Stanford University has acquired a 759-unit apartment complex in Palo Alto for academic housing by taking over the property’s $125 million mortgage and ground lease.
An affiliate of the private university bought the Oak Creek Apartments at 1600 Sand Hill Road, the San Jose Mercury News reported. The sellers were San Francisco-based Merena Properties and Pivnicka Properties, based in Woodside.
The university-controlled affiliate took over a $125 million loan the sellers obtained in 2015, and took ownership of the ground lease the college had provided to the sellers. The university had already owned the land beneath the three-story apartments.
The Oak Creek complex is just north of the Stanford campus and within a half mile of the university’s hospitals.
By assuming the mortgage and taking ownership of the ground lease that it had provided to the owners of the buildings, Stanford was able to skirt recording a deed that would give a precise price for the property, according to the Mercury News.
The assessed value of the land and the buildings at Oak Creek Apartments is $34.7 million, as of mid-2022.
The market value for the complex could be determined by comps. Two big apartment buildings, the 551-unit Platform Urban Apartments in San Jose and the 333-unit Eleanor Apartments in Milpitas, were both bought for $580,000 per unit at the end of July.
Although Palo Alto residential real estate can be more pricey than properties in San Jose and Milpitas, the $580,000 value there would point to a value of $440 million for Oak Creek.
Some property experts believe Oak Creek Apartments, considering its location between San Francisquito Creek and the university, could have a value closer to $600 million. It’s unclear what Stanford ultimately paid for the apartments.
“For several decades, Stanford has been leasing a number of apartments at Oak Creek for members of the university community,” a university spokesman told the newspaper. “Having a Stanford affiliate acquire this leasehold will allow the university to offer additional opportunities for eligible affiliates to rent apartments at reasonable rates.”
— Dana Bartholomew
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