CBRE Group Inc.
) second-quarter 2013 adjusted earnings came in at 31 cents per
share, missing the Zacks Consensus Estimate by 3 cents. A weaker
yen and soft market conditions acted as the dampeners.
However, this was 15% higher than 27 cents earned in the
prior-year quarter. The year-over-year increase is attributable
to strong top-line growth across all operating regions and
consistent improvements in global capital markets and occupier
On a GAAP basis, this commercial real estate investment trust
(REIT) reported earnings of 21 cents per share, down from 23
cents in prior-year quarter.
Revenues came in at $1.7 billion, marginally surpassing the
Zacks Consensus Estimate of $1,721 million. Additionally,
revenues were up 9% from the prior-year quarter figure of $1,601
Adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA) came in at $243.1 million,
reflecting a year-over-year increase of 10% from $220.9 million
in the prior-year quarter.
Behind the Headlines
Global leasing business revenue increased 4% amid weak market
conditions, driven by notable gains in the Americas (up 5%) and
EMEA (up 3%). However, the Asia Pacific region suffered a 1% dip
in the leasing revenue affected by continued weakening of the yen
against the dollar. Notably, the leasing business on a global
platform is currently at a low due to the fragile economic
environment and a higher level of occupier caution.
Moreover, Global Corporate Services ('GCS') - which is CBRE's
outsourcing business for occupier clients - remained strong with
an 11% gain in revenues on year-over-year basis. CBRE inked 55
GCS contracts during the quarter, including 22 new-clients
contracts. Among these, the new deal with
J. C. Penney Company, Inc.
) is noteworthy. Additionally, the quarterly contracts comprised
the extension of 20 existing contracts, including those with
In addition, property, facilities and project management
services revenues upped 11% on year-over-year basis, primarily
driven by gains of 22% from the EMEA region. Furthermore, capital
markets businesses were strong, with global property sales
revenues rising 20% year over year, led by the Asia Pacific and
Region (U.S., Canada and Latin America)
: Revenues increased 10% year-over-year to $1.1 billion from $1.0
EMEA Region (primarily Europe)
: Buoyed by enhanced performances in France and the U.K.,
especially in property, facilities and project management
business, revenues upped 9% year over year to $270.3 million.
Asia Pacific Region (Asia, Australia and New Zealand):
Geographically, the region remained the best performer, with
revenues of $233.1 million, up 16% from $201.2 million. The
increase reflects enhanced overall performance, particularly in
Australia, Greater China and Singapore.
Global Investment Management Business (investment
management operations in the U.S., Europe and Asia):
Revenues fell 4% year over year to $115.1 million from $119.7
million in prior year quarter.
Development Services (real estate development and
investment activities primarily in the U.S.):
Revenues declined 44% year-over-year to $9.9 million from $17.8
million, due to low rental revenues following the property sales.
The development projects in process totaled $4.7 billion, up 12%
from the end of 2012, and inventory of pipeline deals were $1.7
billion, down 19% from year-end 2012.
As of Jun 30, 2013, CBRE had cash and cash equivalents of
$485.5 million, compared with $1.1 billion in at year-end
CBRE reaffirmed its adjusted earnings per share guidance it in
the range of $1.40-$1.45 for full-year 2013.
Although the weak market conditions and currency fluctuations
remain the concerns, we believe that CBRE's solid and flexible
capital structure as well as its flourishing outsourcing and
capital markets business strengthens its market position. Hence,
backed by its solid operating model and strong revenue gains
across all operating regions in the reported quarter, we expect
the company to tide over the current stress market
CBRE currently carries a Zacks Rank #3 (Hold).
CITIGROUP INC (C): Free Stock Analysis Report
CBRE GROUP INC (CBG): Free Stock Analysis
PENNEY (JC) INC (JCP): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
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