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
Monday, May 7, 2007
The glut of US properties for sale is about to hit the rental market.
The glut of US properties for sale is about to hit the rental market.
A record number of homeowners who can’t sell condominiums and houses are competing for tenants with the country’s biggest apartment owners led by Chicago-based Equity Residential, said Jack McCabe, the founder of Deerfield Beach, Florida-based McCabe Research & Consulting LLC. Rents in metropolitan New York, where demand for housing exceeds supply, may be the only place where rents increase, albeit at a slower pace, he said.
‘Competition already is forcing the big apartment owners to offer concessions like two months free rent,’ Mr McCabe said.
Vacant rental apartments rose to 6.1 per cent in the US during the first quarter, the most in almost two years, even as the average monthly rent reached a record US$991, said Sam Chandan, chief economist of New York-based real estate research company Reis Inc. New York had the lowest vacancy rate in the first quarter, he said.
Nationwide, 2.8 per cent of houses for sale were unoccupied in the first quarter, the highest since the Census Department started collecting the data in 1956. Unsold properties on the market totalled a record 3.45 million in 2006, according to the Chicago-based National Association of Realtors. ‘Unsold properties being turned into rental units are creating a shadow market that’s driving up the vacancy rate and slowing the growth of rents,’ Mr Chandan said in an interview. ‘Areas that saw the most speculative investing, particularly in condos, will see the biggest pressure on rents.’
Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a US$100,000 profit. Instead, he’s looking for tenants at US$1,700 a month.
‘I don’t want to sell for less than I paid, so my only choice is to rent it,’ said Mr De Silva, 45, a New Yorker who made US$80,000 in November 2005 by flipping, or selling quickly, his first Florida real estate investment, a condominium in Ft Lauderdale. At the time, prices had gained 29 per cent from a year earlier, the peak of the market in that area.
The increase in competition is spurring apartment owners to offer enticements. Lincoln Green Apartments, a Philadelphia complex that rents units from US$840 to US$1,370 a month, is offering two months free rent for people who sign a one-year lease. Citrus Park Apartments in Tampa, Florida, and Ten Faxon in Quincy, Massachusetts, have the same deal.
‘Increasing vacancies does not bode well for rental incomes,’ said Nabil N El-Hage, a professor at Harvard Business School in Boston, across the Charles River from Harvard University’s main campus in Cambridge, Massachusetts. ‘We’ve seen a softening in apartment Reits as a result.’
A Bloomberg index of 19 apartment-focused real estate investment trusts, or REITs, has fallen 14 per cent over the last three months, the longest consecutive monthly decline since a three-month rout that ended February 2003.
Frustrated sellers who become landlords have created an inventory of for-sale properties that could derail a housing recovery next year, Mr Chandan said. If home sales improve in early 2008, as predicted by Freddie Mac, the No 2 mortgage buyer, properties now being rented could reappear in 12 months time to flood the spring market.
‘Those homes that are disappearing off the sales market can just as easily appear again when demand is stronger,’ he said.
US real estate prices ‘continued to weaken’ in many districts during March and April, the Federal Reserve said last week in its regional survey known as the Beige Book. The report cited the San Francisco and Richmond, Virginia, markets as ‘falling or soft’. Sales dipped in the Cleveland, Atlanta, Kansas City, and
St Paul, Minnesota regions, the Fed said.
The exception was New York, where homes were ’selling well’, the Fed survey said. Manhattan’s median apartment price rose 1.2 per cent to US$835,000 in the first quarter from a year earlier, said Jonathan Miller, president of New York residential appraiser Miller Samuel Inc. For all of the US, the median fell 2.1 per cent to US$212,300, according to Fannie Mae, the largest mortgage buyer.
The city’s average rent was US$2,605 a month in the first quarter, the highest in the nation, and the vacancy rate was the lowest, at 2.5 per cent, according to Reis. Fairfield County, Connecticut, had a 3 per cent vacancy rate, central New Jersey was 3.6 per cent, and New York’s Long Island was 3.9 per cent, fuelled by demand from New York commuters, said Mr Chandan of Reis.
