MENTORING REPORT ON

Revenue analysis of CBRE and its Competitor

“Submitted in the Partial Fulfillment for the Requirement of

Post
Graduate Diploma in Management”
(PGDM)

Submitted to: Submitted by:

Dr. Neelam Tandon Akash Singh
(Professor) Roll no. - 66
PGDM-B (2018-2020)

Jagannath International Management School Kalkaji, New

Delhi
 DECLARATION

I hereby declare that this project report titled “Revenue analysis of CBRE
and its competitors” executed as per the course requirement for the post
graduate program in management and it has not been submitted by me
or any other person to any other university or institution for degree or
diploma. It’s my own work.

Name: Akash Singh

Roll No. : 66
Project Title : Revenue analysis of CBRE and its competitors.
 CERTIFICATE FROM EXTERNAL MENTOR

This is to certify that the Project Work titled “Revenue analysis of

CBRE and its competitors” is a bonafide work carried out by AKASH
SINGH (66) student of PGDM 2018 – 2020 of JIMS, KALKAJI, NEW
DELHI

Signature of Guide :

Name, Designation :

Date :

Place :
 CERTIFICATE FROM INTERNAL MENTOR

This is to certify that the Project Work titled “Revenue analysis of

CBRE and its competitors” is a bonafide work carried out by AKASH
SINGH(66) student of PGDM 2018 – 2020 of JIMS, KALKAJI, NEW
DELHI

Signature of Guide :

Name, Designation :

Place :

Date :
 TABLE OF CONTENTS

[Link]. Description Page No.

1 Certificate from organization, faculty and -

declaration

2 List of tables -

3 Acknowledgement -

4 Executive summary 1

5 Chapter 1- Introduction 2-7

6 Chapter 2- About the company 8-20

7 Chapter 3- Research methodology 21-24

8 Chapter 4- Research Analysis and Findings 25-38

9 Conclusion 39

10 Bibliography 40
 LIST OF TABLES

Table Description Page No.

Number

1 Shows comparison between financials of 26

CBRE for 2014 & 2015

2 Shows comparison between financials of 28

CBRE for 2015 & 2016

3 Shows comparison between financials of 30

CBRE for 2016 & 2017

4 Shows comparison between financials of 32

CBRE for 2017 & 2018

5 Shows comparison between financials of 34

CWK for 2015 & 2016

6 Shows comparison between financials of 36

CWK for 2016 & 2017
 LIST OF FIGURES

Figure Description Page No.

Number

1 Shows comparison between financials of 27

CBRE for 2014 & 2015

2 Shows comparison between financials of 29

CBRE for 2015 & 2016

3 Shows comparison between financials of 31

CBRE for 2016 & 2017

4 Shows comparison between financials of 33

CBRE for 2017 & 2018

5 Shows comparison between financials of 35

CWK for 2015 & 2016

6 Shows comparison between financials of 37

CWK for 2016 & 2017
 ACKNOWLEDGEMENT

Firstly I would like to thank our Director, Dr. J. K. Batra for introducing the
mentorship program in our curriculum and I would also like to thank my external
mentor Mr. SANDEEP MITTAL, manager of HSBC. My project guide for his
guidance and support throughout the tenure of internship. Without his efforts and
review, the project would not have encompassed so many aspects of marketing and
wouldn’t have been such a wonderful learning experience.
I express my gratitude to my Faculty Guide Dr. Neelam Tandon, Professor,
Jagannath International Managemant School, Kalkaji who assisted me in compiling
the project.
Finally, I would like to express my deepest gratitude to HSBC and Jagannath
International Management School, Kalkaji for giving me an opportunity to
undertake this project.
It was a wonderful learning opportunity and I look forward to associations with HSBC
in the future as well.

AKASH SINGH
PGDM (B) - 66
JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL
2018-20
 EXECUTIVE SUMMARY

The project titled “Revenue analysis of CBRE and its competitors” was done for
CBRE Ltd. for American region. The aim of the study is to study the key factors
which influence the revenue difference to compare growth in revenue over the years,
to compare CBRE with its competitors in terms of revenue generation over the years.
The project is carried out depending on the various data which are obtained from
secondary sources i.e., from annual reports on official site of the companyand other
secondary sources i.e., through internet, awards [Link] is about the real
estate sector in the economy which type of businesses consult real estate
consultancy for their project is also studied. A brief history of both the companies-
CBRE and CWK has been mentioned, how they have started, and their growth over
the years. Global overview as well as Indian overview of CBRE has been also
[Link] differences in revenue and expenses year on year has also been
compared for 5 years, the revenues and consolidated income statement of two
companies – CBRE and Cushman & Wakefield over the years has also been
compared. It has been concluded that CBRE’s sales has been increasing along with
its gross income and other factors which indicates the healthy financials state of the
company. On comparing the financials of CBRE with CWK, it has been found that
CWK is performing much inferior than CBRE in spite of the fact that they have
started at the same time.

