CBRE Group (CBG) Acquires Stake, Forms JV With Streetsense

CBRE Group Inc. (NYSE:CBG) recently announced the acquisition of a 50% stake in a privately-held strategy and design company — Streetsense. The joint venture (JV) will offer services to retailers and other clients on creating captivating consumer experiences.

Particularly, as part of the investment, CBRE acquired Streetsense’s retail brokerage operation. Its team of 17 employees also joined CBRE. This unit offers services to clients in the greater Washington, D.C. market. Its acquisition bolsters the company’s retail offering nationally. The new business will be named Streetsense|CBRE.

Founded in 2001, Streetsense helps clients connect with customers on an emotional level with the help of insight-driven strategy and design. The firm has already offered services to a diverse base of clients, and the list includes names like JBG Smith Properties (NYSE:JBGS) , Interbake Foods, GGP Inc. (NYSE:GGP) , The Ritz-Carlton, and others. The company has offices in both Washington, D.C. and New York.

This consumer-experience JV of CBRE with Streetsense is a strategic fit. This is because the real estate needs have transformed drastically amid an e-commerce boom and change in consumer preferences. Amid these, the JV adds to the company’s abilities for advising clients.

In fact, to meet the clients’ evolving requirements, CBRE’s set of retail and omni-channel advisory services comprises location analytics, store-portfolio optimization, predictive consumer analytics, supply chain services and retail project management. Such services help clients in their growth pursuits and hence make CBRE a much sought-after company.

Notably, CBRE has banked on strategic acquisitions to widen its geographic coverage, as well as expand and reinforce service offerings. The company focuses on acquiring regional or specialty firms which complement its existing platform as well as independent affiliates in which, at times, it holds small stakes. Furthermore, the company opts for larger, transformational deals driven by macro policies. In fact, it has completed more than 110 acquisitions since 2003, including five large, strategic acquisitions.

Specifically, CBRE closed nine acquisitions through October 2017 and maintains active pipeline. As market conditions continue to improve, we believe these opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing its organic growth.

Earlier this month, CBRE delivered a better-than-expected performance for third-quarter 2017. The company reported adjusted earnings per share of 64 cents for the quarter, beating the Zacks Consensus Estimate of 54 cents. The figure also marked a 28% increase from the prior-year quarter tally of 50 cents. Results indicate strength in all three of its regional services businesses and solid growth in occupier outsourcing business. The company also raised its adjusted earnings per share outlook for full-year 2017.

CBRE Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has gained 35.4% year to date, outperforming the 14.9% growth recorded by its industry.

Other Stock to Consider

Investors interested in the real estate industry can also consider another top-ranked stock — Jones Lang LaSalle Incorporated (NYSE:JLL) — popularly known as JLL. It sports a Zacks Rank #1. The Zacks Consensus Estimate for current-year earnings of JLL moved up 2.7% to $8.23 in a month’s time.

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