Someone recently suggested to me that CBRE was at risk of going out of business. I am not sure if there is much, if any, truth to that but I figured the answer probably lie in their balance sheet. Buying Trammell Crow Company at what in retrospect was an absolute market peak in late 2006 for $2.0B, may turn out to be the albatross around their neck. And they levered up to buy it. Oops. CB's market cap right now is roughly $930mm.
Let's look at the debt on book. The debt on the book mainly consists of the following:
1) A $600mm credit revolver due June 24, 2011
2) $1.1B tranche A term loan due December 20, 2011, with payments starting March 31, 2009
3) $1.1B tranche B term loan facility due December 20, 2013, with quarterly payments due. Quarterly debt service payments are $2.75mm.
4) A $300mm tranche A-1 term loan facility, with balance due December 20, 2013. Quarterly debt service payments total $0.75mm.
Looks like 2011 ($1.7B) and 2013 ($1.4B) are the big debt maturity dates for them. These dollars don't include any compounded interest that will increase the principal balances to be paid. As of their latest 10Q dated June 30, 2008. They had ~$275mm in cash ($24mm restricted). This help them carry the firm for a little time. However, negative CF from operations for the first 6 months of the year totaled $380mm. The burn rate is high and cash on hand only gives them another 2 quarters at this rate. I am not sure all of the specific loan convenants but they may be at risk of making debt service payments and MAY already be at risk of busting through some loan covenants and getting into technical default.
They have some operations that have real value such as CBRE Investors and Trammell Crow Company development but sales of their best operations may not be enough to plug the hole. I have not dug in that deeply, but the balance sheet looks quite risky.
Subscribe to:
Post Comments (Atom)
1 comment:
This company is in financial ruin. Not the least of which is related to their fraudulent and illegal transactions whereby they violate Real Estate Ethics laws and rules by housing the appraisal division in the same building as their sales force brokers. Threatening Charlotte, NC regulators into putting them on every approval list for fee appraisers that they can, after having been taken off because of violations to ethics behavior back in 1998 and again in 2000 is also another example of fraudulent and illegal behavior.
They botched a multi-million dollar appraisal on Atlantic Station in Altanta costing the state over 10 million dollars in tax payer dollars, and the appraisers walked and the state ignored their presence.
This company is not just in trouble financially, when the regulators coming knocking, the perp-walks will begin.
C3
Post a Comment