Sale of nearly 80 Robert Morgan apartment properties now official

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The sale of a massive chunk of Robert Morgan’s real estate empire is now official, which should clear the way for the under-siege Rochester developer to make whole his investors.

Morgan Properties, a real estate investment and management conglomerate based in King of Prussia, Pa., has acquired nearly 80 apartment communities comprising more than 18,000 units from Morgan Communities, Robert Morgan’s Perinton-based business.

Robert Morgan will retain a minority ownership stake, sources close to the deal confirmed. Work on this joint-venture sale to Morgan Properties began in July, according to court papers. That’s also when a Morgan Properties subsidiary — MORE Management — assumed management of the apartment communities. Until this deal, the two firms were not related or connected.

Morgan and two company executives were indicted by federal authorities in May for their alleged role in a $500 million real estate fraud case. Scott Cresswell, his former chief operating officer who also was charged in May, has already pleaded guilty to conspiracy to commit wire fraud.

Ever since, Morgan Communities has been in sell mode. Once the owner of around 150 apartment communities from New York and Pennsylvania to Texas and Alabama, the firm’s website now lists just six properties still under its control.

Morgan’s son, Todd, and nephew, Kevin, were indicted a year earlier, along with two mortgage brokers from Buffalo. Kevin Morgan pleaded guilty in December to conspiracy to commit bank fraud. Todd Morgan and his father continue to fight to prove their innocence.

The Securities and Exchange Commission also accused Robert Morgan of operating a Ponzi-like scheme that put at risk tens of millions of dollars in investor funds, even though there apparently were no complaints by investors.

The closing on the sale to Morgan Properties very likely will provide him the cash to pay off those investors. The sale price was not revealed.

Also, federal authorities have agreed not to seek forfeiture of the apartment communities now owned by Morgan Properties, although they could still go after the minority share owned by Robert Morgan and/or his firm.

Last month, Morgan completed the sale of eight New York properties to Berkley Properties LLC of Nanuet (Rockland County). Two of those apartment communities are in the Rochester area, Wedgewood West in Henrietta and Brockport Landing.

“Morgan, whatever you say about him, he did a nice job re-positioning the properties,” Michael Silberberg, principal at Berkley Properties, said shortly after his purchase.

Morgan Properties is now one of the five largest multifamily owners in the United States, and the largest in New York. The firm has a total of 75,000 units in 15 states, and since 2012 has acquired more than $7 billion in multifamily assets.

“Morgan Properties prides itself as a turnaround specialist in the multifamily industry and this portfolio fits our investment criteria given its size, scale and unique re-positioning opportunity,” Jason Morgan, principal at Morgan Properties, said in a news release. “We target opportunistic multifamily investments and are extremely well positioned to stabilize this portfolio for the greater benefit of residents, employees and investors.”

He said more than 750 employees of the apartment communities transitioned to Morgan Properties/MORE Management.

Morgan Properties isn’t done yet, either. The company also will be acquiring 3,000 more apartment units from Morgan Communities in a separate transaction that has yet to close, the Pennsylvania firm said.

“This year we have acquired over $3 billion in total volume — our biggest year since our founding — and remain bullish on multifamily fundamentals,” Jonathan Morgan, president of Morgan Properties, said in a news release.

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