Join realty subdivisions New unit among largest property managers

KLNB, BGE

April 18, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

KLNB Inc. and a Baltimore Gas and Electric Co. subsidiary yesterday merged their respective asset and property management divisions in the first of what is expected to be a wave of consolidations of local commercial real estate companies.

The merger between the Towson-based real estate brokerage and management firm and BGE's Constellation Real Estate Group Inc. creates an entity that will manage 10.3 million square feet of commercial space, ranging from high-rise office buildings to acres-wide distribution centers.

With 231 buildings under its control, the newly formed Constellation Realty Management becomes one of the largest HTC property managers in the metropolitan area. The two sides had been discussing a merger since fall.

"This is an integral step in our stated strategy of establishing a critical mass of properties managed that will enable us to expand on a regional basis," said Randall M. Griffin, president of Constellation Real Estate.

Eventually, Constellation hopes to manage property as far south as Charlotte, N.C., and as far north as Philadelphia.

Mr. Griffin said Constellation has devoted roughly $1 million to finance the expansion. An office is already being planned in the Washington area to serve that market and Northern Virginia.

Constellation Realty, to be headed by Constellation Real Estate Vice President Michael D. Kaiser and headquartered in Columbia, will have 48 employees.

"This is very much client-driven," said John P. Blumer, KLNB's executive vice president and chief operating officer. "There's pressure from large institutional clients to cover a wider geographic territory, handle different and diverse property types and have the financial resources to meet their needs."

Mr. Blumer noted that client Westmark Realty Advisors, a Los Angeles-based pension fund adviser, over the past 18 months has slashed the number of property managers it uses nationwide from 300 to 15.

"Institutional owners want to deal with a minimum number of suppliers," Mr. Blumer said. "The companies that survive will be bigger and stronger and able to provide a greater level of services."

In addition to Westmark, Constellation Realty will manage property on behalf of BGE, Rite Aid Corp., Confederation Life Insurance Co., the Army Corps of Engineers, TA Associates Realty and PM Realty Advisors.

The new company also is likely to manage BGE and Potomac Electric Power Co.'s planned 10-story headquarters in the Annapolis area.

Pub Date: 4/18/96

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