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Harbor Group International: Investing in Denver Apartments for $132M

CEO Khai Intela
Investors are increasingly drawn to the promising U.S. multifamily market, as evidenced by a recent nine-figure deal in the Denver area. Harbor Group International (HGI), a prominent commercial real estate owner, lender, and developer, has...

Investors are increasingly drawn to the promising U.S. multifamily market, as evidenced by a recent nine-figure deal in the Denver area. Harbor Group International (HGI), a prominent commercial real estate owner, lender, and developer, has acquired two newly constructed apartment complexes in Denver for a total of $132.5 million. This marks HGI's first national asset acquisition in 2024 and adds to their portfolio of multifamily properties in the Denver area, bringing the total to 10. In 2023 alone, HGI invested $891.5 million in acquiring 13 multifamily properties. The move demonstrates the company's confidence in the local market.

A Shifting Multifamily Market

The Denver purchases align with the evolving trends in the multifamily market, both nationally and locally. Financing uncertainties that emerged during the pandemic have stabilized in recent months, paving the way for increased deal activity. Data from CBRE, a reputable brokerage, indicates a growing consensus between buyers and sellers regarding the valuation of apartment assets. Simultaneously, the construction of new apartment buildings, which had previously tempered rent growth, is now leveling off. While more apartments entered the Denver market in the third quarter of 2023 than ever before, experts believe that this surge represents a peak. Consequently, the supply of new units is expected to decrease, leading to a higher demand-supply imbalance that favors landlords like HGI.

Favorable Market Conditions for Landlords

Several factors contribute to the current favorable conditions for landlords in the multifamily sector. Mortgage rates remain relatively high compared to two years ago, placing homeownership out of reach for many individuals. Consequently, there is increased competition for rental properties, driving up demand. Institutional buyers, including HGI, are capitalizing on this opportunity by acquiring large portfolios of homes for rental purposes. According to Jordan Slone, HGI's chairman and CEO, multifamily fundamentals are expected to strengthen significantly in the second half of 2025 and into 2026 as the absorption of new construction takes place.

The Denver Apartment Deals

HGI's recent acquisitions include the Prospector Modern, a 238-unit apartment complex located in Castle Rock, a suburb of Denver. As of 2024, the complex was 86.1% occupied. The Prospector Modern offers one-bedroom units starting at $1,855 per month and is strategically positioned within a 25-minute drive from the Denver Tech Center, a prominent business hub in Colorado.

The second property, Ladora Modern, is situated in Denver proper and is just a 10-minute drive from the city's airport. With 196 apartments, Ladora Modern achieved an 84.7% occupancy rate in 2024. One-bedroom units in Ladora Modern are available starting at $1,795 per month. Notably, Denver's average effective rent in the fourth quarter of 2024 stood at $1,902, according to CBRE.

Both apartment complexes offer a range of amenities expected in higher-end properties, including in-unit washer-dryers, pet spas, fitness centers, pools, and even garages in some cases.

The Deal Execution

The seller of the Prospector Modern and Ladora Modern, believed to be the developer the Garrett Companies, was represented by a CBRE multifamily team based in Denver. The acquisition financing was also arranged by a CBRE team, involving professionals from New York and Denver. Unfortunately, the seller's name remains undisclosed at this time.

Conclusion

HGI's strategic investment in Denver's multifamily market exemplifies the growing appeal of such properties among investors. With changing market dynamics and favorable conditions favoring landlords, HGI's acquisition of the Prospector Modern and Ladora Modern is just the beginning of their foray into the Denver apartment market. As demand continues to outpace supply, multifamily fundamentals are set to strengthen in the coming years, making investments in this sector even more appealing.

The Prospector Modern The Prospector Modern. Photo: HGI

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