Firm Has a New Name, CEO and High Hopes : Expansion: SMS Real Estate Information Services projects sevenfold increase in sales after buying part of TRW Inc.
SMS Real Estate Information Services has a new chief executive officer, a new name and hopes of becoming a major information source for the real estate industry.
Formerly Specialized Management Support Inc., the privately held Costa Mesa company--which reported 1992 sales of $20 million--is projecting a more than sevenfold increase in sales this year after buying portions of TRW Inc.’s real estate loan services division earlier in the year.
Joseph R. Reppert, who took over July 1 as CEO, said the combined company, with 130 offices nationwide, is better positioned to capitalize on the growing mortgage lending industry. The level of mortgage applications nationwide increased during the first half of 1993 compared to the first half of 1992; mortgage activity for the year is forecast at $840 billion, according to the Mortgage Bankers Assn.
SMS purchased several TRW divisions, including its appraisal, property title, credit mortgage and mortgage documents operations--picking up about 1,400 of its current 1,700 employees. However, SMS spokesman Jeff Galt said the company did not purchase TRW’s title insurance division because it did not want to become an insurer. Value of the acquisition was not disclosed.
The sale to SMS was part of a cost-cutting reorganization by TRW, an $8.3-billion conglomerate that has its credit reporting operations in the city of Orange.
SMS provides a variety of services to the escrow, title service, property management and banking industries, including property appraisals, title information, credit reports on borrowers and loan preparation documents for mortgage lenders.
Reppert said the company wants to make it cheaper and easier for lenders to make loans. He said SMS will continue to serve the lending industry, particularly companies such as Pasadena-based Countrywide Funding Corp., the nation’s largest mortgage banker.
“If there is a company that provides appraisal and credit reporting services and the information is high quality, our branches may be interested,” said Greg Lumsden, executive vice president at Countrywide.
In contrast, John Bajorek, chief appraiser at Plaza Home Mortgage Bank in Santa Ana, said his company is “self-sufficient” and already does in-house most of the services SMS offers.
And at least one rival suggests that SMS will be an able competitor.
“They are in a lot of different areas but I think they have a good nucleus for growth in the future. The businesses they are in complement each other,” said Parker Kennedy, president of First American Financial Corp., whose Midland Title Information subsidiary will compete directly with SMS.
According to Gerard Cassidy, a banking analyst with Sutro & Co., a San Francisco-based investment banking firm, SMS would be the only company to provide a single source for national mortgage lending information.
“Currently, lenders have to go to about six different areas to get information, so if this company can be a one-stop shop and provide information in a cost-effective manner, they will be quite successful,” said Cassidy. Projections for $140 million in SMS sales this year are “not unrealistic,” Cassidy said, given the increased business in mortgage lending.
However, Sal Serrantino, president of California Research Corp., a Santa Monica-based banking consulting firm, said there may be a “potential problem” with SMS’s diversification strategy.
“It sounds like an interesting idea, but whether they can produce all these services is another matter,” Serrantino said. “What mortgage bankers want is dependable, reliable, cost-effective services. They can’t get stuck with a supplier which can’t handle them in a crunch.”
SMS is counting on the national mortgage market, which is flourishing despite the regional real estate slump. Low interest rates in the past three years have triggered a large number of refinancings.
Reppert, who was previously a mortgage banker at Amerifirst Mortgage Corp. in Miami, succeeds former CEO David M. Connell, who resigned shortly after the acquisition from TRW. Connell became chief executive in 1990 when Automated Processing & Development Corp., a Santa Ana company that provided computer systems to the escrow and title insurance industries, purchased Specialized Management Support, then based in New York.
SMS is owned by a group of private investors, including New York investment management company Welsh, Carson, Anderson and Stowe, which holds a 60% stake; and venture capital firms: DSV Partners in Newport Beach and Venrock Associates, an investment group of the Rockefeller family, both in New York.
SMS Real Estate Information Services
Business: Compiles and markets information data bases to real estate lending industry.
Former name: Specialized Management Support Inc.
Headquarters: Costa Mesa
1992 sales: $20 million
Projected 1993 sales: $140 million
CEO: Joseph R. Reppert
Background: Recently acquired part of TRW’s real estate loan services division.
Source: SMS Real Estate Information Services
