Meridian Capital Group, America’s most active debt broker, negotiated $51.2 million in acquisition and renovation financing for the purchase of 394 rental units spanning 10 non-contiguous multifamily properties, one retail property, and five land parcels located in Chicago’s Hyde Park neighborhood, on behalf of Pioneer Acquisitions.
The three-year, interest-only loan, provided by a national debt fund, features flexibility, future funding for improvements, an attractive floating-rate over the 30-day LIBOR index, and two one-year extension options. This transaction was negotiated by Meridian Managing Director, Seth Grossman and Analyst, Andy Strauss, who are both based in the company’s Carlsbad, CA office.
The University of Chicago acquired the properties over many decades and has operated this portfolio solely as student and faculty housing. The assets are located on Hyde Park Boulevard, Kenwood Avenue, Blackstone Avenue, Harper Avenue and 57th Street. While the recent revitalization and heavy new commercial development within Hyde Park has created strong demand for market rate housing in this sub-market, the intent of the buyer is to continue catering to a primarily student and faculty based population, while also opening up units to non-university related tenants. There is a significant value-add component based on the planned modernization of the units that will begin immediately. Kitchens, bathrooms and common areas will be included in upgrades, as Pioneer sees the assets as a long term investment and believes early capital improvements will help demonstrate their commitment to the tenant base and community.
“Our client purchased a nearly identical portfolio from the university last year that contained 676 apartment units and its performance to date has drastically exceeded expectations,” explained Mr. Grossman. “That measurable success, coupled with the additional efficiencies to be gained by now having in excess of 1,000 units in such a high-demand sub-market, gave comfort to many lenders that competed aggressively for the assignment,” he added.
Pioneer Acquisitions was founded in 2008 with the goal of acquiring well-located assets in urban neighborhoods currently experiencing a rejuvenation. The company’s primary business model is to purchase and renovate vintage apartment buildings to meet the demands and tastes of today’s renters and position the assets for long-term appreciation. Headquartered in New York, with management offices in Chicago, Pioneer owns over 2,000 apartments throughout Chicago.
Founded in 1991, Meridian Capital Group, LLC is one of the nation’s largest commercial real estate finance and advisory firms. Meridian is headquartered in New York with offices in New Jersey, Maryland, Illinois, Florida and California. Working with a broad array of capital providers, Meridian arranges financing for transactions ranging from $1 million to more than $500 million for multifamily, co-op, office, retail, hotel, mixed-use, industrial, healthcare, student housing, self-storage and construction properties. www.meridiancapital.com