Berkshire Hathaway Expands In Real Estate By Adding A German Franchisee 

Berkshire Hathaway HomeServices, a real estate firm under the control of Berkshire Hathaway, has announced Rubina Real Estate GmbH as its franchisee outside the United States. According to Berkshire Hathaway HomeServices Rubina was a perfect fit as it has over 1,500 offices as well as more than 48,000 agents. There are also plans for expansion and additional franchisees in North America, Asia and Europe.

Global expansion of the business started two years ago. Last year in April a marketing agreement was inked with the biggest international property website in China, Juwai.com. In the United States, HomeServices of America is the second-biggest brokerage firm for residential real estate. HomeServices of America holds the majority stake in Berkshire Hathaway HomeServices.

Parent company’s identity

Co-founded by Carstein Heinrich, Rubina will rebrand next month and take up the name Berkshire Hathaway HomeServices Rubina Real Estate thereby joining other firms owned by Berkshire in adopting the mother company’s identity.

This is not Berkshire’s first investment in Europe’s largest economy. Three years ago the investment conglomerate acquired Detlev Louis Motorrad-Vertriebs, a motorcycle accessories and apparel retailer. Last year the Precision Castparts unit of Berkshire acquired Wilhelm Schulz, a piping company.

In 2017 pre-tax profit at Berkshire’s real estate business declined by 2% to reach a figure of $220 million. This was blamed on higher operating costs despite the fact that revenue rose on the back of higher home prices and acquisitions.

Carrier acquisition

Berkshire’s new investment in Germany comes in the wake of speculation that the conglomerate is considering acquiring a carrier. Some of the names that have been floated as possible acquisition targets include Dallas, Texas-based Southwest Airlines.

“Southwest is what most people would point to, because of its strong position in the domestic market,” said Savanthi Syth, an analyst at Raymond James.

In a recent interview the chairman and chief executive officer of Berkshire Hathaway, Warren Buffett, indicated that acquiring an entire airline could not be ruled out. This came after the latest letter Buffett sent to shareholders indicated that the investment conglomerate has cash reserves amounting to $116 billion. In the same letter Buffett indicated that Berkshire was in a position of making a huge acquisition or several.

Already Berkshire Hathaway owns interests of 7% to 9% in various airlines including United Continental Holdings, Delta Air Lines, American Airlines and Southwest. One of the reasons Southwest has been touted as a possible acquisition is that it presents growth opportunities of between 6% and 10%.

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