CBRE Group, Inc. reports strong financial results for second-quarter 2016
We reported another positive quarter of trading for the EMEA region. For the three months from 1 April to 30 June 2016, we performed strongly with a 66% increase in revenue (including contributions from the Global Workplace Solutions acquisition) and 56% increase in adjusted EBITDA, both local currency and with the effects of currency hedging.
The results demonstrate the benefits of the diversity within the EMEA business, with increased contributions from our corporate services, property and facilities management businesses. We are particularly pleased that our acquisitions, including GWS and Norland, have performed well and we expect to see continued benefits from these businesses during the remainder of 2016 and beyond.
Our results include strong growth across Continental Europe with France, Germany, Spain and the Nordic and CEE regions performing particularly well. We have so far seen limited impact from the EU Referendum on the major Continental European property markets. Investors still have significant capital to deploy and sentiment remains strong.
In the UK, investors and occupiers reacted cautiously to the EU Referendum in June, following instability in the financial markets earlier in the year. It is too early to assess the longer term impact of the Referendum result. Whilst some occupiers and investors will take a more cautious approach, UK market fundamentals remain strong and the recent depreciation of sterling, coupled with low interest rates, means that for many overseas investors UK commercial real estate has become more attractive. While many investors will watch and see how the market develops before deciding to act, we have already advised on a number of high profile transactions since the EU Referendum including the sale of British Land’s flagship Debenhams store on Oxford Street, and the significant acquisition of central London office space by international bank, Wells Fargo.
We enter the second half of the year in a strong position with a well-diversified business and a solid business pipeline. Whilst UK market conditions remain challenging, significant transactions are still happening and we continue to see good levels of enquiries and opportunities.
CBRE GROUP, INC. REPORTS STRONG FINANCIAL RESULTS FOR SECOND-QUARTER 2016
Revenue up 34%
Fee Revenue up 19%
GAAP EPS of $0.36; Adjusted EPS of $0.52
Los Angeles, CA – July 28, 2016 — CBRE Group, Inc. (NYSE:CBG) today reported strong financial results for the second quarter ended June 30, 2016.
Second-Quarter 2016 Results*
Revenue for the second quarter totaled $3.2 billion, an increase of 34% (35% local currency1). Fee revenue2 increased 19% (20% local currency) to $2.1 billion. The second quarter of 2016 included approximately $690 million of revenue from the acquired Global Workplace Solutions business. Excluding the acquired Global Workplace Solutions business, revenue was up 5% (6% local currency) and fee revenue was up 3% (4% local currency). On a GAAP basis, net income and earnings per diluted share decreased to $121.7 million and $0.36 per share, respectively. GAAP net income for the second quarter of 2016 was reduced by $27.8 million (pre-tax) of integration costs associated with the Global Workplace Solutions acquisition; $27.2 million (pre-tax) incurred in the previously announced cost-elimination program; and $26.6 million (pre-tax) of acquisition-related non-cash amortization. These costs were partially offset by an associated tax benefit of $23.9 million.
Adjusted net income3 rose 25% to $174.9 million, while adjusted earnings per share3 improved 24% to $0.52 per share. Foreign currency movement, primarily the impact of marking-to-market of currency hedges, increased current-quarter earnings per share by approximately $0.01 per share. For the second quarter of 2015 this impact reduced earnings per share by approximately $0.03.
EBITDA4 rose 4% to $309.9 million and adjusted EBITDA4 increased 19% to $360.5 million. EBITDA and adjusted EBITDA were both positively impacted by $4.1 million of currency movement, primarily the marking-to-market of currency hedges in the second quarter of 2016. EBITDA and adjusted EBITDA were both negatively impacted by $13.9 million of currency movement, primarily the marking-to-market of currency hedges in the second quarter of 2015.
Adjusted EBITDA margin on fee revenue was 17.0%.
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated 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.