It has been a rough week, a rough month, and a rough year for Los Angeles-based CB Richard Ellis Group Inc., the largest real estate services firm in the world.

The company, a commercial brokerage powerhouse, has seen its stock price walloped in recent times. The numbers are certainly ugly.

Shares of CB Richard Ellis lost 32 percent of their value last week to close at $4.54 on Oct. 23. The stock is down 79 percent year-to-date.

To state the obvious: The company has been zonked by the real estate downturn. With the paralysis of credit markets, fewer real estate transactions from investment sales to leases have been closing. That means less work for brokers. Anthony Paolone, a J.P. Morgan analyst, wrote in an Oct. 20 report that he expects a 65 percent year-over-year decline in sales commissions for CB Richard Ellis in North and South America in the second half of 2008.

Paolone gives the stock a "neutral" rating, even though he sees the stock as having been punished and calls the company a top-notch franchise.

In a poll of eight analysts that included Paolone, one analyst rated the company a buy and the rest rated it a hold, according to Bloomberg News.

In addition to the impact of the real estate slowdown, the company is encumbered by $2.1 billion in debt covenants. The company had to take on debt to make its $2.2 billion purchase of Trammell Crow Co. in 2006.

Steven Iaco, a CB Richard Ellis spokesman, said in a statement that the company's earnings and cash flow have been sufficient to meet all debt covenants.

"All year, we have managed the company on a prudent basis and moved to align our expenses with weakening market conditions," he said.

One of the ways the company weathered the down market was to cut costs. That came in the form of an undisclosed number of layoffs, including some in the Los Angeles area.

CB Richard Ellis will release its third quarter financial results in early November.

Industrial Sale

Torrance-based industrial and commercial developer Storm Properties Inc. has sold a 16-building portfolio of industrial properties in an off-market deal with TA Associates Realty of Boston for about $54 million. The 545,000-square-foot portfolio, which traded in September, includes 10 Los Angeles County properties, three San Diego County properties and three Riverside County properties.

Though the industrial sector has been hit by a decline as the general economy suffers, the countywide industrial vacancy rate was 2.3 percent in the third quarter, still incredibly low on a historical basis.


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