Why Realpage Bought Cherre

Last month, property management technology company Realpage announced its acquisition of a proptech darling, data management platform Cherre.

No financial terms were disclosed, and the publicly provided explanation was fairly brief. While Realpage is famously acquisitive, this purchase seemed different: Cherre is not another proptech point solution, but a data platform with clients across asset classes and up the capital stack, including investment managers and allocators.

Realpage began this year with fresh leadership — CEO Dirk Wakeham joined last November — and a new tone, one more vocal about being open and customer-focused. Could this acquisition be a harbinger of a new strategy and approach?

I had the pleasure of spending time with Wakeham as well as Cherre CEO L.D. Salmanson last week, exploring Realpage’s continued evolution into a data platform and its ambitions to compete toe-to-toe with investment management platforms like Juniper Square.

On Rollups and Flywheels

Realpage has always been an outlier among property management systems.

For one, Realpage has been extremely acquisitive. Since its founding in 1998, the company has made more than 60 acquisitions, including consequential purchases of Lease Rent Options (LRO) in 2017, Rentlytics in 2018, and Buildium in 2019 for $580 million. Realpage was itself taken private by PE behemoth Thoma Bravo for $10.2 billion in 2021.

Realpage’s appetite has created opportunities and problems alike. On one hand, acquisitions such as YieldStar (2002) and LRO made the company the leader in revenue automation just as the technology became a must-have among multifamily operators. However, Realpage’s focus on acquisitions over native development has given some real estate operators headaches. While integrating tools with PMS platforms is often challenging, Realpage’s menagerie of acquired tools has developed a reputation for not working well with one another, let alone with third-party software.

In our report on PMS openness earlier this year, one owner-operator referred to Realpage as “a Frankenstein collection of acquired parts."

Realpage's product strategy broke from PMS norms, starting with how the company saw itself: not just a software tool, but a data company. That self-conception dates back nearly to the beginning. Realpage bought apartment market research firm M/PF Research in 1999, a business that had been surveying apartment markets since 1961, then spent two decades bolting a research franchise onto its software. It paid roughly $75 million for Axiometrics in 2017, merged it into MPF, and paired it with a data relationship with Real Capital Analytics, a combination then-CEO Steve Winn said would make Realpage "the definitive source for accurate data intelligence regarding the acquisition, operation and disposition of every market-rate apartment in the U.S." Realpage doubled down with its Rentlytics deal a year later, adding "nearly 900,000 units of real-time data" to improve its benchmarking and yield optimization.

The result was a flywheel unique to property management systems: operating data flowed out of Realpage’s platforms into revenue management in aggregated form, and that same data got compiled into market research and recommendations sold across the industry.