Colliers International Group has agreed to acquire 75 percent of Chicago-based Harrison Street Real Estate Capital LLC, a real estate investment firm, for $450 million. The deal is expected to close in the third quarter of this year. Berkshire Capital provided financial advice to Harrison Street on the transaction while Three Ocean Partners did likewise for certain of Harrison Street’s shareholders.
TORONTO AND CHICAGO, May 14, 2018 – Leading global commercial real estate services firm Colliers International Group Inc. (NASDAQ and TSX: CIGI) today announced it has agreed to make a transformational, strategic investment in Harrison Street Real Estate Capital LLC (“Harrison Street”), one of the largest real estate investment firms dedicated to the education, healthcare and storage sectors with approximately $14.6 billion in assets under management. The transaction, which is fully financed and subject to customary closing conditions, is expected to close by the third quarter of 2018.
Headquartered in Chicago, with an office in London, Harrison Street is a pioneer in demographic-based real estate investing. Since inception in 2005, the firm has established a series of disciplined and highly differentiated investment products across multiple risk/return strategies, originating and managing a series of open and closed-end real estate investment funds and liquid securities. Harrison Street investors include many of the world’s most respected sovereign wealth funds, public & corporate pension funds, endowments, insurance companies, foundations and family offices.
Under the terms of the transaction, Colliers will acquire 75% of Harrison Street from its founders for $450 million, with an additional $100 million payable in 2022, based on the company achieving certain accelerated performance targets. The senior management team of Harrison Street will hold the balance of the equity. Colliers expects the annual run rate of management fee revenue to be between $100-115 million. Harrison Street’s Co-Founder and Chief Executive Officer, Christopher Merrill, will serve as CEO, lead the operations and remains the largest individual shareholder. Harrison Street’s senior management team will continue to operate the firm’s day-to-day business as it always has, providing long-term stability for all the firms’ stakeholders.
“The investment in Harrison Street is transformational and the most significant in our history,” said Jay Hennick, Chairman and CEO of Colliers International. “The transaction establishes us as one of the major players in global real estate investment management, providing an important new growth platform that also facilitates the integration of our existing operations in Europe. Our entrepreneurial operating and partnership philosophy aligns perfectly with Harrison Street, which brings an exceptional group of leaders to our organization and a company recognized by Pension & Investments as a best place to work in money management for the past four consecutive years.”
“In addition to its best-in-class returns, we were particularly attracted to Harrison Street’s focus on attractive real estate asset class strategies; massive segments offering significant, demographically-driven growth opportunities with defensive cycle characteristics,” said John Friedrichsen, Chief Financial Officer of Colliers International. “The recurring management fees and institutional quality reporting and governance offers Colliers another stable and recurring source of revenue and a tremendous opportunity to create value in the future.”
“As we began to explore the idea of partnering with an outside investor to position us for the future, it became clear Colliers was a perfect choice,” said Christopher Merrill. “Colliers provides long-term stability and increased alignment among our team and limited partners. The relationship strengthens our global capability and offers unique market knowledge and deep relationships with owners and occupiers of real estate around the world. Colliers’ entrepreneurial culture, decentralized management style, significant insider ownership and proven investment record was another significant difference. On behalf of our entire team, we look forward to leveraging these advantages for the benefit of our partners, employees and investors while further differentiating Harrison Street in the future,” he concluded.
In connection with this transaction, Berkshire Capital acted as financial advisor and DLA Piper acted as legal advisor to Harrison Street and the management team, while Three Ocean Partners acted as financial advisor and Winston & Strawn acted as legal advisor to certain of Harrison Street’s shareholders. Sidley Austin acted as legal advisor to Colliers.
About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is an industry-leading real estate services company with a global brand operating in 69 countries and a workforce of more than 12,000 skilled professionals serving clients in the world’s most important markets. Colliers is the fastest-growing publicly listed global real estate services company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers has also been ranked the number one property manager in the world by Commercial Property Executive for two years in a row.
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About Harrison Street Real Estate Capital
Harrison Street Real Estate Capital LLC is one of the leading real estate investment management firms exclusively focused on the Education, Healthcare and Storage sectors. The firm has created a series of differentiated investment products across multiple risk/return strategies. Headquartered in Chicago with an office in London, the firm has approximately $14.6 billion in assets under management. For more information, please visit www.harrisonst.com.