KING OF PRUSSIA, PA. — Real estate investment and development firm Morgan Properties has obtained $1.2 billion in loans to refinance a large portion of its multifamily portfolio. Berkadia Commercial Mortgage LLC originated the financing of the 73 apartment communities, 71 of which are eligible for securitization through Freddie Mac’s K-Deal Program.
The 13,799 units linked to the loans are located throughout New York, New Jersey, Pennsylvania, Delaware and Maryland. The transaction marks Morgan Properties largest refinancing. “We saw this as an unprecedented time to refinance our existing portfolio, by locking in attractive long-term financing at historically low interest rates,” says Mitchell Morgan, founder, president and CEO of Morgan Properties.
Freddie Mac provided Morgan Properties with a 10-year, fixed-rate loan with a partial interest-only period. The facility includes individual property loans that are not cross collateralized. The loans amortize on 30-year schedules after the interest-only period and carry a 4 percent interest rate.
K-deals, also known as K Certificates, are regularly issued, structured pass-through securities backed by recently originated multifamily mortgage loans. K-deals feature a range of investor options with stable cash flows and a structured credit enhancement and include guaranteed senior and interest-only classes.
The multifamily properties consist of a mix of garden, mid-rise and high-rise apartment communities ranging in size from 20 to 666 units with an average occupancy of 95 percent. More than 65 percent of the loan portfolio is collateralized by properties in New Jersey. Morgan Properties acquired most of these assets as part of its $1.9 billion acquisition of the Kushner Company’s portfolio in 2007, when the company acquired 16,800 units and doubled the size of its portfolio holdings. Since acquiring the portfolio, Morgan Properties has completed interior unit renovations by upgrading more than 3,000 units with newly renovated kitchens, bathrooms and washer and dryers.
“We were ecstatic to continue and expand our longtime relationship with Morgan Properties through this transaction,” says Warren Higgins, senior vice president of Berkadia Commercial Mortgage. “Working closely with Freddie Mac, the Berkadia team evaluated all 73 properties across five states and delivered financing with attractive loan terms in a short period of time.”
Some of the newer assets are in New Jersey and include Cranford Crossing, a 50-unt apartment building in Westfield, that was constructed in 2007; The Mews at Annandale, a 221-unit apartment community located in Annandale and built in 2003; and Horizons at Franklin Lakes, a 120-unit apartment community in Franklin Lakes, that was built in 2004 and includes a movie theater, fitness center, resident lounge and cyber café. The largest property in the Morgan Properties portfolio is the 666-unit Elmwood Village Apartments in Elmwood Park.
“Morgan Properties is now extremely well positioned for continued growth in the multifamily sector. We have a strong balance sheet and solid foundation to achieve success over the coming years,” says Jonathan Morgan, director of acquisitions and capital markets for Morgan Properties. “Since rent growth is only a partial inflationary hedge, we felt compelled to secure attractive fixed-rate, long-term financing to mitigate future interest rate and refinancing risks.”
King of Prussia, Pa.-based Morgan Properties has acquired more than 2,800 units during the past 18 months. The company owns and manages a portfolio of approximately 30,000 units located in 10 states throughout the country and is one of the largest private multifamily owners in the Northeast and Mid-Atlantic region.
— Rachel Goff