NRT Swallows Another One
February 1, 2002
Cendant Joint Venture Adds Agents In Atlanta, Hints At More Acquisitions To Come
By Bridget McCrea
Inman News Features
NRT has done it again. The real estate giant?s acquisition this week of Atlanta-based Northside Realty?s brokerage operations marks its 18th real estate company purchase in the last 12 months or so.
The acquisitions have grown the Cendant Corp./Apollo Management joint venture from $600 million in gross commissions in 1997 to more than $3 billion today. And, the company now has more than 38,000 sales associates in 750 Coldwell Banker and ERA brand offices throughout the country.
According to NRT CEO Bob Becker, NRT primarily seeks to acquire brokerages that have the largest or second largest local market share, a great reputation and good staff.
"Growing as fast as we have, we need good people," said Becker. "We also look for overall philosophical agreement on where the business is going and how it serves its customers."
In July, NRT found those qualities at King Thompson Realtors and Coldwell Banker Grand Traditions, both in Columbus, Ohio. Michael Huntley, who became president of the freshly minted Coldwell Banker King Thompson following a merger of the two companies, said the merger has been "so far, so good." The only new challenge he said he faced was the amount of paperwork passing over his desk.
"I used to be the last guy to get the report," said Huntley. "Now, since others own the company, they need to know what?s going on from a reporting standpoint."
Huntley said he?s impressed with NRT?s hands-off, yet supportive approach to the acquisition process.
"They don?t have any great designs to send people in to run a company in Columbus," he said. "Instead, they identify good local leadership and companies, then work with them to support their efforts."
Becker points to NRT?s 7-8 percent overall agent attrition rate as evidence that the acquisitions are being smoothly integrated.
"That?s an extraordinarily low figure in any industry," he said. "But in this one, which is characterized by independent contractors, it?s extremely low."
Huntley said King Thompson and Grand Traditions had 759 agents on merger day and the combined entity has 770 agents today.
"We have the same people doing the same thing in the same city," he said. "Other than the fact that our signs changed from burgundy to blue and white, little has changed."
But change has been more obvious in other instances. Linda Berg, president of Coldwell Banker Dallas-Fort Worth, said NRT?s acquisition of Henry S. Miller resulted in the consolidation of 13 offices. The overlap was significant, she said, because both companies had operations in the same metro area.
"We went from 26 offices to 45 on merger day, but now we?re back down to 32," said Berg. "That was a lot of consolidation in nine months."
But most of the sales agents stayed on board, despite the changes brought on by the consolidation, Berg said.
"They felt fortified by the additional strength of being part of a large office with a bigger market share," she said.
NRT?s buying spree hit New York City at an untimely moment: The company acquired The Corcoran Group just 13 days after the Sept. 11 terrorist attacks rocked the city.
Corcoran CEO Pam Liebman said much of the company?s staff was still reeling from the tragedy when the merger papers were being signed, but completing the acquisition proved even more important in the wake of the attacks.
Liebman said Corcoron already had been seeking a "dominant financial partner" prior to Sept. 11 primarily to keep the company?s growth on track and that the NRT acquisition shielded the company from the cost-slashing other NYC real estate firms went through in the following weeks.
"For the two months following Sept. 11, other (real estate) companies across the New York market were slashing budgets and making changes to combat the downturn," said Liebman. "Thanks to our partnership with NRT, we maintained our course and weren?t forced to implement cutbacks."
Liebman also said the biggest challenge of the acquisition has been the increased reporting requirements. But she added that NRT has been through enough acquisitions to realize it takes time for an independent firm to adjust to such processes.
"It?s like bread and butter to them," said Liebman. "They just ease everyone through the process and have been great at helping us transition different accounting procedures and other functions."
This week?s announced merger of NRT-owned Coldwell Banker Buckhead Brokers with Northside Realty with creates a company with 38 offices and more than 2,100 sales associates in the greater Atlanta area. The two companies closed a combined 20,000 transaction sides last year, accounting for 25 percent of the residential resale housing market, according to an NRT statement.
Asked whether NRT expects to add more real estate brokerages this year, Becker?s only reply was "stay tuned."
Copyright: Inman News Service