August 7, 2020
By Paul Bubny
The major publicly traded commercial real estate services firms have now reported their second-quarter results, and it’s hardly startling news that revenues generally took a hit in the prevailing environment of pandemic-related shutdowns. However, even with leasing and sales transaction volumes down, the firms also had Q2 success stories to tell thanks to diversified service lines, illustrating the value of carrying more than one arrow in your quiver.
Here’s an alphabetical round-up of services firms and their Q2 results:
CBRE. First out of the gate with its quarterly results announced on July 31, CBRE’s global revenues were off by just 5.8% from the year-ago period to US$5.38 billion, although GAAP net income and per-share earnings both dropped by about 63% from the year-ago period.
“As expected, Covid-19 took a toll on our performance in the second quarter, with impacts felt across every part of our business,” said Bob Sulentic, CBRE’s president & CEO. “However, the overall impact was cushioned by our diverse business mix, particularly the sustained growth of our contractual businesses over the past decade.”
He continued, “We also benefited from early moves to reduce our expense base, a process that is continuing, and strengthened our financial position and cash-flow generation despite the ongoing challenges from the pandemic.”
Colliers International. Q2 revenues were $550.2 million, down 26% from the year-ago period; adjusted EBITDA was $60.0 million, down 31%; and adjusted EPS was $0.70, down 36%.
“Colliers reported better than expected results across all segments and regions during the second quarter despite the unprecedented impact of COVID-19, especially in leasing and capital markets,” said Jay S. Hennick, global chairman and CEO.
He added, “Fortunately, the majority of our earnings now come from investment management and outsourcing & advisory—high value-add professional services that are recurring and contractual—providing us with more resilience and service line diversification than ever.”
Cushman & Wakefield. Global revenues overall were off 18% year-over-year to $2.12 billion, with declines of 46% and 52% in leasing and capital markets revenues, respectively. However, adjusted net income remained in positive territory.
“Our solid second-quarter performance reflects the commitment of our team to continue to serve clients while driving operating efficiency and tightly managing costs,” said CEO Brett White. “As a result, we have been able to navigate this challenging operating environment reasonably well.”
He added that Cushman & Wakefield’s diversified portfolio “helped to temper the lower demand experienced in our brokerage businesses,” while the property management and facilities management businesses continued to meet “the critical operational needs of our clients.”
JLL. Consolidated global revenue for Q2 was $3.7 billion and fee revenue was $1.2 billion, representing Y-O-Y decreases of 13% and 22%, respectively.
While transaction-based service lines were heavily impacted, JLL said the resilience of its property & facility management businesses, led by corporate solutions, demonstrated the strength of a globally-diversified platform. Similarly, its LaSalle Investment Management platform delivered stable advisory fees.
“Our second quarter top-line performance demonstrated the benefit of a globally diversified and integrated platform amidst unprecedented operating conditions,” said CEO Christian Ulbrich. “Next to the safety of our employees, we have focused our complete attention toward serving our clients during these challenging times, and maximizing the generation and preservation of cash.”
Marcus & Millichap. Q2 revenues fell by 44% Y-O-Y to $117.4 million, while cost savings resulted in quarterly net income of $106,000. Six-month net income was $13.2 million, or $0.33 per diluted share.
“The health crisis and economic shutdown resulted in a major market disruption during the second quarter, with an estimated decline of roughly 60% in market transactions,” said president and CEO Hessam Nadji. “Our team worked extremely hard to take care of our clients’ needs in a difficult environment which resulted in 1,075 closed brokerage transactions.”
That deal tally represented a smaller decline than the CRE market as a whole, “thanks to a seamless transition to virtual operations, immediate escalation of virtual investor outreach and, most importantly, our brokers’ ability to execute.”
He added, “Expense reductions helped us meet our goal of preserving the company’s strong balance sheet and financial position, while continuing to make investments in key tools and initiatives to support our sales force.”
Newmark Group. Revenues were down 30.4% year-over-year to $383.7 million. The year-to-date revenue decline was smaller at 13.2%, pointing to the disruption the pandemic wreaked upon what began as a strong year for CRE.
“Despite significantly lower industry transaction volumes in the second quarter, we generated $47 million of cash flow from operations,” said CEO Barry M. Gosin. “We finished the quarter with over $300 million in cash and cash equivalents, nearly $450 million in mortgage servicing rights and approximately $680 million of expected proceeds from Nasdaq that are not yet reflected on our balance sheet.”
An exception to the rule of lower revenues during Q2 among publicly traded brokerages was Walker & Dunlop, which saw a 26% Y-O-Y increase in revenues to $252.8 million, a new record for the company. This occurred in the face of a 59% annual decline in property sales and an 8% increase in debt financing volume.
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