The Real Deal New York

Cushman losses widen in first quarter

Report comes in contrast to positive reports posted by CBRE, JLL

May 11, 2012 10:34AM
By Adam Pincus

Glenn Rufrano, CEO of Cushman 

Global commercial real estate firm Cushman & Wakefield reported a loss in the first quarter today as well as slow revenue growth, providing one of the weakest earnings statements among the five property companies that have publicly released year-over-year figures for the first three months of 2012. Cushman, through its Italian parent company Exor, said this morning that earnings before interest, taxes, depreciation and amortization (known as EBITDA) in the first three months of 2012, were a negative $13.5 million, compared with positive earnings of $3.7 million in the first three months of 2011.

The company also said its revenues rose by just 6 percent over the same period last year, to $402 million. Last year, it began with a weak first quarter but ended with earnings of $111 million.

It has been an uneven start to the year for the firm. The company’s former CEO, Arthur Mirante, left last month to work at the New York office of the private Canadian brokerage Avison Young, but in a positive note, this month star broker Tara Stacom and Michael Rotchford were awarded one of the Real Estate Board of New York’s most ingenious prizes for the 2011 leasing at 1 World Trade Center.

“For the first quarter of 2012, [Cushman] continued with the execution of its growth initiatives, including balancing its service platform and making strategic hires,” the company, led by CEO Glenn Rufrano, said.

Apart from Cushman, most of the other public commercial real estate brokerage firms reported higher revenues and earnings in the first quarter of 2012 compared with the same period last year, a review of their financial statements by The Real Deal shows.

The world’s largest commercial firm, California-based CBRE Group, reported in April that its EBITDA rose by 24 percent to $140.5 million, on revenue growth of 14 percent, to $1.35 billion, during the first three months of 2012 compared with the same period in 2011.

Jones Lang LaSalle, based in Chicago, reported this month a global EBITDA of $45.9 million in the first quarter of 2012, up 62 percent from $28.3 million in the first three months of 2011. During the first quarter of the year, revenue increased 18 percent to $813 million, the firm reported.

However, in a sign of the weakening commercial rental market overall, JLL reported that its division covering North and South America saw leasing revenue grow by just 5 percent to $149.7 million in the quarter.

Colliers International, the commercial real estate division of the Toronto-based company FirstService, like Cushman, showed a loss in the first quarter of 2012, however it was smaller.

It reported in April an adjusted EBITDA of negative $2 million, compared with a $2.6 million gain in the first three months of 2011. At the same time, revenues rose by 9 percent to $213 million.

Holliday Fenoglio Fowler, the commercial firm based in Pittsburgh, Pa., had an EBITDA of $7.1 million in the first quarter, a 12.7 percent decline from the same period in 2011. However, first quarter revenues rose by 23.7 percent to $51.9 million, the firm reported in April.

Newmark Knight Frank (now Newmark Grubb Knight Frank) reported this month through its parent company BGC Partners that it had first-quarter revenues of $44.9 million. It did not report comparable revenue from the first quarter of 2011, or earnings tied directly to its real estate group.

In addition, the Newmark figures do not include revenue from Grubb & Ellis, which was in turmoil over the past several months and did not report earnings for the first quarter. It was acquired by BGC Partners through bankruptcy and was merged last month into Newmark to create Newmark Grubb Knight Frank. The combined firm is expected to have revenues of about $110 million in the second quarter, BGC Chairman Howard Lutnick said this month in an earnings call.