Chicago Illinois Real Estate Blog

A Chicago-based investment group bought the 72-acre One Imeson Center in North Jacksonville for almost $16.3 million and intends to invest about $2.5 million into upgrades to capitalize on port and shipping logistics.

GIV Imeson LLC, based in Chicago, bought the 1 Imeson Park Blvd. property in mid-December from Jacksonville Holdings Inc., which consists of a group that has owned the property since 1994.

The property was developed in 1974 as a Sears catalog sales distribution center.

The site comprises a 1.7 million-square-foot office-warehouse and about 37 acres of property that can accommodate up to 1 million square feet of space for development, according to a broker representing the property.

“We can handle distribution, manufacturing, outside storage, call center space and development,” said Ladson Montgomery, vice president and principal of Grubb & Ellis Phoenix Realty Group, which is the brokerage agency for the project.

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Equity Residential, benefiting from the moribund housing market, reported surging third-quarter results Wednesday evening.

The Chicago-based real estate investment trust, which owns more than 400 U.S. apartment properties, said funds from operations climbed 18 percent to $200 million, or 63 cents per diluted share, from $169.7 million, or 55 cents per share, in the year-earlier period.

Funds from operations, or FFO, is the preferred measure of profitability of a REIT because it strips out real estate-related depreciation and other factors that skew results.

“We are extremely pleased with the operating performance of the company thus far,”  President and CEO David J. Neithercut told analysts in a conference call. “We have come an awfully long way in the last year.”

Equity Residential’s profit upswing is a byproduct of the bleak outlook for the struggling U.S. housing market.

When the housing bubble burst in 2007, many homeowners defaulted on their mortgages, leading to a jump in foreclosures. As banks and mortgage servicers flooded the market with foreclosures and short sales, they drove down prices, diminishing the equity in homes whose owners were up-to-date with their mortgage payments. The median sales price of an existing U.S. home has fallen 16.5 percent to $165,400 from $198,100 in 2008.

As a result, there is little incentive to buy a home because many consumers fear its value will only continue to decline until the market turns around. And that means more demand for rental housing.

“Somebody who maybe moved into their parents’ basement [during the recession] has gotten a job and feels comfortable enough with their financial situation to move out on their own,” said John Sheehan, an analyst with Edward Jones in St. Louis. But instead of investing in a home, many of those who have gotten back on their feet are opting for a safer route and renting an apartment instead, he added.
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Farmland values in one of the most productive regions in the U.S. Midwest rose 17 percent in the second quarter from a year earlier as higher grain prices made real estate more attractive, the Federal Reserve Bank of Chicago said in an e-mailed report.

Rising demand for wheat, corn and soybeans boosted earnings, supporting higher land prices in the five-state Seventh Federal Reserve District, according to the report. The increase in farmland values was the biggest since the 1970s, the Fed said. Gains were reported in Illinois, Iowa, Indiana, Michigan and Wisconsin.

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Sales of second-quarter existing homes in the Chicago area fell 16.6 percent from the same period last year, to 19,799 homes sold, the Illinois Association of Realtors said Wednesday.

The median price of all single-family homes and condominiums sold in the nine-county region also recorded a double-digit fall, dropping 13.3 percent to $170,000.

Within the city of Chicago, home sales dropped 23.7 percent, to 5,010 sales and the median price of $190,000 was a 17.4 percent drop from the $230,000 recorded in the comparable 2010 period.

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Dirk Degenaars and Caroline L. Degenaars bought a four-bedroom, 3.5-bath home at 328 Warwick Road in Kenilworth from Joan W. Moore and Charles J. Moore for $1.7 million on June 16.

The Moores paid $800,000 for the property in Aug. 1990. The 2,464-square-foot house was built in 1919 in East Kenilworth.

Mr. Degenaars works as a managing director at Pearlmark Real Estate Partners. Prior to this, he was senior vice president at Land Lease and analyst at Jones Lang Salle.

He holds an A.B. from Dartmouth College.

According to BlockShopper.com, there have been 23 home sales in Kenilworth during the past 12 months, with a median sales price of $1.22 million.

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Property taxes for schools would be raised to the maximum allowed by law for the first time in four years — costing the average homeowner an extra $84 — under a proposed Chicago Public School budget released Friday.

