Bloomberg News

Apartment Owner Morgan Properties Seeks $800 Million in IPO

July 27, 2011

(Adds background on partnership with AIG starting in seventh paragraph.)

July 27 (Bloomberg) -- Morgan Properties Trust, a partner with American International Group Inc. in the 2007 purchase of thousands of U.S. apartments, is seeking $800 million in an initial public offering.

Morgan Properties announced its IPO today in a filing with the U.S. Securities and Exchange Commission. The King of Prussia, Pennsylvania-based company didn’t say how many shares it will offer or at what price.

The real estate investment trust, led by Chairman and Chief Executive Officer Mitchell Morgan, owns 94 properties in middle- income suburbs of Philadelphia, New York, Baltimore and Washington, according to the regulatory filing. Total revenue climbed by almost 50 percent to $130.8 million last year.

“These properties give them a big portfolio that’s generating a lot of income that will be attractive to public market investors,” said Ben Thypin, director of market analysis for Real Capital Analytics Inc., a New York-based researcher. “Prior to this, they didn’t have the scale to justify being a public firm.”

Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are leading the offering. The company, which plans to list its shares on the New York Stock Exchange under the symbol MPT, expects to use the proceeds to repay debt.

Mitchell Morgan, 56, is the REIT’s largest shareholder, according to the filing. A phone message left at the company’s general number wasn’t immediately returned.

Deal With AIG

AIG in 2007 bought 86 apartment complexes, mostly in New Jersey and Pennsylvania, in partnership with Morgan for $1.9 billion from Kushner Cos., a New York-based company then headed by Charles Kushner and his son Jared. The deal was close to the peak of U.S. real estate values, which plunged more than 40 percent over the next two years.

Morgan sued AIG in February 2009, saying the insurer’s “self-induced financial collapse” led it to delay payments for apartment renovations. The complaint referred to the 2007 deal as “one of the largest private offerings of multifamily projects ever offered for sale.”

AIG began considering the sale of its stake in 2010 as it sought to repay loans within its $182.3 billion government rescue package.

In January, Morgan bought out its partners in 76 apartment properties valued at about $1.5 billion, the company said in a statement. AIG was among the sellers, the Philadelphia Inquirer reported on Jan. 11.

The insurer took title to some other apartments it once co- owned with Morgan, the newspaper said. Earlier this month, AIG sold 2,200 apartments acquired in the Kushner deal to Vantage Properties LLC and Angelo, Gordon & Co. for $241.5 million.

--Editors: Christine Maurus, Kara Wetzel

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.


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