Harbor Group Spends $100M on Florida Multi-Family Portfolio

Harbor Group International has made another multi-family purchase, snapping up a three-property apartment portfolio in three Florida markets for a total of $99.7 million - a purchase price of approximately $4,000 per unit.

By Gail Kalinoski, Contributing Editor

Serramar in Ft. Lauderdale

Harbor Group International L.L.C. has made its third multi-family purchase within the past year, snapping up a three-property apartment portfolio in three Florida markets for a total of $99.7 million.

The acquisition of the portfolio reflects HGI’s strategic decision to expand our investment and operational presence in major Florida markets, said T. Richard Litton Jr., HGI’s president. All three of the assets are located in stable, high traffic submarkets and are well positioned to benefit from improving apartment fundamentals in south Florida and Orlando, particularly upon completion of our capital improvement program.

Litton said the Norfolk, Va.-based private real estate and management firm is spending nearly $5 million or about $4,000 per unit, in various exterior and upgrades at the three apartment communities. HGI acquired 302 units at Serramar in Fort Lauderdale; 444 units in West Palm Beach and 472 units at Island Club in Orlando. CBRE Group Inc. represented the unidentified seller of the portfolio.

The acquisition comes less than a month after HGI announced one of its affiliates had purchased ownership interest in The Villages at Morgan Metro, a 1,242-unit rental community in Landover, Md. The complex in Prince George’s County has 699 townhomes, 77 duplexes and 466 garden-style apartments and is located across from a Metro station and near the I-95/495 Capital Beltway. Harbor Group Management Co. will manage the property and be responsible for a major capital improvement program being funded by a $130 million senior loan facility arranged by JP Morgan Chase.

HGI acquired a 1,984-unit portfolio of six multi-family properties in Baltimore for $190.1 million in late July. Jones Lang LaSalle brokered the deal and told Commercial Property Executive at the time that the portfolio had attracted interest because of its size and the area’s growing federal government presence and diverse private sector tenant base.

Another large multi-family acquisition occurred in spring 2011, when an HGI affiliate bought an eight-property portfolio in the Hampton roads area of southeast Virginia for $165.9 million. The company invested about $11 million in improvements to the 2,508 rental apartments.

HGI has also been active in Florida for the past several years, picking up a 276-unit property in the Tampa Bay-St. Petersburg region for $19.5 million in June 2011. The previous year, HGI or its affiliates purchased multi-family properties in Orlando and Miami.

Second quarter 2012 apartment research market reports from Marcus & Millichap bolster HGI’s choices for its latest multi-family acquisition. The local market reports for Broward and Palm Beach counties and Orlando note there has been a solid recovery occurring in the apartment markets in those parts of Florida. The report on investments in the Orlando area market notes, Deal flow is surging and competition continues to intensify, with more offers on listings now than at any time since the economic downturn took hold. The reports note that rents are on the rise as tenant demand increases and the supply is limited due to minimal construction.

Despite the current lull in construction, Class A stock in (Broward County), and across the south Florida region, appears certain to increase over the next three years, according to the Broward County Apartment Research Market Report from Marcus & Millichap.

HGI, which also has offices in New York City, Chicago and Tel Aviv, controls a worldwide portfolio valued at more than $3.2 billion. Its real estate holdings include over 9 million square feet of commercial space and approximately 21,000 apartment units.