Graceada Partners buys two assets in Sacramento
Originally posted to IREI.com
TRANSACTIONS - SEPTEMBER 23, 2020
BY ANDREA ZANDER
Modesto, Calif.-based Graceada Partners has acquired two assets in Sacramento in separate deals.
The firm acquired a two-story office building, located at 2101 Arena Blvd.
It is 100 percent occupied by the State of California Department of Business Oversight as its headquarters. The property was purchased for $155 per square foot, while comparable fully leased properties are selling in excess of $180 per square foot and replacement cost is over $300 per square foot.
“Our disciplined strategy has yielded another excellent acquisition,” said Joe Muratore, principal with Graceada Partners. “It aligns with Graceada Partners’ overall approach of securing high-quality, recession-resistant properties at a fraction of the replacement cost.”
The property was built in 1999 and was substantially renovated in 2020 to accommodate the Department of Business Oversight moving their headquarters into the building. The property’s previous owner gutted and completely renovated the interior, bringing it to current Title 24 standards and contemporary finishes.
It is part of the rapidly growing Sacramento submarket of North Natomas, with a new Centene campus nearby. Centene Corporation, a publicly traded Fortune 100 healthcare enterprise, will create 5,000 new high-wage jobs and build 3,000 new houses in the area.
The firm also acquired Westlake Apartments on 1 Shoal Court in Sacramento. The 148-unit apartment community has a lakeside location near downtown Sacramento in the highly desirable Pocket neighborhood. The property was purchased for $159,000 per unit while updated properties in the submarket have sold for between $200,000 and $280,000 per unit.
Graceada Partners plans to extensively renovate and modernize the property, including $12,000 in per unit renovations. This will allow them to charge an additional $250 per unit per month, which will significantly increase the value of the property along with increasing net operating income.
“With conservative underwriting, we anticipate yielding an 18 percent internal rate of return on this investment,” said Ryan Swehla, principal with Graceada Partners. “We are excited to improve this prominent asset in the Pocket neighborhood of Sacramento.”
The acquisitions are investments from Graceada Partners Fund II, which is currently fundraising. It launched in November 2019, reported IREI.
The $25 million commercial fund, Graceada Partners Fund II, follows the full investment of the firm’s flagship Fund I, which raised $12.5 million as of June, three months after launching.
According to an SEC filing dated Feb. 26, Graceada Partners Fund II has raised more than $10 million to date.