S2 Capital Marks Strategic Chicago Market Entry with Historic Ovaltine Apartments Acquisition
S2 Capital, an esteemed real estate investment manager, recently announced their acquisition of Ovaltine Apartments, a 344-unit multifamily community in Villa Park, Illinois. This transaction is particularly noteworthy as it signifies S2’s entrance into the competitive Chicago market, a move that has been strategically planned through years of rigorous market analysis.
Ovaltine Apartments stands as a hallmark of history and architectural intrigue, originally a chocolate factory converted into living spaces in 2001. It boasts loft-style units with high ceilings and a rare aesthetic appeal for the suburban Chicago area. Positioned in DuPage County, the property benefits from being in a submarket with limited supply – no new multifamily developments within three miles – coupled with strong rent growth.
Why is this acquisition pivotal for S2 Capital? According to Cole Stephens, Managing Director of Asset Management, Residential at S2, “All markets are not created equal, and our entry into Chicago reflects years of disciplined research and conviction around long-term fundamentals.” Stephens further notes that “Ovaltine offers a compelling combination of historical character, durable demand drivers, and value creation potential, making it an exciting first investment for S2 in the Chicago market and a strong addition to our portfolio.”
Performance reports of the property have been stellar, with average occupancy rates exceeding 95% since January 2024 and rent growth rates that surpass comparable properties. Notably, the majority of units present untapped potential, as they remain unrenovated or only partially upgraded. This factor grants S2 the chance to implement a robust renovation strategy, aiming to foster rental growth and enrich resident satisfaction.
The investment made through the S2 Real Estate Fund II is indicative of the company’s strategic use of its discretionary closed-end fund. S2’s vertical integration is its linchpin in enacting interior renovations and targeted capital investments, all the while improving operational efficiencies throughout the duration of the investment period.
By taking a position in the Chicago area and with Ovaltine Apartments in particular, S2 Capital exemplifies a commitment to careful market entry supported by comprehensive due diligence. This strategic move demonstrates their continued pursuit of value-add investment opportunities and their ability to adapt and thrive in supply-constrained markets. This is a development to watch as it promises to serve as an inflection point for growth in a vibrant yet challenging urban real estate environment.