Tuesday 20 February 2018

Ryanair chairman does deal to form one of the biggest real estate firms

This is the latest deal to be done by dealmaker David Bonderman
This is the latest deal to be done by dealmaker David Bonderman

Ed Hammond

Ryanair chairman David Bonderman's TPG Capital agreed to buy Cushman & Wakefield, the largest closely held commercial-property brokerage, for about $2bn (€1.78bn) including debt and merge the company with its DTZ unit.

Exor, the Agnelli family's Italian holding company, will generate net proceeds of $1.28bn by selling a 75pc stake in Cushman, according to a statement Monday. Combining Cushman with DTZ will create a real estate services firm with an estimated $5.5bn in annual revenue operating under the Cushman name, which has almost 100 years of brand equity.

The deal is the latest to be done by Mr Bonderman, who has been Ryanair chairman since 1996.

In Ireland, Sherry FitzGerald is part of the DTZ network, whle Lisney is affiliated with Cushman & Wakefield.

"It's fantastic that it's under the Cushman & Wakefield name, which has been an iconic name in the industry for many years," Carlo Barel di Sant'Albano, Cushman's international chief executive, said in a telephone interview. "We will have better capabilities globally."

A combination of New York-based Cushman and DTZ will create a global company that will be ranked third in the industry, behind Jones Lang LaSalle, which has $5.8bn to $5.9bn of annual revenue, said Brandon Dobell, an analyst with William Blair & Co. CBRE will remain top, with revenue that may top $14bn, he said.

Creating a brokerage with that heft has been a goal for Brett White, a former CBRE CEO who will have the same title at the combined Cushman and DTZ.

"The thesis we developed at TPG was that there was a real opportunity to break up what seemed to us to be a duopoly at the top," White said in a phone interview. "There's nothing that we're going to do that's going to change the fortunes of CBRE or JLL -- they're wonderful companies. But we do think the market has been asking for and needs a third real choice."

Unlike its larger competitors, the new Cushman will have the "agility" that comes with being closely held, including the ability to deploy capital without the bureaucracy associated with public companies, White said. An initial public offering might be an option "at some point in our future," once the transition is complete, he said.

The joint company will have more than 43,000 employees, Cushman said in a separate statement Monday. Exor said the deal represents a capital gain of about $722m for its stake in Cushman. The transaction is expected to be completed in the fourth quarter.

TPG, based in Fort Worth, Texas, bought DTZ late last year. In January, DTZ completed the acquisition of Cassidy Turley, a brokerage with strength in the Americas, creating a global top-three commercial real estate services firm. The combined company has about $2.9bn in annual revenue, according to a statement at the time.

DTZ had a market share for commercial property sales of more than 50pc in China and was ranked third in that category in the UK, according to the January statement.

Cushman reported revenue of $2.85bn last year. Net income rose 33pc to $61.6m from the previous year. Fee and service revenue from the Asia-Pacific region climbed 25pc.

Cushman & Wakefield came into existence in 1917 when brokers J. Clydesdale Cushman and Bernard Wakefield took over a New York real estate firm that had been owned by John de Saulles, a one-time Yale University football hero who had been murdered. The firm traces its roots to the 1820s, when London brokerage Healy & Baker, which would eventually become Cushman's European operation, was started.

"If you're with Cassidy, and your business card went to DTZ and now it changes to Cushman, you just hit the lottery," said Mitch Germain, an analyst with JMP Securities. "They've been around forever and the Cushman name carries a lot of prestige." (Bloomberg)

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