An affiliate of Harbor Group International (HGI), which is based in Norfolk, Va., recently purchased a $1.85 billion portfolio of apartment communities from Aragon Holdings. The investment includes 36 properties with 13,243 units in states stretching from Arizona to Florida, including Texas, Colorado, Arizona, Missouri, and Georgia. It is said to to be one of the nation's largest apartment portfolio sales.
“As HGI grows, we continue to seek out larger and more complex deals,” said HGI president Richard Litton Jr. “The properties in this portfolio are well located in primary and strong markets across the country, and we believe there is significant value-add potential to increase rents to market.”
Aragon, which is based in Los Angeles, is divesting itself of all of its value-add holdings, believing the time is right to get out. “We decided to sell our portfolio because we recognized that, in the present market conditions, the properties would have the greatest value in the hands of a ‘value-add’ operator,” said Aragon founder and CEO Larison Clark. “Harbor Group targets value-add opportunities, making this an ideal transaction for both firms.”
Newmark Knight Frank represented Aragon and arranged debt financing for HGI. NorthMarq Capital represented Aragon for debt assumptions and defeasance. Meridian Capital Group also advised Harbor Group.
HGI is bullish on renovations and has big plans for the massive portfolio. “We’re very pleased to have landed this deal with Aragon and look forward to investing in other value-add opportunities that provide attractive returns for our investors,” said Litton. “HGI plans to invest approximately $89.3 million into the portfolio for a capital improvement and enhancement plan, or $6,745 per unit.”
According to The Wall Street Journal, the portfolio is centered on two- to three-story, garden-style configurations that are 95% occupied and have monthly rents of about $1,010. HGI also is scheduled to “put about $580 million of equity into the purchase. New or assumed debt made up the balance of the deal’s $1.85 billion price.”