Harbor Group International Nabs $513M Agency Portfolio Refi From Capital One

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Capital One has provided a $513 million Freddie Mac-backed debt package to Harbor Group International (HGI) to refinance a bundle of eight multifamily assets in the mid-Atlantic region that were part of the massive 24-property Beacon Portfolio, according to information from Capital One and advisory firm Meridian Capital Group, which arranged the financing. 

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The collection of 10-year loans includes five years of interest-only payments under secured overnight financing rate-based floating rates, as per information from Meridian. 

HGI President T. Richard Litton Jr. said in a statement that the firm “continues to implement its proven investment plan for the properties in the Beacon Portfolio. We always look for opportunities to improve upon our assets’ financing terms, which, in turn, allows us to more effectively implement our investment plans and provide returns to our investors.”  

Litton added that HGI has been a longtime client of Freddie Mac, as a “borrower, preferred equity partner and B-Piece investor. [Our] strong, consistent record, when it comes to closing many types of transactions, is key when it comes to securing attractive financing.”

HGI had originally acquired these eight assets as part of its $1.8 billion purchase of the 24-property, 9,407-unit Beacon Portfolio from Dallas-based private equity firm Lone Star Funds in November 2017, as per information from HGI and reporting from the time of the sale. Meridian had originally advised HGI in securing debt and purchasing the Beacon Portfolio from Lone Star in 2017. 

Meridian Capital’s Abe Hirsch, Zev Karpel and Sean Anderson arranged the debt financing out of the firm’s New York headquarters. Capital One’s Michael Maidhof and Molly Steckler spearheaded the bank’s origination. 

“This transaction achieves several important objectives in reducing interest expense, extending interest-only for five additional years, and capitalizing on the competitive environment in the agency lending space,” Hirsch said in a statement.

Maidhof added that the new financing “will allow Harbor Group to further effectuate its business plan and continue to improve operations and cash flow at each of the properties.” 

The eight properties are located in Maryland, Virginia, and Pennsylvania, and comprise a total of 3,227 units, which range from studios to three-bedroom residences. 

The portfolio includes Braddock Lee Apartments in Alexandria, Va.; Cinnamon Run at Peppertree Farm, which counted as two properties in the deal, and Westchester West, both in Silver Spring, Md.; New Orleans Park Apartments in Secane, Pa., just southwest of Philadelphia; Ridley Brook Apartments in Folsom, Pa.; and Racquet Club East and Racquet Club South apartments in Levittown, Pa., between Trenton, N.J., and Philadelphia. 

The suburban apartment complexes feature in-unit amenities, such as washers and dryers and private patios and balconies, while each site has community offerings, such as playgrounds and swimming pools, as per Meridian.