Meridia Capital, a Spain-focused private equity real estate firm, has fully invested its second real estate vehicle, following the acquisition of a Madrid office building, and is expecting to deliver a 15 percent return from the fund for its investors.
The Barcelona-based real estate investment manager bought the 40,000 square foot office asset, located in the city’s business district, along with two other properties – an 83,000 square foot Madrid office and a 400,000 square foot logistics center in the city of Toledo – in three separate deals for a total of €40 million.
Meridia said it was aiming to achieve an average 18 percent return on the trio of deals, which is in line with its overarching value-add strategy.
The firm acquired the 40,000 square foot office property using capital from Meridia II, its first real estate fund, and the vehicle is now fully invested. Meridia collected €150 million of equity for the 2014-vintage fund, providing it with total firepower of €400 million, including leverage. Since then, it has completed 12 deals for the vehicle, investing all of its capital. The majority of these assets, 59 percent, were offices; while 23 percent were retail; 9 percent hotels; 5 percent logistics; and 4 percent residential. Almost 90 percent of fund’s investments are located in Spain’s two main cities – Madrid and Barcelona.
The investment manager has already generated a 1.5x multiple on the equity in the fund, based on its latest net asset value (NAV), and is expecting to reach a 2x multiple at the end of the fund’s life.
The other two properties were acquired using capital from the firm’s follow-up vehicle, Meridia III. The 2016-vintage fund, which drew commitments of €215 million, is now 50 percent committed having completed six transactions. PERE understands Meridia has so far generated a 1.16x equity multiple for its investors in Fund III, just a few months after its launch. Although the focus continues to be Madrid/Barcelona, the fund has a different focus than its predecessor sector-wise as it aims to invest more than 80 percent in offices with the remaining 20 percent split between logistics and residential.
Javier Faus, Meridia’s founder and chief executive, said: “Meridia III has closed six transactions and is now, only three months after its final close, so is almost 50 percent committed. The Spanish value-add market continues to offer great proprietary opportunities and we expect to deploy this vehicle’s remaining equity over the next 12-18 months.”
Speaking about the newly-acquired Spanish assets, Juan Barba, who leads the firm’s real estate operations and is also a partner at the firm, said: “The Toledo-based logistics center is the second industrial asset acquired through Meridia III, thus reinforcing our presence in this segment and in a strategic location – the A-4 area is one of the main industrial and logistics hubs in Madrid.”
“Including two other platforms previously acquired through Meridia II, Meridia’s logistics assets currently amount to around 840,000 square feet. As Spain’s economic recovery gathers pace, logistics has become an increasingly attractive target for real estate investments,” Barba added.
The firm’s investor base is largely comprised of insurance companies, pension funds, asset managers, fund of funds and family offices/high net worth individuals from the US, Europe, Israel and the Middle East. Since the launch of Fund II, Meridia has committed more than €615 million across 5 million square feet of real estate.
The firm cannot begin marketing a fourth fund until its third vehicle is at least 75 percent invested. It is understood that could be sometime in mid-2018.