Century 21 Real Estate Corp., the giant home sales brokerage founded in Santa Ana 24 years ago, is being sold to the world's biggest hostelry franchiser for $200 million in cash and stock.
Hospitality Franchise Systems Inc. of Parsippany, N.J., said Wednesday that it has agreed to buy Irvine-based Century 21, with about 6,000 franchises in 11 countries, from Metropolitan Life Insurance Co. of New York. Anxious to return to its core businesses, Met Life is selling the company for $51.2 million less than it paid for Century 21 in 1985.
The deal is expected to close in August. Met Life could also receive an added payment of $30 million from the sale if Century 21 achieves certain levels of home sales by 1997.
No layoffs are planned at the real estate company, which has about a 10% share of the home sales market nationwide. The company is expected to remain in Irvine with its present management, executives of both companies said.
"We have no intention of moving our headquarters out of Orange County," Century 21 President Richard J. Loughlin said. "We are excited about this. Hospitality knows the franchise business extremely well. We don't expect any changes to our service or franchise system."
Century 21 has about 180 workers at its Irvine headquarters in a building owned by Met Life. Loughlin said the lease expires in 1997.
The purchase is the hostelry franchiser's first move into residential real estate. Hospitality currently has 4,400 hotel franchises, including Days Inns, Howard Johnsons, Park Inns, Ramadas, Super 8s and Villager Lodges. The company provides hotel operators with advertising campaigns, reservation systems and training programs.
"This extends Hospitality's experience in franchising to residential real estate. And their choice of Century 21 is an excellent one," said Mark Mutkoski, an analyst with Ladenburg, Thalmann & Co. in New York. "This is an opportunity for them to improve the relationship between the franchiser and franchisee at Century 21 and increase the company's market share."
Century 21, which was acquired by Met Life for $251.2 million, is one of the world's largest real estate companies and a pioneer of the real estate franchise technique. The firm, known throughout the world for its agents clad in gold blazers, was formed in 1971 by two California brokers, Art Bartlett and Marsh Fisher.
Bartlett, 61, is now an investor in San Diego, and Fisher, 70, runs an Irvine computer software company, Idea Fisher Systems Inc.
The sale to Hospitality "might be very good for Century 21 in the sense that these people are good marketing people and tough bottom-line business people," Bartlett said. "They could be an excellent partner--especially if they don't drain out every cent as soon as it comes in."
Century 21 went public in October, 1977, but merged in 1979 with Trans World Corp., a New York-based food and lodging chain.
Hospitality's experience in supporting hotel franchisees will help it succeed in the real estate franchising arena, said Stephen P. Holmes, the company's chief financial officer.
"We are in the business of providing services to franchisees and can provide those same skills to the real estate industry," Holmes said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Hospitality Franchise Systems Inc. agreed to buy Irvine-based Century 21 Real Estate Corp. for $200 million on Wednesday. Here are profiles of the two companies:
CENTURY 21 REAL ESTATE * Business: Residential real estate broker * Headquarters: Irvine * President/CEO: Richard J. Loughlin * Employees: More than 60,000 * Offices: 6,000 worldwide * 1994 revenue: $130 million
HOSPITALITY FRANCHISE SYSTEMS * Business: Hotel franchiser * Headquarters: Parsippany, N.J. * Chairman/CEO: Henry Silverman * Employees: More than 103,000 * Franchises: 4,400 Days Inn, Howard Johnson, Park Inn, Ramada, Super 8 and Villager Lodge hotels * 1994 revenue: $313 million
CENTURY 21's HISTORY * 1971: Founded in Santa Ana by brokers Art Bartlett and Marsh Fisher * 1975: Relocates to Irvine; first international office opens in Canada * 1979: Merges with TransWorld Corp. * 1985: Purchased by Metropolitan Life Insurance Co. for $251 million * 1995: To be purchased by Hospitality Franchise Systems Inc. for $200 million
Source: Century 21 Real Estate Corp, Hospitality Franchise Systems Inc., Times reports
Researched by JANICE L. JONES / Los Angeles Times