National real estate group The Agency has entered a strategic alliance with MDC Trilogy Group to accelerate market share growth across new and complementary geographical areas.
The alliance is underpinned by a services agreement where The Agency manages property management assets purchased and owned by MDC Trilogy.
MDC Trilogy’s first investment vehicle, MDC Trilogy Wholesale Yield Fund I, has reached financial close on its inaugural investments where it has purchased businesses with more than 650 property managements across Sydney and Queensland, which are now managed by The Agency.
The alliance facilitates all sales agents and team members of businesses purchased by MDC Trilogy to join The Agency, which provides a significant mechanism for market share growth.
The Agency Managing Director Geoff Lucas said the group was always looking for new and innovative ways to expand its market share and agent presence.
“That’s why we’re excited to be collaborating with MDC Trilogy under a services agreement; it opens new doors to more opportunity for agents to join our business, across more markets, in more ways,” he said.
“It also allows continued expansion into more geographical areas across Australia in a capital efficient manner for The Agency shareholders.”
Mr Lucas said an inhibitor to agent recruitment was often that the agent owned an existing rent roll, but the alliance with MDC Trilogy would give agents the opportunity to sell those assets and join The Agency as a sales agent.
“The business sale allows the agent to refocus on their selling strengths rather than administrative tasks that enables a focus on superior services and results to the customers,” he said.
Mr Lucas said with the financial backing of MDC Trilogy there was significant opportunity for The Agency to enhance returns on its scalable operating model.
“Across Australia, there are 3.25 million rental properties, which we estimate are worth near $3 trillion dollars,” Mr Lucas said.
“This is broadly equivalent to the entire ASX listed stocks value and compared to the ASX listed funds management industry, the management of the residential rental properties has seen limited innovation over recent decades.
“The fragmented ownership of real estate offices across Australia means that many rent roll assets are not at sufficient scale to operate efficiently, nor can their owners appropriately invest in technology that improves the tenant and landlord experience.
“This is where The Agency’s operating model and national presence is advantageous, and why MDC Trilogy considered us an attractive services provider for their funds management model.”
Mr Lucas said the partnership was a long-term growth opportunity and did not preclude The Agency from purchasing rent roll assets directly.
Murray Darling Capital Founder Michael Birch said there was significant inherent value in Australian rent rolls and the industry was ripe for consolidation.
“We believe there is significant opportunity for MDC Trilogy to liberate sales agents to return to solely focus on selling while giving the property management arms of these businesses the appropriate infrastructure and system support to organically grow,” he said.
“This provides an opportunity to deploy significant capital in purchasing rent rolls across our target markets as we execute our strategy.”
MDC Trilogy Group is in late stage due diligence on a number of further opportunities that will be managed by The Agency.
Mr Birch said MDC Trilogy chose The Agency as its key service provider for its national reach and direct engagement model with agents.
Trilogy Co-founder Phillip Ryan said the alliance was an extension of its existing managed funds operated by the Trilogy Group, which had $1 billion under management on behalf of more than 5000 active investors.
“This fund is a way for our investors to gain economic exposure to the performance of a significant portfolio of property management assets held by the MDC Trilogy Group and I look forward to further settlements as we grow the portfolio,” he said.