The buyer of the Forest Cove apartment complex plans to spend $6 million fixing up the property.It’s an unusual complex on a wooded site with ponds, wooden bridges and waterfalls, but its apartments and common areas need to be updated.
After accumulating an apartment portfolio that runs from Evanston to South Shore, landlord Stuart Handler is expanding into the northwest suburbs.
Handler said a venture he leads paid $26.3 million last week for Forest Cove, a 300-unit apartment complex in Mount Prospect. It’s his first suburban acquisition outside Evanston, with more to come.
Handler, CEO of Chicago-based TLC Management, plans to spend $6 million fixing up Forest Cove, a property at 1706 Forest Drive that was developed in 1974. It’s an unusual complex on a wooded site with ponds, wooden bridges and waterfalls, but its apartments and common areas need to be updated.
“We’ll take a sow’s ear and turn it into a silk purse,” Handler said.
Forest Cove “is probably a (Class B-) property,” he said. “We’re going to take it to a B+ or A-.”
The Handler venture assumed a $19 million mortgage as part of the acquisition. It bought Forest Cove from Plato Foufas & Co., a Chicago-based real estate firm that had owned the property for 28 years. Company President Plato Foufas did not return a call.
WHAT SUBURBS OFFER INVESTORS
TLC owns 3,200 units in 46 buildings, none outside Chicago or Evanston. But Handler has warmed up to the suburbs, both because they offer diversification and because it’s easier to find acquisition opportunities.
A lot of suburban apartment complexes are owned by big investors that want to exit their investments in five to 10 years, making for a liquid market, he said. It’s harder to find buildings to acquire in the city because many landlords stick to a buy-and-hold strategy, he said.
Apartment landlords have flourished in both the city and suburbs the last five years, as more residents have favored renting over buying and, more recently, the job market has picked up. Suburban apartment rents have risen to record highs, while the occupancy rate hit its highest level since 2007 in the third quarter, according a report by Chicago-based consulting firm Appraisal Research Counselors.
Forest Cove was 95 percent occupied in the third quarter, the same as a year earlier, according to the Appraisal Research report. Monthly rents range from $901 for a one-bedroom unit to $1,162 for the most expensive two-bedroom, the report shows.
Handler also has beefed up his city portfolio. TLC ventures recently paid a combined $4.3 million for two apartment buildings in Hyde Park, Handler said. The ventures acquired a 36-unit building at 5135 S. Blackstone Ave. and a 41-unit building at 5111 S. University Ave., he said.
They bought the properties from ventures of Evanston-based Kinzie Realty, which paid a combined $3.7 million for them in 2005, according to Cook County records. A Kinzie executive did not return a call.