Harrison Street Closes Opportunistic Fund With $2.5B in Equity

Harrison Street has closed its ninth U.S. opportunistic real estate fund, Harrison Street Real Estate Partners IX, LP, and its associated co-investment vehicles, with approximately $2.5 billion in equity commitments. The fund will have more than $7 billion in buying power and will leverage Harrison Street’s experience in alternative real estate investments.

Fund IX received strong support from existing fund series investors who accounted for approximately 60 percent of total commitments. It also attracted new institutional investors from around the globe including public and private pension plans, Taft-Hartley plans, sovereign wealth funds, foundations and endowments and insurance companies.

To date, Fund IX has allocated almost 70 percent of its total equity across 70 assets spanning seven sectors, with the largest concentrations in student housing, senior housing and data centers. The remaining capital is expected to focus primarily on acquiring well-located but underperforming assets and those with strained capital structures in need of liquidity that offer distressed pricing.

The fund is a continuation of Harrison Street’s U.S. opportunistic fund series. In October 2021, Harrison Street raised more than $2.5 billion for its eighth fund, Harrison Street Real Estate Partners VIII, LP. That fund surpassed its target of $1.5 billion and also raised an additional $510 million in co-investment vehicles to invest alongside Fund VIII. The amount of equity raised for Fund VIII translated to more than $8 billion in total buying capacity.

Fund IX is positioned to capitalize on opportunities in fundamentally sound alternative real estate sectors that have resilient and growing demographic-driven demand despite macroeconomic headwinds. Harrison Street noted that the investment landscape has seen historically low levels of new supply across those targeted sectors and rising demand supported by the need for more inventory. The fund addressed that supply-demand imbalance by making initial investments in development projects with long-time partners. The fund’s first development project, a student housing asset at the University of Wisconsin, was recently delivered 100 percent pre-leased.

VERVE Madison, a 142-unit, 536-bed student housing community in Madison, Wisc., serves the University of Wisconsin-Madison. A joint venture between Harrison Street and Subtext completed the 12-story, 278,143-square-foot student housing development in time for the 2024-2025 academic year. Construction on the Class A community began in 2022.

Harrison Street acquisitions

Since it was founded in 2006, Chicago-based Harrison Street has raised an aggregate of $30 billion in equity and invested more then $68 billion across 1,657 assets with 675 fully realized asset sales. Investments have included 220,000 student housing beds, 42,000 senior housing units, 200,000 self storage units, 12,000 square feet of single-family housing, 24.5 million square feet of healthcare space and 2.0 million kilowatts of data centers.

Last month, Harrison Street acquired a five-property senior housing portfolio from Brightview Senior Living—its partner for more than 10 years—as part of their joint-venture agreement. The properties, totaling 743 units, were located in Massachusetts, Maryland, New Jersey, Pennsylvania and Virginia. PGIM Real Estate provided Harrison Street with a $252 million loan for the recapitalization of the assets. Brightview Senior Living continues to operate the properties. The transaction brought the joint venture’s holdings to 26 properties totaling more than 3,600 units, including an asset currently under construction in Fairfax, Va.

In August, Harrison Street acquired an off-market self storage portfolio in the Southeast with 19 properties totaling 1.4 million square feet for more than $200 million. The portfolio includes more than 12,000 self storage units in Georgia, Alabama, Florida, North Carolina and South Carolina. Harrison Street’s established self-storage partner, Reliant Real Estate Management, is managing the properties under its Midgard Self Storage brand.