|Can O' Worms #4|
Here's a recent article from the Los Angeles Times concerning the firm retained by Major Hospital for the marketing and development of Intelliplex Park.
CB Richard Ellis profit plunges 65%. Quarterly earnings for the commercial real estate brokerage fall as property sales slow worldwide.
By Roger Vincent Los Angeles Times November 7, 2008
The world's largest commercial real estate brokerage, CB Richard Ellis Inc., saw profit plunge in the third quarter as property sales slowed worldwide. The Los Angeles company did manage to beat Wall Street's expectations, however.
CB Richard Ellis reported Thursday that its profit fell 65% to $40 million, or 19 cents a share, from $114.9 million, or 48 cents, in last year's third quarter.
Excluding one-time charges, the company would have earned $56.1 million, or 27 cents a share, topping analysts' average prediction of 23 cents.
Revenue in the three months that ended Sept. 30 was $1.3 billion, down from $1.5 billion a year ago.
"Our third-quarter results reflected the extremely challenging marketing conditions, which continued to deteriorate globally," President Brett White said. "However, we performed reasonably well considering the extent of negative conditions in the marketplace."
U.S. commercial property sales fell 55% during the first nine months of this year compared with the same period in 2007, according to data provider Real Capital Analytics. The number of sales CB Richard Ellis participated in last quarter is expected to be announced today.
The company is "doing as good or maybe slightly better than can be expected in this environment," said analyst Craig Silvers, president of Bricks & Mortar Capital.
But the global credit crunch didn't really lock in until September, near the end of the third quarter.
By October "things were a mess," Silvers said, signaling more difficulty to come in the last three months of the year. "This will be a full quarter of total paralysis," Silvers said. "The next few quarters will be a challenge."
Sales that earn brokerages commissions will be down, Silvers said. "Most people are unwilling to do deals right now, and investors who want to do deals can't get financing."
Commissions on lease transactions will also suffer, he predicted, as strapped businesses reduce the amount of space they lease and worried landlords reduce rents.
CB Richard Ellis has cut $190 million in expenses this year through layoffs and reductions in spending. The company also slightly increased its share of the investment sales brokered in this country from 16% to 17%, according to Real Capital Analytics.
The rough real estate market may have the effect of driving some of CB Richard Ellis' competitors out of business in the months ahead, Silvers said. "When the world economy turns around, CB will come out of this stronger," he said.
Shares of CB Richard Ellis fell 62 cents to $5.67 on Thursday, a down day on Wall Street.
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