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How Flats Chicago is reshaping Uptown and other North Side neighborhoods
A decade ago, Alex Samoylovich’s experience in real estate amounted to an investment in an Albany Park nine-flat.
Today, he’s chief executive of Cedar Street, riding a hot streak that began with the real-estate and credit crash five years ago. When that calamity left other entrepreneurs locked out of property deals, Samoylovich, 32, had the capital to expand operations and acquire buildings.
Cedar Street now owns 30 properties, all but one of them in the Chicago area. Its most visible holdings, and the ones that could have the most impact on its surroundings, are its 2,000 apartments on the North Side, from Lincoln Park to Rogers Park.
“We’ll buy distressed. We’ll buy vacant,” Samoylovich said. “We’ll buy hairy deals where you actually have to go in and work to create the value.”
The apartments are part of what he hopes is a nascent empire. With business partners Jay Michael and Thomas Kim, all pals since their school days in Skokie, Samoylovich has created six operating companies that touch various sides of real estate, from interior design to construction, brokerage and property management.
Last month, Samoylovich committed $40 million to a package of commercial properties tied up in bankruptcy. His new prizes include the onetime home of Michael Jordan’s Restaurant at 500 N. LaSalle, slated to become a Gino’s East.
His intent is to navigate the up and down cycles, relying on selling services to third parties when prudence dictates that Cedar Street scale back its own investments. Samoylovich, however, isn’t at that point yet. With about $250 million in assets under management, he said he’s close to raising a $100 million fund for more deals.
Cedar Street’s apartments are mostly in Uptown and Edgewater and serve as a laboratory for branding. Incorporating lessons from hotels, Cedar Street is marketing the buildings under the name Flats Chicago.
Samoylovich hopes renters will associate the brand with rich amenities at “approachable” rents.
What does that mean? Here’s his take on that topic and a few others.
On the branding strategy: “It’s a huge, better-than-expected success. We have over 500 persons on a waiting list to enter into these types of rental apartments and community centers. At the same time, it’s also allowed us to attract institutional investors.”
On alternatives in his chosen neighborhoods for low- to moderate-income renters: “Our price points for some of the units will start as low as $650, $700 [a month]. We created affordable solutions with a finished, branded product.”
On the next hot neighborhood: “There is not one other neighborhood that we care about as much as Uptown. If you look around the area, it is surrounded to the north, to the west and to the south by very expensive areas where there is a huge demand.”
On shopping for deals in River North or downtown: “We look for more of an arbitrage play where we believe if we go into a deal we can create value from day one. Deals in River North are very difficult to do and they’re pricey.”
On Cedar Street’s interest in buying Lawrence House, a large but troubled apartment building in Uptown that is in foreclosure: “It’s still in litigation and we’re not sure what’s going to happen. Depending on what the community and the city want, it could be something that fits into our pipeline.”
Photos by Richard A. Chapman