Montlack sells West Side apartments, including 296-unit Stuart House

Montlack Realty has sold off its West Side apartments, including the 296-unit Stuart House complex in Cleveland’s Jefferson neighborhood.

The sales, which closed in late April, are the first wave in a looming tide of transactions. Montlack, a family business with offices near Shaker Square, put most of its apartment portfolio up for sale this year in hopes of shedding nearly 1,500 units.

“We’re continuing to market the balance of the Montlack portfolio,” said Dan Burkons, an executive managing director with Institutional Property Advisors Midwest, an Independence-based arm of the Marcus & Millichap brokerage. “Some are still available. The majority are under contract.”

Burkons, who is part of a team handling the listings, would not discuss pending sales.

Stuart House changed hands on April 27, according to public records. The buyer was an affiliate of Freeland Ventures, a multifamily investment group based in Middleburg Heights.

Cuyahoga County records list the sale price as close to $15.4 million. However, an email distributed to investors by Freeland in March indicates that the actual price was $16.3 million.

Tyler Brummett, Freeland’s chief operating officer and president of asset management, declined to discuss pricing. And he said it’s too early to talk in detail about the company’s plans.

“Our goal is to keep people there,” he said, adding that Freeland intends to spruce up the complex and address deferred maintenance. “That’s what we want to do. We want to maintain 90% or higher occupancy, and we want to provide people the opportunity to stay.”

Stuart House is 88% occupied, according to Freeland’s investor email. Like many of Montlack’s properties, the apartments are considered a “value-add” deal — a purchase where there’s a significant need for upgrades and, in turn, room to raise rents.

“We’re really hands-on with our properties and very, very involved,” Brummett said of Freeland, which plans to move its corporate offices to Stuart House.

Burkons said IPA Midwest received 13 offers for Stuart House from a mix of local and out-of-state suitors. “Even in the face of rising interest rates, the demand for multifamily has been as strong as ever,” he said.

Montlack also sold two properties in Lakewood, on Clifton Boulevard. In both cases, the buyer was an affiliate of Pero Real Estate, a landlord based in Erie, Pennsylvania.

The combined sale price was $4.6 million, public records show.

Companies tied to Pero paid $3.15 million for Clifton Cove Apartments, at 12511 Clifton Blvd., and $1.45 million for Traymore, at 12943 Clifton Blvd. The properties span 75 units.

Pero plans to invest $1.5 million in improvements, said Jason Pero, the company’s president and owner. That work ranges from repairing roofs and heating systems to renovating kitchens and bathrooms.

Rents, which start around $650 a month, will rise, he said. But Pero isn’t aiming for the top of the market.

“The goal’s not to go in and displace existing tenants,” he said. “We want to get existing tenants better value for their money.”

The company’s apartment portfolio is comprised of almost 3,000 units, most of them in western Pennsylvania and Northeast Ohio. Pero would not say whether he’s pursuing additional Montlack properties in Cleveland, Cleveland Heights or Shaker Heights.

Montlack, led by third-generation owner Kirt Montlack, spent decades amassing a portfolio of modestly priced apartments, most of them on the East Side. The company is the dominant landlord in Shaker Heights.

Stuart House was the largest of 29 properties that Montlack put up for sale. The most recognizable asset is the Alcazar, a historic Cleveland Heights hotel that now serves as housing in the Cedar-Fairmount business district.