Cbre Group Inc · NYSE:CBRE
Cbre — Investor Presentation (September 2019)
51 slides from Cbre's investor presentation, Sep 6, 2019
Slide 1: CBRE Group, Inc. Investor Overview September 2019
CBRE group, inc. Investor Overview September 2019 Exhibit 99.1
Slide 2: Forward-Looking Statements
This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding CBRE’s future growth momentum, operations, market share, business outlook, and financial performance expectations. These state
Slide 3: The Global Leader in an Expanding Industry
The Global Leader in an Expanding Industry Global Market Leadership #1 Leasing #1 Property Sales #1 Outsourcing #1 Appraisal & Valuation #1 Property Management #1 US Commercial Developer CRE Services Market Capitalization1 See slide 48 for footnotes Peers 53% CBRE 47%
Slide 4: CBRE Strategic Priorities
CBRE Strategic priorities Intense Focus on Client Outcomes Top Talent: Leadership and Production Premier Platform, Notably Digital & Technology Scale, Connectivity and Culture Strategic Investment, Notably M&A and Digital & Tech Thoughtful, Intensive Cost Management
Slide 5: Where Does CBRE Derive Its Revenue?
Where Does CBRE Derive Its Revenue? Global market leader across virtually all CBRE business lines Manage Properties (Over 6 billion square feet): - Outsourcing – manage facilities and projects for occupiers - Property Management – for investor owned property Investment Management – deploy institutio
Slide 6: Growing into a Better Balanced and More Resilient Business
$ in millions (%) – share of total fee revenue Note: 2018 fee revenue reflects ASC 606. We have not restated 2006 figures, and fee revenue for 2006 continues to be reported under the accounting standards in effect for that period. 75% of total fee revenue See slide 48 for footnotes Growing into a Be
Slide 7: CBRE's Financial Flexibility Has Improved Dramatically
CBRE’s Financial Flexibility Has Improved Dramatically ($ in millions) 1 2 3 See slide 48 for footnotes Down 57% Up 141% Up 308% Note: As of December 31, 2006 and 2018, respectively. 4,000 3,000 2,000 1,000 0 Debt Maturing in 5 Years1 Liquidity2 Free Cash Flow3 2006 2018
Slide 8: CBRE Cycle Radar – Markets in Balance
CBRE Cycle Radar – Markets in Balance Current measures of economic and CRE cycle suggest an extended cycle from here Q4 2006 (One Year Prior to Start of Downturn) CBRE proprietary Cycle Radar for Commercial Real Estate charts measure relative percentile for each metric at a point in time against the
Slide 9: Three Structural Tailwinds for Commercial Real Estate Services
Three Structural Tailwinds for Commercial Real Estate Services Outsourcing – Occupier Acceptance of Outsourced Commercial Real Estate Services Asset Allocation – By Institutional Investors to the Commercial Real Estate Asset Class Consolidation – Customers are Driving Consolidation to Global Industr
Slide 10: Tailwind 1 – Occupiers Increasingly Turn to Outsourcing
2006 TCC 2013 Norland 2015 JCI GWS 1990 First CRE Outsourcing Contract 500+ Major Accounts High Barriers to Entry 5 Year Contracts Typical Facilities Management Project Management Transactions Consulting Tailwind 1 – Occupiers of Real Estate Increasingly Turn to Outsourcing CBRE’s market leading pos
Slide 11: Increasing Institutional Ownership of CRE Drives Demand for Services
Tailwind 2 – Increasing Institutional Ownership of CRE Drives Demand for Services Institutions are more frequent users of CRE services vs. legacy ownership Institutional Asset Allocation to Real Estate has Increased Strongly Over Time Source: NAIOP, Federal Reserve Board of Governors, The Conference
Slide 12: M&A: CBRE Holds the Market Leading Position in a Consolidating Industry
Notes: Revenues of private companies are estimated; CBRE 2015 gross revenue includes four months of actual gross revenue from the acquired GWS business while under our ownership, annualized for illustrative purposes; other public companies are as reported, with Savills revenue translated to US Dolla
Slide 13: Focused technology investments further differentiating CBRE
Focused technology investments further differentiating CBRE and its professionals CBRE can make impactful investments at a smaller percentage of company spend vs others CBRE Floored SaaS Interactive Creation of 3D Floor Plans and Virtual Environments Sample of CBRE Technology Investments www.cbre.co
