Harrison Street Real Estate Capital LLC, a real estate investment firm that counts senior housing as one of its investment targets, intends to sell a majority stake to global commercial real estate services firm Colliers International Group Inc. (Nasdaq: CIGI).
Specifically, Colliers International has agreed to acquire 75% of Harrison Street from its founders for $450 million, with another $100 million payable in 2022, based on Harrison Street meeting specific accelerated performance targets.
The deal, which is fully financed and subject to customary closing conditions, is scheduled to close by the third quarter of 2018.
Chicago-based Harrison Street, which has about $14.6 billion in assets under management, is dedicated to the education, storage and health care sectors, including senior housing. In 2016, Harrison Street partnered with The Northwind Group and The Engel Burman Group to acquire a $150 million, soon-to-be upscale senior living community on the Upper West Side of Manhattan called The Esplanade. Harrison Street has also raised numerous funds in the past, at least two of which topped $1 billion.
After the Colliers transaction closes, Harrison Street’s co-founder and CEO Christopher Merrill will continue to serve as Harrison Street CEO, as well as remain the firm’s largest individual shareholder. Additionally, Harrison Street’s senior management team will continue to operate the firm’s business on a daily basis.
In terms of an outside investor, Colliers International was the “perfect choice,” for Harrison Street, Merrill said in a press release.
“Colliers provides long-term stability and increased alignment among our team and limited partners,” he continued. “The relationship strengthens our global capability and offers unique market knowledge and deep relationships with owners and occupiers of real estate around the world.”
Similarly, the transaction made strategic sense for Colliers, according to company executives.
“In addition to its best-in-class returns, we were particularly attracted to Harrison Street’s focus on attractive real estate asset class strategies; massive segments offering significant, demographically-driven growth opportunities with defensive cycle characteristics,” Colliers International CFO John Friedrichsen said in the press release. “The recurring management fees and institutional quality reporting and governance offers Colliers another stable and recurring source of revenue and a tremendous opportunity to create value in the future.”
Sidley Austin served as Colliers’ legal advisor in the transaction.
Berkshire Capital, meanwhile, served as financial advisor for Harrison Street, and DLA Piper acted as legal advisor to Harrison Street and the management team. Three Ocean Partners served as financial advisor, and Winston & Strawn acted as legal advisor, for some of Harrison Street’s shareholders.
Written by Mary Kate Nelson