Last week Multifamily Executive took some time to pick the brain of Bob Faith, CEO of Charleston, S.C.-based Greystar about how his company came to ink one of the largest multifamily portfolio deals in recent memory, to the tune of $1.5 billion, with Equity Residential (EQR) just a few weeks ago. Here’s what he had to say on the company’s newest additions to its portfolio.
MFE: Was this portfolio acquisition something Greystar had in the works before Equity and AvalonBay announced the Archstone deal?
Faith: Actually no, it wasn’t. It really came about pretty quickly. My history with the EQR guys goes all the way back to their IPO days in 1993. I was one of the co-founders of Starwood Capital Partners and we took our apartment portfolio at that time and merged it into Sam Zell’s for the IPO. So I got to know all the EQR guys there. Alan George, who is now their chief investment officer, was someone I had been staying touch with over the years as the company grew since 1993. And for this deal, he was the guy on the other side of the table.
So I picked up the phone and we explored the option of putting together a fairly large transaction in a very short time frame. We were able to go through and kind of hand-pick that portfolio. Our first conversation was around December 14. For this to work for Alan, we had to be able to go hard a significant amount of money so he knew he didn’t have to market those assets and he had a certain chunk of capital. We negotiated the transaction where we could go hard $150 million within two weeks. Really no other organization can really do 27 assets within two weeks.
MFE: How did you go about choosing and agreeing on which assets to buy?
Faith: With assets all around the country, we have chief operations in all the markets that these new assets are located in, which is why we picked them. It actually ended up taking about two-and-a-half weeks by the time we went hard and finished our due diligence, which was around January 4. So while we may have encroached on a few people’s holidays, we think it was well worth it. Christmas in March is just as good.
There was some give and take with Alan putting this portfolio together, but we focused on the markets we really wanted to be in and already operate in. Fortunately, there was enough that we wanted to buy that they also wanted to sell, so we were able to get it crafted.
MFE: How will this change the dynamics of Greystar’s portfolio in terms of allocating resources?
Faith: We are going to stay consistent on where we put focus. We’ve got probably approaching $2 billion in development going on across the country and these new acquisitions are really in the same markets where we are doing all this new development today. Greystar Equity Partners 7, which is our discretionary platform we use for the assets we’ve acquired, which tend to be in the same markets where we are very, very deep and very experienced, was used. We know exactly the operations, the expenses, what assets are trading for, what’s going on in the markets—so that’s a big part of why we were able to move so quickly and were comfortable moving so quickly with these new properties.