(To read more on the multifamily market, click here.)
SACRAMENTO-The 195-unit Savannah Court apartments here has changed hands for $17.75 million, or just under $90,000 per unit. The new owner, SVN Equities, plans to get final approval for the units' resale as condominiums and then sell the asset to a condo converter. The seller was a private investor from Del Mar.
Savannah Court was built in the late 1980s. The 24-building, garden-style development contains one- and two-bedroom units that rent for between $550 and $825 per month. The complex is 91% occupied. The site address is 4337 Norwood Ave.
SVN Equities officials say the company plans to finalize the existing condo map on the property and bring the property back to market as a conversion play by the end of the year. Steven Rodick, a condo conversion consultant at CCI in San Diego is facilitating the map process.
David Harrison of Sperry Van Ness in Sacramento represented SVN Equities and also will have the disposition assignment. Don Meagher of Coastal Exchange represented the seller.
Harrison tells GlobeSt.com that the value of the complex when it is conversion ready will be between $125,000 and $130,000 per unit. That would translate to a sale price of between $24 million and $25 million.
The converter would then want to sell off the units at a price point that results in gross sales that are about double what it paid for the asset. After costs, such as unit and site upgrades, sales commissions and insurance, the goal is generally for a 25% to 40% return.
According to Harrison, this is SVN Equities' first apartment acquisition.
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