BETHESDA, MD-The Meridian Group has completed the final closing on its first real estate private equity fund. The fund has taken in more than $160 million from institutional investors—a group that includes a relatively strong showing among foreign investors, Bruce Lane, executive vice president and managing director of Meridian tells GlobeSt.com. With leverage the fund expects to have purchasing power of close to $500 million. Much of that will be invested this year despite the fund’s three-year term, Lane says. “We expect we will close on about $400 million of deals within the next six months.”
Already Meridian has acquired three offices, totaling 572,000 square feet, and a loan purchase, all in Northern Virginia. The acquisitions are One Ballston Plaza in Arlington, Cameron Run in Alexandria, and Tysons Technology Center in Tysons Corner.
The properties all fall into Meridian’s investment strategy of value-add/opportunistic office plays that would attract institutional buyers. The fund plans to hold the properties for five to seven years during which it will reposition the buildings and lease them up. The three properties it has already acquired, for instance, are about 75% leased.
Now is a good time to invest in office in the DC area, Lane says. “We have been through four market cycles and know when and where to buy. With the market being soft, now we can pick our deals and have less competition.”
Prior to the launch of the fund, Meridian Realty Partners I, Meridian’s transactions were capitalized through joint ventures. Meridian’s partners have included The Blackstone Group, Goldman Sachs, The Carlyle Group, and Northwestern Mutual Life Insurance Co.
The fund attracted the usual investors, as well as a good showing of foreign investors, Lane adds. Despite the recent finding by AFIRE that foreign investors are losing their appetite for DC assets, Lane’s experience has been that foreign investors take a far longer term view of the market. “They see the US as a safe haven and they absolutely love Washington, DC.”