“Asset-light” is the buzzword trending in the flex-office space — and at CBRE, too.
Bob Sulentic, the commercial real estate giant’s CEO, said that was a big factor in CBRE’s decision to buy a 35 percent stake in the flex-office provider Industrious.
“They have an asset-light model. That means that they provide flex space as a service,” Sulentic said on the company’s fourth quarter earnings call Tuesday. “They are not taking long-term leases and then turning around and doing short-term leases with occupiers.”
Earlier this week, CBRE announced it paid about $200 million to purchase the stake in Industrious, valuing the company at more than $600 million ahead of a potential IPO later this year.
When it comes to future M&A deals for service companies, Sulentic said CBRE will eye other platforms that similarly are not very capital-intensive.
“We’re mostly pretty asset-light. And I’m going to say it again, one of the things we like so much about Industrious: very asset-light,” he said.
As for CBRE’s performance, the company posted earnings for the fourth quarter of $753 million, an increase of 9 percent over the same period last year. Earnings for 2020 ended up at $1.89 billion, down more than 8 percent from 2019.
During the call, Sulentic also touched on CBRE’s $350 million SPAC, which he said is targeting companies in areas like construction services, smart buildings and data centers.
“We’re very differently situated than most SPAC sponsors,” he said. “We’re not really thought of as a financial sponsor. We’re thought of as a strategic sponsor, and the way the SPAC is financially structured — where our upside comes only when the company that we would ‘de-SPAC’ grows in value — speaks to our confidence that we can find a target partner and help them grow their business.”