CenterSquare Investment Management is expected to be under new ownership by the end of the year, the latest in a string of real estate managers that have struck M&A deals, the company said last week.
BNY Mellon Investment Management, which owned the Plymouth Meeting, Pennsylvania-based investment manager for the last 11 years, sold the business to CenterSquare’s management team and Radnor, Pennsylvania-based private equity firm Lovell Minnick Partners.
Terms of the deal were not disclosed. The transaction is expected to be completed by year-end.
“In the future we expect to see strategic opportunities to grow the business and we will support the company’s pursuit of their growth ideas.”
– Jim Minnick
CenterSquare manages about $9 billion in assets, with investments in real estate and listed infrastructure. PERE understands the firm’s management initiated sale discussions with BNY and hired investment bank Berkshire Capital to find a private equity buyer. It is unclear how long the sale process has been in effect, but PERE understands that Lovell Minnick began talks with CenterSquare last year.
CenterSquare plans to continue its business with its team and brand intact under the new ownership structure, and expand both its employee roster and its investment strategies. Lovell Minnick, which purchased the firm through one of its private equity funds, is expanding its investment focus to real assets through the deal.
“We believe real estate will continue to see allocations by institutional and individual investors. We have experience in asset management, we like firms with specialization and deep levels of expertise and we see CenterSquare as having those qualities in the real estate sector,” co-founder Jim Minnick told PERE, noting the firm has purchased 20 asset managers in its 18-year history. “Our plan, first and foremost, is to support the CenterSquare team as they serve their clients. In the future we expect to see strategic opportunities to grow the business and we will support the company’s pursuit of their growth ideas.”
CenterSquare closed its most recent commingled real estate fund, CenterSquare Value-Added Fund III, on $150 million in the first quarter of 2016, and has since deployed about 90 percent of its capital, PERE understands. Limited partners in the vehicle include the City of Miami Firefighters’ and Police Officers’ Retirement Trust, which could not be reached for comment.
“We’ve had overwhelming positive feedback from clients, LPs and the consultant community,” Todd Briddell, the firm’s chief executive, told PERE.
CenterSquare managed $8 billion in real estate and infrastructure securities and $1.3 billion of private equity real estate as of June 30, according to the announcement. A predecessor to BNY Mellon acquired the firm, then known as Urdang Capital, in 2006.
CenterSquare is far from the only real estate manager that is expected to sell all or part of its company this year. Last week, Boston-based Columbia Threadneedle Investments agreed to buy Houston-based Lionstone Partners for an undisclosed sum, PERE reported. Other M&A deals in private equity real estate this year include Hong Kong-based alternative investment manager CITIC Capital acquiring a 48 percent interest in San Francisco-based Stockbridge Capital Group and Japanese real estate company NTT Urban Development purchasing a 15 percent stake in Morristown, New Jersey-based Normandy Realty Partners, PERE also reported.
This year has also seen two cross-border deals involving larger asset managers with real estate platforms: Japanese telecommunications and internet corporation SoftBank Group’s purchase of New York-based Fortress Investment Group for $3.3 billion; and Japanese conglomerate Mitsui’s buy of a 20 percent stake in Los Angeles’s CIM Group.
Investment firm Neuberger Berman’s permanent capital vehicle Dyal Capital Group has also taken multiple minority interests in firms that have real estate platforms, including Atalaya Capital Management in June, HIG Capital in August 2016 and Starwood Capital Group in September 2016.
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