The Campus on Villa La Jolla attracted capital from a wide variety of sources. | Courtesy NKF Capital Partners

Breadth of Interest Stands Out in $97M Campus Sale

Carrie Rossenfeld Residential & Mixed Use

As SoCal Real Estate recently reported, La Jolla Village Professional Center Associates has sold The Campus on Villa La Jolla, a five-building, 198,453-square-foot mixed-use campus composed of office, medical office and restaurant uses, in La Jolla, California, to GPI Companies for $97.1 million. Kevin Shannon, NKF Capital Markets co-head of U.S. capital markets, along with executive managing directors Brunson Howard, Ken White, and Paul Jones, and senior managing director Rick Stumm, represented the seller in the sale of the asset, which is located very close to the University of California, San Diego.

We spoke with Howard about the transaction, including the intricacies of selling a campus with so many different uses.

SoCal Real Estate: What stood out for you about this campus transaction?
The level of interest was probably the most remarkable thing about the campaign. We had interest from a broad variety of capital sources and investors. This was the broadest array of capital sources showing interest in a single investment opportunity. In our world, we ask investors who are interested to sign a confidentiality agreement before they get access to the offering memorandum and financial information they need to underwrite the opportunity. For this property, we had 196 confidentiality agreements signed.

Tell us about the intricacies of selling a campus with so many different uses.
There were challenges, but I would say it was interesting and exciting for us. We’re charged with creating a narrative over what might be possible at a given site or in a given real estate opportunity. Being a true mixed-use environment, there was a retail play, a medical play, and an office strategy, and we tried to tell all those stories in our marketing materials and conversations with interested parties. You’re not just selling a single property type or a single story around strictly medical, office, or retail. You’re talking about a dynamic opportunity that would represent a different capital source for each buyer. It was interesting, but it definitely had its challenges.

How does the proximity to a major university affect such a sale?
I think overall it had a positive influence in that you had the connectivity to the university and you had a strong UCSD presence on the rent roll. I think that gave some buyers comfort and a level of security that the university was close by — from the perspective of both the tenancy and customers frequenting the retail on site; that was interesting to buyers. The property is a stone’s throw from campus proper, and Regents is one of the largest employers in the county, if not the largest. They have a large influential presence that was good for our prospects.

What else should our readers know about this transaction?
It bodes particularly well for how capital views San Diego and the prospects for San Diego. It was one of the most competitive processes we’ve seen in recent memory, and I think this has a lot to do with how investors see our city in general. We had capital from both coasts and almost every vertical relative to real estate. It was a vote of confidence for the prospects of CRE investment in San Diego.