CPP Investments Funnels Money into Harbor Group International to Target U.S. Multifamily Credit
Posted on 01/28/2023
Norfolk, Virginia-based Harbor Group International, LLC, and its affiliates control an investment portfolio of approximately US$ 20 billion, including 59,000 apartment units in the United States and 5.0 million square feet of commercial space throughout the United States and the United Kingdom. Harbor Group International announced that its Multifamily Credit Fund secured a total of approximately US$ 1.6 billion in capital commitments, including a US$ 585 million commitment from CPPIB Credit Investments III Inc., a wholly-owned subsidiary of the Canada Pension Plan Investment Board (CPP Investments). The commitment marks CPP Investments’ third investment with Harbor Group International since 2019.
Harbor Group International Multifamily Credit Fund seeks to achieve attractive risk-adjusted returns by investing in U.S. multifamily credit opportunities including senior mortgage loans, Freddie Mac K-series bonds, preferred equity and mezzanine debt investments, and investments in securitized multifamily mortgage products.
In 2020, CPP Investments served as the lead investor in HGI’s multifamily whole loan platform, committing US$ 110 million, and in 2019, CPP Investments committed US$ 180 million to HGI’s Freddie Mac Supplemental Loan program.
Some of Harbor Group International’s investments in its Mezzanine Debt & Preferred Equity platform include:
Freddie Mac KX-02 Subordinate Debt, Original Tranche Size US$ 82.97 million
Freddie Mac KF-17, Subordinate Debt, Original Tranche Size US$ 89.90 million
Freddie Mac KF-13, Subordinate Debt, Original Tranche Size US$ 65.69 million
Freddie Mac KF-10 Subordinate Debt, Original Tranche Size US$ 109.27 million
Freddie Mac KF-08 Subordinate Debt, Original Tranche Size US$ 116.16 million
Atlantic Heights Multifamily Mezzanine Loan, Investment US$ 5.6 million
Central CT Portfolio Multifamily Preferred Equity, Investment US$ 7.2 million
Atlanta Portfolio Multifamily Preferred Equity, Investment US$ 8.97 million
Solaire Apartments Multifamily Mezzanine Loan, Investment US$ 6.5 million
(9 Properties) Washington Heights Portfolio Multifamily/Retail via Mezzanine Loan / Common Equity, Investment US$ 30 million
(38 Properties) Bronx Multifamily Portfolio Multifamily/Retail via Mezzanine Loan / Common Equity, Investment US$ 25 million
(2 Properties) The Meadows Office Mezzanine Loan, Investment US$ 12 million
Freddie Mac
Freddie Mac Multifamily is a major issuer of agency-guaranteed structured multifamily securities. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.
