SAN JOSE — A San Jose housing highrise has landed $150 million in financing, a hopeful sign that investors believe the apartment market remains sturdy in the Bay Area’s largest city.
The Grad, a student housing tower in downtown San Jose, attracted funding from Acore Capital Mortgage, which is active in providing financing for real estate projects and properties in the South Bay and elsewhere in the Bay Area.
The Grad San Jose, a housing tower that consists of a 19-story, 260-unit L-shaped building at 88 East San Carlos Street in downtown San Jose, concept. (Amcal)
The new financing enables the principal owners and developers of The Grad residential highrise to replace a prior mortgage for the high-profile property.
Despite widespread uncertainties and faltering values for a wide range of real estate assets, the refinancing suggests that investors still envision plenty of potential in San Jose’s urban core.
“It’s always a good sign for downtown San Jose when things can be worked out to provide new financing for a property,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.
Amcal Housing, a residential developer; and Swenson, a San Jose-based real estate firm, teamed up to develop The Grad, which was completed in 2020 and is located at 88 East Santa Clara Street.
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The 19-story student housing tower has 260 rooms and accommodates 1,039 beds, an Amcal Housing website post shows. Amcal, based in the Los Angeles County city of Agoura Hills, specializes in the development of affordable housing for students and middle-class workers.
The new loan provides “up to $150 million” in financing for The Grad tower, according to documents filed on Nov. 18 with the Santa Clara County Recorder’s Office.
In November 2021, The Grad received $150 million in financing from a fund controlled by CIM Group, a real estate company, investor and lender. Commercial real estate loans often mature after four or five years.
Sometime around June 2024, JLL, a commercial real estate firm, circulated a marketing brochure as part of an effort by Amcal and Swenson to sell The Grad.
JLL described some of The Grad’s amenities as “resort-style” in quality, including a big swimming pool.
“With a three-quarter-acre amenity deck featuring a luxurious pool and jumbotron, as well as private study rooms on every residential floor, residents get the best of both worlds,” JLL stated in the marketing package.
The deck offers a place to relax and unwind as well as a private area to study in a quiet setting, according to the sales package.
This quest to sell the L-shaped tower may be over, however: The JLL webpage that had hosted the marketing brochure is no longer visible. JLL didn’t list a potential sales price in its marketing brochure.
The Grad San Jose’s property value was just under $186 million as of January 2024, according to documents on file with the Santa Clara County Assessor’s Office.
The housing tower also includes 14,900 square feet of ground-floor retail, JLL states in the brochure.
“The Grad offers investors a core student housing opportunity in the fastest growing urban market at a discount to replacement cost,” the JLL brochure states.
The owners also might be able to wring more revenue out of The Grad San Jose by configuring some of the residential units.
“Investors are offered the ability to generate nearly $1.5 million of additional revenue by introducing 46 additional double-occupancy beds as well as through leasing the remaining ground-floor retail suites,” JLL stated in its brochure.