Cushman & Wakefield Update: Focusing On Growth

The chief executive of Cushman & Wakefield has said the global property services firm remains “keenly focused on growth” despite a first half loss of $22.4m.

Glenn Rufrano, president and chief executive of Cushman & Wakefield, said that the company had upheld a strong operating performance in the last six months, and despite the loss was left with the potential for further borrowing to fund its growth plans.

The company reported its results for the first six months to 30 June this week.

Rufrano said: “During the second quarter, the firm replaced its existing $350m credit facility with a new $500m credit facility, most of which is undrawn, thereby expanding the company’s borrowing capacity to fund growth while lowering its cost of capital.

“As a firm we remain keenly focused on growth initiatives, with a cautious optimism that the economy will continue to improve, albeit at a more moderate pace than originally projected.”

Cushman said that the market saw “moderate global growth” in the first half of this year and a significant increase in commercial real estate investment, lending and leasing activity.

Speculation in the industry has been high that the firm will make a bid for a rival firm as part of its ambitious expansion plans following the signing of the new $500m senior debt facility earlier this month.

Bank of America Merrill Lynch and JPMorgan led the refinancing as joint lead arrangers.

Cushman said that the H1 loss was due to one-off compensation and tax charges of $13.6m. In the same period last year the firm made a similar loss of $22.8m.

However, the second quarter 2011 saw a strong 21.5% increase in revenue to $504.4m, the firm’s seventh consecutive quarter of double-digit revenue growth.

Over the six months, revenue increased 17.7% to $8844m and pre-tax earnings increased by $10.7m to $8.6m.

This is up from a loss of $2.1m, over the previous six months.

Rufrano said that the results followed a seasonal pattern of reporting worse results in the first half of the year.

He added: “The firm’s historical operating results have always followed a seasonal pattern, with the first half revenue and operating results being significantly less, or in a loss position, as compared to the second half of the calendar year.

“In the first half of 2011, higher revenues were offset by an increase in employment expenses driven primarily by investment related to the pursuit of the company’s long-term strategic growth plan, as well as higher incentive compensation tied to improved business performance.

“However, the firm’s stronger operating performance in the first half led to significantly improved cash flow and debt reduction, as reflected in the firm’s net financial position, which improved by $98.6m, or 46.1%, as of June 30, 2011.”

Total operational expenses increased in the six months by 12.1% to $435.1m, which the firm puts down to an increase in employment costs and compensation expenses.

Cushman has had an active hiring spree in the UK. Earlier this month it poached Calum Ewing as a partner in the retail team from Knight Frank as part of an expansion in the firm’s UK retail offering which has seen three other retail appointments this year.

Also this month the firm announced the hiring of Douglas Hardman, a DTZ European capital markets director, as partner in its central and eastern Europe investment team, to focus on generating deals in central and eastern Europe.(credit, hroxburgh.co-star)

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