1
CHAPTER – 1

INTRODUCTION

2
The Indian real estate sector is one of the most globally recognised sectors. In the
country, it is the second largest employer after agriculture and is slated to grow at 30
percent over the next decade. It comprises four sub sectors-housing,retail,hospitality,
and commercial. The growth of this sector is well complemented by the growth of the
corporate environment and the demand for office space as well as urban and semi-
urban accomodations.

According to a study by ICRA, the construction industry ranks third among the 14
major sectors in terms of direct, indirect and induced effects in all sectors of the
economy. It is also expected that this sector will incur more non-resident Indian(NRI)
investments in the near future, as a survey by an industry body has revealed a 35
percent surge in the number of enquires with property dealers. India is expected to
be the most favored property investment destination for NRI’s, followed by cities like
Pune, Ahmedabad, Bangalore, Chennai, Mumbai, Delhi.

The real estate sector is a critical sector of our economy. It has a huge multiplier
effect on the economy and therefore, is a big driver of economic growth. It is the
second largest employment generating sector after agriculture. Growing at a rate of
about 20% per annum and this sector has been contributing about 5-6% to India’s
GDP.

The study aims at understanding the change in buying behavior of customers of

realty big projects, which has happened over a period of time, in India.

The research aims studying the past and present needs, aspirations of Customers
and also try to predict the relevant future.

According to Credai, as of 2014, there were more than 450 registered and over
800 unregistered big project consultancies provided in India alone which makes
real estate a highly competitive sector.

So, in order to sustain in such a market, detailed analysis of the customer behavior
is need to develop appropriate product for the target category.

3
If we see that which companies are there which takes project management
consultancy from the CBRE are as shown in the diagram:

This report focuses on the top sectors of industry.

4
 MARKET SCENERIO
REVENUE OF RESAL ESTATE BUYING & SELLING IN INDIA FROM
2008 TO 2018 (IN MILLION US DOLLARS)

Post the introduction of RERA and GST, the real estate market has transformed
into a more structured and accountable industry. A developer operating in a post
RERA world needs to streamline systems, processes and practices to allow for
greater transparency with the end customer. The new regulations, however, have
also created a funding gap for developers, primarily during the initial stages of a
project, where working capital needs were primarily being met earlier with the help
of pre-sales. Additionally, restrictive covenants and a high penalty levied upon
delay of project delivery is driving developers to complete their projects within
timelines, thereby creating a demand for last mile funding.

5
In this environment, developers that follow an asset-light model and have access to
low cost capital, clearly have a competitive advantage over others even as banks
have been finding it difficult to act as perpetual capital providers. Hence, NBFCs
such as ours have been witnessing an increase in demand for funding solutions
due to our ability to extend the continuum of financing through the entire project life
cycle, and also facilitate home loans to the end buyer.

These regulatory reforms have also created a change in developer strategies and
customer buying patterns. We now see developers splitting their projects into
smaller phases in order to reduce completion time, inventory overhang and
manage cash flows. Additionally, end buyers are seeking security in their
investments, hence prefer to choose a developer with strong credentials and track
record of delivery.

Real estate is also a deeply local business and each market operates with its own
set of idiosyncrasies, hence, it is important to understand these further.

India has witnessed a similar trend to MMR. The market has observed a steady
increase in sales as customers seem to prefer well-designed and planned
compact office spaces. A few developers are going the extra mile to provide
furnished units with fixture to drive sales.

Today, developers are embracing technology to reach their target audience and
increasingly sales are taking place through digital and social platforms.
Additionally, real estate broking and advisory firms are playing a key role in aiding
developers outsource their sales function so that they can focus on their core
developmental expertise.

The Property sector – the Real Estate Regulation Act (RERA), REITs, Benami
Property Amendment and other reforms related to the [Link] is a substantial
difference between the collectorate rates and the rate of property in the property
market.

6
Whatever investors pay money in the initial stages, more often than not gets paid
in cash. Moreover, sometimes when the buyers offer to pay large amounts of
cash, they get huge discounts.

The cash input in property transactions is expected to go down now with the
government’s – surgical strike- on black money. In the short run, this is going to
result in a fall in both the land prices and the deals that take place.

Over time, the property developers could very well be forced to slash down
property prices due to the high inventory and corresponding cash crunch. This
suits all buyers and in the long term is expected to bring in the sense of stability in
the ever-fluctuating property market.

RERA
The Real Estate (Regulation and Development) Act, 2016 is an Act of
the Parliament of India which seeks to protect home-buyers as well as help boost
investments in the real estate industry. The Act establishes Real Estate
Regulatory Authority (RERA) in each state for regulation of the real estate sector
and also acts as an adjudicating body for speedy dispute Redressal. The bill was
passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15
March 2016. The Act came into force on 1 May 2016 with 59 of 92 sections
notified.[1] Remaining provisions came into force on 1 May 2017.[2] The Central
and state governments are liable to notify the Rules under the Act within a
statutory period of six months.

7
 Chapter - 2

COMPANY PROFILE

8
With broader and deeper capabilities than any other company, CBRE is the leading
full-service real estate services and investment organization in the world.

