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IN SOME WAYS, THE GREYSTAR–RIVERSTONE MARRIAGE WAS ROOTED in the same family tree.

While June’s landmark deal between the country’s top two apartment managers sent the industry rumor mill buzzing with talk of an almost 400,000-unit man-agement colossus with tentacles reaching into every major market, one of the under-the-radar aspects of the merger was the intellectual capital involved.

Bob Faith, CEO of Charleston, S.C.–based Greystar, had worked with key members of Riverstone’s executive team at Trammell Crow before leaving to build his own empire. And he admired their ability to develop talent.

“It’s just really about having the highest quality of people,” Faith says. “One of the hardest things we do is to find highly motivated, intelligent people. This deal brings together two great groups of folks, and that’s really what we believe it’s all about.”

Now, the hard part begins—unifying all of that tal-ent together under one large umbrella.

CULTURE CLUBTerry Danner is proud of the team he built at River-stone. He established the firm in 2006 by buying out Trammell Crow Residential Services with Riverstone’s other founder, Christy Freeland. Freeland retired as chairman of the company in 2010 and Danner became CEO last year.

And Danner never stopped building that team. Riverstone has sharpened its focus on recruiting the best and brightest over the past year, hiring several recruiting managers and launching a comprehensive outreach effort to sell the company’s opportunities to a new wave of young professionals.

“I think there are so many bright kids coming out of school,” Danner told MFE earlier this year. “And our industry is poised to be a great place for those kids. So, last year, we hired three recruiters. And we’re going to try and bring more young talent into this industry … .”

Approximately 4,700 Riverstone employees were set to join the Greystar team, which stood at approxi-mately 5,900 staff members nationwide, when the sale closed on June 4. As Riverstone’s foot soldiers move under the Greystar tent, Danner is accelerating the transition process by leading team and group sessions across the country.

As of early July, Danner was in the midst of visit-ing and meeting with associates, city by city, to foster collaboration and programming to promote cohesive company culture.

“Company culture is one of those things that may be best learned through experience and interactions with other team members and the leaders of the company,” Danner said in an e-mail. “We’ve been conducting joint town-hall meetings across the country to discuss the in-

Rivals No MoreThe Greystar–Riverstone union will create the biggest management company in multifamily history. But as the two titans join forces, much work lies ahead.

by lindsay machak and les shaver

Over the past decade, Bob Faith (left) and Terry Danner built two property management empires. Now, Greystar and Riverstone will be together under one banner.

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Jay B. Sauceda

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“Over the coming months, these teams will contin-ue to meet regularly to develop strategies for a smooth integration,” Livingstone says. “While it will be chal-lenging, the rewards that come from our combined organizational knowledge, expertise, and greater effi-ciency will make it well worth the effort.”

Greystar hopes to be fully integrated by the end of the year. Danner will continue as Riverstone CEO through the integration. Then, once the company’s ultimate structure is determined, his leadership role will become more defined, according to Greystar.

INDUSTRY AFTERSHOCKSWhile Danner and Livingstone have undoubtedly an-swered important questions about the transition for anxious employees, the ramifications of the Greystar–Riverstone union are still up in the air for both com-petitors and clients.

Publicly, Riverstone’s clients have remained tight-lipped about news of the sale.

As CEO of Dallas-based Pinnacle, the fourth- largest manager in the apartment space, Rick Graf may feel the ramifications of the sale as much as anyone.

“Many of our clients are shared clients with Grey-star and Riverstone,” Graf said on the day the transac-tion was announced. “My phone is blowing up, as you can imagine, with people in the industry wondering what’s the deal.”

Graf’s clients aren’t alone in wondering about the marriage of the two multifamily giants. Some manag-ers wonder how much Greystar paid for Riverstone, thinking it could set a new benchmark in pricing.

Traditionally, apartment management firms have been valued at two to four times their EBITDA (earnings before interest, taxes, depreciation, and amortization), but this deal could change that calculation.

“Not that we’re for sale, but if someone would come along and pay six [times earnings], it might get inter-esting,” said one apartment manager who preferred to remain anonymous.

For those that aren’t thinking about selling any time soon, the more pressing matter is competition. In the end, there are more questions than answers about the newly announced merger of the industry’s two big-gest managers.

“Will it change the landscape?” Graf asks. “Obvi-ously. But, what will it mean? How will it shake out? Time will tell.”

HEIGHTENED COMPETITION While the nearly 400,000-unit Greystar–Riverstone colossus could, on the surface, create problems for both national and regional property managers, those competitors publicly say the merger will create opportunities.

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tegration with team members in a personalized and in-timate setting. This has given team members a chance to meet one another, and has given us an opportunity to introduce ourselves in person, discuss our shared vi-sion and the integration process, and field questions.”

Andrew Livingstone, Greystar’s executive managing director of real estate, is the point man at his company for the integration. A 20-year industry veteran (and 15-year Greystar staffer), Livingstone is up to the task after playing a prominent role in establishing Greystar’s long-term strategic direction.

