Commercial property firm CBRE beats Wall Street expectations with record income

Dallas-based commercial real estate company CBRE Group Inc. significantly exceeded analysts’ expectations with a record quarterly result in the final months of 2020.

The company, which relocated its headquarters from California to Dallas last year, reported that net income rose more than 9% to $ 491 million, with an all-time high in quarterly earnings per share.

While sales were down nearly 3% year-over-year, CBRE achieved its best results since the beginning of the COVID-19 pandemic through cost-cutting measures and business realignments.

“This has been a year of significant challenges emerging from COVID-19, but also the competitive advantages of CBRE, our ability to capitalize on the often overlooked industry opportunities, and the resilience we’ve built into the business in the past Have come to the fore for a decade, ”CEO Bob Sulentic said in a statement. “Our broad diversification across four key dimensions – property types, business areas, geographic markets and customers – has served us well compared to previous downturns.

“Now we are leaving the worst of the COVID-19 crisis in great shape, with a leaner operating structure, substantial financial strength and a strategy precisely aligned with the many opportunities our industry is facing, including those with a secular tailwind . “

CBRE saw revenue growth from an increase in lending, facility management and investment management.

The company, which owns Dallas-based Trammell Crow Co., had a record $ 14.9 billion in late 2020. The U.S. development sector had fourth quarter revenue of more than $ 58 million, double the figure a year earlier.

The decline in U.S. office work caused by the pandemic continued to weigh on the company’s revenues. In the fourth quarter, US office rental income declined 36% year over year.

Companies postpone office rental decisions because the majority of their employees work from home.

At the same time, income from industrial leasing increased by 24% compared to the previous year.

“We created our long-term plan on the assumption that office demand would continue to be under pressure,” said Sulentic. “Even so, we expect a minimum of low double-digit average annual adjusted earnings per share this year through at least 2025 without a recession with significant upside from additional capital allocation.”

Sulentic predicts that U.S. office use will decline to 80% to 85% of prepandemic as the coronavirus pandemic subsides.

CBRE’s total costs and expenses for the final quarter were reduced by more than $ 125 million from the fourth quarter of 2019. The company recently announced nearly 200 pending job cuts at its Dallas headquarters.

CBRE’s flexible office division, Hana, lost more than $ 10 million in the fourth quarter. This week the company announced that it has partnered with partner Industrious by acquiring a 40% ownership interest in the New York-based flexible office company.

Industrious will take over 10 of Hana’s 10 US office facilities, including one in Dallas.