Merrill Lynch to Sell Its Real Estate Unit

Merrill Lynch & Co. said Friday that it would sell its residential real estate operations to Prudential Insurance Co. of America for more than $300 million.

The transaction, which includes Merrill Lynch Realty, a residential broker with 18,000 sales representatives in 450 offices nationwide, will not have a significant effect on Merrill Lynch’s net earnings, the company said in a news release.

The announcement marks the final stroke of a divestiture that began four years ago when Merrill Lynch moved to focus on its core broker-dealer businesses.

Merrill Lynch said it will spend about $140 million to buy back publicly traded units of the Fine Homes International LP at $18 apiece before the partnership can be sold to Prudential.

The brokerage formed Fine Homes, a master limited partnership, to run its residential real estate operations after an unsuccessful attempt to sell the operations outright. It was reported that Merrill Lynch had hoped to reap at least $500 million from such a sale, which would have included a residential mortgage business that was eliminated in 1987.

Instead, Merrill Lynch sold a minority interest in Fine Homes to the public in late 1986. The brokerage retains a 74% interest in the partnership.

“This transaction culminates Merrill Lynch’s divestiture of a business which, while profitable, is not part of our long-term global strategy,” said Merrill Lynch Chairman and Chief Executive William A. Schreyer.