CRE Midwest

Harrison Street Real Estate acquires $125-Million, eight-property senior housing portfolio

Harrison Street Real Estate Capital, on behalf of Harrison Street Real Estate Partners III, LP, announced that it has completed the off-market acquisition of an eight-property senior housing portfolio located in and around the Houston, TX MSA (seven assets) and Oklahoma City, OK (one asset), referred to as the E-Quest Portfolio.

Harrison Street Real Estate Capital, on behalf of Harrison Street Real Estate Partners III, LP (“Fund III”), announced that it has completed the off-market acquisition of an eight-property senior housing portfolio located in and around the Houston, TX MSA (seven assets) and Oklahoma City, OK (one asset), referred to as the E-Quest Portfolio.  One of Harrison Street’s exclusive senior housing operating partners, Bridgewood Property Company, will manage the portfolio, make an equity investment in the venture and will oversee the repositioning/redevelopment of the properties.

This acquisition, valued at approximately $125 million, takes Harrison Street’s Fund III (a $595 million equity fund) to over 50 percent invested since its launch in June of 2010. The Fund now has approximately $1 billion in gross real estate assets.

The portfolio is comprised of approximately 1,000 units and consists of Village on the Park - Houston, Village on the Park - Friendswood, Village on the Park – Oklahoma City, Carriage Inn - Conroe, Carriage Inn - Bryan, Carriage Inn – Lake Jackson, Carriage Inn - Huntsville and Carriage Inn – Katy. The portfolio was purchased from affiliates of E-Quest Management.  The communities average 12 years of age; their locations, physical plant and amenity packages are among the best in their respective markets.

The portfolio currently caters to independent living residents; however, upon completing licensing, zoning and physical plant studies, the venture has cultivated a plan to reposition each of the assets to expand their service mix to include independent living, assisted living and memory care.

While many of the acquired communities are fully-occupied with waiting lists, others have experienced lower occupancies.

Michael Gordon, senior vice president of Harrison Street, said in a statement that his firm elected to involve Bridgewood in this transaction due to a variety of factors, including the firms’ established relationship, Bridgewood’s expertise in the redevelopment of continuum or care communities, their relationship with the Texas licensing agency and their general philosophy of providing great care to seniors.  “Our collective vision for this portfolio has begun to take shape,” Gordon said.

E-Quest Management, the corporate/management company that developed and currently manages the assets, is being purchased by Bridgewood as a part of this transaction, and they will continue to provide management services to the communities.  The existing staff at both the corporate-level and the property-level will stay in place, and Bridgewood will immediately hire a corporate head of Health & Wellness and healthcare professionals at each of the properties.

The assets are currently encumbered by debt that is being assumed by each asset. GE Healthcare is the lender on five of the properties, and FNMA/Greystone is the lender on the remaining three properties.  The venture has restructured the terms of the financing, and all parties are advocating the repositioning of the communities.