Latter & Blum sells to Compass, country’s largest brokerage | Business News

Latter & Blum, a century-old New Orleans company that has dominated the commercial and residential real estate markets in Louisiana for decades, has been purchased by Compass Real Estate, the largest residential real estate brokerage in the U.S.

The sale, announced Wednesday, marks the end of an era for the homegrown company that was founded in 1916 and has steadily expanded over the years to become one of the largest real estate firms in the region, with 3,100 agents across four Gulf South states and some $3.6 billion in sales last year.

Compass is a publicly traded company based in Manhattan with more than 28,000 agents in 28 states and offices in major cities like Atlanta, New York, San Francisco and Miami. The acquisition of Latter & Blum will give the  company a presence in the Deep South for the first time.

“For me it’s bittersweet,” said Latter & Blum Chairman Bob Merrick, who bought the company in 1986 and grew its revenue more than ten-fold in the decades that followed. “I spent 38 years of my life guiding this company. But I’m just about 80 years old and it’s time to move on.”

Terms of the deal were not disclosed, but Merrick’s daughter, Lacey Merrick Conway, will continue to manage day-to-day operations as president and CEO of Latter & Blum, a position she has held since 2018.

While the sale of yet another iconic New Orleans brand to a national company may come as a shock to customers, local industry experts were not surprised. Rumors of Latter & Blum’s sale have been swirling for months, amid industry turbulence, interest rate increases and the rising cost of doing business in a digital world.

Additionally, a recent settlement by the National Association of Realtors over real estate agent commissions leaves large firms like Latter & Blum on the hook for potentially tens of millions of dollars in settlement costs.

Local brokers say it’s too soon to say what the deal will mean to consumers and other firms in the market.

“Today reminds me a little of the day K&B sold to Rite Aid,” said Jeffrey Doussan, operating principal of Keller Williams Realty New Orleans, referring to the sale of the beloved drug-store chain in the 1990s. “The peppermint ice cream never came back.”

Rapid expansion

Founded in 2012, Compass is a rapidly growing real estate company that has been acquiring brokerages across the country for the past decade and is known for its spiffy online platforms and technology. Those tools are increasingly important in the real estate business today.

Merrick said the company approached Latter & Blum, not the other way around, and was an attractive buyer because of its successful rise across the country.

“They are a fabulous company,” he said. “We have watched them and they dominate every market they enter.”

The deal came together relatively quickly, he added, though he could not discuss specifics of the transaction.

Though Compass has grown rapidly, its financial performance has been battered by national pressures. Revenue at the end of 2023 was down 19% from the year before, from $6 billion to $4.9 billion, and the company finished the year in the red, with losses of nearly $84 million. Compass’ stock price closed Wednesday on the NYSE at $3.66 per share.

In remarks to investors at the end of 2023, Compass Founder and CEO Robert Reffkin said the company had “successfully navigated the worst real estate market in decades … reduced operating expenses and continued to invest in growth.”

That growth has persisted into the first quarter of this year. Today’s announcement comes just weeks after Compass purchased a well-known Atlanta brokerage, Beacham and Company.

“We are excited to welcome the No. 1 brokerage in the Gulf South to Compass,” Reffkin said of the Latter & Blum deal. “We will now have a firm presence across the Gulf Coast, from Texas to Florida, providing more opportunities for our agents to transact and better serve their clients.”

Plotting a new course

No immediate changes are expected from the sale, according to Merrick. The firm will operate as “Latter & Blum: A Compass Real Estate Company.” Conway will continue to serve as president and CEO, and existing brokerages and agent commission structures will remain in place for the time being, Merrick said.

“The technology will also remain the same until we can integrate them,” he said.

But change is inevitable, according to industry experts. It’s just too soon to say what that will look like.

“It’s a wait-and-see kind of thing,” said Joyce Delery, a broker with Engel and Volkers. “Real estate is local. It’s personal and people deal with agents because of who they are. Will this change that? We shall see.”

Doussan can’t say what the fallout will be but he predicts it will be significant.

“New Orleans has not seen something like this in the real estate industry,” he said. “We have national franchise operations like ours, Keller Williams, but we are locally owned. This will be a publicly traded company owning a local brokerage directly.”

A history of philanthropy

The immediate fallout, industry experts say, may be the loss of largesse from a local company whose chairman was a civic leader committed to supporting the community. Latter & Blum was founded in 1916 as a commercial real estate broker by Harry Latter and Joseph Blum and grew steadily throughout the 20^th century.

When Merrick took it over in the late 1980s, it had revenues of $350 million. Over the next four decades, he expanded the company through a series of mergers in markets across the state and eventually grew its footprint into Texas, Mississippi and Alabama. At its peak before the pandemic, the company’s sales volume topped $6 billion, Merrick said.

Along the way, Merrick was a leader in the local business community and supported countless charities in the city. In 2014, he estimated the company had given away between $500,000 and $1 million a year to charitable nonprofits.

“Merrick was very generous when it came to donating here locally,” said Arthur Sterbcow, a former president of Latter & Blum. “When you have an out-of-state owner, you’re not likely to see that to the same extent.”