Morgan Properties, the nation’s largest private multifamily owner, has acquired, in partnership with Olayan America, a portfolio of 48 apartment communities and 14,414 units in 11 states for $1.75 billion.
The joint venture purchased the North Star Portfolio from STAR Real Estate Ventures, a joint venture between El-Ad National Properties and Yellowstone Portfolio Trust.
The North Star acquisition is the largest multifamily transaction this year and Morgan Properties’ largest deal since acquiring the Morgan Communities portfolio of 95 apartment communities and 17,500 units in 8 states for $1.9 billion in 2019.
“The North Star investment is a strategic transaction for Olayan America, and provides access to some of the best multifamily markets in the nation. It speaks to the strength of our partnership with Morgan Properties and our continued confidence in the multifamily sector,” said Erik Horvat, Managing Director and Head of Real Estate at Olayan America.
“Olayan America prides itself on its ability to move quickly and capitalize on these unique investment opportunities.”
Since 2014, Morgan Properties and Olayan America have closed 13 transactions (for $4.3 billion in total acquisition volume) to acquire a workforce housing portfolio of over 110 properties and 35,000 units in 14 states, all of which are managed and operated by Morgan Properties. In October of 2020, Morgan Properties and Olayan America bought the Threshold Portfolio, an 18-property, 3,256-unit multifamily portfolio in the Carolinas for $323 million.
“The North Star acquisition is a major milestone for our organization and a testament to our conviction in the fundamentals of class B multifamily,” said Jonathan Morgan, President of Morgan Properties JV.
“This transaction establishes us as the second largest multifamily owner in the country and the nation’s largest private owner. Morgan Properties’ growth has been unprecedented in the multifamily industry. We have acquired $9 billion of assets and over 70,000 units since 2012. While most of our competitors remain defensive and on the sidelines, Morgan Properties continues to play offense. North Star was right in our wheelhouse given the barriers to entry and we pounced on the opportunity to secure it. We are excited to grow our geographic footprint and enter Florida, Texas, Georgia, Louisiana and Michigan. We value our partnership with Olayan and are thrilled to close another monumental transaction together.”
“The North Star transaction played to our strengths and we knew we were one of the only groups in the country that could bring it to fruition,” said Jason Morgan, Principal at Morgan Properties. “It is a daunting task for most buyers to acquire geographically diverse portfolios and incorporate the properties into their operational platform, but this is one of Morgan Properties’ core competencies. The Morgan Communities transaction set precedent for our North Star acquisition given its complexities, assumable debt similarities and size. Due to our long-term hold philosophy, we can pursue transactions encumbered by long-term debt in which the seller is unwilling or unable to defease.
“As a result, we are able to acquire properties at a discount to the broader market. Morgan Properties has acquired over $5.5 billion of assets across 40,000 units in the last two years alone in mostly off-market transactions. Our team is looking forward to hitting the ground running.”
North Star consists of 48 apartment communities and 14,414 units in 11 states including Florida, Texas, Georgia, North Carolina, South Carolina, Louisiana, Michigan, Illinois, Indiana, Ohio and Maryland. The portfolio averages 300 units per property and an average vintage of 1985.
Unit concentrations are in suburban Baltimore (2,566 units), Tampa-St. Petersburg, FL (1,972 units), suburban Atlanta (1,180 units), Lafayette, LA (972 units), suburban Chicago (762 units), Dallas (744 units), and Boca Raton, FL (712 units). Morgan Properties and Olayan America have solidified their strong market presence in the Mid-Atlantic Region, while greatly expanding their concentration in the Southeast, Southwest and Midwest.
They plan to invest an additional $100 million for enhancements and amenity upgrades to the properties of the North Star portfolio.
With the North Star acquisition, Morgan Properties and Olayan America entered five new states including Florida, Texas, Georgia, Louisiana, and Michigan.
As part of the North Star acquisition, Morgan Properties hired 400 new employees to join its organization, while creating two area vice president positions, 14 regional management positions and 70 corporate positions. The Company has decided to open a regional office in Boca Raton to better serve its expansion in the Southeast Region.