NORFOLK, VA-Days after the region saw a 2,000-plus unit multifamily portfolio trade, a similarly-sized deal has also closed: affiliates of Harbor Group International have contracted to purchase an eight-property, 2,508-unit multifamily portfolio, located in the Hampton Roads area of Southeast Virginia, for $165.9 million.

It has already closed on two of the properties from an affiliate of Great Atlantic, a Hampton Roads based apartment firm. The remaining properties will close in the coming weeks.
This is a value-add play for the firm, president T. Richard Litton Jr., tells GlobeSt.com. “We think these properties, with the proper capital upgrades, can be well positioned.” The company plans to invest an additional $11 million, or approximately $4,300 per unit, in improvements. The portfolio traded at cap rate slightly over 8%, he adds.

Don’t let the pricing fool you, though, says Cushman & Wakefield’s Drew White, who, along with the firm’s Mike Marshall, represented the seller of the property. “This was a very complicated transaction in that the financing wasn’t new and there were five different lenders. An 8% cap on an all-cash deal is a lot different than a deal with an 8% cap where the constant on debt is over 8%,” he tells GlobeSt.com.

“Harbor Group paid a fair yet aggressive price for the portfolio that was predicated on the financial engineering, which they are going to do by both adding value to the properties and eventually restructuring the loans,” White concludes. Litton declined to comment on additional acquisition plans the company has, other than to say “we are far from done for the year.”

Properties in the portfolio include Bancroft Hall, a 244-unit apartment community in Virginia Beach; Chase Arbor, a 430-unit multifamily in Virginia Beach; the 300-unit Pembroke Lake in Virginia Beach; Newport News-based Auburn Chase, a 272-unit community; Heatherwood, a 232-unit apartment community in Newport News; Hampton Center, a 418-unit apartment community in Hampton; the Oaks, a 300-unit apartment community in Norfolk; and the Birches, a 312-unit apartment community in Chesapeake.