Interview with Mark Prendergast of Heritage Auctions

Mark Prendergast is director of business development and trust estates at Heritage Auctions, the largest collectibles auctioneer and third largest auction house in the world. Prendergast earned his degree in Art History from Vanderbilt University and began his career in arts working with a national dealer in private sales of 20th Century American Art. Joining Christie’s in 1998, he quickly advanced to Vice President where he was instrumental in bringing to market many prominent works. He later joined Heritage Auctions in 2009, where he provides assistance to fiduciary professionals in all aspects of appraisal and liquidation of assets.

In which areas has Heritage grown the most over the last few years?

Heritage Auctions continues to be the world leader as a dealer and auction house in U.S.. coins, world coins and currency. The market for collectible coins has seen very steady increases over the last few decades – often countering the wider markets, as people see the benefits of having tangible assets in their portfolios.

Other collectibles areas such as comics and sports memorabilia have blossomed during just the last 10 years. One area of art that has seen a huge increase in these past 5 years is illustration art. Once considered outside the fine art realm, the original art produced for commercial use, such as advertising, calendars or magazine illustrations, is now being recognized for its quality and artistic merits – and also as icons of the American experience.

Heritage was the first to conduct auctions in luxury accessories - mainly handbags – which has proven in the last few years to have become an international phenomenon. The luxury brands limit their production and accessibility creating the need for a reliable secondary market that confirms authenticity. We see buyers for handbags around the world purchasing bags for over $200,000! I see it as an outward show of status for the ultra-wealthy that is a bit more subtle (unless you are “in-the-know”) than flashy jewelry.

What are the current areas of focus and growth for Heritage?

It has only been about 15 years since Heritage has sold anything other than coins. In that time, the company has expanded to be the third largest auction house in the world with 40 auction categories holding some 200 live auctions a year (not including the hundreds of on-line auctions we also offer). We continue to build our presence in the more traditional areas of collecting - fine art, jewelry, decorative arts, wine.

Now selling just about $1 Billion a year for our consignors, Heritage has expanding from our Dallas, Texas roots with offices and auctions in New York, Beverly Hills and San Francisco – and looking to expand to Chicago and Hong Kong soon. We already simulcast our Rare Wine auction to a saleroom in Hong Kong to garner the Asian interest in fine wine.

Has the use of 1031 exchanges by collectors increased in recent years?

1031 exchanges continue to be a newer concept to a lot of our serious collectors. We are receiving more inquiries about exactly how they can benefit from the exchanges. Collectors just haven’t been that well informed like they are with real estate – 1031 exchanges can help them keep a lot of their resources to further their collecting.

If collectors were more aware of the benefits of 1031 exchanges, would 1031s be more widely utilized?

Yes, I can see 1031 exchanges becoming more readily accepted and implemented once their benefits are clear to collectors. Wealth advisors and financial planners should be well versed on 1031 exchanges for their client with significant collections.

How could tax reform on 1031 exchanges in the collectibles industry affect your business, if any?

Since the use of 1031 exchanges is still relatively new to the collecting world, reform would probably go mostly unnoticed - except to the savvy few who take advantage of their benefits. As we see higher and higher prices for art, coins and collectibles and the overall values of collections in all categories increase, the need for tax, transfer and investment strategies for such collections will become more necessary.