Cal State System Moves to Public-Private Deals

The apartment complex has 386 units and houses both students and faculty.

LOS ANGELES—The California State University system is the newest public entity forging public-private real estate partnerships. Kennedy Wilson recently purchased University Glen, a 386-unit student housing apartment complex, and Town Center for $81 million from California State University Channel Islands. The property is on an 80-year ground lease with the University, which developed the partnership as a way to monetize its real estate holdings and support academic growth. This is the largest monetization of a real estate asset in the California State University system, but, with the success of this partnership, it is not likely to be the last.

“During the recession, all states cut back funding of higher education and California did so pretty dramatically,” Bob Hunt, managing director in JLL’s public institution team, tells GlobeSt.com. “Now that the economy has strengthened, some of that funding has come back but not at the levels they were getting before. The school is in a situation where they just don’t have the revenue to support their academic programs and growth. This is not unique to Channel Islands; it is a US problem. The school came to us and asked if we could look at their real estate assets to see if there any opportunities for public-private partnerships that could generate revenue to help fund future academic programs and, through the partnership, to improve operations.” Hunt represented the seller along with Javier Rivera, managing director on JLL’s capital markets team.