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CBRE (CBRE) Q3 Earnings call transcript Oct 24, 2024

Daily EarningsMonday, Oct 28, 2024 8:26 pm ET

1min read

CBRE --

CBRE, the world's largest commercial real estate services and investment firm, reported a strong third quarter performance, marking the second-highest core earnings on record. The company's resilient businesses, led by Turner & Townsend and leasing, posted double-digit revenue and segment operating profit growth, while capital markets transactions have started to recover.

Financial Highlights

CBRE's core earnings per share increased by 67%, with all three business segments showing robust double-digit revenue and segment operating profit growth. The resilient businesses, including facilities management, project management, and loan servicing, contributed significantly to this growth, with net revenue reaching $3.6 billion, up 18%. Leasing also saw a 19% revenue increase, driven by accelerated office demand.

Operational Achievements

CBRE's operational gains include the integration of the CBRE project management business with Turner & Townsend, which is expected to start 2025 with considerable momentum. The company's focus on cost efficiency efforts has resulted in margin expansion, and free cash flow grew considerably, reflecting improved cash conversion across segments.

Strategic Positioning

CBRE's strategic positioning includes a strong pipeline of attractive investment opportunities, both for mergers and acquisitions (M&A) and services businesses. The company's efforts to scale and diversify its business have widened growth avenues, particularly in managing data centers and federal government facilities.

Looking Ahead

For the full year 2024, CBRE raised its outlook for core EPS to a range of $4.95 to $5.05, up from $4.70 to $4.90 previously. The company expects to achieve this level of earnings in the fourth quarter without Advisory or REI returning to prior peak profits. CBRE's resilient businesses are expected to generate about $1.8 billion of SOP this year, reflecting double-digit growth, and this pace is expected to continue for the foreseeable future.

Capital Markets and Real Estate Outlook

The company's CEO, Robert Sulentic, highlighted the market's focus on anticipated improvement in the real estate capital markets. CBRE's strong, short and long-term growth prospects are not solely dependent on the capital markets' impact. The company's progress in building resilient businesses, leadership in the global leasing markets, and the large and growing total addressable market for its business underscore its confidence in a strong long-term outlook.

Conclusion

CBRE's strong third-quarter performance and strategic positioning, coupled with its focus on operational efficiency and cost savings, position it well for continued outsized growth in the huge economies of Japan and India. The company's resilient businesses, particularly its facilities management and leasing, are expected to generate significant earnings in the coming years, further solidifying CBRE's position as a global leader in commercial real estate services and investment.

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