CBRE Group Inc, is the world’s largest commercial real estate services and
investment firm, with 2015 revenues of $ 10.9 billion and more than 70,000
employees (excluding affiliate offices). CBRE has been included in the Fortune 500
since 2008, ranking 217 in 2018.

It also has been voted the industry’s top brand by the Lipsey company for 15
consecutive years and has been named “Most Admired Companies” in the real
estate sector for 4 years in a row. Its shares trade on New York Stock Exchange
under the symbol “CBG”.

The company serves real estate owners, investors and occupiers worldwide. CBRE
offers strategic advice and execution for property sales and leasing; corporate
services; property, facilities and project management; mortgage, banking; appraisal
and valuation; development services; investment management and research &
consulting.

9
Parent Company CBRE GROUP

Category Real estate investment management, capital

markets (equity and debt) solutions,
property/agency leasing, property sales, valuation,
development services and proprietary research

Sector Real estate

Tagline Local Real Estate. Worldwide; Your business

partner for all your real estate need;

USP Availability in major location, and convenience

CBRE History

The firm that is now CBRE traces its roots to San Francisco in 1906. By the 1940’s,
that firm, which later became known as CB Commercial, grew to become one of the
largest commercial real estate services companies in the western United States. In
the 1960s and ‘70s’, the company went public and expanded both its service
portfolio and geographic coverage to become a full-service provider with a growing
presence throughout the United States.

The next major milestone occurred in 1989 when employees and others acquired the
company’s operations to form CB Commercial moved aggressively to accelerate
growth and cultivate global capabilities to meet client demands.

The company acquired leading firms in investment management (West mark Realty
Advisors-now CBRE Global Investors, 1995), mortgage banking (L.J. Melody
&Company, 1996) and property and corporate facilities management, as well as
capital markets and investment management (Koll Real Estate Services, 1997).

10
CB Commercial achieved significant global expansion with the 1998 acquisition of
REI Limited, the international arm of Richard Ellis, which traces its roots to London in
1773. At this time, the company changed its name to CB Richard Ellis, or CBRE.

Soon thereafter, CBRE announced the acquisition of London-based Hillier Parker

May & Rowden, one of the top property services firms operating in the United
Kingdom. With this development, CBRE became the first real estate services firm
with a platform to deliver integrated real estate services-through one commonly
owned, commonly managed company-across the world’s major business capitals.

11
Global Overview

CBRE Group. Inc. is the world’s largest commercial real estate services and
investment [Link] 2016 revenues of $10.9 billion and more than 70,000
employees (excluding affiliate offices).

It has been included in the Fortune 500 since 2008, ranking #217 in 2018. It also has
been voted the industry’s top brand by the Lipsey Company for 15 consecutive years
and has been named one of Fortune’s “Most Admired Companies” in the real estate
sector for four years in a row. Its shares trade on the New York Stock Exchange
under the symbol “CBG”.

The company serves real estate owners, investors and occupiers worldwide. CBRE
offers strategic advice and execution for property sales and leasing; corporate
services; property, facilities and project management, mortgage banking, appraisal.

Global Full Service Real Estate Offering:

➢ 70,000+ employees and 527 offices globally

➢ 5 billion SF of real estate managed
➢ 7,000+ Brokers
➢ $310.6 billion in transaction value
➢ $42.4 billion PJM contract value
➢ 80% of the Fortune companies represented

12
India Overview

In 1994, CBRE was the first international real estate services firm to set up an office
in India. Since then, their operations have grown to include more than 4,900
professionals across nine offices, with a presence in over 25 cities in India.

As the leading real estate services firm, they provide their clients with a wide range
of real estate solutions including Agency & Transaction Services, Capital Markets,
Project Management, Strategic Consulting and Valuations/Appraisals.

Their guiding principle has been to provide our clients with tactical and strategic
solutions that make real estate holdings productive and economically efficient.

India Full Service Real Estate Offering:

Present in India for over 20 years.

➢ 4900+ professionals across 9 offices in India

➢ 196+ million sq. ft. of real estate space under management.
➢ 60,000+ properties valued across all estate classes
➢ 250 million sq. ft. of projects managed.
➢ INR 60 billion capital arranged for clients.
➢ 1000+ consulting mandates undertaken.
➢ 115+ million sq. ft of total space transacted.

13
COMPETITOR ANALYSIS

➢ Jones Lang LaSalle Inc.

➢ CUSHMAN & WAKEFIELD, INC.

➢ Colliers International Property Consultants USA, Inc

14
PRODUCT/ SERVICE/ MARKET STUDIED

•Business Plan formulation/ optimal development mix.

