CBRE (formerly CB Richard Ellis Group) is all about location, location, location -- not to mention ubicación, l'emplacement, posizione, and Standort. One of the world's largest commercial real estate services companies, CBRE operates more than 300 offices worldwide. Services include property and facilities management, leasing, brokerage, valuation, asset management, financing, and market research. The company manages about 1.5 billion sq. ft. of commercial space for third-party owners and occupants. Subsidiary Trammell Crow provides property development services for corporate and institutional clients, primarily in the US. CBRE Global Investors manages real estate investments for institutional clients.
The US is CBRE's largest market, accounting for 60% of its revenue. The UK represents about 10%. The global real estate services firm is active in more than 60 countries worldwide, including Bahrain, Brazil, Canada, China, Indonesia, Korea, Russia, South Africa, Thailand, and Vietnam.
CBRE operates in five segments: the Americas; Europe, the Middle East, and Africa (EMEA); the Asia/Pacific region; global investment management (handled by CBRE Global Investors); and development services (handled by Trammell Crow). The Americas division, which includes the US, Canada, and Latin America, is its largest, accounting for more than 60% of all sales.
CBRE's revenue increased 10% in 2012 versus the 2011, while net income grew 32% over the same period. Indeed, 2012 marked the third consecutive year of rising revenue and fourth straight year of increasing profits for the firm, which suffered steep declines in revenue in 2008 and 2009 as a result of the global financial crisis. Revenue reached an all-time high of $6.5 billion in 2012 driven in part by the 2011 acquisition of the majority of the real estate investment management (REIM) business of Netherlands-based ING Groep, N.V., which bolstered CRBE's REIM business and diversified the firm.
Trends that began in 2010 have continued to favor CBRE's global growth aspirations. Commercial real estate markets have stabilized. Vacancy rates have decreased, rents have stabilized or edged up, credit is more widely available, and property sales and leasing activity is increasing. As a result, the company expects acquisitions to continue to drive growth. The firm is continuing to expand its already considerable geographic reach and broaden its service offerings by making fill-in acquisitions in regional markets that complement or expand existing operations. CBRE's strategy is to be the leading firm in each of its major business lines.
Mergers and Acquisitions
After several years of limiting its investments due to the recession, CBRE in 2013 purchased The CAC Group, a top commercial real estate services firm based in San Francisco. The move makes CBRE the #1 provider of commercial property management and leasing in the market. It also acquired technical engineering services firm Norland Managed Services Ltd., which specializes in commercial buildings in the UK and Ireland and has a growing customer base in the US and Singapore. CBRE also bought property and asset management specialist SOGESMAINT-CBRE to build on its previous acquisitions in the Netherlands, the Czech Republic, Slovakia, Poland, Latvia, and Lithuania. Also in 2013 CBRE acquired commercial real estate services business Resource Estate Partners and TPA Realty Services, both based in Atlanta, where it's working to boost its market share. CBRE in 2011 made one of its largest deals in several years. The company bolstered its global real estate investment management business with the acquisition of ING Groep's real estate investment management operations for some $940 million. The Dutch firm's real estate investment management business in Asia and Europe was merged into CBRE Global Investors and more than doubled the size of the unit. The transaction also included US-based Clarion Real Estate Securities and interests in commercial real estate co-investments. (The ING deal helped boost CBRE's investment management revenue by more than 60% in 2012.)
ValueAct Capital Master Fund LP and related entities own about 10% of CBRE's shares.