CRE Giants Report Q1 2017 Earnings

Corporate real estate giants CBRE, Jones Lang LaSalle and Colliers International, reported better than expected Q1 earnings last week. All three companies suffered weaker performances from their Europe, Middle East and Africa (EMEA) operations.

Los Angeles-based CBRE (CBG) reported revenues of $2.98 billion, compared to $2.85 billion last year. Adjusted earnings per share came in at 43 cents, beating analysts’ estimates of 33 cents.

Fee revenues were up 5% (7% in local currency) year over year to $1.9 billion. Further, excluding contributions from all acquisitions completed after first-quarter 2016, organic fee revenue advanced 4% (6% in local currency).

CBRE Group’s largest business segment – The Americas – reported 7% rise in revenues to $1.7 billion (same in local currency), while Asia Pacific (APAC) witnessed 10% increase in revenues to $341.1 million (9% local currency), with solid growth recorded in Greater China, India and Singapore.

However, revenue growth in Europe, the Middle East & Africa (EMEA) was adversely affected by foreign currency movement, mainly the depreciation of the British pound sterling. As a result, although EMEA revenues rose 9% in local currency, the figure was flat at $844.2 million after conversion to the U.S. dollars.

In the Global Investment Management segment, revenues totaled $89.6 million, down nearly 1% (up 3% in local currency) year over year, while the Development Services segment reported revenues of $13.7 million, declining 19% year over year.

Meanwhile, Chicago-based Jones Lang LaSalle (JLL) shares hit a 52-week high despite a drastic plunge in profits from Q1 2016. While profits of $20.6 million, or 45 cents per share, were 45% lower than the $37.2 million, or 82 cents per share reported in Q1 2016, it still beat analysts’ estimates of 37 cents per share. Revenues grew 20.1% to $1.61 billion, up from $1.34 billion last year. Profit margins shrank in the quarter due partly to declines in transaction fees and weakness in its European, Middle Eastern and African unit. After a prolonged boom, the real estate market is slowing and property sales are declining, which will make it harder for transaction-oriented firms like JLL to keep the momentum going.

Lastly, Toronto-based Colliers International (CIGI), reported revenues of $422.8 million in Q1 2017, a 12% increase from $376.1 million in Q1 2016. Consolidated revenues for the first quarter grew 13% on a local currency basis, led by significant increases in Lease Brokerage and Sales Brokerage in the Americas and Asia Pacific regions. Consolidated internal revenue growth in local currencies was 1% (note 3), impacted by a decline in lower margin Outsourcing & Advisory activity in the EMEA region relative to very strong comparatives in the prior year period. Excluding this, consolidated internal revenue growth in local currencies was 6%.