Merrill to Sell Only Minority Interest in Real Estate Units
Merrill Lynch announced Monday that it will sell only a minority interest in its residential real estate operations instead of proceeding with a previous plan to sell the properties altogether.
The move reflects the financial services firm’s unhappiness with the bids it has received since it put the properties up for public sale last September, a company spokesman said. The company had said it expected to get at least $500 million for the operations.
Merrill Lynch said it will form a new concern--known as a master limited partnership--that will include Merrill Lynch Realty Associates, Merrill Lynch Relocation Management and Merrill Lynch Mortgage.
Merrill Lynch, one of the nation’s largest securities brokers, said it will keep a majority interest in the partnership and sell the rest through a public offering in the first half of 1987. The company did not disclose how much it expected to raise from the offering or what percentage it was going to sell.
Third-Largest Real Estate Chain
Merrill Lynch Realty has 400 offices in 20 states, but its operations are heavily concentrated in California, Texas and Florida. It is the nation’s third-largest real estate brokerage chain, behind Century 21 and Coldwell Banker.
Merrill Lynch Relocation Management helps corporations move their employees, while Merrill Lynch Mortgage provides banking services for single-family homes.
The three divisions accounted for more than 7% of Merrill Lynch’s $7.1 billion in revenue last year and accounted for pretax income of about $45 million in a 12-month period ending in late September.
It was less than three months ago that company Chairman William A. Schreyer announced that Merrill Lynch wanted to concentrate on its core businesses, including investment banking, securities trading and merchant banking.
At the time, the company said the sale of the real estate operations would optimize their value and allow the firm to reinvest the proceeds in its basic businesses. Merrill Lynch cannot hope to “be all things to all people,” Schreyer said at the time.
But the company changed its tune when it could not get the price it wanted. The master limited partnership “offered the best alternative,” said James Flynn, a company spokesman in New York. “The bids were not the value we thought they would be.”
