Montecito Property Co. is set to begin selling condominiums this week at three former Orange County apartment complexes the company bought.
The Jacksonville, Fla.-based investor and developer, founded a year ago, is converting some 900 apartments in Laguna Niguel, Foothill Ranch and Yorba Linda, according to Montecito.
Condo conversions have grown in popularity amid the hot housing market. Montecito bought the apartments from a company controlled by apartment and homebuilding mogul William Lyon (see related story, page 1).
The complexes were built in the late 1980s and early 1990s to be condos, according to Christopher Lombardo, regional sales manager with Montecito Key Realty, an affiliate of Montecito Property.
When the housing market retreated in the early 1990s, the projects became apartments, Lombardo said. That made the recent switch back to condos easy, he said.
Sources said the 280-unit Laguna Niguel project, now dubbed Lavista, sold for about $85.8 million, or $306,000 per apartment.
The 340-unit complex in Foothill Ranch and the 296-unit project in Yorba Linda likely sold for less because of their locations, sources said.
Montecito teamed with Merrill Lynch Capital, a unit of New York’s Merrill Lynch & Co., on the acquisition.
Sales prices for apartments have been on the rise for years as investors take advantage of low interest rates.
The county’s median apartment sale price is up 7% from last year to $157,400 per unit, according to Marcus & Millichap Real Estate Investment Brokerage Co.
Even so, condos are much pricier. The median price for a resale condominium here was $457,500 in August, up 20% from a year ago, according to DataQuick Information Systems of La Jolla.
Condo conversions have grown in popularity, but face some limitations, according to Sheila Alimadadian, a senior associate in the Newport Beach office of NAI Capital Commercial Real Estate.
Not every apartment is suited to become a condo or is likely to receive city approval, she said.
“It’s something that people want to do, but it’s hard to find,” Alimadadian said.
The process works best when the original developer puts what’s called a condominium map on the project,a way of laying out the project that meets city approval for condos, sources said.
Other Conversions
A couple of developers have switched projects in Irvine from apartments to condominiums.
Phoenix’s Opus West Corp., which has its regional headquarters in Irvine, scuttled previous plans for 341 apartments at Jamboree Road between Campus and Dupont drives.
Opus instead is selling 404 condos there in a partnership with Red Bank, N.J.-based Hovnanian Enterprises Inc., known as K. Hovnanian.
The switch to condos wasn’t based on low demand for apartments, said Matt Montgomery, director of real estate development with Opus, in a previous interview. He said the market for apartments is strong, but interest in condos is stronger.
Next to Opus’ project, Irvine’s Sares-Regis Group last year decided to sell about half of its 535 units at Watermarke as condos. It originally planned to rent them.
As for Montecito, it already has offered its apartments for sale to the people renting them. Other buyers who pay for a special service can acquire a unit starting Sept. 22 at all three projects, the company’s Lombardo said.
Grand Opening
The Laguna Niguel project is set to host a grand opening this weekend.
Prices range from $358,900 to $476,900 for one and two bedroom units. The condos are 793 square feet to 1,098 square feet in size.
Montecito spent about $3 million to refurbish the complex and condos, according to Houston-based Holliday Fenoglio Fowler LP, which arranged the financing on the Laguna Hills acquisition.
Montecito’s other two complexes are set to hold a grand opening next month.
