Menlo Equities Launches Open-End Real Estate Fund, Menlo Equities Absolute Return Fund - Targeting Office Properties in U.S. Technology-Driven Markets

​​​​Menlo Equities (“Menlo”), a Palo Alto-headquartered real estate investment firm that acquires and develops office property in select western U.S. technology-oriented markets, today announced that it completed the initial formation of its latest fund, Menlo Equities Absolute Return Fund (the “Fund” or “MEARF”) on May 9, 2016, with $215 million of equity capital. The Fund focuses on acquiring and operating core and core-plus office properties leased to investment-grade-rated and credit worthy tenants. At formation, MEARF was seeded with seven office properties leased to internationally recognized firms in Silicon Valley, Orange County and San Diego, Calif.

In late June, MEARF expects to acquire and add a fully leased office property located in Austin, Texas, which will bring the Fund’s total asset value to approximately $465 million. To partially fund the equity requirement of the Austin investment and to provide additional capacity to grow the Fund’s asset base by another $750 million, Menlo is currently seeking to raise an additional $450 million of equity capital.

“We are grateful for the terrific support from our existing investor base during our initial capital raise. The high level of participation amongst our investors is a clear indication that there is a healthy appetite for predictable cash yield from well-located, high-quality office buildings leased to creditworthy tenants. The Fund is comprised of properties in high-demand locations that are likely to remain leased even in market downturns, providing an attractive investment alternative to the highly volatile public equity markets,” noted Menlo chairman Henry D. Bullock. “We consider the composition and risk profile of the Fund analogous to low-leverage, highly rated fixed-income vehicles; however, the Fund will target a higher yield than a portfolio of investment-grade fixed-income instruments while retaining the tax efficiencies and capital-appreciation potential inherent in real estate investing,” Bullock added.

Menlo has a steady pipeline of potential real estate investments, which will be funded by its ongoing capital raises. “Despite heavily appreciated real estate pricing in some of the stronger coastal markets, like Silicon Valley, we continue to see opportunities to acquire well-located and fully leased institutional-quality assets in several other growing tech hubs, especially Austin,” said Bullock. “We’re excited about the Fund’s long-term growth prospects and are eager to continue its expansion.”

As part of the Fund’s initial formation, Menlo closed on a newly syndicated credit facility, with PNC Capital Markets LLC and PNC Bank, National Association, each a member of The PNC Financial Services Group, Inc., serving as lead arranger and administrative agent, respectively. The facility provides up to $250 million of secured financing between a $110 million term loan and revolving credit facility.

About Menlo Equities

Palo Alto-based Menlo Equities (“Menlo”) was established in 1994 by founding partners Henry D. Bullock and Richard J. Holmstrom as an owner-operator real estate investment and development firm. Throughout its history, Menlo has distinguished itself with its sharp focus on investing in office properties in only the most robust technology-driven markets in the western U.S. Since inception, Menlo has syndicated various real estate partnerships and joint ventures and sponsored six private funds that acquired or developed approximately 15.7 million square feet of real estate valued at more than $4.9 billion. Menlo’s current portfolio totals approximately $2.2 billion of assets under management. For more information, visit www.menloequities.com.

Contact:

Margan Mitchell – Menlo Equities
(650) 326-9300 or mitchell@menloequities.com
Cell (510) 219-6761

Source: Menlo Equities


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Tags: CA Private equity, equity capital, MEARF, Menlo Equities Absolute Return Fund, Palo Alto investments, Palo Alto Real Estate, real estate, real estate investment, ​​​Menlo Equities