NAIOP San Francisco Bay Area Chapter: Latest News

Stanford's Cardinal Partners Win the 32nd Annual Real Estate Challenge

May 13, 2021 Filed under: Chapter

Click here to view the team's presentations, resumes and presentation boards.

Stanford University’s team, Cardinal Partners, took home bragging rights, the coveted James W. Brecht Memorial Golden Shovel, and a $2,000 check for charity, compliments of Mechanics Bank, at NAIOP SFBA’s 32nd Annual Cal-Stanford Real Estate Challenge on Thursday, April 29^th.

The Challenge, which plays upon the legendary Cal-Stanford rivalry, is a unique program designed to give graduate students hands-on experience in real estate development. The live presentations are the last step in an intensive ten-week journey in which teams tackle a complex real-life development project and engage with city officials and real estate professionals for guidance and mentoring along the way. Naturally, the pandemic provided an added level of difficulty to an already exacting process.

The Santa Clara Valley Transportation Authority (VTA) served as this year’s site sponsor and provided students with the daunting task of creating a plan for redeveloping VTA’s headquarters site, a 17.7-acre parcel located at 3131 North First Street in San Jose. Teams were charged with devising a plan to meet VTA’s goal of creating a sustainable mixed-use, mixed income, transit-oriented development that will maximize ridership and farebox recovery, create synergy with the surrounding area, maximize the site’s unique location adjacent to the Guadalupe River, monetize real estate assets and generate stable revenue sources.

Challenge Chair Dennis Williams, Managing Director at Northmarq Capital, who has served in a leadership role since 1992, once again lead the entire process. He was supported by returning Co-Chairs all of whom are Challenge alumni:

Charlie McEachron, Chief Operating Officer, Drawbridge Realty
Lauren Pressman, Director of Investments at Hillspire
Alexandra Stoelzle, Director of Development and Land Planning at Kilroy Realty Corporation
Lauren Young, Partner, Chief Risk Officer and Chief Compliance Officer, PCCP, LLC

This year’s esteemed jury was Chaired by Kelly Kline, Economic Development and Land Use Officer with the City of San Jose and included:

Chris Birdwell, Executive, Pacific Union Company
Matt Lituchy, Chief Investment Officer, Jay Paul Company
Alexis Pelosi, Partner, Pelosi Law Group
Paul Nakae, Executive Vice President, Mechanics Bank
Thomas Siewert, Partner, Terence J. Rose, Inc

The Stanford team, Cardinal Partners, was advised by Todd Regonini, President and Chief Development Officer of Sares Regis Group Residential Development.

Cardinal Partners team members included:

Michel Bakhoum, MS 2022
Cara Eckholm, MBA 2022
Katherine Evers, MBA 2022
Meredith Lee, MS 2022
Matt Gregoire Wardrop, MBA 2022

Cardinal Partners wowed the jury and event attendees with The SPUR, an innovative office driven mixed-use development utilizing mass timber construction designed to engage the community and substantially increase ridership. Highlights of the three-phase proposal include high quality office/R&D space targeting hardware focused users, including ground floor incubator space for frontier technologies; 443 mixed income residential units, including 33% affordable housing; a community library; a highly activated civic commons plaza; ground floor retail; an option for a 175 key boutique hotel; a parking structure with large solar array planned for phasing in autonomous vehicles; and 5.2 acres of green space accessible to the public.

Relative to increased ridership and farebox recovery, the proposal generates an impressive 11,000 new daily trips. The deal structure involves the VTA entering a 99-year ground lease with annual payments ($5.4 million year one of stabilization) and implied land value of $220 million. Ground rent is structured as profit participation amounting to 10% of NOI for multifamily, 18% for hotel and 7% of revenue for office. The proposal generates levered IRRs of 17-19%, 1.5x-1.7x levered equity multiples, and $221 million in cumulative profits to the equity across all phases.

In announcing the winners, Jury Chair Kelly Kline spoke on behalf of the jury sharing these quotes. “We loved that you had a really strong vision for the site, and you carried it through the entire proposal. You fulfilled the sponsor’s needs with strong economics, we loved the 11,000 new riders,” she said. “The idea of doubling down on the North San Jose hardware ecosystem was of strong interest and we found the idea around frontier tech compelling. We also loved how the community commons provided a social heart.”

Bill Falik, Managing Partner, Westpark Community Builders, coached the Cal team, Bear Market Partners, who provided the Stanford team with formidable competition.

Bear Market Partners team members included: