Harbor Group International Secures $180M Investment
The loan commitment from CPPIB will support the firm’s Freddie Mac KJ Program.
NEW YORK–Harbor Group International has secured a $180 million investment commitment from CPPIB Credit Investments, a subsidiary of Canada Pension Plan Investment Board, to support Freddie Mac’s Supplemental Loan or “KJ” program.
The investment into HGI’s Freddie Mac structured debt investment platform will provide CPPIB additional access to the multifamily real estate sector in the US.
CPPIB, HGI affiliates and HGI third party investors will collectively invest an estimated $250 million into the Class B section of the KJ program. Specifically, HGI has been granted the rights to purchase the B-piece for any securitized fixed-rate supplemental loan pools completed by Freddie Mac, when the underlying senior loan has been securitized into certain fixed rate K-Deals closed in 2015, 2016 and 2017.
In KJ24, HGI’s most recent supplemental loan B-piece purchase from Freddie Mac, CPPIB took a 31% stake in HGI’s $64 million subordinate Class B tranche. CPPIB will now acquire 80% of the subordinated Class B tranche in all future KJ series securitizations in which HGI will be Freddie Mac’s designated investor, until an aggregate $180 million investment is made in the Class B tranches of the KJ program.
As one of the largest worldwide investors in Freddie Mac B-pieces, HGI has completed 23 investments in Freddie Mac B-Piece securitizations and other Freddie Mac structured debt investments since June 2015, representing a principal balance of $1.9 billion at purchase.
Canada Pension Plan Investment Board is a global investment management organization, which invests unneeded funds of the Canada Pension Plan to pay benefits for 20 million contributors and beneficiaries. Governed and managed independently by the Canada Pension Plan, the organization is headquartered in Toronto, Canada. The CPP fund totaled C$400.6 billion in June of 2019.
Harbor Group International LLC is a private international real estate investment and management firm, which holds a portfolio of assets valued at $9.1 billion. Headquartered in Norfolk, VA, the firm’s real estate holdings include 31,300 apartment units and 3.6 million square feet of commercial property space.