News
May 09, 2006
DTZ announces that it has acquired a 50% interest in Rockwood Realty Associates LLC (‘Rockwood’) from its existing members, for an initial consideration of $45.0 million (£24.2 million). Rockwood is a privately owned North American real estate capital markets consultancy, headquartered in New York.
The transaction, which complements DTZ’s existing relationship with The Staubach Company in occupier services, will significantly enhance DTZ’s real estate services offering to its clients, enabling them to have better access to direct investment and capital raising opportunities in North America. Rockwood’s clients will also benefit from greater access to global real estate services through DTZ’s worldwide network. Following the transaction, Rockwood will be re-branded “DTZ Rockwood”.
The initial consideration will be satisfied by the issue of approximately 743,000 shares in DTZ, which represent 1.4% of the Group’s enlarged share capital, and the payment of $36.4 million (£19.6 million) in cash. DTZ will make a deferred payment to Rockwood’s members of up to $3.5 million (£1.9 million), to be satisfied in shares, dependent on EBITDA in the year ending February 2007. In addition, DTZ will make a further deferred payment to Rockwood’s members three years from the closing of the transaction calculated as two times average EBITDA during the two year period ending February 2009 - up to 25% of which may, at DTZ’s option, be satisfied in shares. Where shares are to be issued, the sellers will initially receive loan notes, which will shortly thereafter be exchanged for DTZ shares. The transaction is expected to be immediately earnings enhancing for the DTZ Group.
For the year ended 28 February 2006, Rockwood reported revenue of $43.3 million (£23.3 million) and EBITDA of $9.1 million (£4.9 million). The full $3.5 million described above will be paid if Rockwood achieves EBITDA of $13.2 million (£7.1 million) in the year to February 2007. The further deferred payment outlined above is subject to an overall cap of $75.0 million (£40.3 million).
Rockwood, a limited liability company, was formed in 1991 by John Magee, Co-Chairman and Co-Chief Executive. Dan McNulty, who also serves as Co-Chairman and Co-Chief Executive, joined in 1993. Mr Magee and Mr McNulty, the two largest shareholders in the company, will continue jointly to manage the firm. The company currently employs 93 staff. On completion of the transaction, two Directors appointed by DTZ will serve, with John Magee and Dan McNulty, on the DTZ Rockwood Advisory Board.
The agreements with Mr Magee and Mr McNulty provide that if, in future, they leave Rockwood, then DTZ Rockwood has an option to purchase their remaining interests at a price based on an appropriate multiple of then current EBITDA (dependant on the reason for their departure).
The key features of the transaction are:
- Rockwood provides DTZ with a strong position in the North American real estate capital markets. It currently has offices in New York, Chicago, Dallas, Kansas City, Miami, Palm Beach Gardens, Orlando and Mexico City.
- Rockwood is a specialist in investment sales, portfolio disposals, note sales, debt and equity finance, asset management, real estate M&A activities and development services in the US and Mexico, and has also most recently expanded into providing such services to the hotels and leisure sector.
- Rockwood will provide access to the Central American markets through its wholly-owned subsidiary in Mexico (Rockwood Asociados LLC) which offers inward real estate investment opportunities into Mexico.
- The transaction will provide DTZ’s existing and future clients with better access to direct investment and capital raising opportunities in the North American market. Rockwood’s clients will benefit from greater access to global real estate services through DTZ’s worldwide network.
- DTZ will continue to provide occupier services in North America to its clients through its relationship with The Staubach Company.
Commenting on the transaction Mark Struckett, DTZ Chief Executive, said:
“This transaction marks a significant step forward for DTZ and further enhances our position as one of the leading global real estate consultancies. It is consistent both with our strategy of further developing our global business and with our proven model of working with highly-regarded local partners and leveraging their expertise. Rockwood has a strong track record in the areas of investment and capital markets, which, together with the existing expertise in the occupier markets offered through our relationship with The Staubach Company, will enable us to provide our clients with a broad, high quality service in North America.”
John Magee, Co-Chairman and Co-Chief Executive of Rockwood, said:
“The creation of DTZ Rockwood is a tremendous opportunity for both businesses and their clients. The partnership cements our ability to provide global capital markets and investment services to our US and Mexico based institutional and private investor clients as they expand outside North America”.
Dan McNulty, Co-Chairman and Co-Chief Executive of Rockwood, added:
“The culture and business philosophies of the two firms are closely aligned and we are already exploring a number of potential opportunities for both US and non-US based clients.”
JPMorgan Cazenove acted as financial adviser and corporate broker to DTZ in relation to this transaction. Berkshire Capital Securities acted as financial adviser to Rockwood.
Back to News