CBRE Enhances, Differentiates Data Center Capabilities with Acquisition of Direct Line Global

Rhea-AI Summary

CBRE Group announced its acquisition of Direct Line Global, a leading provider of data center infrastructure services for major technology companies. The acquisition is expected to enhance CBRE's earnings-per-share immediately and bolster its data center capabilities. Direct Line Global offers design, installation, and maintenance solutions, primarily in the U.S., and has significant operations in both the U.S. and Asia. The acquisition is seen as beneficial due to the growing demand for data and AI. Direct Line Global will operate under CBRE’s Data Centers Solutions business.

Positive

• Acquisition expected to be immediately accretive to CBRE’s core earnings-per-share.
• Enhances CBRE’s data center capabilities with best-in-class technical services.
• Expands CBRE’s market reach in the rapidly growing $30 billion data center support services market.
• Strengthens CBRE’s global platform with Direct Line Global’s operations in the U.S. and Asia.
• Supports CBRE’s strategy to benefit from the increasing digitization of the global economy.

Negative

• Potential integration challenges between CBRE and Direct Line Global operations.
• Financial risk associated with the high-growth expectations of the data center market.
• Dependence on the continued rapid growth of the hyperscale and AI markets.

Insights

Financial Analyst

The acquisition of Direct Line Global by CBRE Group, Inc. is significant as it is expected to be immediately accretive to CBRE’s core earnings-per-share. This implies that the deal will enhance CBRE's profitability from the outset, which is promising for shareholders. The data center support services market is forecasted to grow at an annual rate of 16% through 2028, suggesting a robust demand trajectory. This growth can bolster CBRE's financial performance in the coming years, enhancing long-term shareholder value.

From a financial perspective, integrating Direct Line Global's technical capabilities with CBRE's existing facilities management services could lead to operational synergies. These synergies may result in cost savings and revenue growth, potentially driving higher margins. However, investors should be aware of integration risks that might affect short-term performance.

Overall, the acquisition aligns with CBRE's strategy to tap into sectors benefiting from digital transformation, providing an appealing growth outlook for investors.

Tech Expert

Direct Line Global brings a wealth of technical expertise in the data center infrastructure domain, enhancing CBRE's overall service offering. This acquisition allows CBRE to provide end-to-end integrated data center solutions, from design and installation to maintenance and management. In today's digital age, data centers are pivotal for supporting the exponential growth in data consumption and the rise of technologies like artificial intelligence (AI) and machine learning (ML).

Adding these capabilities positions CBRE to better serve leading technology companies, ensuring they can meet the demands of hyperscale data centers. This move could differentiate CBRE in a competitive market, making it a more attractive partner for firms looking for comprehensive data center solutions.

However, the successful integration of these new capabilities into CBRE's existing operations will be crucial. Investors should monitor how seamlessly CBRE can incorporate Direct Line Global’s services to leverage its full potential.

Market Research Analyst

The acquisition is strategically favorable, considering the expected growth in the data center market driven by increasing data needs and AI advancements. The data center support services market, valued at approximately $30 billion, is poised for significant expansion. This acquisition positions CBRE to capitalize on the expected 16% annual growth rate, potentially expanding its market share.

Direct Line Global’s established presence in key markets like the U.S. and Asia Pacific enhances CBRE's geographic footprint. This expanded reach is likely to attract new clients and increase revenue streams. Furthermore, Direct Line Global's existing relationships with major technology firms can be leveraged to cross-sell CBRE’s broader array of services.

In the long term, CBRE's enhanced capabilities and expanded service offerings could drive sustained revenue growth and solidify its market leadership in the data center sector.

DALLAS--(BUSINESS WIRE)-- CBRE Group, Inc. (NYSE:CBRE) today announced the acquisition of Direct Line Global, a premier provider of mission-critical data center infrastructure for the world’s leading technology companies, from Guardian Capital, a private equity firm. The acquisition is expected to be immediately accretive to CBRE’s core earnings-per-share.

