Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Investor Presentation (November 2006)
34 slides from Cbre's investor presentation, Nov 7, 2006
Slide 1: Investor Presentation November 2006
Investor Presentation November 2006
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our growth momentum in 2006, future operations, future financial performance, and the impact of our acq
Slide 3: Industry/Company Trends
Industry/Company Trends
Slide 4: Favorable Trends – Leasing
Strong net absorption of U.S. commercial real estate Metropolitan areas dominated by trade linkages, tourism, technology and banking showed the strongest pace of improvement Recovery in office leasing is now evident across much of Europe Across Asia, increased office demand has accelerated rental ra
Slide 5: Favorable Trends – Investment Sales
Favorable Trends – Investment Sales Strong capital flows and improving property income continue to underpin a strong environment for investment sales Properties are being purchased with more equity capital, lower leverage and higher cash yield expectations Investment sales activity across Europe con
Slide 6: Favorable Trends – Investment Management
Favorable Trends – Investment Management CAGR: 20.7% Investment Management growing faster than the 5.8% growth in institutional ownership of real estate 1 CBRE’s Assets Under Management ($ in Billions) Revenue ($ in Millions) CAGR: 30.6% ANNUAL Carried Interest Investment Management 1. Source: Insti
Slide 7: Investment Management Business Global Strategy / Fund Matrix
Investment Management Business Global Strategy / Fund Matrix 50% 24% 6% Compounded Annual Growth Rate for Assets Under Management (1) Yes Yes No Coinvestment Acquisition Fees Asset Management Fees LP Profits Carried Interest Acquisition Fees Asset Management Fees LP Profits Carried Interest Acquisit
Slide 8: 2005 & 2006 In-Fill Acquisitions
2005 & 2006 In-Fill Acquisitions Easyburo SAS CPMS Artequation DTZ Queensland McCann Property and Planning Rafter and O’Hagan Advocate Consulting Group, Inc. CB Richard Ellis Charlotte, LLC Columbus Commercial Realty Project Advantage, Inc. The Polacheck Company Rutter & Strutz Groupe Axival, Inc. N
Slide 9: Financial Overview
CBRE CB RICHARD ELLIS Financial Overview
Slide 10: Consistent Long Term Growth
Consistent Long Term Growth CBRE has consistently outpaced industry growth. (1) Normalized EBITDA excludes merger-related and other non-recurring costs, integration costs related to acquisitions and one-time IPO-related compensation expense. ($ in millions) Average Annual Organic Growth: 10% (1) $36
Slide 11: YTD Q3 2006 Business Performance Highlights
YTD Q3 2006 Business Performance Highlights YTD Q3 2005 Record YTD 2006 Performance YTD Q3 2006 $2,420.2 $1,954.6 24% (In millions, except EPS) $274.1 $398.6 45% Revenue Normalized EBITDA 1 $130.0 $213.8 64% $0.57 $0.91 60% Net income, as adjusted 1 EPS, as adjusted 1,2 1. Normalized EBITDA, net inc
Slide 12: YTD Q3 2006 Revenue Breakdown
YTD Q3 2006 Revenue Breakdown ($ in millions) 2006 2005 % Change Leasing 961.0 733.1 31 Sales 818.7 729.7 12 Property and Facilities Management 194.0 149.9 29 Appraisal and Valuation 193.7 142.8 36 Commercial Mortgage Brokerage 108.5 97.0 12 Investment Management 102.4 71.1 44 Other 41.9 31.0 Total
Slide 13: Normalized EBITDA Margins
Normalized EBITDA Margins Notes: Normalized EBITDA margins exclude merger-related and other non-recurringcosts, integration costs related to acquisitions and one-time IPO-related compensation expense. CBRE has consistently improved its EBITDA margin. 9.8% 11.2% 11.2% 12.7% 15.8% 17.4% 0.0% 5.0% 10.0
Slide 14: Debt Highlights
($ in millions) Debt Highlights Notes: - Normalized EBITDA excludes merger-related and other non-recurring costs, integration costs related to acquisitions and one-time IPO-related compensation expense. - Total debt excludes non-recourse debt. $529.8 $798.4 $634.6 $577.3 $297.8 $450.1 $634.5 $377.7
Slide 15: Capitalization
Excludes $92.9 million and $256.0 million of warehouse facility at September 30, 2006 and December 31, 2005, respectively. Capitalization ($ in millions) 09/30/2006 12/31/2005 Variance Cash 138.3 449.3 (311.0) Revolving credit facility 139.8 - 139.8 Senior secured term loan tranche B - 265.2 (265.2)
Slide 16: Strong cash flow generator
Strong cash flow generator $114 million, or 55% improvement from same period last year Low capital intensity Utilization of internal cash flow Debt reduction of approximately $279 million during the nine months ended September 30, 2006 2 Co-investment activities In-fill acquisitions Represents capit
Slide 17: Transaction Overview
CBRE CB RICHARD ELLIS Transaction Overview 16
Slide 18: Transaction Overview
Transaction Overview CBRE has reached an agreement to acquire Trammell Crow Company Trammell Crow shareholders will receive $49.51 per share, all cash consideration This is CBRE’s most significant acquisition to date, combining two premier real estate services platforms Financially attractive transa
