777 South State in Chicago’s South Loop was built in 1985 as a conventional market rate property and converted to student housing in 2003. Now its new owner, American Heritage Investments, LLC (AHI), has the option to convert it back into conventional housing thanks to flexible financing from PNC Real Estate.
AHI was formed more than 30 years ago by William “Bill” O’Kane to invest, broker and develop income-producing properties. AHI currently owns 20 multifamily properties.
The South State building has maintained the quality and unit layouts of a conventional property and much of it has been renovated over the past two years. Currently, the units are 70% leased by a nearby university for part of the year under a master lease.
Property amenities include a student lounge, indoor heated pool, outdoor terraces, game room, business/technology center, fitness center, laundry facility, 24-hour doorman, 201-space parking garage and 14,786 square feet of street-level retail including restaurants, a convenience store and a hardware store.
The owner was looking for the right financing strategy to maintain maximum flexibility. PNC Real Estate was just one of several financial institutions approached.
The strength of the sponsor and high demand for housing in the South Loop enabled PNC Real Estate to create a financing structure that allowed AHI to acquire this unique asset. PNC Real Estate’s relationship with Fannie Mae, reputation and prior experience with the client convinced the sponsor to select its solution.
The transaction called for the addition of 777 South State to the AHI credit facility, which contains 14 properties.
“As a result of this deal, a valuable property will be maintained and enhanced and we will have the flexibility we require,” notes Matthew O'Kane, Principal, Group Fox/American Heritage Investments.
Date: August 2015
Location: Chicago, Illinois
Financing Amount: $58 million
Financing Type: Fannie Mae
Scope: 330 units/882 beds, plus amenities, parking and 14,786 square feet of retail space
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