Norfolk, VA-based Harbor Group International has purchased a $1.8 billion portfolio of multifamily properties from affiliates of Lone Star Funds.
The Beacon Portfolio comprises 25 multifamily properties totaling a combined 9,677 residential units in major metropolitan areas on the East Coast.
The deal is the HGI’s largest to date and increases Harbor Group’s portfolio from $5.2 billion to $7.1 billion.
“The acquisition of the Beacon portfolio represents a milestone transaction for Harbor Group International as we continue to grow our investment portfolio,” commented T. Richard Litton, Jr., HGI president.
Berkadia structured almost $1 billion of Freddie Mac fixed and floating rate debt for the deal.
Managing directors Laura Cathlina and Sharon Plattner of Berkadia’s Chicago office secured the Freddie Mac loan.
“Our team was pleased to have been given the opportunity to assist Harbor Group International with the financing of this exclusive portfolio that supports their diversified investment strategy,” said Cathlina.
“The end result was a creative multi-faceted loan structure which will provide Harbor a significant amount of flexibility for future decision making. Our partners at Freddie Mac did an outstanding job in working with us to structure this transaction.”
The Freddie Mac financing encompasses 16 properties located in Boston, Baltimore, Chicago, Washington D.C. and Philadelphia, which are part of an overall 25 property portfolio.
Eleven of the properties were financed with a fixed rate vehicle for over $789 million. The remaining five properties were financed with a floating rate vehicle for over $138 million.
Meridian Capital brokered the financing package, which includes a five-year, fixed-rate, balance sheet financing provided by New York Community Bank.
Ralph Herzka, Meridian’s CEO, led a team that included senior managing director Abe Hirsch and managing director, Zev Karpel.
“These are excellent cash-flowing assets in premium, supply-constrained East Coast markets. We applaud HGI on this transformative transaction and feel honored to have partnered with HGI on this landmark debt package,” said Hirsch.
Meridian Capital Group provided investment advisory and mortgage brokerage services to Harbor Group, including the placement of $512 million of fixed rate debt with New York Community Bank for the remaining nine properties.
Lone Star was represented by Eastdil Secured.
HGI plans to invest $80 million to upgrade unit interiors, enhance property amenities and improve curb appeal. As of June 30, 2017, the portfolio posted average occupancy of about 95 percent up slightly from the end of 2016.