Investor gets $27M refinancing for West Loop apartments

Breneman Capital completed a $27 million refinancing of the Madison Throop Place apartments, a 72-unit complex the firm owns in Chicago's West Loop neighborhood.

A Chicago-based real estate investor scored a $27 million refinancing of a West Loop apartment complex, a sign of the sector’s strength amid challenges in the debt market over the last few years.

Breneman Capital has refinanced Madison Throop Place, a 72-unit building at 1247 W. Madison St., with a five-year Fannie Mae loan that carries an interest rate of about 5.2%, according to brokerage Northmarq, which arranged the loan on behalf of the firm, and founder Drew Breneman.

The new debt replaces a $20.5 million Fannie Mae loan that Breneman paid off, allowing the firm to refinance without putting in any additional equity and pull some money out to return to its investors, Breneman said.

A series of interest rate hikes that kicked off in 2022 made refinancing tricky for many commercial property landlords with mortgages that matured over the past couple of years, but apartment buildings in well-performing neighborhoods have been able to overcome those hurdles.

“There’s a lot of challenges but I think just for stabilized multifamily, the financing market has been very liquid and very stable,” Breneman said.

Breneman said he was able to raise rents by 33% since acquiring the complex in 2020.“For a variety of reasons, rents have just grown so much in these very desirable North Side neighborhoods,” he said, noting that the firm has seen strong rent growth in properties across its portfolio in Chicago.

The strength of the West Loop rental market “enabled Fannie Mae to take an aggressive approach to keep this deal within their portfolio,” Northmarq managing director Kevin McCarthy said in a statement.

With few units being added to the market amid barriers to new development, downtown rents were up more than 8% year over year in the third quarter, according to data from Integra Realty Resources.

A Breneman-led venture paid $32.8 million, or about $421,000 per unit, for Madison Throop Place in October 2020.

Breneman Capital’s portfolio includes several mid-size apartment buildings in Chicago as well as properties in Wisconsin and Arizona, according to the firm’s website.