Harbor Group International Sells Kansas City Asset for $82M

Berkadia’s Mid Markets Group handled the complicated closing for the 807-unit multifamily property.
Coach House. Image courtesy of Berkadia

Six months after acquiring Coach House, an 807-unit apartment community in Kansas City, Mo., as part of a blockbuster $1.85 billion, 36-property portfolio deal, Harbor Group International has sold the multifamily asset for $81.5 million to an unidentified private buyer from San Francisco.

Richard Litton, Jr., president of HGI, a privately-owned international real estate investment and management firm, said in prepared remarks Coach House was identified early on as prime candidate for disposition because it was outside the company’s geographic focus. The company owns more than 13,240 apartment units mainly in the South and Sunbelt regions. He said the pricing on the sale, arranged by Berkadia’s Mid Markets Group, exceeded initial projects and they were very pleased with the transaction.

The property, located at 655 E. Minor Drive, features one-, two- and three-bedroom floorplans with community amenities including a swimming pool and tennis court. It’s close to Minor Park Golf Course and Interstate 435. HGI noted the Kansas City market has seen significant growth in the technology sector and is known as “The Silicon Prairie.”

Coach House was included in the Sunbelt Portfolio acquisition in January from Aragon Holdings, which was selling its entire multifamily portfolio of 15,000 units across eight states. It was the fifth largest apartment portfolio transaction in history and the largest multifamily deal since 2016. With a total of four assets in the Kansas City region, the portfolio sale also placed Kansas City as one of the top 5 Midwestern markets for multifamily transactions in the first quarter of 2020.

In addition to Coach House, the other area properties in the Aragon Holdings deal were the 550-unit Mansion, 322-unit Timber Lakes and 274-unit Fairways assets, all located in suburban zones. HGI noted it plans to continue executing individual investment plans for each property in the Sunbelt Portfolio, tracking market conditions and selling on an asset by asset basis when the timing is right.

Closing the Deal

The Berkadia Mid Markets Group closed the transaction on behalf of HGI. The team was led by Senior Managing Director Alex Blagojevich, Managing Director Michael Sullivan, Director Brett Meinzer and Associate Director Dominic Martinez. Berkadia also worked with the unidentified buyer who had to recapitalize multiple assets in order to purchase the property. Berkadia completed several transactions for the buyer including bank refinances, a preferred equity investment and an agency refinancing so the buyer could access the necessary amount of capital for the acquisition of Coach House.

Blagojevich noted the complicating factors made the closing more difficult than usual, including dealing with the pandemic which hit almost immediately after the parties went under contract. He said accessing the equity became even more complicated because both lender and investor guidelines changed almost overnight. He credited the full team for overcoming the challenges and noted they were able to preserve the original terms throughout the process and closing.