Harbor Group Secures $1.6B in Commitments for Multifamily Fund
CPPIB Credit Investments III Inc. is the largest investor, with a $585 million contribution.
Harbor Group International’s Multifamily Credit Fund has secured approximately $1.6 billion in capital commitments, including a $585 million commitment from CPPIB Credit Investments III Inc., a wholly owned subsidiary of the Canada Pension Plan Investment Board.
The fund seeks to achieve attractive risk-adjusted returns by investing in multifamily credit opportunities in the United States including senior mortgage loans, Freddie Mac K-series bonds, preferred equity and mezzanine debt investments and investments in securitized multifamily mortgage products.
The commitment marks CPP’s third investment with HGI since 2019. In 2020, CPP Investments served as the lead investor in HGI’s multifamily whole loan platform by committing $110 million. The previous year, the firm committed $180 million to HGI’s Freddie Mac Supplemental Loan program.
Geoffrey Souter, managing director & head of real asset credit at CPP Investments, said in a prepared statement CPP Investments continues to view multifamily credit investments as resilient assets that are well positioned to drive strong returns for the CPP Fund over the long term. Calling HGI a market leader in the space, Souter said CPP Investments is pleased to extend the relationship with HGI in this new investment.
Richard Litton, president of Norfolk, Va.-based HGI, said CPP Investments is the lead investor for the Multifamily Credit Fund. He said in prepared remarks the fund is uniquely positioned to build on HGI’s track record both as an investor in multifamily credit strategies and as a multifamily operator with a large national portfolio. Litton said they expect to benefit from the current rate environment as they seek to achieve positive returns for the fund’s investors.
HGI and its affiliates control an investment portfolio of approximately $20 billion, including 59,000 apartment units in the U.S. and 5 million square feet of commercial space throughout the U.S. and United Kingdom. More than 80 percent of HGI’s portfolio is comprised of multifamily-related investments.
CPP Multifamily Investments
The capital commitment in HGI’s Multifamily Credit Fund is an expansion of CPP Investments’ multifamily investments in the U.S. multifamily sector in recent years. In February 2022, CPP Investments and LMC, a wholly-owned subsidiary of Lennar Corp., announced a joint venture to develop nearly $1 billion of Class A multifamily communities in high-growth metropolitan areas across the U.S. Both entities allocated $979 million in equity to the joint venture with CPP Investments owning a 96 percent stake and LMC owning the remaining 4 percent. The joint venture was seeded with five assets totaling 1,371 units in Boston, Miami and Denver. Future cities targeted by the joint venture included Seattle, Dallas and Austin, Texas.
CPP Investments formed a joint venture in December 2021 with Greystar Real Estate Partners to develop and acquire purpose-built single-family rental communities in the U.S. The partners allocated approximately $840 million in equity for the joint venture that planned to develop and acquire professionally managed rental communities of detached or semi-detached homes and townhomes with private garages and backyards. CPP Investments is the majority partner with a 95 percent stake. Greystar owns the remaining 5 percent and will manage the properties in the portfolio.