CHICAGO AND ATLANTA — Chicago-based brokerage giant Jones Lang LaSalle (JLL) is broadening its capital markets platform with the signing of a definitive agreement that will allow it to acquire part of Atlanta-based Primary Capital Advisors. With the acquisition, JLL will become a Freddie Mac Program Plus Seller/Servicer. The deal also includes a $2 billion loan servicing platform that JLL plans to eventually expand on a national level. The acquisition is expected to close in the first quarter of this year.
Faron Thompson, Primary Capital's co-founder, will lead JLL's multifamily lending business and assume an executive leadership role with the firm's real estate investment banking (REIB) team. John Bray, Primary Capital's managing director and its number one Program Plus producer last year, will join Thompson. The two will partner with President Jay Koster and the REIB leadership team of Tom Melody, Mike Melody and Tom Fish, along with Jubeen Vaghefi, managing director of JLL's national multifamily investment sales team, to drive the firm's expansion of its Americas Capital Markets business. William B. Pendleton, Primary Capital's co-founder, president and chief executive officer, will serve as senior advisor to JLL and will focus on expanding client and lender relations.
According to Thompson, the move stems from the mutual needs of both companies. Jones Lang LaSalle made a recent commitment to beef up its capital markets group, especially its real estate investment banking operations. The company has doubled its multifamily investment sales team to approximately 50 employees.
“[JLL] went to Freddie Mac and asked how to get in the game,” Thompson explains. “The executives at Freddie Mac suggested they needed to acquire someone. The easiest and best way to get in the game was to buy someone who was already in.”
However, there are only 26 licensed Freddie Mac seller/servicers and all but three of them are large institutional companies. Of the three smaller firms, Primary Capital was the most active. It was also looking for a partnership.
“We wanted to continue to be relevant, and, to be relevant, we needed to be able to provide our customers with an expanded lineup of services, so partnering with someone was already on our radar screen” Thompson adds. “What's nice about the JLL arrangement is because they had no presence in our exact space, they needed all the things we do; whereas, some other groups we might have talked to more seriously would not have needed certain components of my team.”
In the near term, Thompson sees the multifamily sector recovering quickly. Americans are more open now to renting than the home-ownership-at-any-cost attitude of recent years. New multifamily construction in markets nationwide has slowed to a trickle. Finally, a tidal wave of young Americans will be graduating college in the coming years and many of them will need to rent apartments. These things add up to a high demand for JLL's new services in the coming years.
Primary Capital will continue to operate its single-family residential mortgage business across 26 states as Primary Capital Mortgage.
— Daniel Beaird and Coleman Wood