CBRE Posts Year-Over-Year Earnings Decline; Plans to Invest in “Secularly Favored” Businesses
In a harbinger of what to expect from the major commercial real estate services firms this earnings season, CBRE Group on Thursday reported double-digit year-over-year declines in core adjusted net income, core EBITDA and core EPS for 2022’s third quarter. By business segment, Q3 results were less uniform than those topline figures might indicate, with the firm citing areas of strength during the quarter.
“In contrast with last year’s strong third quarter, the capital markets environment weakened materially as the quarter progressed,” CEO Robert Sulentic said on Thursday’s earnings call. “Property sales performed in line with expectations in July and August; however, most debt and equity capital sources moved to the sidelines after Labor Day, causing both sales and loan originations to fall sharply.”
Unlike the capital markets segment, leasing performed well, Sulentic said. “Revenue was up across all property types, led by office.”
Additionally, said Sulentic, “many parts of our business are either cyclically resilient or benefit from secular tailwinds. These businesses, including occupier outsourcing, valuations, property management, loan servicing, investment management and project management, posted solid results for the quarter.
“We plan to further capitalize on our balance sheet to invest in secularly favored parts of our business that add differentiated capabilities,” he continued. “Over the past two years, project management, flex office space, renewable energy and industrial and multifamily assets have been at the forefront of those efforts.”
Simultaneously, the company is looking to trim costs. “We are targeting over $400 million of cost reductions due to management actions,” CFO Emma Giamartino said Thursday. She added that approximately $300 million of targeted cost reductions would be permanent, “with the vast majority coming from headcount reductions.”
CBRE was the first among publicly traded services firms to report its Q3 results. Newmark’s earnings announcement comes out on Oct. 28, with JLL, Colliers, Marcus & Millichap and Walker & Dunlop all reporting in early November.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).
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