RealPage, a provider of software and data analytics to the real estate industry, went on quite the run of acquisitions last year, acquiring four different companies throughout the year.
As it turns out, RealPage isn’t done yet.
The company announced Friday that it is acquiring ClickPay, an electronic payment platform servicing 2.3 million units across the multifamily, HOA, condominium and co-op segments of real estate, in a $218 million deal.
The deal is just the latest for the growing RealPage.
Last year, RealPage announced that it was expanding its apartment data offerings by acquiring Axiometrics, a provider of apartment market data, for $75 million. Then, RealPage announced that it planned to acquire Lease Rent Options and related assets from The Rainmaker Group for $300 million in cash.
After that, RealPage announced that it was acquiring American Utility Management, a provider of utility and energy management solutions for the multifamily housing industry, for $70 million. And finally, RealPage announced that it was acquiring “substantially all of the assets” of On-Site Manager for approximately $250 million.
The ClickPay deal brings RealPage’s total outlay for its recent acquisitions to more than $910 million.
Steve Winn, chairman and CEO of RealPage, said that the ClickPay acquisition will fast-track the conversion from paper rent payments to electronic ones.
“Expanding our payments solution to include ClickPay has the potential to further accelerate one of the fastest growing areas of our platform,” Winn said.
“According to data from the U.S. Census Bureau American Housing Survey, over $525 billion of rent is collected annually. Only a fraction of that volume is processed electronically, and we estimate that the vast majority of the U.S. still pays rent with a paper check,” Winn said.
Winn also said that, according to “industry sources,” owner-occupied units in the HOA segment spend approximately $60 billion per year in fees.
“We believe our scale gives RealPage a strategic position to drive deeper client adoption across most real estate categories for payment solutions as well as other solutions that reduce costs and improve efficiency,” Winn said. “In addition, I believe ClickPay and our recent acquisition of On-Site together unlock a significant opportunity to attract, convert and retain renters for clients utilizing property management systems outside of the RealPage ecosystem.”
The company expects the deal add nearly $1 billion to the its total addressable market, and sees the opportunity as far greater than that.
Here’s how the company explains the upside:
The HOA market is estimated to contain over 16 million units, and RealPage estimates that current and future solutions applicable to the market aggregate to a total opportunity of approximately $60 per unit per year. Including the HOA market, the holistic RealPage platform is expected to serve multiple segments of real estate, from rentals to owner occupied units, totaling over 62 million units. Total current and future applicable solutions for those units represent nearly $205 per unit per year, for a total addressable market of over $12.7 billion.
As Matt Davis, senior vice president of RealPage Financial Services, explains it, the ClickPay acquisition will significantly increase the company’s payment processing offerings.
“We intend to incorporate ClickPay’s capabilities into the RealPage payment processing platform enabling clients to eliminate site-level check handling,” Davis said.
“We anticipate ClickPay will remain a standalone platform supporting most third-party property management solutions, but will also begin integrating RealPage’s front office capabilities tailored for rental real estate,” Davis said.
Once completed, RealPage said that the acquisition will create one of the largest payment processing platforms for real estate assets with over $55 billion of annual run-rate transaction volume.
The ClickPay acquisition also “significantly expands RealPage’s footprint into the HOA owner-occupied segment of real estate, broadens the company’s presence in the New York metropolitan market and solidifies the integration of its front-end leasing platform into third-party property management systems,” the company said.
ClickPay is based in New York, and RealPage expects the acquisition to increase its presence in the New York area, complementing its acquisition of On-Site, which is the largest provider of tenant screening services in New York.
As for the financial details, RealPage is buying ClickPay for $218.5 million. That amount is composed of $76.3 million in shares of RealPage common stock and $142.2 million in cash.
RealPage actually completed the purchase of approximately 88% of ClickPay at the time of the agreement and expects to finalize the purchase of the remaining interests within the next six months.
ClickPay’s 2017 revenue was more than $22 million. RealPage expects that ClickPay will contribute revenue of $23 million for the remainder of 2018, representing revenue growth of approximately 45% from 2017 to 2018.
According to RealPage, ClickPay Chairman Ernest Muller and CEO Tom Kiernan will remain with the company, along with approximately 100 employees.
In a statement, Muller said that being acquired by RealPage will allow the company to grow.
“Our clients need assistance automating the entire resident life cycle,” Muller said. “By joining forces with RealPage, we will be able to grow our best-in-class payment platform and instantly add a suite of resident-facing solutions including online service requests, online leasing, online concierge services, package tracking, utility billing, insurance, and lead generation tools.”
Kiernan added: “Our entrepreneurial spirit, flexibility, and strong client relationships have been central to our success. RealPage is committed to ensuring we maintain our DNA in the way we execute and deliver value for our clients.”
