Bloomberg News

Berkshire Venture Buys Hendricks in Buffett Apartment Bet

January 09, 2013

Berkadia Commercial Mortgage LLC, the real estate venture backed by Warren Buffett’s Berkshire Hathaway Inc. (A:US), acquired closely held Hendricks & Partners to expand in apartment sales and research.

Hendricks advises clients on the sale, purchase and financing of multifamily real estate through more than 30 offices in states including California, Texas and Florida. The deal adds to Berkadia’s loan servicing, mortgage origination and proprietary lending operations, the Horsham, Pennsylvania-based company said in a statement today.

Buffett and Leucadia National Corp. (LUK:US) formed Berkadia in 2009, betting that the U.S. commercial real estate market would rebound. Apartment vacancies declined to an 11-year low in the fourth quarter after millions of people forced out of their houses by foreclosure switched to renting and stricter lending standards made it harder for potential homebuyers to get loans.

“Berkadia has been able to steadily grow its strength and presence in the commercial real estate industry,” Buffett, 82, said in the statement. The deal is “another significant step in the growth of their multifamily expertise and services.”

Apartment deals probably totaled more than $75 billion in 2012, an increase of as much as 40 percent from the year before, according to a December report from data provider Real Capital Analytics Inc. The sector is poised to record more sales than the office market for the first time in more than a decade, the New York-based company said.

Vacancy Rates

The national apartment vacancy rate dropped to 4.5 percent from 4.7 percent in the third quarter and 5.2 percent a year earlier, Reis Inc., a New York-based real estate research firm said yesterday. It was the lowest since the third quarter of 2001, when the rate was 3.9 percent.

Construction of multifamily buildings rose for a third straight quarter as strong demand and rising rents encouraged building, Reis said. A total of 24,614 units were completed in the fourth quarter, compared with 10,145 units a year earlier. The average U.S. asking rent rose to $1,097 a month from $1,064 a year earlier, the firm said.

Buffett, the chairman of Omaha, Nebraska-based Berkshire, has been betting on real estate by buying a portfolio of home loans, partnering with Brookfield Asset Management Inc. on a brokerage business, and investing in Wells Fargo & Co., the largest U.S. mortgage lender.

Hendricks CEO Don Hendricks will join Berkadia’s executive committee and will continue to lead the Phoenix-based unit, which was renamed Hendricks-Berkadia, according to the statement, which didn’t disclose terms.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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Companies Mentioned

  • A
    (Agilent Technologies Inc)
    • $56.98 USD
    • -0.17
    • -0.3%
  • LUK
    (Leucadia National Corp)
    • $23.84 USD
    • -0.28
    • -1.17%
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