Harbor Group International, a privately owned international real estate investment and management firm, announced the close of its HGI Multifamily Credit Fund after raising $1.6 billion.
Among the largest commitments to the fund was $585 million from a longtime partner, CPPIB Credit Investments III, a wholly owned subsidiary of the Canada Pension Plan Investment Board, known as CPP Investments.
The fund seeks to invest in U.S. multifamily credit opportunities including senior mortgage loans, Freddie Mac K-series bonds, preferred equity and mezzanine debt investments, as well as investments in securitized multifamily mortgage products.
“The fund is uniquely positioned to build on HGI’s track record both as an investor in multifamily credit strategies and as a multifamily operator with a large national portfolio,” Richard Litton, president of Norfolk, Virginia-based HGI, said in a statement. “We also expect to benefit from the current rate environment as we seek to achieve positive returns for our investors.”
The capital raise strengthens HGI and CPP Investments’ five-year relationship. In 2020, CPP Investments served as the lead investor in HGI’s multifamily whole loan platform, committing $110 million at the time, and in 2019, CPP Investments committed $180 million to HGI’s Freddie Mac supplemental loan program.
“We continue to view multifamily credit investments as resilient assets that are well positioned to drive strong returns for the CPP fund over the long term,” Geoffrey Souter, managing director and head of real assets credit at CPP Investments, said in a statement.
In November, HGI Multifamily Credit Fund participated in HGI’s securitization through Freddie Mac of $153 million in multifamily loans. Part of Freddie Mac’s Q Certificate program introduced in 2014, the bonds are backed by eight multifamily loans on nine properties.
HGI has an investment portfolio of approximately $20 billion, including 59,000 apartment units in the United States and 5 million square feet of commercial space throughout the United States and United Kingdom.