The top executives of Massey Knakal Realty Services have been reaching out for financial partners as the commercial real estate sales firm struggles through one of the toughest markets in years.
Industry sources said co-founder and CEO Paul Massey Jr. and co-founder and chairman Robert Knakal have made phone calls in recent months seeking partners to provide an equity stake.
Massey said in a telephone interview yesterday that the company had held conversations with possible funders, but would not elaborate on any possible structural changes to the closely held firm.
“People have reached out to us and occasionally we have reached out to people. It is the normal course of business,” he said. “We are going to explore what is in the long-term, best interests of the firm… One of the possibilities for us is definitely staying in the form that we are.”
When asked whether the company would take on new equity partners, he said, “If we are going to do something structurally like that it has to be some strategic benefit to the firm’s growth vision… It is a constant dialogue with interesting people.”
The firm was started by Massey and Knakal in 1988 and grew into one of the city’s largest real estate investment firms, using a combination of targeted geographic sales brokers and a transparent pricing system. In July, National Real Estate Investor ranked the company 23rd in a national brokerage survey, with $2.2 billion in sales in 2007.
Massey Knakal is not the only brokerage seeking a cash infusion.
California-based full-service realty firm CB Richard Ellis raised about $207 million in November after it sold 57.5 million shares of stock.
Note: Clarification appended.
Brokerage GVA Williams Real Estate acquired a financial partner in September, when the Toronto real estate services firm FirstService Corp., which is a majority owner in Colliers International, purchased a 65 percent interest in GVA.
In October, The Real Deal reported that Massey Knakal cut the number of brokers by 25 percent to 46. At the time, Massey said the cuts were unrelated to the weak investment sales environment. The firm still plans to open a New Jersey office next year, Massey said yesterday.
Sales of investment properties below $100 million, which is Massey Knakal’s specialty, fell by 34 percent in the first eight months of 2008 compared to the same period in 2007, according to data from The Real Deal.
Massey said the number of sales in November and December was twice the rate of September and October. “It is good activity. What does that mean? We are hopeful,” he said.
New York University clinical associate professor Barry Hersh, at the Schack Institute of Real Estate, said Massey Knakal lacked the income stream that real estate companies such as CBRE and GVA gather from managing building.
“Management is a nice, steady income that keeps people busy in a downtime. That is one reason you do it,” he said.