Greystar Buys Property Management Business for a Pre-Pandemic Reported Price of $200M
Some eyebrows raised at the pre-pandemic valuation of Alliance Residential’s property management business but Greystar says it has long-term faith in the industry.
CHARLESTON, SC—Greystar Real Estate Partners has acquired Alliance Residential Co.’s property management business.
The Phoenix-based company’s portfolio consists of more than 500 multifamily properties and nearly 130,000 primarily Class A units across 21 states and its addition to Greystar’s holdings will cement Greystar’s position as the largest property management company in the US, according to the 2020 rankings by the National Multifamily Housing Council. Alliance is now the fourth largest management company in the US.
Greystar paid nearly $200 million in the all-cash deal, sources told the Wall Street Journal.
GlobeSt.com spoke to one source knowledgeable about the property management industry and that person was surprised at the transaction’s valuation given the current economic environment. The WSJ obliquely touched on this as well, noting that the negotiations for the transaction began in February before the coronavirus became a global pandemic and began its march across the US.
Greystar ultimately decided to move forward with the deal at its previously-agreed upon price, according to the WSJ, because of its long-term faith in the sector.
“Even during severe economic downturns, we believe in the resilience of rental housing and we are committed to continuing to grow our company,” Greystar CEO Bob Faith says in prepared remarks.
The combined portfolio will increase Greystar’s US footprint by approximately 25% and complement the firm’s current presence in such western markets, as the San Francisco Bay Area, Los Angeles, Phoenix, Denver and Las Vegas, in addition to the Northeast and Pacific Northwest.
All told, Greystar will have nearly 19,000 team members overseeing a portfolio of more than 2,400 communities and 660,000 apartment units across 42 US states and 13 countries when the transaction closes.
Alliance, which is also a top developer of multifamily units in the US, will streamline its focus on development, construction and acquisition across the multifamily, workforce and senior housing segments. As part of the deal, Greystar will provide management services to Alliance’s multifamily acquisition and development businesses.
Financial terms of the transaction were not disclosed. Greystar was unable to return a request for comment in time for publication.