Harrison Street Opportunistic Fund Raises $1.1B

Fund VI—which will focus on education, health care and storage assets—surpassed its $850 million target by a long shot, with contributions from more than 65 institutional investors.

Harrison Street Real Estate Capital LLC recently closed Harrison Street Real Estate Partners VI LP with a bang. Fund VI, Harrison Street’s sixth U.S. opportunistic real estate fund, surpassed its $850 million target by a long shot, reeling in a total of $950 million in equity commitments and raising an additional $205 million of equity capital in co-investment vehicles, for a total raise of approximately $1.15 billion.

Christopher Merrill
Christopher Merrill, president & CEO of Harrison Street Real Estate Capital

A lot can happen in a year; Fund VI launched in late July 2016. Like the real estate investment management firm’s previous five closed-end opportunistic funds, Fund VI focuses on investing in the education, health care and storage sectors. Investors can’t seem to get enough. “Our differentiated, disciplined and rigorous investment approach, and deep focus on resilient sectors driven by favorable demographic trends, has generated exceptional risk-adjusted performance across cycles for our investors,” Christopher Merrill, president & CEO of Harrison Street Real Estate Capital said in a prepared statement.

Commitments came from previous investors in Harrison Street funds—repeat offenders accounted for roughly 70 percent of the total capital—as well as new participants, and they came from around the world. Overall, more than 65 institutional investors took part, including, according to public record, the District of Columbia Retirement Board and the Texas County & District Retirement System, which committed $25 million and $50 million, respectively, in 2016. The Illinois State Board of Investment made a $50 million contribution in 2016, noting in a disclosure: “The Board selected Harrison Street based upon the expert recommendations of Staff and Consultant, the experience and qualifications of the firm’s principals, the soundness of the firm’s strategy and process and the strength of the firm’s investment performance.”

To date, Fund VI has invested $310 million in 34 properties spanning 17 states. 

There’s something about those funds

Fund VI wasn’t the first of Harrison Street’s U.S. closed-end opportunistic funds to secure commitments exceeding the target. Fund V topped its goal of $750 million, closing in January 2015 with $850 million in equity. Fund IV, having had a target of $650 million, completed its final capital raise in 2013 with $750 million. In 2011, Fund III wrapped up with $595 million in commitments, surpassing its original target by $95 million.

In addition to the aforementioned approach, the success of the Harrison Street funds can be attributed to the talent factor, according to the firm. As Merrill noted in prepared remarks, “Our team, which comprises experienced investment professionals and operating partners who are also industry experts in our core sectors, provide unparalleled knowledge and insights that uncover unique investment opportunities.

There’s been no word on a seventh fund just yet. Harrison Street declined to comment beyond the press release.