CBRE Enhances Financial Flexibility

Zacks

CBRE Group Inc. (CBG) has recently disclosed the accomplishment of its debt refinancing activities. The move is a strategic fit as it would help improve the company’s financial flexibility through lowering of debt and interest expenses, meet near term obligations and prolong maturity dates.

Specifically, the amendment and restatement of CBRE’s senior secured credit agreement would provide for a $715 million term loan facility and a $1.2 billion revolving credit facility (increased from $700 million).

Earlier this month, CBRE issued $800 million of 10-year senior unsecured notes. Coupled with its available cash, these moves have strengthened the company’s balance sheet and it now intends to pay off its 11.625% senior subordinated notes worth $450 million in Jun 2013. Eventually, the steps would help CBRE lower its debt level by around $500 million as well as interest expenses by nearly $50 million.

We believe the refinancing measures will position CBRE favorably and increase its flexibility. The company would remain well positioned to pursue investment opportunities and acquisitions, which would help enhance its top-line growth in the midst of the current unsettled environment.

Notably, CBRE came up with impressive fourth-quarter 2012 results, after posting disappointing results in the prior quarter. The company’s adjusted earnings of 55 cents per share surpassed the Zacks Consensus Estimate by 6 cents.

Aided by strong top-line growth in all operating regions, this leading commercial real estate services firm bounced back to the growth trajectory in the reported quarter. As of Dec 31, 2012, the company’s cash position stood at $1.09 billion.

CBRE Group currently carries a Zacks Rank #3 (Hold). REIT’s that are performing better and are worth a look include Federal Realty Investment Trust (FRT), Brandywine Realty Trust (BDN) and Cousins Properties Inc. (CUZ). All these stocks carry a Zacks Rank #2 (Buy).
 

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