Savills buys Granite Partners for US$84.6m
It plans significant US investment, expects to double the size of Savills Granite within 12 months
(LONDON) UK property services firm Savills plc achieved the first stage of a long-term strategy to expand its presence in the US real estate market yesterday by buying Granite Partners in a deal worth up to US$84.6 million.
Building in America: Savills’ acquisition of Granite Partners is the first stage of a long-term strategy to expand its presence in the US real estate market
The move marks the UK company’s first independent venture into the US and consolidates its position as one of the world’s biggest property consultancy firms with more than 180 offices and affiliates worldwide.
Savills chief executive Aubrey Adams told Reuters that while market share gleaned after the takeover would be ’small’, the company planned ’significant investment’ in the US and hoped to double the size of the new entity, Savills Granite, within 12 months.
Savills has been searching for a platform upon which to build its US business since the dissolution of its strategic partnership with US property firm Trammell Crow Company after it was taken over by rival CB Richard Ellis in November.
‘We’ve spent a long time looking for the right US partner,’ MrAdams said.
‘We’re going to transfer people from the UK and we’re really going to work at building this business up,’ he said.
Under the terms of the deal, Savills will pay an initial consideration of US$54 million and could pay up to US$84.6 million for Granite, depending on the New York-based firm’s financial performance over a two-year period.
Savills shares were down 1.5per cent to 516.5 pence at 0930GMT, against a fall of almost 2.1 per cent in the FTSE 350 Real Estate Index .
The acquisition coincides with turmoil in US credit markets triggered by a collapse in the subprime mortgage sector.
Some market commentators have said that the subprime crisis will reduce demand for direct investment but Mr Adams was optimistic Savills Granite would not suffer.
‘I think we’re all concerned about subprime but the underlying factors in the commercial real estate business haven’t really changed. There is still a lot of money out there. The US is still a very active market,’ Mr Adams said.
‘This is a long-term strategy play and if you believe that these markets will turn around by September 2008, then this business will be well-placed to take advantage.’
Granite was founded by John Lyons and Gerard Mason in 1996 and offers investment sales, debt and equity placement and advisory services on commercial property in North America - home to some of the world’s most active private equity, corporate and institutional real estate buyers.
Granite has executed property transactions totalling more than US$21 billion on behalf of clients including Blackstone and Morgan Stanley since inception.
It generated turnover of US$15.4 million in the year to Dec31.
Mr Adams said Granite had relationships with a number of New York’s biggest high-end residential brokers and that he would consider using those links as a springboard in expansion of its upmarket residential business. — Reuters
Source : Business Times - 02 Aug 2007
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