CBRE Group Solidifies Asia Footprint

CBRE Group Inc. ( CBG - Analyst Report ) , the world’s largest commercial real estate services firm in terms of 2011 revenue, has recently strengthened its footprint in the Asia Pacific region by acquiring its affiliate company in Vietnam for an undisclosed amount. The transaction would enable CBRE Group to offer seamless integrated services to cater to the increasing demands of South-East Asia.

The acquiree, CB Richard Ellis (Vietnam) Co. Ltd., provides a host of services in the region: property sales, office and retail leasing, occupier advisory services, residential project marketing, property and facilities management, project management, consulting, research and valuation. With such a diverse product portfolio, the affiliate company was a leading real estate service provider in Vietnam and had a significant market share.

The acquisition is expected to be accretive to future earnings, as the affiliate company would eventually have more resources to further expand its portfolio and tap into the premier global network of the parent company. On the other hand, the transaction would complement CBRE Group’s market dominance in Singapore, China, and the entire Asia Pacific region.

In addition, Vietnam is expected to be a key market for the company with strong long-term growth potential as a low-cost business hub once its market-based economy matures. Consequently, the transaction is a win-win deal for both the participating companies.

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 Asia Pacific segment operates in 11 countries, primarily in China, Hong Kong, India, Japan, Singapore, South Korea, Australia and New Zealand. The Asia Pacific segment accounted for 13.4% of 2011 revenue.

We maintain our Neutral rating on CBRE Group, which presently has a Zacks #3 Rank translating into a short-term Hold recommendation. However, we have an Underperform rating and a Zacks #5 Rank (short-term Strong Sell) for NorthStar Realty Finance Corp. ( NRF - Snapshot Report ) , one of the peers of CBRE Group.