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Commercial Property News
Snapshot of global property markets improvement shown by CBRE & JLL swinging to Q2 profit.
Jones Lang LaSalle Inc.and it's grival CB Richard Ellis Group Inc. both reported yesterday that they had swung to a Q2 profit following prior-year restructuring charges and the strongest revenue growth in 2 1/2 years.
JLL exceeded Wall Street's expectations and Chief Executive Colin Dyer said they showed "a solid performance based broadly across our geographies and service lines. JLL reported a profit of $32 million, or 72 cents a share, compared with a year-earlier loss of $14.1 million, or 40 cents a share. Excluding restructuring charges and other items, earnings rose to 83 cents from 30 cents as revenue grew 18% to $680.3 million. The Europe, Middle East and Africa (EMEA) region’s revenue was up 20% to $171m. The most significant revenue improvements were in France and England, up 48% and 40% respectively.
Operating expenses were $165m, an increase of 15%, primarily due to increased variable compensation expense related to improved year-over-year performance. The region’s EBITDA was $10m, compared with $4m for the same period last year.
CBRE, the worlds largest real estate services business, had earlier reported that it had swung to a Q2 net profit of $54.8m, compared with a net loss of $6.6m in the second quarter of 2009.
CEO Brett White said: “Our financial performance continued to strengthen across most business lines globally, and we have good momentum entering the year’s second half,in the US we saw a very strong pick up in property sales and leasing, reflecting recovering market conditions.
“Europe produced robust growth, fueled by the recovery of the property sales market in the larger economies, such as the UK, Germany and France. Asia Pacific also sustained the strong top-line growth that first became evident there late last year.”
“We predicted then that even a modest recovery would produce outsized gains in profitability due to this cost reduction, and this is precisely the result we are now seeing.”
Commenting on the global market Mr White said: "“We are a good proxy for the global property market. Virtually all global economies are in early stages of recovery and others such as China are in full-blown expansion phase, and [so] the majority of property markets are either flat or slightly improved.”
Mr White said that occupiers were more optimistic on the mid- to long-term horizon, with a more normal market for lease terms, which tended to be a forward indicator for job growth. He pointed out that rents were rising in 48 of the 55 markets tracked by CBRE in Europe, while yields – which measure rental income as a percentage of property value – on property transactions had begun to narrow again.
The US saw a strong increase in transactions over the past year, while Europe also produced robust growth in the period, fuelled by recovering property sales markets in the larger economies such as the UK, Germany and France. Asia-Pacific sustained strong growth that had begun late last year.
This recovery boosted CBRE’s second-quarter results. Property sales rose globally by 61% year-on-year, led by a 93% improvement in sales in Europe and 67% growth in Asia Pacific.
Mr White predicted that there would be no new wave of distressed property sales as banks were working with borrowers rather than foreclosing on property backed by bad debts.
JLL exceeded Wall Street's expectations and Chief Executive Colin Dyer said they showed "a solid performance based broadly across our geographies and service lines. JLL reported a profit of $32 million, or 72 cents a share, compared with a year-earlier loss of $14.1 million, or 40 cents a share. Excluding restructuring charges and other items, earnings rose to 83 cents from 30 cents as revenue grew 18% to $680.3 million. The Europe, Middle East and Africa (EMEA) region’s revenue was up 20% to $171m. The most significant revenue improvements were in France and England, up 48% and 40% respectively.
Operating expenses were $165m, an increase of 15%, primarily due to increased variable compensation expense related to improved year-over-year performance. The region’s EBITDA was $10m, compared with $4m for the same period last year.
CBRE, the worlds largest real estate services business, had earlier reported that it had swung to a Q2 net profit of $54.8m, compared with a net loss of $6.6m in the second quarter of 2009.
CEO Brett White said: “Our financial performance continued to strengthen across most business lines globally, and we have good momentum entering the year’s second half,in the US we saw a very strong pick up in property sales and leasing, reflecting recovering market conditions.
“Europe produced robust growth, fueled by the recovery of the property sales market in the larger economies, such as the UK, Germany and France. Asia Pacific also sustained the strong top-line growth that first became evident there late last year.”
“We predicted then that even a modest recovery would produce outsized gains in profitability due to this cost reduction, and this is precisely the result we are now seeing.”
Commenting on the global market Mr White said: "“We are a good proxy for the global property market. Virtually all global economies are in early stages of recovery and others such as China are in full-blown expansion phase, and [so] the majority of property markets are either flat or slightly improved.”
Mr White said that occupiers were more optimistic on the mid- to long-term horizon, with a more normal market for lease terms, which tended to be a forward indicator for job growth. He pointed out that rents were rising in 48 of the 55 markets tracked by CBRE in Europe, while yields – which measure rental income as a percentage of property value – on property transactions had begun to narrow again.
The US saw a strong increase in transactions over the past year, while Europe also produced robust growth in the period, fuelled by recovering property sales markets in the larger economies such as the UK, Germany and France. Asia-Pacific sustained strong growth that had begun late last year.
This recovery boosted CBRE’s second-quarter results. Property sales rose globally by 61% year-on-year, led by a 93% improvement in sales in Europe and 67% growth in Asia Pacific.
Mr White predicted that there would be no new wave of distressed property sales as banks were working with borrowers rather than foreclosing on property backed by bad debts.
Wed, 28th Jul 2010