Edina Realty parent buys Portland brokerage
- Article by: JIM BUCHTA
- Star Tribune
- February 16, 2012 - 9:14 PM
There's yet another sign of optimism for the local real estate market: Minneapolis-based HomeServices of America, the nation's second-largest real estate company, is going on a shopping spree.
On Thursday, it acquired Prudential Northwest Properties, one of the biggest brokerages in the Pacific Northwest with $900 million in sales last year.
CEO Ron Peltier said it won't be the last megadeal for HomeServices, which is also the parent company of Edina Realty. With the market showing promise, he expects to snap up more brokerages in 2012 than in the past five years.
"We're very encouraged by the opportunities," Peltier said.
The Prudential Northwest deal, one of the biggest in years, is a vote of confidence for a market that some say is on the cusp of a meaningful recovery. The company also fits into HomeServices' expansion strategy perfectly because it doesn't have a presence in that region, Peltier said. Terms of the deal weren't disclosed.
The company, founded in 1948, has nearly 500 sales associates in 21 offices and serves the Portland metropolitan area, as well as Longview and Vancouver, Wash., and central and coastal Oregon.
The company's chairman, Bert Waugh Jr., is a lifelong resident of Portland and will continue in his role as chairman. His son, Jason Waugh, will continue as president and CEO and will be in charge of day-to-day operations.
Peltier said he expects to make three to five more acquisitions by the end of the year. With housing inventory down and home sales rising, there's increasing confidence that the housing market is on the mend.
Steve Murray, editor of Real Trends, a national group that tracks the industry, said he expects other firms to follow suit.
"There are other HomeServices out there, companies that are capable of making an acquisition," he said. "For the first time in five years, buyers have the confidence to pay a higher price because there's the belief that business has hit bottom and is coming back again."
As home sales slowed and the industry contracted, many brokerage buyers pulled out of the market because they were concerned that business values were still falling. At the same time, prospective sellers pulled out of the market to minimize their losses.
Though there were plenty of brokers looking for a buyer to rescue them, many brokerages simply didn't have the money. That's not the case for HomeServices. The company is owned by MidAmerican Energy Holdings Company, part of Berkshire Hathaway Inc.
HomeServices has an unusual approach to acquisitions. While many real estate companies will buy and rebrand brokerages as a way to expand market share and name recognition, HomeServices is on the hunt for established firms with a strong local brand. The brokerage gets to keep its name, and often its leadership structure.
Established brokerages are attractive to larger companies that have the resources and infrastructure to develop mortgage, title and other services.
Paul Bishop, vice president of research for the National Association of Realtors, expects to see more consolidation simply because the future looks a little less uncertain.
"A lot of firms might have been apprehensive about placing any bets when we were in the midst of the most serious downturn anyone has seen in a generation," he said. "At this point there's the expectation that the worst of the worst is probably past us."
Jim Buchta • 612-673-7376
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