Harrison Street JV buys NY senior housing portfolio for $380m

The Chicago-based real estate firm has teamed up with a developer to purchase seven Class A senior housing properties located throughout Long Island on behalf of its core open-ended vehicle.

Harrison Street Real Estate Capital has formed a joint venture to purchase seven Class A senior housing properties located throughout New York’s Nassau and Suffolk counties for approximately $380 million. The acquisition was completed on behalf of the Harrison Street Core Property Fund, the firm’s core open-ended vehicle, with a combination of equity and the assumption of existing debt from Freddie Mac.

According to a statement from the Chicago-based real estate investment firm, Harrison Street formed a joint venture with Long Island, New York-based real estate development and management firm Engel Burman Group, which originally developed the assets, to buy the portfolio from a venture led by Chartwell Retirement Residences. Engel Burman made a significant equity investment in the joint venture and will continue to manage the properties. 

Christopher Merrill, Harrison Street’s president and chief executive officer, said in a statement: “We are excited to not only be able to acquire such a portfolio in high barrier to entry markets, but also to form a joint venture with Engel Burman.” Harrison Street and Engel Burman also will partner on additional opportunities.

The seven assets collectively comprise a total of 1,047 beds, 80 percent of which are assisted living and the balance are dedicated to patients with memory care needs. Across the portfolio, residents pay an average of approximately $4,200 per month to rent assisted-living units and $5,500 for memory care units. 

The newest asset in the portfolio, The Bristal at East Northport, includes 100 assisted-living units and 32 units for residents with memory care needs. The newly constructed project, which is located in a strong demographic, in-fill area with a large and growing senior population, was opened in 2012 and already is fully leased.

Engel Burman president Jan Burman added: “This acquisition safeguards our local market share and strategically situates our company for future regional growth.”

In explaining why the firm believes the senior housing asset class will deliver strong fundamentals, Harrison Street principal Michael Gordon said: “The US population continues to age. In fact, the 70 year-old -plus population that uses facilities like The Bristal is expected to grow by 3.7 million by 2015 and continue to grow. 2020 is the first year that the oldest of the Baby Boomer generation reaches 75 years of age.”

Launched in December 2011, Harrison Street’s Core Property Fund focuses on investments in education, health care and storage real estate that produce current and consistent income over an anticipated longer hold period. The core vehicle now owns 19 assets with a gross real estate value of approximately $800 million.