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Broken Condo Project Trades in All-Cash REO Deal

VAN NUYS, CA-The Los Angeles-based buyer acquires 99 units of the 161-unit Sonterra Homes, a fractured condo conversion, from the lender for $6.15 million.

By Bob Howard | Updated on November 06, 2009

VAN NUYS, CA-A Los Angeles-based buyer has acquired 99 units of the 161-unit Sonterra Homes, a fractured condo conversion project at 15425 Sherman Way, for $6.15 million in an all-cash REO sale. Marcus & Millichap’s Ron Harris and Joseph Smolen, who brokered the sale, tell GlobeSt.com that the property generated 26 offers, all of them all-cash and all of them from private buyers, including three opportunity funds. The deal works out to an 8.75% cap rate on a pro-forma stabilized basis.

Harris and Smolen listed the property on behalf of the seller, a Chicago-based lender that foreclosed on the complex when condo sales stalled after 62 of the units had been sold. The buyer was Gidi Cohen of West Los Angeles-based Cohen & Associates.

Harris tells GlobeSt.com that the vast majority of the prospective buyers planned to operate the 99 units as apartments until the market turns to make condo sales feasible again. The $6.15 million paid for the 99 units, 41 of which are occupied, works out to approximately $62,121 per unit, compared with average sales prices of $257,000 per unit when the condos were selling and a high of $310,000 in 2007.

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