CBRE acquires US facility management group for €1.4b

CBRE Group is acquiring the facility management arm of US group Johnson Controls for $1.5 bn (€1.4 bn) in cash.

GWS, a provider of integrated facilities management solutions for major occupiers of commercial real estate, will operate as part of CBRE’s Global Corporate Services (GCS) business.

CBRE's GCS business has increased revenue at a double-digit annual growth rate over the last decade, as more major corporations and other institutions outsource their real estate services.

When the transaction is completed, the full range of combined occupier services will be available to the clients of both companies.

Bob Sulentic, president and chief executive officer of CBRE, said: 'With GWS, we further our ability to create advantages for occupier clients by aligning every aspect of how they lease, own, use and operate real estate to enhance their competitive position.'

CBRE and Johnson Controls also announced a 10-year strategic relationship. CBRE will provide Johnson Controls with a full suite of integrated corporate real estate services (including facilities management, project management and transaction services) on more than 4.6 million m2 and Johnson Controls will offer a factory-direct relationship on heating, ventilating, and air conditioning equipment, building automation systems and related services to CBRE for its managed properties.

In addition, the companies will jointly fund an innovation lab that will develop leading-edge energy management solutions to lower costs and enhance their clients’ work environments.

GWS serves a blue-chip roster of global corporations, particularly in the industrial/manufacturing, life-sciences, and technology sectors. Clients typically purchase these services under five-year contracts, and the average tenure for GWS’s 50 largest clients is 12 years.

Together, CBRE and GWS will manage nearly 464 million m2 of real estate and corporate facilities globally, including 214 million m2 in the Americas, 111 million m2 in Europe, the Middle East & Africa and 130 million m2 in Asia Pacific.

GWS, which has 16,000 employees worldwide, generated $3.4 bn of revenue for the 12 months ended December 31, 2014.

The transaction is expected to close in the late third quarter or early fourth quarter of 2015. Simpson Thacher & Bartlett acted as CBRE’s legal advisor.