After a bankruptcy judge approved a plan of reorganization for Prudential Americana Group on Thursday, owner Mark Stark smiled, hugged his firm’s attorney and promised that his firm would prosper despite a brutal residential real market that will claim other real estate firms.
“The mediocre player will not make it in an environment like this,” Stark said. “I think 2009 is going to be a lot of the same we have had in 2008.”
It’s a mistake to base business plans on an improving residential real estate market, he said.
Prudential Americana, Southern Nevada’s largest real estate firm, has 1,000 sales executives and 70 employees who have already recovered their pre-bankruptcy wages if they agreed to stay with Prudential for six months, said Prudential Americana attorney Rob Charles.
Judge Bruce Markell ruled that about 15 outside real estate brokers who were owed $70,000 before the bankruptcy filing will recover only about 5 cents on the dollar.
The judge ruled after hearing objections from attorney Richard Holley, who represents Peninsula Capital Partners of Detroit, which is recovering about 5 percent of the $14.8 million it was owed. Markell said he realized real estate sales people who lost money may speak ill about Prudential.
Holley said his client hasn’t decided whether to appeal the bankruptcy case.
A financial statement from the holding company, Americana LLC, which does business as Prudential Americana and has a title company, reported $5.4 million in assets and $27.9 million in total liabilities as of March. The report showed a consolidated loss of $394,000 for March, up from $348,000 from the prior month. Stark said the real estate sales business, however, is making profits this year.
After the hearing, Stark said he expects Prudential Americana to expand its market share. He expects small and large realty firms that don’t excel to disappear.
“We’ll see a lot of consolidation. We’ll see a lot of agents moving to companies that they can feel comfortable with,” Stark said.
The firm of O’Keefe & Casto is closing its office and bringing 23 agents to Prudential Americana, he said. Prudential Americana has moved its main office to 2140 E. Pebble Road, Suite 160.
“I don’t see a lot more deterioration (in average sales prices),” he said. However, “there is pressure on average sales’ prices.”
Stark said houses priced between $400,000 and $900,000 continue to take price hits, but he sees improved prices for lower cost homes.
About half of the sales in Southern Nevada are homes repossessed by banks and short sales in which lenders allow the owner to accept less than the amount owed on the mortgage, he said.
The support of Andrew Downs, president of franchisor Prudential Real Estate Financial Services of America, was key to the successful reorganization of the Las Vegas company, Stark said.
Contact reporter John G. Edwards at firstname.lastname@example.org or 702-383-0420.