What’s a Good Small Cap Real Estate Services Stock? CBG, JLL, KW & FSRV

Midcaps CBRE Group Inc (NYSE: CBG) and Jones Lang LaSalle Inc (NYSE: JLL) are probably the better known real estate services stocks with the latter surging 12.36% yesterday on impressive earnings, but small cap stocks Kennedy-Wilson Holdings Inc (NYSE: KW) and FirstService Corporation (NASDAQ: FSRV) are also important real estate services providers that you may have overlooked. After all, real estate services stocks like the following would offer exposure to real estate by being invested in property as well as generating revenue from transactions, property management and other services:   

Kennedy-Wilson Holdings Inc. Founded in 1977 as a real estate auction business, Kennedy-Wilson Holdings is an international real estate investment and services firm providing a diversified array of real estate investments and services from 24 offices in the US, UK, Ireland, Spain and Japan. Specifically, KW Investments covers multifamily, office and residential property acquisitions (including condominium conversions) as well as note purchases while KW Services includes property services for third-party and company-owned assets, auction and conventional sales, research and investment management. Last month, Kennedy-Wilson Holdings announced the pricing of its underwritten public offering of 6,000,000 shares of its common stock at a public offering price of $18.50 per share with the proceeds going for general corporate purposes (including future acquisitions and co-investments) and to repay the $50.0 million outstanding balance under its unsecured revolving credit facility. Kennedy-Wilson Holdings also acquired a portfolio of eight shopping centers out of administration and located throughout England and Scotland for £250 million ($388 million). In addition, Kennedy-Wilson Holdings announced that KW Residential, LLC, the company's unconsolidated Japanese venture, refinanced part of its multifamily portfolio with a $110 million eight year fixed-rate loan at 1.36% and it was noted that since 2010, they have been able to lower their average interest rate across the portfolio from 2.6% to 1.4% to save $22 million in interest payments over the term of the current loans. Otherwise and back in August, Kennedy-Wilson Holdings reported that Adjusted Net Income for the second quarter 2013 came in at $13.8 million verses Adjusted Net Income of $3.0 million. Kennedy-Wilson Holdings is also scheduled to report earnings on Tuesday, November 5, after the market closes. On Tuesday, Kennedy-Wilson Holdings rose 1.87% to $20.18 (KW has a 52 week trading range of $11.83 to $20.25 a share) for a market cap of $1.63 bil! lion plus the stock is up 47.5% since the start of the year, up 44% over the past year and up 124.5% over the past five years.

FirstService Corporation. Founded in 1989 by Jay Hennick from Superior Pools, the swimming pool management business he started as a teenager, FirstService Corporation has three service platforms: 1) Colliers International, one of the top global players in commercial real estate services, 2) FirstService Residential, North America's largest manager of residential communities; and the 3) Property Services division, one of North America's largest providers of property services delivered through company-owned operations, franchise systems and contractor networks. Last Wednesday, FirstService Corporation reported a 9% revenue increase to $608.3 million while adjusted EBITDA rose 11% to $55.4 million. The founder and CEO noted:

"Each of our service lines reported strong revenue growth; both Colliers International and FirstService Brands grew their EBITDA by more than 30%; we completed the re-branding at FirstService Residential; we redeemed our outstanding convertible debentures and we successfully completed the sale of Field Asset Services."

He ended by saying that FirstService Corporation is positioned better than ever to deliver strong growth in revenue and profits in the future. FirstService Corporation's FirstService Residential also recently acquired Curry Association Management, Missouri's largest residential property management company. On Tuesday, FirstService Corporation rose 0.80% to $41.34 (FSRV has a 52 week trading range of $26.88 to $42.55 a share) for a market cap of $1.41 billion plus the stock is up 50.3% since the start of the year, up 39% over the past year and up 270.4% over the past five years.

Finally, here is a look at the performance of small cap real estate services stocks Kennedy-Wilson Holdings Inc and FirstService Corporation verses midcaps CBRE Group Inc and Jones Lang LaSalle Inc:

As you can see from the above chart, the performance of small cap FirstService Corporation is pretty close to the performance of CBRE Group Inc while small cap Kennedy-Wilson Holdings has been the laggard albeit its still a decent performance for long term investors.