Harrison Street is a leading investment management firm exclusively focused on alternative real assets. Since inception in 2005, the firm has created a series of differentiated investment solutions focused on demographic-driven, needs-based assets. The firm has acquired and developed over 1,463 properties that comprise more than $59bn in real estate cost across senior housing, student housing, healthcare delivery, life sciences, build-to-rent and storage real estate as well as social and utility infrastructure. Our experience includes investments on, near, or in partnership with 200+ universities and 30 top health systems and ~120 leading operating partners. We continue to innovate with this robust network throughout North America and Europe.
Headquartered in Chicago with offices in London, Toronto, San Francisco and Washington DC, the firm has more than 220 employees and approximately $49bn in assets under management. Our dedicated and passionate team excels in finding innovative ways to generate long-term value as fiduciaries for our investors. The team consists of subject matter experts in alternative real asset investing and has one of the longest track records in non-traditional real estate. Clients of the firm include a global institutional investor base domiciled in North America, Europe, Asia Pacific, Middle East and Latin America.
Investment principles & strategy
Harrison Street leverages its investment expertise and exclusive focus in alternative real assets to execute its strategy with confidence. As a first mover in demographic-driven, needs-based real assets, the firm has invested $59bn of gross investment cost across 1,463 transactions in its target sectors. Additionally, the firm has realised on more than 610 assets totalling $13.9bn in total cost. It is with this deep experience that we execute a rigorous and time-tested investment process. We bring together all disciplines of the firm to collabora- tively manage assets throughout the investment life cycle from strategy conception to disposition.
The demand for Harrison Street’s target sectors is driven by demographics and life events. The cycle-resilient user demand is derived from demographic trends: an aging population that continues to grow and live longer; increasing college enrollments; and a more mobile population. Further, there are varying degrees of need for services offered at the assets including important life events, such as the one-time need to obtain a college degree contributing to student housing occupancy; recurring events, such as the need to visit a physician’s office regularly; or absolute needs, such as the need to live in an assisted living or memory care senior housing community.
The firm executes strategies across the risk-return spectrum in North America and Europe.
Sector forecasts
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Student housing – We believe that the importance of earning a col- lege degree will continue to drive enrolment in the higher education sector. As the economy continues to reward workers with higher skills, we expect that the amount of education people need will rise, and there are limited viable alternatives to attaining a college degree. Enrolment growth at four-year public and private universities continues to increase. The cost differential between attending a public in state university versus attending a private university often drives students to select the public university. Public universities facing reduced levels of state support can, on average, only house 30% of students on-campus, thus providing continued growth opportunities for the purpose-built student housing market. Student housing is resilient, fundamentals have remained intact, online proved an unacceptable substitute during the pandemic, smaller schools continue to lose enrolment share and abundant new capital continues to enter the space seeking opportunities.
Senior housing – The senior housing sector uniquely benefits from positive underlying demographic trends and needs-based demand. Seniors want to age in place and remain in a community that can address the senior’s changing health needs. Fundamentals are benefiting from an aging population that is at the very beginning stages of accessing needs-based communities. The 80 year+ population will double by 2024. This demographic segment will continue to drive significant demand over the coming decade and beyond. Increasing pen- etration rates suggest an often wealthier and better-informed senior resident has begun to anticipate and plan for the eventuality of needing specialised care at some point in their lives.
Healthcare delivery/medical office – The healthcare delivery sector is evolv- ing and expanding as the healthcare landscape shifts from traditional doctors’ offices and hospitals to include a variety of other retail-like settings that are consumer preferred and provide a lower cost alternative than a hospital . The range of healthcare services delivered in outpatient settings now encompasses imaging facilities, diagnostic centres, cancer care, disease treatment, inpatient rehabilitation, emergency care, and outpatient surgery. Medical office buildings benefit from a stable tenant base, needs-based demand drivers, positive demographics, and a long-term rental model. Additionally, secular and structural trends, like longer life expectancy, healthcare system consolidation , positive demographics, and the popularity of outpatient procedures, are all contributing to continued growth in this sector.
Life sciences – The life sciences real estate sector is a segment created by the ongoing demand for specialized buildings for the life sciences industry including office, laboratory, research and computing needs. The life sciences sector has evolved rapidly as the demand for specialised life sciences facilities has grown. The life sciences sector benefits from positive underlying and aging US and worldwide population demographics and the recurring demand for the latest drug therapies, procedures and discoveries emerging from life sciences industry participants. We believe that the impending growth of the worldwide aged population combined with enhanced life expectancies, the growth of chronic diseases and greater affluence will continue to create demand for new discoveries across the spectrum of life sciences companies.
Self storage – The self storage sector offers attractive operating characteristics as limited labour required and rental rates can be reset daily in an inflationary environment. The underlying demand for self storage is created by life events supported by population transitions, household mobility, renewed commercial activity and a shift away from home ownership and work from home. Selfstorage facilities have historically benefited from steady NOI and consistently low cap-ex, which is among the lowest of all commercial sectors. The low-cap-ex profile of the sector helped the sector recover more quickly compared to the traditional asset classes after the most recent recession.
Digital – Explosive growth in demand across a variety of categories underpins the investment interest into th esector. No other asset class is supported by the positive demand fundamentals we see in data centres and digital infrastructure. At a very high level, the growth is driven by rapid expansion in cloud computing and an emerging capacity arms race among the major hyperscale cloud providers. Related to the impending growth of cloud computing is the massive pro-liferation in data which has been growing exponentially and could arguably be accelerating. This phenomenon overlaps many underlying demand drivers such as distributed computing, content distribution, social media, artificial intelligence, internet of things, wearable devices and others.
Social infrastructure – Harrison Street’s focus includes investments in social and utility infrastructure predominately with education, healthcare and government users. Our strategy capitalises on the increasing demand from these institutions as they look for a single source of capital to address significant deferred maintenance on campus and begin to tackle the growing priority of improving their carbon footprint and self-sustaining resources. We believe these key investment characteristics, combined with the passage of the Infla- tion Reduction Act – the largest climate package representing the US’ commit- ment to a clean energy economy – increase the likelihood of producing stable financial performance across economic cycles and we have seen this resiliency throughout the pandemic.
Strategic corporate development
Since 2005, the Harrison Street team has spent significant time developing and nurturing relationships with top universities, health systems and operating partners across North America and Europe. It is through this network that the firm will continue to innovate within demographic-driven, needs-based real assets and strategically expand into new investment strategies and mar- kets that complement our existing activities and meet the needs of our clients.
Performance verification
Performance return cashflows for Harrison Street’s funds have been verified by the accounting firm Ernst & Young through 31 December 2021. Returns are calculated in accordance with INREV guidelines. The calculated performance is thoroughly checked in-house by Harrison Street as part of a multi-stage process.
COMPLIANCE STATEMENT
The information contained herein is for the sole purpose of providing general informa- tion to institutional investors about Harrison Street and its affiliates. Certain subsidiaries are registered with appropriate regulatory authorities. No representation is made concerning the accuracy of the information compiles herein, and no guarantee or assur- ance is given that any forecast or opinion in these materials will be realized. The information contained herein is not invest- ment advice and may not be construed as the promotion or marketing of any services or financial product sponsored or provided by Harrison Street and its affiliates. All information herein is as of June 30, 2022, unless otherwise stated, and Harrison Street undertakes no obligation to update any such information.
