Blame Canada?

Canadian investors seeking higher returns internationally have set their sights on value-add multifamily in Chicago. (We hope this means hockey-related amenities and a property manager dressed like a Mountie.)

Chicago Real Estate Resources’ Nate Gautsche and Timothy Keenan (above) just repped both sides in the short sale of a six-building, 74-unit multifamily portfolio on the South Side. (The seller was IM Construction & Property Management.) The buyer was Target 5, a Canadian investment group that is slowly amassing a sizable South Side multifamily portfolio, they tell us. The challenge: the note was sold twice while CRER was working on the deal. The latest Texas-based note buyer (a CRER client on the receivership side) agreed to the short sale and provided Target 5 with a two-year loan. Financing is still tough for foreign nationals, and the loan allows the buyer to refi each property individually over the next couple years.

The portfolio: 8000 (above) and 8010 S Cottage Grove in Chatham; 7007 S Sangamon in Englewood; 6131 S Michigan in Washington Park; and 732 E 80th and 8139 S Drexel in Chatham. CRER is working with three other Canadian groups buying up local multifamily value-add, and their advantage is lower return expectations than the local guys, Nate and Timothy say. (When your normal currency is snow, any cash at all seems wonderful.) The deal was done on a 12% cap rate. CRER will manage the properties. “You can buy these things and rehab them beautifully, but if you don’t re-tenant properly and management isn’t good, the whole ship will sink,” Timothy says. As for the local investors, they may have to open their pocketbooks wider to keep up, eh?