Berkadia has announced that it successfully negotiated the sale of the 2,826-unit Star Portfolio consisting of 11 separate apartment communities located in four states – Maryland, Pennsylvania, North Carolina and South Carolina. The purchase price for these assets was in excess of $300 million.
Berkadia’s Senior Managing Directors Scott Melnick and David Oakley negotiated the transaction on behalf of the buyer, Morgan Properties JV, an affiliate of Morgan Properties, one of the nation’s largest multi-family owners. Deutsche Bank represented the seller.
All of the Star Portfolio properties are located in very desirable, high-barrier submarkets in close proximity to major development hubs and public transit. Morgan Properties will execute an extensive, multimillion dollar value-add repositioning plan in aggregate to enhance the value of each property, and the renovation strategy will include premium kitchen and bath renovations and top-of-the-line amenity upgrades.
The six suburban Maryland apartment communities include Silver Spring Station, Westerlee, The Willows, St. Mary’s, Taylor Park and Willowood; in Pennsylvania, The Greens at Westgate; in South Carolina, The Waterway and Forest Oaks; and in Raleigh, North Carolina, Falls Creek and Heather Park.
Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.
Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.
In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.
The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.