Cushman & Wakefield Revenue Declines Amid Sharp Capital Markets Drop
The firm also reported a third consecutive quarter of leasing growth
By Nick Trombola July 30, 2024 6:23 pm
reprints
Global real estate services powerhouse Cushman & Wakefield (CWK) is showing more signs of weakness with each new quarter lately.
The century-old firm posted an annual revenue decline of 5 percent during its second-quarter 2024 earnings call on Monday. The drop follows annual revenue declines of 3 percent in the first quarter and 6 percent in the final quarter of 2023.
Much of this quarter’s revenue drop comes from bruising declines across its capital markets, valuation and services business, which annually lost 15 percent, 4 percent and 3 percent, respectively.
The silver lining for C&W was the 2 percent increase in its global leasing business, which had its third straight quarter of growth, according to the firm.
“Our solid second-quarter results, highlighted by our third consecutive quarter of leasing revenue growth and a meaningful improvement in free cash flow, are evidence of our execution against our strategic priorities,” Michelle MacKay, C&W’s CEO who took over leadership of the firm this time last year, said in a statement. “We are confident in our position and energized about the increase in market optimism.”
Yet C&W’s profitability measures muffle MacKay’s optimism. The firm’s adjusted earnings were $138.9 million in the second quarter of this year, a decrease of 5 percent compared to the second quarter of 2023.
Still, C&W boasted solid progress in getting its truckload of debt under control. The firm this past quarter repriced $1 billion in loans maturing in 2030, and prepaid $45 million in debt coming due next year. C&W ended 2023 carrying an outstanding bill of about $3 billion.
The firm also moved to shed a “non-core business” to help repay its loans. It signed an agreement last month to sell off an unnamed provider of a “third-party supplier network” to an unnamed buyer for $165 million. The deal is expected to close in the third quarter of this year.
C&W’s net cash flow also notably improved this past quarter by more than $130 million compared to the second quarter of 2023, though leadership did not detail where exactly the cost cutting came from on the earnings call. The firm’s liquidity remained the same as last quarter’s at $1.7 billion.
“We are in a growth mindset head space, and we know that we can walk and chew gum at the same time,” MacKay said on the call.
MacKay was optimistic about the growth of the industry in general, indicating that broad concerns over interest rates and inflation have “begun to move into the rearview mirror,” with rebounding capital markets business to follow.
“Subsequent rate cuts are going to create this waterfall effect because we think that more assets will start to move in as rates are reduced,” MacKay said.
Nick Trombola can be reached at NTrombola@commercialobserver.com.
