Centerbridge Eyeing Minority Stake in Merritt Properties

Centerbridge Partners is a frontrunner for a potential stake in a $3 billion commercial firm.

The private equity group is eyeing a minority stake in Maryland-based Merritt Properties, the Financial Times reported. Talks are ongoing, but a deal is expected to be reached in the coming weeks.

Centerbridge would be acquiring the minority stake from Almanac Realty Investors, the real estate investment division of asset manager Neuberger Berman. The stake represents roughly a third of the business; a majority of the business will remain in the hands of the Merritt family, which started the firm in the 1960s.

Centerbridge and Merritt did not respond to requests for comment, while Neuberger declined to comment to the publication.

Merritt’s commercial real estate portfolio spans more than 20 million square feet, primarily located in Maryland, Virginia, North Carolina and Florida. Its assets include warehouses, distribution centers and office buildings.

Centerbridge emerged in recent years as a big investor in the real estate sector. In early 2022, the company closed its second real estate fund, Centerbridge Partners Real Estate Fund II. The fund received $2.3 billion in capital commitments, easily exceeding 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.

As of the end of 2021, Centerbridge had approximately $33 billion in capital under management. Today, that’s ballooned to $47 billion.

While Neuberger’s real estate investment arm may be on the verge of selling a significant stake in Merritt, the company’s moves in the sector remain undeniable. Last year, George Walker’s firm raised more than $1 billion for NB Real Estate Secondary Opportunities Fund II, exceeding the company’s target for the fund by 30 percent and surpassing the predecessor fund by 48 percent.

— Holden Walter-Warner