DALLAS–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the third quarter ended September 30, 2024.
Key Highlights:
- GAAP EPS up 20% to $0.73; Core EPS up 67% to $1.20
- Revenue up 15%; net revenue up 20%
- Resilient Business(1) net revenue increased 18%, anchored by Turner & Townsend
- Global leasing revenue surged 19%, supported by a 24% increase in the United States
- Global property sales revenue increased for the first time in eight quarters; 20% growth in the United Sates was driven by multifamily and retail assets
- Net cash flow from operations improved to $573 million and free cash flow to $494 million – the fourth consecutive quarter of improvement. Free cash flow increased 61% from third-quarter 2023
- Increased full-year Core EPS outlook to a range of $4.95 to $5.05 – up from $4.70 to $4.90
“Our performance in the third quarter was highlighted by our second-highest third quarter core earnings per share in company history, driven by double-digit revenue and profit growth and significant operating leverage in all three business segments. In addition, we achieved operational gains across key parts of our business and continued to advance our strategic positioning,” said Bob Sulentic, chair and chief executive officer of CBRE.
Consolidated Financial Results Overview
The following table presents highlights of CBRE performance (dollars in millions, except per share data; totals may not add due to rounding):
|
|
|
|
|
|
% Change |
||||||||
|
|
Q3 2024 |
|
Q3 2023 |
|
USD |
|
LC (2) |
||||||
|
Operating Results |
|
|
|
|
|
|
|
||||||
|
Revenue |
$ |
9,036 |
|
$ |
7,868 |
|
14.8 |
% |
|
15.4 |
% |
||
|
Net revenue (3) |
|
5,318 |
|
|
4,430 |
|
20.0 |
% |
|
20.5 |
% |
||
|
GAAP net income |
|
225 |
|
|
191 |
|
17.8 |
% |
|
20.9 |
% |
||
|
GAAP EPS |
|
0.73 |
|
|
0.61 |
|
19.7 |
% |
|
23.0 |
% |
||
|
Core adjusted net income (4) |
|
369 |
|
|
226 |
|
63.3 |
% |
|
65.5 |
% |
||
|
Core EBITDA (5) |
|
688 |
|
|
436 |
|
57.8 |
% |
|
58.9 |
% |
||
|
Core EPS (4) |
|
1.20 |
|
|
0.72 |
|
66.7 |
% |
|
68.1 |
% |
||
|
|
|
|
|
|
|
|
|
||||||
|
Cash Flow Results |
|
|
|
|
|
|
|
||||||
|
Cash flow provided by (used in) operations |
$ |
573 |
|
$ |
383 |
|
49.6 |
% |
|
|
|||
|
Less: Capital expenditures |
|
79 |
|
|
76 |
|
3.9 |
% |
|
|
|||
|
Free cash flow (6) |
$ |
494 |
|
$ |
307 |
|
60.9 |
% |
|
|
|||
Advisory Services Segment
The following table presents highlights of the Advisory Services segment performance (dollars in millions; totals may not add due to rounding):
|
|
|
|
|
|
% Change |
||||||||
|
|
Q3 2024 |
|
Q3 2023 |
|
USD |
|
LC |
||||||
|
Revenue |
$ |
2,395 |
|
|
$ |
2,013 |
|
|
19.0 |
% |
|
19.5 |
% |
|
Net revenue |
|
2,371 |
|
|
|
1,992 |
|
|
19.0 |
% |
|
19.5 |
% |
|
Segment operating profit (7) |
|
414 |
|
|
|
277 |
|
|
49.5 |
% |
|
50.2 |
% |
|
Segment operating profit on revenue margin (8) |
|
17.3 |
% |
|
|
13.8 |
% |
|
3.5 pts |
|
3.5 pts |
||
|
Segment operating profit on net revenue margin (8) |
|
17.5 |
% |
|
|
13.9 |
% |
|
3.6 pts |
|
3.6 pts |
||
Note: all percent changes cited are vs. third-quarter 2023, except where noted.
Property Leasing
- Global leasing revenue surged 19% (same local currency), well above expectations.
- Growth was led by Europe, the Middle East & Africa (EMEA), with leasing revenue up 28% (27% local currency), driven by strong gains in the United Kingdom and several Continental European countries.
- The Americas was also very strong, with leasing revenue up 20% (same local currency), including a 24% increase in the United States.
- Asia-Pacific (APAC) leasing revenue rose 3% (4% local currency).
- Global office leasing revenue reached a new high for any third quarter, increasing by 26%. Greater certainty about the economic outlook is supporting occupier decision making across primary and secondary markets, particularly in the United States and Europe.
Capital Markets
- Global property sales revenue showed year-over-year growth for the first time since second-quarter 2022, rising 14% (15% local currency), better than expected.
- The Americas paced global activity with sales revenue up 18% (19% local currency), led by 20% growth in the United States.
- Higher U.S. property sales growth was driven by stronger activity in multi-family and retail.
- Sales revenue increased more modestly in EMEA, up 6% (same local currency), and APAC, up 5% (up 6% local currency). Growth was notably strong in Singapore, reflecting an especially large industrial portfolio sale.
