JLL scoops up brokerage HFF for $2B

Deal, which is set to close in Q3, values HFF at $49.16 per share
By Kevin Sun and Eddie Small | March 19, 2019 09:14AM

JLL CEO Christian Ulbrich and HFF CEO Mark Gibson (Credit: Wikipedia and NAREIM)

UPDATED, March 19, 11:13 a.m.: JLL has a definitive agreement to acquire HFF for approximately $2 billion in cash and stocks, the companies announced Tuesday.

The deal is expected to close in the third quarter, subject to HFF shareholder approval. Both companies’ boards have unanimously approved the deal, which values HFF at $49.16 per share based on yesterday’s market close.

“Increasing the scale of our Capital Markets business is one of the key priorities in our Beyond strategic vision to drive long-term sustainable and profitable growth,” JLL Global CEO Christian Ulbrich said in the release. “The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities.”

Mark Gibson, CEO of HFF, will serve as the CEO of capital markets in the Americas at JLL, according to a phone call with investors that JLL held Tuesday morning.

The firms expect to see $28 million in cost savings during the first 12 months of the merger, along with an 11 percent increase in fee revenues. Their initial main focus will be on broadening their client base.

According to The Real Deal‘s latest NYC investment sale ranking, Dallas-based HFF was the city’s No. 4 firm by dollar volume, brokering 15 deals worth $3.34 billion. Chicago-based JLL came in seventh, with nine deals totaling $1.54 billion.

Once the deal closes, JLL shareholders are expected to own approximately 87 percent of the combined company’s shares, while HFF shareholders are expected to own the remaining 13 percent.

Last March, JLL and HFF co-brokered Blackstone’s sale of 5 Bryant Park to Savanna for $640 million, the last of Blackstone’s buildings in the Bryant Park area.

The deal comes amid a broader climate of consolidation. Facing an uncertain market, M&A activity among real estate firms has been on the up, hitting $524.7 billion — nearly 25 percent more than the 2007 record of $424.5 billion, according to figures from Thomson Reuters.

In New York, for instance, retail brokerage RKF sold itself to Newmark Knight Frank last year.

Meanwhile, other brokerages have ceased operations. In July, Eastern Consolidated, one of New York’s most active investment sales firms, closed its doors after more than 35 years. Founders Peter Hauspurg and Daun Paris explored the potential of a sale, but could not find a favorable deal.