Harrison Street Real Estate Capital, the largest real estate private equity firm focused exclusively on investments in the Education, Healthcare, and Storage sectors, has sold a multi-state 12-asset healthcare portfolio for $283 million.
The portfolio is 655,661 square feet comprised of seven medical office buildings, three inpatient rehabilitation hospitals, and two short-term acute care hospitals characterized by primarily newly-constructed Class A assets. Locations of the assets are in demographically significant markets including Florida, Texas, Nevada, Oklahoma, South Carolina, and Indiana. In total, occupancy is 99.6% represented by national and regional health systems and hospitals as well as local and regional physician groups, all of which provide Healthcare services throughout the acute and post-acute care spectrum. In many instances, the tenants are affiliated with leading national and regional non-profit and for-profit health systems the majority of which are investment grade credit or better.
“The landscape of Healthcare delivery is changing. The traditional hospital is not necessarily the setting for acute care as evidenced by the advent of properties designed for and dedicated to the treatment of specialized conditions,” states Brian Mutchler, Co-Head of Harrison Street’s Asset Management Group. “It is anticipated that an integrative approach: partnerships with strong health systems coupled with specialized services easily accessible to the local community will continue since it presents a convenient and cost effective approach to Healthcare delivery,” adds Mutchler.
Institutional investor interest for the portfolio was substantial based on the large number of confidentiality agreements signed and qualified offers received. “The interest garnered by this portfolio is indicative of the demand for Healthcare real estate. Institutional investors have made significant allocations to this property type as they recognize the attractiveness of demographically driven, needs-based real estate,” according to Christopher Merrill, Co-founder, President & CEO of Harrison Street. In addition, ownership in Healthcare real estate remains fragmented given the smaller size of the investment and the gain of immediate scale supported by top-quality stabilized assets appealed to many institutional investors,” continues Merrill.
HSRE aggregated the portfolio through single asset acquisitions and development with four operating partners with capital from Harrison Street Real Estate Partners III, the third private fund in HSRE’s opportunity fund series. Since inception, Harrison Street has realized over $2 billion in asset sales making it the largest real estate manager to acquire, develop, and sell assets within the Education, Healthcare, and Storage segments.