Despite the sluggishness of the U.S. housing market, HomeServices of America is continuing its cross-country shopping spree with the purchase of a real estate firm in southwest Missouri.
On Tuesday, the Minneapolis-based real estate company announced its fourth acquisition of the year, the purchase of Tri-Lakes Realtors, which has 40 sales associates and three offices in Missouri.
HomeServices, owner of Edina Realty and the nation's second largest real estate firm, has been pursuing an aggressive national expansion strategy, and has grown to include locations in 23 states. It has about 17,000 sales agents and 2,300 additional employees.
CEO Ron Peltier said the company has no plans to slow its march and has its eye on several other potential deals. He hopes to complete two or three more acquisitions by year's end. Peltier didn't cite specific brokerages, but said HomeServices sees opportunities for growth in the Northeast, Pacific Northwest, Florida and Texas.
The company's strategy has been to acquire existing firms with strong local brands and community ties, but leave the name in place or fold the firm into an affiliated holding in the same market to maintain regional recognition.
In Missouri, Tri-Lakes will merge with another HomeServices affiliate, Carol Jones Realtors.
The president of Tri-Lakes, Rick Witeka, will serve as general manager of the new firm, which will be named CJR Tri-Lakes. It will have six offices and more than 220 agents. No employees would be laid off and no offices would close as a result of the merger.
Tri-Lakes and Carol Jones were the top two players in the Branson, Mo., area, Peltier said. "This acquisition firmly places us No. 1," he said. "Ahead of all the competition."
Last year, Tri-Lakes generated more than $60 million in sales, Witeka said. He noted that Tri-Lakes would benefit from the improved technological and marketing resources provided by HomeServices.
Peltier and Witeka declined to release the terms of the deal, but Peltier said it was a cash transaction.
"We're buying only the best companies that fit into our long-term strategy," Peltier said.
Steve Murray, publisher of RealTrends, a real estate research and publishing company, said he's seen more acquisition activity during the past six months than in the past four years, and that HomeServices has had more success than any other company. "They're acquiring good companies with decent market share," he said.
"I think the attitude is that the market is definitely on the upswing," Murray said, signaling to companies that now is a good time to buy smaller firms.
"We're probably going to continue to see a lot of this going on simply because it's one way firms can squeeze a little more cost out of a transaction," said Paul Bishop, vice president of research for the National Association of Realtors. By acquiring smaller firms, large companies can get more business activity under one roof and drive down costs, he said.
Large companies like Home Services, a debt-free affiliate of Berkshire Hathaway, are less concerned about the immediate state of the housing market, Bishop said, and are more focused on what their business looks like years down the road. "These are strategic acquisitions," he said.
The acquisition of Tri-Lakes was small in comparison of purchases HomeServices made of firms in Portland, Seattle, and Connecticut earlier this year. Prudential Connecticut Realty, which HomeServices acquired in April, had $2.5 billion in sales and more than 50 offices.
Walker Moskop • 612-673-4265