Douglas Elliman is acquiring Beverly Hills-based Teles Properties, a move that will add over 500 agents and 20 offices to its operation and make the firm one of the largest residential players on the West Coast.
The financial terms of the acquisition were not disclosed. The deal is expected to close in the coming weeks.
Stephen Kotler, who moved to Los Angeles in January 2016 to oversee Elliman’s expansion on the West Coast, will become CEO of the western region for Elliman. Sharran Srivatsaa, co-president at Teles, will take on Kotler’s former role of president of the western region.
Evan Ageloff, Teles’ COO, will be named COO of brokerage for the western region. Peter Hernandez, co-president and co-founder of Teles, will become president of brokerage for California.
The acquisition will boost Elliman’s California roster to 630 agents across 21 offices from Carmel to Coronado. Nationally, this gives Elliman more than 7,000 agents and 110 offices.
Teles, which reported revenue of $3.4 billion last year, will be rebranded as Douglas Elliman in the fall. Until then, it will operate as “Teles, a Douglas Elliman Real Estate Co.”, according to Kotler. Elliman’s sales volume in L.A. was about $700 million last year, according to Kotler.
Bigger footprint, smaller price points
The word on the street for nearly two years was that Elliman would expand its L.A. footprint through an acquisition. When Compass opened its first West Coast location in Beverly Hills two years ago, sources said it put even more pressure on Elliman to speed up its search. The company was said to be struggling to pick up the kind of top-shelf talent that would allow it do bigger deals.
Howard Lorber, chairman of Elliman, said Monday that the company had acquisition talks with several firms in the area.
“When we spoke to Teles, they had offices in all the markets we wanted to be in,” Lorber said. “It took them 10 years [to expand]. It would’ve taken us maybe less, maybe more but we wanted to get a jump start.”
Unlike Elliman’s offices outside of L.A., which skew toward the luxury market, Teles agents typically list properties under $5 million. The average Teles listing is priced at between $1.3 million and $1.4 million, Loewy said, adding that the company’s L.A. listings were “similar to Elliman” in price range.
“It’s an interesting play because they are saying: ‘we were unable to make it in L.A on our own, we saw no great numbers,” said a luxury market insider. “By buying Teles, they are actually saying: ‘We will always be a mid-market firm.”
Kotler countered by saying that in some markets outside of L.A., Teles has pricier listings.
“There is a perception that they are mid-level, but they are in higher-end markets like Newport,” he said. “We are looking for higher-end markets and we have been [working on this] deal for a year.” When approached by The Real Deal last month, both Elliman and Teles had denied talk of any deal.
“Going into markets blind is detrimental,” Kotler said. “So, we had a choice to either grow organically or acquire and we decided to acquire a company we thought would be a fit.”