just less than$1.9 billion. Now, according to a report in The BergenRecord, any or all of those properties, a large percentage ofwhich are in New Jersey, are for sale as the ailing insurer triesto raise cash.

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AIG had announced last month that it would try to sell somenon-core assets, including its AIG Global Real Estate InvestmentCorp. The latter controls the former Kushner portfolio, and theproperties themselves are managed by Morgan. An AIG spokesmandeclined to comment on the report, and a spokesman in MorganProperties' office here told GlobeSt.com that, "we are under ordersnot to comment on any properties in the portfolio."

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AIG is reported to have put $500 million of equity into theKushner deal, with several banks funding the rest of the saleprice. As far as the current value of the portfolio and what theproperties might garner in the current market, views are mixed.

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"While the Kushner properties aren't likely to sell as aportfolio, there's a strong market for individual one-offproperties in New Jersey and eastern Pennsylvania," Alan Hammer, apartner in the real estate practice group of the WolfBlock law firmin Roseland, NJ, tells GlobeSt.com. Hammer represented Kushner inthe portfolio sale to AIG and Morgan last year."The potentialreturn depends on individual properties," Hammer says. "When AIGbought the portfolio, they did a price allocation because it didn'tmatter to the seller, who was receiving a gross price. So theyestablished prices for individual buildings, many of which they canexceed but some of which they can't.

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"If a buyer wanted to finance the whole portfolio, that would bea problem," Hammer says. "But if a buyer wanted to buy the buildingin Short Hills, or Montclair, or Franklin Lakes, then financingwon't be a problem. Could you get an extremely aggressive price ona large property and get high-leverage financing? No. But if thedeal made economic sense, you could finance any of these propertiesindividually."

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According to information released by Kushner, the portfolio hadan occupancy rate of 98% at the time of sale, and a Morganspokesman confirms that the rate has fallen to 92%. The statewideoccupancy rate is 96.3%, according to a report by Marcus &Millichap. And while apartments still trade, sales have dropped by22% over the past year, says M&M.

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"Acquiring investment property is based purely on how it'sdefined--the investment and the income," Michael Fasano, regionalmanager for Marcus & Millichap in Elmwood Park, NJ, tellsGlobest.com. "In large part, how you buy those assets is leveraginga mortgage or financing, and as interest rates have climbed andunderwriting requirements spread, bank requirements have changedand it's put a lot of pressure on pricing.

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"That said, as the constraints and the lending environment haveevolved over the past 13 to 14 months, pricing has come down,"Fasano says. "Apartment properties continue to trade, albeit at aslower pace and at slightly lower prices than a few quarters ago.Apartment fundamentals in New Jersey will soften in the monthsahead, but remain strong relative to other areas of thecountry."

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"If AIG were to put them all on the market on an individualbasis, there would be great activity," Hammer says. "At the moment,there are very few buildings on the market where the sellers'prices are realistic. New Jersey apartments have a wide range ofasking prices. North Jersey could be more than $200,000 per unitfor really nice buildings, but much less in Camden, Salem,Burlington and other counties."

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Hammer adds, "The sale would have a very positive impact on NewJersey, but only if AIG were to sell at prices that madesense."

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