Multifamily Executive: Greystar Has Right Ingredients for Growth

Wednesday, August 26, 2020

For Greystar Real Estate Partners, the nation’s top apartment manager, combining the best team of people with the best technology and adding scale is its tried-and-true recipe, says executive managing director Andrew Livingstone.

“We have a global view. We’re not looking to be the biggest,” says Livingstone, who leads Greystar’s property management business. “We refer to ourselves as a leader and want to be a thought leader in the different areas. For us, it’s the combination of people first, the technology that we can put in the hands and the power it gives to all of our people, and to do that across so much scale.”

While it may not be looking to be the biggest, Charleston, S.C.–based Greystar has a clear lead over the rest of the nation’s top property managers and grew its portfolio even further in early June with the acquisition of Alliance Residential’s property management business and nearly 130,000 primarily Class A units in 21 states. The acquisition also expanded its footprint and local talent pool.

The deal started early in January before concerns of COVID-19 took over. However, even after the nation was in the grips of the pandemic, Greystar continued to move forward with the acquisition, citing the strong fundamentals of the multifamily industry. It reportedly paid nearly $200 million in the all-cash deal.

“We really didn’t in any point in time feel like it was something we didn’t want to do or do right now. It was so strategic for us for the longer term,” says Livingstone. “The same reasons in January, and before we got deep in due diligence, were still the same reasons in June. Fundamentally, we believe there’s still lots of demand in the marketplace. When we thought about the opportunity in a longer perspective—three, five, or 10 years—it would have been a missed opportunity. All of the fundamentals and all of the reasons were still in check even though COVID was top of mind.”

Another major ingredient for Greystar moving ahead with the acquisition was the companies’ cultural compatibility.

“First and foremost, it’s about the people and how we feel about the team members. If you start at the top, Bruce Ward and his team at Alliance are the best of the best. We are culturally compatible, and we share a lot of clients as well. We felt really good about them as a company, and that’s the biggest hurdle for us.”

Client Concentration

Greystar and Alliance shared a number of top clients. “If you looked at their top 30 clients, we shared 20 of those 30. Coming together, it works really well for our clients. It allows us to invest more around these clients. And more and more, our clients are looking for companies like ours that can invest more deeply in resources.”

One of those shared clients is TruAmerica Multifamily, led by CEO Bob Hart. While the firm’s communities are managed by six top property managers, over 13,000 units are managed by Greystar and an additional 4,000 had been managed by Alliance.

“It’s a big statement. Greystar is highly committed to the multifamily business and is making a big bet,” says Hart. “It shows the company’s commitment to the space. And they wouldn’t have bought it if they weren’t going to grow it.”

Hart adds that he thinks it’s a good move for both firms, allowing Alliance to stay in its core business of development and investment. Alliance, which ranks No. 1 on the NMHC Top 25 Developers list and No. 2 on the NMHC Top 25 Builders list, is continuing to focus on the development, construction, and acquisition of multifamily, workforce, and senior housing. As part of the acquisition deal, Greystar will provide management services for Alliance’s acquisition and development businesses going forward.

“Greystar honored the deal it made pre-pandemic and saw it as an opportunity,” Hart says.

Tapping into Talent

The combined portfolio increases Greystar’s portfolio by approximately 25% and complements its presence in key West Coast, Pacific Northwest, and Northeast markets. It boosts the company’s team to nearly 19,000 employees.

“It really deepens our footprint in major markets, and it gets us access to the local talent in those markets. When you look at the footprint of Alliance and how it laid over Greystar’s, it gives us a much deeper team in Southern and Northern California, Las Vegas, Salt Lake City, Phoenix, and Denver,” says Livingstone. “And even markets where we already have a large team and footprint, like Houston and Dallas, it rounded us out nicely in Texas. Getting access to that local talent was super important.”

Transition During COVID

As the teams transition into one, Greystar will go through a process to look at all of the combined staff members. “Everyone really has to evaluate for themselves if they feel like being part of a large organization that is better resourced or if they want to be in a smaller boutique organization where they can wear many hats,” says Livingstone.

Greystar is adapting to bring the team on board during the COVID-19 pandemic.

“Our plan is to unite similar cultures,” says Livingstone. “Alliance is very focused on a culture of service for all of their residents. That’s where we will unite the areas of the company—taking care of our residents. Both companies have always been looking for ways to improve the resident experience.”

First, it plans to unite around the residents, and then Greystar will be working closely to unite both companies around the community and around the industry. “That’s a way that we have really given back to the community—it’s in our company DNA,” he says.

From a tactical perspective, Greystar has a process that it has learned from past acquisitions. It has formed a core team of people—critical leaders from Alliance that are put side by side with Greystar leaders—that oversees 12 separate working teams.

It also is looking at some new ways of doing things that Livingstone says the firm didn’t do as well, such as property marketing through the in-house marketing agency that came over with the Alliance team.

“We are learning about that early on and meeting clients who value that service. To add scale to that could really supercharge that business,” he says.

Livingstone says he also thinks COVID is pointing out that business moves fast and companies need to be agile. “With COVID and the financial crisis, more and more you really have to have a lot of subject matter expertise. You need a team and a robust organization to do that,” he says. “It’s us against the market instead of competing with [Alliance]. They are tremendous people, and we’re really excited to build a tremendous company and keep providing opportunities for our team members. That’s a big part of what we think people get with Greystar.”

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