$47M Buys 280 Units for Conversion

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SACRAMENTO-Somerfield at Lakeside, a luxury apartment community in Elk Grove, CA is being converted to condominiums. An affiliate of Housing Source Partners of Pismo Beach, CA paid $47 million for the 280-unit development and is now selling off the units as Somerfield Luxury Condominiums.

Built in 1999, Somerfield at Lakeside is located north of Elk Grove Boulevard on Harbour Point Drive. The development includes one-, two-, and three-bedroom units that range from 767 sf to 1,247 sf and average more than 1,000 sf. Units include full-size washer-dryers, high ceilings and walk-in closets.

The acquisition price represents a per-unit cost of about $168,000 per unit. In an advertisement in the Sacramento Bee last week, the smallest units were being offered for sale at $190,000.

David Silver of Arroyo & Coates sold the complex on behalf of Kohala Investors LLC, a group of investors from San Francisco. Silver tells GlobeSt.com that very few apartment complexes in the Sacramento area have sold to condo converters in 2006, in part because there’s a lot of converted apartment units on the market that have not yet sold.

“It’s turning back into a strong apartment market,” Silver says. “Buyers now have to price in a slower sell-through.”

As one of the fastest growing cities in the state, Elk Grove has remained a relative boomtown. It’s strong school district and proximity to Interstate 5 is part of the draw. Silver says that for people who want to be in Elk Grove, Somerfield Luxury Condominiums will be attractive, in part because it is surrounded by new single-family residential product selling for between $450,000 and $700,000.