Desert Canyon Rehabilitation Hospital

CHICAGO—Harrison Street Real Estate Capital, a private equity firm that makes investments in the education, healthcare, and storage sectors, has just sold a multi-state 12-asset healthcare portfolio for $283 million. The investors who bought the properties were not disclosed.

Chicago-based JLL, led by managing director Mindy Berman and vice president Daniel Turley, brokered the transaction.

The sale comes just after the Chicago-based firm acquired a multi-state senior housing portfolio with 1,600 units that includes properties in Philadelphia, Baltimore, Boston, Staunton, VA and Newport, RI.

The healthcare portfolio, comprised mostly of newly-constructed class A assets, has seven medical office buildings, three inpatient rehabilitation hospitals, and two short-term acute care hospitals. The assets are spread across the country in Florida, Texas, Nevada, Oklahoma, South Carolina, and Indiana. National and regional health systems, hospitals as well as local and regional physician groups occupy 99.6% of the portfolio.

Specific properties include Desert Canyon Rehabilitation Hospital, a 50-bed inpatient rehabilitation hospital in Las Vegas and Crane Creek Medical Center in Melbourne, FL.

“The landscape of healthcare delivery is changing,” says Brian Mutchler, co-head of Harrison Street’s asset management group. “The traditional hospital is not necessarily the setting for acute care as evidenced by the advent of properties designed for and dedicated to the treatment of specialized conditions. It is anticipated that an integrative approach: partnerships with strong health systems coupled with specialized services easily accessible to the local community will continue since it presents a convenient and cost effective approach to healthcare delivery.”

Harrison officials add that institutional investor interest for the portfolio was substantial, and a large number of confidentiality agreements were signed and qualified offers received. “Institutional investors have made significant allocations to this property type as they recognize the attractiveness of demographically driven, needs-based real estate,” according to Christopher Merrill, co-founder, president and chief executive officer of Harrison Street. “In addition, ownership in healthcare real estate remains fragmented given the smaller size of the investment and the gain of immediate scale supported by top-quality stabilized assets appealed to many institutional investors.”

HSRE built the portfolio both through acquisitions and development with four operating partners with capital from Harrison Street Real Estate Partners III, the third private fund in HSRE’s opportunity fund series. Since it was founded in 2005, the firm has realized over $2 billion in asset sales.