Commercial Real Estate Brokerage CB Richard Ellis Net Jumps
CB Richard Ellis Group Inc., the world’s largest commercial real estate brokerage, said on Monday its net income rose 24.5 percent, boosted by strong global growth and its acquisition of real estate corporate services company Trammell Crow Co.
CB Richard Ellis posted a third-quarter net profit of $114.9 million, or 48 cents per share, compared with $92.3 million, or 39 cents per share, in the year-ago quarter.
Excluding items, the Los Angeles-based company posted a profit of $130.2 million, or 55 cents per share, trailing the average analysts’ forecast of 57 cents per share, according to Reuters Estimates.
Quarterly revenue rose 54.2 percent to $1.49 billion, ahead of analysts’ average forecast of $1.46 billion.
Based on its results so far this year, the company maintained its 2007 forecast to earnings per share growth, excluding items, that will be 50 percent higher than 2006 results or $2.22 per share for the year.
Analysts’ average forecast for the year was $2.31 per share, according to Reuters Estimates.
Troubles in the residential mortgage market have shaken investors and lenders in the commercial real estate market, despite the higher rents and occupancy rates the commercial real estate market continues to experience. This helped drive down CB Richard Ellis shares about 19 percent since the beginning of the year, as investors believed slacken demand to buy buildings would hurt the company’s brokerage commission revenue.
The building sales comprise about 29 percent of the company’s business and about 70 percent of that is concentrated in the United States, according to JMP Securities analyst William Marks.
“We expect the changed market conditions to have more of an impact on our investment sales performance in the fourth quarter,” Brett White, president and chief executive, said in a statement. “While non-U.S. leasing performance was quite strong, U.S. leasing results were affected by uncertainty surrounding domestic economic growth, and the generally slower pace of activity in selected markets.”
In December 2006, CB Richard Ellis bought Trammell Crow Company for $1.9 billion, bolstering its property management and global corporate services, and adding development services to its offerings.
The total revenue in the Americas rose 46.3 percent to $914.7 million of which Trammell Crow, a fee-based service, was a significant contributor, CB Richard Ellis said.
In the Europe, Middle East and Africa region, revenue rose 49.5 percent to $320.2 million, and in the Asia Pacific region, the increase was 54.5 percent to $87.0 million.
The company’s Global Investment Management Business, which works for institutional investors, saw revenue rise 139.5 percent to $99.1 million.
CB Richard Ellis shares closed up 3.4 percent, or 88 cents, at $26.74. Its shares rose in after-hours trading to $26.90.