Harrison Street's latest fund lands $200m first close

The Chicago-based real estate firm has also made its first acquisition on behalf of its open-ended property fund targeting assets within the education, healthcare and storage markets.

Harrison Street Real Estate Capital's new open-ended US property fund targeting properties within the education, healthcare and storage markets has landed its first close. Additionally, the Chicago-based private equity real estate firm has already made its first acquisition on behalf of the new vehicle, Harrison Street Core Property Fund.

According to the firm, Harrison Street Core Property Fund has closed on more than $200 million in commitments in December 2011. Early investors include the Texas Municipal Retirement System and the Kentucky Retirement Systems.

Launched in November 2011, Harrison Street's latest property fund will seek to acquire stabilised, income-producing properties across the US in the student housing, senior housing, medical office and storage segments of the market. The fund will cap its leverage at 40 percent across the portfolio and is seeking gross IRRs of 9 to 10 percent, of which 7 to 8 percent is expected to be generated from current income.

Christopher Merrill, co-founder, president and chief executive officer of Harrison Street said in a statement: “The launch of the Core Fund is a logical extension of our firm's investment products given our expertise and operating partner network established through our opportunity fund business that owns more than 200 assets in these segments.”

In December, Harrison Street made its first acquisition on behalf of the fund: an off-market purchase of Sterling Central Apartments, in Orlando, Florida. The 1,527-bed purpose-built student housing community is located adjacent to the University of Central Florida in Orlando. The asset, which includes two 3,000 square foot clubhouses, is currently 98 percent occupied. The closing price was not disclosed.

“We believe that we will be able to generate attractive absolute and relative returns primarily focussed on current income coupled with long term appreciation from owning stabilized education, healthcare and storage assets,” said the fund's portfolio manager Joey Lansing.

Harrison Street owns approximately $3.1 billion in real estate assets on behalf of its three funds: Harrison Street Real Estate Partners I, II and III, and the Core Fund. This includes about 19,000 student housing beds, 5,200 senior housing and assisted living units, 1.2 million square feet of medical office space and 64,000 self-storage units. In June 2011, Harrison Street Real Estate Partners III closed on $600 million in capital. Fund III is currently more than 75 percent committed to investments either closed or poised to close in 2012.