Temasek, Guggenheim in Talks with Wells Fargo Over Real Estate
Singapore-based Temasek and the US asset management group Guggenheim Investment have both been confirmed to be in talks regarding the purchase of Eastdil Secured. According to Deal Street Asia, the real-estate brokerage and investment bank is owned by Wells Fargo & Co.
Everything is not final as the two parties have yet to come to an agreement as to the price, and it is still possible that they may not come to terms with each other's requirements. That being said, Wells Fargo has been in a transaction such as this before--with the acquisition being Eastdil, which was bought for $150 million in 1999. It was in 2006 when the firm merged with Secure Capital.
The management team entrenched at Eastdil, even if the deal is completed, will continue on as part owners of the firm's shares. The deal, however, will mark an achievement for Temasek, their first direct investment in a US-owned real estate brokerage. Eastdil, meanwhile, will benefit from Temasek's extensive portfolios and studies on the Asian region.
This is an accomplishment for Wells Fargo, which was in talks to sell Eastdil in the middle of last year. American Banker reported that, during the time of the deal, the US-based bank was just about to make up their minds. The negotiations were ongoing at the time, and the person who revealed the news wasn't at liberty to discuss the details of the sale.
At the time, Wells Fargo was trying to boost more revenue and cut any costs they incurred. They were trying to lessen the impact of an 'asset cap' that was imposed upon them--and other financial institutions, perhaps--by the Federal Reserve. Jessica Ong, a Wells Fargo spokeswoman, didn't comment at the time.
Wells Fargo, at the time, was trying to control their commercial real estate spending, since loans were on the rise. Tim Sloan, the CEO, was observing competitor comments that said the bank was in a free-for-all entering transactions. Lending for commercial real estate was on the decline during the second quarter of last year, making their decisions seem bad at the time.
Whatever their reasons, Eastdil's sale should help Wells Fargo control the departure of its talent. In February, Doug Middleton jumped ship to competitor CBRE, taking the vacant position of VP for the NYC market. Senior team members have also left the company to join up with competitors that included Newmark and Cushman & Wakefield.