Graceada Partners buys second Sacramento property

Originally Published on Sacramento Business Journal

Modesto-based investment firm Graceada Partners has closed escrow on Westlake Apartments, a 148-unit apartment property in Sacramento's Pocket neighborhood, for $23.5 million.

Investment fund Graceada Partners' vow to commit to Central Valley property has translated into the firm's second Sacramento buy in the last six months.

The Modesto-based firm closed escrow this month on Westlake Apartments, a 148-unit complex in Sacramento's Pocket neighborhood. Based on a per-unit price of $159,000, the total purchase price was about $23.5 million.

"We definitely have a fundamental belief in the strength of not just the Sacramento market, but the Central Valley market as a whole," said Ryan Swehla, a principal and co-founder with Graceada. "Everyone's hunkering down during the pandemic environment, and we've put our heads down and started looking for good investments."

Though Westlake Apartments is about 98% occupied, Swehla said, it's got a significant amount of deferred maintenance. Graceada Partners is looking to spend as much as $15,000 per unit. The planned improvements include new kitchen appliances, countertops and bathrooms; replacing all windows with double-pane glass; and property additions such as a new dog park, barbecue areas and a fitness center.

"This property should be an amenity-rich community, especially backing up to Greenhaven Lake," he said. Westlake Apartments, at 1 Shoal Court, was built in 1970.

Improvements will mean higher rents, Swehla said, though he emphasized the apartment upgrades and subsequent rent increases will come as residents move out. There will be some rent increases for current residents as other property improvements are completed, he added.

The Lily Co., based in Sacramento, appears to be the seller of Westlake Apartments. A message left with Lily Co. on Friday was not returned.

In March, Graceada Partners entered Sacramento by buying 1651 Response Road, a three-story office building in Sacramento's Point West area. The fund's focus, Swehla said, is on the geographic area of the Central Valley, including Sacramento, rather than a specific commercial property type.

"Based here, we have a unique informational advantage over the competition," he said. With the Covid-19 pandemic accelerating a migration from the Bay Area to Sacramento and the valley, Graceada Partners is in position to take advantage.

Swehla noted a new report by apartment data tracking firm Zumper showed one-bedroom apartment rents in San Francisco have dropped by more than 16% in the last four months. They've risen by more than 17% in Sacramento in that time, he added.

Looking ahead, Graceada Partners is in the final stages of escrow on purchasing a North Natomas-area office building, he said, and in due diligence on a fourth local property.