CBRE Group Inc. (CBG) reported fourth quarter 2011 revenues of $1.8 billion compared with $1.7 billion in the year-earlier quarter, reflecting an increase of 7%. The revenues in the reported quarter missed the Zacks Consensus Estimate of $1.9 billion.
The company reported a net income of $79.8 million or 25 cents per share during the quarter, compared with $95.1 million or 30 cents in the year-ago period. Excluding non-recurring items, CBRE Group reported a net income of $149.3 million or 46 cents per share during the quarter compared with $115.4 million or 36 cents in the year-earlier quarter. The fourth quarter 2011 recurring earnings surpassed the Zacks Consensus Estimate by 2 cents.
For full year 2011, the company reported revenues of $5.9 billion compared with $5.1 billion in 2010, reflecting a year-over-year increase of 15%. CBRE Group is the world’s largest commercial real estate services firm in terms of 2011 revenue.
For fiscal 2011, the company reported a net income of $239.2 million or 74 cents per share, compared with $200.3 million or 63 cents in 2010. Excluding non-recurring items, CBRE Group’s net income increased to $334.5 million or $1.03 per share, compared with $239.8 million or $0.75 in the previous year. The fiscal 2011 recurring earnings beat the Zacks Consensus Estimate by 2 cents.
Fourth quarter 2011 EBITDA (earnings before interest, tax, depreciation and amortization) excluding selected charges increased 24% to $314.9 million, compared to $253.1 million in the year-ago quarter. For full year 2011, EBITDA excluding selected charges increased 18% to $802.6 million, compared to $681.3 million in 2010. The better-than-expected results were primarily due to improved performance across almost all geographic regions and business lines.
CBRE Group witnessed robust global property sales and leasing activities during the quarter buoyed by its leading market position in the world’s major business centers. Global property sales revenue surged 10% year-over-year during fourth quarter 2011, as credit availability became easier and broad investor sentiment improved.
The company signed 33 long-term real estate outsourcing contracts during the quarter, bringing the tally for 2011 to 173 – a new single-year record for CBRE Group. However, global property leasing revenue declined moderately, as double-digit growth in EMEA (Europe, Middle East and Africa) was offset by a decline in the Americas region (U.S., Canada and Latin America).
Geographically, revenue in the Americas increased 3% in fourth quarter 2011 to $1.1 billion. In the Asia Pacific region (Asia, Australia and New Zealand) revenue rose 11% due to strong performance in India, Australia, and Japan. Revenues for the EMEA region grew by 9% year-over-year due to a healthy growth in northern continental Europe and the U.K.
The Global Investment Management segment, comprising investment management operations in the U.S., Europe and Asia, reported revenues of $104.8 million during the reported quarter compared with $79.8 million in the year-earlier quarter. Assets under management totaled $94.1 billion at year-end 2011, up 150% from year-end 2010.
During the reported quarter, Development Services segment, that includes real estate development and investment activities primarily in the U.S., reported revenues of $21.1 million compared with $17.4 million in the year-ago quarter. The development pipeline of the company totaled $4.9 billion at year-end 2011.
The gradual revival of the overall economy, albeit at a tepid and inconsistent pace, has enabled the company to drive its growth engine and management further expects to continue the momentum in 2012 as well. We also remain encouraged by indications of stabilization and recovery of market conditions. At year-end 2011, CBRE Group had cash and cash equivalents of $1.1 billion compared to $506.6 million in the year-earlier period.
For full year 2012, the company expects recurring earnings in the range of $1.20 to $1.25 per share. We maintain our Neutral recommendation on the stock, which presently has a Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Jones Lang LaSalle Inc. (JLL), one of the competitors of CBRE Group.
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