CPPIB commits to HGI's Freddie Mac structured debt investment platform

The credit investment arm of Canada Pension Plan Investment Board (CPPIB) has committed $180m (€163m) to Harbor Group International’s (HGI) Freddie Mac structured debt investment platform

Real estate investment firm Harbor Group said the lead investor CPPIB Credit Investments, together with HGI affiliates and HGI third party investors, will invest $250m into the subordinated class B tranche of certain future Freddie Mac supplemental loan securitisations, known as the KJ series.

HGI said it has been granted the exclusive rights to purchase the B-piece for any securitised fixed rate supplemental loan pools completed by Freddie Mac in situations where the underlying Freddie Mac senior loan was securitised 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, which closed in June, CPPIB took a 31% stake in HGI’s $64m subordinate class B tranche.

For future KJ series securitisations 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 $180m investment in the class B tranches of the KJ program, it said.

Richard Litton, president of Harbor Group International, said: “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.

“We continue to see strong investor demand, including demand from institutional investors, for our Freddie Mac structured debt investment platform.”

Geoff Souter, managing director and head of real assets credit, CPPIB, said: “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 US.

“We look forward to working closely with HGI, a large and experienced owner and operator of US multifamily.”

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