By Scott Baltic, Contributing Editor<\/p>\n
Harrison Street Real Estate Capital has completed the $520 million acquisition of a seniors housing portfolio of 11 properties located in the Northeast, the company announced on Wednesday. The properties are in metro Baltimore; metro Boston; Philadelphia; Staunton, Va.; and Newport, R.I.<\/p>\n
The seller was a joint venture of The Shelter Group and its Brightview Senior Living affiliate, a Harrison Street spokesperson told Commercial Property Executive<\/i>.<\/p>\n
This transaction also marks the start of a joint venture with The Shelter Group, which, through Brightview, will continue to operate these properties. Brightview, which is based in Baltimore, developed nine of these communities and currently operates each of them.<\/p>\n
\u201cThis investment complements our existing portfolio and highlights our firm\u2019s various cost of capital products, which creates excellent opportunities for our LPs,\u201d Christopher Merrill, Harrison Street\u2019s co-founder, president & CEO, said in a release.<\/p>\n
The 11 assets comprise 1,600 units, half of which are independent living, with the balance dedicated to assisted-living and memory-care residents. The communities average 12 years of age; their locations, physical plants and amenity packages are reportedly among the best in their respective markets.<\/p>\n
\u201cThe cross-section of exemplary operations, thoughtfully designed Class-A assets, reputation and strong and strategic submarkets are perfectly aligned with HSRE\u2019s senior housing strategy. Brightview is going to be \u2026 an important component of our senior housing growth strategy for years to come,\u201d Michael Gordon, a Harrison Street principal and head of the company\u2019s Transaction Group, said in the same release.<\/p>\n
Harrison Street acquired the portfolio on behalf of Harrison Street Core Property Partners L.P., its $2 billion open-end fund, and Harrison Street Real Estate Partners IV L.P., a $750 million discretionary, closed-end fund. Given the properties\u2019 varying risk profiles and unique characteristics, HSRE allocated each asset to its appropriate fund.<\/p>\n
The former is the firm\u2019s open-end core fund that focuses on stabilized income-producing properties; eight of the properties, with a blended occupancy of 96 percent plus, were purchased through this vehicle. The latter is the firm\u2019s opportunistic fund. It purchased the remaining three communities, which average 82 percent occupancy and have been undergoing significant capital programs and repositioning initiatives.<\/p>\n
Brightview also made a significant equity investment in the joint venture.<\/p>\n
The Brightview communities continue Harrison Street\u2019s strategy of focusing on private-pay rental properties that serve independent-living, assisted-living and memory-care residents and allow residents to age in place. Each is situated in a strategic submarket with advantageous supply-demand dynamics, high barriers to entry and strong demographics.<\/p>\n
The portfolio was financed through multiple sources, including PNC, Fannie Mae, Synovus Bank and GE Capital. The largest component of the portfolio financing came in the form of newly originated Fannie Mae debt, which carries a 10-year term and a 3.69 percent interest-only rate.<\/p>\n
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