REAL ESTATE : Acting Chief Schwartz expected to Take Over Prudential Real Estate

Prudential Real Estate Affiliates, which runs the big insurance company’s chain of real estate brokerages from Costa Mesa, is expected to soon name acting president Will Schwartz to the job permanently.

Schwartz is to replace Jerome M. Cole, the chain’s first president.

Cole resigned more than three months ago; he cites a confidentiality agreement with Prudential in declining to disclose the reason.

Cole started the chain for Prudential in 1988 by selling Prudential franchises to small brokerages around the country.

But there’s another way for a chain to grow: by purchasing brokerages outright and owning them.

Cole, however, was quoted several times in newspaper stories as saying franchising was a much less expensive way to build a chain because it required less money up front than must otherwise be spent buying brokerages.

What’s more, Cole criticized the profitability of Merrill Lynch’s brokerage chain, which had adopted the acquisition approach.

Nevertheless, Prudential last year coughed up $300 million to acquire Merrill Lynch’s nationwide chain of 450 brokerages, one of the largest deals in the history of the industry.

Prudential said at the time that it didn’t really want the brokerages; it had been forced to buy them in order to acquire Merrill Lynch’s corporate relocation service. Prudential says it is now selling off the brokerages and converting them to Prudential franchises.

Schwartz, a 14-year Prudential veteran, was the executive who handled the acquisition. He joined the brokerage chain’s board from the parent company about the same time.

It’s not clear--even to people in the industry--whether Schwartz’s arrival at the company or the Merrill Lynch purchase were behind Cole’s leaving.