•Financial Feasibility Studies
•Special Economic Zones
•Townships/ other real estate segments including residential & retail

•Joint ventures
•Joint development
•Debt syndication
•Investment sales

•Office
•Retail
•Industrial & Logistics
•Project Marketing

•Multiple market property portfolios

•Vacant land parcels
•Special use products such as golf resorts and health spas

•Facility Management
•Property Management
•Real estate advice (Insurance, reporting, benchmarking service levels and costs)

•Construction management/ monitoring

•Technical due diligence
•Quality surveying/ Quality control
•Cost consultancy

15
Project Management Consultancy service: Overview India

• CBRE project consultancy Services was set up in 1995 as a specialized

vertical within CBRE India to cater to the growing demands of clients in
this sector.
• Over the years, the department has grown from strength to strength,
undertaking a number of market-defining transactions.
• CBRE has the most experienced transaction management team with
strong relationships and reputation across India.
• The CBRE team specializes in generating leads and fulfilling the client
requirements in India.
• CBRE team has been involved in a wide spectrum of transactions such
as Primary sales, Corporate Leasing, Project marketing and Resale, audit
check and comparing revenue of different months in each project.

Shows the major areas in which projects are been undertaken with
consultancy.

16
Project Management:
Project Management provides on-time, on-budget project management solutions
through various staffing models, supply chain optimization and expertise by project
and asset type - all customized to ensure success of your real estate projects.

CBRE’S Project Management business line partners with clients to deliver projects
from “concept to completion” by employing cost efficient, industry leading processes
to optimize projects, minimize risks and create value.

The service portfolio is diverse with the team being experienced in delivering projects
covering almost every aspect of the real estate segment - including commercial
buildings, corporate greenfield campuses, built-to-suit facilities, residential
developments, retail developments, research and development facilities, critical
facilities, hospitals and other medical facilities, integrated townships, educational and
institutional facilities.

Key Facts

Portfolio of more than 500+ million sq. ft

1,400+ Project Management Professionals
500+ Ongoing Projects
700+ Clients Serviced
1,400+ Projects Completed
Executed assignments across 80 cities

CBRE Services

Project Management
Cost Consultancy
Construction Management
Design Advisory & Management Service
Wellness Advisory
Technical Due Diligence
Principal Contracting
Quality Assurance/Quality Control
Secondment Service
Green Consultancy
OHSE Service
Audit Services/Resource Second ment
Independent Commissioning
Risk Management

17
CBRE Group SWOT Analysis:

1. Ranked in fortune 500 companies, as well as highest rank in

commercial real estate.
2. Global leader in real estate and the world’s largest commercial
real estate services
3. Strong brand equity
4. Robust and diversified clients
5. Strong & quality workforce and management of approx
Strengths 35,000 people

1. Depend largely on US
2. Global market depends on the investment in the local market
Weaknesses 3. Environmental regulations are a concern

1. Acquisition for stronger market presence

[Link] market contract
Opportunities 3. Expansion globally into emerging economies

1. Volatile global financial markets.

2. Credit market crisis
3. Immense competition.
4. Commercial real estate industry is highly cyclical, and also
highly correlated to the macroeconomic state
Threats 5. Tighter economics policy.

18
Cushman & Wakefield Inc. is an American commercial real estate services
company. The company's headquarters is located in Chicago, with regional
headquarters in New York City (Americas), London (EMEA), Sydney (APAC),
and Bangalore (Asia).
Cushman & Wakefield is among the largest commercial real estate services firms
with revenues of $6 [Link] firm operates in more than 70 countries and has
48,000 employees.
Cushman & Wakefield was founded in New York on October 31, 1917 by brothers-
in-law J. Clydesdale Cushman and Bernard Wakefield. Having expanded throughout
the United States, as well as globally, Cushman & Wakefield at one point had more
than 400 offices in more than 70 countries, employing more than 48,000 people.
In the 1960s, Cushman & Wakefield began a national expansion, establishing offices
throughout the U.S. In 1969, Media conglomerate RCA acquired Cushman &
Wakefield, and subsequently sold its stake to The Rockefeller Group in 1976. In
1989, Mitsubishi Estate Co. Ltd became the majority shareholder in The Rockefeller
Group.
In 1990, a presence in Europe was established through the acquisition of Healey &
Baker. Healey & Baker was started in London in 1820 by George Healey, who took
building leases on Crown lands to the east and north of Regent's Park at the time
when Regent Street was being built. In 1910, George Henry Baker joined the firm
and became a partner and started focusing on commercial property in 1920, when
the firm became known as Healey & Baker.
In 1994, C&W worldwide partnership was established with real estate services firms
in the U.S., Europe, Asia, South America, Mexico, and Canada.
In 2001, Cushman & Wakefield acquired Cushman Realty Corporation (CRC),
increasing its presence on the West Coast and Southwest United States, bringing
CRC founders John C. Cushman III and Louis B. Cushman back to the firm founded
by their grandfather, J. Clydesdale Cushman and great-uncle, Bernard Wakefield.
John C. Cushman became Chairman of the Board of Directors, and Louis B.
Cushman, Vice Chairman.
The Cushman & Wakefield Alliance Program was formed in 2002 to expand service
capabilities for clients in U.S. markets where owned offices were not maintained.
IFIL (now known as EXOR, the investment group of the Agnelli family, acquires an
approximately 70 percent stake in Cushman & Wakefield becoming the firm's
majority shareholders and replacing the Rockefeller Group as majority shareholder

