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Prudential real estate sign. (Fred Lum/The Globe and Mail/Fred Lum/The Globe and Mail)
Prudential real estate sign. (Fred Lum/The Globe and Mail/Fred Lum/The Globe and Mail)

Brookfield pumps up with U.S. acquisition Add to ...

Canada’s largest real estate brokerage company is expanding, as Brookfield Residential Property Services pays $131-million to absorb U.S.-based rival Prudential Real Estate and Relocation Services.

The company – a unit of of Toronto-based Brookfield Asset Management Inc. and best known in Canada for its Royal LePage brand – said it would take over its rival in a deal that will make it the third largest brokerage in the world, with more than 80,000 agents spread through North America. The takeover also gives it a foothold in nine other countries, including China, Brazil and India.

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It’s the third time the company has taken advantage of a weaker U.S. rival. In 2009, it took over both GMAC Financial and Real Living, merging the two companies into single entity with some 15,000 agents and $20-billion in annual sales. Last year, it moved 85,000 families in and out of 125 countries.

Prudential – a financial services company – stepped into the real estate market in 1987. While Prudential said in a statement that “proceeds of the sale” would be $110-million, it added that the net book value of the real estate division was $25-million.

It didn’t sell the division out of desperation – in its last quarter it reported a profit of $1.5-billion ($3.06 a share), up from $1.1-billion (or $2.46) a year ago. Prudential’s Earl Lee will continue to lead the U.S. real estate business, and said now that it is untethered from its massive parent it can more aggressively pursue global growth.

“Prudential’s real estate and relocation services businesses join a global company with a track record of over 100 years of success,” he said. “We’re excited to become part of a company that is focused on and deeply immersed in the real estate sector and is in the business for the long-term.”

Brookfield operates its residential brokerage businesses through a franchising model. In Canada it operates as Royal LePage and La Capitale Real Estate Network and Johnston & Daniel. It franchises the Real Living Brand in the United States, and will continue to licence the Prudential brand as well.

Brookfield Residential has benefited from a strong Canadian real estate market, with a steady royalty flow from its franchises generating a steady stream of cash. But its stock has been beaten back in 2011, with investors pushing its shares down 13 per cent.

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