Merger Mania: NRT, Prudential Beat the Holiday Buying Rush
Merger Mania: NRT, Prudential Beat the Holiday Buying Rush
Two big mergers--one on each coast--may be just the new toys a pair of major real estate companies was hoping to find in their stockings this year. In Los Angeles, behemoth NRT Inc., wrapped up its fourth major company purchase in the past few weeks. On the East Coast, Prudential tied the final bows on a three-company deal, right under the noses of its competition in the tough Northern New Jersey market.
NRT, the largest residential real estate brokerage in the country, according to REALTOR® Magazine, grew still larger with the purchase of Los Angeles-area powerhouse Fred Sands, REALTORS®. As reported by Realtormag.com’s online news last week, Fred Sands will merge with NRT's Coldwell Banker Residential Brokerage regional office in Southern California. Not that the Coldwell Banker office needed any sales help: the two companies have dominated sales in various parts of the Southern California region for several years.
The merger earlier this month added Fred Sands' $5 billion annual sales volume and 23 offices with 1,200 salespeople to Coldwell Banker's $16 billion volume and 90 offices with 4,500 sales associates. Sands was ranked 27th in the country last year by REALTOR Magazine's “Top 100 Companies” survey. Included in the merger are Sands’ offices in L.A. and Ventura counties, the New Homes Group, the International Estates division, the International Relocation and Corporate Services division, and the Fred Sands School of Real Estate. Franchisees of Fred Sands, REALTORS , throughout Southern California aren’t affected by the merger and will continue to do business as a separate corporation.
Fred C. Sands founded the company in 1969 and quickly led it to prominence in California residential real estate. Sands established an expertise in the Los Angeles area's lucrative luxury home market, while the business earned the reputation as "the company of the stars."
Sands said that the merger offers Sands' salespeople “a great opportunity to take advantage of the brand and vast resources NRT has to offer." Sands will continue to head up the franchise operation and also will act as vice chairman of the regional Coldwell Banker Residential Brokerage, which covers Los Angeles, Orange, San Diego, Santa Barbara, and Ventura counties.
Bob LeFever, president and chief operating officer of the regional Coldwell Banker Residential Brokerage, noted that in the tight Southern California market, housing inventory hasn’t kept pace with job and population growth. "What's great about the merger is that the inventories of the two companies are now merged, which is a winning proposition for consumers," LeFever said. He also predicted that Coldwell Banker would now close four out of every five luxury home purchases in California. "But we'll also be strong in all price ranges," he added.
Bob Becker, president and chief executive officer of NRT, was delighted to add such a fine company as Fred Sands to NRT's national family. He cited Sands' "impeccable reputation and commitment to customer service excellence" as a "wonderful fit with our company's philosophy." Asked about NRT's next step, Becker said, "NRT will continue to seek out growth opportunities with top companies."
New Giant in New Jersey
Prudential New Jersey Realty of East Brunswick has consolidated with two major competitors to form the second largest independently owned company in the state. PNJR Chairman and CEO William O. Keleher Jr. has merged his company with Prudential Pioneer Real Estate in Bridgewater and Prudential Brown-Fowler of New Providence to create the new Prudential New Jersey Properties.
The union will surely make for some hot competition in the already highly competitive northern New Jersey area, which primarily serves as a residential area for New York City commuters. Keleher, who will head up the new entity, said the merger would make PNJP second in size to Weichert, REALTORS, of Morris Plains.
Another tough player in the area is Burgdorff ERA, which just last month consolidated its offices in the region so it can continue to compete effectively in the New York commuter market (See “Market Leaders,” November 2000, "New Era of Service at Burgdorff ERA").
"Competition was a big factor in our merger decision," Keleher told us. "Another compelling reason was that recruitment, retention, and new business development could be done more effectively through our one new entity than by three separate companies."
Keleher has no plans to consolidate the offices of the three companies; just the opposite. "Our No. 1 priority is adding salespeople to our existing offices--most aren’t near their capacity." His goal is to increase the sales force by 25 percent.
“We're want to be big enough to support our people with marketing and technology, but not so big that individuals are overlooked. Our big draw--why people want to work for us--is that we're a locally owned company, we've lived here all our lives, and our managers and sales associates know us and can talk to us."
PNJP also projects some big numbers: the combination of the three companies brings together more than 500 salespeople in 26 offices more than 10 counties is anticipated to yield more than $1.4 billion in sales for 2000.
Seymour Litwin, who headed up Prudential Pioneer, will serve as the new company’s vice chairman; his wife, Nancy Litwin will serve as co-president, along with Chris Brown of Prudential Brown-Fowler.
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