Sears Selling O.C.-Based Coldwell Unit
Sears, Roebuck & Co. said Thursday that it will sell its Coldwell Banker residential real estate division to a San Francisco investment firm. Coldwell Banker’s corporate headquarters will remain in Orange County.
The sale to Fremont Group, at an undisclosed price, was good news for the company’s 500 locally based corporate employees.
“There will be no change in management or our strategic direction,” Coldwell Banker Chairman Chandler Barton said. “If anything, we’ll probably accelerate our growth plans.”
The sale of Coldwell Banker, which Sears purchased in 1981 for $179 million, “should come as no surprise,” said N. Richard Nelson Jr., a retail industry analyst with Duff & Phelps in Chicago. “The (divestiture) plan has been in place for some time now, and we’ve been anticipating that the sale would occur this summer.”
Real estate industry observers have speculated that Sears would receive about $600 million for Coldwell Banker.
Fremont Group, an investment company owned largely by members of the Bechtel family, has more than $3.5 billion in assets. Its holdings include the Cost Plus Inc. retail chain, the Petro Stopping Centers truck-stop chain, several commercial real estate companies as well as timber, energy and communications operations.
Thursday’s announcement ended speculation over the fate of Coldwell Banker. At one point, real estate industry observers suggested that the company would be acquired by a group that included the Bass family of Ft. Worth, Tex.
Barton said Thursday that Fremont Group “has been a very serious buyer all along. . . . We’re extremely pleased to be associated with a company with the longstanding tradition and heritage of the Bechtels.”
Beside Barton, Coldwell Banker senior managers participating in the sale are Gregory S. Campbell, executive vice president of the Residential Group; Robert J. Arrigoni, president of the Residential Brokerage Group; Robert A. Rist, president of Residential Affiliates Inc.; and Stephen C. Roney, president of Relocation Services Inc.
Coldwell Banker is the nation’s third-largest national residential real estate firm in terms of home transactions. The company completed 420,000 deals in 1992 with a total value of $50 billion. It has more than 2,100 residential real estate offices and more than 50,000 sales associates and employees in North America. It also operates title and escrow divisions.
Edward A. Brennan, Sears’ chairman and chief executive, announced the Coldwell Banker sale at the retailer’s annual shareholder meeting, held this year in Overland Park, Kan. The divestiture is part of Sears’ ongoing retreat from the real estate and banking businesses that it acquired during the 1980s.
Analysts have said Sears, which once saw itself as a diversified corporation selling everything “from socks to stocks,” spread itself too thin. Along with many other conglomerates, it is learning one of the hard lessons of the 1980s, analysts say: that when companies venture too far afield, their core businesses inevitably suffer.
Sears, once the nation’s largest retailer, is now No. 3, but it is regrouping. On Tuesday, it sold its Glendale-based savings bank and two mortgage operations to PNC Bank Corp. for $328 million. It also intends to spin off its Dean Witter Financial Services operation and a 20% ownership stake in Allstate Insurance.
The restructuring is designed to save Sears about $300 million annually and refocus the company on its retail operations. In addition to exiting the real estate and banking businesses, Chicago-based Sears is eliminating about 50,000 jobs, closing 113 of its stores and doing away with its money-losing catalogue operation.
At Coldwell Banker, senior managers including Barton will remain at the company. Fremont Group intends to let Coldwell Banker “continue our long-term strategic plans, including aggressive franchise growth,” after the deal is completed in July, Barton said.
Sears sold Coldwell’s commercial real-estate operations to a management-led buyout in April, 1989. The commercial real estate company, based in Los Angeles, is now known as CB Commercial Holdings Inc.
How Real Estate Giant Stacks Up
Coldwell Banker, one of the nation’s largest residential real estate companies, has been sold by Sears, Roebuck & Co. to Fremont Group, a San Francisco-based investment group. How Coldwell has fared during the Sears years:
TOP FIVE IN TRANSACTIONS Coldwell Banker’s company-owned sales offices completed more transactions in 1992 than its nearest three competitors combined. But its franchise sales offices ranked third behind Century 21 and Remax.
Company-Owned Offices Company & Transactions Coldwell Banker: 119,000 Weichert Realty (N.J.): 47,200 Long & Foster (Washington): 40,179 Burnet Realty (Minn.): 28,910 Edina Realty (Minn.): 26,546
National Franchisers Company & Transactions Century 21: 700,000 Remax: 600,000 Coldwell Banker: 442,000 Prudential Real Estate: 240,000 Better Homes & Gardens: 230,000
Coldwell Banker Offices 1982: 396 1987: 1,808 1992: 2,028
Sales associates 1982: 7,694 1987: 36,204 1992: 45,087
COLDWELL BANKER AT A GLANCE Business: Residential real estate sales Headquarters: Mission Viejo Chairman: Chandler Barton Divisions: Coldwell Banker Residential Brokerage (company-owned offices), Coldwell Banker Residential Affiliates Inc. (franchise offices), Coldwell Banker Relocation Services.
1992 Performance Revenue: $1.6 billion Properties listed: 442,556 Transactions: 421,401 Value of transactions: $49.55 billion Sources: Coldwell Banker Residential Group, REALtrends; Researched by JANICE L. JONES / Los Angeles Times
