INSIGNIA FINANCIAL GROUP TO ACQUIRE DOUGLAS ELLIMAN
Acquisition to Give Insignia Commanding New York Market Position;
Douglas Elliman, Insignia Residential Group, Insignia/ESG
Book value for IFS = $17.50 !!!!!!
to Comprise Foremost Powerhouse in Regional Real Estate Services
Synergies With Realty One Also Prominent
NEW YORK, May 28 /PRNewswire/ -- Insignia Financial Group, Inc.
(NYSE: IFS) today announced that it has entered into a definitive
agreement to acquire Douglas Elliman, the leading residential real
estate brokerage firm in New York City. The acquisition bolsters
Insignia's leadership position in the New York market, adding the
number one residential brokerage firm to a portfolio of Insignia
companies that also includes the area's largest manager of cooperative
and condominium housing and premier provider of commercial real estate
services.
The acquisition of Douglas Elliman is expected to close in late June.
The purchase price is approximately $65 million in cash, plus an
earn-out of up to an additional $10 million over the next five years,
contingent upon Douglas Elliman's achievement of certain performance
standards. Insignia believes that the purchase price represents a
multiple of five times the estimated EBITDA run rate.
Insignia expects the Douglas Elliman transaction to be accretive to Net
Income per share by $0.10 on an annual basis, to after-tax cash flow
per share by $0.24 on an annual basis, and to Net EBITDA per share by
$0.33 on an annual basis. The financial contributions for 1999 will be
lower due to the inclusion of Douglas Elliman for only part of the year
and the additional expenses arising from the change in ownership.
Douglas Elliman commands the number one market position for both
residential sales and rentals in New York City. The firm also holds
leadership positions in upscale suburban markets of New York City
through offices in Greenwich, CT, Bernardsville/Basking Ridge, NJ and
three on Long Island: Manhasset, Locust Valley and Port
Washington/Sands Point.
Besides residential brokerage, other Douglas Elliman operations
included in the sale are commercial retail leasing and professional
office sales and leasing.
New York market primacy
"With the Douglas Elliman acquisition, Insignia companies have
attained a depth and breadth of leadership in New York area real estate
-- the bellwether marketplace in the country -- that no other single
firm can match," said Andrew L. Farkas, Chairman and Chief Executive
Officer of Insignia. "Having only entered the New York marketplace in
1995, Insignia has developed the quintessential New York real estate
services company, with annual revenues from regional operations of more
than $270 million, a regional workforce in excess of 1,700, and more
than 5,500 transactions completed on a regional basis."
"Insignia Residential Group (IRG) is clearly the number one firm in
cooperative and condominium housing management in New York. IRG
provides services for 60,000 apartment units, a portfolio that is more
than three times as large as its nearest competitor. Insignia also
owns the number one commercial real estate services firm in New York
through Insignia/ESG, which annually closes more major transactions in
New York than any other service- provider. Douglas Elliman -- the
largest and most prestigious residential sales and rental broker in New
York -- completes the triad. Douglas Elliman is an exceptional
brand-name that has been nurtured through nearly 90 years of successful
operations."
"In addition to Douglas Elliman's own exceptional pedigree, we
anticipate that the firm will benefit from the many synergies that will
be realized by providing residential brokerage services to the
residents of the properties managed by IRG, as well as the corporate
and institutional decision-makers that constitute Insignia/ESG's client
base," Mr. Farkas added. "We will have repeated, multi-level contacts
with our New York area customers. Insignia will be exceptionally and
uniquely able to meet their real estate needs whether they are
commercial or residential."
On behalf of the seller, the Milstein family, Howard Milstein said:
"We have been the proud guardians of the Douglas Elliman heritage for
the past 10 years. Douglas Elliman has enjoyed fantastic growth during
our ownership -- with annual transaction volume growing from $300
million to nearly $1.8 billion -- and enhanced its decisive number
one position in both residential sales and rentals. We are most
pleased that the Douglas Elliman brand will now be in the hands of a
high-quality company like Insignia. We wish Andrew Farkas and the
professionals at Douglas Elliman the best in leading Douglas Elliman
into the 21st century."
Growing impact from residential operations
The acquisition of Douglas Elliman now provides Insignia with the
leading market position for residential brokerage in two markets: the
New York metropolitan area and northern Ohio. Cleveland-based Realty
One, acquired by Insignia in October 1997, is the largest residential
brokerage firm in Ohio and the eighth-largest in the U.S.
On a combined basis, Douglas Elliman and Realty One completed in excess
of 25,000 transactions in 1998 with an aggregate value of nearly $5
billion -- an amount exceeded by only six other residential brokerage
firms nationwide.
