It's official. CB Commercial Real Estate Services Group and REI Ltd., the holding company for all of Richard Ellis operations outside the United Kingdom, have completed their merger and created a huge international real estate services company. On May 4, the companies announced that they now will operate as CB Richard Ellis, a global real estate services firm with more than 8,000 employees in 200 principal offices in 29 countries.
The new company says its size and international scope position it to take advantage of the considerable potential for growth in today's global business arena. "Whether it's in the United States or around the world, we are where our clients want us to be," says CB Commercial Chairman and CEO Jim Didion, who assumes the same posts at CB Richard Ellis. "We're excited to have created the first commonly owned, commonly managed global real estate services firm."
Barry White, REI's chief executive who now serves as vice chairman of the new company's Global Operations Management Board, echoes Didion's enthusiasm about CB Richard Ellis. "This is a great time to be in the real estate services business and a great time for Richard Ellis to join with CB Commercial," White says. "CB Richard Ellis provides our professionals with the best possible platform to deliver service and [provides] our clients with the most comprehensive portfolio of corporate real estate and investment services available anywhere.
He had hoped that Richard Ellis Group Ltd. (REGL), which handles Richard Ellis' business inside the United Kingdom, also would join CB Richard Ellis, but REGL instead has chosen to merge with Insignia/ESG. (In the United Kingdom, CB Richard Ellis conducts business under the name CB Commercial Ltd.)
Still, the combination of CB Commercial's 147 offices in the United States, Canada and Mexico with REI's offices in Europe, Africa, South Africa and the Asia-Pacific region, creates a truly global operation, the principals say. "As one company, CB Richard Ellis is much more than a loose association or network of separately owned firms," Didion stresses. "It's a real marriage born of common vision and philosophy about the best way to help clients navigate the increasingly complex world of real estate decision-making. All of our clients should benefit from the merger, no matter their size or the scale of their requirements."
CB Richard Ellis "views the potential for growth in today's global business arena as considerable" as companies continue to outsource their noncore activities such as real estate. "The initial drive to outsource was to lower costs, but the concept has evolved to reflect the recognition that quality and continuity of service must be dominant considerations," Didion says.
Also, as the globalization of real estate capital markets picks up speed, service firms will be even more necessary and sought after as offshore activities become a common part of real estate investors' strategies, CB Richard Ellis says.
"Institutional investment generally, and real estate investment specifically, is increasingly viewed in a global context," White says. "CB Richard Ellis is able to service cross-border real estate investors with on-the-ground experience and a global-service capability that are unequaled in the industry."
The newly created CB Richard Ellis is the largest vertically integrated commercial real estate services company in the world, based on revenues, transaction volume, staff and company-owned principal offices. In 1997, CB Commercial had revenues of $730 million, and Richard Ellis reported revenues of about $119 million. CB Richard Ellis, based in Los Angeles, will continue to be listed on the New York Stock Exchange under the symbol "CBG."
As for the firm's new name, Didion says CB Richard Ellis offers the best of both worlds. "The name CB Richard Ellis was a natural," he explains. "It allows us to take advantage of two already-well-established brand names in a way that creates immediate positive recognition around the world. The CB Richard Ellis name also communicates our expanded market strength and capabilities, and it assures clients of both firms that the service they have come to depend on will continue and, in fact, be further enhanced. CB Richard Ellis' global client list includes AT&T, American Express, Bank of America, Bristol Myers Squibb, Chase Manhattan, Ford, General Motors, IBM, Nortel and Whirlpool.
Meanwhile, the new firm has selected four people to head CB Richard Ellis' geographical business units. They are Ray Wirta, North America; Barry White, Europe; David Runciman, Asia; and Francis Pons, South America. Wirta came from CB Commercial, and White, Runciman and Pons had been with Richard Ellis.
In a housekeeping matter the new firm says is in the interest of common branding, its property management arm, which had been operating as CB Commercial/Koll Management Services, now operates under the CB Richard Ellis name. The firm manages more than 200 million sq. ft.