PALO ALTO, CA—385 Sherman is comprised of 63,618 square feet of office space that is fully leased to Visa, a credit tenant with annual revenues in excess of $30 billion, and four fully leased multifamily units. Newer office buildings delivered after 2010 only comprise 7% of the overall Palo Alto office inventory, strategically positioning 385 Sherman for long-term demand and increased future value.

American Realty Advisors recently acquired the 67,974-square-foot newly constructed mixed-use pending LEED-certified building for $138 million, according to insiders close to the transaction. The seller was a joint venture between The Minkoff Group and a fund managed by JPMorgan Asset Management.

“Completed at the end of 2016, 385 Sherman is a true core investment with an A-plus investment-grade tenant in one of the nation's top-performing office markets. Our ability to acquire an asset of this caliber with long-term leases in place fits well within our investment strategy and provides downside protection to our investors,” according to Scott Darling, ARA's president. “The market is home to a majority of the country's leading technology, professional services and venture capital firms, in close proximity to the Bay Area's most affluent residential neighborhoods, and is dominated by extremely high barriers to entry and limited supply.”

Located two blocks from the California Avenue Caltrain station and in close proximity to the California Avenue retail corridor, the property benefits from its highly walkable, densely populated locale, as well as its amenities. 385 Sherman features column-free floorplates to accommodate an open and flexible design, floor-to-ceiling glass window line, bike storage, shower facilities and a landscaped third floor roof deck. The property's four multifamily units currently serve as executive residences and are fully leased, providing an additional revenue stream that further enhances the long-term value of the asset.

“These best-in-class amenities, coupled with high walkability and transit-orientation, will maintain this property's sought-after position in both office and multifamily for the long-term,” says Albert Pura, ARA's senior director in the investment group.

The $6.4 million campus was completed in November 2016 and combines three stories of offices with research-and-development space, GlobeSt.com learns. Employees focus on technology research, business intelligence, data security and merchant solutions at the facility. The campus at the corner of Sherman and Birch Street added to the company's existing locations in Foster City and San Francisco. Visa has had a presence in Silicon Valley since the early 1970s.

385 Sherman also offers unique interest for its public art piece–Tabula–which is integrated into the building façade and consists of 63 LED light panels that run along two exterior walls of the building. The LED lights transmit live seismic data from the USGA overlain on a world map.

“This piece further gives the building a modern feel that translates well among its environmental surroundings as well as in the tech community,” adds Pura.

The seller was represented by Stephen Van Dusen and Paul Nelson at Eastdil Secured.

American Realty Advisors is an institutional fund manager with more than $8 billion in assets under management.

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Assets with Long-Term Leases Provide Downside Protection

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