By Steve Lubetkin, GlobeSt.
CHICAGO, IL— ESG Kullen is acquiring The Flats on LaSalle, 1140 N. LaSalle Dr., for $38 million and will convert the property into rental apartments.
The Flats on LaSalle Condominium Association agreed to a bulk sale of all 250 units. The deal was brokered by Kiser Group’s Lee Kiser, Michael D’Agostino and Jake Parker. Kiser Group also introduced equity broker Alpha Capital to ESG Kullen, resulting in Harrison Street Capital becoming a partner in the deal.
The 250-unit, eight-story building was originally built in 1924 as a luxury hotel. It later converted to apartments and in 2006 converted to condominiums. The condominiums are a mix of studio and one-bedroom units.
“After being approached with an unsolicited verbal offer, the board of directors interviewed multifamily brokerage firms to meet our fiduciary responsibility in securing the highest possible offering,” says Jim Bright, president of Flats on LaSalle Condominium Association. “With their overall experience and ability to market the property on a national basis, Kiser Group was selected, and the results confirmed our decision. The de-conversion process was explained as the Kiser Group team led the board through the preliminary process, and all offers were fully vetted. The final offer was approved by over 85% of the ownership.”
“During the marketing phase, 1140 N. LaSalle had 50 property tours in two weeks and received more than a dozen offers. This is a hybrid property, meaning although size and location would be attractive to institutions, the vintage and unit size are more closely associated with the private market,” says Michael D’Agostino. “Kiser Group is uniquely positioned to broker these hybrid properties to marry private and institutional markets to effectuate a transaction. Amongst several highly qualified buyers, ESG Kullen was selected not only because of price and terms but also because of their experience with condo deconversions and 1920s construction.”
“The conversion of apartment buildings into condominiums was a significant trend from 1999 through 2007, when returns to condo developers outweighed the returns to apartment owners. In today’s market, the inverse is true. While the price of a condominium may not be attractive to the homeowner, the whole may be greater than the sum of the parts – meaning an apartment investor might pay a lot more for the unit. This doesn’t hold true for every condominium building, which is why a market analysis and plan should be completed for the association prior to the entertaining offers,” says Lee Kiser. “Kiser Group continues to focus on this segment of the market. We have completed numerous deconversions in 2018 and have more than a dozen deconversion projects currently in our pipeline.”
Kiser Group is marketing additional condo deconversions throughout the Chicagoland area, including a 64-unit deconversion in the Uptown neighborhood on the market, a five-unit deconversion, located at 2147 W. Potomac in Wicker Park and a 26-unit deconversion, located at 628 Harrison Street in Oak Park.