Rent Collection Is Down, and Apartment Owners Feel the Squeeze (Wall Street Journal)

The apartment business has weathered the Covid-19 pandemic better than most of the real-estate sector. That is starting to change...

Developers of new apartment buildings look even more vulnerable right now, having to fill units when many renters left large cities to buy homes or find cheaper apartments. Some investors see an opportunity in giving these troubled builders short-term, high-cost financing, to keep their operations afloat until the pandemic ends.

One is Harbor Group International LLC. The Norfolk, Va., investment firm, with about $13 billion of assets under management, has raised $245 million in equity for a loan fund, counting the Canada Pension Plan Investment Board among its investors. With leverage, the fund will be able to make loans totaling $900 million to $1 billion.

The Harbor fund is completing a loan to a developer that finished construction of a 200-unit project in late 2019. "In March 2020, they started signing leases and then the whole world stopped," said Harbor's president, Richard Litton Jr. "Now their construction loan is maturing, and they're at [only] 65% occupancy."

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Harbor Group International controls $19 billion1 in real estate investments and is constantly exploring real estate investment opportunities in the worldwide market.