Luxury brokerage Douglas Elliman Real Estate, a well-known New York firm that entered the L.A. market less than four years ago, has agreed to purchase Teles Properties in a bid to expand in California as the state's housing market booms.
Teles, a local rival based in Beverly Hills, has offices throughout Southern California. When Douglas Elliman completes the acquisition, the combined firm will have 20 offices and 630 sales associates within the state — a dramatic expansion from Elliman's single location in Beverly Hills.
A purchase price for the deal, expected to close in August, was not disclosed.
Stephen H. Kotler, president of Douglas Elliman's Western region, said the company wants to grow in California because its wealthy clients from New York, Miami and abroad want to acquire another home in the state. The red-hot California real estate market also played a role, as did new luxury condos rising in Los Angeles.
"We thought it was a good time to be here," said Kotler, who will continue to lead the western region.
Douglas Elliman estimated that the deal will make it the second-largest non-franchise residential brokerage in California based on sales volume, behind only Pacific Union.
Last year, Elliman and Teles combined had sales volume of about $4 billion in California and $27.4 billion nationwide, according to Douglas Elliman, which was founded in 1911.
Teles Properties, founded in 2007, has among its current listings a $21.9-million "gated estate compound" in Bel Air and a $19.9-million five-bedroom home on Newport Beach's Lido Isle with 200 feet of bay frontage and "multiple docks for large yachts."
Peter Loewy, Teles' chief executive, said agents selling such luxury compounds can now use Elliman's superior marketing capability on the East Coast and abroad.
"It makes our ability to sell so much stronger," he said.
The deal comes as several online brokerages try to shake up an industry built on personal relationships. One of those, Redfin, out of Seattle, went public last week; its shares soared nearly 45% on the first day of trading.
Even traditional brokerages like Teles want to incorporate more technology. The firm has built an online portal that enables agents to handle their listings in one place, including marketing on social media and websites for individual listings.
"The kind of things that can take a week or more, we can do in 24 hours," Loewy said.
Howard M. Lorber, chairman of parent company Douglas Elliman Realty, said Teles' technology is impressive but was not the driving force behind the deal.
"It was great they had it," he said. "But my initial consideration was where their offices are."
Among Teles' 19 offices in California are locations in San Diego, Newport Beach, Beverly Hills and Carmel.
Following the acquisition, the Teles name will be dropped, though senior executives will stay with the firm, including Loewy, who is set to become chief executive of brokerage for California.