GlobeSt.com EXCLUSIVE: Holliday Fenoglio, GMAC Unit Both On the Block

DALLAS-Though the principals behind the plays aren't talking, GlobeSt.com has confirmed Holliday Fenoglio Fowler LP is being shopped to the capital markets by Goldman Sachs Group Inc., which has its own unrelated high-powered deal in motion to take over GMAC's commercial mortgage group.

Just like the buildings they sell, the industry's facilitators have become hot properties. "If you're going to get a good price, this is the time to sell," Raymond G. Torto, principal and chief strategist for the Boston-based Torto Wheaton Research, tells GlobeSt.com. "It's a good time to be selling such a company."

John Pelusi, the Pittsburgh-based managing director for HFF's operating committee, won't confirm or deny the 17-office, 345-employee network is on the market. Goldman Sachs didn't respond by publication time to comment on the run to find a buyer for HFF or its partnership play with Kolberg Kravis Roberts & Co. of New York City and an affiliate company of Lewis S. Ranieri to take over the GMAC unit. The deal is rumored to be closing this week. Other rumblings on the circuit is Chicago-based Cohen Financial LP could be up for grabs as well, but there's no word from the leader of its camp as to whether it's fact or fiction although a corporate spokesman says it's not so.

"It's a comment on the industry," says John B. Levy, president of John B. Levy & Co. Inc. of Richmond, VA. "Right now, everyone wants to be in the real estate business and this would be a way, other than owning assets, to own the facilitators."

Torto speculates HFF's most likely buyer would be a large brokerage house looking to mimic the synergy of CB Richard Ellis Inc. and L.J. Melody & Co. "It has worked very, very well," he says. "There might be some copycat strategy."

Levy, on the other hand, says it's more likely that a private equity buyer will rise to the occasion. "I don't see a mainstream brokerage house being the buyer," he says, "but one of their private equity funds might be."

HFF's operating committee recently met in Seattle to discuss its growth opportunities. Pelusi says HFF's hard focus is on its customers, services and growing business lines. "In today's capital markets, you can't continue to do business as usual," he says. "There are lots of ways to grow our lines of business."

Pelusi says HFF's growth plans last year brought a private equity business unit based in Los Angeles, a beefed-up group for note sales headquartered in New York City and a Freddie Mac program-plus service. And, he says, there are plans in the works for this year, but he's not at liberty to say what's coming in the months ahead.

GlobeSt.com's inside source says HFF has gone to market to "look at strategic opportunities" that might prevail with today's seemingly insatiable thirst for real estate investment. Since the management team bought the firm in June 2003 from Sydney, Australia-based Lend Lease, it's pushed the annual sales volume from $13.3 billion to last year's record-breaking $22.3 billion. This year's volume was $15 billion at midyear and is on track to exceed last year's $22.3 billion, according to Pelusi.

The 2003 management buyout was based on the $10-million book value. In December 1999, Lend Lease paid $257.5 million for five commercial business units of the former Amresco Inc., a one-time Dallas icon in the commercial lending industry. During its Lend Lease days, HFF operated as an independent, wholly owned subsidiary.

Most everyone on the capital circuit has heard about HFF. But, Torto says, HFF has "been pretty tight-lipped."

As for Cohen Financial, there is a chance that last month's name change of former affiliate, Cohen Capital, triggered talk about a sale. The two companies split last year. Since then, the spin-off has completed a $1-billion capitalization. "I can assure you that the company's not for sale," stresses Bruce R. Cohen, CEO of the newly christened Wrightwood Capital. "We are extremely well capitalized and not going anywhere."