The Sanders Trust Expanding In Venture With Chicago's Harrison Street Real Estate Capital Company

BIRMINGHAM, Alabama - The Sanders Trust, a Birmingham-based medical real estate investment company, has formed a $250 million joint venture with a Chicago equity firm that will enable it to double its growth rate, a Sanders Trust executive said.

The deal with Harrison Street Real Estate Capital gives Sanders Trust a mix of equity and debt to invest in properties over the next two years, said Steve Hewett, Sanders Trust senior vice president. The deal is expected to be formally announced sometime this week.

"It's just a huge commitment they have made to us," Hewett said in an interview.

The privately-owned Sanders Trust, which has invested $500 million in properties in its 22-year history, now expects to invest about $100 million in the current year alone. Medical properties are an appealing investment because they're essentially recession proof, and because the "graying of America" is going to push demand for medical services to record levels, Hewett said.

Leonard Zumpano, a finance professor and chair of real estate at the University of Alabama, agreed.

"As the economy goes south, people get laid off and typically, retail sales suffer. But in medical related industry, that's not the case," he said. "And with the baby boom generation you're talking about something like 80 million Americans. That's a chunk of people."

Sanders Trust typically buys, holds and manages medical office buildings, and it already owns properties in 14 states including Alabama.

The additional capital will allow the company to broaden the scope of its acquisitions, Hewett said, adding more rehabilitation hospitals, acute care hospitals and ambulatory surgery centers. "Now there really is not a project that's too big for us," he said.

Efforts to reach executives with Harrison Street were not successful, but Hewett said the large, private equity firm sought out Sanders Trust because both firms have investments in the same niche market.

Harrison Street is a private firm that holds about $2.4 billion in assets, mostly in student housing, senior housing, assisted living, self-storage, marinas and medical offices. According to the company's website, it both holds properties and invests capital in other real estate companies. It currently has about $700 million in capital, its website indicates.

Harrison Street has several holdings in Alabama, including student housing at both the University of Alabama and Auburn University. The Retreat at Lake Tamaha, upscale student housing in Tuscaloosa, is among its properties.