Whether they expected the climate to turn in just one week is unclear, but after a two-day meeting earlier this week with the executive committee, the international real estate services company announced this morning (Wednesday) the workforce reductions will indeed occur, due to "a recent decline in revenues congruent with the overall decline of commercial real estate activity."
CEO Ray Wirta explained the situation in a prepared statement saying, "In the latter part of the first quarter of 2001, our business was adversely affected by a slowdown in the U.S. economy in general, and certain local and regional U.S. economies in particular, which have led to deteriorating commercial real estate market conditions."
A CBRE source tells GlobeSt.com that most of the savings will come from not filling vacant positions, many of which were budgeted to be filled in the coming months. In addition, the company said cutbacks would include smaller bonuses for executives, cutbacks in discretionary spending and continued streamlining of its back-office operations.
The company's stated plan is to complete the retrenching by Sept. 31, the end of the third quarter. As a result, the company expects savings of between $35 million and $40 million this year, excluding unspecified one-time severance costs. The news comes on the heels of a first-quarter net loss it attributed to softening international revenues and a drop in real estate activity by its corporate clients.
Shares of CB Richard Ellis were off 34 cents at $14.56 in afternoon trading on the New York Stock Exchange. The company is in the midst of a $350-million buyout whereby members of senior management, Ray Wirta, CEO, and Brett White, Chairman, together with director, Fred Malek and directors, Richard Blum, Bradford Freeman and Donald Koll and their respective affiliates will acquire all of CBRE's outstanding shares (which they do not already own) at a price of $16 per share.
The individuals are making the acquisition through the entities CBRE Holding Inc. and Blum CB Corporation. Blum announced Wednesday it plans to finance the deal partly through a private sale of $175 million in 10-year senior subordinated notes.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