19
of the firm. Cushman & Wakefield carries out a series of acquisitions which include
real estate investment banking firm Sonnenblick Goldman, Semco, Alston Nock.
2015 On February 24, 2015, it was confirmed that Exor SpA has approved
management's hiring of Goldman Sachs Group Inc. and Morgan Stanley to help look
for a buyer for Cushman.
On May 11, 2015, DTZ, a commercial-real-estate-services firm backed by private-
equity giant TPG, has agreed to buy Cushman & Wakefield Inc. for $2 billion.
On September 1, 2015, Cushman & Wakefield and DTZ merged. The firm now
operates under the Cushman & Wakefield brand. The new Cushman & Wakefield is
majority owned by an investor group led by TPG, PAG, and OTPP. The two
companies combine for $6 billion in revenues and 45,000 employees. In 2016, the
two engaged in more than $191 billion in commercial real estate transactions and
approximately 4.3 billion square feet under management.
In October 2017 Chaney Brooks became an alliance partner with Cushman &
Wakefield establishing a foothold in the Hawaii & Guam markets by partnering with
one of the oldest commercial real estate firms in the islands.
In June 2018 Cushman & Wakefield filed a S1 form with the Securities & Exchange
Commission announcing its intent to be listed on the NYSE.

20
 Chapter-3

RESEARCH METHODOLOGY

21
“Research is a systematic inquiry to describe, explain, predict and control the
observed phenomenon. Research involves inductive and deductive methods.”

Objectives of the study

1. To analyze the financial performance of CBRE Ltd.

2. To compare the financial performance of CBRE Ltd. with its competitors such
as Cushman & Wakefield.
3. To measure the trend of CBRE Ltd. across four years viz. 2014 – 2018.

Research Design

A research design is the set of methods and procedures used in collecting and
analyzing measures of the variables specified in the research problem research. The
design of a study defines the study type (descriptive, correlation, semi-experimental,
experimental, review, meta-analytic) and sub-type (e.g., descriptive-longitudinal case
study), research problem, hypotheses, independent and dependent
variables, experimental design, and, if applicable, data collection methods and a
statistical analysis plan. A research design is a framework that has been created to
find answers to research questions.

For the purpose of this project research deigns is exploratory in nature. Exploratory
research design Exploratory research is research conducted for a problem that has
not been studied more clearly, intended to establish priorities, develop operational
definitions and improve the final research design. Through this project it is aimed to
compare the financial performance of CBRE Ltd. with its competitors.

22
Method of Collecting Data

The data has been collected from the secondary sources. The working is done on
the revenue part and the data has been taken from annual reports of CBRE. And the
secondary data also include data collected from company’s website and other
sources online i.e. [Link], [Link]

Variables used to analyze company’s financials

Sales- These terms refer to the value of a company's sales of goods and services to
its customers. Even though a company's bottom line (its net income) gets most of the
attention from investors, the top line is where the revenue or income process begins.

COGS- Cost of goods sold refers to the direct costs attributable to the production of
the goods sold in a company. This amount includes the cost of the materials used in
creating the good along with the direct labor costs used to produce the good.

Depreciation and Amortization expenses- depreciation is a method of spreading

the cost of an asset over a specified period of time, typically the asset's useful life.
Amortization is a method of spreading the cost of an intangible asset over a specific
period of time, which is usually the course of its useful life.

Equity in affiliates- Equity Income in Affiliates. Many companies have influential,

but non-controlling investments in other firms (defined as ownership of 20% to 50%).
They will account for income from their equity ownership as a proportional share of
the investee's earnings as “Equity in Affiliates” on their income statement.

Net income- Net income - NI is equal to net earnings (profit) calculated as sales
less cost of goods sold, selling, general and administrative expenses, operating
expenses, depreciation, interest, taxes and other expenses. This number appears on
a company's income statement and is an important measure of how profitable the
company is.

EBITDA- Earnings before interest, tax, depreciation and amortization is a measure

of a company's operating performance. Essentially, it's a way to evaluate a
company's performance without having to factor in financing decisions, accounting
decisions or tax environments.

23
EBITDA is calculated by adding back the non-cash expenses of depreciation and
amortization to a firm's operating income.

Annual revenue reports

The annual revenue and monthly revenues of the CBRE being evaluated and audit
has been and compared over the years as well as its competitor Cushman &
Wakefield.

24
 Chapter – 4

ANALYSIS AND INTERPRETATION

25
CBRE Group Inc.
Financials variables are considered for comparison over the years are
sales, cogs, deprecation, gross income, net income, EBITDA and other
factors to analyse the growth of these factors over the years.

Financials of CBRE for the year ending 2014 and 2015.

