CBRE Group Inc. (
came up with an impressive result in the fourth quarter 2012,
after a disappointing performance in the prior quarter. The
company's adjusted earnings of 55 cents per share surpassed the
Zacks Consensus Estimate by 6 cents. Also, earnings substantially
exceeded the last quarter and prior year quarter figure of 26
cents and 46 cents, respectively.
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Helped by strong top-line growth in all operating regions, this
leading commercial real estate services firm bounced back to
growth track in the reported quarter. For 2012, the company
recorded the highest total revenue in its history with highest
earnings and normalized EBITDA since 2007.
For full year 2012, CBRE reported adjusted earnings of $1.22 per
share higher than the Zacks Consensus Estimate by a penny and
outpaced the prior-year earnings of $1.03 per share by 18%.
For fourth quarter 2012, on a GAAP basis, CBRE reported earnings
of 53 cents per share, up significantly from 25 cents in the
prior-year quarter. For full year 2012, earnings came in at 97
cents per share, increasing 31% from 74 cents in 2011.
Inside the Headlines
Revenues for the fourth quarter were $2.01 billion, substantially
higher than the Zacks Consensus Estimate of $1.87 billion. Also
revenues surpassed the last quarter and prior year quarter figure
by 29% and 14%, respectively. Full year 2012 revenues were $6.51
billion, ahead of the Zacks Consensus Estimate of $6.47 billion
and improved 10% from the prior year.
Adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA) came in at $351.7 million,
reflecting a year-over-year increase of 12%. For 2012, adjusted
EBITDA came in at $918.4 million, up 14% from 2011.
Leasing revenue hiked 5% globally during the fourth quarter,
despite uneven market conditions, mainly driven by strong
performance in the Americas and Asia Pacific regions.
Also, Outsourcing revenues rose 13% globally and this was helped
by double-digit revenue growth in all three global regions -
Americas, EMEA and Asia-pacific. Macerich inked 61 long-term
contracts during the quarter in Global Corporate Services.
Of the 61 contracts, 21 were expansion contracts inked during the
quarter- this represented a new company record. It continued to
experience robust growth in services for existing clients.
Americas Region (U.S., Canada and Latin
Geographically, the region remained the best performer, with
year-over-year revenue increase of 16% to $1.2 billion. Also,
adjusted EBITDA augmented 26% to $199.3 million.
EMEA Region (primarily Europe):
Backed by strong outsourcing gains and improved performance in
UK, the region's revenues hiked 7% year over year to $357.5
million. However, adjusted EBITDA inched up 1% to $53.8 million.
Asia Pacific Region (Asia, Australia and New
Benefitting from strong valuation and leasing business lines
growth, particularly in Australia and Singapore, the region
generated revenues of $248.8 million - a year-over-year increase
of 7%. Also, adjusted EBITDA rose 10% to $38.6 million.
Global Investment Management Business (investment
management operations in the U.S., Europe and Asia):
Revenues escalated 18% year over year to $123.4 million,
primarily driven by higher asset management and incentive fees as
well as contribution from integration of the ING REIM businesses,
acquired in 2011. Adjusted, EBITDA surged 48% to $24.4 million.
Development Services (real estate development and
investment activities primarily in the U.S.):
Revenues soared 35% year over year to $28.4 million. However,
adjusted EBITDA plummeted 32% to $35.6 million. The development
projects in process totaled $4.2 billion, down $0.4 billion
sequentially and $0.7 billion from the end of 2011.
At year-end, CBRE Group had cash and cash equivalents of $1.09
billion, almost in line with 2011 level.
CBRE expects adjusted earnings in the range of $1.40- $1.45 for
Management remains encouraged by U.S. economic conditions, and
thus expects the Americas to remain the biggest growth driver
going forward. Also, it expects CBRE to benefit from the recent
strengthening of China's economic condition and the easing of
credit-market tensions in Europe. Considering all these,
management looks forward to witness solid revenue and earnings
growth in 2013.
We are impressed with CBRE's transformation compared to the last
quarter. The company managed to come back with a bang in the
fourth quarter, with decent improvements in the revenue and EPS
figure. Also, the buyout of commercial real estate services
businesses of Atlanta-based Resource Real Estate Partners LLC
(RREP) and TPA Realty Services LLC, during the quarter, will help
improve ongoing client service offerings, especially in the
Moreover, the acquisition of EA Shaw in central London, during
the quarter, enhanced its portfolio and strengthened its presence
in the EMEA region. Thus, we believe such strategic moves will
well-position the company for growth and provide upside potential
for the company.
Last week, another REIT -
Jones Lang LaSalle Inc. (
- reported modest results in the fourth quarter of 2012 with
adjusted earnings of $2.60 per share, missing the Zacks Consensus
Estimate by a penny.
CBRE currently holds a Zacks Rank #3 (Hold). However, other REITs
that are performing better than CBRE include
Ventas Inc. (
Simon Property Group Inc. (
, both carrying a Zacks Rank #2 (Buy).