Greystar has purchased Alliance Residential's property management arm, which currently manages 130,000 units, adding to the global behemoth that is Greystar.
I have tremendous respect for Greystar's development team and have many friends over there at various levels in the company, but I have also had particularly poor experiences with Greystar's third party management teams. Many of these issues are due more to individuals than the company, but there has also been a tremendous aversion to change and preference toward homogenization in how a management staff conducts themselves. In the apartment world, this isn't particularly useful when trying to beat competitors with what is essentially a commoditized product. I'm also personally convinced that they, perhaps understandably, keep their best performers on Greystar assets.
I'm interested in what everyone's own experiences have been with either Greystar or Alliance management staff, what your thoughts are on consolidation within the apartment management industry, and how you think this will impact the apartment world more generally.
Outside of Charleston, Greystar is pretty marginal I would say. You're just another $125K/yr fee to them. Regionals don't give you good feedback let alone your PMs and leasing associates. We predominantly use a more regional firm for that very reason.
Our primary MGMT company just requested a reduction in MGMT fee from 3.00% to 2.75% for more guaranteed dollars during lease-ups. We found this odd as we are long term owners and the project, they initiated this on was financed by HUD (40-year term.) It was an easy yes for us and seemed shortsighted for them.
They are also trying to restrict vendors. We had to fight them on letting us keep the landscaper who installed the landscaping to manage it for the 1st year (keeping the warranty valid) vs the “MGMT approved vendor.”
Not sure where this is heading, but it looks like a similar trend in healthcare, with costs increasing quicker than revenues, scale is the only path to NOI growth.
CRE I agree with your assessment, sometimes you get lucky and have a great PM but often it feels like you get a B team. I once had a great PM get moved to a Greystar owned asset, needless to say we fired Greystar portfolio wide soon after... It never felt like they cared enough about minimizing expenses they were more revenue driven which aligns with their incentives but from an ownership standpoint expense management results in immediate NOI improvement whereas revenue relies on tenants/prospects. I also always wondered if their development and investment teams had access to all the property level P&L, and leasing data of the 3rd party group. It seems like you could make superior investment/development decisions based on that data.
As someone who comes from a company that manages and invests, I can assure you they do have access.
Wow. That’s pretty suspect on their part, but definitely a huge advantage in underwriting development and acquisitions deals.
It is super common. Read your PMA and push back if you have issues with it.
what is everyone seeing in the market for management fees?
is the management fee a % if total income? EGI? EGI+ other income? EGI + non recurring fees such as amenity fees?
what’s the typical structure. I’d assume it cant be only EGI because then management doesn’t make money on other charges such as application fee, pet rent, lockout charges. is this correct?
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