CBRE Group income dives 88% in Q2

July 31, 2008
CBRE Group income dives 88% in Q2
Brokerage fees hit as sales dry up due to global credit market crunch

(NEW YORK) CB Richard Ellis Group Inc, the world's largest commercial
real estate brokerage, said quarterly net income plunged 88 per cent,
partly on lower brokerage fees from sales that have all but dried up
due to the severely constrained global credit markets.

Second-quarter net income fell to US$16.6 million, or 8 cents per
share, from US$141.1 million, or 59 cents per share, in the year-
earlier quarter, the company said on Tuesday.

Excluding one-time charges Los Angeles-based CB Richard Ellis would
have earned US$33.2 million, or 16 cents per share, compared with
US$157.3 million, or 66 cents last year, still far from the 44 cents
analysts on average had expected, according to Reuters Estimates.

'As we had anticipated, the leasing business turned down from the
strong first quarter, especially in the Americas and the UK,
reflecting weak economic activity and decreasing business
confidence,' Brett White, chief executive, said in a statement.

'Investment sales activity remained quite soft due to a broadening of
the credit market turmoil and a continuing gap between buyer and
seller expectations of property values. Decreased investment volumes
have now become evident in all parts of the world.'

Revenue fell to US$1.3 billion from US$1.5 billion and behind the
US$1.42 billion analysts had expected, according to Reuters
Estimates.

The commercial real estate market has been hampered by the broader
tightness in the credit markets.

The company's two biggest markets, the United States and Britain have
seen a dramatic fall-off in commercial real estate sales and a
slowdown in demand for space.

One bright spot was the company's real estate outsourcing business,
which overseas real estate needs for large global companies. That
segment saw revenue rise 29 per cent, accounting for one third of the
Los Angeles-based company's global revenue. Also the Asia-Pacific
region saw revenue rise 27.8 per cent to US$155.7 million.

But the larger regions were gloomy. In the Americas region, which
includes the United States, Canada and Latin America, revenue fell 16
per cent to US$785.5 million. In Europe, Middle East and Africa,
revenue fell 9.4 per cent to US$299.7 million.

In the Global Investment Management segment, which consists of
investment management operations in the United States, Europe and
Asia, revenue fell 49 per cent to US$42.7 million, compared with the
second-quarter last year, which included performance fees from funds.

In addition, the second quarter of 2008 included a writedown of
US$11.9 million for two investments whose market value declined.