Berkshire unit buys Atlanta real estate firm

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Posted: Thursday, March 21, 2013 12:00 am

Berkshire Hathaway Inc. has continued betting on the U.S. housing recovery, with its real-estate brokerage unit buying the largest firm matching home buyers and sellers in Atlanta, the nation’s ninth-largest metro area.

Minneapolis-based HomeServices of America said late Tuesday it bought Prudential Georgia Realty for undisclosed terms. Prudential Georgia has ranked first in metro Atlanta home sales since 2009, HomeServices said in a statement.

The deal gains HomeServices almost 1,000 agents and 20 offices in the Atlanta area. The Atlanta Business Chronicle said Prudential Georgia last year handled $2 billion of transactions.

It is the second foray into Atlanta in seven years. In 2006, HomeServices bought Atlanta’s Harry Norman Realtors, which contributed 1,200 agents, 20 offices and $3.6 billion in deals.

The acquisition nets shareholders of Omaha-based Berkshire a beefier real-estate brigade in Atlanta, where housing prices are rebounding after a multi-year low hit last year, when they were 40 percent lower than before the housing bubble burst last decade.

“We are in Atlanta already and like Atlanta very much,” said Ron Peltier, HomeServices chief executive. “It is a very robust market and we want more of it.”

Home prices in Atlanta rose 10 percent in 2012, according to the S&P/Case-Shiller home price index. There is plenty of upside to go: Home prices in Atlanta are level with what they were in 1999, according to Case-Shiller, after plummeting last decade amid the worst period for real estate since the Great Depression.

Housing investments by Berkshire, led by chief executive and majority shareholder Warren Buffett, have been on the rise, consistent with the company’s long-held inclination to buy historically valuable assets when they are out of favor.

The company owns Acme Brick Co., homebuilder Clayton Homes, building materials maker Johns Manville and last year bought the loan portfolio of bankrupt mortgage lender Residential Capital for $1.5 billion.

HomeServices is the second-largest U.S. independent residential real estate brokerage. Last year, the company took a majority stake in HSF Affiliates, a company formed with Toronto-based partner Brookfield Asset Management to operate the Prudential Real Estate franchise network. Franchisees of that network will become known as Berkshire Hathaway HomeServices later this year.

HomeServices has about 17,000 agents in 21 states. It was acquired by Berkshire Hathaway in 2000 as part of the purchase of Des Moines-based utility MidAmerican Energy. Last year, HomeServices contributed $82 million in profit to Berkshire Hathaway, more than double from that of 2011. Berkshire, a holding company that owns dozens of privately held firms and equity stakes in many publicly traded ones, had 2012 profit of $14.8 billion, on revenue of $162.4 billion.

“As the housing market continues to strengthen, we expect earnings to rise significantly,” Buffett wrote of HomeServices in his 2012 shareholder letter.

Peltier said he has no intention of disappointing, with buyers beginning to compete for scarce goods, a broker’s dream.

“The recovery is well under way, it started last year,” he said. “What we are seeing is an acute inventory shortage across the whole country.”

Contact the writer: 402-444-3133, russell.hubbard@owh.com

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