CBRE Group Agrees To Acquire 49% Stake In Malaysia's WTW

CBRE Group Inc. (NYSE:CBG) has inked a deal to buy a 49% stake in Malaysia’s real estate services provider – C H Williams Talhar & Wong Sdn Bhd, WTW Real Estate Sdn Bhd and WTW Property Services Sdn Bhd (“WTW”). The terms of the deal were not disclosed.

Expected to close in second-quarter 2016, this acquisition would result in the business being rebranded as CBRE | WTW. It would be led by the present leaders of WTW – Mr Foo Gee Jen and Mr Danny SK Yeo.

WTW was founded in 1960 and offers valuation, market research, consultancy, estate agency, project marketing, corporate real estate and property management services. It has 13 offices in Kuala Lumpur, Petaling Jaya, Penang, Johor Bahru, Kuantan, Malacca, Ipoh, Alor Setar, Kota Bahru, Butterworth, Batu Pahat, Kuala Terengganu and Seremban.

This deal for a 49% stake acquisition seems a strategic fit given the opportunity to unite WTW’s valuation, agency and capital markets’ proficiency with CBRE’s full-service offering. Together with CBRE’s occupier outsourcing business, this broader platform in Malaysia is expected to provide an edge to CBRE in that part of the world.

Importantly, the liberalization of capital inflows into the ASEAN Economic Community is expected to lead to an increase in economic and investment activities in Southeast Asia, and Malaysia is well poised to leverage on this trend. In fact, the Malaysian Economic Transformation Programme is estimated to generate $400 billion in investments by 2020. With these in the background, the stake is expected to open up scope for CBRE to capitalize on market opportunities.

As a matter of fact, CBRE’s occupier outsourcing business, also called Global Workplace Solutions, caters to a premium list of occupiers from a vast array of industries, ranging from financial services, healthcare, life sciences, to industrial/manufacturing, technology and telecommunications. In fact, around 5.2 billion square feet of commercial property and corporate facilities throughout the world are under the company’s management.

Going forward, CBRE’s extensive real estate products and services offerings; improved leasing, property sales and outsourcing business; strategic buyouts; investments in people and a healthy balance sheet are expected to drive its results. Yet, competition from international, regional and local players, its exposure to unfavorable foreign currency movements and uneasiness in certain global economies are concerns before CBRE.

Currently, CBRE carries a Zacks Rank #3 (Hold). Investors interested in the real estate industry can however consider better-placed stocks like Brookfield Asset Management Inc. (NYSE:BAM) , HFF Inc. (NYSE:HF) and Re/Max Holdings Inc. (NYSE:RMAX) . While Brookfield Asset Management and HFF hold a Zacks Rank #1 (Strong Buy), Re/Max carries a Zacks Rank #2 (Buy).


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