Shopoff Realty Investments, a manager of opportunistic and value-add real estate investments, along with partners Praelium Commercial Real Estate and Blackbird Investment Group, sold its leasehold interest in 50 Castilian Drive, a 43,655-square-foot building in Goleta, California’s Castilian Technical Center. The sellers, represented by Newmark and Hayes Commercial, received $13.9 million for the disposition of the Santa Barbara County building.
Operating under the name of Castilian Holding Company, the joint venture had acquired the three-building, 166,000-square-foot Castilian Technical Center in late 2020 for $61 million. The partnership sold the fee interest concurrent with the acquisition, through separate 99-year ground leases for each of the three buildings. AppFolio occupies 50, 70 and 90 Castilian Drive as its company headquarters, under an 11-year triple net lease arrangement.
“Rather than see this as a simple acquisition of an office building, we identified the property’s hidden value early on and implemented a multifaceted strategy to create value; bifurcating the improvements from the underlying land by creating ground leases, and simultaneously selling the ground leases concurrent with our acquisition to reduce our investment and mitigate risk, and then positioning the three individual buildings as separate assets for sale,” said Shopoff president and chief executive officer William Shopoff.
“Goleta has been attracting a wide range of tech and other companies for many years and has become one of the most sought out office markets in California,” said Scott B. San Filippo, founding principal of Praelium Commercial Real Estate. “However, with our strategy to separate the acquisition into three individual long term triple net leased buildings, then sell off distinct ground leases, and position each building to have much lower disposition pricing, we were able to reach a much broader buyer pool interested in these exceptional credit tenant assets.”
Shopoff Realty Investments is an Irvine, California-based real estate firm with a 30-year history of value-add and opportunistic investing across the United States. The company primarily focuses on generating appreciation through the repositioning of commercial income-producing properties and the entitlement of land assets. The 30-year history includes operating as Asset Recovery Fund, Eastbridge Partners and Shopoff Realty Investments (formerly known as The Shopoff Group).