Tishman West reported mulling purchase by Koll.

Deal would create nation's 3rd largest property manager

Koll Management Services Inc., a publicly traded Newport Beach-based property management company, is investigating buying Los Angeles-based property manager Tishman West Cos., according to sources familiar with both firms.

KMS has been talking with Tishman about possibly acquiring the firm for the past few months, sources said. Tishman's asking price is reportedly between $4 million and $5 million.

KMS is the fifth largest property management firm in the country with 62 million square feet of office, industrial and retail space under its control. Tishman, which ranks as the nation's 22nd largest property management firm, has 28 million square feet of property management contracts.

A combined KMS and Tishman would be the third largest property management firm in the country in terms of square footage under management.

Trammell Crow Co. ranks first and Cushman & Wakefield is second. KMS would be about the same size as Resources Property Management Corp., currently third largest in the country.

Although the real estate rumor mill has been predicting that Tishman would be acquired, Bill Rothe, president and chief operating officer of KMS, would not confirm KMS as Tishman's suitor.

"I can't really say one way or the other," said Rothe. "I can tell you that we are engaged in discussions with a number of probable acquisition candidates throughout the country."

Alan Levy, president and COO of Tishman West, did not return phone calls.

In the past Tishman has been approached by other property management firms interested in gaining a foothold in California, where most of Tishman's property management activities are.

Houston-based PM Realty offered to buy Tishman a year and a half ago. However, PM Realty ultimately backed away from the deal, claiming Tishman's asking price, between $5 million and $10 million, was too high.

But for the past year and a half KMS has been on an aggressive expansion plan, evaluating acquisition candidates across the country. Last July KMS, which represents a small portion of developer Don Koll's real estate holdings, went public to obtain additional funds for future acquisitions.

Although smaller and less aggressive than KMS, Tishman is an established, old-line property management firm with a prestigious name.

The company began as a construction firm in the 1800s and turned to property management in the late 1970s. Tishman operates as four separately owned entities, with two operations based on the East Coast and one each in the Midwest and on the West Coast.

Four years ago, Tishman West Cos. sold a 50 percent stake in itself to Balcor Co. Tishman West manages several trophy properties in Los Angeles and has relationships with institutional property owners such as Metropolitan Life Insurance Co.

Lately Tishman's win-loss record has been mixed. The company lost its management contract on two buildings totaling 1.2 million square feet in Westwood, one of which served as Tishman's headquarters, after lenders took control of the troubled properties.

But in Orange County, the company recently won a contract to manage the 450,000-square-foot Century Center office complex in Irvine owned by Metropolitan Life Insurance Co.

Koll, while losing a few contracts as a result of changes in building ownership, has managed to increase the amount of square feet under its management by roughly 27.3 million square feet within the past year and a half through new acquisitions.

In January the company bought Sunwest Asset Management, adding 7.3 million square feet to its portfolio and gaining a foothold in the Las Vegas and Phoenix markets. That same month the company formed a joint venture with Boston-based CC&F Asset Management.

Barron is a staff reporter for the Orange County Business Journal