Construction is underway at 633 S LaSalle in Chicago (Image: QIP)
Singapore-based private equity real estate firm Q Investment Partners (QIP) is expanding its foothold in the US with a pair of residential development projects in Chicago and a newly built warehouse facility in New York.
QIP in mid-February announced that it raised $63.7 million in construction financing for its first US project, a 358-bed multi-family project at 633 S LaSalle in Chicago’s South Loop, which it is developing together with joint venture partner, Melrose Ascension Capital (MAC).
The announcement comes as the JV prepares to take on a second multi-family project within the same neighbourhood south of the city’s downtown, the firm’s co-founder and chief executive officer Peter Young told Mingtiandi recently, with the company also investing in industrial projects in the US.
Growing their US business is crucial to boosting QIP’s global footprint initially focused on the Japanese multi-family and UK student housing sectors, Young said, with the company seeing a favourable outlook for residential and industrial property in the US, despite fluctuations in other US real estate sectors.
“We’re excited about the US real estate market,” Young said, “Sometimes the distance of the US probably hinders investments in the US for a lot of APAC groups. Our view is that the US macro and fundamentals are strong, the multi-family and the last mile logistics sectors are particularly strong as well so we want to continue to develop that.”
Post-Covid Recovery
The construction loan for 633 S LaSalle was syndicated between Glacier Global Partners, BH3 Management and Petros PACE Finance, and comes over two years after QIP secured $24.5 million in equity for the project from Swiss lender Bank Julius Baer and private investors via an initial funding round in 2021.
QIP co-founder and chief executive officer Peter Young
The 17-storey project targets students and young professionals in the South Loop area and is scheduled to be operational in the first quarter of 2025 after breaking ground in June, Young said.
“The COVID-19 pandemic significantly impacted the timing of our ground-breaking, but we were fortunate that it afforded us the time to reposition, re-imagine, and navigate through a tremendously difficult period of escalating construction costs and rising interest rates to come out with an even better project,” James Coppack, QIP’s US head of development, said in a statement, noting that the project will bring “much-needed inventory” to the Chicago rental residential market.
With Chicago-based MAC maintaining a minority stake in the project, Young said the partners are already planning a second multi-family development in the South Loop in anticipation of strong demand for rental accommodation.
“We expect our project to have a high take up with the product that we’ve created, and the rental pricing of that is particularly attractive for those looking to live in the city center. So Chicago as a sub-market, specifically South Loop, is expected to be very, very strong, but of course, the wider broader market in US real estate is very dynamic,” Young said.
Construction completions for rental apartment projects have already peaked in America’s third-largest city, making Chicago one of the country’s few multi-family markets with strong prospects for rental growth and occupancy over the near term, according to a recent report by CBRE.
This favourable outlook is despite the broader US market bracing for its biggest crop of multi-family projects in decades, with 440,000 units scheduled to be completed in 2024 and another 900,000 or more rental homes in the pipeline. CBRE expects the surge in supply to dampen overall multi-family rental growth across the US this year as vacancies rise.
Upstate Sheds
On the industrial side, Young said QIP took on its first ever warehouse project late last year when its development division unit served as the development manager for a last-mile logistics project in Utica, New York.
QIP as the development manager of this build-to-suit warehouse in upstate New York
The 52,500 square foot (4,877 square metre) build-to-suit project is located in the Schuyler Business Park, and was developed by New York-based Routine Properties. Completed in October, the property is now occupied by an unspecified American national retailer.
Young said QIP has been growing its US team over the past two years led by Coppack together with US development manager, Albert Figueras.
“Having a local presence in the US will be key in delivering this Chicago project and taking more passive investments like the other investment we have with MAC in Chicago and our warehousing project,” he said.
The trio of American projects adds to QIP’s portfolio of four multi-family assets in Japan with 249 beds and 11 student accommodation facilities in the UK with 2,139 beds.
The company acquired its four Japanese assets under its $50-million GK APG Asset 1 multi-family vehicle which closed in June of last year, counting investment manager Alyssa Partners as a co-investor and local operating partner.
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