Paced by a $509 million purchase in Northern Virginia, King of Prussia, Pa.–based Morgan Properties completed $1.2 billion in acquisitions last year and added more than 8,600 units to its portfolio.
The company now has roughly 45,000 units in 10 states, primarily in the Mid-Atlantic and Northeast. Jonathan Morgan, president of Morgan Properties JV Management, who is company founder’s Mitchell Morgan’s son, notes that despite being a second-generation business, Morgan Properties is far more institutional than a “family firm.”
“We are a well-oiled machine on the acquisition front,” Jonathan Morgan says. “To be able to bring in close to 8,700 units and close the largest transaction in the state of Virginia and basically, just from two portfolio deals, become the largest landlord in the state of Maryland and New Jersey … this is a big year for us and one we’re proud of.”
Heading into 2017, Morgan Properties was targeting $1 billion in acquisition volume. “We ended up executing on a few large portfolio opportunities, and had that not happened, it could’ve gone in a different direction,” Morgan says. “When we look at an opportunity, we’re extremely well positioned given who we are, given our track record, and given our strong capital relationships. We know that if we’re looking at a portfolio, odds are we’re going to be able to buy it, if the deal makes sense for us.”
Here’s a breakdown of the company’s 2017 acquisitions:
o Rolling Road Portfolio, a 1,979-unit apartment portfolio in the Baltimore metro region;
o Montgomery Manor, a 264-unit apartment community in Montgomery County, Pa.;
o Mark Center Portfolio, a six-property, 2,664-unit apartment portfolio in Alexandria, Va.;
o Parkview at Collingswood, a 1,030-unit apartment community in Collingswood, N.J.; and
o NOAH Portfolio, a 2,729-unit apartment portfolio located in the suburban Maryland–Washington, D.C., corridor.
The firm acquired the properties through its affiliate Morgan Properties JV, which launched in 2011. In the past five years, Morgan Properties JV has acquired about 23,000 units and completed more than $3 billion in total acquisitions.
When Morgan joined the business in 2011, he thought there was an opportunity to scale and leverage Morgan Properties’ existing platform and continue to grow through joint ventures. Before Morgan Properties JV, the company would partner with institutional investors and put in roughly 10% to 20% of the equity on a given deal. In 2011, the company wholly owned about 22,000 units and still does today.
According to Morgan, the firm is having success utilizing its strong capital relationships, its proven track record, and its expanding executive team.
“With our success in our acquisitions over the last several years, we’re in a unique position to take this business to the next level,” Morgan says. “So for us to acquire $1.2 billion and over 8,600 units in a year … that’s an impressive year by any means and speaks to our successful track record as a Class A owner of Class B apartments.”
Morgan Properties is a vertically integrated company and manages each of the 150 properties in its portfolio. When weighing a potential acquisition from an operational standpoint, Morgan says the company is in a good position to hit the ground running.
“It’s not easy to step in and buy 800 units in Maryland or 2,600 units in Northern Virginia, but, for us, we have the boots on the ground that we can bring into the portfolio without missing a beat,” he says.
Before the Mark Center Portfolio acquisition in Northern Virginia, Morgan Properties didn’t have a presence in the market. However, “We knew that we could relocate one of our regional managers and have them solely focused on that portfolio,” adds Morgan. “So it made us a player overnight.”
In recent years, Morgan Properties JV has been targeting large, one-off deals and portfolios. Typically, the portfolios feature properties built from the 1960s to the 1980s. Like many firms this cycle, Morgan Properties JV has a value-add strategy and often completes kitchen and bathroom renovations, installs washers and dryers, and enhances common-area amenities.
“We have to buy in markets [where] we have a geographic concentration that [can afford us] economies of scale,” Morgan says. “We’re buying [in] markets [where] we have a strong market presence [already] and local market knowledge. So we know that’s a proven value-add strategy, since we’re upgrading our existing assets that are located down the street. So that helps us to continue to scale.”
Morgan expects Morgan Properties JV to remain active in 2018, adding that it’s in pursuit of a couple of deals now.