Why Institutional Capital Wants To Be In Carmel Valley

CBRE’s San Diego capital markets’ debt & structured finance team has arranged a $65M permanent loan for an upscale retail center in Pacific Highlands Ranch.

The team, which includes EVP Bill Chiles, VP Scott Peterson and analyst Brian Cruz, arranged the financing with a life insurance company to replace locally based Coast Income Properties' construction loan for The Village at Pacific Highlands with permanent financing.

This upscale 160k SF retail center is in Carmel Valley’s new Pacific Highlands Ranch master planned community. Bisnow caught up with Bill to find out more about this project and why it attracted institutional capital.

He says the area’s demographics are as good as it gets in San Diego County. It's a highly affluent community, and the project created a lot of institutional excitement. According to Onboard Informatics, a research firm focused on local demographics, more than 75% of the adult population has a four-year college or graduate degree, and the average household income is more than $165k.

“Carmel Valley also has three of the region’s top high schools,” Bill adds, explaining there’s a charter HS adjacent to the Pacific Highlands Ranch community and the region’s top Catholic school is in the Carmel Valley area, as well as Torrey Pines High, which is one of the best public high schools in the county.

Additionally, locally based developer R&V Management Corp is underway on a 331-unit residential, mixed-use project adjacent to the new shopping center, Bill tells us, noting the project is actually within The Village’s 24-acre site. The JV is also planning another residential project within an easy walk of the shopping center.

The lender was also impressed the center was completed in August 2015 and is already about 95% leased, Bill said. The loan deal provides an 11-year fixed-rate loan at 65% loan to value, with one year of interest-only payments, then rolls to payments based on a 30-year amortization schedule.

The new open-air lifestyle center is designed in charming Santa Barbara-style, with stunning mosaics, lush gardens and a pedestrian-friendly Main Street with a mix of local and national retail tenants that offer gourmet and casual dining options with award-winning chefs, clothing boutiques, a fitness studio and neighborhood retail services.

National tenants include a Trader Joe’s; a new Starbucks Evening concept that sells wine, beer and new food offerings, along with its regular beverage and food fare; and Rite Aid's Wellness Stores: The Next Generation concept, with upscale design elements like marble floors, a broader offering of wellness services and products and improved shopper experience that includes an ice cream bar.

There’s also a five-acre park and gathering space for events, as well as a SD public library, dog park, bocce ball court and garden.