Morgan Properties, Olayan America Make $1.75B Portfolio Buy

Audubon Lake. Image courtesy of Morgan Properties

Morgan Properties and Olayan America have teamed up to acquire a portfolio of 48 apartment communities totaling 14,414 units in 11 states for $1.75 billion from STAR Real Estate Ventures, a joint venture between El-Ad National Properties LLC and Yellowstone Portfolio Trust. The largest multifamily transaction so far this year, the massive deal makes Morgan Properties the second largest multifamily owner in the country and the nation’s largest private owner with a portfolio of 357 communities and more than 90,000 units in 20 states.

Known as the North Star portfolio, it has assets in 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, Fla., (1,972); suburban Atlanta (1,180 units); Lafayette, La., (972 units); suburban Chicago (762 units); Dallas (744 units) and Boca Raton, Fla., (712) units. 

Since 2014, Morgan Properties and Olayan America, a division of The Olayan Group, an international real estate investment firm, have closed 13 transactions for a total of $4.3 billion and acquired a workforce housing portfolio of more than 110 properties and 35,000 units in 14 states. Morgan Properties manages all the joint venture assets. In October, Morgan Properties and Olayan America bought the Threshold portfolio, an 18-property, 3,256-unit multifamily portfolio in North and South Carolina for $323 million. Their first acquisitions together in June and December of 2014 totaled 3,462 units in Maryland and Virginia.

Growing Presence

Erik Horvat, managing director & head of Real Estate at Olayan America, said in a prepared statement the North Star transaction provides access to some of the best multifamily markets in the nation. He said it speaks to the strength of the firm’s partnership with Morgan Properties and continued confidence in the multifamily sector.

With the North Star acquisition, Morgan Properties and Olayan America have entered five new states—Florida, Texas, Georgia, Louisiana and Michigan. The transaction also solidifies their strong market presence in the Mid-Atlantic region while greatly expanding their concentration in the Southeast, Southwest and Midwest. The partners plan to invest an additional $100 million in the portfolio through unit and amenity upgrades.

Morgan Properties, which has had massive growth in recent years, has hired 400 new employees. The company has also created two area vice president positions, 14 regional management positions and 70 corporate positions. Morgan Properties also plans to open a regional office in Boca Raton to better serve its Southeast expansion.

‘Major Milestone’

Jonathan Morgan, president of Morgan Properties JV, said in a prepared statement the North Star acquisition is a major milestone for the company, which his father, founder & CEO Mitchell Morgan, started in 1985 with the purchase of a 1,395-unit portfolio. He said the company has acquired $9 billion of assets and more than 70,000 units since 2012. The North Star transaction is its second largest transaction behind the October 2019 purchase of a 95-property portfolio consisting of 17,500 units across eight states from Morgan Communities, an unrelated company, for $1.9 billion.

Jason Morgan, principal at Morgan Properties, said in prepared remarks the Morgan Communities deal set a precedent that the company could handle a complex transaction with assumable long-term debt and geographically diverse properties and incorporate the assets into its operational platform. Noting Morgan Properties has acquired more than $5.5 billion of assets across 40,000 units in two years mostly through off-market transactions, he said the company’s experience and long-term hold philosophy enabled it to acquire properties at a discount to the broader market.