CBRE Group, Inc. CBRE recently announced the acquisition of Direct Line Global from a private equity firm, Guardian Capital. The acquisition is expected to be immediately accretive to CBRE’s core earnings per share (“EPS”).
Founded in 1997, Direct Line Global is a premier provider of mission-critical data center infrastructure for the world’s leading technology companies across the hyperscale market. The company, based in Fremont, CA, specializes in offering design, installation, maintenance and management solutions to data center owners and operators, primarily in the United States.
It boasts a workforce of more than 1,000 employees with major operations in northern Virginia. It also has additional operations in Hong Kong, the Philippines, Singapore and South Korea.
With the growth in cloud computing, Artificial Intelligence, the Internet of Things and Big Data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are experiencing a booming market. Theglobal marketfor data center support services is projected to reach around $30 billion and is forecasted to grow 16% annually through 2028.
Per Vikram Kohli, CEO of CBRE, “This acquisition fits squarely with our strategy of enhancing our capabilities in asset classes that benefit from secular tailwinds, in this case, the increasing digitization of the global economy.”
Direct Line Global will operate as part of CBRE’s Data Centers Solutions business under the Global Workplace Solutions business segment.
Over the years, CBRE Group has banked on strategic in-fill acquisitions to boost its service offerings and widen its geographic coverage. The company focuses on acquiring regional or specialty firms that complement its existing platform as well as independent affiliates in which, at times, it holds small stakes.
In the first quarter of 2024, CBRE acquired J&J Worldwide Services, Inc. for a total cash and non-cash consideration of $820 million. In 2023, CBRE Group completed 16 in-fill business acquisitions for approximately $311.5 million in cash and non-cash consideration. These comprised nine in the Advisory Services segment, six in the Global Workplace Solutions segment and one in the Real Estate Investments segment.
These opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing its organic growth.
Shares of this Zacks Rank #3 (Hold) company have declined 1.2% in the past six months compared with the industry’s fall of 2.8%.
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Stocks to Consider
Some better-ranked stocks from the real estate operations sector are Kennedy-Wilson KW and Jones Lang LaSalle JLL.
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The Zacks Consensus Estimate for JLL’s 2024 EPS has increased marginally upward over the past month to $12.22. The company currently carries a Zacks Rank #2 (Buy).
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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.
