NORFOLK, VA. — Harbor Group International LLC (HGI), a privately owned real estate investment and management firm based in Norfolk, has acquired a 36-property multifamily portfolio for $1.85 billion.
The portfolio comprises 13,243 units, most highly concentrated in the Dallas/Fort Worth and Denver markets. The remaining properties are located in Houston, San Antonio, Atlanta, Orlando, Phoenix, Salt Lake City, Albuquerque, St. Louis and Kansas City. The properties average 350 units each, primarily in two- and three-story buildings.
The transaction was the largest multifamily sale since 2016 and the fifth largest ever recorded in the U.S., according to the seller, Los Angeles-based Aragon Holdings LLC. The deal is part of Aragon’s broader $2 billion sale of its entire apartment portfolio, which consists of 15,000 units located in 12 cities and eight states across the nation.
“We decided to sell our portfolio because we recognized that, in the present market conditions, the properties would have the greatest value in the hands of a ‘value-add’ operator,” says Larison Clark, founder, chairman and CEO of Aragon Holdings. “Harbor Group targets value-add opportunities, making this an ideal transaction for both firms.”
Dan Guy, Aragon’s president and chief operating officer, adds that Aragon initially focused on multifamily housing because the company saw the opportunity for strong investor returns in the wake of the 2008 economic crisis. “Since then, we have achieved exceptional cash-on-cash and IRR returns for our investors.”
What’s next for Aragon? “Our team is now analyzing commercial real estate opportunities that provide the best risk-adjusted returns for our investors,” adds Guy.
HGI plans to invest approximately $90 million in property upgrades and enhancements throughout the portfolio, including $51.5 million for in-unit renovations. Harbor Group Management Company, HGI’s in-house property management firm, will immediately assume management of the portfolio.
Henry Stimler, Bill Weber and Matt Mense led a Newmark Knight Frank team that arranged approximately $1 billion in financing for the acquisition, while HGI directly assumed $400 million of existing debt. The new debt was placed in two separate pools: an NKF-originated, fixed-rate loan with Freddie Mac and a short-term, floating-rate loan arranged by Bank of America.
Zach Springer of NKF represented Aragon in the transaction. NorthMarq Capital represented Aragon for debt assumptions and defeasance. HGI used Meridian Capital Group as an advisor.
— Alex Patton