A Washington investment firm yesterday purchased the 12-story Candler Building, a $21.8 million gamble that the Market Place area downtown will revive because of a series of new public and tourist-oriented projects.
The odds are potentially long. The Meridian Group Inc.'s acquisition comes as a pension affiliate of the powerful General Electric Co. decided to abandon Candler after 10 years and investing more than $60 million into one of downtown's largest structures.
"We believe Candler represents a unique investment opportunity and that we obtained an outstanding value, and it's the type of value-added opportunity that we seek," said Meridian President G. David Cheek, whose firm bought the building with Brookwood Financial Corp., a Boston-based real estate investor.
"We also like the building's Pratt Street location, and the level of activity surrounding it. It's a hot area."
Cheek and other local commercial real estate analysts expect that the pending Metropolis at the Power Plant, Christopher Columbus Center and Fishmarket renovation projects in proximity to the 111 Market Place project will significantly boost the 86-year-old building's occupancy level, which now stands at 68 percent.
The Candler purchase marks the second time that Meridian has rolled the dice on a Baltimore-area property investment. In June 1995, the firm sold the two-building Dulaney Center office project in Towson to a San Francisco pension consultant, reaping a $17 million, 76 percent profit after only 16 months of ownership.
Meridian is also betting that the languishing downtown office market is poised for recovery, as space in newer, higher quality buildings tightens and investors begin to scour the market for deals.
"I can't say that downtown will recover to the extent or as quickly as the suburbs did," Cheek said. "But, desite that, we're focused on Candler because it's a unique opportunity, a quality asset with a good tenant base. And we're comfortable with the other activity that's going on."
General Electric had received 16 offers for the 535,000-square-foot Candler, after deciding in January to shed the building for $22.8 million. The Connecticut-based conglomerate's decision to sell Candler -- named for Coca-Cola founder Asa G. Candler and one of three former hubs for the soft drink maker -- resulted from a perception of declining values for ,, downtown properties, sources said.
"Because of its age and location in the city's central business district, the property isn't necessarily perceived as a institutional investment today," said Philip C. Iglehart, the Colliers Pinkard principal who together with Dennis P. Malone represented GE in the sale.
"I believe they felt the time, carry and potential risks were too difficult, and they elected to sell," he added. "At the same time, they saw how a regional entrepreneur would be attracted to it if any downside with vacancy could be minimized."
GE officials did not return telephone calls for comment.
Pub Date: 8/02/96