Shares in the world’s largest office space and commercial real estate advisors have dramatically dropped by 37% in the last week as fears over the decline in the property market take their toll.
CB Richard Ellis’ gross debt of $2.5bn is a huge contributing factor to almost a third of the office space giant’s value disappearing in a working week. Shares were at $13.37 when trading closed on 30th September and were trading at a 4-year low on the New York Stock Exchange by the afternoon of October 8th. This is a huge step up from 3 years ago when they recorded a debt of $577m (£329m).
The office space and commercial real estate services company is now valued at $1.7bn (£1bn) and on 7th October Citi analysts raised the risk raiting of CB Richard Ellis from ‘high’ to ’speculative’ saying: ‘We believe a speculative risk rating is justified because of the significant deterioration in the commercial real estate market arising from the recent credit crunch, the possibility that fundamentals are getting worse, and CBRE’s high levels of debt and the risk that the company could breach its debt covenants – leading to a possible dilutive equity event or refinancing at higher interest rates.’
CB Richard Ellis are not the only office space company to suffer from the share drop this week; their main rival and key player in the office space market, Jones Lang LaSalle also saw their prices plunge on the New York Stock Exchange. With a 23% drop Jones Lang LaSalle were not hit so hard, their shares fell from $43.48 to $33.18.
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