Biggest apartment sale ever in Chicago suburbs delivers big payoff for investor


The $137 million deal for a 1,155-unit property in Glendale Heights completes a complicated turnaround of the complex that began nearly a decade ago.

Rockwell sold Ellyn Crossing to a fund managed by Turner Impact Capital, a Los Angeles-based investment firm that specializes in affordable housing. Turner, which now owns more than 2,800 apartments in the Chicago area, plans to keep rents at the property within reach of residents who live on limited budgets but don’t qualify for subsidized housing.

The sale to Turner ends a drama that began more than 16 years ago, when the complex at Gregory Avenue and Glen Ellyn Road was all rentals.

In 2005, a unit of Oak Brook-based Inland Group bought the 66-acre property, then known as Stonegate Apartments, for $70.5 million. Amid a booming condominium market, Inland decided to convert 736 of the apartments into condos and sell them off individually, a move that seemed like a winner at the time.

But the plan backfired after the condo market collapsed, leaving Inland with hundreds of unsold units. Rockwell came along in 2013, first paying Inland $26.7 million for the 420 unconverted apartments. Then, in January 2017, Rockwell paid $14 million for 307 condos that Inland never sold.

In September 2018, Rockwell completed the final and most complicated part of the deal: buying out the owners of the 429 condos that Inland did sell. The price: $28.4 million. Rockwell returned the property to its original state—all apartments—and renamed it Ellyn Crossing.

Reassembling former multifamily properties that were converted to condos during the condo boom has become a popular investment strategy over the past several years. Amid a strong rental market, investors have profited by “deconverting” the properties back into apartments.

Some investors have acquired entire high-rises with hundreds of condos, while others, like Rockwell, have targeted properties that were never fully converted. In another local deal, Rockwell turned a partially converted 356-unit housing complex in Naperville back into apartments about three years ago.

Yet the deals are hard to pull off because an investor often must persuade dozens or even hundreds of condo owners to sell their units. Under state law, the owners of at least 75% of a condo property must approve a bulk sale to a single investor. Owners of about 80% of the Glendale Heights complex approved the 2018 sale to Rockwell.

The investment worked out well for Rockwell, which pocketed a hefty gain in the sale to Turner. Including its roughly $69 million in acquisition costs and nearly $7 million in capital improvements, Rockwell put roughly $76 million into the property, said Rockwell Principal Jason Fishleder. The $137 million sale price represents an 80% increase in value—a big jump when compared to a standard apartment sale.

“It was rewarding in a number of different ways,” said Rockwell Managing Principal Doug Fisher. “Yes, financially, but it was an extraordinarily messed up property. It is light years from what it was when we bought it.”

Rockwell, which owns a large portfolio of smaller buildings in the city, has no plans to sell its property in Naperville, Fisher said. The firm today is mainly focused on multifamily acquisitions outside Illinois, in markets including Phoenix, Denver, Austin and Atlanta.