Employee group buys Westside brokerage from British firm for an undisclosed price.

Employee group buys Westside brokerage from British firm for an undisclosed price

Competing executives say risks involved are huge

Four key employees at the Beverly Hills office of Lambert Smith & Hampton have agreed to buy that Westside commercial brokerage from its London-based owner, the Business Journal has learned.

Purchasing the $150 million (1989 transactions) brokerage office are William Harper Jr., Sonny Astani, Scott Milano and Jeffrey Iee.

Harper, managing director of the office and leader of the buyout group, said he expected the deal to close this week. He refused to disclose the purchase price.

The deal, once consummated, will be the office's fourth ownership change in five years.

Lambert Smith & Hampton, an old-line British brokerage, had bought the Westside office, along with eight other U.S. brokerage offices, just seven months ago from the bankrupt Australian-based conglomerate L.J. Hooker International.

But Lambert Smith & Hampton decided a few weeks ago to unload its newly acquired U.S. offices, and offered to sell those offices to their respective managers.

Six of the nine managers, including Harper of Beverly Hills, had accepted that offer as of last week.

The Lambert Smith & Hampton office in Phoenix has been shut down, and the fate of the British company's other two U.S. offices remained in question as of press time last week.

Prompting Lambert Smith & Hampton's decision to unload its U.S. brokerage operations was the worsening financial travails of its own parent company, British & Commonwealth.

That company filed for the British equivalent of Chapeter 11 bankruptcy in July. At that time, British & Commonwealth proposed that it sell off its Lambert Smith & Hampton subsidiary to the principals of that brokerage. And the British principals accepted that offer. They've since formed a buyout group and are near consummating that purchase.

As part of that decision, the Lambert Smith & Hampton principals decided to sell its U.S. offices due to this country's soft real estate market.

The firm's brokerage offices throughout Europe and Asia are all operating much more profitably, Harper said.

But Harper expressed optimism last week about the long-term profit potential of his just-acquired Westside office.

"We fill a very specific niche in this market, namely Hollywood and the Westside, and we have a good roster of repeat-business clients," he said.

Harper said he hand-picked Astani, Milano and Iee to join him in the buyout because of their varied areas of expertise.

"Astani has been my top producer for the past five years, Milano specializes in Hollywood apartment buildings and Iee interfaces with our institutional investors, who are primarily Asian clients and local pension funds," Harper explained.

Despite Harper's optimism, some Westside brokerage executives questioned the wisdom of buying a major L.A. brokerage in such a depressed market.

"Owning a brokerage exposes you to huge risks and constant overhead," said one prominent Westside broker. "If you don't have enough in receivables to clear overhead and salaries, it comes right out of your pocket."

One thing Harper may have in his favor, industry sources said, is a guaranteed salary, which is typical for the principal owner of a brokerage firm.

Harper would not discuss any monetary aspects of his new venture. But industry sources estimated he could reasonably command an annual salary of between $85,000 and $150,000, plus bonuses and expenses.

Harper said his new ownership group has no immediate plans to increase or decrease the size of the office's 30-agent staff, which carried out $150 million worth of lease and sales transactions last year.

The office will retain the name Lambert Smith & Hampton under a licensing agreement that Harper's group expects to finalize with the British brokerage this week.

Hence, this will be the office's first ownership change not to result in a name change.

The office initially opened in 1985 under the banner Merrill Lynch Commercial Real Estate. But in December 1986, Merrill Lynch decided to sell its 15 commercial brokerage offices, including the Beverly Hills office, to L.J. Hooker International.

Hooker expanded the U.S. brokerage chain to 22 offices, and simultaneously began investing heavily in high-end retail chains such as Bonwit Teller, B. Altman, The Parisian Group and Sakowitz.

That diversification into retail proved to be ill-fated for Hooker, forcing it into Chapter 11 bankruptcy earlier this year.

Sigoloff & Associates, the Santa Monica-based turnaround firm of former Wickes Cos. chief Sanford Sigoloff, was brought in to advise Hooker on its fire-sale restructuring.

That fire sale included the sale of nine Hooker offices, including the Beverly Hills office, to Lambert Smith & Hampton.

In the midst of these ownership changes, the Beverly Hills office lost two of its top-producing agents. Michael Geller left to form his own Westside brokerage firm, First Property Realty Corp. And Don Ferris jumped to Julien J. Studley Inc. "because of the uncertainty about the future of Hooker . . . and uncertainty about the potential purchaser of the brokerage," he said at the time.

Through it all, however, Harper has remained at the helm.

"We're still in the same office; we even have the same phone number," Harper pointed out.

PHOTO : Harper: Organizes employee buyout group