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CBRE Prices Senior Notes Offering

Zacks Equity Research

Recently, CBRE Group, Inc (CBG) announced that it has priced a public offering of $800 million worth 5.00% senior notes, maturing in 2023. The company expects to generate around $785.2 million (after deducting the underwriters’ discounts and estimated offering expenses) of net proceeds from the offering. Proceeds from the offering are intended to be used to pay off, in part, the debt outstanding under its secured senior credit facilities.

Notably, the notes will be issued by the company’s subsidiary, CBRE Services, Inc. and will be guaranteed by CBRE and the subsidiaries that guarantee its senior secured credit facility on a full and unconditional basis. The senior notes, having an interest rate of 5.00% per annum, are being issued at a price equal to 100% of the face value.

The offering involves a consortium of renowned banks acting as the joint book-running managers. These include BofA Merrill Lynch of Bank of America Corporation (BAC), J.P. Morgan (JPM), Wells Fargo Securities of Wells Fargo & Company (WFC), Credit Suisse, HSBC Holdings plc (HBC), Scotiabank, Barclays Capital and RBS.

This public offering will enable the company to attain financial flexibility and position it favorably to pursue investment opportunities and acquisitions, which will go a long way in enhancing its top-line growth.

Last month, CBRE came up with an 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 growth track in the reported quarter.

As of Dec 31, 2012, the company’s cash position stood at $1.09 billion.

CBRE currently holds a Zacks Rank #3 (Hold).

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