2014 (In
Particulars Billions) 2015 (In Billions) Absolute Change % Change
Sales 9.04 10.86 1.82 20%
COGS 5.88 7.4 1.52 26%
Depreciation and
Amortization Expenses 0.265 0.314 0.049 18%
Gross Income 3.17 3.46 0.29 9%

SG&A Expenses 2.43 2.63 0.2 8%

Unusual Expenses 0.019 -0.021 -0.04 -211%
EBIT After Unusual Expenses 0.723 0.846 0.123 17%
Non-Operating
Income/Expense 0.045 -0.009 -0.054 -120%
Non-Operating Interest
Income 0.00623 0.00631 .00008 1%
Equity in Affiliates (Pre Tax) 0.101 0.162 0.061 60%
Interest Expense 0.1 0.126 0.026 26%
Pretax Income 0.777 0.879 0.102 13%
Income Tax 0.263 0.32 0.057 22%

Consolidated Net Income 0.513 0.558 0.045 9%

Minority Interest Expense 0.029 0.011 -0.018 -62%
Net Income 0.484 0.547 0.063 13%

EBITDA 1.01 1.14 0.13 13%

Chart.1

26
 CBRE
12
10.86

10 9.04

8 7.4

5.88
6

4 3.17 3.46

2 1.01 1.14
0.484 0.547
0
Sales COGS Gross Income Net Income EBITDA

2014 (In Billions) 2015 (In Billions)

Fig.1
Inferences

• Sales increased by 20% from 2014 to 2015.

• COGS in proportion to sales have been increased in 2015 as compared to 2014.
• Depreciation & amortization expenses have increased which implies that there has
been more CAPEX in 2015.
• Gross income has only increased by 9% as compared to 20% increase in sales
because of above mentioned reasons.
• Growth has been better in 2015 compared to 2014 as equity has been hiked by
60%
• Gross income and consolidated net income have increased at the same rate
because of two reasons, 1st hike in equity expenses 2nd net operating expenses in
2015 compared to net operating income in 2014.
• Growth in EBITDA in 2015 is 13% which shows the healthy financial condition.

27
 Financials of CBRE for the year ending 2015 and 2016.

Absolute
Particulars 2015 (In Billions) 2016 (In Billions) Change %Change
Sales 10.86 13.07 2.21 20%
COGS 7.4 9.49 2.09 28%
Depreciation and
Amortization Expenses 0.314 0.366 0.052 17%
Gross Income 3.46 3.58 0.12 3%

SG&A Expenses 2.63 2.78 0.15 6%

Unusual Expenses -0.021 -0.007 0.014 -67%
EBIT After Unusual
Expenses 0.846 0.807 -0.039 -5%
Non Operating
Income/Expense -0.009 0.019 0.028 -311%
Non Operating Interest
Income 0.00631 0.00805 0.00174 28%
Equity in Affiliates (Pre
Tax) 0.162 0.197 0.035 22%
Interest Expense 0.126 0.151 0.025 20%
Pre-tax Income 0.879 0.88 0.001 0%
Income Tax 0.32 0.29 -0.03 -9%

Consolidated Net
Income 0.558 0.584 0.026 5%
Minority Interest
Expense 0.011 0.012 0.001 9%
Net Income 0.547 0.571 0.024 4%

EBITDA 1.14 1.17 0.03 3%

Chart.2

28
 CBRE
14 13.07

12 10.86

10 9.49

8 7.4

4 3.46 3.58

2 1.14 1.17
0.547 0.571
0
Sales COGS Gross Income Net Income EBITDA

2015 (In Billions) 2016 (In Billions)

Fig.2

Inferences

• Sales increased by 20% from 2015 to 2016.

• Gross income only increased by 3% because of increased COGS & depreciation and
amortization expenses as compared to previous year.
• Non-operating income has been also earned as compared to expenses in the
previous year.
• Net income growth is only of 4% despite 20% increase in sales which shows that
expenses for 2016 have increased.
• EBITDA has increased by only 3% which shows slow growth.

29
Financials of CBRE for the year ending 2016 and 2017.

2016 (In 2017 (In Absolute

Particulars Billions) Billions) Change %Change
Sales 13.07 14.21 1.14 9%
COGS 9.49 10.3 0.81 9%
Depreciation and Amortization
Expenses 0.366 0.406 0.04 11%
Gross Income 3.58 3.91 0.33 9%

SG&A Expenses 2.78 2.86 0.08 3%

Unusual Expenses -0.007 - - -
EBIT After Unusual Expenses 0.807 - - -
Non-Operating Income/Expense 0.019 0.034 0.015 79%
Non-Operating Interest Income 0.00805 0.00985 0.0018 22%
Equity in Affiliates (Pre Tax) 0.197 0.21 0.013 7%
Interest Expense 0.151 0.141 -0.01 -7%
Pre-tax Income 0.88 1.16 0.28 32%
Income Tax 0.29 0.46 0.17 59%

Consolidated Net Income 0.584 0.697 0.113 19%

Minority Interest Expense 0.012 0.006 -0.006 -50%
Net Income 0.571 0.691 0.12 21%

EBITDA 1.17 1.46 0.29 25%

Chart.3

30
 CBRE
16
14.21
14 13.07

12
10.3
9.49
10

6
3.58 3.91
4

2 1.17 1.46
0.571 0.691
0
Sales COGS Gross Income Net Income EBITDA

2016 (In Billions) 2017 (In Billions)

Fig.3

Inferences

• Increase in sales and COGS is same which implies that the change in COGS and
depreciation & amortization is proportion to sales.
• Non operation income has increased 79% which implies that income from other
sources than operation is very high.
• Equity expenses have only increased by 7% which is lower as compared to
previous years.
• Net income & EBITDA has increased by 21% and 25% respectively which show
strong financial position.

