National capital markets brokerage Northmarq said it will merge with Oregon-based investment management firm Morrison Street Capital in a move that supports its national focus on lending and other services to commercial real estate investors.
Northmarq, based in Minneapolis, said 22-year-old Morrison Street Capital, based in Lake Oswego, near Portland, will be renamed Northmarq Fund Management, a wholly owned existing subsidiary of the company, when the merger agreement is finalized.
The deal is part of Northmarq's strategy to expand its national office and services footprint. The company counts more than 50 locations across the country after it ramped up a national expansion across all major commercial property types in 2022, when it acquired Tulsa, Oklahoma-based national real estate brokerage rival Stan Johnson Co.
Morrison Street Capital, a subsidiary of Portland-based Norris, Beggs & Simpson Cos. founded in 2002, has invested $750 million on behalf of clients in over 300 retail, multifamily, industrial, office, parking and hotel properties across the country with a combined value of nearly $5.4 billion, including mortgage debt, according to a Northmarq statement.
“This merger serves as an important milestone as we continue to expand our national platform,” Northmarq CEO Jeffrey Weidell said, adding that the capital in Morrison Street's funds “will help bridge gaps to allow our clients to close deals in this challenging market.”
Morrison Street has three closed-end funds and one open-end investment vehicle that will be used for such deals, and will continue to be led by company founder and CEO Rance Gregory, whose team will remain based in Lake Oswego, according to the statement.
Investment Uptick
Gregory said the merged company will be able to launch new and expanded investment vehicles that can tap into the national client and deal underwriting network provided by Northmarq, a company founded in 1960 that links commercial real estate investors with debt, equity, investment sales and loan servicing advisers.
“Investors and real estate operators can continue accessing our funds and advisory services through the same management team they’ve known over the past 20-plus years," Gregory said. "Meanwhile, we can better serve our clients through the greatly expanded network and nationwide resources Northmarq has to offer.”
Under the agreement, Northmarq would also acquire NBS Real Estate Consulting, a boutique company affiliated with Morrison Street Capital that provides advisory services to real estate owners and lenders.
NBS Real Estate, also based in Lake Oswego, will operate as Northmarq Advisory Services after the two companies finalize the deal.
The U.S. office sales market appeared to regain its footing in late 2023, according to CoStar data, and if that momentum continues, the market could see around $10 billion in transactions by mid-year, "echoing transaction volumes last seen in the first half of 2009," according to a U.S. market analytics report.
Mike McDonald, a senior managing director in JLL's capital markets group, said he's seeing more activity this year than last year, with an uptick of broker opinion of values, or a formal opinion on the valuation of a property completed through a broker analysis.
"It's been choppy with what the Fed and interest rates are doing, but most people have accepted a higher-for-longer rate environment," McDonald previously told CoStar News. "There's distress out there, especially in the office sector, and a lot of capitulation on where the real market values are. We are seeing more engaging conversations and the need to offer more strategic advice."