Ventas Buys Raleigh Mixed-Use Assets for $80M

Keystone Centennial Portfolio. Image courtesy of JLL

The Center for Technology & Innovation and the Keystone Science Center, two mixed-use office properties totaling 175,400 square feet on the Centennial Campus of North Carolina State University in Raleigh, N.C., have recently come under new ownership. Acting on behalf of Keystone Corp., JLL Capital Markets arranged the sale of the 100 percent leased buildings to entities of Ventas Inc., according to Wake County property records.

READ ALSO: Raleigh-Durham Office Report – Fall 2019

Keystone developed CTI and KSC in 2016 and 2010, respectively, as part of a public-private partnership with NCSU State. The state-of-the-art buildings, also known as the Keystone Centennial Portfolio, boast a strong roster of creditworthy tenants in the science, technology, engineering and mathematics (STEM) sector. “With 96 percent of tenants falling under the STEM umbrella, the tenant roster is a microcosm of the flourishing technology and innovation taking place in the broader Raleigh-Durham market,” JLL noted in its offering memo.

Located at 1010 Main Campus Drive, CTI encompasses 105,000 square feet of space, including 60,000 square feet of office/lab accommodations and 45,000 square feet of industrial manufacturing space leased to engineered fabrics research entity The Nonwovens Institute. KSC, carrying the address of 1791 Varsity Drive, encompasses roughly 70,400 square feet of office and R&D lab space.

Raleigh on the radar

Ryan Clutter, Scot Humphrey, Chris Lingerfelt and Zack Drozda of JLL’s Capital Markets team marketed the Keystone portfolio to an eager investment community drawn to the robust fundamentals of the Raleigh-area office market. According to a new Raleigh economy report by Wells Fargo Securities’ Economics Group, the office market enjoys a vacancy rate of 5.3 percent, and despite solid construction activity, rents are rising 5.2 percent year-over-year. Clutter noted in a prepared statement that investors are especially keen on public-private partnerships between office building owners and universities, particularly those with STEM curriculums, as they offer a high tenant retention possibility and outsized returns as compared to traditional office buildings. The Raleigh- Durham-Chapel Hill MSA, ranks as the fifth most STEM-intensive labor market in the country, according to the Wells Fargo report.

The list of notable STEM-related office transactions in metropolitan Raleigh-Durham over the last several months includes Longfellow Strategic Value Fund LLC’s acquisition of a 1.3 million-square-foot, STEM-tenanted life sciences office portfolio from Bain Capital Real Estate in a $405 million transaction. And Starwood Capital Group, Trinity Capital Advisors and Vanderbilt Partners’ joined forces on the acquisition of the 645,000-square-foot Park Point at Research Triangle Park, which the partners plan to reposition via a $100 million transformation designed to appeal to the STEM sector.