Origin Investments has expanded its IncomePlus Fund with a strategic $6.25 million preferred equity investment in Maple Street Lofts. This deal, finalized on July 17, 2020, marks the fund’s first venture since the onset of the COVID-19 pandemic, signaling confidence in resilient real estate opportunities. Maple Street Lofts, situated in Mount Prospect, Illinois, a well-established suburb 19 miles northwest of downtown Chicago, represents a compelling transit-oriented development (TOD). The project is poised to transform 6.5 acres, combining 14,000 square feet of retail and entertainment space with 257 luxury apartments and 56 single-family attached rowhomes.
Origin’s investment is specifically directed towards Phase I of this ambitious project, focusing on a six-story, 192-unit Class A luxury apartment building. This phase will also feature 3,000 square feet of resident amenities and a 15,000 square foot commercial space anchored by a local grocer. The attractiveness of Maple Street Lofts lies in its robust equity protection, prime location within a TOD, and partnership with a highly experienced developer. Furthermore, the project is projected to deliver a strong 15% total return for the Origin IncomePlus Fund, making it an appealing investment in the current market.
Significant Equity Protection for Investors
Capital Stack: Maple Street Lofts
The capital structure of Maple Street Lofts is designed to prioritize investor security. Origin’s preferred equity position, ranging from 67% to 81% of the capital stack, is strategically placed. It sits behind $39.2 million in senior bank debt and ahead of $13 million in common equity. This structure provides a substantial cushion, meaning the project could absorb losses up to $12.8 million before Origin’s investment is at risk, excluding the developer’s profit margin. Including the developer’s anticipated $5.6 million profit upon completion further strengthens this security. From a loan-to-cost perspective, the first point of risk for Origin is at 81%, and from a loan-to-value perspective, it’s at 75%. This indicates that the property value could decrease by 25% before the investment faces potential losses, highlighting the robust downside protection inherent in the Maple Street Lofts deal.
Prime Transit-Oriented Development Location
Location of Asset, Maple Street Lofts
Maple Street Lofts benefits significantly from its location in a transit-oriented development zone. Chicago’s TOD policy, initiated in 2013, encourages denser, pedestrian-friendly communities around train stations by easing development restrictions, particularly concerning parking requirements. Given Chicago’s extensive Metra rail network, serving over 300,000 commuters daily, TOD projects like Maple Street Lofts are highly attractive. The property’s mere four-minute walk to the Mount Prospect Metra Station is a key advantage, even closer than the station’s own public parking facilities. This proximity caters to the growing demand for convenient, car-optional living, particularly in suburban areas with strong links to urban centers like Chicago. The location enhances the appeal of Maple Street Lofts for residents seeking both suburban tranquility and easy city access.
Experienced and Local Development Partner
Origin Investments is partnering with Wingspan Development Group for the Maple Street Lofts project. Wingspan, a vertically integrated development firm based in Mount Prospect, Illinois, brings significant local expertise. Their headquarters are conveniently located just 2.2 miles from the development site, underscoring their deep understanding of the local market. Wingspan specializes in residential, mixed-use, and student housing across the Midwest, Colorado, and Florida, demonstrating a broad and successful portfolio. Notably, they have a proven track record in TOD projects, having recently completed a 70-unit development, 20 West Apartments, also a TOD project, located just a quarter mile from Maple Street Lofts. This prior success in the immediate vicinity further de-risks the Maple Street Lofts development, leveraging Wingspan’s established operational capabilities and market insight.
Investment Summary and Future Outlook
Origin’s Maple Street Lofts Project
Construction of Maple Street Lofts commenced in January 2020, with an anticipated completion date of August 2021. With 25% of construction already completed at the time of investment, Maple Street Lofts presents a compelling risk-reward profile. The 15% projected total return on a Class A TOD project, coupled with significant equity protection, positions Maple Street Lofts as an attractive investment within the current economic landscape. This project not only expands the Origin IncomePlus Fund portfolio but also offers investors access to a high-quality real estate asset in a thriving suburban Chicago market.