31
Financials of CBRE for the year ending 2016 and 2017.

2017 (In 2018 (In Absolute

Particulars Billions) Billions) Change %Change
Sales 14.21 21.34 7.13 50%
COGS 10.3 16.9 6.6 64%
Depreciation and Amortization
Expenses 0.406 0.451 0.045 11%
Gross Income 3.91 4.44 0.53 14%

SG&A Expenses 2.86 3.3 0.44 15%

Unusual Expenses - 0.027 - -
EBIT After Unusual Expenses - 1.05 - -
Non-Operating Income/Expense 0.034 0.107 0.073 215%
Non-Operating Interest Income 0.00985 0.00859 -0.00126 -13%
Equity in Affiliates (Pre Tax) 0.21 0.32 0.11 52%
Interest Expense 0.141 0.107 -0.034 -24%
Pre-tax Income 1.16 1.38 0.22 19%
Income Tax 0.46 0.31 -0.15 -33%

Consolidated Net Income 0.697 1.07 0.373 54%

Minority Interest Expense 0.006 0.002 -0.004 -67%
Net Income 0.691 1.06 0.369 53%

EBITDA 1.46 1.53 0.07 5%

Chart.4

32
 CBRE
25
21.34
20
16.9
14.21
15

10.3
10

5 3.91 4.44
1.46 1.53
0.691 1.06
0
Sales COGS Gross Income Net Income EBITDA

2017 (In Billions) 2018 (In Billions)

Fig.4

Inferences

• Sales have increased by 50 % but Gross income only increased by 14% because
of 64% rise in COGS.
• Net operating income has risen up with a high percentage.
• Equity expense is 52% which shows that the growth of the company is good this
year.
• Net income rose up by 53% but EBITDA by only 5% which shows high amount in
expenses this year.

33
 Cushman & Wakefield
Financials variables are considered for comparison over the years are
sales, cogs, deprecation, gross income, net income, EBITDA and other
factors to analyse the growth of these factors over the years.

Financials of CWK for the year ending 2015 and 2016

2015 (In 2016 (In Absolute

Particulars Billions) Billions) Change %Change
Sales 4.19 6.22 2.03 48%
COGS 3.54 5.34 1.8 51%
Depreciation and Amortization
Expenses 0.155 0.26 0.105 68%
Gross Income 0.651 0.878 0.227 35%

SG&A Expenses 0.865 1.18 0.315 36%

Unusual Expenses 0.203 0.03 -0.173 -85%
EBIT After Unusual Expenses -0.417 -0.327 0.09 67%
Non-Operating Income/Expense 0.005 0.013 0.008 160%
Non-Operating Interest Income 0 0 0 0%
Equity in Affiliates (Pre Tax) 0.004 0.005 0.001 25%
Interest Expense 0.121 0.169 0.048 40%
Pre-tax Income -0.529 -0.476 0.053 52%
Income Tax -0.056 -0.027 0.029 97%

Consolidated Net Income -0.472 -0.449 0.023 55%

Minority Interest Expense 0.0009 -0.0004 -0.0013 100%
Net Income -0.473 -0.449 0.024 55%

EBITDA -0.058 1.14 1.198 214%

Chart.5

34
 7
6.22
CWK
6
5.34
5
4.19
4 3.54

2
1.14
0.878
1 0.651

0 -0.473 -0.449 -0.058

Sales COGS Gross Income Net Income EBITDA
-1

2015 (In Billions) 2016 (In Billions)

Fig.5

Inferences

• Sales and gross income have increased by 48% & 35% respectively which implies
that the company is growth in sales is good.
• Non-operating income has also risen as compared to previous year.
• Equity expenses have grown by 25% which is a good sign of growth.
• Net income and EBITDA have risen which is good sign for the company.

