Robert Reffkin may have announced a certain “scaling back” of Compass spending and expansion into new markets at Inman New York in January.
But when it comes to the primo properties of San Francisco’s Bay Area and the Peninsula, home to Silicon Valley, money is apparently no object.
Inman broke the story yesterday that Compass is acquiring Alain Pinel Realtors, a 30-year old, family owned innovative luxury broker headquartered in Saratoga, California. Saratoga is not far from the high tech bustling of Palo Alto, Atherton, home to the most expensive real estate in the country housing Apple, Facebook, Google, Intuit, Cisco Systems, Lockheed Martin, Advanced Micro Devices, Lockheed Martin, Hewlett Packard, Tesla, Agilent Technologies, and Oracle, to name a few, executives. This is where $1.5 teardowns are commonplace, Airbnb was born out of housing necessity, and billionsirrs like to roost between trips to their homes in Martis Camp and Hawaii.
In that tech and start-up rich environment, Alain Pinel closed more than $12 billion in sales volume in 2017, placing them seventh on the Real Trends 500.
The acquisition will build Compass’s presence in the Bay Area market enormously, because, Compass bought powerhouse Pacific Union ($14.5 billion in sales) and Paragon Real Estate ($4.5 billion) in 2018. With Alain Pinel, let’s do the math: $12 billion plus $14.5 billion plus $4.5 billion equals almost 19% of the Bay Area market, darn close to Reffkin’s stated goal of 20% market share in the top 20 markets.
Of particular interest to the Dallas-Fort Worth Market: Alain Pinel is a member of Luxury Portfolio, as is our Allie Beth Allman & Associates, Dave Perry Miller, Ebby Halliday and Williams Trew.
Compass confirmed the acquisition to Inman, in a release, after the story broke.
“Over the last 30 years, Alain Pinel Realtors have become leaders in the Bay Area, known for their luxury offering and strong culture,” Robert Reffkin, Compass CEO said in a statement. “The Hulme family has built a company with the same entrepreneurial, agent-centric values as Compass and I am excited to work together to build the future of the real estate industry.”
A source told Inman that they have heard from a few agents at APR that regular weekly meetings for Tuesday have been canceled. A Compass team also confirmed the move on Twitter. A source told Inman Compass informed its agents of the acquisition on Monday afternoon.
“When my family founded Alain Pinel Realtors in 1990, we were committed to transforming real estate and 30 years later, we continue to look for ways to innovate,” Mike Hulme, President of Alain Pinel Realtors said, in a statement. “By partnering with Compass, we are able to further our vision and offer our agents the opportunity to build the future of real estate.”
According to Inman, Compass acquired Pacific Union International by paying Fidelity National Financial, (which owned a 62 percent stake in the company) $43 million in cash and an additional $27 million from an earn out if the company meets undisclosed metrics, common in brokerage purchases everywhere.
Alain Pinel is a privately-owned company, so the Pinel price-tag ad will not be public. However, Reffkin has said in the past that his company pays four to six times a company’s earnings before interest, tax, depreciation and amortization.
And he also said he’s be paying less this year for companies, without saying why.
Compass, still a privately held company, is said to be valued at $4.4 billion following multiple several hundred million dollar investment rounds, and backing by SoftBank. The high-dollar venture capital investments have helped fund Compass’ furious acquisition-spree and immense growth in the top twenty US real estate markets.
With the acquisition, Compass says it has north of 10,000 agents now total, 3,000 agents across 97 office locations in the Bay Area alone. In property-crazed California, the company claims to have 4,500 agents.