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Harbor Group buys multifamily portfolio in Long Beach for $180M
Firm anticipates “steady rent growth” in 348 units
Harbor Group International has moved ahead with apartment acquisitions in Long Beach in spite of rising multifamily cap rates and the Federal Reserve’s decision to further hike interest benchmarks.
The investment firm bought three multifamily complexes in Long Beach totaling 348 units for $180 million, or $517,000 per unit, according to a Thursday announcement.
The three apartment complexes are located within a few blocks in Downtown Long Beach, at 230 West 3rd Street, 101 Alamitos Avenue and 434 East 4th Street.
All three buildings were developed and previously owned by Irvine-based development firm Sares Regis, which bought the land for the sites in 2016 for roughly $14 million, public property records show.
Low interest rates and soaring rental rates over the last two years have propelled investors to buy apartment buildings. Total multifamily investment reached $374 billion in the most recent March-to-March 12-month period, according to a report from CBRE. During the first quarter, total investment in the sector was 56 percent higher than the previous year’s first quarter.
Harbor Group alone bought 105 properties in 2021, compared to 70 the firm purchased in 2020 and 36 in 2019, according to its website.
But, with the Fed’s recent rate hikes, it has become more expensive to obtain financing, and cap rates — used to measure rates of return and risk — have started to rise, prompting some investors to refrain from purchases.
Still, investors could make up for the increased cost of capital with more income if rents continue to rise.
Average rent for a one-bedroom unit in Long Beach is currently $1,795 per month, according to Zumper, up from $1,600 in July of last year.
“We see significant opportunity for operational upside with this transaction, anticipating high occupancies and steady rent growth,” Harbor Group’s managing director, Greg Heller, said in a statement.
The deal came just days after the firm teamed up with Azure Partners to buy a 617-unit garden-style apartment complex in Westchester, New York, for $306 million, or about $496,000 per unit.