CHICAGO—Private equity firm Harrison Street Real Estate Capital LLC said Thursday it had closed its sixth US opportunistic real estate fund with $1.15 billion in equity capital. In the market for less than a year, Harrison Street Real Estate Partners VI LP closed at a hard cap of $950 million, exceeding its $850-million target as well as the cap for Fund V, which closed in 2015. Harrison Street also raised $205 million of additional equity capital in co-investment vehicles for Fund VI, compared to $160 million for Fund V.
“As capital needs intensify at the top public universities and health systems—groups in need of flexible and innovative capital solutions—we are well positioned to leverage our longstanding relationships to solidify our role as the partner of choice for these institutions,” says Christopher Merrill, Harrison Street's co-founder, president and CEO. The firm specializes in the education, healthcare and storage sectors through its core and opportunistic funds, which target assets both in the US and in Europe.
“Our differentiated, disciplined and rigorous investment approach, and deep focus on resilient sectors driven by favorable demographic trends, has generated exceptional risk-adjusted performance across cycles for our investors,” Merrill says.” Moreover, our team, comprised of experienced investment professionals and operating partners who are also industry experts in our core sectors, provide unparalleled knowledge and insights that uncover unique investment opportunities.”
Existing Harrison Street investors provided approximately 70% of total committed capital for Fund VI, while a number of new investors from across the globe came on board as well. In total, more than 65 institutional investors committed to Fund VI. Harrison Street is targeting a 15% net IRR for the fund, PERE reported, citing data from the New Mexico Public Employees Retirement Association, one of Fund VI's investors.
Brought to market in the third quarter of 2016, Fund VI has already committed $310 million across 34 properties and 17 states, Harrison Street says. The firm has also been stepping up its game in the public-private partnerships space as well, having closed five deals with a combined value more than $405 million.
Since Merrill formed the company in partnership with Chris and Mike Galvin in 2005, Harrison Street has raised just under $10 billion through its commingled funds, and has invested $17.1 billion across 693 properties, including its $1.9-billion acquisition of Campus Crest Communities early last year. Over the same period, the firm has sold more than 300 assets for a total gross transaction value of $6.5 billion.
Last month, the firm added three asset management experts to work on its open-ended core vehicle, Harrison Street Core Property Fund, PERE reported. Launched in 2011, the $4.2-billion core fund focuses on income-producing properties that the company expects to hold for at least 10 years. Harrison Street believes it's the first of its kind to exclusively target stabilized properties in education, healthcare and storage.
This past April, for example, the fund acquired 15 storage properties across four states from Redondo Beach, CA-based Trojan Storage. Totaling 1.4 million square feet and 10,900 storage units, the portfolio traded at north of $100 million, according to PERE.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
