In one of the largest apartment portfolio deals ever, Harbor Group International purchased a 36-property multifamily portfolio for $1.8 billion from Aragon Holdings.
The acquisition is part of Aragon’s larger $2 billion sale of its entire multifamily portfolio, which totals 15,000 units spread across 12 cities and eight states.
According to Harbor Group, the blockbuster sale is the fifth largest apartment portfolio transaction in history and the largest multifamily deal since 2016. Aragon Holdings chose to sell the portfolio to a multifamily value-add focused firm, as it has shifted its focus away from the apartment sector and is now looking at commercial deals.
“We felt that, for our investors, this was a very good time to sell,” Larry Clark, Founder, Chairman & CEO of Aragon Holdings, told Multi-Housing News. “The market is at a high, and still projected to grow because of the strong demand for multifamily properties. These conditions make these properties especially suitable for a value-add operator, versus the buy-and-hold strategy that Aragon has followed.”
Clark added that his firm is looking at various asset categories in markets nationwide, but is not ready to announce more specifics.
Harbor Group CEO Jordan Slone said in prepared remarks that the acquisition is a “significant step” for the firm in its push to expand its footprint in high-performing markets.
The 13,243-unit portfolio was put together by Harbor Group over the last decade and is located mainly in the South and Sunbelt regions—spreading from Arizona to Florida. Most of the properties are in the Dallas/Fort Worth and Denver areas, with the rest in Houston, San Antonio, Atlanta, Orlando, Phoenix, Salt Lake City, Albuquerque, St. Louis and Kansas City, Mo. Each of the 36 properties averages 350 units and is located in suburban areas with easy access to transit.
Newmark Knight Frank represented the seller in the deal as well as the buyer for debt financing. The brokerage firm arranged approximately $1 billion of combined new financing, while $400 million of existing debt was assumed directly by Harbor Group. Meridian Capital Group was also an advisor to the seller in the deal. NorthMarq Capital represented Aragon Holdings for debt assumptions and defeasance.
Mega portfolio deals
Last summer saw a series of large portfolio trades and mergers by high-profile players in the multifamily sector. In July, Cortland agreed to acquire a Canadian multifamily REIT and its portfolio of more than 7,000 units for $1.2 billion, followed by Steadfast Apartment REIT’s acquisition of three affiliated REITs, creating a firm valued at $3.3 billion. Both deals included apartment communities in the Sunbelt regions of the country, which have continued to be a big draw for investors.
Meanwhile, Harbor Group has been an active player in both the multifamily and commercial markets over the past few months. Just last week, the firm closed on its purchase of a Class A office building in Jersey City, N.J., for $372 million, and sold a 396-unit community in suburban Atlanta, for $48 million.