Slide 14: CBRE Digital & Technology Combining Software + Services
Experience ‘platform as a service’ (patent pending) 80+ active client opportunities with recurring annual SaaS revenue CBRE Digital & Technology is Combining Software + Services PERSONALIZED HOME SCREEN ROOM BOOKING MAPPING & WAYFINDING
Slide 15: CBRE Has Increased Profit Margin While Improving Business Mix
Note: Profit margin defined as adjusted net income1/fee revenue2. Note: 2016 and 2017 adjusted net income margin figures were restated for ASC 606. We have not made a similar restatement for 2014 and 2015, and adjusted net income margin figures for such periods continue to be reported under the acco
Slide 16: Track Record – High-Quality Earnings Growth Outpaced the Market
Track Record – High-Quality Earnings Growth Materially Outpaced the Market Nine consecutive years of double-digit adjusted EPS growth1 Leverage ratio2 declined to 0.6x in 2018 from 1.7x in 2012 Source: FactSet, Company filings Note: 2016 and 2017 adjusted EPS were restated for ASC 606. 2016 adjusted
Slide 17: CBRE's Three Global Segments
CBRE’s Three Global Segments
Slide 18: CBRE Reorganization: 2018 Actual Results in Three New Global Segments
Capital Markets, Development & Carried Interest Leasing Contractual Sources ($ in millions) See slide 49 for footnotes. $7,564 Fee Revenue1 $1,303 Adj. EBITDA2 $535 Revenue1 $852 Adj. Revenue3 $256 Adj. EBITDA2 $2,739 Fee Revenue1 $346 Adj. EBITDA2 CBRE Reorganization: 2018 Actual Results in Three N
Slide 19: Advisory Services
Advisory Services Property Sales Loan Servicing Advisory Leasing Advisory Property & Project Mgmt. Commercial Mort. Origination Valuation $230B Transactions $53B Transactions $151B* Transactions 2.8B** Square Feet 513,800 Annual Appraisals *Reflects all leasing including activity for GWS accounts **
Slide 20: Advisory Services - Advisory Platform for Occupiers & Investors
Advisory Services - Advisory Platform for Occupiers & Investors Office Industrial & Logistics Retail Multi-Family Hotels Specialty PROPERTY TYPES Workplace Strategy Labor Analytics Economic Incentives Supply Chain Analytics Retail Analytics Portfolio Services ADVISORY CAPABILITIES Law Firms Tech & M
Slide 21: Advisory Services - Account Based Leadership Demonstrates Differentiation
Advisory Services - Account Based Leadership Demonstrates CBRE’s Differentiation Almost 60% of Large Leasing Transactions Come From Account Based Relationships CBRE Account Based Execution is a Relative Strength and Contributed to Share Gains Market percentage measured in square feet of leasing tran
Slide 22: Advisory Services - Driving Client Value with Integrated Global Relationships
Advisory Services - Driving Client Value with Integrated, Global, Relationships Fee Revenue1 from Top 100 Americas Clients (Advisory and GWS) Fee Revenue1 from Top 100 Facilities Mgmt. Clients CBRE’s global footprint allows us to do more for our largest clients in the Americas CBRE’s best-in-class t
Slide 23: Advisory Services - Capital Markets Leader Across the Largest Markets
Advisory Services - Top Talent: CBRE Cap. Mkts. is the Leader Across the Largest Markets CBRE is the Overall Leader in Capital Markets Share of US Property Sales per RCA CBRE Capital Markets has Broad Leadership Across the Largest Local Markets See slide 49 for footnotes. Other 59% CBRE 16% Peer #1
Slide 24: Advisory Services - CBRE Leads on the Largest Occupier Leasing Transactions
Advisory Services - Top Talent: CBRE Leads on the Largest Occupier Leasing Transactions CBRE Does More of the Largest Leasing Transactions Share of Top 25 US Office Occupier Leasing Transactions* CBRE Most Often the Local Market Leader in US Occupier Transactions *Note: Data represent top 25 deals d
Slide 25: Advisory Services - CBRE Attracts and Retains Top Talent
Advisory Services - CBRE Attracts and Retains Top Talent in the Industry 4-Year Summary: Hires and Losses from and to Competitors (U.S.) Boutique Competitors are Increasingly Less Competitive Note: Hires do not include hundreds of internal hires and hires from non-direct competitors 25% of producers
Slide 26: Global Workplace Solutions
Global Workplace Solutions Account-Based Contractual Business 4 Major Service Offerings 49,000 Employees 100+ Countries 500+ Contractual Client Portfolios 95% Client Satisfaction Mission Create measurably superior client outcomes by improving occupant experiences through safe, engaging and high perf
