Morgan Buys DC Portfolio for $509M

The company’s purchase of the Mark Center portfolio, consisting of nearly 2,700 apartment units and a 63,000-square-foot retail center, is one of the largest transactions in Virginia.

The Shops at Mark Center
The Shops at Mark Center

Already having one of the largest multifamily footprints in Greater Washington, D.C., Morgan Properties has acquired the Mark Center apartment and retail portfolio in Alexandria, Va., for $509 million. The seller was JBG.

Sited fewer than five miles from The Pentagon, the portfolio is regarded as one of the largest institutionally-maintained contiguous portfolios in the country. In addition to the Apartments at Mark Center, consisting of six 1960- and 1970s-era garden style-buildings, the 150-acre asset features the 63,300-square-foot Shops at Mark Center, which is anchored by a grocery store and a pharmacy tenant. Furthermore, Mark Center offers a substantial redevelopment opportunity, or more specifically, the potential for twice the permitted density. Former owner JBG previously secured regulatory approvals for approximately 5,000 multifamily and townhome units and 700,000 square feet of retail, office and hotel offerings, as noted in a JBG filling with the SEC.

“Berkadia and Fannie Mae provided us with very attractive fixed-rate financing,” Jonathan Morgan, president of Morgan Properties JV Management, told Commercial Property Executive. “While it is not in our immediate plans, we value this optionality and will continue to re-evaluate our business plan during the approval period for the redevelopment,” Morgan added.

MINING METRO DC

The Pavilion at Mark Center
The Pavilion at Mark Center

The acquisition of Mark Center constitutes Morgan Properties’ second-largest transaction ever, and marks a continuation of a years-long expansion in the Maryland-DC Corridor, where the company has increased its multifamily portfolio from 4,300 units to 21,500 over the last five years. Morgan Properties has its reasons for keeping the area high on its target list.

“We are opportunity driven and compared to New Jersey and Philadelphia, which mostly consists of family owners (us included) who typically own and manage for the long haul and acquisition opportunities are limited, the Maryland-D.C. Corridor is an institutional market comprised of fund ownership, which has led to more opportunities,” noted Morgan. “We have a competitive advantage given our local market knowledge and our geographic concentration, which enables us to deliver economies of scale and generate operational efficiencies.”

The future for the suburban Washington, D.C., multifamily sector is bright. According to a second quarter report by commercial real estate services firm JLL, demand will keep pace with supply in Northern Virginia and Suburban Maryland through 2020. Morgan is certainly keen on the market; however, the company does not precisely have tunnel vision. “Over the last five years, we have acquired over $2.5 billion in total acquisition volume and over 20,000 units,” Morgan concluded.

Photos courtesy of Morgan Properties