Bloomberg News

Cushman & Wakefield Sees Higher Profit on Costs, New Management

September 28, 2011

Sept. 28 (Bloomberg) -- Cushman & Wakefield Inc., the largest closely held commercial real-estate broker, will report higher earnings this year as cost cuts and management changes bear fruit, Chief Executive Officer Glenn Rufrano said.

Rufrano, 61, joined Cushman in March 2010 and has implemented a five-year plan to trim costs and boost profits, promoting or hiring five managers to a 10-person senior executive team to carry out the strategy. A recovery in real- estate and work on large deals helped lift revenue per employee by more than 10 percent in the first half from a year earlier.

“The plan will really start to show its benefits in 2012,” Rufrano said in an interview in London last week. “We have a more efficient group of people and the wind is blowing on our backs.”

The New York-based company, controlled by the Agnelli family’s holding company, reported earnings before interest, taxes, depreciation and amortization of $107.3 million for 2010. In the first half, Ebitda amounted to $8.6 million, an Aug. 29 statement showed.

In the first half, Cushman brokered the $715 million sale of Capital Square in Singapore and Conde Nast Publications Inc.’s 25-year lease of New York’s One World Trade Center building in a deal valued at $2 billion, the broker said.

New Hires

Cushman hired 1,046 people during that period in its five main divisions: capital markets, corporate occupier and investor services, consulting, leasing and valuations.

A third of the hires were in Asia, which accounts for 8 percent of Cushman’s annual revenue. In Europe, where Cushman gets about 25 percent of its revenue, the company has focused on expanding its leasing as well as its property and facilities- management capabilities in Russia and former Soviet bloc countries. The Americas account for 55 percent of revenue.

Higher earnings reflect the cost cuts coupled with a recovery in leasing and property sales since 2008, when the freeze in credit markets and ensuing recession led companies to defer relocation plans and curb real-estate investment.

Rufrano said Cushman favors expanding through recruiting or partnerships with local operators, though he didn’t rule out acquisitions.

CB Richard Ellis Group Inc., a larger broker, agreed in February to buy ING Groep NV’s global real estate asset management arm for about $940 million. Jones Lang LaSalle Inc., another competitor, bought London-based King Sturge LLP in May for about $300 million.

Sovereign Debt Crisis

Cushman normally completes most of its large investment and leasing deals in the second half of the year. Rufrano said the sovereign-debt crisis in the euro region is prompting investors to shun riskier, non-prime real estate assets for safer, income- producing properties.

“Since August, things have changed and there’s no consensus about what’s going to happen,” Rufrano said. “Pricing is going to be tough” because of a mismatch in expectations between sellers and prospective buyers, he said.

Cushman shed about 18 percent of its staff in 2009 to cut costs and weather the recession, Chairman Carlo Sant’Albano said in the same interview.

“The business needed to be streamlined,” said Sant’Albano, a 47-year-old board member of Exor SpA, the Turin- based company that bought 75 percent of Cushman in 2007. Exor also owns stakes in Fiat SpA, SGS SA and Juventus soccer club.

--Editors: Jeff St.Onge, Andrew Blackman.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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