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JLL buying HFF in $2 billion deal that will create multifamily real estate giant

Two of the largest multifamily operators are joining forces

In a deal that will combine two of the biggest names in multifamily and commercial real estate, Jones Lang LaSalle announced Tuesday that it is buying HFF for approximately $2 billion.

Under the terms of the agreement, JLL will acquire all the outstanding shares of HFF in a cash and stock transaction that carries an equity value of approximately $2 billion.

Both JLL and HFF are consistently among the top lenders in the multifamily real estate space, with both companies placing in Freddie Mac’s top 10 lenders of 2018.

JLL touted HFF’s capital markets experience as a significant draw to the deal. JLL claims that the deal will allow the company to “rapidly scale” its presence in the U.S. capital markets, and accelerate the growth of its debt advisory business in Europe and Asia, along with driving increased operating efficiency.

“Increasing the scale of our capital markets business is one of the key priorities in our Beyond strategic vision to drive long-term sustainable and profitable growth. The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities,” said Christian Ulbrich, global CEO of JLL.

“We have long admired HFF for its expertise and leading reputation in the industry, as well as its client-first culture of teamwork, ethics and excellence, which aligns with our own,” Ulbrich added. “I believe that combining our organizations will deliver a range of compelling benefits for our clients, employees and shareholders.”

Upon closing of the deal, JLL shareholders are expected to own approximately 87% of the combined company, while HFF shareholders are expected to own approximately 13%.

The companies also expect the deal to provide “significant run-rate synergies,” estimated to be approximately $60 million over two to three years.

As part of the deal, HFF CEO Mark Gibson will become JLL’s CEO, Capital Markets, Americas and Co-Chair of its Global Capital Markets Board.

“This is a terrific transaction for our shareholders, providing them with an immediate cash payment and the opportunity to participate in the long-term value of the combined company,” Gibson said.

“In addition, we believe the combination with JLL will create a superior platform for our shareholders, clients and employees than either company would have independent of the other and will significantly accelerate our firm's strategic plan,” Gibson added. “JLL’s team-oriented culture with the additional standards of high character and integrity are an excellent match with the HFF culture, which has been HFF’s fundamental differentiator since its inception.”

The companies expect the deal to close in the third quarter of 2019.

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