Gavin Swartzman, president and CEO of Peerage Realty Partners. (Image courtesy Peerage Realty Partners)

Toronto-based Peerage Realty Partners has made its first expansion into the U.S. with the purchase of a majority stake in Denver-based independent brokerage Madison & Company Properties, LLC.

President and CEO Gavin Swartzman said Peerage has set aside $250 million for other U.S. and Canadian acquisitions.

“We’re focused on communities that are growing (in which) there is velocity in transactions (and) a wide range of real estate options,” he told RENX.

Swartzman declined to discuss financial terms of the purchase.

Madison, which describes itself as Denver’s No. 1 boutique real estate firm, has seven offices in the city with about 150 real estate agents serving the residential and commercial markets. It was founded by CEO Todd Narlinger during the height of the recession in 2008.

“You couldn’t pick a worse time to be in the real estate business in the U.S. and yet he did,” Swartzman says. “He’s a resilient, resourceful person (who is) super passionate about the quality of his product and his agents.”

Madison’s senior management to remain

Narlinger will remain as Madison CEO and maintain a “significant ongoing equity” in the brokerage.

In a statement, Narlinger said partnering with Peerage will allow Madison to benefit from additional resources and accelerate its expansion plans, while preserving its operational independence and culture.

“He had been approached by most of the major players over the years and he turned them all down because he was not interested in selling,” Swartzman says. However, Narlinger decided to partner with Peerage because “we never think about buying a company. We think of ourselves as forming a partnership.”

Under Peerage’s acquisition model, founders of its partner companies remain with their businesses over the long haul, unlike the traditional mergers and acquisitions model.

“We take the time to really understand our partners and why they want to do something. If their objective is an exit, there’s nothing wrong with that (but) we’re probably not going to be their partner of choice.”

Peerage’s partner firms

Company founders who partner with Peerage “know their businesses best,” Swartzman says. “We’re here to help them support their growth. We’re not here to run their business.”

Peerage’s other partners include:

* Toronto-based luxury brokerage Chestnut Park Real Estate (which is affiliated with Christie’s International Real Estate in the Toronto area) with 339 real estate agents;

* Baker Real Estate, which specializes in selling and marketing new developments and condominiums in Ontario and Montreal;

* B.C.-based condominium sales and marketing firm Fifth Avenue Real Estate Marketing;

* and brokerage StreetCity Realty, with 10 offices and more than 300 agents in Ontario.

Peerage seeks the “right partner”

Because Peerage is a private company, it is under no pressure to grow for the sake of growing, Swartzman says.

“For us, it’s really about the quality of the partner, which means finding the right partner is more important than just doing something for the sake of it.”

A slowdown in the housing market would actually be beneficial to Peerage, Swartzman said, because it will allow professional real estate agents to shine and scare away more marginal players.

“When the markets are tighter, it’s really when the value of having a really experienced real estate professional is more apparent than when things are literally flying off the shelf.”

Swartzman, a chartered accountant, spent 10 years as a managing director at MDC Partners before joining Peerage.

About Peerage

Peerage Realty, which sells $7 billion worth of real estate annually, was founded in 2007 by private equity firm Peerage Capital Group founder and executive chairman Miles S. Nadal. 

Peerage Capital Group is a business services and private investment firm that partners with businesses in real estate, asset management, wealth advisory services and land assembly. Peerage Capital’s network of partner companies employs over 1,000 across Canada and the United States with more than $7 billion in total assets under management and administration.

Nadal is the former CEO of MDC Partners, which he founded in 1986 and which became a major marketing and digital advertising firm. He resigned from MDC in 2015, amid an investigation by the U.S. Securities and Exchange Commission (SEC) into undisclosed CEO compensation.

Nadal accepted a settlement with the SEC in 2016 to pay back more than US$10 million in cash bonuses he received during his time as CEO of MDC and reimburse undisclosed expenses that included cosmetic surgery, private aircraft, pet care, sports cars, jewellery and charitable donations.

Last April, the Ontario Securities Commission approved a settlement with Nadal which bars him from serving as a director or officer of any public company until May 2022.