A national lender has blown a boatload of cash toward a portfolio of Windy City college apartments, Commercial Observer can exclusively report.
Realty Finance Trust provided a $70.5 million loan to New York-based Pioneer Acquisitions for the purchase and renovations of 19 apartment buildings in the Hyde Park section of Chicago, according to Meridian Capital Group, which arranged the financing. It was not immediately clear what the total cost of the sale was.
Comprised of 676 rental units, the buildings serve as off-campus housing for University of Chicago students. The sale also included two vacant lots.
The interest-only debt carries a three-year term, with two one-year extensions. It features floating rates with weighted average spreads in the high 300s over a 30-day Libor period. There is also future funding for improvements to the properties.
Managing Director Seth Grossman and Analyst Andy Strauss, both based in Meridian’s Carlsbad, Cali. office, worked on the deal.
“Our client has successfully replicated and scaled this renovation model across their portfolio, consistently generating higher rents and increasing property values,” Mr. Grossman said in prepared remarks provided to CO. “Upon demonstrating these past successes to our lender pool, coupled with the opportunity to obtain rare scale in such a high demand sub-market, we quickly generated strong lender interest that led to a very smooth process from start to end.”
Pioneer Acquisitions, which focuses on deals in the New York and Chicago markets, bought the portfolio from the University of Chicago, which had purchased the buildings over the course of several decades to be used by both students and faculty.
James Peterson, a principal of Pioneer Acquisitions, said the university had been a good partner in the transaction. The buildings will be upgraded in the coming years and most will remain housing for students and faculty.
“We’re excited about the transaction,” Mr. Peterson told CO. “We’re going to be putting significant improvements into the buildings. Meridian did a great job for us, as they always do.”
A representative for Realty Finance Trust did not return a call for comment.