21 Sep

REAL ESTATE CONSULTANTS: A BATTLE FOR LEADERSHIP

The term “real estate consulting” brings together a diverse set of services to occupiers and investors in real estate. Initially acting merely as agents in sales and rentals, consultants have expanded their skill set to include asset management, investment brokerage, expert valuation, financial advice, sustainability certifications, architecture and property and project management.

Most specialise in commercial real estate -offices, high street retail, shopping centres, logistics, warehousing and hotels-. Some (in decreasing numbers) deal with all types of property, including residential. All seek profitability through large size transactions and value-add services and stability through recurring income.

One of the benefits, and the great challenge of this business is its increasingly global scope. The best clients, occupiers or investors, are large companies that demand services in more and more countries. Those who have the capacity to provide them in full are more likely to win that “account” and getting regular business for the benefit of the firm as a whole and revenue in several countries. Something similar to what happens with audit firms.

To achieve this they must have a network with wide geographical coverage, with the difficulty of providing local knowledge in each case whilst conveying a strong corporate culture, good service delivery and a deep understanding of the reality of each country -hence the importance of the research departments-. And, of course, a fluid contact of its executives with clients at the two ends of the chain, international and local.

In the leading positions of this business are CBRE and JLL. The new Cushman & Wakefield is now seeking to join the party. This is an update for the three of them. Since the first two are listed companies, the information is more readily available:

 

CBRE

Listed on the NY Stock Exchange [CBRE Group Inc., ticker CBG]. Market cap US$ 10,980 M. PER 20.8. 52,000 employees in 44 countries with 372 offices. In 2015, is has acquired Global Workplace Solutions from Johnson Controls.

Financial data 2011-2014:

Year

2011

2012

2013

2014

Revenue

US$ 5.905 M

US$ 6.514 M

US$ 7.185 M

US$ 9.050 M

Recursos propios

US$ 1.417 M

US$ 1.682 M

US$ 1.936 M

US$ 2.301 M

Gross profit

US$ 2.448 M

US$ 2.772 M

US$ 2.995 M

US$ 3.438 M

Net income

US$ 239 M

US$ 316 M

US$ 316 M

US$ 484 M

Ratios (to 06/30/2015): Gross margin 37.78% – Debt to total assets: 66.44% – ROE 23.16%

Robert E. Sulentic (59) is CEO since 2012 (Chairman since 2010). Harvard graduate. From Dallas, Texas. He was the CEO of Trammell Crow Company, now a subsidiary of CBRE. Earnings 2014 US$ 6.4 M.

 

JLL

Listed on the NY Stock Exchange [ticker JLL]. Market cap US$ 6,720 M. PER 15,5. 58,000 employees in 80 countries, with 250 offices.

Financial data 2011-2014:

 Año

2011

2012

2013

2014

Facturación

US$ 3.585 M

US$ 3.933 M

US$ 4.462 M

US$ 5.430 M

Total equity

US$ 1.713 M

US$ 1.979 M

US$ 2.211 M

US$ 2.422 M

Beneficio bruto

US$ 2.721 M

US$ 2.961 M

US$ 3.284 M

US$ 3.861 M

Beneficio neto

US$ 164 M

US$ 208 M

US$ 270 M

US$ 386 M

Ratios (to 06/30/2015): Gross margin 71.53% – Debt to total assets: 50.53% – ROE 17.92%

Colin Dyer (62) is CEO since 2005. British mechanical engineer from the Imperial College, London. Based in Chicago. 2014 earnings US$ 9.6 M.

