The Agency Group Australia to acquire Top Level and unlock synergies in real estate

The Agency Group Australia (ASX: AU1) has given its national brand presence a boost after announcing it will acquire high-growth east coast real estate agency Top Level Real Estate Pty Ltd, which is managed by ex-McGraths Real Estate agents.

The deal is tipped to unlock significant synergies and see Australia’s two leading disruptive, fast growing real estate agencies become one business.

Top Level CEO and ex-McGraths agent, Matt Lahood will be appointed as an executive director of The Agency Group Australia with a Top Level nominated non-executive director to be appointed to The Agency Group Australia board.

Combined, The Agency Group will consist of 131 real estate agents, approximately 114 staff and 4,000 property managers; having generated $31 million revenue in half year 2017.

Under the deal, The Agency Group will acquire all Top Level shares held by the majority shareholders in Top Level Real Estate as well as all the remaining Top Level shares from those who aren’t majority shareholders.

Total consideration for the acquisition is 550 million AU1 shares.

“This transaction provides an exciting opportunity for The Agency, its staff and shareholders, and further cements our position as the fastest growing disruptive real estate group in the country,” The Agency Group Australia Managing Director Paul Niardone said.

“Top Level, which has been trading as ‘The Agency’ on the east coast of Australia since launching in March this year, has established, with our support, a significant business in a short period of time, surpassing our recruitment and sales targets.

“Integration of these two businesses makes perfect sense, since both parties will be able to capitalise on the continuing success of The Agency brand, the rollout of the Sell Lease Property Brand while fully realising the efficiency benefits of working under the one ownership structure, Mr Niardone added.

Mr Lahood believes that by formally joining The Agency Group Australia, the Top Level team can significantly enhance and fast track its already impressive east coast offering and results to the benefit of the enlarged business.

“We are thrilled to be merging with The Agency Group Australia to become Australia’s leading disruptive, high growth real estate agency,” he said.

“I am highly confident this agreement will provide us with great scale and will create great leverage with our clients nationally.”

Since launching in March 2017, Top Level has recruited 75 high-quality real estate agents with a further 27 agents confirmed to start and has also expanded to 9 office locations, with 3 proposed new locations.

Top Level has also reported $480 million in sales, $7.2 million in commissions, 267 settlements and 3,375 property managements since the launch.

Once the transaction is completed, The Agency Group will be the only national real estate company to have two national brands in the Australian market – replicating a strategy that has proven very effective in both the US and UK real estate markets.

Todays amended option agreement replaces a previous option agreement announced in January 2017 where it entered into License Agreement and Option to acquire Top Level at any time on or before 30 January 2018.

The company has also launched a placement (on a pre-consolidation basis) to raise a minimum of A$10 million to assist in funding the acquisition, which requires shareholder approval.

Shares in The Agency Group finished up 5% at close of trade.