CBRE To Buy Telford Homes, Taps U.K. Housing Rental Market
Zacks Investment Research | Jul 05, 2019 07:52AM ET
CBRE Group, Inc. (NYSE:CBRE) recently announced its plans to purchase all the issued and to-be-issued shares of Telford Homes Plc. Telford is a well-known developer of multifamily residential properties in London, with a development in-process portfolio (total project cost) worth $1.66 billion.
Per the terms of the deal, Telford shareholders will receive $4.41 per share in cash, thus, valuing Telford at $336.9 million. CBRE has announced a bridge acquisition facility to confirm the availability of financial resources, however, it intends to fulfill the offer through a combination of cash on hand and availability under its revolving credit facility.
The acquisition will enable CBRE to expand its highly successful Trammell Crow Company real estate development business in the U.K. and Europe. In fact, Trammell Crow Company has achieved impressive earnings growth over the past five years, as well as produced robust returns for its capital partners.
The acquisition is expected to conclude in third-quarter 2019, upon which, Telford will operate as part of the Trammell Crow Company. Its financial results will be reported in CBRE’s Real Estate Investments business segment.
Importantly, the transaction is subject to customary regulatory approvals. While Telford’s board has committed to vote in favor of the proposal, the deal requires at least 75% of the company’s shareholders to vote in the deal’s favor.
Notably, Telford is focused on development of middle-market build-to-rent properties in London. Greater affordability relative to for-sale housing properties and limited supply is shifting inclination from home ownership to renting. This is fueling the rental housing market’s growth in Britain, which is in its nascent stage as compared to the renter-housing market in the United States that has flourished over the decades.
In fact, for the 12-month period ended Mar 31, 2019, Telford generated revenues of nearly $446 million and pre-tax profit of $50 million.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 4%, as compared with the Zacks Investment Research
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