 

Cushman & Wakefield

The merger of Cushman & Wakefield with DTZ was completed on September 1st. The new company, that will trade with the name of the former –DTZ name apparently disappearing– is now becoming the third contender for the leadership, with an estimated US$ 5000 M revenue, 43,000 employees and presence in 60 countries. The new president and CEO, Brett White (51), worked 28 years for CBRE, of which he was CEO from 2005 to 2012 and president from 2001 to 2010. Tod Lickerman (52), who will be its Global Chairman was the CEO of DTZ and  previously CEO of JLL for the Americas. The financial muscle is provided by TPG, in partnership with PAG Asia and OTPP -Ontario Teachers’ Pension Plan-. Three giants who manage together more than US$ 100,000 M in equity and loans in the whole the world. This merger closes, it seems, a stage in which the two companies have found difficult to join in this “battle on the heights.”

DTZ, with origins in 1784, has spent its last years struggling to be competitive, except for its strength in Asia, China in particular. The control of Australian UGL proving to be a waste of time. But then TPG acquired it in 2014 as a result of its alliance with Brett White, and it now seems, a grander plan.

Cushman & Wakefield, founded in 1917, meanwhile, does not appear to have benefited from going through several owners in its history. From RCA in 1969 to The Rockefeller Group in 1976, to Mitsubishi Estate in 1986 to EXOR –known before as IFIL, Agnelli group- in 2007. TPG has now acquired the participation of EXOR, around 80%, for US $ 2,000 million, and the company is again essentially American. It seems that with the financial support it has, the complementarity of networks -DTZ stength in Asia and Cushman & Wakefield in the United States- and the certainly experienced top management, together with the whole team, this renewed Cushman & Wakefield can really become a serious competitor to contest the leadership in this business. But it will surely take some hard work.

 

Summary

As for CBRE and JLL, CBRE remains the company with the highest revenue and market cap and it is perceived as the leader by the market (see PER). But JLL generates higher gross profit, is more capitalized and has a larger network. We do not need a photo finish, as yet, but they are certainly close.

Coming soon: Colliers, Savills, Newmark Grubb Knight Frank, BNP Paribas and Aguirre Newman.


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    21 Sep

    REAL ESTATE CONSULTANTS: A BATTLE FOR LEADERSHIP

    The term “real estate consulting” brings together a diverse set of services to occupiers and investors in real estate. Initially acting merely as agents in sales and rentals, consultants have expanded their skill set to include asset management, investment brokerage, expert valuation, financial advice, sustainability certifications, architecture and property and project management.

    Most specialise in commercial real estate -offices, high street retail, shopping centres, logistics, warehousing and hotels-. Some (in decreasing numbers) deal with all types of property, including residential. All seek profitability through large size transactions and value-add services and stability through recurring income.

    One of the benefits, and the great challenge of this business is its increasingly global scope. The best clients, occupiers or investors, are large companies that demand services in more and more countries. Those who have the capacity to provide them in full are more likely to win that “account” and getting regular business for the benefit of the firm as a whole and revenue in several countries. Something similar to what happens with audit firms.

    To achieve this they must have a network with wide geographical coverage, with the difficulty of providing local knowledge in each case whilst conveying a strong corporate culture, good service delivery and a deep understanding of the reality of each country -hence the importance of the research departments-. And, of course, a fluid contact of its executives with clients at the two ends of the chain, international and local.

    In the leading positions of this business are CBRE and JLL. The new Cushman & Wakefield is now seeking to join the party. This is an update for the three of them. Since the first two are listed companies, the information is more readily available:

     

    CBRE

    Listed on the NY Stock Exchange [CBRE Group Inc., ticker CBG]. Market cap US$ 10,980 M. PER 20.8. 52,000 employees in 44 countries with 372 offices. In 2015, is has acquired Global Workplace Solutions from Johnson Controls.

