"The current recovery, unlike past ones, remains frustratingly… (Glenn Koenig, Los Angeles…)
CBRE Group Inc., the world's largest commercial real estate brokerage, turned a profit in the third quarter even as transactions slowed in the U.S.
The Los Angeles firm said Tuesday that income from arranging deals to buy or rent space in offices, warehouses and other commercial properties was down slightly from the same period a year earlier.
The reduction was more than offset by growth in CBRE's business of managing the real estate assets of other companies and growth in CBRE's mortgage brokerage.
Sales and leasing in the U.S. have slowed as business owners wait for the nation's economic picture to clear after the election next week before making real estate decisions, analysts said. Europe's sovereign debt crisis and slowing economic growth in Asia also weighed on CBRE's revenue, which rose only 1% from a year earlier to $1.56 billion.
"The current recovery, unlike past ones, remains frustratingly slow and inconsistent, and is subject to quick swings in market sentiment," Chief Executive Brett White said. "We expect these variable conditions to persist until global economic growth and job creation shift into higher gear."
The company reported a profit of $39.7 million, or 12 cents a share, down from $63.8 million, or 20 cents, a year earlier. Selected charges totaled $43.9 million, much of it a write-down for changing the company name from CB Richard Ellis Group Inc. to CBRE Group last year. The name Richard Ellis had value in Britain.
Excluding the charges, CBRE's profit was 26 cents a share, short of Wall Street analysts' expectation of about 32 cents.
"Their biggest problem was in Europe, where revenues were down 17%," said analyst Craig Silvers, president of Bricks & Mortar Capital. "That shouldn't surprise anybody. The surprise is the slowdown in decision making in the U.S."
Many business leaders have a wait-and-see attitude, Silvers said. "People want to see what is going on in Washington and whether we go over the fiscal cliff or not."