CBRE Group: "Rolls Royce of Real Estate"

05/02/2017 2:50 am EST


Todd Shaver

Founder and Editor-in-Chief,

Real estate firm CBRE (CBG) delivered a good quarter. It was a clean beat; EPS of $0.43 came in well-ahead of the $0.33 consensus, as expenses trended materially below expectations, notes Todd Shaver, editor of

CBRE Group’s resilient first quarter result validated the persistent strength of the commercial real estate cycle and the company’s first-rate global platform. Europe, Middle East and Africa as well as Asia stood out for the company. 

The company has a strong outlook. Management commented that it was not making any adjustments to its 2017 earnings outlook of $2.40. The backdrop remains favorable as rates have retreated, the election fallout has stabilized, global economies are growing and new construction remains strong.

M&A is emerging again. This could be a big boost for the company. The company closed two investments in the quarter, and an additional one at quarter end. 

Management suggested that after a year of remaining mostly absent from the acquisition markets, pricing was becoming more rational again, suggesting we could see slightly more activity from the company. 

With a balance sheet that remains healthy, with in excess of $3 billion of dry powder on hand, management could step on the gas if they choose to.

CBRE Group is the Rolls Royce of real estate. With nearly $3.00 in EPS due in 2018 with upside from possible M&A, the current price in the mid $30s sure looks like a cheap value to us.

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