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Harbert raises $209m for debut senior housing fund

Two former Fortress Investment Group executives are leading the Birmingham, Alabama-based investment firm’s efforts in the new strategy.

Harbert Management Corporation has wrapped up fundraising for its first senior housing vehicle, the firm said Monday.

The Birmingham, Alabama-based investment firm closed Harbert Seniors Housing Fund I, its first sector-specific real estate fund, on $209 million, including co-investment capital. HMC launched the value-added vehicle in November 2015, according to a filing with the Securities and Exchange Commission.

Brian Landrum and Trent Johnson lead the firm’s senior housing strategy. Both joined HMC in 2015 from Fortress Investment Group, the New York-based investment management firm, where they were managing directors.

“Having successfully raised a pool of discretionary capital puts us in an excellent position to continue to build a high-quality portfolio of seniors housing properties,” Johnson said in Monday’s statement.

The firm has deployed $103 million of HSHF I’s capital in seven transactions, totaling 24 properties. Its most recent senior housing acquisition was the June purchase of two properties, a 69-unit building in Albuquerque, New Mexico and a 64-unit building in Wheat Ridge, Colorado, for an undisclosed price from Denver-based developer Confluent Development, according to data provider Real Capital Analytics.

Across its fund series, the firm is targeting a mid-teens net internal rate of return, a source with knowledge of the fundraising said. HMC is currently in the market with its latest US fund, and has corralled $346 million against a $500 million target for Harbert United States Real Estate Fund VI, according to PERE data. The firm is now investing Harbert European Real Estate Fund IV, a €500 million vehicle. Unlike its European and US funds, HMC expects about 50 percent of HSHF I’s returns to come from cashflow.

Investors in HSHF I are similar to those in the firm’s value-added series, with a minority of high-net-worth individuals and a mix of largely domestic institutional sources, including insurance companies, pension plans and one endowment.

HMC manages $5.1 billion across real estate, growth equity, credit, power and hedge funds, of which $2.4 billion is held in its real estate funds, according to Monday’s statement.