On May 27, ACRE closed a $351 million loan facility for a joint venture of Harbor Group International, the Garrett Companies, and Telis Group. The capital refinances eight newly built suburban multifamily assets totaling 1,572 units across Colorado, Minnesota, Indiana, and Arizona.
Harbor Group International is a Norfolk-based real estate investment firm with a $30 billion portfolio. The Garrett Companies and Telis Group are its development partners on this 11-asset portfolio recapitalized in early 2025. The eight properties in this refinancing were delivered between 2024 and 2026.
Yisroel Berg, HGI's chief investment officer for multifamily, told Commercial Observer the refi "was essentially able to take out construction debt and give us some runway to fully stabilize these assets." Leasing occupancy ranges from 50 to 60 percent in some properties to 90 percent in others.
The portfolio includes the 225-unit Nash in Rosemont, Minnesota; the 226-unit Maverick in Greenwood, Indiana; the 324-unit Agave Ranch in Glendale, Arizona; and five Colorado properties: Stone Mesa Flats (158 units) and Citizen on Constitution (226 units) in Colorado Springs, Artifact Townhomes (128 units) and Lennox at Copperleaf (176 units) in Aurora, and Ara Townhomes & Flats (85 units) in Castle Rock.
Walker & Dunlop negotiated the financing. Its capital markets team included Aaron Appel, Jonathan Schwartz, Keith Kurland, Adam Schwartz, Dustin Stolly, Sean Reimer, Michael Ianno, Nicholas Gillhooley, Craig West, Kevin Walsh, and Holden Berry.
The loan replaces construction debt on assets that have not yet reached full stabilization. Occupancy below 60 percent at several properties means the portfolio is still absorbing lease-up risk. ACRE is betting on continued suburban rental demand and the sponsors' ability to push occupancy higher.
Suburban multifamily has been a favored institutional allocation since the pandemic. Remote and hybrid work patterns drove renters from urban cores to lower-density markets with better affordability. Colorado Springs, Greenwood, and Glendale fit that thesis: growing Sun Belt and Mountain West metros with strong job growth and constrained for-sale housing supply.
The $351 million facility is large for a single-asset or small-portfolio refi. ACRE, a New York-based lender, has been active in the multifamily space, but this deal tests its underwriting on a portfolio where lease-up is incomplete. The spread between 50 percent and 90 percent occupancy across properties creates a wide range of net operating income outcomes.
Construction debt carries higher interest rates and shorter terms than permanent financing. By refinancing now, the sponsors lock in a longer runway and likely lower cost of capital. The trade-off: ACRE takes on lease-up risk that a construction lender would have held for another 12 to 18 months.
This deal reflects a broader market pattern. Lenders are willing to refinance newly built multifamily if the sponsor has scale, track record, and equity in the deal. Harbor Group's $30 billion portfolio and institutional relationships provide that comfort. Smaller developers without such backing would struggle to get this done.
The eight properties are part of an 11-asset portfolio recapitalized in early 2025. The remaining three assets were not included in this refinancing. Their status is unclear, but the sponsors may be pursuing separate capital solutions or holding them for further lease-up before refinancing.
ACRE's willingness to lend $351 million on suburban multifamily signals confidence in the asset class. But the occupancy range is a reminder that lease-up risk remains real. If suburban demand softens or new supply floods these markets, the portfolio's cash flow could fall short of underwriting assumptions.
For now, the sponsors have replaced expensive construction debt with patient capital. The next 12 months will determine whether that capital was well placed. Leasing velocity at the 50-percent-occupied properties will be the metric to watch.