CB Commercial and Koll sign letter of intent to combine.
CB Commercial Real Estate Services Group, which recently completed a public offering and is based in Los Angeles, would exchange about six million shares of its common stock for all the shares of Koll Real Estate Services, a privately-held Newport Beach, California company.
The transaction would be a tax-free reorganization and would not include other Koll entities like Koll Construction, the development arm, Koll Real Estate Group, or Koll International, its resorts and recreational development group.
Koll was founded by Don Koll, and is owned by Koll, Koll management and affiliates of Freeman Spogli & Co., and Apollo Real Estate Advisors.
The transaction is currently valued at about $145 million and while expected to close in April, is subject to board and regulatory approval.
Although neither company has become a dominant force in the New York City market, across the country, the firms are power players and the new entity would become America's leading brokerage service provider, and a leader in commercial property and facilities management, commercial mortgage lending, capital markets and advisory services and corporate real estate services.
CB Commercial had 1996 revenues of $598 million and has more than 4,000 employees while Koll Real Estate Services had 1996 revenues of $176 million and has over 2,600 employees.
In the New York area, CB Hampshire represents the company in New Jersey, Long Island and Connecticut. Koll is also strong on Long Island and New Jersey and manages properties including 1500 Broadway.
CB Commercial Real Estate Services has been making inroads in the city's sales and leasing markets, while Koll, which only entered the city a few years ago, has been making a strong impression with management and leasing assignments.
"We're very excited about the combination," said Steven A. Swerdlow, executive vice president and executive manager of the New York office of CB Commercial. "We know it will be the preeminent firm nationwide and makes a powerhouse in this region."
Gil Robinov, executive vice president of Koll Management Services, believes the companies will compliment each others strengths and weaknesses, particularly in the New York area.
He said people who select brokers look for size, strength and power. "The large institutions across the country like to deal with one company," Robinov explained as a reason for the trend towards conglomerations.
Investment property sales broker Marc Freud of CB Commercial believes that the effect of these consolidations will be that during the "beauty pageant" to sell a larger transactions, the field of competition will continue to narrow, both in New York City and throughout the country.
Robinov added, "The one thing that makes everything so exciting is that the market is so good. When the ocean rises all the boats rise. A market makes heros."
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|Title Annotation:||real estate services|
|Publication:||Real Estate Weekly|
|Date:||Mar 26, 1997|
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