NORFOLK, VA. — An affiliate of Harbor Group International (HGI) has acquired a portfolio of 25 multifamily properties totaling 9,677 units across five major metropolitan areas for $1.8 billion. The sellers were affiliates of Lone Star Funds.
The transaction, which closed on Nov. 30, is HGI’s largest to date and increases the value of its investment portfolio from approximately $5.2 billion to $7.1 billion.
The properties, which boast a collective occupancy rate of 95 percent, are located in the metro areas of Baltimore, Boston, Chicago, Philadelphia and Washington, D.C. HGI plans to invest roughly $80 million in capital improvements to the unit interiors and communal amenities of the properties.
Berkadia and New York-based Meridian Capital Group secured approximately $1.4 billion in acquisition financing for the deal. Berkadia secured roughly $927 million in fixed- and floating-rate debt through Freddie Mac, while Meridian Capital secured approximately $512 million in fixed-rate debt through New York Community Bank.
Among the portion of the financing arranged by Berkadia, 11 of the properties totaling $789 million were financed at a fixed interest rate. The remaining five assets totaling $138 million were financed with a floating-rate vehicle. Laura Cathlina and Sharon Plattner of Berkadia led the loan structuring effort.
“The financing of this exclusive portfolio supports the company’s diversified investment strategy,” says Cathlina about HGI, which also owns retail and office properties. “The end result was a creative, multi-faceted loan structure that will provide Harbor a significant amount of flexibility for future decision making.”
HGI is a private investment and management firm based in Norfolk, with offices in New York, Baltimore and Tel Aviv. The company’s real estate holdings currently total approximately 4.8 million square feet of commercial properties and 30,000 apartment units.
Lone Star Funds is a Dallas-based private equity firm specializing in the acquisition and disposition of distressed assets. Since 1995, the company has established 17 private equity funds with aggregate capital commitments in excess of $70 billion.
— Taylor Williams