CBRE, JLL see earnings rebound in Q2

The two largest global commercial real estate advisory firms have reported a strong bounce back to profitability in the second quarter of this year, thanks to the combined effect of cost-cutting and higher earnings driven by a pick up in market activity.

Los Angeles-based CBRE, the largest property advisor in the world, posted a profit of just under $55 mln (EUR 42.3 mln), or $0.17 per share, for the period from April to June this year compared with a net loss of $6.6 mln, or $0.02 loss per share, in the second quarter of 2009. Earnings Before Interest Taxes Depreciation and Amortisation (EBITDA) more than doubled to $161.6 mln from $68.4 mln a year earlier. Revenue for the quarter totalled $1.2 bn, an increase of 23% from $955.7 mln a year earlier.

These are the company's strongest quarterly year-over-year growth in revenue since the fourth quarter of 2007, and in EBITDA, excluding selected charges, since the first quarter of 2007. 'Our financial performance continued to strengthen across most business lines globally, and we have good momentum entering the year's second half,' said Brett White, CEO of CB Richard Ellis.

'In the US, we saw a very strong pick up in property sales and leasing, reflecting recovering market conditions. Europe produced robust growth, fuelled by the recovery of the property sales market in the larger economies, such as the U.K., Germany and France. Asia Pacific also sustained the strong top-line growth that first became evident there late last year.'

Revenue for the EMEA region, which mainly consists of operations in Europe, rose 28% to $225.4 mln from $176.6 mln for the second quarter of 2009. EBITDA totalled $19.9 mln for the second quarter of 2010 - more than three times the $5.9 mln of EBITDA achieved in last year's second quarter.

'We are mindful of concerns about the pace of economic recovery, but the rebound in commercial real estate activity is progressing. During the 2008-2009 downturn, we removed more than $600 mln of expense from our platform. We predicted then that even a modest recovery would produce outsized gains in profitability due to this cost reduction, and this is precisely the result we are now seeing, Brett added.

Chicago-based Jones Lang LaSalle - which has also carried out a cost-cutting exercise - reported net income of $32 mln, or $0.72 per share, for the second quarter. This compares with a net loss of $14 mln, or $0.40 per share, for the same period last year. Adjusted EBITDA on a year-to-date basis was $115 mln compared with $60 mln in 2009. Revenue for the first six months of 2010 was $1.3 bn, compared with $1.1 bn in 2009, an increase of 18%.

EMEA's second-quarter revenue was $171 mln in 2010, an increase of 20% compared with $143 mln in 2009. The most significant revenue improvements were made in France and England, up 48% and 40%, respectively, in local currency compared with the second quarter of 2009. Year-to-date revenue in the region was $322 mln in 2010 compared with $264 mln 2009.

Colin Dyer, CEO of Jones Lang LaSalle: 'Business prospects for the year remain good, and we are moving forward with confidence while watching market and economic dynamics. Our competitive position is strong in real estate markets, which continue their cyclical recovery.'