Centerbridge Partners’ negotiations for a stake in a Maryland-based commercial real estate firm proved successful.
The alternative asset manager paid $750 million for a portion of Merritt Properties, Bisnow reported. The valuation of the company wasn’t disclosed, though when talks were reported several weeks ago, a $3 billion valuation was being eyed; Merritt did not respond to a request for comment regarding the valuation.
Centerbridge acquired its stake from Almanac Realty Investors, the real estate investment division of asset manager Neuberger Berman. Almanac did contribute to Centerbridge’s investment in Merritt, though. CBRE served as a real estate adviser to the transaction.
Merritt is also shuffling its leadership ranks as it welcomes Centerbridge into the fold.
Chief executive officer Scott Dorsey is transitioning to the executive chair role, while president Robb Merritt is being elevated to CEO. Executive Bobby Lanigan was named president.
The Merritt family retains majority control of the firm, which it launched in the 1960s. Merritt’s commercial real estate portfolio spans more than 20 million square feet, primarily in Maryland, Virginia, North Carolina and Florida. Its assets include warehouses, distribution centers and office buildings.
Centerbridge’s investment is expected to fund an expansion into new markets and growth in shallow-bay industrial properties, or warehouses that are 50,000 square feet or smaller, but can house multiple tenants.
Centerbridge has grown in stature as a big investor in the real estate sector in recent years. In early 2022, the company closed its second real estate fund, Centerbridge Partners Real Estate Fund II, which received $2.3 billion in capital commitments. That easily exceeded its target of $1.5 billion; the second fund represented a 150 percent increase in committed capital from the first fund.
That second fund targeted a variety of opportunities, including investments in self-storage and specialized storage, digital real estate, industrial and logistics, as well as residential. The company said the fund will also focus on areas benefiting from shifts in customer behavior, including leisure and experiential real estate.
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