in 1999, writes Robinson-Humphrey.

The investment firm also believes that Post's concentration on urban communities gives the REIT a leg up on its competition. The strategy recognizes the modern taste of upscale renters, says Robinson-Humphrey.

"We believe the affluent renter is unlikely to pay a premium for garden-style suburban multifamily housing," says the report.

Mixed-use, urban apartments often have little competition in the surrounding area and that means they can "generate above-average rents," adds the report. "While urban developments are more difficult to find and complete, they offer better long-term rent growth and build substantial shareholder value."

Robinson-Humphrey also approves of Post's expansion into new markets. Post, which owns 104 apartment communities located mostly in the Southeastern and Southwestern United States, is moving into the New York City market. The company has signed an agreement with Clarett Group, a New York-based developer, to look for multifamily development opportunities in the Big Apple area.Post has said it hopes to begin development of an apartment property in New York by the end of the year.

Finally, Robinson-Humphrey points to Post's healthy financial status. The investment firm points out that Post's total debt is 38.4% of undepreciated real estate assets.

Investment yield from Post stock "is attractive and secure, in our opinion," writes Robinson-Humphrey. "Expect 10% [to] 15% to represent a return of capital."

As with every investment, though, there are risks. For Post, it is the potential economic slowdown, which could make tenants "less willing to pay upscale apartment rents."

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