School officials also want to tap $241 million in reserve funds, eliminate $100 million in scheduled raises to teachers and other union workers, and cut nearly $87 million from school programs to get the district’s $5.1 billion budget into the black.

The first budget produced by Mayor Rahm Emanuel’s new schools team, however, will not raise class size in most schools, as was threatened last year, and also manages to add 6,000 more all-day kindergarten spots and 2,300 new magnet ones.

However, to whittle down the $712 million deficit the new school team inherited, CPS officials believe they need to raise property taxes for schools to the maximum for the first time in four years, said CPS Chief Administrative Officer Tim Cawley. The move will generate $150 million in extra funding.

“If we did not raise property taxes, it’s not clear where the cuts would have come from,’’ Cawley said. Even with the property tax hike, multiple other cuts were needed and “everyone one of [them] has pain in it.’’

Another $107 million would be shaved from the deficit by consolidating Central Office departments and other reorganizations. And $27 million would be saved in what CPS described as “operations efficiencies,” including reducing the number of janitors and police officers in schools.

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According to the Chicago City Council, if a home has been abandoned then the lender who holds the lien on the property is responsible for the upkeep of that home – even if the lender did not foreclose on the property and the borrower still holds the title[1]. Rahm Emmanuel, Chicago’s mayor, stated that he is “proud of this strong piece of legislation requiring banks to be good neighbors” and believes that “Chicago is leading the way in protecting residents, neighborhoods and communities from the devastating impact of foreclosure.” However, since the lenders’ responsibility begins before the foreclosure process is complete, the legislation has amended the existing definition of “property owner” as we know it. Now, the term “property owner” includes “an entity who holds a mortgage on a property.” Those “property owners” are required to perform “routine maintenance” on the properties, including repairs, yard work, trash removal and boarding up entrances and windows[2].

Although this legislation may be well-intentioned, blurring the lines between lenders and property owners before those lenders take title via foreclosure may be a slippery slope. In fact, the American Securitization Forum (ASF) has warned that lenders and investors in the Chicago area are likely to shy away from the real estate market since legal costs and obligations have suddenly become very unclear. Emmanuel and the council responded that vacancies are becoming a “financial burden on the city” and that the new ordinance is a solution to that problem. However, the ordinance also ignores basic property rights in the process.

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While the real estate market continues to struggle toward recovery in Illinois and throughout the country, the most recent Standard & Poor’s/Case-Shiller Home Price Index had some good news for Chicago homeowners.

According to the report, home prices in the Chicago metropolitan area in May increased 1.7 percent over the previous month, but when compared to the same month last year, home prices are still down 8.1 percent.

The data, which also marked a just better than 1 percent improvement among all 20 of the metropolitan areas included in the index, "support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years," David Blitzer of S&P’s Index Committee said in a statement.

"[W]e might have a long way to go before we see a real recovery," Blitzer said. "Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery."

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A program used to analyze housing data has been identified as the cause of inflated median price calculations for the city of Chicago, the Illinois Association of Realtors announced today.

The program failed to recognize some data fields and subsequently eliminated an average of 11 percent of records per month beginning in November 2010; originally, they thought they may have overstated the figures since 2008 . The error resulted in monthly median home prices elevated by as much as 25.5 percent.

The program used has been corrected; all reports since November 2010 have been updated to include the previously eliminated data; and data since the inception of the Chicago reports in 2008 has been verified, the association said.

The association also hired an outside certified public accounting and technology firm, Sikich LLP, to conduct an independent review of the issue, and the firm agreed with the association about the cause of the problem and its fix, the association said.

"IAR regrets the error and hopes that the swift determination as to the cause and engagement of an independent public accounting firm for validation allays any concerns as to the integrity of the revised reports," the association added.

For example, the original IAR monthly report for May was a $238,450 median, but the recalculated median price was $190,000.

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The Illinois Association of Realtors is trying to figure out a little price inflation. Last week the trade group admitted that it had been releasing some overly cheery housing data for Chicago. For example, last month the IAR had the median existing condo price in the city for May at $290,000 when it should have been at least $50,000 lower.

These errors could go back as far as 2008 but the revelation came only last week, following inquiries from the Chicago Tribune. The IAR said the inflation was not intentional; Dennis Rodkin joined Alison Cuddy to explore the numbers. Rodkin is the Deal Estate columnist for Chicago magazine.

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