Harbor Group International owns apartments across the U.S. and beyond. And last week it added to that total. The Norfolk, Va.-based investment and management firm closed on a seven-property portfolio in Central Florida.
For an aggregate purchase price of $164 million, HGI acquired:
- Emerald Pointe, 441 units, St. Petersburg
-Gates of Bradenton, 259 units, Bradenton
-Park Place, 372 units, Tampa
-Sailwind, 368 units, Winter Haven (Orlando)
-Villas at Deer Park, 172 units, Tampa
-Sweetwater Cove, 288 units, Tampa
-Somerset, 384 units, Tampa
“We’ve had a lot of success in the Central Florida market,” says Richard Litton Jr., HGI's president. “We’ve owned and sold a number of properties in Orlando and also previously owned in Tampa. We just feel good about the fundamentals and the markets where we bought the assets.”
When the deal closed on April 1, HGI upped its unit count in the Tampa, Orlando, and Jacksonville areas to about 3,700 units. According to Litton, a broker approached HGI with the deal and the company then negotiated with the seller, which couldn’t be disclosed.
Litton describes the communities as Class B, which is right where HGI wants to be. He says both the Tampa and Orlando markets have had strong job growth for people who are looking for Class B apartments. “It’s a market where we’d like to find more opportunities to buy more,” he adds.
The properties have had strong occupancy rates over the years, Litton says, and HGI has already begun investing $11.75 million into upgrades at each of the apartments. The work will focus on increasing the properties’ curb appeal, which should keep occupancy high, Litton notes, and lead to rent growth. The upgrades will take between six months and a year to complete.
Now that the portfolio has been purchased, HGI will look for the ideal time to sell its properties. “We like to buy portfolios where we can buy a nice clump of assets in a particular market and then sell them off on a one-off or a one-by-one basis over our hold period,” he says. “We rarely buy a portfolio and then turn around and sell the exact same portfolio. We may hold individual assets for a relatively short period of time, we may hold some of the assets longer.”
Purchasing large portfolios is something Litton and HGI are comfortable with. It has acquired several multi-property portfolios in the past three years, including a 12-property portfolio in Texas in 2014.
Central Florida will continue to be a priority for HGI, Litton says. “We’re an active buyer and seller so these continue to be focus markets for us. There’s nothing imminent in the pipeline in Central Florida but we will continue to underwrite transactions there and look at opportunities.”