Greystar Acquires Riverstone Residential: What’s Next?

 

Faith says ‘business as usual’ during transition for leadership, staffing, supplier relations of both companies.

With the goal of becoming better—not just bigger--the two largest property management companies joined forces on June 2 when Greystar Real Estate Partners acquired Riverstone Residential Group from London-based CAS Capital Limited, a wholly owned subsidiary of Regis Group PLC, owned by Nick and Peter Gould.

The company, which will continue under the name “Greystar,” comprises more than 385,000 apartment units.

Unofficially that puts it at more than twice the size of the second-largest management company, Lincoln Property Company, with approximately 153,000 units and Pinnacle third at 132,000, according to the 2014 NMHC Top 50 apartment management firms.

Terms were not disclosed. The merger was first reported by Multifamily Executive.

Greystar Chairman and CEO Robert Faith says both companies will continue to operate in a “business-as-usual” fashion. “Executive leadership, job titles and lines of reporting will remain the same,” Faith says. “There are great people working at both companies. This deal enables both companies to bring it all together into one.”

He says the companies have begun a “shared best practices process” and that they will proceed with a slow and deliberate” transition.

The company’s new workforce now totals approximately 10,000 staff members. They were notified earlier this week through a series of telephone conferences and meetings. Supervisors then passed the news down within their communities, accordingly, Faith says.

Faith says the timing for the deal, which he says originated in December with conversations between he and the Goulds, is right.

“All signs indicate to us that the multifamily sector is healthy and will remain that way for some time,” Faith says. “And when you get deeper and deeper into a positive real estate cycle, it becomes more and more difficult to find talented people. With this deal, we have done that. It will be the best of the best from both companies.”

Both companies have been through the acquisition process often.

Riverstone Residential Group Chief Executive Officer Terry Danner says acquisitions have always been “on the radar” for his company. “Sometimes you can look at a deal this big and think it can’t get done,” Danner says. “Here, we got it done. This is a deal that will transform the industry. This is the big leap that our companies needed. We’ll all learn during the transition, and we’ll see that two heads are better than one.”

Faith, who founded Greystar in 1993, called the deal’s announcement a “shared celebration” between the firms.

“These employees got us to where we are today,” Faith says. “This is just the start. We’ve all got a lot of work to do to make it a success. Sure, we are happy now, but we all still need to get up and go to work every morning. The professionals who work for us are dedicated. This is an opportunity for them. They will see this as a chance to grow their careers.”

Faith and Danner, whose companies both use the NAA Click & Lease program, say the acquisition will not result in any wholesale changes to the supplier partners Greystar uses. “We regularly work toward identifying the best technology and services companies out there,” Faith says. “When you look across our portfolios, we use many different service providers. We use who our investors and partners want us to use.”

Greystar, which has an ownership stake in approximately 50,000 of its units, has been among the largest managers of apartments in the United States for a number of years. Over its 20-year history, the company has successfully integrated a number of major operators, including the management arms of JPI, Archon and Glacier. In addition to property management, the company also has a robust investment management and development platform and recently expanded its operations to Mexico and the United Kingdom.

“We’ve been growing for years, and our plan is to continue to grow,” Faith says. “It is our goal to be number one or two in market share in every major market in the United States and we will also continue to grow our platform internationally. There are markets such as New York City where we are not yet number one or two in market share and we will work hard to grow our presence in those markets over the coming years.”

Nick Gould, Chairman of the Board for CAS Capital Limited, said in a released statement, “We are excited to complete this transaction with Greystar. The combining of these two great companies represents the realization of our vision to create the highest quality multifamily residential service provider in the U.S.”

Peter Gould, Vice Chairman, added “We believe Greystar is a great strategic and cultural fit for the company and are proud that they will continue our legacy in providing high quality services to clients and residents. We now entrust a great company to Bob Faith as we move on to continue what we do best, creating and growing our other large scale business platforms.”

Nick and Peter Gould, who purchased Riverstone Residential in July 2006, have led Regis Group PLC over a 30-year period, to become internationally recognized as significant investors in the residential real estate markets in the United States, United Kingdom and France. By investing widely, buying, building, and merging multiple entities, they specialize in the creation and management of residential platforms.

Invitation Homes was established in 2012 in partnership with The Blackstone Group; the Gould’s are founding partners. To date, Invitation Homes has deployed over $8 billion to acquire in excess of 43,000 homes for rent in the United States. The company is now the largest owner of single-family rental properties in the United States.

Faith says Greystar provides some services for its single-family rental clients, and “we’ll continue to do that.’

Also part of Regis Group PLC is B2R Finance, a joint venture between the Goulds and The Blackstone Group. B2R Finance provides cost effective buy to rent mortgages for residential property investors throughout the United States.

R4 Capital, a New York based subsidiary of the Regis Group PLC, provides low income housing tax-credit (LIHTC) opportunities to investors and developers in the United States.

By Paul R. Bergeron III, NAA Director of Publications

 

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