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CBRE Expects Its BTR Development Business To Boom This Year

CBRE CEO Robert Sulentic

When CBRE bought UK housebuilder Telford Homes in 2019 for £267M, a lot of people were surprised. Brokerages typically don’t buy listed developers, and CBRE beat competition from some big private equity firms to acquire the company.

But CBRE Chief Executive Bob Sulentic expects the surprise acquisition to bear fruit this year.

Telford Homes was in the process of pivoting from a traditional company building homes for sale to a specialist build-to-rent developer when it was bought. CBRE incorporated it into its Trammell Crow development subsidiary and used it as a platform to expand into the UK and European development business. 

Speaking after the company’s full-year 2020 results earlier this week, Sulentic said the company expects earnings from its UK BTR platform to expand dramatically in 2021.

“For our UK multifamily development business, we expect the pace of construction to pick up as COVID restrictions lift,” he told analysts on a post-results conference call. “As a result, we are forecasting this business to produce around $15M more in adjusted EBITDA than the $3M contribution it generated in 2020.”

When CBRE bought London-listed Telford in 2019, it had a pipeline of 4,900 build-for-sale homes with a potential end value of £1.6B, and a pipeline of 1,422 BTR units it did not put a value on.

Asked about M&A opportunities in 2021, Sulentic again pointed to the success of the acquisition, and he said CBRE has already used it as a springboard to expand into new areas of European development.

“I am going to highlight one that surprised everybody one-and-a-half years ago when we did the Telford Homes acquisition in the UK,” he said. “That was an area where we came in. We realized that there was a real need for institutional quality, multifamily housing in London that wasn’t being fulfilled. We had the opportunity to buy that business. We love the long-term profile of that business, and now we’re using our presence there to expand into industrial development in the UK and Europe.”

The latter point refers to an announcement this week that CBRE has hired European logistics development veteran Ian Worboys to lead an expansion of Trammell Crow into European logistics development. 

The firm plans to open offices this year across major European markets, including the Czech Republic, Germany, France, UK and Spain, with additional expansion throughout Europe envisioned.

“We are seeing tremendous demand from U.S.-based capital partners and occupiers for logistics facilities across Europe and are assembling an experienced team under the highly regarded Trammell Crow brand to meet this exploding demand,” Sulentic told analysts.