Deals

Walton Street sells Silicon Valley office park

The Chicago-based private equity real estate firm has sold Menlo Corporate Center to Kilroy Realty for more than $162 million.

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Walton Street Capital has sold an office park in California’s Silicon Valley to a Los Angeles-based REIT. The asset had been in the Chicago-based private equity real estate firm’s portfolio for nearly six years after Walton Street purchased it on behalf of its fifth real estate fund. 

According to a statement issued by the buyer, Walton Street sold Menlo Corporate Center in Menlo Park, California to Kilroy Realty for $162.2 million. The 374,000-square-foot campus located at 4100-4700 Bohannon Drive is 79 percent occupied. Tenants in the seven-building complex include the Lucile Packard Children’s Hospital at Stanford, e*Trade and Allstate Insurance.

Mike Sanford, senior vice president for northern California at Kilroy Realty, said in a statement that the purchase of Menlo Corporate Center “provides us with a great opportunity to capture additional value as we lease the remainder of the vacant space at rents that are well above the current in-place rates.” Including this acquisition, the REIT has acquired eight office properties totalling 2.6 million square feet since 2010 for an aggregate investment of $877 million.

Walton Street initially purchased the asset in 2006 for $109.6 million on behalf of its Walton Street Real Estate Fund V. Fund V is a value-added commingled US vehicle that closed on $1.6 billion in equity commitments in June 2006. A spokesman for the firm declined to comment on why Walton Street opted to sell the property now. 

“The acquisition represents an important first step in our longer-term commitment to have a significant presence on the San Francisco peninsula and in Silicon Valley to serve the base of technology, media, [and] Internet companies that have grown and will continue to grow in this region,” said Eli Khouri, executive vice president and chief investment officer of Kilroy Realty.

HFF marketed the property on behalf of the seller.

Separately, the firm is currently in the market with a new commingled vehicle. Walton Street Real Estate Fund VII is targeting $2 billion for value-added and distressed properties in the US. Representatives from Walton Street declined to comment on Fund VII.