- Mortgage origination revenue jumped 52% (same local currency), as liquidity returned to the real estate investment market. Growth was driven by a 36% increase in loan origination fees and higher interest earnings on escrow balances. Origination activity picked up notably with Government-Sponsored Enterprises.
Other Advisory Business Lines
- Loan servicing revenue edged up 1% (flat local currency). The servicing portfolio increased to more than $435 billion, up 2% for the quarter and 10% from a year ago.
- Property management net revenue increased 22% (23% local currency), with strong growth across geographies, most notably in the United States, driven by the addition of the Brookfield office portfolio.
- Valuations revenue climbed 9% (same local currency).
Global Workplace Solutions (GWS) Segment
The following table presents highlights of the GWS segment performance (dollars in millions; totals may not add due to rounding):
|
|
|
|
|
|
% Change |
||||||||
|
|
Q3 2024 |
|
Q3 2023 |
|
USD |
|
LC |
||||||
|
Revenue |
$ |
6,346 |
|
|
$ |
5,649 |
|
|
12.3 |
% |
|
13.0 |
% |
|
Net revenue |
|
2,652 |
|
|
|
2,232 |
|
|
18.8 |
% |
|
19.4 |
% |
|
Segment operating profit |
|
318 |
|
|
|
251 |
|
|
26.7 |
% |
|
27.5 |
% |
|
Segment operating profit on revenue margin |
|
5.0 |
% |
|
|
4.4 |
% |
|
0.6 pts |
|
0.6 pts |
||
|
Segment operating profit on net revenue margin |
|
12.0 |
% |
|
|
11.3 |
% |
|
0.7 pts |
|
0.8 pts |
||
Note: all percent changes cited are vs. third-quarter 2023, except where noted.
- Facilities management net revenue increased 22% (23% local currency), with broad-based strength in both the Enterprise and Local businesses.
- Project management net revenue rose 12% (13% local currency). Turner & Townsend exhibited strength across its geographies and asset types, with revenue up 18%.
- Net operating margin improved more than 70 basis points versus third-quarter 2023, reflecting the benefit of cost efficiency efforts.
Real Estate Investments (REI) Segment
The following table presents highlights of the REI segment performance (dollars in millions):
|
|
|
|
|
|
% Change |
||||||||
|
|
Q3 2024 |
|
Q3 2023 |
|
USD |
|
LC |
||||||
|
Revenue |
$ |
302 |
|
$ |
210 |
|
43.8 |
% |
|
43.8 |
% |
||
|
Segment operating profit |
|
67 |
|
|
7 |
|
857.1 |
% |
|
857.1 |
% |
||
Note: all percent changes cited are vs. third-quarter 2023, except where noted.
Investment Management
- Total revenue surged 43% (same local currency), reflecting higher incentive fees. Asset Management fees also rose modestly.
- Operating profit(9) totaled more than $75 million, up from $29 million in last year’s third quarter. This was driven by incentive fees and significant co-investment returns.
- Assets Under Management (AUM) totaled $148.3 billion, an increase of $5.8 billion from second-quarter 2024. The increase was driven by capital raising, higher asset values, primarily in the listed securities portfolio, and favorable foreign currency movement.
Real Estate Development
- Global development operating loss(9) narrowed to $8 million. As expected, the company did not monetize any significant development assets in the period.
- The in-process portfolio ended third-quarter 2024 at $19.0 billion, up $0.2 billion from second-quarter 2024. The pipeline increased $0.3 billion during the quarter to $13.4 billion.
Core Corporate Segment
- Core corporate operating loss increased by approximately $12 million, reflecting both higher insurance costs and increased incentive compensation due to improved business performance.
Capital Allocation Overview
- Free Cash Flow – During the third quarter of 2024, free cash flow improved significantly to $494 million. This reflected cash provided by operating activities of $573 million, adjusted for total capital expenditures of $79 million.(10) Free cash flow conversion improved to 71% on a trailing 12-month basis, the fourth consecutive increase.
- Stock Repurchase Program – The company repurchased approximately 0.6 million shares for $62 million ($109.20 average price per share) during the third quarter. There was approximately $1.4 billion of capacity remaining under the company’s authorized stock repurchase program as of September 30, 2024.
- Acquisitions and Investments – CBRE did not make any significant acquisitions during the third quarter.
Leverage and Financing Overview
- Leverage – CBRE’s net leverage ratio (net debt(11) to trailing twelve-month core EBITDA) was 1.26x as of September 30, 2024, which is substantially below the company’s primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):
|
|
As of |
|
|
|
September 30, 2024 |
|
|
Total debt |
$ |
4,002 |
|
Less: Cash (12) |
|
1,025 |
|
Net debt (11) |
$ |
2,977 |
|
|
|
|
|
Divided by: Trailing twelve-month Core EBITDA |
$ |
2,354 |
|
|
|
|
|
Net leverage ratio |
1.26x |
|
- Liquidity – As of September 30, 2024, the company had approximately $4.0 billion of total liquidity, consisting of $1.0 billion in cash, plus the ability to borrow an aggregate of approximately $3.0 billion under its revolving credit facilities, net of any outstanding letters of credit.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
