Compass wants to make a big splash in the nation’s smallest state, and it’s fueling intrigue and apprehension in a close-knit brokerage ecosystem.
The New York City-based company announced in January they acquired Lila Delman Real Estate, a Newport, Rhode Island-based brokerage that has been around since 1964 specializing in the grand mansions that dot the state’s seashore.
The deal was announced just prior to Compass’s acquisition of Bold New York, which focuses on high-end New York City rental leasing.
Like Bold, Lila Delman reports having 120 real estate agents. In other words, it is another mid-sized buy for Compass, which after years of accumulating venture capital investments – at least $1.6 billion in all, filed confidential paperwork for an IPO in January.
Compass’s legion of skeptics see the deal as a molehill for a company that needs to demonstrate that their heady growth of three years ago, when they purchased much larger brokerages like Pacific Union in San Francisco, can get back on track. “Why aren’t they thinking a lot bigger now in advance of their IPO?” said Jonathan Miller, real estate appraiser at Miller Samuel.
But for Rhode Island real estate, the deal is a mountain.
It’s effectively the first time Compass branched into a non-metropolitan market, and, perhaps intuiting the new territory, it’s the first time Compass allowed a brokerage to keep its name.
“Lila Delman is a strong, locally grown brand. And people from here take pride in dealing with locally grown players,” said James DeRentis, an agent at Residential Properties in Providence. “So, it will be interesting to see how people react to knowing it’s Compass.”
Judy Chace, of Mott & Chace in Providence, an affiliate of Sotheby’s International Realty, doubts Compass will let “Lila Delman” stick. “I would be very surprised if Compass lets Lila Delman keep the name. They didn’t even let Pacific Union keep theirs. My understanding is that they will probably phase it out.”
One question is whether Compass/Lila Delman will recruit Sotheby’s/Mott & Chace agents.
“We know that in Boston some of the Compass agents were enticed by a signing bonus,” Chace said. “But we haven’t lost anybody at all yet to Compass.”
In fact, brokers don’t know what Compass has done so far.
“They made the announcement, and we haven’t really seen anything from them since,” added Chace, who was at Lila Delman for 16 years.
Compass declined to comment. Messages left with Lila Delman Chief Operating Officer Ryan Elsman, along with company brokers John Hodnett, and Pamela Delman-Hodnett, went unreturned.
When Lila Delman found her eponymous company she was – quite literally – vying to retain Rhode Island’s monied past.
“As real estate developers began tearing down Gilded Age mansions, Lila took preservation efforts into her own hands – dragging a stone Pelican statue from the demolished Dunemere Estate and saving a series of antique chandeliers,” reads the company’s website.
The website also notes, “Lila Delman Real Estate remains independently owned and independently minded.”
While that claim is no longer true today, the company had been a family-run business up to now, with Melanie Delman replacing her mother.
“Melanie was the face of the company, and she was a powerhouse,” DeRentis said.
Under Delman’s watch, the brokerage expanded to seven offices. It competed with Sotheby’s for supremacy in luxury homes that boast of “carriage houses” and names like Honeysuckle Lodge. (Lila Delman’s website claims the company is the no. 1 “luxury brokerage” in Rhode Island, but Chace asserted that Sotheby’s is, in fact, tops in sales volume. Chace said that Sotheby’s Rhode Island brokerages hit over $1.1 billion in 2020 sales volume.)
But Delman died at age 61 last year from breast cancer. Her death “created a leadership void,” noted Pauline Bennett, Coldwell Banker’s New England regional president.
The brokerage stitched together a four-headed leadership team of Elsman, Melanie’s sister Pamela Delman-Hodnett, Pamela’s husband John Hodnett, and Brandyn Brunelle.
That group “will all remain in place to establish and lead Compass’s presence in Rhode Island,” stated a press release, while “Jeffrey Heighton, Compass’s New England Regional President will work in partnership with Lila Delman’s leadership to grow their footprint in the Ocean State.”
Dean deTonnancourt, a broker at HomeSmart in Warwick, notes that Compass “grows through their acquisitions, not organically.” He wonders if other Rhode Island brokerages are being eyed for purchase.
“Ultimately, there is room here for another model,” deTonnancourt said. “But it would be a shame to lose more well-respected names.”