Dealmaker: Harbor Group International Acquires $1.8B Apartment Portfolio

Harbor Group International, Norfolk, Va., acquired a 25-property multifamily portfolio from Lone Star Funds, Dallas, for $1.8 billion.

The transaction–HGI’s largest to date–increased the firm’s investment portfolio from $5.2 billion to $7.1 billion.

The properties in the Washington, D.C. metro area, Philadelphia, Baltimore, Chicago and Boston total 9,677 units. HGI said it plans to invest nearly $80 million to upgrade unit interiors and property amenities.

“HGI was selected to acquire this portfolio due to the company’s strong track record with complicated portfolio transactions,” HGI Chairman and CEO Jordan Slone said, noting his firm quickly mobilized a large-scale due diligence effort.

The portfolio is located in supply-constrained in-fill markets, each of which benefits from solid demographics, convenient transportation, access to highways and desirable school districts. Average occupancy for the portfolio is approximately 95 percent and HGI believes its value-add initiatives and focused management will boost revenue.

Meridian Capital Group, New York, provided investment advisory and mortgage brokerage services to HGI, including placing $512 million of fixed-rate debt with New York Community Bank, Westbury, N.Y. Meridian CEO Ralph Herzka 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,” Herzka said.

Berkadia Commercial Mortgage, Horsham, Pa., provided $930 million in fixed- and floating-rate debt through Freddie Mac, McLean, Va. Berkadia Managing Directors Laura Cathlina and Sharon Plattner secured the financing. The deal closed November 30.

Eastdil Secured, New York, represented seller Lone Star Funds.