A Profitable Coldwell Banker Awaits a Buyer
Chandler B. Barton was a 47-year-old regional executive with Coldwell Banker Real Estate in Atlanta when the company was sold to Sears, Roebuck & Co. in 1981.
Now, at 58, Barton is chairman of Coldwell Banker Residential Group as Sears prepares to sell the profitable unit as part of a plan to pay down its massive corporate debt and return to its retailing roots.
With 2,000 offices, 42,000 agents and 4,000 employees, including 460 at corporate headquarters in Mission Viejo, Coldwell Banker Residential is the third-largest resale realty operation in the country.
In a Thursday interview, two days after Sears stunned the business world with its announcement, Chandler discussed the ramifications the proposed divestiture would have for the company.
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Q First, is there a sale already in the works?
A I have no idea as to what progress Sears is making. I certainly am not privy to any information about a sale at this point.
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Q Any plans for a management-led buyout, as happened in 1989 when insiders bought Coldwell Banker Commercial Real Estate from Sears?
A I’m not aware of any movement of that sort.
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Q Sears said it wants to sell all of the Coldwell Banker Real Estate Group except Homart Development, which builds its stores. That leaves three parts including your operation. Are they all going to go together?
A The real estate group includes Sears Savings Bank, Sears Mortgage Co. and Coldwell Banker Residential Real Estate Group. I imagine they could be sold separately, but it makes the most sense to me to sell them as a block. I believe the three companies work extremely well together and give our customers the best level of service.
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Q How much overlap is there? Do most of your real estate buyers get their mortgages at Sears Mortgage?
A It differs from region to region, but nationwide an average of 22% of all of our transactions involve either the mortgage company or the savings bank as well.
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Q On Tuesday, when Sears made its announcement, managers at several Coldwell Banker real estate offices told us that their first word about the plan to sell came when they turned on their radios. Why weren’t your employees and agents told in advance?
A Our main concern, because Sears is a publicly traded company, was to not be in violation of the insider information rules by letting people in the company know before our shareholders did.
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Q How far in advance where you told?
A I’d prefer not to get into the aspect of when I was told. But it was not a long lead time, just a matter of a few days.
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Q What are your plans, once a sale is made?
A To remain with the company! We are in the best financial condition we have ever been in, we are stronger and selling more property today with more market share than ever before. I would expect that the entire management team will remain intact under whoever buys us.
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Q How about plans for the company? Do you expect they’ll stay pretty much the same?
A We have a very sound five-year strategic plan, and while a new owner certainly could do whatever it wanted, from a practical and strategic standpoint it makes sense, as the saying goes, not to fix anything that isn’t broken. Our plan calls for this company to increase in size by 70% in five years by increasing each of our three sections--the relocation service, the (478) company-owned offices and the (1,522) franchised offices.
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Q You bought an office in Hong Kong last year and announced that the company planned to do more overseas expansion. How does this affect those plans?
A Our foreign expansion is on hold because we think a new owner ought to be look at those plans before we move on with them. But we have the Hong Kong office, and we are in Canada and Puerto Rico, and that won’t change.
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Q Now that they have had time to absorb the information, how are your people in the field reacting to the news that Sears wants to sell?
A Very positive. Sears has been a terrific parent, and we are all pleased that we’re in a position now to help Sears. The franchisees are naturally surprised, but they feel as we do that the company will have a strong new ownership and that the sale probably will give us greater opportunities than we may have had if we’d remained part of Sears while it was turning its focus back to its retailing side.
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Q Coldwell Banker doesn’t report its profits separately, but you have said you’ve been profitable for the past seven years, with record profits in 1990 and 1991 and a new record expected this year. Sears paid $202 million for all of Coldwell Banker when it bought it 11 years ago and got $350 million just for commercial operations when they were sold a few years ago. What does that make the residential real estate group worth?
A I prefer not to get into that area. But I believe that we could not have had the growth we’ve had without a parent with the resources of Sears. They were a vital part of our growth.
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Q Does that mean it will take a company as big as Sears to buy you? How big is the potential universe of buyers out there?
A I really don’t know. I don’t think our competitors are big enough, financially, to buy us. Although Prudential Realty’s parent (Prudential Insurance) would be strong enough, there would be a tremendous overlap in offices and services.
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Q How long do you think it will take for Sears to sell the company?
A I would say we’re looking at between six months and a year to find a buyer and complete a sale.
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Q And in the meantime?
A We are continuing with business as usual. Our people and our corporate clients in the relocation business are all very comfortable with things they way they are right now.
