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Colliers Buying Majority Stake in Harrison Street

$450 Million Investment Gives Colliers Control of Real Estate Investment Management Firm
May 14, 2018
Jay Hennick, Colliers chairman and CEO

Colliers International Group Inc. this morning announced it has agreed to acquire a 75% stake in Harrison Street Real Estate Capital LLC, a real estate investment firm with $14.6 billion in assets under management. The deal is expected to close by the third quarter of 2018.

Under the terms of the transaction, Colliers will acquire 75% of Harrison Street from its founders for $450 million, with an additional $100 million payable in 2022, based on the company achieving certain performance targets.

Co-founder and Chief Executive Christopher Merrill will continue to serve as Harrison Street's CEO and will remain the largest individual shareholder. Harrison Street’s senior management team will continue to operate the firm’s day-to-day business.

Jay Hennick, chairman and CEO of Colliers International, called the transaction the most significant in the company's history and said acquiring the global real estate investment management firm would provide a major new growth platform while also helping to integrate its existing operations in Europe.

"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," added Colliers Chief Financial Officer John Friedrichsen in a statement announcing the agreement with Colliers.

Colliers expects the annual run rate of management fee revenue to be between $100 million to $115 million.

"As we began to explore the idea of partnering with an outside investor to position us for the future, it became clear Colliers was a perfect choice," said Harrison Street CEO Merrill in a statement. "Colliers provides long-term stability and increased alignment among our team and limited partners. The relationship strengthens our global capability and offers unique market knowledge and deep relationships with owners and occupiers of real estate around the world."

Based in Chicago with an office in London, Harrison Street focuses on student and senior housing, medical office and storage investments. Harrison Street launched its first real estate investment fund in 2006 and has since created a series of commingled real estate funds. In addition, the firm has a European Student Housing Opportunity Fund, targeting the acquisition and development of student housing properties throughout the UK and Europe.

The firm reports it has acquired or developed more than 822 properties in its targeted sectors of student housing, senior housing, medical office and self-storage. Its investment clients include sovereign wealth funds, public and corporate pension funds, endowments, insurance companies, foundations and private family offices.

The firm was founded at the end of 2005 by Merrill in partnership with Chris and Mike Galvin, members of the founding family of Motorola. A Motorola predecessor firm, the Galvin Manufacturing Company, began operations on Harrison Street in Chicago.

In connection with this transaction, Berkshire Capital acted as financial advisor and DLA Piper acted as legal advisor to Harrison Street and the management team. Three Ocean Partners acted as financial advisor and Winston & Strawn acted as legal advisor to certain of Harrison Street's shareholders. Sidley Austin acted as legal advisor to Colliers.

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