TORONTO AND CHICAGO — In an effort to expand its global investment management platform, Colliers International Group Inc. (NASDAQ: CIGI) has agreed to acquire 75 percent of Harrison Street Real Estate Capital LLC for $450 million.
Under the terms of the transaction, which is expected to close during the third quarter, the senior management team of Harrison Street will hold the remaining 25 percent of equity. An additional $100 million will be payable to Harrison Street in 2022 based on the achievement certain performance targets.
Chicago-based Harrison Street currently manages about $14.6 billion worth of assets, primarily in the seniors housing, student housing, medical office and self-storage sectors. The company’s senior management team will continue to handle its day-to-day operations. No changes to the company name have been announced at this time.
According to CEO Christopher Merrill, Harrison Street was seeking an outside investment partner to assist with its global positioning strategy. Harrison Street was drawn to the depth of Colliers’ relationships on a global scale, as well as the brokerage firm’s decentralized management style and track record in investment sales.
For its part, Toronto-based Colliers was in the market for a new platform that would enable global investment growth. The company expects the annual management fee revenue to be between $100 million and $115 million.
“We were particularly attracted to Harrison Street’s focus on attractive real estate asset class strategies and its massive segments offering significant, demographically driven growth opportunities with defensive-cycle characteristics,” says John Friedrichsen, CFO of Colliers. “The recurring management fees offer Colliers another stable and recurring source of revenue.”
Berkshire Capital acted as financial advisor and DLA Piper acted as legal advisor to Harrison Street. Sidley Austin acted as legal advisor to Colliers.
The stock price of Colliers opened at $70.90 per share on Monday, May 14, up from $51.80 per share a year ago. The company’s stock price rose to $75.25 per share in the opening hours of trading following the announcement of the deal with Harrison Street.
— Taylor Williams