NEW YORK, Harbor Group International, LLC (HGI), a privately-owned international real estate investment and management firm, today announced that it has secured a $180 million investment commitment from CPPIB Credit Investments Inc., a subsidiary of Canada Pension Plan Investment Board (CPPIB), to support Freddie Mac’s Supplemental Loan, or “KJ” program.
CPPIB, a C$400.6 billion global investment management organization, together with HGI affiliates and HGI third party investors, will invest an estimated $250 million into the subordinated class B tranche of certain future Freddie Mac supplemental loan securitizations, known as the KJ series. HGI has been granted the exclusive rights to purchase the B-piece for any securitized fixed rate supplemental loan pools completed by Freddie Mac in situations where the underlying Freddie Mac senior loan was securitized into certain fixed rate K-Deals closed in 2015, 2016 and 2017.
In HGI’s most recent supplemental loan B piece purchase from Freddie Mac, KJ24, which closed in June, CPPIB took a 31% stake in HGI’s approximately $64 million subordinate class B tranche. For future KJ series securitizations in which HGI will be Freddie Mac’s designated investor, CPPIB will acquire 80% of the subordinated class B tranche until they have made an aggregate $180 million investment in the class B tranches of the KJ program.
“We are thrilled to partner with CPPIB as our lead investor for our KJ investment program and look forward to opportunities to grow the relationship,” said Richard Litton, President of Harbor Group International. “We continue to see strong investor demand, including demand from institutional investors, for our Freddie Mac structured debt investment platform.”
HGI, one of the largest worldwide investors in Freddie Mac B-pieces, has completed 23 investments in Freddie Mac B-Piece securitizations and other Freddie Mac structured debt investments since June 2015, representing a collective principal balance of approximately $1.9 billion at purchase.
“This investment in the Freddie Mac KJ program gives CPPIB additional access to the strong underlying fundamentals of the multifamily real estate sector in the United States. We look forward to working closely with HGI, a large and experienced owner and operator of U.S. multifamily,” said Geoff Souter, Managing Director & Head of Real Assets Credit, CPPIB.
About Harbor Group International
Harbor Group International, LLC, including its affiliates, is a private real estate and real estate related investment and management firm which controls a portfolio of worldwide assets valued at $9.7 billion. HGI is headquartered in Norfolk, Virginia with offices in New York, Baltimore, Los Angeles and Tel Aviv. The company’s real estate holdings include 3.6 million square feet of commercial properties and 33,000 apartment units. For additional information, please visit www.harborgroupint.com.
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits in the best interest of 20 million contributors and beneficiaries. In order to build diversified portfolios of assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan. At June 30, 2019, the CPP Fund totaled C$400.6 billion. For more information about CPPIB, please visit www.cppib.com.