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FLORHAM PARK, NJ-Just more than a year ago, AIG Global teamed with Morgan Properties to buy a portfolio of 16,784 apartments in 86 properties in five states from locally based Kushner Cos. for just less than $1.9 billion. Now, according to a report in The Bergen Record, any or all of those properties, a large percentage of which are in New Jersey, are for sale as the ailing insurer tries to raise cash.

AIG had announced last month that it would try to sell some non-core assets, including its AIG Global Real Estate Investment Corp. The latter controls the former Kushner portfolio, and the properties themselves are managed by Morgan. An AIG spokesman declined to comment on the report, and a spokesman in Morgan Properties’ office here told GlobeSt.com that, “we are under orders not to comment on any properties in the portfolio.”

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

“While the Kushner properties aren’t likely to sell as a portfolio, there’s a strong market for individual one-off properties in New Jersey and eastern Pennsylvania,” Alan Hammer, a partner in the real estate practice group of the WolfBlock law firm in Roseland, NJ, tells GlobeSt.com. Hammer represented Kushner in the portfolio sale to AIG and Morgan last year.”The potential return depends on individual properties,” Hammer says. “When AIG bought the portfolio, they did a price allocation because it didn’t matter to the seller, who was receiving a gross price. So they established prices for individual buildings, many of which they can exceed but some of which they can’t.

“If a buyer wanted to finance the whole portfolio, that would be a problem,” Hammer says. “But if a buyer wanted to buy the building in Short Hills, or Montclair, or Franklin Lakes, then financing won’t be a problem. Could you get an extremely aggressive price on a large property and get high-leverage financing? No. But if the deal made economic sense, you could finance any of these properties individually.”

According to information released by Kushner, the portfolio had an occupancy rate of 98% at the time of sale, and a Morgan spokesman confirms that the rate has fallen to 92%. The statewide occupancy rate is 96.3%, according to a report by Marcus & Millichap. And while apartments still trade, sales have dropped by 22% over the past year, says M&M.

“Acquiring investment property is based purely on how it’s defined–the investment and the income,” Michael Fasano, regional manager for Marcus & Millichap in Elmwood Park, NJ, tells Globest.com. “In large part, how you buy those assets is leveraging a mortgage or financing, and as interest rates have climbed and underwriting requirements spread, bank requirements have changed and it’s put a lot of pressure on pricing.

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

“If AIG were to put them all on the market on an individual basis, 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 of asking prices. North Jersey could be more than $200,000 per unit for really nice buildings, but much less in Camden, Salem, Burlington and other counties.”

Hammer adds, “The sale would have a very positive impact on New Jersey, but only if AIG were to sell at prices that made sense.”

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