CBRE Group, Inc. (NYSE:CBG) have reported strong revenue and earnings growth for the second quarter ended June 30, 2012.
James Brounger, Regional Managing Director, CBRE South Central, said: “Across the South Central region transaction activity during the first six months of 2012 was substantially improved over a year ago. Although the market remains constrained by continued economic uncertainty, there are a number of occupiers that are taking the opportunity to upgrade their accommodation.
“Property Management and Building Surveying performances have been buoyed a number of major portfolio successes including a number of local remits for Aberdeen Asset Management and the reappointment by the HCA at Hythe Marine Park on the South coast. Valuation also continues to perform strongly with regular advisory mandates from banks and property businesses across the region.
“Regional investment transactions have been scarce during the early part of the year, with little prime stock coming to the market. However, there is a reasonably good level of demand in the area for quality, well located and well properties.
EMEA Commentary on CBRE’s Q2 2012 Financial Results
Mike Strong, Chairman & CEO of CBRE – Europe, Middle East and Africa, commented:
“In the second quarter, we were very pleased to record year-on-year revenue growth in local currency.
“In a period when investment and leasing market activity contracted, our ability to increase revenue on a like for like basis is a direct result of our absolute focus on clients, the diverse nature of our business and the significant number of major mandates won by our corporate services and property management businesses in Q2.”
Management Commentary
“CBRE’s key strengths – people, brand and diverse platform – served us well amid elevated global economic uncertainty during the second quarter,” said Brett White, the Company’s chief executive officer.
“Despite tepid economic growth around the world, we once again produced double-digit revenue gains, with notably strong performance in the Americas, solid growth in Asia Pacific, and increased contributions from our global investment management operations. As we execute our growth strategy, we continue to be highly focused on cost discipline as well, which also contributed to significant bottom-line improvement during the quarter.”
Global revenue rose during the quarter in every business line. CBRE’s capital markets businesses performed very well, particularly in the Americas. Global property sales revenue increased 16%, with all regions showing improvement. The Americas set the pace with a 23% rise in property sales revenue. Both EMEA and Asia Pacific posted modest increases, notwithstanding the ongoing euro zone financial difficulties and slowing economic activity in both regions. Mortgage brokerage (predominantly an Americas business) saw revenue climb 36%, reflecting continued improvement in the U.S. debt financing market.
Global investment management operations continued to make significant contributions to the Company’s overall performance, bolstered by the ING REIM acquisitions in the second half of 2011. Revenue from this business line more than doubled compared with a year earlier. Overall, global investment management accounted for 7% of total Company revenue and 13% of normalized EBITDA – up from approximately 4% of both revenue and normalized EBITDA in the second quarter of 2011.
Outsourcing revenue rose by double digits for the seventh consecutive quarter, with a 10% increase globally. The Company continues to on-board new outsourcing clients at a brisk pace, with 24 new contracts signed during the period – a Company record for one quarter. Among these new clients are three each in the healthcare and government sectors – vertical markets that the Company has targeted for growth opportunities – as well as major corporate wins with Monsanto, Samsung and SONY. All told, CBRE signed 54 outsourcing contracts – renewals, new clients and expansions of existing relationships – during the second quarter of 2012.
On a global basis, leasing revenue increased slightly, reflecting generally soft market conditions in many parts of the world. Despite these challenges, the Americas and Asia Pacific produced moderate leasing revenue growth.
During the second quarter, the Company enhanced its commercial real estate services platform in EMEA with the acquisition of its former affiliate in Turkey, one of the world’s fastest-growing economies.
“The recovery continues to progress, but at a historically slow pace and with a high degree of inconsistency and uncertainty across global markets and business lines,” Mr. White said. “Nevertheless, CBRE has a history of performing well for clients amid these market conditions. We are therefore cautiously optimistic about our business, and remain comfortable with our ability to deliver on the full-year earnings per share outlook we announced early this year.”
