Kushner Selling 17,628 Apartments

FLORHAM PARK, NJ-Kushner Cos., based here, is under contract to sell most of its multifamily portfolio, amounting to 17,628 apartments in five states. The news comes just eight weeks after the portfolio of 18,500 units in New Jersey, Pennsylvania, Delaware, Maryland and New York went on the block, as reported by GlobeSt.com in May.

The bulk of the portfolio is being sold to a joint venture of AIG Global Real Estate Investment Corp. and an affiliate of Morgan Properties of King of Prussia, PA. The purchase, consisting of 86 individual apartment complexes totaling 16,784 units, is expected to close within 90 days. The sale price was not released, but sources put the number in the $1-billion range, plus the assumption of more than $900 million of debt.

The largest concentration of the residences is Southern New Jersey and Philadelphia (25 complexes with 5,282 units) and Northern New Jersey (23 complexes with 3,473 units). The rest includes 14 complexes in Central New Jersey (2,991 units), nine complexes on the Jersey shore (1,306 units), seven complexes in Pennsylvania (1,912 units), seven complexes in Delaware (1,273 units) and one complex in New York State (547 units).

In separate transactions, Kushner has also agreed to sell 844 units in Maryland and Southern New Jersey to investment clients of the Kislak Co. for a total of $42 million. Those sales, both brokered by Kislak, are expected to close within 30 days. Not included in either offering was Kushner's commercial real estate portfolio of more than 6.5 million sf, or about 6,500 residential units in which the company has ownership interests.

"We are delighted that such pre-eminent real estate groups will be assuming the ownership and operation of this portfolio," says Jared Kushner, a principal of company founded by his father, Charles Kushner. According to Jared Kushner, the deal signals "a shifting of real estate focus from our traditional multifamily roots."

That new focus appears to be toward larger asset investments, specifically class A office buildings in New York City. As reported by GlobeSt.com earlier this year, Kushner purchased 666 Fifth Ave. in Manhattan for $1.8 billion.

A CB Richard Ellis team headed by Darcy Stacom in conjunction with Goldman Sachs represented Kushner in the multifamily portfolio offering and purchase. "There was a lot of interest from institutions, offshore investors and operating companies from around the world," Stacom says. "In the end, AIG and Morgan Properties decided they were simply not going to miss out on this opportunity to acquire a critical mass of residential properties in one of the hottest regions of the country."

Headquartered in New York, AIG Global Real Estate comprises a group of international companies within AIG Global Investment Group that invest in and actively manage real estate for its investor base. Morgan Properties, was founded in 1985 by Mitchell Morgan, is a privately owned owner/operator of 46 apartment complexes with more than 16,000 units.