In markets such as South Florida, Nevada and Arizona that led the country in speculative buying, owners who can’t rent their properties may default on their mortgages, Mr Chandan said.
Demand to purchase real estate will begin to improve in the final quarter of 2007, the Mortgage Bankers Association said last week. Until then, home prices may decline 2 per cent, the Washington group said on April 24.
Source: The Business Times, 03 May 2007
A record number of homeowners who can’t sell condominiums and houses are competing for tenants with the country’s biggest apartment owners led by Chicago-based Equity Residential, said Jack McCabe, the founder of Deerfield Beach, Florida-based McCabe Research & Consulting LLC. Rents in metropolitan New York, where demand for housing exceeds supply, may be the only place where rents increase, albeit at a slower pace, he said.
‘Competition already is forcing the big apartment owners to offer concessions like two months free rent,’ Mr McCabe said.
Vacant rental apartments rose to 6.1 per cent in the US during the first quarter, the most in almost two years, even as the average monthly rent reached a record US$991, said Sam Chandan, chief economist of New York-based real estate research company Reis Inc. New York had the lowest vacancy rate in the first quarter, he said.
Nationwide, 2.8 per cent of houses for sale were unoccupied in the first quarter, the highest since the Census Department started collecting the data in 1956. Unsold properties on the market totalled a record 3.45 million in 2006, according to the Chicago-based National Association of Realtors. ‘Unsold properties being turned into rental units are creating a shadow market that’s driving up the vacancy rate and slowing the growth of rents,’ Mr Chandan said in an interview. ‘Areas that saw the most speculative investing, particularly in condos, will see the biggest pressure on rents.’
Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a US$100,000 profit. Instead, he’s looking for tenants at US$1,700 a month.
‘I don’t want to sell for less than I paid, so my only choice is to rent it,’ said Mr De Silva, 45, a New Yorker who made US$80,000 in November 2005 by flipping, or selling quickly, his first Florida real estate investment, a condominium in Ft Lauderdale. At the time, prices had gained 29 per cent from a year earlier, the peak of the market in that area.
The increase in competition is spurring apartment owners to offer enticements. Lincoln Green Apartments, a Philadelphia complex that rents units from US$840 to US$1,370 a month, is offering two months free rent for people who sign a one-year lease. Citrus Park Apartments in Tampa, Florida, and Ten Faxon in Quincy, Massachusetts, have the same deal.
‘Increasing vacancies does not bode well for rental incomes,’ said Nabil N El-Hage, a professor at Harvard Business School in Boston, across the Charles River from Harvard University’s main campus in Cambridge, Massachusetts. ‘We’ve seen a softening in apartment Reits as a result.’
A Bloomberg index of 19 apartment-focused real estate investment trusts, or REITs, has fallen 14 per cent over the last three months, the longest consecutive monthly decline since a three-month rout that ended February 2003.
Frustrated sellers who become landlords have created an inventory of for-sale properties that could derail a housing recovery next year, Mr Chandan said. If home sales improve in early 2008, as predicted by Freddie Mac, the No 2 mortgage buyer, properties now being rented could reappear in 12 months time to flood the spring market.
‘Those homes that are disappearing off the sales market can just as easily appear again when demand is stronger,’ he said.
US real estate prices ‘continued to weaken’ in many districts during March and April, the Federal Reserve said last week in its regional survey known as the Beige Book. The report cited the San Francisco and Richmond, Virginia, markets as ‘falling or soft’. Sales dipped in the Cleveland, Atlanta, Kansas City, and
St Paul, Minnesota regions, the Fed said.
The exception was New York, where homes were ’selling well’, the Fed survey said. Manhattan’s median apartment price rose 1.2 per cent to US$835,000 in the first quarter from a year earlier, said Jonathan Miller, president of New York residential appraiser Miller Samuel Inc. For all of the US, the median fell 2.1 per cent to US$212,300, according to Fannie Mae, the largest mortgage buyer.
