Long & Foster Real Estate Inc., the Washington area's largest real estate firm, just keeps getting larger.
The company announced yesterday that it plans to acquire Anderson-Stokes Inc., a Rehoboth Beach, Del.-based realty firm that sells and leases beach property on the Delmarva peninsula. It marks Long & Foster's first presence in Delaware and is its third acquisition in as many months.
The deal expands Long & Foster's reach into the popular summer getaway spot frequented by tens of thousands of sun lovers from the Washington, Baltimore and Philadelphia metropolitan areas. The mainstay of the Eastern Shore real estate market is the leasing of summer homes and condominiums to vacationers.
The Eastern Shore real estate industry has been mired in a sales slump since the Tax Reform Act of 1986 was passed, tightening tax rules on real estate rentals. Condominium sales in the Ocean City area shot up in the early 1980s but fell after tax reform, according to the real estate consulting firm of Lipman Frizzell & Mitchell. Last year, Ocean City condominium sales fell 4 percent.
Anderson-Stokes's sales have suffered as well. Its total sales volume is down about 20 percent so far this year compared with the same period last year, said George Chabbott, an executive at Anderson-Stokes.
Paul Stokes and Daniel Anderson founded the firm in 1959. Anderson left the firm in the early 1970s and Stokes died in 1984. Since then, his widow, Phyllis, and son, Paul III, have run the company.
George Eastment, a Long & Foster vice president, said his company plans to close four Anderson-Stokes offices in Maryland -- in Easton, Salisbury, Ocean City and Kent Island. The company's offices in Bethany Beach, Rehoboth Beach and Lewes, Del., will stay open under the name Anderson-Stokes/Long & Foster. Most of Anderson-Stokes's 135 real estate agents have been asked to stay.
Anderson-Stokes handles the leasing for about 1,000 rental units. Those units will be combined with Long & Foster's 300 rental units that it handles out of its Ocean City office. Two of Anderson-Stokes's offices, in Seaford and Dover, Del., are not included in the transaction. Chabbott said the company is negotiating to sell those offices elsewhere. He declined to provide details.
Eastment said the acquisition gives Long & Foster "critical mass" in the Eastern Shore beach-home market, and it is banking on its name recognition among beach-goers from the Washington-Baltimore area. With the addition of Anderson-Stokes's Bethany and Rehoboth offices, "we now cover the shore completely," he said. Long & Foster had a total sales volume of $6.4 billion last year. It operates 182 offices with 5,800 agents.
Anderson-Stokes said Long & Foster has agreed to pay it a portion of future real estate and rental commissions over the next five years that are earned by the agents who join Long & Foster. Eastment declined to say whether any cash changed hands in the deal. Anderson-Stokes is publicly held, but its stock has not traded in years, according to Chabbott.
The deal, which is subject to Securities and Exchange Commission approval and Anderson-Stokes's shareholders, is expected to be finalized in September.