    Financial data 2011-2014:

    Year

    2011

    2012

    2013

    2014

    Revenue

    US$ 5.905 M

    US$ 6.514 M

    US$ 7.185 M

    US$ 9.050 M

    Recursos propios

    US$ 1.417 M

    US$ 1.682 M

    US$ 1.936 M

    US$ 2.301 M

    Gross profit

    US$ 2.448 M

    US$ 2.772 M

    US$ 2.995 M

    US$ 3.438 M

    Net income

    US$ 239 M

    US$ 316 M

    US$ 316 M

    US$ 484 M

    Ratios (to 06/30/2015): Gross margin 37.78% – Debt to total assets: 66.44% – ROE 23.16%

    Robert E. Sulentic (59) is CEO since 2012 (Chairman since 2010). Harvard graduate. From Dallas, Texas. He was the CEO of Trammell Crow Company, now a subsidiary of CBRE. Earnings 2014 US$ 6.4 M.

     

    JLL

    Listed on the NY Stock Exchange [ticker JLL]. Market cap US$ 6,720 M. PER 15,5. 58,000 employees in 80 countries, with 250 offices.

    Financial data 2011-2014:

     Año

    2011

    2012

    2013

    2014

    Facturación

    US$ 3.585 M

    US$ 3.933 M

    US$ 4.462 M

    US$ 5.430 M

    Total equity

    US$ 1.713 M

    US$ 1.979 M

    US$ 2.211 M

    US$ 2.422 M

    Beneficio bruto

    US$ 2.721 M

    US$ 2.961 M

    US$ 3.284 M

    US$ 3.861 M

    Beneficio neto

    US$ 164 M

    US$ 208 M

    US$ 270 M

    US$ 386 M

    Ratios (to 06/30/2015): Gross margin 71.53% – Debt to total assets: 50.53% – ROE 17.92%

    Colin Dyer (62) is CEO since 2005. British mechanical engineer from the Imperial College, London. Based in Chicago. 2014 earnings US$ 9.6 M.

     

    Cushman & Wakefield

    The merger of Cushman & Wakefield with DTZ was completed on September 1st. The new company, that will trade with the name of the former –DTZ name apparently disappearing– is now becoming the third contender for the leadership, with an estimated US$ 5000 M revenue, 43,000 employees and presence in 60 countries. The new president and CEO, Brett White (51), worked 28 years for CBRE, of which he was CEO from 2005 to 2012 and president from 2001 to 2010. Tod Lickerman (52), who will be its Global Chairman was the CEO of DTZ and  previously CEO of JLL for the Americas. The financial muscle is provided by TPG, in partnership with PAG Asia and OTPP -Ontario Teachers’ Pension Plan-. Three giants who manage together more than US$ 100,000 M in equity and loans in the whole the world. This merger closes, it seems, a stage in which the two companies have found difficult to join in this “battle on the heights.”

    DTZ, with origins in 1784, has spent its last years struggling to be competitive, except for its strength in Asia, China in particular. The control of Australian UGL proving to be a waste of time. But then TPG acquired it in 2014 as a result of its alliance with Brett White, and it now seems, a grander plan.

    Cushman & Wakefield, founded in 1917, meanwhile, does not appear to have benefited from going through several owners in its history. From RCA in 1969 to The Rockefeller Group in 1976, to Mitsubishi Estate in 1986 to EXOR –known before as IFIL, Agnelli group- in 2007. TPG has now acquired the participation of EXOR, around 80%, for US $ 2,000 million, and the company is again essentially American. It seems that with the financial support it has, the complementarity of networks -DTZ stength in Asia and Cushman & Wakefield in the United States- and the certainly experienced top management, together with the whole team, this renewed Cushman & Wakefield can really become a serious competitor to contest the leadership in this business. But it will surely take some hard work.

     

    Summary

    As for CBRE and JLL, CBRE remains the company with the highest revenue and market cap and it is perceived as the leader by the market (see PER). But JLL generates higher gross profit, is more capitalized and has a larger network. We do not need a photo finish, as yet, but they are certainly close.

    Coming soon: Colliers, Savills, Newmark Grubb Knight Frank, BNP Paribas and Aguirre Newman.


    0 Comment

    Would you like to join the discussion? Feel free to contribute!

      Write a Reply or Comment

      Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

      You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

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