Slide 19: Rationale for Acquisition
Rationale for Acquisition A respected and leading industry brand that will add value to our brand Furthers CBRE’s position as the world’s premier commercial real estate services provider Complementary alignment, in particular our strength in Transaction Management is a perfect match with Trammell Cr
Slide 20: The World's Premier Commercial Real Estate Services Provider
2.5x nearest competitor Thousands of clients, more than 85% of Fortune 100 Pro Forma 2006E Revenue of approximately $4.4 billion Pro Forma 2006E EBITDA of approximately $800 million (2) Strong organic revenue and earnings growth #1 commercial real estate brokerage #1 appraisal and valuation #1 prope
Slide 21: $24 Billion US Commercial Real Estate Services Industry
$24 Billion US Commercial Real Estate Services Industry (1) U.S. Market Share Top 5 = 16.9% Share Further Strengthens Our #1 Position in a Fragmented Market Source: External public filings and management estimates as of 12/31/05. (1) Excluding investment management. The market is large but still hig
Slide 22: Financially Attractive Transaction
Financially Attractive Transaction $3.4 $4.4 29% ($ in billions) 2006E Revenues 2006E EBITDA The transaction is expected to generate incremental percentage earnings per share accretion in the low teens on a Pro Forma 2006 basis (1) . Standalone Pro Forma Combined $0.6 $0.8 33% (1) Includes first yea
Slide 23: Pro Forma Historical Financials
Pro Forma Historical Financials Revenue Normalized EBITDA ($ in millions) Margin 10.4% 12.1% 15.1% 18.4% ($ in millions) Growth 22.7% 34.5% 21.3% 15.6% CBRE Trammell Crow Pro Forma Combined $243 $380 $574 $800 $2,334 $3,139 $3,807 $4,400 $1,630 $2,365 $2,911 $704 $774 $896 2003 2004 2005 2006E $183
Slide 24: Expanded Services Platform
Expanded Services Platform Property and Facilities Management Sales and Leasing $0.3 billion $0.8 billion $2.8 billion 8% 18% 2006E CBRE Standalone 2006E Pro Forma Combined Outsourcing Services Revenues Transaction Revenues $2.5 billion 74% 64% Note: Chart does not represent 100% of total revenues o
Slide 25: Sources and Uses
Sources and Uses Sources ($ in billions) Amount New Term A Debt $1.2 New Term B Debt 1.0 Total Funds Received $2.2 Uses ($ in billions) Amount Purchase Equity ($49.51 per common share) (1) $1.9 Redeem Existing TCC Corporate Debt 0.1 Transaction and Integration Costs and Fees 0.2 Total Uses $2.2 (1)
Slide 26: Favorable Financing
Favorable Financing New fully committed Term A and Term B Loans used to finance the acquisition Plan to maintain current revolving credit facility and amend existing credit agreement to enable the transaction Favorable interest rates anticipated Tender for 9.75% senior notes, with redemption from op
Slide 27: Pro Forma Q3 2006 TTM Normalized Internal Cash Flow
Represents capital expenditures, net of concessions. Pro Forma Q3 2006 TTM Normalized Internal Cash Flow ($ millions) 62 383 Net Income, as adjusted D&A Cap Ex (66) 379 Internal Cash Flow 1 Strong cash flow generator Low capital intensity Utilization of internal cash flow Debt reduction Co-Investmen
Slide 28: Appendix
CBRE CB RICHARD ELLIS Appendix a
Slide 29: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) Q3 2006 Q3 2005 Normalized EBITDA 585.8 411.1 Less: Integration costs related to acquisitions 6.4 8.8 EBITDA 579.4 402.3 Add: Interest income 9.0 10.7 Less: Depreciation and amortization 54.8 47.7 Interest expense 46.3 56.9
Slide 30: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) (1) The results of operations for the year ended December 31, 2001 have been derived by combining the results of operations of the company for the period from February 20, 2001 (inception) to December 31, 2001, with the results of op
Slide 31: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) 2006 2005 Normalized EBITDA 398.6 274.1 Less: Integration costs related to the acquisitions 5.5 6.2 EBITDA 393.1 267.9 Add: Interest income 7.6 7.9 Less: Depreciation and amortization 42.1 32.8 Interest expense 34.7 42.8 Los
Slide 32: Reconciliation of Net Income to Net Income, As Adjusted
Reconciliation of Net Income to Net Income, As Adjusted Nine Months Ended September 30, ($ in millions, except share data) 2006 2005 Net income 193.5 121.9 Amortization related to net revenue backlog acquired in acquisitions, net of tax 2.8 - Integration costs related to acquisitions, net of tax 3.4
Slide 33: Reconciliation of Net Income to Net Income, As Adjusted
(a) Amortization expense related to net revenue backlog acquired in acquisitions 1 (b) Integration costs related to acquisitions 1 (c) Costs of extinguishment of debt 1 (d) Tax expense related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004 Net Income, As Adjuste
Slide 34: CB Richard Ellis
CBRE CB RICHARD ELLIS
CB Richard Ellis Group — Investor Presentation (November 2006) on 6ix