To broaden The RMR Group’s position as an alternative asset manager, the firm has entered into a definitive agreement to acquire 100% of the equity interests in MPC Partnership Holdings, LLC, doing business as CARROLL, a vertically integrated multifamily platform.
The $80 million all-cash acquisition includes the platform, approximately $7 billion in assets under management (AUM), over 28,000 units across the Sun Belt, and more than 20 institutional partner relationships.
“We are excited to announce the strategic acquisition of CARROLL, a leading vertically integrated multifamily housing platform. This transaction will further diversify and expand the reach of RMR, augmenting RMR’s already considerable scale with differentiated operational expertise in a favored commercial real estate sector. Importantly, the CARROLL platform is uniquely positioned to continue benefiting from favorable demographic tailwinds in high-growth Sun Belt markets,” says Adam Portnoy, president and CEO of The RMR Group.
“Additionally, this acquisition will advance RMR’s private capital growth strategy with high-quality global institutional investors and drive continued growth across the combined platform with the potential to make in excess of $3 billion of additional multifamily investments. We look forward to welcoming the CARROLL team to RMR at closing and supporting CARROLL’s continued growth and expanding its operations as part of RMR.”
While entering the only major commercial real estate sector that RMR does not have significant presence in, the transaction will ultimately double the asset manager's private capital to $15 billion and grow the total AUM to $44 billion. CARROLL’s advanced technology infrastructure and digital marketing capabilities will be leveraged across the RMR platform.
Providing asset and property management services to 81 multifamily properties primarily across Sun Belt markets, CARROLL’s platform and roughly 700 employees combine operations with expertise in capital raising, property acquisitions, asset management, and property management through its in-house brand, ARIUM Living, to unlock value at managed assets. With a track record of delivering average gross realized returns of nearly 30% for institutional investors, the company’s scalable, profitable, and asset-light business generates recurring fee income, which will position RMR for continued growth.
“I’m incredibly proud of the business my team and I have built over the past nearly 20 years with the support of our investors and partners, and I’m thrilled to see CARROLL take the next step under RMR’s ownership. CARROLL’s long track record of success and expertise in the multifamily sector will perfectly complement RMR’s diverse real estate investment management platform,” Patrick Carroll, founder and CEO of CARROLL, says. “I believe RMR is the right company to lead the CARROLL team and business through the next phase of growth, while continuing to focus on the core tenets of our business— consistently delivering best-in-class management and generating meaningful value for our partners.”
The transaction, which was unanimously approved by RMR’s board of directors, is expected to close in the fall of this year, subject to customary conditions, primarily obtaining limited partner, joint-venture partner, and lender consents. In the first full year of operations post-closing, RMR expects the CARROLL platform to generate more than $35 million in recurring fees and approximately $11 million to $13 million of adjusted EBITDA, including $5 million to $6 million of synergies. Post-transaction, RMR expects to have no debt and approximately $200 million of cash on hand for further opportunistic growth strategies.
The CenterCap Group is serving as exclusive financial adviser and Skadden, Arps, Slate, Meagher & Flom is acting as legal adviser to RMR on this transaction. UBS Investment Bank is acting as exclusive financial adviser and King & Spalding LLP is acting as legal adviser to CARROLL.
