KKR Lends $364M on HGI’s Workforce Housing Portfolio Acquisition

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KKR provided a $364 million loan for Harbor Group International’s (HGI) $475 million acquisition of Dasmen Residential’s workforce housing portfolio, Commercial Observer has learned. 

Newmark‘s Henry Stimler and Bill Weber arranged the fixed-rate, five-year financing on behalf of HGI. Newmark’s Dean Smith, John Heimburger and Jason Kon led the sale. 

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“The interest from investors regarding the housing market in the Carolinas has grown to be on par with other gateway markets across the nation in terms of the amount of capital deployed to the region,” Kon said in a statement. “This was a strategic opportunity for HGI to continue to grow their North Carolina presence in a singular transaction giving them access to the coveted Research Triangle [Park] area.”   

The portfolio spans 2,356 units of housing across four communities in Durham, three communities in Raleigh and one in Charlotte. The portfolio’s proximity to the Research Triangle from the Durham and Raleigh locations meets the housing needs of the area’s research universities and science, technology, engineering and math (STEM) companies. 

“We worked tirelessly for the success of these assets in North Carolina and have a great deal of respect for HGI, and we’re confident they will continue to be good stewards of the community,” said Michael Katz, CEO of Dasmen, in a statement. 

According to Newmark’s research, in 2021, the Southeast saw 30.7 percent of investor allocation to multifamily opportunities. This was the highest level of investment of any region, with more than $103 billion invested in the area last year. 

“In addition to the stellar fixed-rate loan we were able to secure for HGI, this financing will also include future funding of all of the firm’s budgeted capital expenditures budget as they work to upgrade the assets,” Stimler said. “Securing the financing as required by HGI to take over this portfolio did pose some challenges; however, we were lucky to find the right lender that understood HGI’s vision for the assets and delivered spectacular results.” 

The new workforce housing portfolio puts the total number of units under HGI’s management in North Carolina to nearly 5,000 apartments. The firm plans to invest approximately $21.9 million to renovate one-fourth of the interior units across the properties.

Emily Fu can be reached at efu@commercialobserver.com.