JLL & Warren Buffett Purchase Multi Family Brokerage Firms

Since investors have a really strong interest in apartments, it’s only been a matter of time till that interest made its way to brokerage firms that bring sellers of apartments and apartment buyers together, and possibly even provide them with financing at one fell swoop.

In a deal that was completed on December 31, 2012, Berkadia  Commercial Mortgage, formerly part of Capmark Financial, but now a commercial real estate lender owned by Berkshire Hathaway, acquired Hendricks & Partners, which is a Phoenix-based multifamily sales brokerage firm that currently has 37 offices across the United States of America.

And last week alone, Jones Lang LaSalle also widened its brokerage operations of a multi family variety by moving into Texas and buying The Apartment Group, LTD based in Dallas. Right after the acquisition is completed, the founder and president of The Apartment Group, Jeff Price, is going to join JLL’s capital markets team, where he will lead the company’s overall multifamily brokerage in the state of Texas and act as their managing director.

It’s no surprise that the Texas acquisition really adds to JLL’s existing multifamily operations as a brokerage firm, but Berkadia surprised everybody by entering into the market, and they now brought a new player into the quickly evolving real estate services business of a commercial variety.

“Our industry continues to evolve toward providing as many services as possible to our customers,” says Hugh Frater, Berkadia CEO, in a statement that he made when he announced the acquisition. “In this new partnership we see tremendous opportunities to not only expand our existing client relationships with the offer of additional services, but also to build new relationships in the commercial real estate industry.”

“Since the company was formed back in 2009, Berkadia has been able to steadily grow its strength and presence in the commercial real estate industry,” added Warren Buffett, chairman and CEO of Berkshire Hathaway. “We see Berkadia’s acquisition of Hendricks as another significant step in the growth of their multifamily expertise and services.”

Hendricks & Partners, founded by Don Hendricks in 1995, is currently one of the largest privately held firms exclusively focused on multifamily sales and investments. The company, which can operate as a separate business unit under the new name Hendricks – Berkadia, brings a brand-new service line to go with Berkadia’s lending operations, mortgage origination and loan servicing businesses.

Don Hendricks is going to join Berkadia’s Executive Committee as the new CEO of Hendricks – Berkadia, and they also named him the executive vice president of the company. The firm is going to continue to stay located in Phoenix, Arizona.

Berkshire Hathaway and Leucadia National Corp., who joint venture to form Berkadia, are now known mostly in this industry as a special servicer, managing a portfolio that mainly consists of distressed properties with more than $200 billion under its management at the end of the year 2012.

The company is also an insurance company correspondant, as well as other institutional lenders, and they are an approved lender for Freddie Mac, Fannie Mae, and HUD/FHA, where they provide capital for clients to either buy, refinance or build commercial properties and multifamily dwellings.

 

Under Frater, their CEO – who is also a former executive VP at PNC Financial Services, where he previously led their real estate division, and also served as the CEO of Midland Loan Services, which is a subsidiary of PNC in their software development and loan servicing business – Berkadia has fortunately been expanding its lending operations steadily, and this includes their proprietary lending program in which they originate fixed-rate loans for packaging commercial mortgage-backed securities (CMBS), and they offer floating-rate bridge loans.

During the year 2011, Berkadia brought in Stephannie Mower, a former executive vice president with Cushman & Wakefield out of Texas, also head of its Dallas Capital Markets team, where she had the opportunity to help create a new line of business providing commercial real estate investment sales on a national level.

Jones Lang LaSalle also set up its acquisition as a capital markets play, saying the additional support of The Apartment Group will add to its strategic plan to become the largest capital markets provider in the commercial real estate arena.

Over the last four years, JLL has brought in over 75 debt and equity and multifamily sales specialists on to its roster in the capital markets. At the end of last year, they were approved as a Freddie Mac Multifamily Program Plus seller/servicer in Texas, which added to its already approved Southeast and Mid-Atlantic territories.

“These full-scale capabilities will allow us to offer clients the most comprehensive multifamily platform in the Southwest,” says Jay Koster, the current president of JLL’s Americas Capital Markets.

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