Friday, February 08, 2002
Opportunity of a lifetime
'Now we have to make it fly,' Huff says
When Jim Huff shook up the Tristate's real estate business with a three-way deal, he jumped on an offer he couldn't refuse.
The chief executive of Florence-based Huff Realty set the local industry abuzz last week after saying his company would merge with HER Realtors of Greater Columbus and form a holding company to acquire Realty One of Akron and Cleveland.
In a deal estimated at $65 million, Mr. Huff in one swoop became part of new company named Real Living Inc. that will become the nation's seventh-largest real estate firm.
Huff Realty President Scott Schilling at the company's office under construction in Campbell County. |
(Dick Swaim photo)
| ZOOM |
Mr. Huff, 58, says the new entity will be the Midwest's largest real estate firm, with annual sales of about $6 billion, 35,000 transactions, 3,100 agents and 100 offices from Northern Kentucky to the Great Lakes.
The deal also sent shock waves through the Tristate housing business. Some local real estate agencies question what inspired and motivated the deal by Huff Realty. Before the merger, Huff was the area's fourth-largest real estate firm behind Sibcy Cline, Coldwell Banker West Shell and Star One Realtors.
Mr. Huff and Scott Schilling, president of Huff Realty, discussed the merger with Enquirer reporter Jeff McKinney at separate times this week:
Question: Huff was already among the fastest-growing real estate brokerages locally and nationally. Why did it do this deal now, and what prompted it?
Mr. Huff: We did this because it was a once-in-a-lifetime opportunity, something that would be good for HER Realtors, Realty One and us. We've worked with HER Realtors on some things before, but they contacted us about a month ago and asked if we'd be interested in this deal. We like the synergies of this deal, as it will help us grow in terms of increasing sales, agents and customers.
Q: Why didn't Huff consider just selling, buying or merging with one of Greater Cincinnati's largest real estate firms instead of an out-of-town firm? That would have been particularly key in terms of possible cost savings and building local market share.
Mr. Huff: Nobody is really interested in buying or selling now. Plus, nobody could give us the scope or magnitude we get in this deal. With this, we instantly get access to another 2,500-plus agents, almost seven times more in transactions than we're (Huff) doing and some of the industry's best technology with the system HER Realtors has. Those were some of the things we saw as major positives for our company, employees, agents and customers. We've always been open to opportunities in Cincinnati, but none were available.
Q: How will local consumers and Huff agents benefit from this merger and acquisition?
Mr. Schilling: It will immediately give us access to $2 million in new technology that HER Realtors has installed, recognized as among the best in the industry. For example, buyers will have the option to get financing from 1,800 mortgage products and response to find homes that meet their needs. For sellers, they will be to list properties online the same day and get access to more out-of-town buyers at Huff than before. For agents, they will have more tools to boost productivity, including enhanced Intranet capabilities and automated comparative market analysis reports.
Q: There has been speculation that Huff Realty was acquired by HER Realtors, not simply merged with them. What's your reaction to that and other such talk about the deal?
Mr. Schilling: We did not acquire them, and they did not acquire us. Individual shareholders of Huff and HER Realtors traded shares of the respective companies for shares of stock in Real Living. Then, Real Living acquired the stock of Realty One in a cash transaction. The management responsibilities of Real Living will be shared equally among Huff and HER Realtors. We, Huff, will continue to operate locally as we always have.
Q: Given the amount of debt you've incurred with this transaction, including in the $30 million range to buy Realty One, are you concerned about the future impact that will have on the viability of Huff Realty? And couldn't that become more of a concern if the economy remains as volatile as it has been in recent months?
Mr. Huff: There are always some concerns, particularly when you do a deal like this. But we're not overly concerned because we believe that we can make it work. The new company includes some of the industry's most respected and best executives HER Realtors' Rouda family, for example and we're very excited about that. And Barbara Reynolds, formerly general manager of Realty One, became president the same day the deal was announced. The banks' willingness to finance this also shows they are convinced that we can pull it off. We also have more than sufficient cash flow to weather a slow market should that occur and meet the demands of our new debt. We've got this airplane off the ground; now we have to make it fly. We are confident that we can.
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