SAN JOSE, Calif.--(BUSINESS WIRE)--Urban Catalyst, a real estate fund manager and developer based in San Jose, California, has facilitated the $23.8 million sale of an approved apartment development site in San Jose to the Santa Clara Valley Transportation Authority (VTA).
The deal, which closed Dec. 15, paves the way for the buyer and several “Partner Agencies,” a group of local government and transit agencies, to advance their vision of a redeveloped Diridon Station, already among the West Coast’s busiest transit hubs.
On behalf of a trust affiliated with the late local architect Thang Do, Urban Catalyst negotiated and executed a purchase-and-sale agreement with VTA for 1.2 acres spanning two adjacent parcels at 32 and 60 Stockton Avenue. The site sits between a Whole Foods market and the SAP Center, San Jose’s leading events venue, and is a short walk from Diridon Station and Downtown San Jose’s western edge. Urban Catalyst represented the Do-affiliated trust when it acquired the site in two separate transactions for $15.1 million in 2021 and last year.
Working with Do and his architecture firm, Aedis Architects, Urban Catalyst entitled a 20-story, 472-unit development project called Apollo that involved demolishing the Stockton Avenue site’s existing structures and replacing them with apartments ranging from studios to three-bedroom units. Urban Catalyst shepherded the project through San Jose’s project review and hearing process, culminating in the city’s planning director unilaterally approving Apollo last year.
After Apollo received planning approval in November 2022, the Partner Agencies’ plans and budget for the project site became clear. The rail authority designated the property among the right-of-way parcels needed for the first phase of California’s “bullet train” project. VTA and the city need the site for a planned widening of train tracks from the station to just north of West Santa Clara Street.
After the Partner Agencies approached Urban Catalyst about acquiring the Apollo site, both parties engaged in multiple rounds of negotiations that culminated in an Oct. 17 City Council hearing in which the purchase-and-sale agreement between the Do-affiliated trust and VTA was up for approval.
The City Council unanimously approved purchasing the Apollo site on behalf of VTA at that public hearing. A week later, the sale cleared one of its last major obstacles when the Metropolitan Transportation Commission, another Partner Agency, approved VTA’s request for funds to acquire the property and finance planning work related to redesigning Diridon Station.
The Partner Agencies aim to rebuild and expand the station in anticipation of electrified Caltrain, BART, and high-speed rail coming to San Jose. The Apollo site is located within an area anticipated for future rail infrastructure.
“We weren’t planning on facilitating this sale; we planned on building Apollo,” Urban Catalyst CEO Erik Hayden said in a statement. "Yet after being approached by the city and other Partner Agencies about potentially selling the property to them, Urban Catalyst worked with various local government and transit agencies to find a good solution," Hayden said.
Urban Catalyst expects the Apollo site’s existing tenants, a car wash and a billboard, will remain in place for the foreseeable future. Meanwhile, the city and/or VTA staff will consider interim land uses for the property.
Apollo was Urban Catalyst’s only development project located outside an Opportunity Zone, federally designated census tracts designed to spur economic development and job creation by providing tax benefits to those who invest eligible capital into them. The sale doesn’t impact Urban Catalyst’s Opportunity Zone Fund I and Fund II investors.
Urban Catalyst recently completed the land assemblage for its Icon/Echo project and is well under construction on its 176-key Marriott TownePlace Suites, Downtown San Jose’s first extended-stay hotel. The firm expects to complete the hotel, one of eight Opportunity Zone development projects in its portfolio, in the fourth quarter of 2024.
About Urban Catalyst
Urban Catalyst is a real estate fund manager and developer with decades of experience doing ground-up development projects and owning and managing stabilized, income-producing assets. The company’s home market, San Jose, has the strongest job market of the U.S.’s 150 largest metropolitan areas, according to the latest U.S. News and World Report data. News and World Report also recently ranked San Jose as the country's second-best area to raise a family, behind Huntsville, Alabama.
For more information, visit urbancatalyst.com.
Real Estate Risk Disclosure:
- There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
- Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
- Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
- Potential for foreclosure – All financed real estate investments have the potential for foreclosure;
- Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;
- Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
- Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits;
- Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.
