Senior management

Private equity real estate firm Harrison Street is working with Kaplan Development to acquire and develop $350 million (€248 million) worth of senior housing properties.

The firm's interest in the sector is fueled by the demographic trends in the US, where baby boomers are retiring, according to Christopher Merrill, co-founder and managing director of Harrison Street. “You can't get away from that momentum,” he said, adding that new construction has slowed and less supply is being added.

The new joint venture was launched with the recapitalization of six senior housing properties located in New Jersey, Pennsylvania, Delaware and Georgia. The properties are comprised of 540 units and include independent living, assisted living and memory care units in Philadelphia and Harrisburg, Pennsylvania; Savannah and Atlanta, Georgia; and Princeton, New Jersey.

“Glen [Kaplan, the founder of Kaplan Development] has already built a portfolio and taken it public,” Merrill said. Kaplan began investing in senior living properties in 1970, eventually establishing assisted living company Senior Quarters. Merrill added that the firm seeks to continue aligning itself with the leading operators and developers in the senior living space.

While the joint venture with Kaplan will focus on opportunities on the East Coast, Harrison Street has invested in senior living facilities across the US, including a portfolio of properties in Minnesota and a property in Florida.

The firm has committed $100 million in equity to the venture, Merrill said, which comes out of the firm's debut fund, Harrison Street Real Estate Partners I, which closed this spring on $210 million. The fund is focusing on niche plays like student living, self-storage and marinas, in addition to investments in senior living.

“It's significantly invested,” Merrill said of the fund, adding that it has acquired more than 50 assets.

Harrison Street was founded in 2005 by Merrill, formerly a partner at Chicago-based private equity real estate firm Heitman, and the Galvin family of Chicago, the founding family of Motorola. Kaplan Development Group operates 14 senior communities in the US and currently has seven new senior housing projects under development.

Senior living centers in the US have become increasingly popular with private equity real estate firms. Earlier this summer, Westport Capital and Reichmann Healthcare acquired a controlling interest in Wellington Healthcare Services, a healthcare provider based in Roswell, Georgia that owns 11 long-term care and senior living centers in the Southeast US.

Last year, The Blackstone Group formed a joint venture with Seattle-based Emeritus Corporation, which owns and operates senior living facilities, to acquire 25 assisted living facilities and one skilled nursing facility throughout the US for $190 million.

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