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The renovations at 14th & Spring are designed to prioritize a welcoming experience for all tenants, and will include a complete repositioning of the lobby, expanded first-floor amenities, and the build-out of a full floor of speculative ("spec") suites. Atlanta-based law firm Cushing, Morris, Armbruster, & Montgomery, LLP, has preleased one of the new spec suites, with plans to relocate from its current downtown office by August 2025. Since Shorenstein's acquisition of 14th & Spring in July 2024, the Proper ...

Shares of CBRE Group (CBRE) have rallied 8.6% in the past six months, outperforming its industry’s decline of 1.5%.With a wide array of real estate products and services offerings, CBRE enjoys a robust scale and is the largest commercial real estate services and investment firm (based on 2024 revenues). A healthy outsourcing business, strategic acquisitions and a solid balance sheet are expected to drive its performance.This Zacks Rank #3 (Hold) company has modified its segments and will now report four bus ...

For Immediate ReleaseChicago, IL – March 4, 2025 – Today, Zacks Equity Research Equity are CBRE Group, Inc. (CBRE) , Newmark Group, Inc. (NMRK) and Redfin Corp. (RDFN) .Industry: Real Estate OperationsLink: https://www.zacks.com/commentary/2424618/3-real-estate-operations-stocks-to-consider-despite-industry-woesThe Zacks Real Estate Operations industry faces disruptions, including geopolitical unrest and macroeconomic challenges, in the near-term. Moreover, customers remain focused on cost controls and for ...

Industry Overview - The Zacks Real Estate Operations industry is currently facing disruptions due to geopolitical unrest and macroeconomic challenges, leading to a cautious approach from clients regarding property purchases and leasing decisions [1][4]. - The industry includes companies that provide various real estate services, excluding real estate investment trusts (REITs), and is influenced by economic trends, government policies, and geopolitical factors [3]. Current Challenges - Geopolitical conflicts, particularly in Ukraine and the Middle East, have escalated supply-chain disruptions and inflation, creating a volatile environment for the industry [4]. - The pandemic has altered the demand for commercial real estate, with a slow return to office occupancy levels and subdued demand in industrial real estate [5]. Emerging Trends - There is an increasing trend towards outsourcing real estate needs among corporations and public sector entities, which is expected to create opportunities for industry participants [6]. - Companies are prioritizing investments in technology to enhance efficiency and client services, which is seen as a competitive advantage [2][6]. Industry Performance - The Zacks Real Estate Operations industry has outperformed the S&P 500 with a growth of 20.2% over the past year, compared to the S&P 500's 18.7%, but has underperformed the broader Finance sector, which grew by 25.1% [11]. - The industry's current forward 12-month price-to-earnings (P/E) ratio is 17.76X, which is lower than the S&P 500's 21.95X but higher than the Finance sector's 17.11X [13]. Earnings Outlook - The industry's earnings per share (EPS) estimates for 2024 and 2025 have decreased by 25.5% and 8.6%, respectively, indicating a loss of confidence among analysts regarding growth potential [9]. - The Zacks Industry Rank for the Real Estate Operations industry is 216, placing it in the bottom 12% of over 246 Zacks industries, reflecting bleak near-term prospects [7][8]. Company Highlights - **Newmark Group, Inc.**: Positioned to benefit from outsourcing trends and has a Zacks Rank of 1 (Strong Buy), with a 2025 EPS estimate of $1.45, indicating a 17.9% year-over-year growth [18]. - **Redfin Corporation**: Engaged in residential real estate services, with a Zacks Rank of 2 (Buy) and a 2025 EPS estimate of 84 cents, reflecting a 38.2% increase year-over-year [20]. - **CBRE Group**: A commercial real estate services firm with a Zacks Rank of 3 (Hold), expecting a 2025 EPS of $6.03, with shares gaining 3.6% over the past three months [21].

With a market capitalization of over $40 billion, CBRE Group (NYSE: CBRE ) is the global leader in commercial real estate services, investment and development, as well as the largest company in the sector by revenue.I am a financial analyst and public accountant, with experience in accounting, auditing and tax areas, working for various multinational companies over 10 years. I have also passed the CFA level II exam.For about 6 years I have been creating content on economics and financial markets on social n ...

