The Real Deal New York

Cushman loses $22M in first half of 2011

Weakness comes as public rivals CBRE and JLL posted profits

August 29, 2011 11:04AM
By Adam Pincus

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From left: Cushman & Wakefield President and CEO Glenn Rufrano, Vice Chairmen John Cefaly and Tara Stacom, Worldwide Plaza and a rendering of One World Trade Center

[Updated at 11:20 a.m. with comment from Cushman & Wakefield President and CEO Glenn Rufrano] Midtown-based global commercial services firm Cushman & Wakefield lost $22.4
million in the first six months of 2011 even as revenues rose sharply compared to the same period last year, the brokerage firm’s parent
company, Italy-based Exor, reported on its website today.

The loss is in contrast with the firm’s two main global competitors, the world’s
largest commercial firm CB Richard Ellis, and another large player, Jones Lang
LaSalle, which each posted profits over the same time period.

Cushman lost $22.4 million through June, compared with a loss of $22.8 million
in the same six-month period in 2010, the company said, using generally
accepted accounting standards for the United States.

The brokerage, led by President and CEO Glenn Rufrano, blamed the rise in costs on expansion and higher incentive
payments.

“In the first half of 2011, higher revenues were offset by an increase in employment expenses driven primarily by investment related to the pursuit of the company’s long-term strategic growth plan, as well as higher incentive compensation tied to improved business performance,” Rufrano said. “As a firm we remain keenly focused on growth initiatives, with a cautious optimism that the economy will continue to improve, albeit at a more moderate pace than originally projected.”

Revenues from January through June rose by $133 million, or 17.7 percent, to
$884.4 million, compared with $751.3 million in the same period in 2010, Exor said today.

For the first six months of 2011, CBRE had a net profit of $95.6 million on
revenues of $2.6 billion, while JLL posted a net profit of $45 million on revenues
of $1.5 billion, each firm reported last month.

Cushman explained the loss as part of a seasonal trend in which the firm
generally loses money in the first half of the year and then ultimately turns a profit
by year’s end. Last year, the company concluded the year with a profit of $25.7
million, company records show.

The loss comes even as Cushman dominated the leasing market in the first half
of the year, with brokers such as John Cefaly and his team repping Nomura
Holdings moving 900,000 square feet in Worldwide Plaza
and Tara Stacom representing 1
World Trade Center
in the 1 million square foot lease to Conde Nast.

Cushman’s commission expenses grew by $52.2 million to $238.7 million in the six-month period, a 28 percent increase compared with the same period in 2010, outstripping revenue growth, which rose by just 17.7 percent.

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