Pick-up in building sales, leasing boost commercial services firms' earnings
(NEW YORK) Two of the world's largest commercial real estate services firms reported sharply improved earnings on Tuesday, fuelled chiefly by a pick-up in building sales and leasing, particularly in the United States.
US commercial real estate has been struggling since it began to weaken in late 2007, with activity falling precipitously last year. That hurt commercial real estate firms such as Jones Lang LaSalle Inc and CB Richard Ellis Group (CBRE), which rely heavily on sales and leasing commissions.
However, during the second quarter, sales of investment-grade US commercial real estate rose 32 per cent over the first quarter to US$20.6 billion, according to preliminary data by real estate research firm Real Capital Analytics, which measures sales greater than US$5 million.
'In the US, we saw a very strong pick-up in property sales and leasing, reflecting recovering market conditions,' Brett White, CB Richard Ellis chief executive, said in a statement.
His company posted a second-quarter profit of US$54.8 million, or 17 cents a share, compared with a loss of US$6.6 million, or two cents per share, a year ago.
Excluding one-time charges related to acquisitions, severance, space consolidations and impairments, the Los Angeles- based company earned US$58.8 million, or 18 cents a share, exceeding analysts' average expectation of nine cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 23 per cent to US$1.2 billion in the second quarter. Revenue from the Americas region, which includes the United States, Canada and Latin America, rose 20 per cent to US$722.3 million. Jones Lang LaSalle reported a second-quarter profit of US$32 million, or 72 cents per share compared with a net loss of US$14 million, or 40 cents per share in the second quarter 2009.
Excluding restructuring and other charges, the company's income was US$37 million, or 83 cents per share, versus analysts' average forecast of 58 cents per share, according to according to Thomson Reuters I/B/E/S, and US$11 million, or 30 cents per share, a year earlier.
Chicago-based Jones Lang LaSalle said its revenue rose 18 per cent to US$680.3 million. In the Americas, second-quarter revenue rose 18 per cent to US$296 million.
'Business prospects for the year remain good, and we are moving forward with confidence while watching market and economic dynamics,' Colin Dyer, Jones Lang LaSalle chief executive, said in a statement. - Reuters
Source: Business Times, 29 Jul 2010