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N.Y. firm buys large Wilmington rental portfolio for $14M

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WILMINGTON – A New York City real estate investment and management firm recently bought a large portfolio of Wilmington rental properties for $14 million, according to land records.

On April 21, Dwight City Group closed an acquisition of Morningstar Property Group’s portfolio of 44 properties totaling 204 multi-family units. The properties have reportedly had high occupancy, even throughout the COVID-19 pandemic.

1401 Maryland Ave. in Wilmington is one of the 44 properties recently acquired by the Dwight City Group. | PHOTO COURTESY OF RRA

Owned by Robert Jones, Morningstar was founded in 2003 as a real estate investment firm focused on Wilmington and is now headquartered on 7th Street. The majority of its properties are in the downtown city center.

“We have sought from the beginning to find distressed properties to purchase and renovate them as desirable and functioning rental units. It is our desire to invest and increase the value of the property and the neighborhood with each and every acquisition,” the company wrote of its mission on its website.

Dwight City Group, founded in 2018 by friends Adam Sasouness, Josh Sasouness and Judah Angster, focuses on “the growing need for affordable luxury apartments in revitalizing neighborhoods.” The firm’s focus lies on investing in areas with access to rail lines within a 30-minute commute to a major city center, analyzing public transit use data for evidence that an area is being revitalized.

“The company’s core focus is to locate assets within growing neighborhoods and revitalize them through updates, renovations and amenity additions. With acute focus on specific cities, using in depth and up to date data coupled with economies of scale, Dwight City Group is able to realize added value where others may not,” the firm writes on its website.

Angster told Delaware Business Times that his firm had made acquisitions in the greater Philadelphia region as well as northern New Jersey in recent years when he considered the Wilmington area. Almost by chance, he was patronizing a Retro Fitness in Wilmington, the only open gym in the area, when he drove through the city. He was immediately impressed.

“I’m like, ‘Oh my god, what a beautiful city.’ I would live here in a heartbeat. It was love at first sight on the drive through,” he recalled, adding that he would later do his homework on the city and its leaders. “I think that in many ways Wilmington has not only a great history but has a potential for a fantastic future.”

Working with Rittenhouse Realty Advisors out of Philadelphia, DCG found the Morningstar opportunity. Angster noted that the portfolio was a little more scattered than they would typically invest in, but they felt it was a good first step in learning about Wilmington’s neighborhoods.

The firm plans on renovating the portfolio, including more than just cosmetic changes like installing more efficient and environmentally friendly HVAC systems or replacing roofs. A currently vacant four-unit complex will get a major overhaul to see if it can attract higher rents, but Angster said that they weren’t looking to price out members of the community.

“We don’t like to come in and start renovating right away. We like to come in and get to understand the community, and then over time we’ll improve the assets, so that way people from within the community, who are making more money, have opportunities to stay within that neighborhood, as opposed to feeling like they have to leave to find a better market,” he said.

Angster, who was out scouting sites in June, said DCG hopes to get to 500 units in Wilmington within the next two years. That growth would likely come through more acquisitions – DCG specializes in adaptive reuse of old buildings – or even possibly some new construction.

Bob DiPasquale and Corey Lonberger, of Rittenhouse Realty Advisors (RRA), arranged the sale to Dwight City Group.

It’s the second such Wilmington-area sale that RRA has been able to arrange with an out-of-state buyer after it brokered a sale of three apartment complexes to New Jersey-based firm Yada Properties last year. Yada has since gone on to also purchase the former Delaware College of Art and Design dormitory on Market Street for conversion into an apartment building.

“The Northern Delaware market has been seeing a large influx of regional buyers being drawn to the area in search of better returns than they see in the NYC/northern New Jersey MSA. This is driving values in Wilmington to all-time highs,” DiPasquale said in a statement.

While this deal is DCG’s first acquisition in the state, it is familiar with the market. The firm’s leading loan origination business, Dwight Capital, recently completed a loan with local stalwart developer Buccini/Pollin Group. Josh Sasouness originated a $50.7 million U.S. Department of Housing and Urban Development refinance loan for BPG’s The Residences at Justison Landing, a 214-unit, mixed-use project located in the Riverfront.

Editor’s note: This story was updated June 9, 2021, with additional details.

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