CBRE Reports Increased Revenue, Cash Flow in Q3
The company’s performance — particularly in office leasing and property management — coupled with a sunnier macroeconomic climate has it hopeful for a robust Q4 too
By Brian Pascus October 24, 2024 12:15 pm
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Earnings season is providing more indicators that capital markets are finally finding their footing.
CBRE (CBRE) reported encouraging financials during its third-quarter earnings call Thursday, as revenue rose 15 percent quarter-over-quarter to $9 billion, and cash flow increased nearly 50 percent quarterly to $573 million.
Overall, the firm posted its second highest third-quarter core earnings per share (EPS) on record, with EPS rising from 72 cents in the third quarter of 2023 to $1.20 in the third quarter of 2024, an increase of 67 percent.
CBRE CEO Bob Sulentic said that the firm’s strong third-quarter performance was defined by operational gains across key business lines and the continued advancement of the firm’s strategic position in brokerage, advisory and real estate investment services.
Sulentic noted that accelerated office demand helped the firm’s leasing business post a 19 percent increase in third-quarter revenue, and its subsidiary Turner & Townsend’s project management business helped net revenue increase by 18 percent on the quarter to $3.8 billion
“Our efforts to scale and diversify our business have resulted in a growing total addressable market,” said Sulentic. “We’ve widened growth avenues in managing data centers and federal government facilities through recent acquisitions in CBRE Global Workplace Solutions.”
CBRE Chief Financial Officer Emma Giamartino said the firm’s several business lines now have “greater earnings growth potential than at any point in our history,” and pointed to the strong office leasing metrics as the source for that optimism, with demand skewing to the highest-quality office space in markets where CBRE is most active.
“We continue to benefit from our strong position in the office leasing market,” she said. “In fact, global office leasing revenue reached a new record for any Q3, increasing by 26 percent, better than we expected.”
The firms’ real estate investment (REI) business saw its revenue increase by $3 million — improving from $134 million to $137 million quarter-over-quarter — with that business line boasting $148.3 billion in assets under management. Capital totaling $5 billion has been raised this year and $32 billion sits ready to be deployed for investment purposes in the firm’s in-process pipeline portfolio, according to Giamartino.
“REI segment operating profits were better than expected, and meaningfully above the prior year, led by investment management, which benefited from incentive fees and significant co-investment returns reflecting improving market conditions,” said Giamartino. “We expect the market backdrop for AUM growth to improve significantly in 2025.”
All told, Giamartino struck a triumphant tone, announcing that CBRE expects to announce “its best fourth-quarter earnings per share ever” in three months.
“All segments are expected to materially exceed their prior earnings peaks in coming years,” she said. “Within advisory, we now expect 20 percent growth for the full year, mostly driven by stronger than expected leasing activity.”
Sulentic said that the improved CRE capital markets environment has created “secondary impacts” across all of CBRE’s business lines, notable property sales, loan originations, real estate development and investment management, primarily because these businesses are so sensitive to interest rates.
“The Fed’s monetary easing cycle has heightened investor enthusiasm for the commercial real estate sector,” he said. “We share the market’s enthusiasm and expect to benefit from the market recovery in the coming years.”
Brian Pascus can be reached at bpascus@commercialobserver.com
