DALLAS–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the fourth quarter and year ended December 31, 2023.
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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|
|
% Change |
|
|
% Change |
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|
|
Q4 2023 |
Q4 2022 |
USD |
LC (1) |
FY 2023 |
FY 2022 |
USD |
LC (1) |
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|
Operating Results |
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Revenue |
$ |
8,950 |
|
$ |
8,194 |
|
9.2 |
% |
7.7 |
% |
$ |
31,949 |
|
$ |
30,828 |
|
3.6 |
% |
4.1 |
% |
||||||||
|
Net revenue (2) |
|
5,187 |
|
|
4,975 |
|
4.3 |
% |
2.9 |
% |
|
18,276 |
|
|
18,777 |
|
(2.7 |
)% |
(2.2 |
)% |
||||||||
|
GAAP net income |
|
477 |
|
|
81 |
|
487.9 |
% |
503.9 |
% |
|
986 |
|
|
1,407 |
|
(30.0 |
)% |
(28.0 |
)% |
||||||||
|
GAAP EPS |
|
1.55 |
|
|
0.25 |
|
508.3 |
% |
524.8 |
% |
|
3.15 |
|
|
4.29 |
|
(26.6 |
)% |
(24.6 |
)% |
||||||||
|
Core adjusted net income (3) |
|
426 |
|
|
424 |
|
0.3 |
% |
3.2 |
% |
|
1,199 |
|
|
1,863 |
|
(35.6 |
)% |
(33.9 |
)% |
||||||||
|
Core EBITDA (4) |
|
737 |
|
|
668 |
|
10.4 |
% |
9.8 |
% |
|
2,209 |
|
|
2,924 |
|
(24.5 |
)% |
(23.7 |
)% |
||||||||
|
Core EPS (3) |
|
1.38 |
|
|
1.33 |
|
3.8 |
% |
6.8 |
% |
|
3.84 |
|
|
5.69 |
|
(32.5 |
)% |
(30.7 |
)% |
||||||||
|
|
|
|
|
|
|
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|
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|
Cash Flow Results |
|
|
|
|
|
|
|
|
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|
Cash flow provided by operations |
$ |
853 |
|
$ |
814 |
|
4.8 |
% |
|
$ |
480 |
|
$ |
1,629 |
|
(70.5 |
)% |
|
||||||||||
|
Less: Capital expenditures |
|
94 |
|
|
99 |
|
(5.4 |
)% |
|
|
305 |
|
|
260 |
|
17.3 |
% |
|
||||||||||
|
Free cash flow (5) |
$ |
759 |
|
$ |
715 |
|
6.2 |
% |
|
$ |
175 |
|
$ |
1,369 |
|
(87.2 |
)% |
|
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“We ended 2023 on a high note with fourth quarter year-over-year operating profit growth across all three of our business segments,” said Bob Sulentic, CBRE’s chair and chief executive officer.
“Even though 2023 was a difficult year for commercial real estate, we delivered the third-highest full-year earnings in CBRE’s history, as our resilient businesses(6) continued their strong growth. This partly offset market-driven revenue declines in businesses that are sensitive to interest rates and debt availability,” he continued.
For 2024, CBRE expects to achieve core earnings-per-share of $4.25 to $4.65, implying mid-teens percentage growth at the midpoint of the range.
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 |
|||||||||||
|
|
Q4 2023 |
Q4 2022 |
USD |
LC |
||||||||||
|
Revenue |
$ |
2,591 |
|
$ |
2,613 |
|
(0.9 |
)% |
(1.9 |
)% |
||||
|
Net revenue |
|
2,567 |
|
|
2,595 |
|
(1.0 |
)% |
(2.0 |
)% |
||||
|
Segment operating profit (7) |
|
502 |
|
|
500 |
|
0.4 |
% |
0.3 |
% |
||||
|
Segment operating profit on revenue margin (8) |
|
19.4 |
% |
|
19.1 |
% |
0.3 |
pts |
0.4 |
pts |
||||
|
Segment operating profit on net revenue margin (8) |
|
19.5 |
% |
|
19.3 |
% |
0.3 |
pts |
0.5 |
pts |
||||
Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.
Property Leasing
- Global leasing revenue edged up 1% (flat local currency), slightly above expectations, driven by growth overseas.
- Leasing revenue grew 7% (1% local currency) in Europe, Middle East & Africa (EMEA), paced by a handful of Continental European countries.
- Asia-Pacific (APAC) leasing revenue growth of 2% (4% local currency) was led by robust increases in Japan and India.
- Americas leasing revenue was flat, as large office deals in Canada offset modestly lower U.S. activity.
- Globally, higher office leasing revenue offset a slight decline in industrial activity.
Capital Markets
- Global sales revenue declined 19% (20% local currency), in line with expectations amid a challenging real estate capital markets environment.
- In the Americas, sales revenue fell 22% (same local currency), while EMEA declined 16% (20% local currency) and APAC fell 12% (10% local currency).
- Sales revenue declines were less pronounced in industrial and retail than in multifamily and office, supported by healthier fundamentals.
- Mortgage origination revenue rose 23% (same local currency), attributable to interest earnings on escrow balances.
