DALLAS–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the second quarter ended June 30, 2022.
“CBRE had an outstanding second quarter with strength across our global businesses. All three business segments posted double-digit revenue and segment operating profit growth, despite the significant currency headwinds that affected all U.S.-based global companies. Core EPS was the highest for any quarter in CBRE’s history – up 37% from last year’s second quarter and even slightly higher than last year’s record fourth quarter,” said Bob Sulentic, CBRE’s president and chief executive officer. “These results reflect the benefits of our diversification strategy and an economic backdrop that was still generally supportive despite heightened macro concerns.”
Consolidated Financial Results Overview
The following table presents highlights of CBRE performance (dollars in millions, except per share data; totals may not add due to rounding):
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|
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% Change |
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Q2 2022 |
|
Q2 2021 |
|
USD |
|
LC (1) |
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|
Operating Results |
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|
|
|
|
|
|
|||||
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Revenue |
$ |
7,771 |
|
$ |
6,459 |
|
20.3 |
% |
|
24.0 |
% |
|
|
Net revenue (2) |
|
4,803 |
|
|
3,912 |
|
22.8 |
% |
|
26.5 |
% |
|
|
GAAP net income |
|
487 |
|
|
443 |
|
10.1 |
% |
|
12.5 |
% |
|
|
GAAP EPS |
$ |
1.48 |
|
$ |
1.30 |
|
13.3 |
% |
|
15.8 |
% |
|
|
Core adjusted net income (3) |
|
604 |
|
|
455 |
|
32.8 |
% |
|
37.0 |
% |
|
|
Core EBITDA (4) |
|
919 |
|
|
708 |
|
29.8 |
% |
|
33.6 |
% |
|
|
Core EPS (3) |
$ |
1.83 |
|
$ |
1.34 |
|
36.7 |
% |
|
41.0 |
% |
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|
|
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|
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Cash Flow Results |
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Cash flow provided by operations |
$ |
454 |
|
$ |
421 |
|
8.1 |
% |
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Less: Capital expenditures |
|
55 |
|
|
46 |
|
17.9 |
% |
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Free cash flow (5) |
$ |
400 |
|
$ |
375 |
|
6.8 |
% |
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|
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Advisory Services Segment
The following table presents highlights of the Advisory Services segment performance (dollars in millions; totals may not add due to rounding):
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% Change |
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|
Q2 2022 |
|
Q2 2021 |
|
USD |
|
LC |
|||||||
|
Revenue |
$ |
2,588 |
|
|
$ |
2,137 |
|
|
21.1 |
% |
|
24.5 |
% |
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|
Net revenue |
|
2,571 |
|
|
|
2,135 |
|
|
20.4 |
% |
|
23.8 |
% |
|
|
Segment operating profit (6) |
|
521 |
|
|
|
465 |
|
|
12.1 |
% |
|
15.2 |
% |
|
|
Segment operating profit on revenue margin (7) |
|
20.1 |
% |
|
|
21.7 |
% |
|
(1.6 pts) |
|
(1.6 pts) |
|||
|
Segment operating profit on net revenue margin (7) |
|
20.2 |
% |
|
|
21.8 |
% |
|
(1.5 pts) |
|
(1.5 pts) |
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Note: all percent changes cited are vs. second-quarter 2021, except where noted.
Property Leasing
- Global revenue rose 40% (43% local currency).
- The Americas was the primary growth catalyst with revenue up 56% (same in local currency).
- Leasing revenue grew by 14% in local currency in EMEA and APAC combined, with 5% growth in USD due to a significant foreign currency headwind.
- All major property types realized revenue increases, led by office.
Capital Markets
- Global sales revenue rose 17% (21% local currency), reflecting healthy market fundamentals and market share gains. Global mortgage origination revenue slipped 1% (same in local currency).
- The Americas led sales revenue growth across regions, up 26% (same in local currency). Sales revenue in EMEA and APAC combined was flat in USD but increased 10% in local currency.
- Global retail, industrial and multifamily sales maintained strong momentum.
- Lower gains on mortgage origination servicing rights from loans sourced for the Government Sponsored Enterprises (GSEs) reduced mortgage origination revenue growth during the quarter. Aside from the lower gains on GSE servicing rights, global mortgage origination revenue rose 4%.
Other Advisory Business Lines
- Loan servicing revenue surged 28% (29% local currency).
- The servicing portfolio increased 18% from a year ago to more than $348 billion.
- Valuation revenue rose 8% (13% local currency).
- Property management net revenue rose 5% (10% local currency).
