Coldwell Banker Sale Agreement Reported
Coldwell Banker Corp., one of the nation’s largest residential real-estate brokerages, has agreed to be acquired by the parent of the Century 21 brokerage in a deal estimated to be worth about $700 million, sources close to the transaction said Wednesday.
HFS Inc. of Parsippany, N.J., is expected to announce today that it is purchasing Coldwell, a privately held Mission Viejo-based real estate brokerage founded in San Francisco 90 years ago, sources said.
One of Orange County’s largest companies, Coldwell Banker is expected to keep its name and remain separate from HFS’s other real estate firms. It was unclear whether Coldwell will remain in Orange County or whether jobs will be lost.
Coldwell Banker, the only national firm offering both residential and commercial brokerage services, has about 500 employees in its Mission Viejo headquarters. Its annual revenue approaches $1 billion.
But if HFS’s past acquisitions are any indicator, Coldwell might not remain in Orange County for long. When HFS purchased Century 21, it moved the company’s headquarters from Irvine to New Jersey and restructured the brokerage firm, laying off hundreds of workers here.
The Coldwell purchase would be part of a consolidation trend in the nation’s real estate industry. Within the last year, HFS, the world’s biggest hotel franchiser, snapped up privately held Century 21 Real Estate Corp. for $200 million, and paid $36.8 million for Electronic Realty Associates, or ERA, the nation’s fourth-largest real estate franchise system.
The acquisition of Coldwell Banker would strengthen HFS’s position as the world’s largest residential real estate franchising firm. Coldwell’s emphasis is on franchising--it owns only 300 of its offices and franchises more than 2,100 nationwide. The company has 53,000 sales associates.
In interviews last year after the purchase of Century 21, HFS executives said more acquisitions in the real estate area were planned.
HFS, which reported revenue of $413 million last year, is acquiring Coldwell from Fremont Group, a San Francisco-based private investment company that manages $5 billion in assets and was formerly Bechtel Investments Inc., sources said.
Company officials on both sides did not comment on the proposed acquisition.
“We’re not going to comment on any rumors,” Coldwell Banker spokesman Hugh Siler said.
Chandler B. Barton, Coldwell Banker’s president and chief executive, could not be reached for comment. Calls to John Snodgrass, president of HFS, were not returned.
HFS has 4,400 hotel franchises, including Days Inn, Howard Johnson, Park Inn, Ramada, Super 8 and Villager Lodge hotels. The company provides hotel operators with advertising campaigns, reservation systems and training programs.
The company is taking a similar approach in real estate, an industry that historically has been fragmented and competitive. When it purchased Century 21, HFS said it wanted to improve the relationship between franchiser and franchisees and increase market share.
“You need more capital to stay on top of this industry, so a combined size makes you more powerful,” said Mike Meyer, a managing partner with E&Y; Kenneth Leventhal Real Estate Group in Newport Beach. “It’s part of the overall consolidation trend we’re seeing.” HFS’s push into real estate franchising has helped the company’s stock price more than triple since last June to more than $50 a share. The company has a current market value of about $5.7 billion.
Coldwell was founded in 1906 by real estate agent Colbert Coldwell. In 1913, Benjamin Arthur Banker joined the firm as a salesman and became a company partner a year later. The firm’s first residential office opened in San Francisco in 1925.
The firm grew quickly, becoming a national firm in the late 1960s and 1970s. In 1981, Coldwell was acquired by Sears, Roebuck & Co. By 1990, the company had offices in all 50 states.
In 1989, Sears sold Coldwell Banker Commercial Group to focus on residential real estate. In 1993, the Fremont Group purchased Coldwell’s residential operations from Sears.
Earlier this year, Coldwell announced it was reentering the commercial market, making it the only national firm to offer both services.
