Wells Fargo & Co.’s Eastdil Realty LLC announced Wednesday that it had agreed to buy a fellow real estate investment banking firm, Secured Capital Corp. of Los Angeles.
The acquisition will strengthen Eastdil’s debt placement capabilities, said Benjamin V. Lambert, the New York unit’s founder, chairman, and chief executive.
Eastdil, which Wells Fargo bought in 1999, did not say how much it would pay. The deal is expected to close next quarter, after which the unit is to be called Eastdil Secured.
D. Michael Van Konynenburg, Secured Capital’s president and CEO, said his company had been approached by other groups seven months ago about being acquired, “but we always felt that the best strategic fit was Eastdil and Secured Capital.”
In addition to its East Coast presence, Eastdil’s ties to the San Francisco banking company made it attractive, Mr. Van Konynenburg said.
“We had the benefit of seeing how well the Eastdil-Wells Fargo relationship has been going for the last six years and how synergistic and symbiotic that has been,” he said.
Mr. Lambert said his company’s relationship with Wells “is an example of a cross-sell that works.”
“There is a team of people just focusing on cross-selling what we do to the client base on all levels of Wells Fargo,” he said. “And relationships we have with clients have become relationships for Wells Fargo.”
Mr. Lambert said Eastdil, founded in 1967, is a good cultural fit with the 15-year-old Secured Capital. In particular, both take an “investment banking approach” to compensation (salaries and bonuses) as opposed to a “broker commission mentality,” he said.
Even though he viewed Secured Capital as his company’s principal competitor, there is not a lot of overlap in their clientele, Mr. Lambert said.
Secured Capital is a leading adviser for commercial mortgage loan sales, a capability Eastdil does not have. Secured Capital also raises capital for real estate funds and real estate hedge funds, something Eastdil clients have asked the firm to do, “but frankly we’ve been kind of busy doing other things,” Mr. Lambert said.
Both Eastdil and Secured Capital have offices in Los Angeles, San Francisco, and New York. The acquisition would give Eastdil offices in San Diego and Orange County. Eastdil also has offices in Atlanta, Washington, and Chicago, cities where Secured does business but has no physical presence.
Mr. Lambert said that both companies have solid offshore capabilities, but in different areas. He says Eastdil is much stronger in Europe and Secured Capital offers a better footing in Japan.