35
Financials of CWK for the year ending 2016 and 2017.

2016 (In 2017 (In Absolute

Particulars Billions) Billions) Change %Change
Sales 6.22 6.92 0.7 11%
COGS 5.34 5.91 0.57 11%
Depreciation and Amortization
Expenses 0.26 0.27 0.01 4%
Gross Income 0.878 1.01 0.132 15%

SG&A Expenses 1.18 1.14 -0.04 -3%

Unusual Expenses 0.03 0.031 0.001 3%
EBIT After Unusual Expenses -0.327 -0.16 0.167 84%
Non Operating Income/Expense 0.013 -0.005 -0.018 -138%
Non Operating Interest Income 0 0 0 0%
Equity in Affiliates (Pre Tax) 0.005 0.001 -0.004 -80%
Interest Expense 0.169 0.175 0.006 4%
Pretax Income -0.476 -0.39 0.086 61%
Income Tax -0.027 0.12 0.147 112%

Consolidated Net Income -0.449 0.22 0.669 122%

Minority Interest Expense 0 0 0 0%
Net Income -0.449 -0.22 0.229 78%

EBITDA -0.036 0.141 0.177 114%

Chart.6

36
 CWK
8
6.92
7 6.22
5.91
6 5.34
5
4
3
2
0.878 1.01
1 -0.449 -0.22 -0.036 0.141
0
Sales COGS Gross Income Net Income EBITDA
-1

2016 (In Billions) 2017 (In Billions)

Fig.6

Inferences

• Gross income has increased more as compared to sales which implies that the
other expenses like COGS and CAPEX is less.
• In 2018 the company incurred non operating expenses as compared to income in
previous year.
• Equity expenses have reduced which is not a good sign for the company as
shareholders won’t be satisfied.
• Net income and EBITDA have increased in good amount which is a good sign for
the company

37
Financial analysis of CBRE in comparison to CWK

• CBRE as well as CWK are old and well known companies in the real estate
sector.
• CBRE has better financials than CWK because for all the 3 years
(2015, 2016, 2017) CWK EBITDA is in negatives where as for CBRE EBITDA
was in billions.
• CBRE gross incomes are much higher (2015- $ 3.46B, 2016- $ 3.58B, 2017- $
3.91B) than its competitor CWK (2015- $ 651M, 2016- $ 878M, 2017- $ 1.01B)
which shows the position of the companies with respect to each other.
• CBRE equity expenses are higher than CWK by 208 million which shows that
CBRE growth is good and it can afford the expenditure of giving dividends to its
shareholders.
• Net income of CWK is in negative for all three years (2015- $ {473M}, 2016- $
{449M}, 2017- $ {220B}) but in the case of CBRE (2015- $ 547M, 2016- $
571M, 2017- $ 691M) is growing at a high rate.
• EBITDA for CWK is improving as in 2017($ 141M) compared to in 2016 $ (36)
M and in the case of CBRE it is far better than its rival CWK and growing with a
high percentage (15% on average).

Findings:

On conducting secondary research on the financial performance of CBRE Ltd., and

comparing it with Cushman & Wakefield (CWK), it has been found that CBRE is
doing financially well and is able to give better returns to it shareholders year on year
from the period of 2014 to 2018. Cushman & Wakefield on the other hand has not
been performing as well as CBRE and in fact has been incurring repeated losses
year on year. During 2016 – 2017 it has shown signs of improvement and has
managed to cover costs but increasing High Costs still remain a problem for CWK as
its COGS have been increasing year on year as well along with a similar increase in
sales.

38
 CONCLUSION

CBRE is a well-known company in real estate consultancy sector. It has a huge

customer base. Its business is increasing at a respectable rate. CBRE is doing
very well in terms of financials as compared to its [Link] financials are
bad as in 2015, 2016& 2017 its net income is in negative. In comparing the two
companies, it can be concluded that CBRE is performing at a much more
financially stable position than CWK. Consistent profits and an ever-increasing
value to shareholders means that CBRE is much more lucrative to investors as
compared to CWK. CWK is improving year on year but because of the large size
of its investments it has not been able to cover its costs, as costs have also been
increasing year on year at a rate of 11%. This is the main reason why CWK has
been incurring losses for the past few years. In 2017, CWK has managed to
reduce its losses and in 2018 it is expected to further shorten this negative gap.

CBRE on the other hand has been performing tremendously well financially.
From 2015 to 2016, while it was having a positive net income, the overall growth
did slow down to 4%, but in 2017, there was a considerable growth of 21% in net
income. This shows that CBRE is very financially successful. Through this project
it was aimed to analyze the financial position of CBRE and compare it with a
similar company such as CWK. On comparing, it can be concluded that CBRE is
financially more secure and growing than CWK and CWK need to cover their
huge costs before they can be more profitable.

39
 BIBLIOGRAPHY

• Dr.N. Kanthirvel, John.V. Sugumaran, ISSN 2277 3630, Emerging trends in

real estate investment in India

• SayaliSandbhor, RavindraBapat, N. B. Chaphalkar - Analysis of Behavior of

Real Estate Rates in India

• Mumbai Real Estate Report: update 2012, Retrieved from

[Link]
content/uploads/2012/02/[Link] - 26/11/2012.

• D. Ambika (2014), influence of real estate industry on national economic

growth, Retrieved from
[Link]

• Nest Fest (2014), Retrieved from [Link]

amuratechnologies-kolte-patil-team-up-to-sell-luxury-real-estate-online

• Online Property Buying Behavior (2015), Retrieved from

[Link]
online/2/

• Market watch
[Link]

40