Northland is the majority owner of the new entity, with a 77.5% controlling interest. Tarragon will hold the balance. The companies last worked together in December when Northland Investment bought a large portfolio in Florida from Tarragon.

According to Steven P. Rosenthal, Northland's CEO, the idea to combine the firms' multifamily assets made sense. "Our businesses overlap in several markets, including Connecticut and Florida," he explains. "We came up with the idea that combining our multifamily assets would create a bigger and stronger platform that could access capital more easily and continue to grow into a much larger entity. The portfolio's concentration in our core markets is pretty striking." He points out that the JV is staring out as one of the Top 50 multifamily owners in the country. "That position allows us to access capital and acquire assets that we would not have been able to prior to the deal," he adds.

Northland Properties currently has 83 communities in a dozen states, with concentrations in Florida, Connecticut, Massachusetts, North Carolina, Texas, Tennessee and Arizona. Rosenthal says the JV intends to grow aggressively, acquiring market-rate rental product in key growth markets such as Charlotte and Raleigh, NC and Austin, TX as well as markets in which they already have a presence. The entity will also pursue value-add opportunities.

"We expect to add additional assets to our portfolio, doubling, tripling or even quadrupling the $2 billion we already have," the CEO says. "The dislocation in the real estate business has resulted in a great benefit to Northland. With our access to capital, we've been able to buy assets even in difficult economic times. We think the multifamily sector is extremely strong and will get even stronger, and by focusing on some contrarian locations, such as Florida, and some of the markets with strong information technology industries, along with being opportunistic in our underwriting, we think there are a lot of very compelling investment opportunities. This is an exciting platform from which we expect to grow significantly and aggressively."

Northland Properties is starting off with a significant pool of equity, Rosenthal says. Northland Investment also has a $200-million fund it intends to tap into to fund the purchases. "We expect to try to recapitalize the new entity and raise additional money for the platform," he adds. "In making purchases, we will supplement that equity with debt, of course."

As part of the joint venture, the firms also have created a new management company, Northland Properties Management LLC, for the portfolio's property, asset and construction management services. The Newton, MA-based firm will have satellite offices in Hartford, CT and Florida. Northland Investment will direct the JV's investment decisions and oversee management of the portfolio.

In a transaction separate from the joint venture, Northland has provided Tarragon with a $50-million loan commitment that it can use to help purchase some of its subordinated debt at a discount. Tarragon's minority interest in the new entity will serve as collateral on the two-year, senior secured paper.