Sumitomo Case Study: How Investment Banking Paved the Way for a Successful $215 Million Multifamily Platform Acquisition

Zelman Partners, a subsidiary of Walker & Dunlop, recently served as financial advisor to Japanese development company Sumitomo Forestry Co. (“Sumitomo”) on its $215 million acquisition of JPI, a leading developer in Class A and attainable multifamily communities. Building on Sumitomo’s previous acquisition of Crescent Communities in 2018, where Zelman also advised Sumitomo, this transaction catapults Sumitomo to a top-10 apartment developer in the U.S. The transaction closed on November 30, 2023.

The acquisition encompasses JPI’s multifamily operating platform and leadership, including all land acquisition, development, construction, service, and management operations, along with related staff, as well as all future real estate projects.

Tony McGill, Alex Virtue, and Haitham Said led the investment banking transaction team advising Sumitomo. “These types of transactions can be very challenging to structure in a way that accommodates both acquirer and seller parties because development platforms like JPI often have complex organizational structures and many stakeholders – with potentially differing objectives – at the entity and project levels. In addition, enterprise valuation requires a particularly high level of sophistication, experience, and discretion because business models (and cash flow streams) amongst developers are rarely exactly alike, making the universe of already limited comparable transactions anything but comparable,” shares McGill. “Our longstanding relationship and M&A advisory track record with Sumitomo’s U.S. leadership team provided us with an understanding of their transaction objectives and constraints, allowing us to confidently navigate the various transaction complexities for the maximum outcome for our client.”

Here’s a closer look at our process and how we tailor our corporate M&A and public equity and debt capital markets expertise for our client’s unique needs and objectives.

Building on Existing Relationships

Spanning over 330 years in business, Sumitomo Forestry is the #1 share company in Japan’s domestic timber and building materials distribution market. Its business has expanded to include single-family and multifamily development, as well as other housing-related businesses including active investment in multifamily developments in the U.S.

Sumitomo is a long-standing client of Zelman, who advised Sumitomo on a similar multifamily platform acquisition in 2018 when Sumitomo acquired Crescent Communities. Sumitomo also had an existing investing relationship as a limited partner with JPI dating to 2019. Building on this partnership, Sumitomo advanced discussions regarding a strategic combination with JPI and retained Zelman as a financial advisor early in the process.

As the leading multifamily and housing industry experts, Walker & Dunlop’s Investment Banking and Investment Sales teams together provided comprehensive, turnkey corporate acquisition advisory services, alleviating the need for Sumitomo to hire multiple firms at a higher cost and far less cooperation.

Creating a Custom Approach for a Winning Outcome

Our extensive M&A experience with Sumitomo, including successful transactions with several homebuilders and multifamily developers, provided invaluable working knowledge and insight relating to Sumitomo’s core strategic investment thesis for for-sale and for-rent residential real estate in the U.S.

“Ultimately, our seamless Investment Banking and Investment Sales capabilities allowed us to provide hands-on involvement from veteran dealmakers with decades of transaction experience and unique entity and project-level domain expertise,” noted McGill.

Under Sumitomo’s ownership, the JPI platform is well-positioned to continue to grow its presence nationally, expanding its position as a leading developer of multifamily properties in the U.S. and expanding its footprint in key growth markets. Walker & Dunlop looks forward to continuing to provide value in advising the company regarding future mergers, acquisitions, capital markets, investment sales, and project financing initiatives.

The Takeaway: Bespoke Processes and Industry Expertise Create an Optimal Collaboration

Large, complex transactions like the acquisition of JPI by Sumitomo Forestry rarely follow a specific blueprint. With unique considerations and multiple stakeholders involved, it’s essential for advisory partners to think creatively and understand the critical components of success from the client’s perspective.

When clients partner with Walker & Dunlop, we promise to provide unconflicted, world-class advice and execution services with the industry’s most successful corporate finance, project finance, and M&A professionals.

Walker & Dunlop is positioned to act as an advisory partner with you for M&A and financing needs, both at the entity and asset level. Contact us today to learn how we can work together to generate an optimal outcome.

Zelman Partners is a registered broker dealer and member of FINRA and SIPC.

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