Sears OKs Deal to Sell Coldwell Commercial Unit

Times Staff Writer

Sears, Roebuck said Monday that it has agreed to sell its Coldwell Banker commercial real estate group to employees and outside investors. The price was not disclosed, but sources in the industry put it in the range of $300 million.

James J. Didion, the Los Angeles-based unit’s 49-year-old chairman, said he will remain in his post as will other top managers. Under terms of the deal, the company’s 4,990 employees will all be invited to participate in the ownership and could end up holding as much as 50%.

As reported earlier, the outside investors, who will hold the remaining half, include the Carlyle Group, a merchant banking firm in Washington that former Defense Secretary Frank C. Carlucci joined after leaving the Pentagon, and other U.S. and Japanese investors.

Use Name for 3 Years


Financing for the deal is being put together by Sumitomo Bank and Bankers Trust Co.

Sears announced in October that it planned to sell the Coldwell Banker Commercial Group as part of a corporate overhaul designed to strengthen its consumer operations. The giant retailing company, based in Chicago, will retain the arm of Coldwell Banker that sells residential real estate.

Didion said in a telephone interview Monday that the commercial group will be allowed to use the Coldwell Banker name for three years. In the meantime, the new owners “will develop a new identity and new logo,” a spokesman said.

Didion, a Sacramento native who started with Coldwell Banker as a salesman 26 years ago, said the company is “excited by the opportunity of being independent again” and plans to accelerate its most recent growth plan, formulated in 1988.


“We had completed our geographical growth,” he said, “and we’re now focusing on increasing our market share and revenue potential with each individual (salesperson).”

With 1988 gross sales of $460 million, Coldwell Banker is the nation’s largest commercial real estate services company. It has 95 offices in the United States and four in Canada, up from 52 offices at the start of 1982 when the company was bought by Sears.

Didion said other key officers at Coldwell Banker plan to remain in their posts. They include former UCLA football star Gary J. Beban, president; Peter L. Marr, Western division executive vice president; Boyd Van Ness, Eastern division executive vice president; Robert D. Scanlan, president of Coldwell Banker Capital Markets, and Tad Jones, president of Coldwell Banker Capital Management Services.

Stan Ross, co-managing director of Kenneth Leventhal & Co., a Los Angeles accounting firm, said management’s decision to stay on will be a major advantage for the company.

“That’s a very strong management group,” he said. “Given the opportunity to operate freely in an entrepreneurial environment, they can be highly competitive.” Ross said he expects the company to get more involved in property management and development.

The involvement of Japanese investors and funding also should help the company develop business in East Asia, observers said. Didion said the company “will spend more time internationally than we have in the past” and expects to explore the idea of opening offices in Tokyo, Hong Kong, Singapore, Taiwan and “other places of commerce.”

Coldwell Banker started as a commercial real estate firm in San Francisco as Tucker, Lynch & Coldwell in 1906. Two of its principal founders, Colbert Coldwell and Benjamin Arthur Banker, concentrated for years on building a network of offices in California. In 1952, the first location outside California was opened in Phoenix.

A nationwide expansion was begun in 1969, when the company also moved into residential real estate.


Carlyle Group, formed in May, 1987, has attracted a number of prominent Washington people, including Carlucci, who is vice chairman. Carlucci once served as chairman of Sears World Trade Corp., a short-lived subsidiary. The investment firm’s senior adviser is Frederic V. Malek, a former president of Marriott Hotels.

Malek said Monday that the investors plan to take no active role in managing the Coldwell Banker business. “We’ve got the best management group in America running this group,” he said. He noted that the investors expect Coldwell Banker employees to be motivated by the chance to own a big chunk of the company.

Sources had said earlier that the investment group buying Coldwell Banker Commercial Group was also expected to include the Hillman family of Pittsburgh, whose real estate empire encompasses many rich properties in Southern California. Malek said, however, that “we never got to a point of commitment with them.”