Global Workplace Solutions (GWS) Segment
The following table presents highlights of the GWS segment performance (dollars in millions; totals may not add due to rounding):
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% Change |
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|
Q2 2022 |
|
Q2 2021 |
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USD |
|
LC |
|||||||
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Revenue |
$ |
4,908 |
|
|
$ |
4,083 |
|
|
20.2 |
% |
|
23.8 |
% |
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Net revenue |
|
1,956 |
|
|
|
1,538 |
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|
27.2 |
% |
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31.0 |
% |
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Segment operating profit |
|
218 |
|
|
|
170 |
|
|
28.3 |
% |
|
33.4 |
% |
|
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Segment operating profit on revenue margin |
|
4.4 |
% |
|
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4.2 |
% |
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0.2 pts |
|
0.3 pts |
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Segment operating profit on net revenue margin |
|
11.2 |
% |
|
|
11.1 |
% |
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0.1 pts |
|
0.2 pts |
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Note: all percent changes cited are vs. second-quarter 2021, except where noted.
- Excluding $338 million of revenue from Turner & Townsend (60% interest acquired on November 1, 2021), GWS revenue rose 12% (16% local currency).
- Net revenue increased 8% (12% local currency), excluding $292 million from Turner & Townsend. This growth was broad based by client type and supported by a mix of new wins and expansions.
- Project management net revenue rose 12% (17% local currency), excluding Turner & Townsend contributions.
- Facilities management saw 7% (11% local currency) net revenue growth.
- New contract signings for the quarter reached a record level.
- The new business pipeline remained elevated, with a diversified mix of energy, financial and professional services, manufacturing/logistics and retail prospects.
- Excluding contributions from Turner & Townsend, GWS segment operating profit increased 5% (10% local currency).
Real Estate Investments (REI) Segment
The following table presents highlights of the REI segment performance (dollars in millions):
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% Change |
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Q2 2022 |
|
Q2 2021 |
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USD |
|
LC |
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Revenue |
$ |
277 |
|
$ |
243 |
|
13.9 |
% |
|
20.8 |
% |
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Segment operating profit |
|
275 |
|
|
154 |
|
78.2 |
% |
|
80.8 |
% |
|
Note: all percent changes cited are vs. second-quarter 2021, except where noted.
Real Estate Development
- Operating profit(8) surged by $96 million to approximately $215 million, driven by a strong pace of large asset and land dispositions.
- The in-process portfolio ended the quarter at $19.3 billion, down $0.5 billion from the record level achieved in first-quarter 2022, due to the monetization of assets during the quarter.
- The development pipeline increased $1.3 billion from first-quarter 2022 to $11.5 billion, a record level.
- Industrial and multifamily assets continued to comprise more than two-thirds of the in-process portfolio.
Investment Management
- Revenue rose 13% (20% local currency) to $158 million.
- Growth was driven by higher asset management fees, up 14% (21% local currency), and incentive fees, up 113% (124% local currency).
- Operating profit increased 29% (39% local currency) to approximately $58.4 million.
- AUM increased by $0.1 billion ($4.4 billion local currency) to $146.9 billion, a record high.
- Foreign currency movement largely offset strong net capital inflows and higher asset valuations.
Corporate and Other Segment
- Operating loss increased by $79.0 million, primarily due to a $65.0 million decrease in fair-value adjustments on strategic non-core, non-controlled investment portfolio.
- This was largely driven by a $42.6 million adjustment on the company’s investment interest in Altus Power, due to lower publicly traded share and warrant prices and an alignment-share conversion loss during the quarter.
- Corporate overhead expenses increased by roughly $13.9 million (17.2%), driven by increases in general compensation and related benefits as well as incentive compensation.
Capital Allocation Overview
- Free Cash Flow – During the second quarter of 2022, the company’s free cash flow was $399.8 million. This reflected cash from operating activities of $454.4 million, less total capital expenditures of $54.7 million. Net capital expenditures totaled $52.5 million. (9)
- Stock Repurchase Program – The company repurchased approximately 7.5 million shares for $611.2 million ($81.39 average price per share) during the second quarter of 2022. As of July 31, 2022, repurchases for the year totaled approximately 12.7 million shares for nearly $1.1 billion ($85.17 average purchase price). There was $898.4 million of capacity remaining under the company’s authorized stock repurchase program as of July 31, 2022.
- Acquisitions and Investments – During the second quarter of 2022, CBRE completed three in-fill acquisitions for a total of $42.2 million in cash and deferred consideration: a property evaluation and advisory firm in New Zealand, a property advisory consultant in Scotland and a sustainability advisory specialist in France.
Leverage and Financing Overview
- Leverage – The company’s net leverage ratio (net debt(10) – to trailing twelve-month core EBITDA) was 0.20x as of June 30, 2022, which is substantially below the company’s primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):
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As of |
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|
June 30, 2022 |
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Total debt |
$ |
1,851 |
|
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Less: Cash (11) |
|
1,193 |
|
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Net debt (10) |
$ |
658 |
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Divided by: Trailing twelve month consolidated Core EBITDA |
$ |
3,339 |
|
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Net leverage ratio |
0.20x |
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- Liquidity – As of June 30, 2022, the company had approximately $4.2 billion of total liquidity, consisting of approximately $1.2 billion in cash, plus the ability to borrow an aggregate of approximately $3.0 billion under its revolving credit facilities, net of any outstanding letters of credit.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of 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. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
