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CBRE Group Inc. (CBG - Analyst Report), the world’s largest commercial real estate services firm in terms of fiscal 2011 revenue, has recently expanded its operations in the EMEA region (Europe, Middle East and Africa) with the acquisition of its affiliate company in Turkey for an undisclosed amount.
The acquiree offers valuation, leasing, investment, research and consultancy services in Turkey, and has a huge client base of local and international property companies that has been developed over a period of more than 20 years.
With the acquisition, CBRE Group anticipates to meet the increasing demands of clients who are targeting new commercial real estate opportunities in the country backed by its strong economic and political stability, and its strategic location offering a vital link between Europe, the Middle East, and Asia.
Turkey recorded a GDP (gross domestic product) growth of 8% in 2011 – the highest by any European country, primarily due to the emergence of an increasingly young and prosperous middle class population.
Furthermore, according to Urban Land Institute analysis, Istanbul – the largest city in Turkey, is ranked the highest in Europe in terms of both investment opportunities and for city development prospects. This in turn has resulted in improved retailer confidence and leading international retailer brands are aggressively expanding in the country.
Presently, Turkey has the highest shopping center development pipeline in Europe. The hotel and office market also experiencing strong growth and low vacancy rates compared to other countries in Europe. Consequently, the acquisition offers unmatched revenue generating potential for CBRE Group.
CBRE Group is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management. The company has an extensive knowledge of domestic and international real estate markets that enables it to operate as a single-source provider of real estate solutions.
CBRE Group has a hard-to-replicate intellectual capital and technology resources that develop and deliver superior analytical, research and client service tools to its professionals that enable it to meet diverse client needs. The EMEA segment operates in 37 countries, with its largest operations located in the U.K., France, Spain, Germany, the Netherlands, Russia and Italy.
Within EMEA, services are organized along the same lines as in the Americas, including brokerage, investment properties, corporate services, valuation/appraisal services, asset management services and facilities management among others. The EMEA segment accounted for 18.2% of 2011 revenue.
We maintain our Outperform rating on CBRE Group, which presently has a Zacks #3 Rank translating into a short-term Hold recommendation. However, we have a Neutral rating and a Zacks #3 Rank for NorthStar Realty Finance Corp. (NRF - Snapshot Report), one of the peers of CBRE Group.