CB Richard Ellis Misses by a Penny

CB Richard Ellis Group Inc. (CBG - Snapshot Report) reported third quarter earnings of 4 cents a share. Excluding one-time charges, the company earned 8 cents per share which was a penny down from the Zacks Consensus Estimate of 9 cents. The company had earned 27 cents on an adjusted basis in the year-ago period.

CB Richard Ellis reported a net income of $12.4 million or 4 cents a share, down from income of $40.4 million or 19 cents a year earlier.

The credit market downturn and the economic recession have significantly impacted major investment sales and leasing markets globally. Increased unemployment levels coupled with store closures by retailers are significantly impacting the commercial real estate market and thereby impacting the company’s earnings.

However, the company is experiencing the benefits of the cost containments measures and remains right on track to achieve its goal of reducing annualized operating costs by $600 million.

Revenue for the quarter came in at $1.02 billion, down 21% year-over-year. The company operates through five segments: Americas , EMEA (Europe, Middle East and Africa ), Asia Pacific, Global Investment Management and Development Services.

Revenue for the Americas region decreased 21% year-over-year to $646.2 million. The EMEA’s region’s revenue was down 29% to $192.3 million. In the Asia Pacific region, revenues declined 7% from the prior-year quarter to $131.6 million.

The Global Investment Management segment, comprising investment management operations in the U.S. , Europe and Asia , reported a 17% drop in revenue to $32.9 million. The decline was driven by lower asset management, acquisition and incentive fees that had been achieved in the prior-year quarter. Assets under management totaled $34.9 billion at the end of the quarter, down 4% sequentially and 9% year-to-date.

Development Services segment, that includes real estate development and investment activities primarily in the U.S. , reported a 34% decline in revenues to $20.2 million.

The company reported a 19% year-over-year decrease in expenses to $969 million. Operating income was down 47% from the year-ago period to $57 million.

CB Richard Ellis Group Inc. is a commercial real estate services firm with full-service operations in metropolitan areas worldwide. The company offers a range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate assets globally under the CB Richard Ellis brand name and provides development services under the Trammell Crow brand name.

The current market dislocations have resulted in newer opportunities for the company such as distressed assets marketing and service of failed commercial mortgage backed securities loan funds.

Though we remain encouraged with some early indications of stabilization and recovery of market conditions, we think that sales and leasing markets will remain stretched in the near term.