Morgan Properties, Olayan Acquire $1.75B Apartment Portfolio

Olayan America and Morgan Properties have partnered to buy a portfolio of 14,414 units from STAR Real Estate Ventures, a joint venture between El-Ad National Properties and Yellowstone Portfolio Trust, for $1.75 billion.

The North Star portfolio consists of 48 apartment communities and 11 states, including Florida, Texas, Georgia, North Carolina, South Carolina, Louisiana, Michigan, Illinois, Indiana, Ohio and Maryland. The acquisition allows Morgan Properties and Olayan America to establish a foothold in Florida, Texas, Georgia, Louisiana and Michigan.

“We are seeing a shift in demographic trends throughout these regions. For instance, Florida has a total of 22 million residents and is expecting to add 4 million more residents by 2030 or 900 each day,” Jason Morgan, principal at Morgan Properties, told GlobeSt.com in a written statement. “The pandemic has brought residents’ new priorities to light and we look to continue to expand our portfolio to cater to their new wants and needs.”

The North Star acquisition also allows Morgan Properties and Olayan America to solidify their strong market presence in the Mid-Atlantic Region, while significantly expanding their concentration in the Southeast, Southwest and Midwest. The portfolio is concentrated in suburban Baltimore (2,566 units), Tampa-St. Petersburg, Fla., (1,972 units), suburban Atlanta (1,180 units), Lafayette, La., (972 units), suburban Chicago (762 units), Dallas (744 units), and Boca Raton, Fla., (712 units).

The portfolio averages 300 units per property and an average vintage of 1985.

Morgan Properties and Olayan America plan to invest an additional $100 million for enhancements and amenity upgrades to the properties of the North Star portfolio. Included in that upgrade will be enhanced curb appeal and signage; premium kitchen and bathroom upgrades; washer and dryer installations; and amenity upgrades such as dog parks, playgrounds with exterior fitness stations, high-end bike racks and a bike-share program, among other things.

While the deal was multiple years in the making, discussions started heating up last November, according to Jonathan Morgan, President of Morgan Properties JV.

“COVID-19 did not necessarily alter the timing of the deal, but it did decrease competition,” Jason Morgan told GlobeSt.com in a written statement. “Morgan Properties is able to stay active because we pursue opportunities with limited competition and as a result secure deals at more attractive pricing.”

The North Star acquisition is the largest multifamily transaction this year, according to Morgan. It is 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. With the transaction, Morgan becomes the largest private apartment owner in the country and the second-largest overall.

“Over the past five years, Morgan Properties has experienced unprecedented growth in the multifamily industry,” Jonathan Morgan told GlobeSt.com in a written statement. “We are excited about becoming the second largest multifamily owner in the country and have our eyes set on securing the top spot.”

As part of the North Star acquisition, Morgan Properties hired 400 new employees to join its growing 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 serve its expansion in the Southeast Region better.