CBRE hopes for Telford turnaround after Q4 loss
CBRE is expecting renewed growth at its Telford Homes business after writing down “a handful” of projects and posting a $43m (£35.8m) loss in the division during the final months of 2022.
Chief financial officer Emma Giamartino said remediation costs linked to the UK’s Fire Safety Act were behind a $140m reserve for the business in the fourth quarter.
“What’s important to know about that is that is our best estimate of what we think the cost will be to remediate those [buildings],” she added on an earnings call. “But the actual cash outflow to remediate those issues across those buildings will be over a very long period of time. We view that as an isolated anomalistic issue that’s occurring across all homebuilders in the UK.”
CBRE is expecting renewed growth at its Telford Homes business after writing down “a handful” of projects and posting a $43m (£35.8m) loss in the division during the final months of 2022.
Chief financial officer Emma Giamartino said remediation costs linked to the UK’s Fire Safety Act were behind a $140m reserve for the business in the fourth quarter.
“What’s important to know about that is that is our best estimate of what we think the cost will be to remediate those [buildings],” she added on an earnings call. “But the actual cash outflow to remediate those issues across those buildings will be over a very long period of time. We view that as an isolated anomalistic issue that’s occurring across all homebuilders in the UK.”
CBRE completed its £267m acquisition of Telford in 2019, folding it into its Trammell Crow Company subsidiary. Jon Di-Stefano, Telford’s chief executive for more than a decade, left the business in mid-2022.
Following the hit from the Covid-19 pandemic, CBRE has now revaluated Telford’s pipeline, Giamartino said, writing down the value of some projects.
“We have a number of Covid slowdowns that we’ve talked about over the past number of years within Telford specifically,” she said. “What we did in Q4 is evaluated all of our projects. We saw that we impaired a number of assets, and we took a $43m loss in Q4. For the full year, it was just shy of $50m.
“We believe that that’s contained, that’s a very good estimate of the value of those assets going forward, and that we’re at an inflection point.
“We expect under new leadership and with the tailwinds behind UK build-to-rent, that business will continue to grow.”
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