CBRE Group Inc.
) is boosting its business in San Francisco with the purchase of
commercial real estate services firm, The CAC Group. The move is
expected to considerably enhance CBRE's service offerings in the
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CAC acts as an agent for approximately 18 million square foot
while it manages about 11 million square foot of office
properties in downtown San Francisco, the greater Bay area and
Seattle (including Bellevue). Since 2000, the company has
accomplished nearly 3,000 sales and lease transactions.
We believe the acquisition to be a strategic one, given the
opportunity to leverage on the San Francisco market - one of the
strong and growing office markets of the country. Moreover, CAC
has an increasing presence in the Seattle/Bellevue area, thereby
providing CBRE sufficient growth prospects.
Notably, in recent times, to aim for expansion of business in the
U.S. and UK, CBRE opted for a number of acquisitions including CB
Richard Ellis Carmody, KLMK Group, Alan Selby & Partners.
The company is also in a deal to acquire UK-based commercial
building technical engineering services provider, Norland Managed
Services Ltd. for increasing its capabilities and expanding its
corporate outsourcing platform in Europe.
We believe that such opportunistic acquisitions would serve as
growth drivers, supplementing the company's organic growth.
Moreover, the company's investments in people and systems augur
Apart from this, CBRE has a flourishing outsourcing business,
backed by an increasing clientele. In third-quarter 2013, the
company inked a total of 54 contracts in Global Corporate
Services, including 20 with new customers such as Heinz,
Tesla Motors Inc.
) and EMG, a Japan-based petroleum and petrochemical company.
Gradual stabilization and a recovery of the commercial real
estate market have aided CBRE to drive its growth engine and this
is expected to continue, thereby providing strong upside
potential for the company.
CBRE currently has a Zacks Rank #3 (Hold). Investors interested
in the real estate operations industry may consider stocks like
E-House (China) Holdings Limited
Kennedy-Wilson Holdings, Inc.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).