Greystone & Cushman JV
Thoughts? - https://www.businesswire.com/news/home/2021102000…
My first reaction was that it took just 500MM for a 40% stake? lol, that seems ridiculously cheap for me. I have always wondered how much it would cost to acquire an agency platform given Capital One, Wells Fargo, Newpoint and many others only have agency platforms via acquisitions and it is much harder to get a new license. Sure Greystone might be a tier or two below the top 3 agency lenders (CBRE, Berkadia, W&D) but still if their entire agency business is valued at only $1.25B, I would imagine a shit ton of lenders particularly banks who do not have an agency platform would have been willing to acquire the whole or part of the platform and even pay a premium for it. The benefit for the bank in this case would be that you get to be a one stop shop for your borrowers and can provide balance sheet and agency quotes. I am obviously really bullish and like the agency business and think Cushman just got away with the deal of the year but does anyone have a different perspective?
By what metrics is $1.25bn cheap? How much in EBITDA does Greystone’s agency business earn each year? If they make $200mm in EBITDA, sure, that’s cheap. But I’m guessing you don’t have those figures
Also, the company was not for sale. So no one could have bought the whole company even if they wanted to. Notice they only took a 40% stake - the founders still have control of the company. Which is generally what founders want
Obviously I dont have access to their books and they are a private company but I am looking at this from a buyer perspective. If I do not have an agency platform, how much would it cost to build out an agency team from the ground up and get a new license vs acquiring an existing agency platform where you get the license and the existing team and the agency infrastructure-origination, underwriting, servicing, etc. We all have seen the numbers thrown around to poach just top producers, it is nuts. In that aspect, a business valued at $1.25B seemed cheap to me at first glance. And I come from the banking world where $500MM was pocket change in the sense that when we plan our budget for next year, we set aside something like $500MM for "new initiatives" where you try to build a new business, expand product offerings, etc. So, getting a 40% stake in an agency business for that amount seemed like a steal for me.
I think it is mutually beneficial considering how CW can help feed the agency pipeline via Investment Sales. Wouldn't surprise me to see Berkadia or W&D in a similar situation. All the major brokerages are looking to provide service in the agency space.
Yes, this article touches on it, it has a paywall but one can access the article using the wayback machine. Ironically per the article, one borrower noted C&W was easy to deal with on the advisory side because they didn't have an adjacent debt origination business nipping at the borrower heels during the process. That was funny. Now they will try to nab fees in every conceivable way they can but that is pretty par for the course in this business I guess.
https://commercialobserver.com/2021/05/fannie-mae-freddie-mac-apartment…
I mean Cushman's multifamily investment sales platform sucks outside of the SE/FL and LA, so it's not like this is that big of a deal. To me, these are two very Tier II/III players in multifamily working putting a venture together (can't remember if Greystone has a DUS license which is a big, expensive deal).
Berkadia obviously merged with Moran to get more institutional MF business to feed the debt machine, and W&D has probably been the most acquisitive company in MF on both the debt and equity side of things.
There is definitely a consolidation happening in the Multifamily space, and there is a clear distinction between platforms right now. Eastdil, W&D, JLL, Newmark, and CBRE are pretty complete Tier I platforms. In my view Eastdil and W&D are pulling away from the pack, CBRE and JLL are moving in the wrong direction, and Newmark is holding steady. Everyone else is definitely a step below, and it is a big step.
Greystone has a DUS license. I believe they were in the lower half of the top 10 list with Fannie last year, so pretty decent and they are a big player in the small loan space with them.
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