By Jon Peterson
Menlo Park-based Menlo Equities has placed on the market for sale the 87,774 square foot office building in Redwood City located at 305 Walnut Street, according to sources familiar with the property. It’s unclear at this time what the price point on the sale might be.
Menlo Equities is selling the property, which is home to digital note taking app maker Evernote, with the help of HFF’s San Francisco office. Two people involved in the property sale are Ben Bullock and David Dokko, both senior directors. Menlo Equities declined to comment when contacted for this story.
The seller of the building has had the office building in its portfolio for over six years. The real estate investment firm had acquired the property in October 2013 for $35 million, according to public records. In late 2017, Menlo Equities began a capital raise for a new commingled fund called Menlo Institutional Perpetual Partners (MIPP). It was planning to seed the fund at the time with six properties it owned in California, and one of them was the 305 Walnut Street building leased to Evernote.
Menlo Equities conducts a portfolio review of all of its assets on an annual basis, according to sources familiar with the company’s activities. Given its investment strategy of owning primarily single-tenant assets across the country, the company felt that 305 Walnut, which is a multi-tenant asset, may not really fit within its future investment plans.
The main tenant in 305 Walnut is Evernote. This company originally had a lease to cover the entire building. Currently, the company’s footprint covers roughly 60 percent of the space in the building. Its lease runs through May of 2022, and the software firm has a current estimate of 471 employees at the property.
Evernote did sub-lease the other 40 percent, or roughly 35,000 square feet to Lime, a transportation and bike, scooter and car sharing mobile application company. The tenant had its lease start in October 2018 for the third floor of the building, and in January of this year it also moved into the second floor. Both of these leases expire in March 2022.
The new owner of the building will have the possibility of adding new income to the property in the future. The in-place rents in the property are now 51 percent below market rates, according to some estimates, allowing a mark-to-market opportunity in the future.
305 Walnut has a strong location. It is located within walking distance to the highly amenitized downtown Redwood City retail market with over 40 restaurants spread over four blocks. The building is also within walking distance to the Redwood City Caltrain station.