Name: Peter Merrigan
Title: CEO and Co-Founder, Taurus Investment Holdings
Experience: 28 years
Peter Merrigan just raised $250 million to spend on real estate over the next 18 months, and he’s looking to buy industrial properties. In late March, Taurus Investment Holdings completed fundraising for its new logistics fund that it will use to pay for approximately $750 million in acquisitions. A former Berkeley Investments executive, Merrigan founded Taurus’ Boston office in 1997 and led projects including the assemblage of parcels in Somerville’s Assembly Square, which were eventually acquired by Federal Realty Investment Trust for its Assembly Row development. Taurus has more than 70 current investments totaling 14.5 million square feet and acquisition costs topping $2 billion.
Q: Why does your newest fund focus on industrial properties?
A: The supply and demand are best for logistics right now. Demand has outstripped supply over the last 10 years. What you see retail giving up, warehouses are taking. The demand is shifting from one sector to the other. We just haven’t seen as much development as is needed to satisfy demand. On (March 31), we closed on a new logistics fund. The overall platform will have $250 million of equity which will fund an acquisition program over the next 18 months of about $750 million.
Q: Your first project with Taurus was Assembly Square?
A: It was a mall that had failed, anchored by Kmart and Macy’s, and Aetna had foreclosed on it. We bought it out of foreclosure. We’d already acquired the building across the street, the old Good Times Emporium billiards property. It was an 80,000-square-foot bar where the Partners HealthCare headquarters is now. In total we controlled 55 acres in Assembly Square.
Q: What was the impetus for Taurus to open the Boston office?
A: Taurus was a small company out of Florida dealing with German investors exclusively on U.S. projects. My two partners wanted to set up a more vertically integrated platform in the U.S. with its own development and acquisition capabilities as opposed to syndicating capital into other peoples’ projects. That was the genesis of the relationship.
Q: Has your strategy changed in your emphasis on acquisitions versus ground-up development?
A: No, we do a lot of development but not so much in the Boston area: more down in Florida, Texas and some other markets. We also do regular value-added acquisitions. We would do development in Boston, but land costs are fairly high and construction costs are high. Maybe it’s easier for me to get my head around it in other markets to take that leap than it is here. It’s a very high barrier-to-entry market.
Q: How frequently do you reassess the portfolio by product type?
A: It really depends on where we are in the market cycle. We’re not very optimistic about most retail product types right now. We’re still doing some development work, mostly in the Florida market where there are still some infill-type opportunities. In some of the heavily built-out areas like the Northeast, it’s not an area to be optimistic from our point of view.
Q: What’s the trickiest transaction you’ve participated in?
A: The most challenging one was the land assemblage in Assembly Square because we had to do so many different acquisitions, a full rezoning, master planning, reconstruction of the historic facility with the old Ford plant and retenanting of a failed retail complex. That overall undertaking was incredibly complicated and time-consuming (seven years). We sold it in 2004 (to Federal Realty Investment Trust).
Q: Any development plans in Massachusetts right now?
A: We’re looking at a few residential projects. We’re focused on transit-oriented sites with good access to the job market downtown. Affordability is important. When you’re building class A (multifamily), you get high rents and not everybody can afford them. There’s a bigger market in the lower-cost multifamily, but you have to have access to downtown where the jobs are.
Merrigan’s Five Favorite Bands And Songs:
- Led Zeppelin, “Kashmir”
- Arcade Fire, “Reflektor”
- Bob Marley and the Wailers, “Rastaman Live Up”
- The Jam, “The Bitterest Pill”
- Everlast, “Ends”
SOURCE: BANKER & TRADESMAN