Economic Environment and Market Conditions - In 2023 and early 2024, commercial real estate capital markets faced significant pressure, leading to a sustained slowdown in property sales and debt financing activity[48] - Economic downturns may lead to lower sale prices for real estate investments, impacting the company's profitability and asset values[49] - Adverse economic conditions, political or regulatory uncertainty, and significant public health events may lead to declines in real estate sale and leasing volumes, impacting the company's revenue[48] - The company’s investment management, development services, capital markets, and mortgage servicing businesses are sensitive to credit cost and availability, which were adversely affected by central banks raising interest rates in 2023[52] Financial Performance and Revenue - Approximately 43.6% of the company's revenue for the year ended December 31, 2024, was transacted in foreign currencies, making it sensitive to currency fluctuations[53] - The company experienced a decline in mortgage servicing revenue due to reduced lending activity from U.S. Government Sponsored Enterprises (GSEs)[46] - The company's revenue, net income, and cash flows from its investment management business may be volatile due to market movements, impacting management fees and investment returns[65] - The company’s growth and financial performance have significantly benefited from acquisitions, which may not perform as expected in the future[60] Acquisitions and Growth Strategy - Acquisitions have significantly contributed to the company's growth, but future acquisitions may involve increased debt and integration challenges[60] - Future growth through acquisitions will depend on the availability of suitable candidates at attractive prices, as well as sufficient liquidity and credit to fund these acquisitions[60] Competition and Market Position - The company faces competition from various commercial real estate services providers, which may affect its market share and pricing strategies[56] - The company’s ability to attract and retain clients is highly dependent on external perceptions of its service quality and trustworthiness[63] Debt and Financial Liabilities - As of December 31, 2024, the company's total debt was $3.6 billion, with an interest expense of $440 million for the year[84] - The company has limited restrictions on incurring additional recourse debt, which may intensify leverage risks and affect its ability to service indebtedness[87] - The company is exposed to interest rate risk due to variable rate indebtedness, which could increase debt service obligations significantly[88] - The company’s ability to refinance debt depends on securing new financing at manageable interest rates, which may be affected by market conditions[89] Regulatory and Compliance Risks - The company is exposed to risks associated with international operations, including compliance with complex legal and regulatory environments[54] - Compliance with numerous licensing and regulatory requirements has become more complex and costly as the company's size and scope have increased[106] - The company is subject to evolving corporate governance and public disclosure regulations, particularly regarding sustainability matters, which could impact its operations and reputation[108] - The company is required to comply with the GDPR and other global data protection laws, exposing it to potential fines and enforcement actions for violations[96] Operational Risks - The company relies heavily on information technology and data services, and any disruption could materially harm its operating results and reputation[91] - The company relies on third parties for information and technology networks, which exposes it to risks related to security breaches and compromised systems[100] - The company has not experienced any material cybersecurity breaches to date, but the risk of future breaches remains significant[94] - The company may incur significant recovery and remediation costs due to potential cybersecurity incidents, which could adversely affect its financial results[94] Reputational Risks - The company faces reputational risks from negative perceptions or publicity, which could materially affect revenues and profitability[63] - Allegations or regulatory investigations could harm the company's professional reputation and adversely impact its business prospects[102] - The company faces potential financial liabilities and reputational damage due to litigation and regulatory risks, particularly in its valuations business[102] Investment and Asset Management - As of December 31, 2024, the company had a net investment of approximately $361 million and committed $205 million for future co-investments, with about $74 million expected to be funded in 2025[66] - The company was involved as a principal in 44 consolidated real estate projects with invested equity of $649 million and co-invested in approximately 125 unconsolidated projects with a net investment of $340 million as of December 31, 2024[67] - The company has over $1.4 billion invested in certain companies and projects that it does not control, which are subject to various business risks[115] Internal Controls and Financial Reporting - The company must maintain effective internal controls over financial reporting to ensure the accuracy and completeness of its financial reports[113] - Impairment of goodwill and other intangible assets could result in significant non-cash charges against earnings, adversely affecting reported results[114]

