$600M Sale in Chicago Sets 2 Records
The assets traded with help from a Fannie Mae loan co-funded by Arbor Realty and NewPoint Real Estate Capital.
The recent sale of Pangea Properties’ Chicago portfolio with about 7,500 units across more than 400 buildings for approximately $600 million to Emerald Empire was both one of the biggest multifamily deals in the city’s history and one of the largest Fannie Mae Structured Adjustable-Rate Mortgage loans of 2022.
The Fannie Mae SARM loan was primarily financed by Arbor Realty Trust with NewPoint Real Estate Capital also participating in the transaction.
Ivan Kaufman, founder, chairman & CEO of Arbor Realty Trust, said in a prepared statement the transaction is representative of the strong social commitment to the provision and preservation of affordable housing shared by Fannie Mae, Arbor Realty Trust and Emerald Empire. Headquartered in Uniondale, N.Y., Arbor Realty Trust has been a Top 10 Fannie Mae DUS Multifamily Lender for more than a decade.
About 97 percent of the properties, primarily located on the South and West sides of Chicago, are considered affordable at 60 percent Area Median Income. One of the largest landlords in Chicago, Pangea Properties acquired much of the portfolio as distressed properties after the Great Recession, some for less than $20,000 per unit, according to The Real Deal. Emerald Empire, a New York-based real estate investment firm, paid more than $75,000 per unit.
The deal expands Emerald Empire’s holdings in Chicago as well as other parts of Illinois, Indiana, Oklahoma, Missouri and New Jersey. Some of Emerald Empire’s Chicago assets include The Onyx at North Shore, The Onyx Sheridan, The Onyx at Hoyne and The Onyx Carmen. The company has invested approximately $3.5 billion in a portfolio located in primary and secondary cities that contains residential, office, industrial and retail assets.
Arbor Realty Trust stated Pangea Properties’ Chicago-area employees will be kept on to manage the properties for Emerald Empire.
Rent Payment Program
The portfolio will become participants in Fannie Mae’s Multifamily Positive Rent Program pilot program, which supports the mission-driven goal of creating equitable financial opportunities for renters by sharing their on-time rent payments with the three major credit bureaus for incorporation in the renters’ credit profiles.
Michele Evans, executive vice president & head of multifamily at Fannie Mae, said in a prepared statement Fannie Mae is proud to have worked with Arbor Realty Trust on what she called an impactful transaction. Evans said in addition to providing affordable housing in Chicago, the deal also offers residents opportunities to build credit by providing positive rent payment reporting. Fannie Mae launched the pilot program in September. The initiative is part of Fannie Mae’s ongoing solutions to bolster equitable access to credit for more consumers and remove obstacles in their housing journey, whether they continue to rent or are seeking to become homeowners.