Real Estate Companies Report Strong Q1 2018 Earnings

Buyoed by a robust real estate market, corporate real estate giants reported strong earnings growth in Q1 2018, including higher brokerage commissions, fee income and mortgage originations.

Marcus & Millichap (Business Wire)

  • Total revenues increased by 13.9% to $174.5 million compared to $153.2 million for the same period in the prior year.
  • The increase in total revenues was primarily driven by the increase in real estate brokerage commissions, which increased by 16.0% to $162.5 million. This increase in brokerage commissions was primarily due to an increase in sales volume and number of transactions.
  • Net income increased by 50.1%. Net income when adjusted for the new tax law increased by 24.7%.
  • Adjusted EBITDA increased by 22.3%.
  • Private Client Market segment brokerage commissions and transactions increased by 6.3% and 4.2%, respectively. Transaction growth indicates further market share gains in a flat to moderately positive market sales based on preliminary reports.
  • Middle Market and Larger Transaction Market segments combined brokerage commissions and transactions increased by 44.3% and 36.5%, respectively.

CBRE (Business Wire)

  • Revenue for the first quarter totaled $4.7 billion, an increase of 15% (11% local currency2). Fee revenue3 rose 18% (13% local currency) to $2.3 billion. Organic fee revenue3 growth was 16% (11% local currency).
  • On a GAAP basis, net income and earnings per diluted share increased 10% to $150.3 million and $0.44 per share, respectively. Adjusted net income4 for the first quarter of 2018 rose 22% to $186.2 million, while adjusted earnings per share improved 20% to $0.54 per share.
  • CBRE produced strong revenue growth in its three global regions in the first quarter. APAC (Asia Pacific) saw revenue increase 23% (17% local currency) with outsized growth in India and Japan. EMEA (Europe, the Middle East & Africa) revenue also increased strongly, rising 31% (16% local currency), driven by France, Italy, the Netherlands and the United Kingdom. Americas revenue was up 8% (same local currency), supported by growth in Canada, Mexico and the United States.
  • EBITDA6 increased 13% (11% local currency) to $357.8 million and adjusted EBITDA increased 11% (8% local currency) to $347.8 million. Adjusted EBITDA margin on fee revenue was 15.3% for the three months ended March 31, 2018.
  • Global occupier outsourcing once again achieved robust revenue growth, as the secular outsourcing trend continued to be a powerful growth catalyst. Revenue increased 16% (12% local currency) and fee revenue rose 26% (18% local currency). Growth was strong across geographies, notably in India, the United States and several continental European countries.
  • CBRE’s capital markets businesses – property sales and commercial mortgage origination – achieved combined revenue growth of 17% (14% local currency).
  • Global property sales revenue rose 15% (11% local currency), as CBRE continued to gain market share. Americas sales revenue rose 14% (same local currency), with double-digit growth in Canada and the United States. APAC sales revenue increased 14% (8% local currency), driven largely by Japan, and EMEA sales revenue rose 16% (3% local currency), led by Germany. This growth followed a 16% (local currency) increase in EMEA sales revenue in the first quarter of 2017.
  • Commercial mortgage origination revenue increased 27% (26% local currency), reflecting brisk growth with both government agencies and private sector lenders.
  • Strong mortgage origination activity supported the continued growth of the $184 billion loan servicing portfolio, which increased 23% from the first quarter of 2017. Recurring revenue from loan servicing increased 15% (14% local currency).
  • Leasing revenue rose 8% (5% local currency), with notable strength in international markets. EMEA and APAC achieved growth of 34% (19% local currency) and 18% (13% local currency), respectively. France, India and the United Kingdom were standouts during the quarter. Americas leasing revenue edged up 2% (1% local currency).
  • Property management services produced revenue and fee revenue growth of 11% (7% local currency) and 18% (13% local currency), respectively. Fee revenue rose by double digits in all three global regions and was supported in part by the continued strong growth in the investment fund administration business.
  • Valuation revenue rose 8% (3% local currency), paced by EMEA.

Jones Lang LaSalle (PR News Wire)

  • First-quarter revenue up 10 percent to $3.6 billion; fee revenue up 9 percent to $1.3 billion
  • Consolidated revenue and consolidated fee revenue growth was broad-based across all four segments and increased 10 percent and 9 percent, respectively, compared with the prior year. Fee revenue expansion in the RES service lines was led by Capital Markets and Project & Development Services. Geographically across the service lines, the increase in RES fee revenue, on a local currency basis, was driven by EMEA (50 percent) and Americas (40 percent).
  • Consolidated operating expenses, excluding reimbursed expenses, were $1.8 billion and consolidated fee-based operating expenses1, excluding restructuring and acquisition charges, were $1.2 billion, increases of 9 percent and 7 percent, respectively, over 2017.
  • LaSalle revenue growth and overall performance were primarily due to higher incentive fees earned on the disposition of real estate assets on behalf of clients. LaSalle results also reflect solid advisory fees and notable equity earnings, led by net valuation increases across the co-investment portfolio.
  • Net income attributable to common shareholders was $40.3 million, compared with $7.2 million last year, and adjusted EBITDA increased 51 percent to $107.7 million. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 8.4 percent in USD and local currency, compared with 6.0 percent in 2017. The consolidated results reflect strong performance in LaSalle and Americas and year-over-year improvement in EMEA, partially offset by a slight decline in Asia Pacific. In addition, results also reflect continued increases to investments in data, technology and people, including amounts attributable to platform transformation and client-facing products.
  • Diluted earnings per share were $0.88, compared with $0.16 in 2017, and adjusted diluted earnings per share were $0.97, up from $0.37 last year.

Re/Max (Earnings Release)

  • Total agent count increased 6.2% to 120,821 agents
  • U.S. and Canada combined agent count increased 1.9% to 84,829 agents
  • Revenue increased 11.0% to $52.6 million
  • Net income attributable to RE/MAX Holdings, Inc. of $5.0 million and earnings per diluted share (GAAP EPS) of $0.28
  • Adjusted EBITDA1 of $22.8 million, Adjusted EBITDA margin1 of 43.4% and Adjusted earnings per diluted
    share (Adjusted EPS1) of $0.49