"Conditions have deteriorated on a scale and with a speed that no one could have predicted just a few months ago," White said in a letter to clients this month after third- quarter profit fell 60% from the same period a year earlier.
"Market conditions of unprecedented strength are roiling the world's financial markets," White went on to say. "The global economy is either in, or close to, recession and 2009 is not likely to be a year of great recovery."
White insisted, however, that the company had quickly responded to the downturn by reducing expenses and would be positioned to grab a bigger share of the real estate market when the economy eventually improved.
Wall Street analysts aren't so sure success is around the corner. They have given the real estate services firm mixed reviews on its efforts to cope with the downturn and a debt of $515 million it has coming due during the next two years, though most reject dire prospects for CB Richard Ellis.
"I don't expect CB to go bankrupt, and I don't think their lenders have any interest in owning them," said analyst Will Marks, who follows the company for JMP Securities.
The brokerage, he said, is also "doing everything it can" to keep its debt at a level that lenders have insisted on. If it fails to maintain the agreed-upon level, CB Richard Ellis could be forced to pay higher interest rates on its debt.
To improve its financial position, the company raised about $207 million in a public stock offering this month after abandoning plans to raise the money from private sources. The largest buyer was Blum.
What is ahead will be key to the industry's stability.
"There is not going to be a lot of transaction income" for real estate companies, said analyst Craig Silvers, president of Bricks & Mortar Capital. "Tenants who aren't going bankrupt are curtailing their expansion plans or shutting down and consolidating offices and stores. And with the capital markets basically shut down, there are not going to be a lot of sales."
JMP Securities analyst Marks, however, said property sales might pick up in 2009 because the market has been stalled for almost a year and pent-up demand to buy commercial property is growing. If lenders reopen their money spigots, sales by owners who are in financial distress might be brisk, he said.
