Twin Cities-based HomeServices of America added Philadelphia-based Prudential Fox & Roach Realtors, the nation's fifth-largest stand-alone brokerage, to its growing portfolio of companies.
Terms of the deal were not disclosed. It was the biggest acquisition to date for HomeServices, which is in the midst of an ambitious expansion plan aimed at building a new national brand.
"This fills a very significant void," said Ron Peltier, HomeServices' chairman and CEO.
HomeServices, owner of Edina Realty and an affiliate of Berkshire Hathaway, has been aggressively pursuing established brokerages in markets where it lacks a presence.
Fox & Roach is the largest brokerage in the tri-state area of Pennsylvania, New Jersey and Delaware. The deal, the company's first entry into the mid-Atlantic region, increases the company's holdings to 30 brands with more than 21,000 agents and associates in 24 states. Last year the company reported nearly 186,000 transactions worth $53 billion.
"It's an outstanding achievement," said Steve Murray, editor and partner at REAL Trends and Murray Consulting. "It's a huge win for Berkshire Hathaway HomeServices."
Murray said Prudential Fox & Roach is among the nation's most respected, best-managed companies. The company will retain its name until it becomes part of the new Berkshire Hathaway real estate franchise this fall. But in keeping with HomeServices' philosophy, few changes are expected to leadership and daily operations of the brokerage. This hands-off approach is consistent with HomeServices' growth strategy, which focuses on acquiring market-leading companies with deep roots in economically vital communities.
Fox & Roach is the nation's largest single-market residential real estate brokerage, with more than 4,000 agents, 62 offices and 25,000 transactions worth $8.3 billion. It was an obvious choice, Murray said, because HomeServices lacked a presence in that market. And he's not surprised that it happened, given recent improvements in the buying environment for brokerages.
During the worst of the downturn, there were few consolidations. But with home sales on the rise, brokers are back on the hunt.
Competitive market
"It's very competitive and it's getting much more so," said Murray, noting that several large acquisitions have already happened this year.
NRT, the Realogy Holdings subsidiary that owns Edina-based Coldwell Banker Burnet, remains the largest U.S. real estate brokerage company, with HomeServices second. Murray estimated that of the roughly 11 million annual transaction sides, NRT is responsible for about 300,000, while HomeServices brokerages account for about 200,000, including the latest deal.
HomeServices is also in the enviable position of having the financial backing of Berkshire Hathaway, which gives the company a competitive advantage over companies still swimming in debt. Late last year, Peltier predicted that 2013 would be a record year for acquisitions, and that's been the case. In March, HomeServices bought Prudential Georgia Realty, the largest real estate brokerage in Atlanta and the top-ranked company in terms of homes sold. Peltier expects at least one, possibly two, more deals by the end of the year.
Peltier said that he's been acquainted with the company for at least 30 years, and started courting executives about a decade ago. Negotiations happened in fits and starts, following the ups and downs of the market.
Multiple suitors
Larry Flick, longtime chief executive of Fox & Roach, said the company had more than one suitor, but Peltier landed the deal because of the similarities in culture between the companies.
"It was important for me to find a future home that would share the same values and would be a successful competitor, but would allow me and our leadership to continue running this business," Flick said,
Jim Buchta • 612-673-7376