Patrick Carroll To Sell His 28,000-Unit Multifamily Business For $80M

Patrick Carroll, the founder of Atlanta-based multifamily investor Carroll, has agreed to sell his eponymous company, which controls 28,000 apartments, for $80M.

Alternative asset management firm RMR Group is the buyer in the all-cash transaction, which will see Carroll depart from his company after being engulfed in scandal in recent months. The other members of the executive team and 700 employees will be retained, according to the companies' press release.

“I’m excited for the next chapter of my career and look forward to sharing my plans with you when the time is right," Carroll said in a statement through a spokesperson. "The next chapter of my career will not be related to Carroll or the multifamily sector, and I’m thrilled to see Carroll take the next step under RMR’s ownership."

Carroll said he “will be retaining my co-investment and profit share interests in the current portfolio” once the deal closes. RMR expects to reap more than $35M in recurring revenues from the Carroll acquisition, which is closing at a multiple between 11.4 to 13.3 times Carroll’s recurring 2024 earnings before interest, taxes, depreciation and amortization, the company said in a press release. 

In the deal, RMR will gain control of Carroll’s portfolio of 81 owned or managed apartment properties across the Sun Belt, which has a value of around $7B, according to RMR’s investor presentation. The average rent growth of Carroll’s apartments, mainly under the Arium Living brand, was 17% with a 95% occupancy rate.

Massachusetts-based RMR is using the Carroll acquisition as its launching pad into multifamily investment. It manages publicly traded REITs that own office, medical and industrial properties, and its overall portfolio will grow to $44B in assets under management with the deal.

“This transaction will further diversify and expand the reach of RMR, augmenting RMR’s already considerable scale with differentiated operational expertise in a favored commercial real estate sector,” RMR CEO Adam Portnoy said in a statement. “The Carroll platform is uniquely positioned to continue benefitting from favorable demographic tailwinds in high-growth Sunbelt markets. Additionally, this acquisition will advance RMR’s private capital growth strategy with high-quality global institutional investors and drive continued growth across the combined platform with the potential to make in excess of $3 billion of additional multifamily investments.”

RMR manages Service Properties Trust, Industrial Logistics Properties Trust, Diversified Healthcare Trust and Office Properties Income Trust. It is looking to merge the latter two REITs into a combined company, a plan that has drawn pushback from some investors who claim RMR is looking to prop up the floundering Office Properties Income at the expense of Diversified Healthcare.

RMR's acquisition comes months after Carroll announced he had hired UBS Group AG to explore selling all or part of his company. At the time, Carroll told Bisnow that the move was being driven to grow and strengthen the company with a much larger partner as investors gravitate to bigger platforms instead of local and regional players as a result of the latest banking crisis. 

“Smaller players that don’t have great access to capital, I think they’re going to go away. So it was really just a strategic decision based off where I think the world’s going,” he said in April. “What I’m trying to do is either scale up, or potentially merge [with a] partner or sell to a larger group.”

As of March, nearly two decades after launching, Carroll had raised more than $4.4B of equity in total and distributed more than $5B back to investors, according to RMR's investor presentation. Overall, Carroll has purchased, developed or sold more than $20.9B in real estate, according to a company release.

Carroll has built a public profile of a self-made real estate mogul and philanthropist who donates generously to charities, has over a million Instagram followers and speaks on CNBC as an expert on the economy and apartment industry.

But in recent months, incidents in his private life have bubbled to the surface around the time he looked to sell his firm.

According to court documents obtained by Bisnow, Carroll has been accused of domestic abuse by his ex-wife, and a recording of him admitting to hitting her in the face surfaced on a website that has since been taken down.

He was also recorded allegedly spitting in the face of a restaurant manager and was accused of using the N-word against an employee of a different restaurant. Both establishments are in Miami, where he moved during the pandemic. He's being sued for defamation by his ex-wife's attorney after Carroll published a series of social media posts with derogatory language, according to court records.

A handful of Carroll's top executives, including Josh Champion, former president and chief investment officer, have left the firm in the past year.