CBRE Group Inc.
(
CBG
), the world's largest commercial real estate services firm in
terms of 2011 revenue, reported second quarter 2012 revenues of
$1.6 billion compared with $1.4 billion in the year-earlier
quarter, reflecting a year-over-year increase of 13%.
The company reported a net income of $75.9 million or 23 cents per
share during the quarter, compared with $61.2 million or 19 cents
in the year-ago period. While earnings increased 24% compared to
the prior year, EPS surged by 21% in the reported quarter.
Excluding non-recurring items, CBRE Group reported a net income
of $88.0 million or 27 cents per share during the quarter, compared
with $67.0 million or 21 cents in the year-earlier quarter.
Recurring earnings spiked 31% year over year, while recurring EPS
rose by 29% compared to the second quarter of 2011. Second quarter
2012 recurring earnings marginally surpassed the Zacks Consensus
Estimate by a penny.
Second quarter 2012 EBITDA (earnings before interest, tax,
depreciation and amortization) excluding selected charges increased
28% to $220.9 million, compared to $172.4 million in the year-ago
quarter. The double-digit growth in revenues and earnings, despite
a challenging macroeconomic environment, were primarily due to an
improved performance in the U.S., strong growth in the Asia-Pacific
region, and incremental contributions from the global investment
management operations.
Revenue increased in all the business lines as CBRE Group witnessed
robust global property sales and leasing activities during the
quarter, buoyed by its leading market position in the world's major
business centers. Global property sales revenue surged by double
digits for the 11th consecutive quarter during second quarter 2012,
as credit availability became easier and broad investor sentiment
improved.
The company signed 54 long-term real estate outsourcing contracts
during the quarter out of which 24 were new clients - a record of
sorts for the company in any quarter. Global property leasing
revenue increased marginally owing to relatively soft market
conditions in most parts of the world.
Despite the headwinds, CBRE Group was able to expand its
operations in the EMEA region (Europe, Middle East and Africa)
during the quarter with the acquisition of its affiliate company in
Turkey for an undisclosed amount.
The acquiree offers valuation, leasing, investment, research and
consultancy services in Turkey, and has a huge client base of local
and international property companies that has been developed over a
period of more than 20 years.
With the acquisition, CBRE Group anticipates to meet the
increasing demands of clients who are targeting new commercial real
estate opportunities in Turkey backed by its strong economic and
political stability, and its strategic location offering a vital
link between Europe, the Middle East and Asia.
Geographically, revenue in the Americas (U.S., Canada and Latin
America) increased 13% in second quarter 2012 to $1.0 billion. In
the Asia-Pacific region, revenue rose 7% due to strong performance
in India, Australia and Japan. Revenues for the EMEA region
declined to $248.2 million during the reported quarter, compared
with $261.1 million in the second quarter of 2011 due to the
continued weak economic growth in Europe.
The Global Investment Management segment, comprising investment
management operations in the U.S., Europe and Asia, reported
revenues of $119.7 million during the reported quarter compared
with $57.6 million in the year-earlier quarter.
The strong revenue growth was attributable to the ING Real
Estate Investment Management business that was acquired by CBRE
Group in the second half of 2011, and was fully integrated with its
existing investment management business by the first quarter 2012.
Assets under management totaled $91.2 billion at quarter-end, down
3% from year-end 2011.
During the reported quarter, the Development Services segment which
includes real estate development and investment activities
primarily in the U.S., reported revenues of $17.8 million compared
with $17.2 million in the year-ago quarter. The development
pipeline of the company totaled $4.7 billion at quarter-end.
The gradual revival of the overall economy, albeit at a tepid and
inconsistent pace, has enabled the company to drive its growth
engine. Management further expects to continue the growth momentum
in 2012 with a diverse operating platform, premier brand and global
footprint.
We also remain encouraged by indications of stabilization and
recovery of market conditions. At quarter-end, CBRE Group had cash
and cash equivalents of $731.2 million compared to $1.1 billion at
year-end 2011.
For full year 2012, the company reiterated its earlier recurring
earnings guidance in the range of $1.20 to $1.25 per share. We
maintain our Neutral recommendation for the stock. We also have a
Neutral recommendation and a Zacks #3 Rank (short-term Hold rating)
for
Jones Lang LaSalle Inc.
(
JLL
), one of the competitors of CBRE Group.
CBRE GROUP INC (CBG): Free Stock Analysis
Report
JONES LANG LASL (JLL): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research