Hoddy Hanna zips past behind the wheel of a green Cadillac, the car the same hue as the dominant corporate color of Howard Hanna Real Estate Services, and extends his arm in a wave.
After a couple of hours of chatting with him in his office, the question arises: Is he bidding farewell to the last transaction or greeting the next one? He may be doing both.
A little earlier, Hanna, president of Howard Hanna Real Estate Services, dined on a takeout lunch from a white foam container and talked about the real estate industry, the agency his parents founded and where his company is headed. The discussion also revealed that the company had a big deal in the works.
“We’re working on a pretty good-sized deal,” Hanna said at the time.
Hanna hadn’t exaggerated. Three weeks later, the story led on the local business pages.
Last month, Howard Hanna Real Estate Services acquired Cleveland-based Smythe, Cramer Co., a close peer in terms of size, to form the ninth largest full-service real estate organization in the United States, with combined real estate sales of nearly $5 billion. The unified organization has 105 offices and more than 3,000 sales associates and employees.
Hanna will remain as president and CEO.
Under holding company Hanna Holdings are a dozen operating units, including a land development company that developed 600 lots last year, and Hawthorne Homes, a residential construction company. To round out its effort to be a one-stop shop, it operates a title company, an appraisal company and a division that coordinates services like cable TV hookups, carpet and flooring installation, and relocation and moving services.
Howard Hanna Real Estate Services has opened new offices and acquired others, expanding its footprint into Western Pennsylvania and the Erie and Harrisburg areas, West Virginia, Ohio and Southwestern New York. It placed 24th in 2002 on Real Trends magazine’s list of the largest real estate brokers in the United States, which also ranked Howard Hanna Insurance the 11th largest owned by a real estate company.
Hanna has the assistance of several family members in running the growing company. Sister Helen Hanna Casey runs the residential division, while sister Annie Hanna Cestra handles the demands of the administrative side of the business.
Hoddy’s son, Howard IV, is an executive vice president who will move to Cleveland to play a key role in the day-to-day operations of the Smythe, Cramer acquisition.
No mortgages, no sales, no deals
The Howard Hanna Real Estate Services story has been one of growth and diversification — and deals. Hanna’s father, Howard Hanna Jr., today the company’s chairman, started his real estate business in the Squirrel Hill area of Pittsburgh in 1957 with his wife, Anne, with about $75. By the early 1970s, Howard Hanna had expanded into the growing North Hills communities, as well as east and west of the city, and he was on his way to building a multiservice real estate company.
At one point in the early 1980s, Howard Hanna Real Estate was having a tough time getting mortgages approved for about a dozen potential buyers. The bank it was using at the time, the former West Penn Federal in Wilkinsburg, didn’t have enough equity to lend for the mortgages.
No mortgages, no sales, no deals. Hanna credits his father for coming up with a creative solution.
Hanna’s father scraped up most of the cash he had and placed it in an account at the bank to be used to fund the mortgages, with the stipulation that he could draw on the cash as the bank improved its equity position.
The bank granted the mortgages, improved its equity position and Hanna was able to withdraw the money, ultimately using it to launch a mortgage company. Today, it is one of the largest mortgage lenders in the United States.
Is there a bubble?
Howard Hanna’s merger with Smythe, Cramer comes as the real estate industry finds itself in an unusual position, facing the lowest interest rates in four decades and a strong residential market for both resale and new construction that shows few signs of abating, but phlegmatic movement in commercial development.
“If you look at most real estate slowdowns, commercial, residential, homebuilding, they all sort of go together, but this is a little unique,” Hanna says.
It’s little wonder that the real estate industry is in confusion. The economy is in what some analysts characterize as a “jobless recovery,” in which economic indicators improve but few jobs are created as a result.
With low interest rates, a tentative stock market, corporate accounting scandals, little employment expansion, international tensions and the threat of terrorism, the economy almost looks like it’s headed for a “perfect storm,” as one CFO describes it.
But Hanna sees stability, at least in the Pittsburgh market where his company is based.. Traditionally, that market hasn’t experienced the spikes up or down in home values that have characterized some other markets.
“We’ve had, if you track the last seven or eight years, somewhere between 2 and 3 percent appreciation in almost every community,” says Hanna. “It’s hard for that to hurt you.” How to reach: Howard Hanna Real Estate Services, www.howardhanna.com; Fannie Mae, www.fanniemae.com; Pittsburgh Construction News, www.pittconnews.com