The city’s average rent was US$2,605 a month in the first quarter, the highest in the nation, and the vacancy rate was the lowest, at 2.5 per cent, according to Reis. Fairfield County, Connecticut, had a 3 per cent vacancy rate, central New Jersey was 3.6 per cent, and New York’s Long Island was 3.9 per cent, fuelled by demand from New York commuters, said Mr Chandan of Reis.
In markets such as South Florida, Nevada and Arizona that led the country in speculative buying, owners who can’t rent their properties may default on their mortgages, Mr Chandan said.
Demand to purchase real estate will begin to improve in the final quarter of 2007, the Mortgage Bankers Association said last week. Until then, home prices may decline 2 per cent, the Washington group said on April 24.
Source: The Business Times, 03 May 2007
Investment sales of industrial properties could set a new record of S$3 billion this year, said property consultants, easily outstripping last year’s
Investment sales of industrial properties could set a new record of S$3 billion this year, said property consultants, easily outstripping last year’s record high of S$1.9 billion.
Analysts attribute the increase to more acquisitions by real estate investment trusts and an impending divestment by JTC.
JTC, Singapore’s largest industrial landlord, is expected to divest properties totalling some 1.7 million square metres through a REIT and trade sales later this year.
The deal includes JTC’s flatted factories, business park buildings and a warehouse.
At the same time, other industrial REITs are also looking to boost their portfolios.
Tay Huey Ying, Director of Research, Colliers International, said: “The industrial REITs are seen to be continuing with acquisitions to grow their portfolio. Moreover, we are also seeing the listing of more REITs, for example, the recently-listed MacArthur Cook Industrial REIT.
“The impending divestment of JTC’s ready-built facilities will also boost the investment sales figures in 2007 so we are likely to see a higher volume compared to last year.”
Market watchers said there is a growing trend of companies selling their buildings and then leasing back the space.
This will help to boost activity in the sector.
Lim Kien Kim, Director (Industrial), Knight Frank, said: “These companies generally have property sizes that are in excess of 100,000 square foot gross floor area, usually worth more than S$10 million, and with land tenure in excess of 40 years. These are key components which will interest the REITs.”
Property consultants also note that the entry of foreign funds from countries like Australia and the Middle East has added more fuel to the mix.
Mr Lim said: “These funds are basically looking at industrial properties that they can enhance. The enhancements will lead to better rental yields and possibly an increase in capital values, which they may then sell off later.”
Foreign funds have already bought into offices such as Temasek Tower and apartments like Horizon Towers this year.
Analysts attribute the increase to more acquisitions by real estate investment trusts and an impending divestment by JTC.
JTC, Singapore’s largest industrial landlord, is expected to divest properties totalling some 1.7 million square metres through a REIT and trade sales later this year.
The deal includes JTC’s flatted factories, business park buildings and a warehouse.
At the same time, other industrial REITs are also looking to boost their portfolios.
Tay Huey Ying, Director of Research, Colliers International, said: “The industrial REITs are seen to be continuing with acquisitions to grow their portfolio. Moreover, we are also seeing the listing of more REITs, for example, the recently-listed MacArthur Cook Industrial REIT.
“The impending divestment of JTC’s ready-built facilities will also boost the investment sales figures in 2007 so we are likely to see a higher volume compared to last year.”
Market watchers said there is a growing trend of companies selling their buildings and then leasing back the space.
This will help to boost activity in the sector.
Lim Kien Kim, Director (Industrial), Knight Frank, said: “These companies generally have property sizes that are in excess of 100,000 square foot gross floor area, usually worth more than S$10 million, and with land tenure in excess of 40 years. These are key components which will interest the REITs.”
Property consultants also note that the entry of foreign funds from countries like Australia and the Middle East has added more fuel to the mix.
Mr Lim said: “These funds are basically looking at industrial properties that they can enhance. The enhancements will lead to better rental yields and possibly an increase in capital values, which they may then sell off later.”
Foreign funds have already bought into offices such as Temasek Tower and apartments like Horizon Towers this year.
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