Harrison Street Real Estate Capital LLC has announced the launch of Harrison Street Core Property Fund L.P., the first open-end core fund dedicated exclusively to investing in the demographically driven education, healthcare and storage segments of the real estate market.
The fund will seek to acquire stabilized, income producing properties in the student housing, senior housing, medical office and storage segments of the market. The fund will cap its leverage at 40 percent across the portfolio and will seek to provide investors with annual average gross returns of 9 to 10 percent, of which 7 to 8 percent is expected to be generated from current income.
Currently, HSRE is the largest real estate manager focused on the education, healthcare and storage segments of the US property markets.
The core fund’s first acquisition was an off-market purchase of Sterling Central Apartments, a 1,527-bed purpose-built student housing community located adjacent to the University of Central Florida in Orlando. The asset is currently 98 percent occupied.
The property includes two 3,000-square-foot clubhouses, two state-of-the-art fitness centers, two computer centers, four pools, tanning facilities and a screening room. Student residents can either walk to campus or utilize the university shuttle, which makes frequent stops at the property. The investment is consistent with the types of student housing properties that the core fund will purchase, such as a high quality asset in an irreplaceable location next to a large and growing university.
In establishing the core fund, HSRE is seeking to capitalize on the experience and knowledge it has gained as the largest owner/manager focusing on investing in these segments of the real estate market. In addition, HSRE expects that the fund will benefit from the exclusive relationships that the firm has formed with more than 30 local and regional operating partners who are the domain experts in the day-to-day property management and leasing of student housing, senior housing, medical office and storage properties.
Joey Lansing, a 20-year real estate industry veteran who joined the firm in early 2011, will be the fund’s portfolio manager. In this role, Lansing will supervise all aspects of the firm’s core business and the team dedicated to the core strategy including investment strategy, deal sourcing and selection, asset management, fund accounting, investor reporting, capital raising and research.
In addition, though the core fund does not expect to rely heavily on debt as a major driver of fund returns, as evidenced by the University of Central Florida acquisition, the broad availability of very attractive, long-term, fixed rate financing will help to enhance the fund’s returns.