"We believe that our exceptional residential brands position Insignia
to launch an expansion of our residential brokerage services in the
U.S. and the U.K., where we are already a leading provider of
commercial real estate services through our subsidiary, Richard Ellis
St. Quintin," Mr. Farkas said. "We expect to roll out the Douglas
Elliman and Realty One brand names in this expansion initiative,
replicating in other major markets the stature and leadership that both
brands have attained in their home markets."
"Further, we believe that our use of the Internet will play an
increasing role in the delivery of services in all our business lines,
and we are deploying our resources toward the continued development of
our Internet capabilities," Mr. Farkas added. "We have an outstanding
platform for our Internet initiative in the technical capabilities and
marketing expertise at Realty One, which is already using the Internet
to efficiently market properties and enhance the homebuying experience
for sellers and buyers."
"Finally, these companies create a platform for the development of a
number of affinity services, including mortgage finance, title
insurance, renovation services and valuation. Realty One already owns
a mortgage origination company called First Ohio Mortgage, which
provided more than $411 million of financing in 1998. We expect to
expand the mortgage services into the New York market, and to develop
the other service lines in both New York and Ohio."
In total, Insignia's residential real estate operations -- including
Douglas Elliman, IRG and Realty One -- are expected to account for
more than $200 million in annual revenues and more than $20 million of
the Company's run-rate EBITDA.
Alan Rogers, Chief Executive Officer of Douglas Elliman, will oversee
Insignia's residential brokerage operations in New York, reporting to
Ron Uretta, President of Insignia Residential Group and Chief Operating
Officer of Insignia Financial Group.
Mr. Rogers said: "We are excited to be joining the Insignia team.
There are many synergies to be realized by marrying the market
knowledge of our brokers with the property management expertise of
Insignia Residential Group. Plus, we see added benefits from our close
association with Insignia/ESG. Many of our clients are the same
corporate decision-makers that Insignia/ESG works with every day. The
opportunity to meet the full spectrum of these clients' real estate
needs within one company is truly compelling -- and something no
other single firm can offer."
"We are equally looking forward to the resources that Insignia will
bring to our business. Insignia is clearly committed to helping us
build our market share through investments in technology and operating
systems. In addition, Realty One has developed sophisticated marketing
and lead-generation platforms that we are confident can be adapted to
the New York marketplace."
Examples of Realty One's innovative platforms are its Realty One
Marketing System,(TM) which utilizes sophisticated technology to market
homes to potential buyers with the greatest propensity to purchase
them, and 2010 Professional System,(TM) a program designed to create
more opportunities for higher earnings and future security for sales
associates. The system includes an Intranet, retirement plan and
specialized training for new and experienced sales associates.
Douglas Elliman closed more than 4,100 transactions valued at nearly
$1.8 billion during 1998. This is, by far, the highest production of
any New York City firm, according to the annual ranking of residential
brokerage companies nationwide published by Real Trends, the industry
trade publication.
The firm, founded in 1911, has more than 780 brokers, supported by more
than 100 corporate employees in 15 offices in the New York area.
Douglas Elliman will continue to be headquartered at 575 Madison Avenue
in Manhattan.
Insignia Financial Group, Inc., based in New York, is among the leading
providers of commercial and residential real estate services in the
United States, with a growing presence in Europe. Its major operating
units are: Insignia/ESG, Inc., one of the largest providers of
commercial real estate services in the United States and the
pre-eminent commercial real estate service provider in the New York
metropolitan area; Richard Ellis St. Quintin, one of the premier real
estate services firms in the United Kingdom; Realty One, the
eighth-largest residential real estate brokerage firm in the United
States and the largest in Ohio; and Insignia Residential Group, the
largest manager of cooperative and condominium housing in the New York
metropolitan area.
Certain items discussed in this press release may constitute forward-
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and, as such, may involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements.
Statements which make reference to the expectations or beliefs of the
Company or any of its management are such forward-looking statements.
These statements include the expected roll out of Company brand names
in other jurisdictions, the expected utilization of the Internet, the
expected accretiveness of this transaction to the Company's earnings,
and the expected synergies from this transaction. Such forward-
looking statements speak only as of the date of this press release.
The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's
expectations with regard thereto or any change in events, conditions or
circumstances upon which any such statement is based.
SOURCE Insignia Financial Group, Inc.
-0- 05/28/99 /CONTACT: Steve Iaco,
212-984-6535, or Patric Dolan, 212-984-8073, both of Insignia Financial
Group, Inc./
/Company News On-Call: prnewswire.com or
fax, 800-758-5804, ext. 437907/
(IFS)
CO: Insignia Financial Group, Inc.; Douglas Elliman; Realty One ST:
New York, Ohio, Connecticut, New Jersey IN: FIN RLT SU: TNM
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