CBRE Group Acquires Peloton's San Antonio Operations

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In an effort to strengthen its business in the Texas market, CBRE Group CBRE has announced the acquisition of the San Antonio operations of Peloton, which is a full-service commercial real estate firm in Texas. Terms of the deal remain undisclosed.

Particularly, with this acquisition, CBRE Group has become the top provider of commercial property leasing, sales and management services in this thriving market. In fact, when combined, CBRE and Peloton's San Antonio operations completed $681 million of sales and leasing transactions in 2017. Further, collectively, more than 20 million square feet of commercial property in the San Antonio market is currently managed and/or leased by CBRE and Peloton's San Antonio operations.

Gardner Peavy, who heads Peloton in San Antonio, will join CBRE as the managing director for San Antonio. Also, 26 employees from the Peloton San Antonio operations will accompany him. Together, the workforce from CBRE and Peloton will aggregate around 300 in San Antonio.

In fact, CBRE has banked on strategic in-fill acquisitions to widen its geographic coverage, as well as expand and reinforce service offerings. The company focuses on acquiring regional or specialty firms which complement its existing platform, as well as independent affiliates in which, at times, it holds small stakes. Furthermore, the company opts for larger, transformational deals driven by macro policies.

In fact, the company's M&A activity increased in 2017 and it made 11 acquisitions. Such buyout efforts continued in 2018 as well and the company made three acquisitions in the second quarter, with the most notable being FacilitySource, which is a leader in technology-based procurement and facility management solutions in the United States. As market conditions continue to improve, we believe these opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing the company's organic growth.

Recently, the company reported better-than-anticipated adjusted earnings per share for the June-end quarter. Results indicate strong revenue growth driven by leasing, occupier outsourcing and development services. It also raised its outlook for 2018.

CBRE's extensive real-estate products and services offerings, improving leasing and outsourcing business, strategic in-fill acquisitions, transformational deals and healthy balance sheet are expected to be conducive to long-term results. Strategic reinvestment in its business, specifically on the digital and technology front, is expected to differentiate CBRE Group from its peers. Yet, with a shift towards a comparatively lower margin business, the company's margin is likely to be affected in the near-term.

Currently, CBRE has a Zacks Rank #2 (Buy). The company's shares have increased 8.3% year-to-date against its industry 's decline of 5.3%.

Stocks to Consider

Investors interested in the real estate industry can also consider some other top-ranked stocks like Colliers International Group Inc. CIGI , Consolidated-Tomoka Land Co. CTO and Newmark Group, Inc. NMRK . While Colliers International Group and Consolidated-Tomoka Land Co. flaunt a Zacks Rank of 1 (Strong Buy), Newmark Group carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here .

Colliers International's Zacks Consensus Estimate for 2018 earnings moved 3.9% north to $3.74 in a month's time.

The same for Consolidated-Tomoka Land Co. inched up marginally to $8.24, in the past month.

The current-year earnings estimate for Newmark Group moved up 2% to $1.53 over the past two months.   

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: CTO , CIGI , NMRK , CBRE

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