Menlo Equities Plans Perpetual Life Commingled Fund, Seeds it With Evernote’s Building in Redwood City

Menlo Park, Menlo Equities, Redwood City, Evernote, HFF, San Francisco, Menlo Institutional Perpetual Partners, Caltrain,

By Jon Peterson

Menlo Park-based Menlo Equities is planning to start soon its capital raise for a new commingled fund called Menlo Institutional Perpetual Partners, as stated by sources familiar with the company’s recent investment activities.

Menlo Equities declined to comment when contacted for this story. The real estate manager has hired Threadmark L.P., a New York-based placement agent to assist the company in raising capital for the commingled fund.

Being a perpetual life fund will mean that MIPP will always be open to potential new investors. The initial capital raise for the first six to 12 months is projected to be $300 million to $400 million of equity. The plan is that this capital will come from three to four very large institutional investors with each of them contributing $100 million.

The next phase of the capital raise would be happening over six to 12 months after the initial raise. This would be for an additional $600 million to $800 million. Many investors in this part of the raise would likely be making commitments of at least $50 million.

Menlo Equities has plans to seed MIPP with six properties. Two of the assets are in Silicon Valley. One of these is the 87,775 square foot 305 Walton Street office building in Redwood City. This asset is fully leased to the Evernote Corporation. The other property is a data center building in downtown Palo Alto. The other seeded assets are three properties in Orange County and one in San Diego.

The overall investment strategy for the fund is core plus. This would be to focus on existing assets with solid current income where value could be increased over time. The favored property types would be office buildings, biotech buildings, data centers and light industrial assets. The leverage component on the fund will be 40 percent.

Menlo Equities will be making a $30 million co-investment into MIPP. The targeted returns for the fund would be 9 to 10 percent net IRRs. The commingled fund will be looking to acquire assets in a variety of markets around the country. This would include Silicon Valley, Seattle, San Diego, Phoenix, Denver, North Carolina, Austin and the 128 Corridor outside of Boston.

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