Sotheby's Realty group sold to Cendant Corp. for $100M.
Cendant has acquired the residential real estate brokerage operations of Sotheby's International Realty and entered into an agreement with. Sotheby's for a 100-year term, which consists of an initial 50-year term and a 50-year renewal option, whereby Cendant will license the Sotheby's International Realty brand in exchange for a licensing fee to Sotheby's.
The total cash purchase price for the company-owned real estate brokerage operations as well as the license agreement was approximately $100 million, plus ah ongoing license lee based on future royalties from the development of the Sotheby's International Realty franchise system and company-owned operations.
"Sotheby's reviewed its role in the market place as a premier real estate brokerage firm and decided to seek a strategic partner to grow this business more rapidly," said Bill Ruprecht, president and chief executive officer of Sotheby's Holdings, Inc., the parent company of Sotheby's worldwide auction, real estate and finance operations.
"Cendant, which is the premier operator in the residential real estate sector and a proven manager of quality brands, is uniquely suited to be our partner. This new partnership with Cendant and its plans for significant investment over the next couple of years will give both Sotheby's and the Sotheby's International Realty brand dramatically more exposure among high net worth families throughout the United States."
Ruprecht continued: "Last week Sotheby's announced a commitment for a new long-term credit facility of up to $200 million which dramatically expands our financing capacity and is indicative of the growing strength and momentum of our organization. We will invest the funds received from this transaction with Cendant in our core auction business to further build on this momentum and on our position as the world's pre-eminent auction house."
Richard A. Smith, chairman and CEO of Cendant's Real Estate Services Division, said) We now look forward to building and operating a franchise system that will add significant value to those residential real estate brokerage firms who will becomes, franchisees of Sotheby's Intemational Realty."
Sotheby's International Realty will operate under two business units. The company-owned residential real estate brokerage operations will be owned and operated by NRT Incorporated. Stuart Siegel, former president and CEO of Sotheby's International Realty, now becomes senior vice president for NRT with responsibility for the company-owned operations, which do business as Sotheby's International Realty.
Cendant also announced that Michael R. Good has been appointed as the president and CEO of Sotheby's International Realty Corporation, the entity responsible for servicing the current affiliate network as well as the development of the franchise system. Good is a 27-year real estate industry veteran who most recently served as NRT's executive rice president and chief operating officer.
European offices and affiliates will continue to operate under the Sotheby's International Realty name, managed by current leadership. These operations will not become part of the Cendant family at this time.
Goldman Sachs acted as financial advisor to Sotheby's Holdings and Cendant was advised by J.P. Morgan Securities Inc.