CB Richard Ellis Group Inc. (CBG), the world’s largest commercial real estate services company (on the basis of 2010 revenues), has recently consolidated its strategic alliance with the United States Postal Service (USPS), an independent agency of the U.S. government for providing postal service across the country, by forging an exclusive deal to serve as its sole provider of corporate real estate solutions.
Under the terms of the agreement, CB Richard Ellis will facilitate transaction management services for USPS, including leasing and asset sale across its portfolio of approximately 35,000 facilities totaling over 300 million square feet. Although no dollar value was assigned to the new contract, sources familiar with the deal opine that it would involve approximately 200 transactions annually.
USPS has historically employed multiple real estate service providers, including CB Richard Ellis, with which it was associated since 1997. However, over the past few years, USPS was mulling to consolidate and streamline its real estate operations under a single service provider due to budgetary constraints owing to federal deficit. Consequently, CB Richard Ellis bagged the exclusive contract from the postal company with its broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.
The deal offers CB Richard Ellis an opportunity to cement its ties with one of the leading postal service providers of the country. The market dislocations have also resulted in newer opportunities for the company such as distressed assets marketing and service of failed commercial mortgage-backed securities loan funds, which in turn would further enable it to drive its growth engine.
CB Richard Ellis is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management. The company has a hard-to-replicate intellectual capital and technology resources that develop and deliver superior analytical, research and client service tools to its professionals enabling it to meet diverse client needs.
Currently, we maintain our long-term ‘Neutral’ rating on CB Richard Ellis, which presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months. We also have a ‘Neutral’ rating and a Zacks #4 Rank (short-term ‘Sell’) for NorthStar Realty Finance Corp. (NRF), one of the peers of CB Richard Ellis.
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