A bold move to take Marcus & Millichap public is a signal the company is ready to take on its global real estate competitors, according to one analyst.
Dan Fasulo, managing director at Real Capital Analytics, said news that the firm has filed for an initial public offering of its stock shows Marcus & Millichap’s will to compete with large, publicly-listed brokerages like Jones Lang LaSalle.
“They are seeing their competitors invest,” he said. “You have to keep up with the Joneses.”
Marcus & Millichap announced Monday that it has filed for an IPO with the U.S. Securities and Exchange Commission.
The company said the number of shares, which will be common stock, and their price has not been determined. According to a preliminary SEC prospectus, the brokerage plans to raise up to $103.5 million, money it will use for “general corporate purposes,ˮ including buying real estate businesses or companies, capital expenditures and working capital to expand its markets and services.
Founded in 1971 by George M. Marcus and William A. Millichap, the company has 1,000 brokers in offices across the US. Last year, it closed 6,149 investment transactions for private and institutional investors, more than any other firm.
Marcus & Millichap Real Estate Investment Services Inc. is now one of eight companies founded by Marcus & Millichap that include Meridian Property Company, Pacific Property Company, Sovereign Investment Company, SummerHill Homes and Urban Housing Group.
Fasulo said another generally positive effect of IPOs is to clear up an ownership structure with dozens of partners and different interests.
The IPO shows how far the recovery of the real estate market has progressed. “This wouldn’t have been possible years ago”, Fasulo said. “Others, like Jones Lang LaSalle, have seen a run-up in their share prices. The environment today is such that an IPO makes sense.”
He added that rising house prices also make this a good time to reinvest the income from the IPO, for example, in the takeover of other brokerages.
Marcus & Millichap did not comment on the move, citing a mandatory “quiet period”.
The IPO will be underwritten by Citigroup, Goldman Sachs, JMP Group and William Blair & Co.