CB's Contract as FDIC Advisor Not Exclusive
CB Richard Ellis disheartened its rivals two weeks ago by announcing it had landed a contract to market foreclosed properties for the FDIC, but now the agency has clarified that the arrangement is nonexclusive.
CB announced the day before Thanksgiving that it had been selected as "a primary advisor" to the FDIC and would be "responsible for the management and marketing of residential and commercial [foreclosed real estate] throughout all 50 states."
Press reports initially suggested that the contract was exclusive, and that was how many rival brokerages interpreted the announcement. Given the expectation that hundreds of banks could fail before the financial crisis subsides, the contract was seen as a big victory for CB. With advisory work on distressed properties likely to be a main source of business for brokerages over the next few years, CB's selection seemed to take one of the potentially richest contracts off the table.
But after being peppered with questions from industry players about the agreement, the FDIC this week clarified that it might still appoint additional "primary advisors" for the handling of foreclosed properties. "It's not an exclusive contract," said spokesman David Barr. With the announcement, the contract "came across as exclusive, but it's not."
The FDIC currently controls about 2,500 foreclosed properties from 23 failed banks. As of now, CB will call the shots in marketing those properties, which have an estimated value of $650 million.
However, the FDIC could add other primary advisors if needed and, depending on market conditions, could adjust which firms handle the properties already under the agency's control, Barr said.
Firms still interested in handling commercial properties for the FDIC should contact the agency's procurement specialists and should be ready for additional requests for proposals for advisors, Barr added.
For its part, CB also acknowledged that its contract wasn't exclusive. "We're 'an' advisor, not 'the' advisor," said spokesman Robert McGrath.
CB has already lined up Realogy of Parsippany, N.J., as a subcontractor for the single-family portion of its FDIC contract. Realogy is the parent of Coldwell Banker, ERA, Century 21 and Sotheby's International.
CB's Nov. 26 announcement was seen as a blow by many executives at competing firms that were lining up for distressed-asset work from the government. Marcus & Millichap, for instance, had recently hired a Washington lobbyist to help them capture a share of the FDIC business - which some industry players have likened to Resolution Trust Corp., the federal agency set up to liquidate seized thrift assets in the early 1990's.
Grubb & Ellis executives met with FDIC procurement officials last week.