Amid continuing turmoil in the market for commercial real estate, CB Richard Ellis Group Inc. said Wednesday that it had lost money in the second quarter.
The Los Angeles company, the world's largest commercial real estate brokerage, said it had a net loss of $6.6 million, or 2 cents a share, compared with a profit of $16.6 million, or 8 cents a share, a year earlier. Revenue was down 27% to $955.6 million.
CB Richard Ellis' performance matched Wall Street analysts' predictions, however, showing adjusted earnings of 4 cents a share after deducting one-time charges mostly related to cost-cutting measures.
"Our second-quarter results were in line with expectations," said Chief Executive Brett White, citing "ongoing global economic difficulties" as a heavy weight on the company.
Real estate transactions have fallen drastically for several months as investors sit on the sidelines waiting for the market to hit bottom or find themselves unable to secure financing.
Leasing, another main source of revenue for brokerages, has also shriveled as beleaguered tenants go out of business or reduce their need for space by laying off workers.
In response, the brokerage has beefed up its business of managing real estate for landlords, raising its revenue from management contracts to 42% from 32% a year ago.
Analyst Will Marks, who follows the company for JMP Securities, said he was impressed by the company's relentless cost-cutting.
About 2,000 employees have been laid off from a base of about 30,000 since early last year. Cuts have also been made in marketing expenses, budgets for company meetings and travel expenses.
The company declined to say how much those cuts have saved, but CBRE said earlier this year that it would cut as much as $500 million in expenses. Now it plans to slash an additional $100 million.
The company assuaged some investor fears in the quarter ended June 30 by raising capital, paying down debt and renegotiating some of its loans, Marks said.
As a result, he said, investors were less worried that the giant brokerage might wind up in bankruptcy.
"I think Chapter 11 is far out of the question at this point," he said.
Shares of CB Richard Ellis fell 49 cents Wednesday to $9.93.