(Mark your calendars: RealShare Apartments 2011, Oct.20 in Los Angeles)
NEW YORK CITY-Norfolk, VA-based Harbor Group International has teamed up with Great Neck, NY-based Jadam Equities LLC to acquire a distressed $31-million, 214-unit, four-building multifamily portfolio from a joint venture of Vantage Properties LLC and Apollo Real Estate Investors in Upper Manhattan, HGI president T. Richard Litton tells GlobeSt.com. The properties, according to Real Capital Analytics, include a $6-million, 54-unit complex at 610-618 W. 163rd St.; a $7-million, 56-unit building at 548 W. 164th St.; a 24-unit, $3-million building at 519 W. 143rd St.; and a 79-unit, $15.3-million complex at 3489-3499 Broadway.
Litton says HGI originally held a mezzanine loan position on the portfolio, which the international investment firm acquired in late 2007. HGI then purchased the principal amount of the mezz loan for just under $3.2 million. “We were there from 2007 until recently, we were just the mezzanine lender on the portfolio and Vantage was the equity partner, along with Apollo,” he says.
Shortly after, Litton says HGI purchased the mezzanine loan in partnership with Jadam Equities. “We were already joint venture partners on holding the mezzanine position, and now we are working together as the equity or the operators,” he says, explaining that the partners will divide their stake in the portfolio down the middle. “We have invested together in the past on a number of office building transactions,” Litton adds.
Going forward, the joint venture plans to renovate the units in the portfolio and allocate capital toward building improvements, though an exact amount hasn’t been determined. “The original plan of the sponsorship was to renovate the units as turnover occurred and to be able to ride an improving rental market,” Litton says. “We think that first and foremost we need to get in and get our arms around the day-to-day operations and do the capital that is necessary.”
Elsewhere in New York, HGI owns the $107-million 4 New York Plaza in Lower Manhattan and the $151 million Fashion Gallery building at 1412 Broadway and 39th St. in Midtown, according to RCA. In the multifamily arena, Harbor holds 108 properties in its portfolio nationwide, including 19 in Norfolk, VA, totaling $434 million in volume; 11 in Atlanta for $345 million; and seven in Baltimore, fetching $202 million, RCA data shows. HGI’s latest deal is its first major foray into Manhattan, Litton explained. “We are very bullish on the rental market on a long-term basis,” he says. “It could be a longer term hold period for us to achieve full value.”
On the Vantage side, it acquired the four-building portfolio with Apollo in February 2007 for approximately $33.8 million, RCA data shows. But as GlobeSt.com previously reported, Vantage has recently crossed the river to the Jersey side, acquiring AIG’s six-building central New Jersey multifamily portfolio, totaling 2,200 units for $241.5 million. It has also created a new subsidiary, Candlebrook, focusing on suburban rental properties.
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