Samuel Merritt University, California’s second-largest school for nurses, has raised $139 million for a new campus in Downtown Oakland.
The nonprofit university secured the bond financing for the 10-story, 260,000-square-foot campus at 520 11th Street, the San Francisco Business Times reported.
The 114-year-old school committed $120 million of its own money toward building 20 classrooms, labs and a research center, which could break ground this summer and open in 2026.
Samuel Merritt signed a ground lease with the city in November for a 1.25-acre city-owned lot bounded by 11th, Clay and 12th streets, and Broadway. SMU will pay the city $118,200 a year during construction and $236,400 plus annual increases after the school is built.
Oakland leaders, including former Mayor Libby Schaaf, have said the new campus will be a boon for Downtown, which has struggled since the pandemic to regain foot traffic amid rising homelessness and crime.
The office vacancy rate in Oakland’s City Center grew from 18.7 percent before the pandemic to 33.1 percent last fall.
Samuel Merritt’s new Downtown campus would be the only major commercial project moving ahead in Oakland. Several approved high-rise office projects are now on hold, given the pandemic and the economy, according to the Business Times.
The city supports the new campus because it says the development could help create a 24-hour, seven-day-a-week environment in an otherwise dead Downtown.
Samuel Merritt’s offering received more than $750 million in orders from more than 20 institutional investors, said John Augustine, managing director at Barclays’ higher education and academic medical center finance group, which oversaw the bond issue.
Augustine called the response “remarkable,” and said the interest allowed the university to achieve “an attractive financing yield.”
Strada Investment Group, based in San Francisco, won approval to build the campus in July. The glass-fronted campus, designed by Perkins&Will of Chicago, would be the second phase of a Strada development that launched with a mixed-use, 288-unit apartment tower in 2020.
Jesse Blout, founding partner with Strada Investment, told the Business Times in December that Samuel Merritt had wasted no time going to the bond market. He said the offering came when economic headwinds made it difficult to secure financing for most commercial projects.
The school aims to expand enrollment to 10,000 students by 2050, from 1,300 students last year at its century-old Pill Hill campus at 3100 Telegraph Avenue leased from Sutter Health. It has satellite campuses in San Mateo, Sacramento and Fresno.
— Dana Bartholomew