Analysis: NAI Purchase Reflective of Corporate America
Commercial Property Executive
By Barbra Murray
Real estate investment company C-III Capital Partners L.L.C.'s announcement that it will acquire NAI Global--combining its commercial real estate loan servicing, loan origination, fund management and principal investment activities with the largest network of independent commercial real estate firms in the world--turned heads in the industry, but the deal says just as much about where the country is going as it does about the real estate market.
It will be quite a syndicate, C-III with its portfolio of $150 billion in assets and NAI bringing to the table its staff of 5,000 and presence in 55 countries. In the end, the merger will provide for an augmentation of service offerings on both sides, a new capacity for growth and the potential for significant savings. It's an increasingly popular recipe for success.
"There's growing consolidation in real estate just as there is in corporate America," Stan Ross, chairman of the USC Lusk Center for Real Estate, told CPE. "Businesses are looking to reduce overhead and become more efficient and more effective, so the real estate industry is doing the same thing."
Through M&A companies have been able to maintain or increase the bottom line, he said, adding, that "the overused term of 'synergy' finds its way into the conversation." With synergies, there is an overlap in jobs, which leads to a reduction in headcount. That's part of the efficiency side; then there's the expansion issue. Globalization is becoming more of a necessity for real estate corporations and other business. "You're going to find companies that haven't created platforms to compete in that marketplace, so the quickest way to get it is through M&A."