When the Paul Merage family, the creator of Hot Pockets microwavable sandwiches, elected to sell Chef America to Nestle in 2002 for $2.5 billion in cash, Merage family stakeholders were faced with major investment decisions. “We met extendedly as a family, and we met with a series of typical Wall Street investment firms, all in an effort to decide how to best allocate that capital to maximize risk-adjusted returns,” recalls Greg Merage, Paul Merage’s nephew.
After much deliberation, the Merage family redeployed its Chef America cash into the space they knew best: consumer products. Turns out, one of the ultimate consumer products, according to Merage, is multifamily real estate. The family launched the Newport Beach, Calif.-based real estate firm Stoneridge Capital Partners in January 2009 to focus on those investments.
The firm is now ready to ramp up acquisitions to the tune of approximately $400 million. But there are no hot pockets this time; the money doesn’t need to be spent quickly. “There are no income requirements on our capital; it is to be invested and reinvested for perpetuity,” explains Merage, Stoneridge’s CEO. “We have discretionary capital because we are internally funded, but more importantly, it is very patient capital. We are focused on a much longer-term asset hold.”
That doesn’t mean Stoneridge won’t move fast on a deal. The firm’s first multifamily acquisition—the 498-unit Avila Apartment Homes in Rancho Santa Margarita, Calif.—closed in under 30 days. “We have no multi-level approval process and no legacy assets to distract the team,” Merage says. “We plan to do a lot of those going forward.”