Slide 1: Second Quarter 2014: Earnings Conference Call
CBRE GROUP, INC. Second Quarter 2014: Earnings Conference Call July 29, 2014
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Bob Sulentic PRESIDENT AND CHIEF EXECUTIVE OFFICER Gil Borok DEPUTY CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER Jim Groch CHIEF FINANCIAL OFFICER AND GLOBAL DIRECTOR OF CORPORATE DEVELOPMENT Steve Iaco INVESTOR RELATIONS AND CORPORATE COMMUNICATIONS
Slide 3: Q2 2014 Region Highlights
Q2 2014 Region Highlights BUSINESS OVERVIEW Americas EMEA Asia Pacific Revenue 11% (12% local currency) Revenue 89% (82% local currency) Ex. Norland Revenue 16% (9% local currency) Revenue 3% (9% local currency)
Slide 4: Q2 2014 Business Line Revenue
Revenue ($ in millions) Contractual Revenue Sources Capital Markets Global Corporate Services and Asset Services2 Investment Management Appraisal & Valuation Leasing Sales Commercial Mortgage Services Development Services Other Total Q2 2014 $ 892.9 $ 126.3 $ 103.5 $ 559.3 $ 335.1 $ 78.6 $ 10.7 $ 20
Slide 5: Q2 2014 Performance Overview
Q2 2014 PERFORMANCE OVERVIEW Includes discontinued operations. See slide 20 for details. Normalized EBITDA excludes certain carried interest incentive compensation expense. Adjusted net income and adjusted EPS exclude amortization expense related to certain intangible assets attributable to acquisit
Slide 6: Americas Revenue: Major Components
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q2 2014 $ 490.2 $ 405.8 $ 214.3 USD2 13% 18% 3% Local Currency2 14% 19% 4% YTD Q2 2014 $ 954.4 $ 684.2 $ 373.4 USD3 11% 15% 9% Local Currency3 12% 15% 10% 1. Global Corporate Services (GCS) and Asset Services revenue exclude
Slide 7: EMEA Revenue: Major Components
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q2 2014 $ 322.1 $ 125.8 ex. Norland $ 83.3 $ 62.3 USD2 226% 27% ex. Norland 1% 22% Local Currency2 218% 20% ex. Norland -5% 14% YTD Q2 2014 $ 653.3 $ 240.1 ex. Norland $ 163.6 $ 126.4 USD3 249% 28% ex. Norland 8% 39% Local C
Slide 8: Asia Pacific Revenue: Major Components
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q2 2014 $ 79.0 $ 69.9 $ 58.5 USD2 6% 5% 0% Local Currency2 12% 9% 6% YTD Q2 2014 $ 151.1 $ 122.3 $ 102.5 USD3 4% 5% 10% Local Currency3 12% 10% 18% ASIA PACIFIC REVENUE: MAJOR COMPONENTS Total Q2 2014 revenue up 3% in USD or
Slide 9: Global Corporate Services Highlights
Q2 YTD Q2 New 19 44 Expansions 15 39 Renewals 13 27 GLOBAL CORPORATE SERVICES 32 total contracts in EMEA and Asia Pacific YTD Q2 2014 8 total contracts in U.S. healthcare sector YTD Q2 2014 Norland materially strengthens European platform 2014 TOTAL CONTRACTS Facilities Management Transaction Servic
Slide 10: Global Investment Management
YTD Q2 Q2 GLOBAL INVESTMENT MANAGEMENT Excludes securities business. Normalized EBITDA excludes certain carried interest compensation expense. Includes discontinued operations. See slide 20 for details. In 2011, CBRE acquired the real estate investment management operations of ING Group in Europe, A
Slide 11: Development Services
YTD Q2 Q2 DEVELOPMENT SERVICES 1 $96.0 million of co-investments at the end of Q2 2014 $13.0 million in recourse debt to CBRE and repayment guarantees at the end of Q2 2014 1. In Process figures include Long-Term Operating Assets (LTOA) of $0.3 billion for 2Q 14, $0.9 billion for 4Q 13, $1.2 billion
Slide 12: Business Outlook
We are pleased with how 2014 is unfolding Mixed macro global environment but signs of improvement in U.S. and Europe For first half 2014: Property sales in line with expectations for full-year double-digit growth Property leasing pacing ahead of full-year expectations Occupier outsourcing (GCS) shou
Slide 13: Supplemental Slides and GAAP Reconciliation Tables
SUPPLEMENTAL SLIDES AND GAAP RECONCILIATION TABLES
Slide 14: U.S. Market Statistics
U.S. VACANCY U.S. ABSORPTION TRENDS (in MSF) 2Q13 2Q14 4Q14 F 4Q15F 2Q13 2Q14 2013 2014F 2015F Office 15.2% 14.5% 14.4% 14.0% 10.0 15.4 36.7 36.8 35.5 Industrial 12.0% 10.8% 10.7% 10.4% 48.7 52.1 237.7 172.9 141.3 Retail 12.2% 11.7% 10.9% 9.8% 9.7 7.5 27.7 38.3 50.9 U.S. MARKET STATISTICS Source: CB
Slide 15: Mandatory Amortization and Maturity Schedule
As of June 30, 2014 MANDATORY AMORTIZATION AND MATURITY SCHEDULE ($ in millions) $1,200.0 million revolver facility matures in March 2018. As of June 30, 2014, the outstanding revolver balance was 1. $336.0 million. 1 Global Cash Available Revolver 1,187 20 40 68 255 416 2 352 198 800 - 250.0 500.0
Slide 16: Capitalization
CAPITALIZATION 1. Excludes $47.2 million of cash in consolidated funds and other entities not available for Company use at June 30, 2014. 2. Represents notes payable on real estate in Development Services that are recourse to the Company. Excludes non-recourse notes payable on real estate of $85.8 m
Slide 17: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Three Months Ended June 30, ($ in millions) 2014 20131 Normalized EBITDA $ 262.8 $ 243.1 Adjustments: Carried interest incentive compensation 2 2.6 2.6 EBITDA 260.2 240.5 Add: Interest Income 1.1 1.5 Less: Depreciation and amortization 63.2 44.2 Interest expense 28.5 38.9 Write-off of financing cost
Slide 18: Reconciliation of Net Income to Net Income, As Adjusted
Three Months Ended June 30, ($ in millions) 2014 2013 Net income attributable to CBRE Group, Inc. $ 105.5 $ 69.9 Amortization expense related to certain intangible assets attributable to acquisitions, net of tax 11.7 4.6 Carried interest incentive compensation, net of tax 1 1.5 1.6 Write-off of fina
Slide 19: Reconciliation of Discontinued Operations
Discontinued Operations for the Three Months Ended June 30, 2013 Discontinued Operations for the Six Months Ended June 30, 2013 ($ in millions) Global Investment Management Development Services Total Global Investment Management Development Services Total Revenue $ 0.8 $ 4.1 $ 4.9 $ 1.5 $ 7.4 $ 8.9