Other Advisory Business Lines
- Loan servicing revenue rose 6% (same local currency). The servicing portfolio increased to $410 billion, up 4% for the quarter and 8% for the prior year.
- Property management net revenue increased 9% (7% local currency), reflecting fourth-quarter new account wins and expansions.
- Valuations revenue slipped 1% (3% 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 |
|||||||||
|
|
Q4 2023 |
|
Q4 2022 |
|
USD |
|
LC |
|||||||
|
Revenue |
$ |
6,103 |
|
$ |
5,294 |
|
15.3 |
% |
13.6 |
% |
||||
|
Net revenue |
|
2,363 |
|
|
2,093 |
|
12.9 |
% |
11.2 |
% |
||||
|
Segment operating profit |
|
292 |
|
|
259 |
|
12.9 |
% |
11.2 |
% |
||||
|
Segment operating profit on revenue margin |
|
4.8 |
% |
|
4.9 |
% |
(0.1 |
pts) |
(0.1 |
pts) |
||||
|
Segment operating profit on net revenue margin |
|
12.4 |
% |
|
12.4 |
% |
— |
pts |
— |
pts |
||||
Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.
- Facilities management net revenue increased 14% (13% local currency). This growth was driven by increased activity in the technology and financial services sectors within the Enterprise business and the continued robust growth of the Local business, notably in the U.S.
- Project management net revenue rose 11% (9% local currency), led by the continued expansion of Turner & Townsend’s large-scale program management work globally.
- The pipeline going into 2024 remains elevated and significantly above year-earlier levels, notably driven by industrial & logistics and financial & professional services.
Real Estate Investments (REI) Segment
The following table presents highlights of the REI segment performance (dollars in millions):
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|
|
|
|
|
|
% Change |
|||||||
|
|
Q4 2023 |
|
Q4 2022 |
|
USD |
|
LC |
|||||||
|
Revenue |
$ |
262 |
$ |
291 |
(9.9 |
)% |
(12.7 |
)% |
||||||
|
Segment operating profit |
|
68 |
|
17 |
295.9 |
% |
294.5 |
% |
||||||
Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.
Real Estate Development
- Global development operating profit (9) totaled $27.0 million, compared with a U.K.-driven loss in last year’s fourth quarter. The current quarter result exceeded expectations, due to the earlier-than-anticipated monetization of several U.S. assets.
- The in-process portfolio ended 2023 at $15.8 billion, up $0.4 billion from third-quarter 2023.
Investment Management
- Total revenue increased 11% (8% local currency), driven by higher incentive fees. Asset management fees rose 4% (1% local currency).
- Operating profit surged 76% (72% local currency) to $41.7 million, reflecting the higher incentive fees and recurring asset management fees.
- Assets Under Management (AUM) totaled $147.5 billion, an increase of $3.3 billion from third-quarter 2023. The increase was primarily driven by favorable foreign currency movement, along with modest net capital inflows, which offset lower private asset values.
Corporate and Other Segment
- Non-core profit totaled $76 million, primarily due to an improvement in the value of CBRE’s investment in Altus Power, Inc. (NYSE:AMPS), whose share price increased during the quarter.
- Core corporate operating loss increased by roughly $16 million (15%), with lower incentive compensation expense being outweighed by a change in the timing of certain expense recognition and cost transfers from the business segments.
Capital Allocation Overview
- Free Cash Flow – During the fourth quarter, free cash flow was $759 million. This reflected cash provided by operating activities of $853 million, less total capital expenditures of $94 million.(10)
- Stock Repurchase Program – The company repurchased approximately 0.3 million shares for $19.6 million ($68.69 average price per share) during the fourth quarter. There was approximately $1.5 billion of capacity remaining under the company’s authorized stock repurchase program as of year-end 2023.
- Acquisitions and Investments – During the fourth quarter, CBRE completed five in-fill acquisitions, four in Advisory Services and one in REI, totaling $111 million in cash and non-cash consideration. The company’s planned acquisition of J&J Worldwide Services, announced on February 5, 2024, is expected to close in the coming months. CBRE will acquire J&J, a leading provider of engineering services, base support operations and facilities maintenance for the U.S. federal government, for $800 million in cash, plus a potential earn-out of up to $250 million, payable in 2027, subject to the acquired business meeting certain performance thresholds.
Leverage and Financing Overview
- Leverage – CBRE’s net leverage ratio (net debt (11) to trailing twelve-month Core EBITDA) was 0.71x as of December 31, 2023, 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 |
|||
|
|
December 31, 2023 |
|||
|
Total debt |
$ |
2,830 |
|
|
|
Less: Cash (12) |
|
1,265 |
|
|
|
Net debt (11) |
$ |
1,565 |
|
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|
|
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|||
|
Divided by: Trailing twelve-month Core EBITDA |
$ |
2,209 |
|
|
|
|
|
|||
|
Net leverage ratio |
0.71x |
|||
- Liquidity – As of year-end 2023, the company had approximately $4.9 billion of total liquidity, consisting of approximately $1.3 billion in cash, plus the ability to borrow an aggregate of approximately $3.7 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 2023 revenue). The company has more than 130,000 employees (including 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.
