Savills, a prominent property agency founded in the UK in 1855, has recently reported H2 results that exceeded expectations, driven by strength in less transactional businesses and prior restructuring efforts. The company saw a 30 basis-point margin improvement, improved earnings per share, and cash generation, leading to a proposed 12% dividend increase.
One of the major strategic developments for Savills is the agreement to acquire U.S.-focused real estate investment bank Eastdil Secured for £685 million. This acquisition is expected to lift pro-forma revenues above £3 billion, increase commercial transaction revenues by approximately 70%, and boost EBITDA by over 50% with a margin uplift of around two percentage points. The deal also aims to deliver conservative run-rate synergies of over £60 million and provide low-to-mid-teens EPS accretion next year.
CEO Simon Shaw highlighted the company’s strong performance late in the year, overcoming volatile conditions driven by geopolitical and macroeconomic factors. Shaw emphasized the company’s outperformance in less transactional business lines, improved margin efficiency, and the benefits of prior restructuring actions.
Looking ahead, Shaw mentioned that momentum built through the fourth quarter and that pipelines early in the year were healthy in most locations. However, he noted the uncertainty surrounding the potential impact of conflict in the Middle East on the company’s performance.
The acquisition of Eastdil Secured is seen as highly complementary, with limited overlap in services, locations, and clients. The deal is expected to generate significant revenue synergies and increase annual operating cash generation to over £300 million.
Savills CFO Nick Sanderson outlined financial expectations post-acquisition, including an increase in total annual revenues above £3 billion, a rise in commercial transaction revenues, and conservative run-rate revenue synergies of more than £60 million annually. The company also expects low-to-mid-teens percentage EPS accretion next year and high-teens group return on capital employed by 2028.
In conclusion, Savills’ acquisition of Eastdil Secured marks a significant strategic move for the company, positioning it for growth and improved performance in the coming years. With a focus on cost control, strong regional growth, and a solid financial outlook, Savills is poised for success in the competitive real estate market.
