Florida Builder Meridian Enters Retail Channel With $14M BTR Offering
Meridian Capital Solutions, a Maitland, Fla.-based residential builder and developer, has launched a $14 million private placement to fund The Grove on Monroe, a 43-unit build-to-rent townhome community in Apopka, Fla., northwest of Orlando.
The offering is Meridian’s first sponsored investment offering in the retail channel, the company said. The issuer, Meridian Capital BTR Fund I LLC, is conducting the offering under Rule 506(c) of Regulation D, which restricts purchases to verified accredited investors. As of Sept. 24, the fund had reported no sales.
Cobalt Capital is serving as managing broker-dealer, and the offering is being distributed through broker-dealer and registered investment adviser channels, the firm said. The selling commission is 6%, with a total investor load of 10.25%, Meridian said. FactRight has completed an offering report, and Mick Law has completed a sponsor report, according to the company.
The minimum investment is $50,000, subject to the manager’s discretion to accept a lower amount. Meridian plans to keep the offering open until September 2027.
Ryan Courech, chief executive officer of Meridian Capital Solutions, said the offering applies the company’s residential construction and development experience to projects it will invest in alongside investors.
The Project
The Grove on Monroe will be built on a six-acre site that is fully entitled, with most horizontal work complete and a site-work permit issued, according to Meridian. The community will consist of 43 fee-simple townhomes using a single floor plan of approximately 1,600 square feet, each with three bedrooms, 2½ bathrooms, and a one-car garage. Target rent is $2,400 a month, which Meridian places in the lower third of rent comparables in the area.
The $14 million is an equity raise, and Meridian plans to develop the project without construction debt. The firm put the development budget at about $12.43 million, or roughly $289,000 per townhome, including $2.6 million for land, $9.1 million for construction, a $364,000 general contractor fee, and a $364,000 development fee. The remaining approximately $1.57 million of the raise is intended for other project costs, offering expenses, and reserves, subject to final sources and uses.
Site work will begin once the offering raises $3 million and breaks escrow, according to the sponsor. Vertical construction will be phased across six buildings, each with an expected nine-month build, allowing completed buildings to be delivered and leased while the rest are under construction. Meridian expects the project to be complete in 18 to 24 months.
Affiliate Roles and Fees
A&R Meridian Development LLC, a wholly owned Meridian affiliate, is expected to serve as general contractor under a guaranteed maximum price agreement, the sponsor said. The development fee and the general contractor fee are each 4%.
The land was acquired from a Meridian affiliate. Meridian said the affiliate’s raw land purchase was approximately $1.1 million, and horizontal work, entitlement, and permitting supported an as-is appraised value of $2.64 million.
The offering charges no acquisition fee and a 1% asset management fee. A third-party property manager will be paid 4%, including leasing and marketing.
The sponsor and its principals will invest at least $1 million, with an option to invest up to 10% of the offering, through standard limited partnership units carrying the same fees as investors’ units minus commissions, Meridian said.
Investor Economics
The offering carries a 10% preferred return for Class B investors, who make up the first $2.5 million raised, and an 8% preferred return for Class C investors. Meridian projects a 14.5% total internal rate of return, including its $1 million investment in the LP interest. The projected IRR is at the project level and includes all fees.
Distributions are expected to begin after units start generating rental income, subject to operating expenses, reserves, and available cash, the sponsor said. Meridian anticipates a hold period of approximately three to four years. Potential exits include a portfolio sale to an institutional buyer or real estate investment trust or, because the townhomes are fee-simple, individual unit sales.
Although the issuer is named “Fund I,” Meridian describes the offering as a single-development investment and said the name reflects its plans for a broader investment platform.
Track Record
Meridian said its residential real estate and construction operations date to 2009 and that it most recently completed more than 230 purpose-built single-family rental homes for a publicly traded single-family rental owner it declined to name. Meridian sourced and acquired the lots, managed construction to the customer’s specifications, and sold the completed homes to the customer at certificate of occupancy, the firm said.
The company said it has raised friends-and-family capital for multiple projects since 2009. It did not provide performance figures for those projects.
Meridian plans to use the offering as the start of an investment platform that draws on its construction and development operations, said Mark Aitchison, chief operating officer and director of capital markets.
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