CB Richard Ellis Group Inc, the largest commercial real-estate broker by market value, said that first-quarter profit fell 68 per cent, the first decline in almost three years, on charges related to buying Trammell Crow Co for US$1.9 billion.
Net earnings fell to US$12 million, or five US cents a share, from US$36.9 million, or 16 US cents, a year earlier, the Los Angeles-based company said on Tuesday. Revenue increased 62 per cent to US$1.2 billion from US$751.3 million a year earlier.
CBRE bought Trammell Crow to increase its North American building management business and diversify beyond leasing and sales. Ultimately, the acquisition will help protect the company against cyclical declines in the real estate market, Michael Fox, an analyst with JPMorgan Chase & Co, said before the release of CBRE’s results.
The integration of Trammell Crow is ‘ahead of schedule’, Brett White, CBRE president and chief executive officer of CB Richard Ellis said. ‘Our bias for full-year 2007 results is at the upper end of our previously discussed earnings guidance range.’
Excluding one-time charges, net earnings rose 62 per cent to US$65 million, or 27 US cents a share. By that measure, the broker beat the average estimate of six analysts surveyed by Bloomberg for earnings per share excluding some charges of 15 US cents.
The company has exceeded analysts’ estimates for the past six quarters as office rents and commercial sale prices in cities such as New York have risen. US office rents climbed an average of 11 per cent in the first quarter as companies sought bigger space to accommodate more employees, according to New York-based real estate services provider Cushman & Wakefield, a closely held competitor of CBRE.
Jones Lang LaSalle, CBRE’s closest publicly traded competitor, also reported first-quarter results on Tuesday. The second-largest commercial real estate broker said that first-quarter profit jumped almost sixfold on revenue gains in Europe and Asia. Net earnings for the quarter ended March 31 rose to US$27.2 million, or 81 US cents a share, from US$4.6 million, or 14 US cents, a year earlier, the Chicago-based company said. Revenue increased 45 per cent to US$490.1 million.
CBRE reported that revenue from the Asia-Pacific region rose almost 50 per cent to US$94 million, driven mainly by improved results in Australia, Singapore and Japan.
In Europe, CBRE reported revenue rose 37 per cent to US$225.4 million, with more than three-quarters of the increase from existing businesses. Growth was led by the UK, France, Spain and Germany.
Assets under management grew to US$30.6 billion at the end of the first quarter, up US$2 billion, or 7 per cent, from year-end 2006.
Source: The Business Times
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