Warren Buffett, chairman and CEO of Berkshire Hathaway, in May 2012. (Photo: Nati Harnik, AP)
OMAHA, Neb. -- Warren Buffett's company is buying a real estate
franchise from Prudential and Real Living and launching a new brokerage
brand for those agents.
Berkshire Hathaway (BRK.A)(BRK.B) said Tuesday it is acquiring Prudential's real estate agent network from Brookfield Asset Management.
Berkshire and Brookfield will start Berkshire Hathaway Home Services next year and begin switching agents to the new firm.
said he's happy to lend Berkshire's name and financial strength to the
new company, which will be based in Irvine, Calif., and be led by a team
of executives from Prudential Real Estate.
"I am confident
that these partners will deliver value to the residential real estate
industry, and I am pleased to have Berkshire Hathaway be a part of the
new brand," Buffett said in a statement.
Financial terms of
the deal weren't disclosed, but Berkshire's HomeServices of America unit
will be the majority owner. HomeServices already owns local brokerages
with 16,000 real estate agents in 21 states.
Chairman and CEO Ron Peltier said this deal gives the company a national
franchise network with 75,000 to complement its local brokerages.
an interview, Peltier said that he wanted to acquire a national
franchise because building one would be too costly and take several
years. The Prudential and Real Living brands will be eliminated over the
next couple years.
"The strategy going forward is to migrate the
franchises over to one super brand: Berkshire Hathaway HomeServices,"
Peltier said. That will help the company build one main brand online
under the Berkshire Hathaway HomeServices banner, he added.
said the independent local brokers that HomeServices already owns won't
be forced to switch affiliation to the new network, but they will begin
noting they are owned by Berkshire Hathaway. For example, CBS Home Real
Estate in Omaha will keep its name, but any branded products will show
that it's a Berkshire Hathaway affiliate.
Peltier said that will
help ensure that both independent brokers who work for the brokerage it
is acquiring and those at Berkshire Hathaway HomeServices locations will
show up in Internet searches.
Berkshire owns roughly 80
subsidiaries, including railroad, clothing, furniture and jewelry firms,
but its insurance and utility businesses typically account for more
than half of the company's net income.
The Omaha, Neb., company also has major investments in such companies as Coca-Cola, IBM and Wells Fargo.
Brookfield, based in Toronto, manages more than $150 billion worth of utility, infrastructure and real estate assets.