Madison Marquette Closes on $500M Fund

WASHINGTON, DC-Madison Marquette has closed the doors to its Madison Marquette Retail Enhancement Fund – a $487-million private equity fund that is investing in retail acquisitions along the East Coast and in California and Seattle. With leverage, the company has close to $1.7 billion in purchasing power – nearly the same amount that it has invested over the past eight to ten years.

This is Madison Marquette’s first equity fund, and at least as measured by the participants, was met by high demand from the market. Investors include ABP, ColoradoPERS, OhioSERS, PennsylvaniaSERS and Wells Fargo.

CFO Paul Andrews tells GlobeSt.com that demand in part is due to Madison Marquette’s rather unique position in the retail investment space. “We come from the development/operations side. Most of the other private equity funds outsource their operations and leasing activities. We, though, will be fully integrated.” He says that model was a differentiator as it spoke with investors.

Madison Marquette has already closed on three properties for the fund and has three others in the pipeline, Andrews says. These six transactions total $120 million in equity – or one-quarter of the fund’s equity investment. The company couldn’t discuss the fund publicly until now because of securities regulations, Andrews says.

These recent transactions include Asbury Park, a 400,000-sf redevelopment of one of the last available sites at New Jersey’s oceanfront community; Montgomery Promenade, a development of a 325,000-sf town center project in Montgomery Township, NJ; and Bayfair Center, a revitalization and remerchandising of an aging regional mall in San Leandro, CA.

These projects illustrate the fund’s overall investment criteria, Andrews says. Basically it will be looking at three categories of properties, he explains: existing malls and community centers that can be revitalized for value add; reformatting urban in-fill locations by expanding and remerchandising retail uses and by adding new uses such as residential; and developing town center urban villages.

The fund will focus its investments in the markets where Madison Marquette already has a local presence, including Philadelphia, New Jersey, Florida, California, Seattle, and Washington, DC.