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Flush with cash, CBRE is ready to spend

Blowing past pre-pandemic earnings, firm eyes more deals like its $1.3B Turner & Townsend investment

CBRE's Emma Giamartino and Bob Sulentic (CBRE, iStock)
CBRE's Emma Giamartino and Bob Sulentic (CBRE, iStock)

Expect more blockbuster deals from CBRE on the heels of its $1.3 billion investment in global project manager Turner & Townsend.

“​​We still have a very strong M&A pipeline. I think we’re going to look to do more deals like Turner & Townsend,” said newly promoted chief financial officer Emma Giamartino on CBRE’s second-quarter earnings call Thursday.

The world’s largest real estate services firm is sitting on a pile of money it’s looking to put into action. The company has about $2 billion in cash and another $2.8 billion in credit facilities that can be used to diversify its business through acquisitions.

In February, the firm spent about $200 million for a 35 percent stake in the flex-office operator Industrious, and earlier this month, a CBRE-created SPAC announced plans to merge with the solar-power builder Altus Power in a deal valuing the latter company at $1.58 billion.

CBRE’s purchase of a 60 percent stake in Turner & Townsend, company executives explained, fits in with its strategy of diversifying into areas like infrastructure and green energy.

Giamartino said that in addition to large M&A deals, CBRE is evaluating a pipeline of smaller, infill acquisitions to bolt onto the brokerage. She said the company would not try to force any purchases, and if it can’t find the right targets, the firm will opt to return cash to shareholders through stock buybacks.

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But the message is clear: CBRE has deep pockets and it’s looking to spend. Giamartino’s promotion further drives home that point, as her new position consolidates CBRE’s finance and investment activities into one role.

As for CBRE’s quarterly performance, the company not only blew past its earnings from last year, but posted strong growth over the same period in 2019.

Adjusted EBITDA for the quarter totaled $718 million, an increase of nearly 169 percent over the second quarter last year and up more than 50 percent from the $468 million in EBITDA recorded in the second quarter of 2019.

CEO Bob Sulentic said the growth was driven by strong performance in investment sales and originating mortgages, while revenue from office leasing continued to lag.

He said the unpredictability surrounding employers’ return-to-office timelines is delaying leasing activity.

“It’s what it has been,” he said. “There’s real uncertainty about how and when companies will go back to the office post-Covid. And as long as that overhang is out there decisions will be made more slowly than they have been historically.”

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