CoStar Exclusive: Madison Marquette, PMRG Merging

Washington, D.C. Investment Manager to Hook Up with Houston Services Firm

Madison Marquette, a top real estate investment management firm, and PM Realty Group, a powerhouse in property management and landlord representation, are in talks to merge their firms.

The merger will create a new company that blends Madison Marquette’s experience in helping oversee landmark mixed-use projects such as The Wharf in Washington, D.C., and PMRG’s long history of property management and development services. The two companies already have been pitching new business together, touting their combined strengths.

Ultimately, PMRG will be owned by Capital Guidance, an international investment company. Capital Guidance also owns Madison Marquette.

“Our real goal here is to build a fully integrated real estate investment company,” Madison Chairman Amer Hammour told CoStar News. “Investors prefer investment managers who have full on-the-ground capabilities.” Hammour also is a managing director of Capital Guidance.

PMRG will provide just that and more for the new company that will have 600 employees in 12 offices, he added.

For PMRG Chairman and CEO Rick Kirk, the transaction brings to end years of discussions with potential partners.

“For years, we’ve been approached by various groups, the major players called. None of us were getting any younger, so we’d entertain the overtures,” Kirk said Thursday. But speaking with what he calls “The Big Guys,” led nowhere. “It really wasn’t a fit in terms of culture or what we do. Our company was a little bit more diverse, and that was intentional.”

Then, about a year ago, Kirk met Madison Marquette. “The more we talked, the more I realized what a great fit it was.”

While their cultures proved similar, their differences mattered, too, Kirk said. Whereas PMRG has a major presence in the South and Sun Belt, Madison was a dominant player in the North. While PMRG did more multifamily and medical-related projects, Madison emerged as a top creator of retail-centric mixed-use developments. “It just made so much sense,” he said of heading toward the marriage aisle.

In a press release issued three hours after CoStar News broke the story, PMRG said the closing is expected in the next 30 days.

“We anticipate a highly complementary combination that significantly expands the capability of both firms,” Hammour said. “PMRG’s dominance in the Southern U.S. is a perfect match for Madison’s presence in primary gateway markets on both coasts. The companies’ shared clients include many of the top institutional owners and investors in the industry.”

The merger comes as mid-sized services firms try to find their place in the brokerage world dominated by the Big Three - CBRE, JLL and Cushman & Wakefield. Firms such as PMRG, Avison Young, Newmark Knight Frank and Cresa Partners are seeking alternative ways to compete with the global players.

Just this week, several PMRG executives attended ICSC’s RECon convention to learn more about retail and its key role in today’s mixed-use projects.

The new company will retain the leadership of both Madison and PMRG and maintain its two primary offices in Washington, D.C. and Houston.

“The merger is an excellent match of culture and expertise - a tremendous win-win for our people, clients and investment partners,” Kirk said.

The merger is contingent on approval from a majority of the firms' clients and 100 percent approval from certain key clients, according to PMRG executives.

Tony Wilbert, Atlanta Market Reporter  CoStar Group