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GOLETA, California — One of the three buildings in the Appfolio headquarters campus, 50 Castilian Drive, was purchased by an investor for $13.9 million. The leasehold interest sale was of the building itself, combined with a 99-year ground lease on the underlying 3.35-acre parcel. The building is leased by Appfolio with more than 10 years of term remaining, providing a 5.37% capitalization rate to the new owner.
The seller was a joint venture by Shopoff Realty Investments (“Shopoff”), Praelium Commercial Real Estate (“Praelium”), and Blackbird Investment Group (“Blackbird”). Representing the seller were Sean Fulp & Matt Berres of Newmark and Steve Hayes & Francois DeJohn of Hayes Commercial Group.
The joint venture purchased the entire campus, 165,905 square feet of creative office on 10.82 acres, in December 2020. By dividing the asset into three buildings and then presenting them for sale separately from the land, the ownership was able to position the offering at a lower price point and reach a larger pool of potential buyers. The other two buildings at 70 and 90 Castilian Drive are still for sale.
“NNN-leased investment property like this is in demand in our market,” Steve Hayes said. “We are seeing considerable interest in assets in this price range, including the other two buildings at this location. There are vastly more $10 to $15 million buyers than we would see for the whole campus, so selling the buildings individually was a creative disposition strategy by the venture.”
Appfolio is a publicly traded software-as-a-service (SaaS) company with a $3.0 billion market cap and which employs an estimated 600 employees in south Santa Barbara County. The company began leasing space at 50 Castilian Drive, which is a two-story, 43,655 square-foot creative office building, in 2011 and since then has expanded into the entire campus for its corporate headquarters.