Founded in 1997, Direct Line Global provides design, installation, maintenance and management solutions for data center owners and operators, primarily in the U.S. It is focused on serving the world’s largest global technology companies across the hyperscale market, which is growing rapidly, co-location and enterprise segments.

The global market for data center support services is estimated to be approximately $30 billion and is expected to grow at 16% per year through 2028.

“This acquisition fits squarely with our strategy of enhancing our capabilities in asset classes that benefit from secular tailwinds – in this case, the increasing digitization of the global economy,” said Vikram Kohli, chief operating officer of CBRE. “Direct Line Global perfectly complements our existing data center management capabilities and provides us with best-in-class technical capabilities that differentiate our service offering.”

Direct Line Global provides technical services, such as server support infrastructure, while CBRE currently focuses on facilities management services. Combining the two gives CBRE the ability to deliver integrated data center solutions that no other service provider can match.

“We see huge benefits from operating as part of CBRE,” said Bill Nelligan, chief executive officer of Direct Line Global. “Our business has strong momentum, driven by the economy’s voracious appetite for data and artificial intelligence’s explosive growth. We are particularly energized about the opportunities that CBRE’s preeminent global platform will afford us for overseas growth.”

Direct Line Global has grown significantly since Mr. Nelligan became CEO in 2021. The company, based in Fremont, CA, has more than 1,000 employees including significant operations in northern Virginia with additional operations in Hong Kong, the Philippines, Singapore and South Korea.

Direct Line Global will operate as part of CBRE’s Data Centers Solutions business within the Global Workplace Solutions business segment.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

About Direct Line Global

Direct Line Global, based in Fremont, CA, is a leading technology infrastructure services provider enabling mission-critical data center infrastructure for the world’s technology leaders. Direct Line Global’s 1000+ skilled technicians deliver over 1000 projects annually across data center markets in the US and Asia Pacific. The company has proven success in the deployment of next-generation infrastructure technologies across the data center lifecycle – from design & planning, install & build through Day 2 maintenance, technology upgrades & retrofits, including delivering the latest wave of AI/ML platforms.

Forward-Looking Statements

Certain of the statements in this release regarding CBRE’s acquisition of Direct Line Global that do not concern purely historical data are forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Accordingly, actual performance, results and events may vary materially from those indicated in forward-looking statements, and you should not rely on forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in forward-looking statements, including, but not limited to, the further development of the market for data center services and the ability to operate Direct Line Global in conjunction with CBRE’s existing data center business, as well as other risks and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (SEC). Any forward-looking statements speak only as of the date of this release. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. For additional information concerning factors that may cause actual results to differ from those anticipated in the forward-looking statements and other risks and uncertainties to our business in general, please refer to our SEC filings, including our Form 10-K for the fiscal year ended December 31, 2023, and our Form 10-Q for the period ended March 31, 2024. Such filings are available publicly and may be obtained from our website at www.cbre.com or upon request from the CBRE Investor Relations Department at investorrelations@cbre.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240618907734/en/

Steve Iaco

CBRE-Media

212.984.6535

Steven.Iaco@cbre.com

Chandni Luthra

CBRE-Investors

212.984.8113

Chandni.luthra@cbre.com

Source: CBRE Group, Inc.

FAQ

What company did CBRE acquire?

CBRE acquired Direct Line Global, a provider of data center infrastructure services.

When did CBRE announce the acquisition of Direct Line Global?

CBRE announced the acquisition on the date of the press release.

How will the acquisition of Direct Line Global affect CBRE's earnings?

The acquisition is expected to be immediately accretive to CBRE’s core earnings-per-share.

What services does Direct Line Global provide?

Direct Line Global provides design, installation, maintenance, and management solutions for data centers.

How large is the global market for data center support services?

The global market for data center support services is estimated to be approximately $30 billion and is expected to grow at 16% per year through 2028.

What is the significance of the acquisition for CBRE?

The acquisition enhances CBRE's data center capabilities and supports their strategy to benefit from the increasing digitization of the global economy.