River Oaks North Apartments

Wien & Malkin investors have acquired the premier multi-family development in one of the most affluent and desirable suburban communities in the Midwest.

In November, two Wien & Malkin-led investment groups - 1185 River Oaks LLC and Foxfire River Oaks LLC - purchased River Oaks North Apartments, a 424-unit luxury Class-A community situated on a 70-acre beautifully landscaped and wooded site adjoining two golf courses in exclusive Rochester Hills, Michigan, approximately 30 miles northwest of Detroit. The property, which is 98% occupied, sits in the heart of one of the fastest growing submarkets of the greater Detroit metropolitan area.

"We were fortunate to find this property for the swap programs," says Anthony E. Malkin, president of W&M Properties, the acquisition, management and marketing arm of the Malkin family. "We were seeking a Class-A residential property in a high-growth community with tough barriers to new construction. River Oaks fits each of those criteria."

River Oaks North was purchased from Prudential Real Estate Investors for $43,550,000. The acquisition uses "like-kind exchange" provisions of the federal tax code to defer capital gains taxes on the sale of two former Wien & Malkin investments: the leasehold on 1185 Avenue of the Americas, a Manhattan office building, sold in August, and Foxfire Apartments, a garden-apartment complex in the Chicago suburb of Palatine, Illinois, sold in October. (Please see story at right for details on how "swap" transactions benefit Wien & Malkin investors.)

River Oaks North consists of generously sized apartments and townhomes with one, two and three bedrooms. The average unit size is nearly 1,400 square feet, with the townhomes ranging up to 2,300 square feet. Amenities include a pool, two lighted tennis courts, children's playground, a 24-hour attended gatehouse, a clubhouse with fitness center, sauna and billiards, and a business center. River Oaks North is the best property in the submarket, having the largest units, superior amenities, an outstanding location and the best rental value.

The area surrounding Rochester Hills boasts a median household income in excess of $125,000 - more than three times the national average - and new single-family home prices are above a half-million dollars.

"The average vacancy rate for Class-A multi-family residences in Rochester Hills is approximately 2%, in an area where household formation and employment are growing vigorously," notes George S. Perry, W&M vice president of acquisitions. "Even more significant, however, is the fact that only 240 multi-family permits have been issued for Rochester Hills since 1991. A lack of multi-family-zoned parcels and strict rezoning laws make the prospect of new apartment development in this market unlikely. The demand for quality apartment living is high, which supports a rising trend in rental rates.

Rochester Hills is located approximately five miles north of the city of Troy, a major employment center that is becoming the Detroit region's second largest office submarket. The vacancy rate for Troy's 12 million square feet of office space is slightly over 2.2%, and demand by expanding employers is strong.

One of the amenities at River Oaks North

Consequently, the area around Rochester Hills is attracting high-end office construction, a trend that is contributing to employment and additional household formation, which together are fueling the demand for quality apartments.

"River Oaks North is a strong addition to our quality multi-family portfolio," Mr. Malkin says, noting that Wien & Malkin investors own high-quality residential developments in five other major markets in the Midwest and Mid-Atlantic regions.

For more information on how Wien & Malkin evaluates and selects residential investments, please see the article entitled "Multi-Family Investments Yield Steady Distributions and Growth."