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One week after telling investors it was readying to take advantage of investment opportunities created by adverse market conditions in the United States, Brookfield Asset Management Inc. is executing on its strategy with the acquisition of a U.S.-based real estate services firm.
Brookfield's residential property services division said Tuesday it is buying GMAC Home Services LLC, which primarily provides real estate relocation and brokerage services in the United States, for an undisclosed amount.
"It's been a tumultuous time in the real estate market, that's not news to anybody. The opportunity is as other companies are looking at focusing on their core business, there are more opportunities to acquire assets against the core competency that we have here in Canada," Graham Badun, chief executive officer of the division, Brookfield Residential Property Services, said in an interview.
The sellers are GMAC Residential Holding Company LLC and GMAC mortgage unit Residential Capital LLC (ResCap). Earlier this month ResCap announced plans to cut 5,000 jobs, or 60 per cent of its work force, due to the weak housing and mortgage markets.
Brookfield Asset Management
In Canada, Brookfield Residential Property Services provides executive relocation services, home appraisals and property brokerage services under the Royal LePage, La Capitale, Johnston & Daniel and Centract brands.
The company has been looking for acquisitions in the U.S. on and off for the past three years, and the purchase marks its first material foray there, Mr. Badun said.
Brookfield Asset Management already has significant investments in the U.S., including in the Manhattan office sector through its 50 per cent stake in Brookfield Properties Corp.
Shares of both companies have been caught in the market downturn hurting both U.S. financial services firms and landlords with significant real estate holdings in New York City.
Despite the market turmoil, Brookfield Asset Management, which has more than $95-billion (U.S.) under management, reiterated its long-term investment view at a presentation to investors last week in New York.
This includes looking for "sizable" distressed investment opportunities in the company's core business areas in the U.S., according to materials used in the presentation.
While the acquisition of GMAC Home Services is not significant financially for Brookfield, it will be an important source of future growth and a platform for international expansion, Mr. Badun said.
"We think that housing and real estate is a terrific long term opportunity, and the services that we provide around it certainly, these markets ebb and flow. We think with the right discipline and the right focus we'll be very well positioned to take advantage of the rebound when it comes."
The purchase fits with the strategic growth objectives at Brookfield Residential Property Services, and with Brookfield Asset Management's overall intentions, he said.
GMAC was formerly known as General Motors Acceptance Corp. In 2006, the auto maker sold a majority stake to a private group led by Cerberus Capital Management.
