Meridian Group closes on three SAIC office buildings

Published July 29, 2013 by Paula C. Squires

The Meridian Group said Monday that it has closed on the purchase of three Class A office towers occupied by Science Applications International Corp. (SAIC). Eastdil Secured assisted Meridian in capitalizing the transaction by procuring $105 million of debt financing and assisting in the equity component of the investment.

JM Zell, the corporate advisor to SAIC, arranged for the sale to be made between SAIC and Meridian.

The Meridian Group, a real estate investment and development firm based in Bethesda, Md., agreed to buy the buildings from SAIC in May. The buildings are part of SAIC’s 18-acre corporate headquarters campus at Tysons Corner. The company is splitting into two companies and, as a result,  is changing its mix of real estate properties.  

“We had exceptional interest from a broad array of investors and institutional partners for these offerings,” John Kevill, managing director of Eastdil Secure, said in a statement. 

The purchase was made through Meridian’s $160-million discretionary real estate fund — Meridian Realty Partners I. It is one of the largest equity funds focused on real estate in the Washington, D.C. metropolitan area.

“Our fund, together with co-investment from our limited partners, provided $75 million of equity for the towers’ acquisition and repositioning …” said Gary Block, managing director of The Meridian Group, who sourced and led the transactiion. We are excited to move forward with this acquisition, which represents a unique opportunity to capitalize on the growth of Tysons,” Block added. “It is a tremendous investment opportunity thanks to its repositioning potential and its ideal location next to Metro and a whole host of amenities.”

The property is located on Route 7 at the new Greensboro Metro station, which is expected to open in early 2014. The three buildings – called Towers I, II and III — total 640,000 square feet on 3.4 acres adjacent to the Metro station.

As part of the sale, SAIC is committing to occupy Tower III for the long term, and Meridian will be renovating and repositioning Towers I and II. The repositioning will provide for more than $20 million in capital improvements to the properties. Among the upgrades: new lobbies and common areas, elevator cabs, HVAC systems, and pedestrian walkways and plazas near the Metro station.

Over the next several years, Meridian plans to develop 3.2 million square feet of mixed-use space near the office towers. Plans include more than 1.3 million square feet of residential space and over 1.1 million square feet of office space, as well as a 400-room hotel and up to 200,000 square feet of retail space adjacent to the Towers.

“Tysons Corner is the downtown of Northern Virginia and one of the most coveted areas in the country. It is the 12th largest office market in the country and has the largest concentration of retail space between Washington, D.C. and Miami,” Bruce Lane, co-founder and executive vice president of The Meridian Group, said in a statement.  “And it’s only going to get better with new HOT lanes and four new Metro stations. This is an incredible place to be a part of.”