X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

OCEANSIDE, CA-A joint venture of the Bethany Group and Overland Realty Capital has acquired the 114-unit Sunset Village apartment complex in a $29-million deal and has started rehabbing the for a condo conversion. The property is being renamed Bethany Summit and the new units, which are expected to be completed in about six months, will be marketed for $285,000 and up.

The $29-million co-investment included nearly $6 million from Overland Realty Capital and $23 million in financing from CW Capital, according to Holliday Fenoglio Fowler. HFF represented the Bethany Group in arranging the acquisition financing and joint venture equity for the project.

Orange County-based Steve Gunther from HFF tells Globest.com that the finance structure for this deal was “somewhat atypical” of what he is accustomed to seeing. The acquisition and bridge financing carry a term of two years, with an adjustable rate, and are leveraged at 80% of the total cost, including remodeling costs.

Gunther says the boom in San Diego’s condo conversion market has also made some players apprehensive about participating in certain deals. “Lenders are cooling to new projects except in strong barrier to entry markets and are picking their sponsors carefully,” Gunther tells Globest.com.

Sunset Village is located at 3634 College Blvd. on the Carlsbad border of Oceanside. The property is 98% occupied as apartments and has been fully entitled as a condominium project since its construction in 1987. After the conversion, the property will still consist of 114 units, but they will be remodeled with granite countertops and stainless steel appliance kitchens.

The condominiums will bring affordable housing to San Diego County, where single-family homes are starting in the $600,000 range but the Bethany Summit units will sell for $285,000 to $350,000. Despite the apprehension of some lenders, the apartment-condo conversion market is still strong. According to Gunther, the threat of rising interest rates will have little no effect on conversion projects like Sunset Village.

“Interest rates are not expected to rise enough to impact the relatively small number of units offered in this development, Gunther tells Globest.com. “In addition, as units will be available quickly, the sellout period should not extend far into the future.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.