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Sale of MOB, Hospital Properties Brings $283 Million to Harrison Street Real Estate

Chicago-Based Investment Manager's Recent Sales Activity Underscore Strong Investor Demand for Health Care Properties
August 27, 2014
Just a few days after announcing the $520 million purchase of an 11-property seniors housing portfolio in the Northeast, Chicago-based Harrison Street Real Estate Capital has divested 12 health care properties in Florida, Texas, Nevada, Oklahoma, South Carolina and Indiana for $283 million. Two undisclosed entities acquired the portfolio, reportedly winning out over a number of strong offers.

Though details of the individual properties were not immediately available, the 655,661-square-foot portfolio includes seven medical office buildings (MOBs), three inpatient rehabilitation hospitals and two short-term acute care hospitals. According to Harrison Street, the properties are secured by long-term leases, many of which are single-tenant leases with hospitals. The portfolio was 99.6% occupied at the time of the sale.

A JLL brokerage team headed by Managing Director Mindy Berman and Vice President Daniel Turley marketed the portfolio.

Since the economic downturn, medical properties have proven to be very attractive to investors due to their secure cash flow and high occupancy, and demand will only get stronger as the U.S. population ages, Berman said.

"Health care investors ranging from REITs, pension funds and private equity are aggressively seeking the opportunity to acquire scale and diversification across a well-occupied portfolio," Berman said. "This portfolio features highly sought-after hospital occupancy and alignment with substantial remaining lease term."

A private real estate equity firm, Harrison Street Real Estate Capital controls over $7 billion in assets under management through commingled funds and public securities products in the education, health care and self-storage sectors. The firm has established four closed-end funds, including Harrison Street Real Estate Partners I, II, III, & IV L.P, and one open-end fund, Harrison Street Core Property Fund.

On Aug. 22, the firm announced a new joint venture with The Shelter Group’s Baltimore-based Brightview Senior Living entity to acquire 11 seniors housing properties totaling 1,600 units, half of them independent living and the rest assisted-living and memory care facilities.

Brightview will operate the properties located in the Baltimore, Boston and Philadelphia areas, and in in Staunton, VA, and Newport, RI.

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