In fact, Livingstone led the integration efforts follow-ing the company’s acquisition of JPI Property Manage-ment Co. in 2009 and the Archon and Glacier portfolios in 2010. He’s even gone international, supervising the es-tablishment of Greystar’s operations in both the United Kingdom and Mexico.

Livingstone says the goal is to make the transition as seamless as possible for everyone involved, which includes about 120 of Riverstone’s regional managers.

“During the transition period, most existing pro-grams, policies, and business processes that are in place at Greystar and Riverstone will continue as is,” he said in an e-mail. “This provides for continuation of

“We at Laramar [Group, based in Chicago] always sold David against Goliath,” says Dave Woodward, now president of New York–based property management firm CompassRock Real Estate. “My gut reaction is this helps [do that].”

Back in the late ’90s, after a period of initial public offerings and mergers and acquisitions, several com-panies built massive portfolios, but none approached 400,000 units, according to the National Multifamily Housing Council (see sidebar, right).

Ultimately, owners pared down these large, unruly holdings. Many wonder if Greystar will face similar challenges, with more than 390,000 units and 10,000 employees.

“You have 10,000 employees,” Graf says. “That’s a huge number of properties, employees, and relation-ships. I’m sure the Riverstone guys would say that one of their challenges in acquiring companies was creat-ing culture and creating systems.”

Dennis Treadaway is confident the merger will bring more opportunities his way. Treadaway, presi-dent of Folsom, Calif.–based FPI Management, doesn’t believe bigger is always better.

“It really limits your ability to be completely flex-ible client by client,” he says. “[Greystar will] need to run to create efficiency, and that might create opportu-nities for companies like mine.”

And while FPI does business in both affordable and market-rate product across all styles of portfolios, Treadaway believes Greystar’s best bet is with insti-tutional clients rather than small-scale, homegrown, affordable communities. “I think Greystar will have their sweet spot, and that will be in institutional prod-uct,” Treadaway says.

In addition to business opportunities for his com-pany, Treadaway thinks some of the current Greystar–Riverstone talent may look for other work as the inte-gration effort exposes where employee overlap exists.

“I also think, because both companies are big and both will bring resources together, they’ll probably be consolidating some of their efforts,” Treadaway says. “So, good talent may come to the market.”

But Danner believes the past absorption of large portfolios gives Greystar the advantage. “Both compa-nies have experienced rapid growth throughout our respective histories,” he says. “This has built a certain discipline within our organizations that is a part of our shared DNA.

“We have both become accustomed to rapid growth and understand its challenges and opportunities. While this integration may lead to some greater ef-ficiency, it’s not about streamlining. It’s really about combining the top talent and business practices in our local markets so that we can deliver the best services to our clients and residents.” MFE

our business while the integration teams collaborate to understand and compare our respective operations, explore best and market-leading practices, and estab-lish processes for the combined companies.”

FITTING THE PIECESThough Greystar had a national platform to begin with, the acquisition of Riverstone provides the firm much more depth in several key markets, such as Seattle; Portland, Ore.; and parts of California. But blending two cultures will be a challenge.

“Fortunately, this is a competency that both com-panies have honed over the years,” Livingstone says. “We both have established integration practices, tools, and subject-matter experts who have performed these tasks before, in taking on new management assign-ments and property portfolios, and integrating smaller management companies.”

Addressing operations has been the most immedi-ate task in the initial integration effort. As soon as the sale was made public, the company assembled “joint integration teams,” based on areas of expertise, to help bridge the divide between the different staffs and get everyone on the same page.

THE 10 BIGGEST MANAGERS OF THE PAST 25 YEARS391,015* Greystar Real Estate Partners, 2014

362,468 Apartment Investment and Management Co.,† 2000

347,692 Apartment Investment and Management Co., 1999

325,094 Apartment Investment and Management Co., 2001

309,000 Apartment Investment and Management Co., 2003

303,805 Apartment Investment and Management Co., 2002

272,071 Insignia Financial Group, 1996

250,123 Insignia Financial Group, 1998

244,689 Insignia Financial Group, 1997

239,875 Apartment Investment and Management Co., 2004

*This figure is an MFE estimate based on individual unit counts published in the 2014 NMHC 50 for both Riverstone and Greystar. †Now referred to as “Aimco.”Source: National Multifamily Housing Council

[Being big] really limits your ability to be completely flexible client by client. [Greystar] will need to run to create efficiency, and that might create opportunities for companies like mine. —Dennis Treadaway, president, FPI Management“ “

One of the big challenges in the Greystar–Riverstone

merger will be integrating Greystar’s property manage-

ment groups, such as the employees at Elan Midtown

in Charleston, S.C. (above, left), with those from River-

stone, including the site-level staff at WaterMarke Tower in

Los Angeles (above, right).