Core Insights - CBRE Group Inc. reported fourth-quarter 2024 core EPS of $2.32, exceeding the Zacks Consensus Estimate of $2.21 and reflecting a 68.1% year-over-year increase [1] - The company achieved record core earnings and free cash flow, with a 16.2% year-over-year revenue growth to $10.4 billion, surpassing the Zacks Consensus Estimate of $10.28 billion [2] Financial Performance - Net revenues increased 18.3% year-over-year to $6.13 billion, with core EBITDA rising 47.4% to $1.09 billion [3] - For the full year 2024, core EPS was $5.10, up from $3.84 in the prior year, and revenues increased by 11.6% to $35.64 billion [3] Segment Performance - Advisory Services segment revenue grew 19.2% year-over-year to $3.09 billion, exceeding estimates [4] - Global leasing revenue rose 15%, driven by growth in Asia-Pacific, Americas, and Europe, the Middle East & Africa [4] - Global property sales revenues increased 35% year-over-year, with mortgage origination revenues up 37% due to a significant rise in loan origination fees [5] - The GWS segment reported a 15.4% year-over-year revenue increase to $7.04 billion, also surpassing estimates [5] - Facilities management net revenues rose 24%, while project management net revenues increased 9% [6] - Real Estate Investments segment revenues increased 5% to $275 million, with assets under management decreasing by $2.1 billion due to foreign currency movements [7] Balance Sheet and Liquidity - At the end of Q4 2024, CBRE had cash and cash equivalents of $1.11 billion, up from $1.03 billion at the end of Q3 2024 [8] - Total liquidity stood at $4.4 billion, including $1.1 billion in cash and approximately $3.3 billion available for borrowing [9] - The company's net leverage ratio was 0.93X, significantly below the primary debt covenant of 4.25X [9] Share Repurchase and Outlook - During Q4 2024, CBRE repurchased approximately 6.05 million shares for $806 million, with $5.5 billion remaining under its stock repurchase program [10] - For 2025, CBRE projects core EPS in the range of $5.80-$6.10, with the Zacks Consensus Estimate at $6.00 [11]

Financial Data and Key Metrics Changes - Q4 2024 was CBRE's best quarter ever for core earnings and free cash flow, with significant progress in executing its strategy [9][18] - Resilient businesses grew net revenue by 16% in Q4 and 14% for the year, contributing nearly 60% of total SOP for the year [18][19] - Free cash flow exceeded expectations, increasing to more than $1.5 billion for the year, with a conversion rate of almost 100% [31][34] Business Line Data and Key Metrics Changes - Building Operations & Experience and Project Management segments generated $1.4 billion of SOP in 2024, growing organically at a double-digit rate [14][19] - Advisory segment SOP rose 34%, driven by record leasing revenue and a rebound in capital markets [19][25] - GWS segment net revenue grew 18%, with facilities management net revenue increasing by 24% [25][26] Market Data and Key Metrics Changes - Global leasing revenue grew 15%, with U.S. office leasing delivering 28% revenue growth [20][21] - Global property sales revenue growth accelerated to 35%, with strong performance across all asset classes [23] - Mortgage origination business was up 37%, led by a 76% increase in origination fees [24] Company Strategy and Development Direction - CBRE acquired Industrious to enhance flexibility in office space offerings and consolidated building management businesses into one segment [10][11] - The company reorganized into four business segments to leverage synergies and scale advantages [13] - Focus on resilient businesses and investment in development projects, with plans to break ground on over 50 projects in 2025 [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in CBRE's future, expecting core EPS growth of 16% in 2025, supported by mid-teens SOP growth across resilient lines of business [36][37] - The company anticipates continued growth in leasing and a rebound in capital markets, despite uncertainties around interest rates [36][55] - Management highlighted the importance of capitalizing on opportunities in the data center sector, which has seen significant profit growth [46][48] Other Important Information - CBRE repurchased over $800 million worth of shares since the end of Q3 2024, reflecting confidence in growth prospects [34][36] - The company expects to narrow the delta between GAAP and core earnings in 2025 due to improved market conditions [44] Q&A Session Summary Question: Can you talk about your guidance around capital markets recovery? - Management noted that transaction activity picked up in Q4 but remains below peak levels, with expectations for continued growth in 2025 [54][56] Question: How much of the growth in the Advisory segment is from revenue versus margin expansion? - Management expects low double-digit revenue growth and margin expansion on top of that [58] Question: What are the long-term growth prospects for the Turner & Townsend business? - Management expects mid-teens growth for the combined project management business, driven by areas with strong tailwinds [66] Question: How do you see the outlook for industrial leasing in 2025? - Management anticipates low single-digit growth in industrial leasing, with expectations for improved conditions in the future [105] Question: Can you comment on the investment management division's growth potential? - Management believes the investment management segment is underappreciated and expects significant growth opportunities in the coming years [80][84] Question: How do you view share repurchase activity in relation to M&A opportunities? - Management prioritizes M&A but will consider share buybacks if M&A opportunities do not materialize [87] Question: What is the outlook for margin expansion in the GWS segment? - Management expects continued margin expansion in GWS due to successful cost management initiatives [91][93] Question: How does CBRE manage talent acquisition in the current environment? - Management indicated that while competition for talent exists, CBRE's stability and brand strength help attract talent [108]

February 13, 2025 Forward-Looking Statements This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning our business outlook, our business plans and capital allocation strategy and our earnings and cash flow outlook. These statements involve risks and uncertainties that may cause actual results and trends to differ materially from those projected. When citing financial perform ...