OMAHA, Neb. (AP) — Warren Buffett's company said Tuesday that it is buying the Prudential and Real Living real estate franchise and launching a new brokerage brand for those agents.
Berkshire Hathaway Inc.'s real estate unit is acquiring the network from Brookfield Asset Management. Berkshire's HomeServices of America and Brookfield will launch Berkshire Hathaway HomeServices next year and begin switching agents to the new firm.
Buffett 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 will be the majority owner. HomeServices already owns local brokerages with 16,000 real estate agents in 21 states.
HomeServices, which is part of Berkshire's MidAmerican Energy unit, played the lead role in the deal with Buffett offering final approval on the use of the Berkshire Hathaway name, MidAmerican spokeswoman Ann Thelen said.
HomeServices Chairman and CEO Ron Peltier said the deal gives the company a national franchise network with more than 53,000 agents to complement its local brokerages. Peltier said in an interview 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 of 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.
Peltier said the independent local brokers that HomeServices already owns won't be forced to switch affiliation to the new franchise 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 add that it's a Berkshire Hathaway affiliate.
Peltier said that will help ensure that both the independent brokers it owns and 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 Co., IBM and Wells Fargo & Co.
Brookfield, based in Toronto, manages more than $150 billion worth of utility, infrastructure and real estate assets.
Follow Josh Funk online at www.twitter.com/funkwrite
Berkshire Hathaway HomeServices: http://www.berkshirehathawayhs.com
Berkshire Hathaway Inc.: www.berkshirehathaway.com
Brookfield Asset Management: http://www.brookfield.com