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Century 21 Parent to Buy Coldwell, Sources Say

Real estate: The deal, estimated to be worth $700 million, would fortify HFS' position as the world's largest residential brokerage.


Coldwell Banker Corp., one of the nation's largest residential real estate brokerages, has agreed to be acquired by the parent of the Century 21 brokerage in a deal estimated to be worth about $700 million, sources close to the transaction said Wednesday.

HFS Inc., formerly called Hospitality Franchise Systems Inc., of Parsippany, N.J., is expected to announce today that it is purchasing Coldwell, the privately held Mission Viejo-based real estate brokerage founded in San Francisco 90 years ago, sources said.

The planned purchase is part of a trend toward consolidation in the nation's real estate industry. Within the last year, HFS, the world's biggest hotel franchiser, snapped up privately held Century 21 Real Estate Corp. for $200 million, and Electronic Realty Associates, or ERA, the nation's fourth-largest real estate franchise system, for which it paid $36.8 million.

The proposed acquisition would strengthen HFS' position as the world's largest residential real estate brokerage.

HFS reported revenue of $413 million last year. It is acquiring Coldwell from Fremont Group, a San Francisco-based private investment company, formerly Bechtel Investments Inc., that manages $5 billion in assets, sources said.

HFS would purchase all divisions of Coldwell Banker, which has 53,000 sales associates and employees in more than 2,300 offices nationwide, sources said. Coldwell is expected to keep its name and image and not be merged into HFS' other real estate firms, but it is unclear whether the company would remain in Orange County or if jobs would be lost.

When HFS bought Century 21, it moved Century 21's headquarters to New Jersey from Irvine and restructured the company, laying off hundreds of workers.

Company executives on both sides either declined or could not be reached for comment on the proposed acquisition.

"We're not going to comment on any rumors," Coldwell Banker spokesman Hugh Siler said.

Chandler B. Barton, Coldwell Banker president and chief executive, was in a meeting and could not be reached for comment. Calls to John Snodgrass, president of HFS, were not returned.

The purchase would fit with Coldwell's current emphasis on franchising--it owns only 300 of its offices, franchising more than 2,100--and in is line with HFS' major move into real estate. In interviews last year after the purchase of Century 21, HFS executives said more acquisitions in the real estate area were planned.

HFS, successful in hotel franchising, currently has 4,400 hotel franchises, including Days Inn, Howard Johnson, Park Inn, Ramada, Super 8 and Villager Lodge hotels. HFS provides hotel operators with advertising campaigns, reservation systems and training programs.

The company plans to do the same thing in real estate, an industry that has historically been fragmented and competitive. When it purchased Century 21, Hospitality said it planned to improve the relationship between franchiser and franchisees and increase market share.

Coldwell was founded in 1906 by real estate agent Colbert Coldwell. In 1913, Benjamin Arthur Banker joined the firm as a salesman and became a partner a year later. The firm's first residential office opened in San Francisco in 1925.

It grew quickly, becoming a national firm in the late 1960s. In 1981, Coldwell was acquired by Sears, Roebuck & Co. By 1990, it had offices in all 50 states.

Sears sold Coldwell Banker Commercial Group in 1989 to focus on residential real estate. Earlier this year, Coldwell announced that it was reentering the commercial market, making it the only national firm to offer both residential and commercial properties. Coldwell was purchased by Fremont Group in 1993.

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