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CBRE Shells Out $290M to Buy FacilitySource from Warburg


CBRE Group Inc. CBRE has announced the acquisition of the procurement and facilities management solutions provider — FacilitySource, LLC — from Warburg Pincus. The company has shelled out approximately $290 million in cash for this acquisition, which is expected to considerably boost the delivery of integrated solutions to occupier clients.

Founded in 2005, FacilitySource has carved a niche for itself over the years with its proprietary SaaS technology platform. The company’s services are based on advanced analytics competencies that use performance data, collected over a long period across $3 billion of annualized spending.

In fact, with operation centers in Columbus, OH, and a back-office support center in Phoenix, AZ; FacilitySource supports more than 120,000 client sites throughout the nation for facilities management services, capital-improvement and energy-management projects. The company particularly focuses on large multi-site portfolios.

Hence, the acquisition of FacilitySource seems a strategic fit for CBRE. Per the company, the buyout will aid in building “a tech-enabled supply chain capability that is unique in the occupier outsourcing industry” while around 550 professionals and more than 25,000 qualified service providers will join CBRE Group’s platform.

Notably, CBRE Group has banked on strategic in-fill acquisitions to widen its geographic coverage while expanding and reinforcing 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. As market conditions continue to improve, we believe, these opportunistic acquisitions and strategic investments will likely serve as growth drivers, driving its organic growth.

Further, with an increasing trend of real estate occupiers turning to outsourcing and its market-leading position, CBRE Group remains well poised to continue experiencing a flourishing trend in this business line.

Currently, CBRE Group has a Zacks Rank #3 (Hold).

The company’s shares have increased 14.4% in the past six months against its industry’s decline of 0.1%.

Stocks to Consider

A few better-ranked stocks from the same space are Colliers International Group Inc. CIGI, Jones Lang LaSalle Inc. JLL and Vonovia SE Unsponsored ADR VONOY. All the stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Colliers International’s Zacks Consensus Estimate for 2018 earnings moved 5.9% north to $3.60 in two months’ time.

Jones Lang LaSalle’s Zacks Consensus Estimate for the current year has risen 4% to $10.29 in the past two months.

The Zacks Consensus Estimate for 2018 earnings of Vonovia moved up marginally to $1.19 over the past two months.

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