Harrison Street sets its sights on mainland Europe

Harrison Street has set its eyes on Europe after emerging as one of the largest private equity investors in student housing in the US, where the company has developed or transacted over 60,000 beds over the past 10 years.

Founded in 2005, the Chicago-based privately-held firm has just unveiled plans to build up a portfolio of up to 3,000 beds in Dublin and said it is looking to invest €250 mln in total in student homes in the city jointly with its partner, developer Global Student Accomodation (GSA).

But the company also has plans to expand in other European markets, according to Robert Mathias, the firm’s principal and co-head of acquisitions. ‘We started to look at Europe two years ago because we found that the student housing market was tremendously undersupplied. We decided to focus on Ireland where there is virtually no off campus supply and where we see a big opportunity over the next five years. But we would also like to build up a presence in other markets, particularly Germany and the Netherlands, while later on we could also expand to other countries in Europe.’

As its maiden European investment, the group, jointly with GSA, has acquired the Mill Street student housing development which will serve students of Trinity College Dublin and Royal College of Surgeons, which have about 17,000 and 3,800 students respectively. Once completed, the asset will offer 414 beds in southwest Dublin as well as shops, a restaurant and office space for occupation by local businesses. GSA’s Dublin-based team will develop and operate the scheme and its Investment Management business will be responsible for the management of the JV.

First foray
The operation marks Chicago-based Harrison's entry into the European market following the launch of its maiden European student housing opportunity fund, which raised €135 mln in equity capital at first close last June. The vehicle, Harrison Street European Property Partners I, counts both US and European institutions among its investors. It is targeting equity of €300 mln in total which it hopes to raise over the course of the first six months of 2016.

‘The fund is primarily opportunistic in terms of risk profile. It focuses on existing assets that can be repositioned but we are also ready to take development risk,’ commented Mathias. ‘On the long term, we are looking to replicate in Europe what we have accomplished in the US, where we have launched a series of funds and where we are active across a number of asset strategies.’

To spearhead investments in the European student housing market, Harrison Street has opened an
office in London and just made its first European appointment with the hire of AIG’s former managing director, Daniel Gorzawski. Prior to opening the London office, Harrison Street operated solely within the US, focusing on niche real estate segments including healthcare, student housing and storage.

‘We built our strategy around need-based real estate, more specifically student housing, healthcare and self-storage,’ noted Mathias. ‘What these sectors have in common is that they tend to outperform the traditional real estate sectors and are less dependent on real estate cycles. This is because people will always need senior or medical facilities, or go to university or use self-storage facilities particularly with the disruption in the housing market caused by the global financial crisis. These types of life changing events create demand for self storage.’

In the US Harrison Street has acquired, developed and sold more than 60,000 beds, representing over $4 bn in gross student housing real estate throughout over 80 universities. In total, the group has $7.6 bn in assets under management.