By Vladimir Bosanac
Stanford University is expanding its multifamily real estate holdings. The Palo Alto-based University, which has owned the land where the 759-unit Oak Creek Apartments were developed in 1969, is now the full owner of the property that sits on top of that land. It’s a massive deal for an asset that is spread over five parcels across Santa Clara and San Mateo counties, but it’s a deal whose pricing will remain a mystery for the time being.
The property located at 1600 Sand Hill Road was owned by entities that were associated with and include the Texas-based Bass family, a San Francisco entity Gerson Bakar and Associates, an entity affiliated with San Francisco-based Diane Wilsey and a company tied to Silicon Valley-based Richard Pivnicka, according to public documents reviewed by The Registry. Stanford, which had owned the land, purchased the asset on September 15th, according to Santa Clara and San Mateo county records, and because the transaction was deemed as “an assignment of a lease for a remaining term, including options of renewal, less than 35 years (expiring June 30, 2048),” it is exempt from a transfer tax payment on the transaction. In essence, this means that the financial details of the sale will remain under wrap until the property assessment is completed in 2023.
“The current apartment operator lessee decided to sell its leasehold and Stanford took the unexpected opportunity to have an affiliate acquire the leasehold in order to increase the supply of academic housing on an accelerated timeframe,” said Joel Berman, a director of community engagement communications at Stanford University in an e-mail statement. “Oak Creek is adjacent to the academic portion of the main campus and is within a half mile of Stanford’s hospitals.”
The property did have a $125 million Fannie Mae loan, which was issued in 2015, and of which roughly $91 million of principal balance remains. It should be noted that Wilsey’s and Pivnicka’s companies have assumed this loan and the $716,308.32 monthly payments. The two entities are also paying Fannie Mae a $908,330 transfer fee for this loan assumption, according to public documents.
It is difficult to estimate what Stanford may have paid for this property. The University has engaged in acquiring multifamily assets in the past. As The Registry reported in May of 2017, the University paid $130.5 million to buy the 167-unit Colonnade complex in Los Altos from a partnership of Sares Regis Group of Northern California and its financial partner Pritzker Realty Group. At the time, the acquisition was for roughly $781,437 per unit, however, that property was newly developed just a year earlier.
In the first quarter of 2015, before the complex was completed, Stanford University had pre-leased the entire development. At the time, it seemed like a bold move, but it signaled that the University saw value in the ability to offer its staff housing in a region that is very short on affordable options. At the same time, the University has had a long history of helping its employees with housing, and it had developed its own projects in the past in order to achieve those goals.
According to Berman, Stanford has been leasing a number of apartments at Oak Creek for members of the University community. Having a Stanford affiliate acquire this leasehold will allow the University to offer additional opportunities for eligible affiliates to rent apartments at reasonable rates, he said.
The school plans to offer apartments to eligible members of the University community as the units turn over. Stanford plans to offer rental rates that will be below market rates, and while they will not be designated as Below Market Rates, the University anticipates this offering may reduce demand for similarly priced rental housing in the neighborhood.
According to Oak Creek’s web page on Apartments.com, the property is a mix of studio, one-bedroom and two-bedroom units ranging in size from 508 square feet to 1,311 square feet. The rent starts at $2,885 and goes as high as $5,895, according to this web page.
The property is considered a luxury residence complex featuring 27 acres of landscaping and offers fully furnished and accessorized corporate suites, as well. Also, the property features tennis courts, five heated pools, a jacuzzi and steam/sauna rooms. The property’s location on Sand Hill Road puts it in close proximity to US Interstate 280 and El Camino Real, the main thoroughfare that connects most of the cities along California’s famed highway in Silicon Valley.
West Coast Commercial Real Estate News