Harbor Group International completes $ 245 million capital increase for new multi-family platform – Commercial Observer
Port International Group (HGI) raised $ 245 million for its new multi-family loan platform, with the Canada Pension Plan Investment Board (CPP Investments) as the lead investor, the company said on Tuesday.
CPP Investments has committed $ 110 million in equity for the initiative launched last year, whereby HGI will provide senior mortgage bridge financing on multi-family assets across the United States. HGI expects to close over $ 300 million in senior multi-family loans by the end of January, and plans to reach a total of $ 450 million to $ 500 million in loans by the end of the first quarter of 2021.
The loan program will target value-added assets and new construction assets nationwide.
Richard Litton, chairman of HGI, said CO’s multi-family equity increase initiative began at the start of the COVID-19 pandemic in late March, when it was determined that other debt players were facing lending problems in the hospitality and retail sectors. Litton noted that HGI has always had its eyes set on granting multi-family loans, before the pandemic, after 35 years of investing in the buy-and-sell industry.
“We’re so active in the multifamily market on the buy and sell side anyway, and we were getting a lot of data points in the industry that there weren’t that many active bridge lenders,” Litton said. “We closed our first loan in August and felt, with the pipeline we had, that we could achieve a significant capital increase and work towards equity that would support up to $ 1 billion in loans to the government. over the next year. “
Litton noted that many new apartments under construction before the pandemic were linked to construction loans, with properties not stable enough to receive Freddie Mac or Fannie Mae loans, making bridge financing an effective tool for these assets. . He said overall demand for multi-family housing is expected to remain strong in the United States in 2021 and beyond, especially in suburban areas.
HGI has been researching and managing debt investments for over a decade to support its real estate portfolio. The Norfolk, Virginia-based company has made preferred stock investments and mezzanine loans on multi-family properties across the United States, and is also one of the largest buyers of Freddie mac multi-family subordinated debt positions.
In November, HGI caught a $ 513 million Freddie Mac loan to refinance a set of eight multi-family assets in the mid-Atlantic region.
“As a well-known owner and operator with a solid understanding of the US multifamily market, HGI has the ability to approach loan transactions with a holistic perspective that gives them a unique advantage. ” Geoffroy Souter, managing director, head of real estate lending at CPP Investments, said in a statement. “We look forward to continuing our relationship with HGI to meet a growing market need. “
Update: This post has been updated with additional information and quotes from the President of HGI