Altus Group says it has an agreement to acquire the commercial real estate valuation and advisory services business (REVS) of Houston-based Situs Group LLC in an all-cash transaction which values the business at $310.1 million (all figures Cdn).
The acquisition is timely, Altus CEO Jim Hannon notes, in part because of the ongoing economic uncertainty, elevated interest rates and other constantly fluctuating conditions. In many sectors, comparable transactions are few and far between, making property valuations increasingly challenging to determine.
“Current market complexity and increasing financial reporting demands drive the need for high-quality and timely valuations and data-driven insights for CRE investors and operators,” Hannon said in the announcement. “We are excited to have the highly regarded REVS team join the top talent at Altus Group.”
“Collectively we will expand the scope of valuation offers, including advanced analytics, that we deliver to clients."
This is the second major acquisition in the sector which Altus has announced this week. It also has a deal to acquire Forbury Property Valuation Solutions Limited – which operates in the APAC region. That deal is expected to close by Dec. 1.
Objectives of the Situs Group REVS acquisition
Altus believes the pending Situs Group REVS acquisition offers it a number of strategic advantages:
- enhancing Altus’ valuation offerings and opens up growth avenues for advanced analytics applications;
- increasing Altus’ talent base with experienced, licensed valuation professionals, technologists and a scalable service delivery function;
- strengthening the company’s financial profile and offering opportunities for operational efficiencies; and
- enhancing strategic long-term growth opportunities with expansive valuation datasets that are core to its strategy to scale advanced analytics.
The REVS division offers independent valuation management solutions to some of the largest CRE institutional investors in the U.S., including pension funds, insurance companies, investment managers, banks and other asset owners and investors.
The transaction will include the REVS division’s key commercial solutions for valuation management (including its valuation management system and the daily valuation system technology platforms), as well as related appraisal and consulting services such as portfolio monitoring and reporting, portfolio valuations, pension fund monitoring and reporting, and other similar services.
Approximately 350 employees are expected to join Altus Group as part of the acquisition.
“The combination of our market expertise and expansive valuation datasets will create best-in-class valuation intelligence,” Rick Kalvoda, president of analytics for the Americas region at Altus Group, said in the announcement.
“It will elevate the insights and transparency we bring to clients to help them drive asset performance and manage risk.”
The REVS division has been growing its top line in the double digits, Altus states, and expects to generate approximately approximately $63.6 million in revenue and approximately $19.5 million in normalized EBITDA for fiscal 2023.
Assuming that this transaction, as well as the Forbury acquisition both close, Altus' funded debt to adjusted EBITDA leverage ratio is forecast to still be below its 4.5 times maximum capacity limit under its credit facilities.
Altus expects to de-lever to its target 2.0 – 2.5 times leverage ratio range by the end of 2025.
The acquisition of the REVS division is expected to close prior to the end of Q2 2024, subject to customary closing conditions and receipt of regulatory approvals.
About Altus Group
Altus Group is a global company headquartered in Toronto with approximately 3,000 employees across North America, Europe, the Middle East and Africa (EMEA) and Asia Pacific.
It provides asset and fund intelligence for commercial real estate, offering intelligence-as-a-service through its technology, advanced analytics and advisory services.