Slide 27: Global Workplace Solutions - Large and Growing Facilities Management Market
Global Workplace Solutions - Large and Growing Facilities Management Market Long-term, performance-based management contracts Proven to create value: Simplification Cost Reduction Risk Reduction Consistency/Globalization Speed & Agility Increasing differentiation in our fully integrated facilities m
Slide 28: Global Workplace Solutions - Facilities Management Differentiation
CBRE Self Perform CBRE Subcontract Energy CBRE Account Management Building Maintenance Adjacent Technical Services* Experience Services** Energy Management and Energy Projects Cleaning, Exterior, Security, Elevators, Pest, HVAC, etc. FacilitySource DIGITAL & TECHNOLOGY and FM BACK OFFICE Enterprise
Slide 29: Global Workplace Solutions - Project Management
Global Workplace Solutions - Project Management: Bridge Between Transactions & Facilities Advisory & Transaction Services Design Cost consulting and mgmt Energy / efficiency planning Occupancy mgmt Capital planning Architecture and engineering Master planning Stakeholder management Consulting Projec
Slide 30: Global Workplace Solutions - Macro & Industry Trends Continue to Favor Growth
Global Workplace Solutions - Macro & Industry Trends Continue to Favor Growth In a typical year, new clients drive ~40% of growth …while existing clients drive ~60% of growth New clients and sectors Adjacent Offerings Expanded Geographies Expanded Asset Type Expanded Service Lines Today, GWS has an
Slide 31: Global Workplace Solutions - Record Pipeline Growth
Global Workplace Solutions - Record Pipeline Growth Global Workplace Solutions’ Pipeline Has Nearly Doubled in Two Years Pipeline Value1 Indexed to 2016 Embedded sales leaders in each of our Divisions Continued strong pipeline in vertical markets such as Financial Services and Technology Momentum in
Slide 32: Global Workplace Solutions - Strong Client Satisfaction
Global Workplace Solutions - Strong Client Satisfaction Drives “Dark Green” Dividend Global Client Satisfaction Scores Have Continually Risen in the Last 3 Years Annual survey administered by an independent third party High client satisfaction correlates to strong renewal rates and expansion opportu
Slide 33: Three Real Estate Investment Businesses with Over $100B of Third-Party Capital
Advisory & Transaction Capital Markets Project Management Property Management Valuation & Advisory Real Estate Investments CBRE Commercial Real Estate Services Three Real Estate Investment Businesses with Over $100B of Third-Party Capital CBRE Global Investors – Global Real Asset Investment Manager
Slide 34: Real Estate Investments - CBRE Global Investors
Real Estate Investments - CBRE Global Investors Global Real Asset Investment Manager Real asset solutions provided through real estate and infrastructure investment capabilities 46-year track record $106.7B assets under management (AUM)1 AUM by Investment Type2 ($B) AUM by Strategy2 ($B) Investment
Slide 35: Real Estate Investments - Trammell Crow Company
Real Estate Investments - Trammell Crow Company Leading U.S. Commercial Real Estate Developer Representative Equity Partners In Process by Product Types1 Projects in Process/Pipeline ($ in billions) Total Cost $10.6B 2 3 See slide 50 for footnotes. $12.5 Healthcare 11% Office 36% Industrial 21% Resi
Slide 36: Real Estate Investments - Hana
Targets Enterprise Clients and Structural Alignment with Owners Branded, semi-custom suites Flexible lease terms Enterprise teams of 15-300+ Control over branding/culture Conference, meeting and project team spaces Available by day, week, or month Light food & beverage offerings Integrated, easy to
Slide 37: Appendix
APPENDIX CBRE
Slide 38: 2018 Revenue
See slide 50 for footnotes. Revenue ($ in millions) Contractual Revenue & Leasing Global Workplace Solutions Property & Advisory Project Management Investment Management (excl. Carried Interest) Valuation Loan Servicing Advisory Leasing Advisory Sales Commercial Mortgage Origination Development Serv
Slide 39: CBRE Leverage Guideposts
3.0x 0.0x 1.0x Leverage Ratio Recession Recovery Above Target Leverage (>2.0x): Prioritize debt reduction absent compelling early-cycle investments Avoid leverage in this range later in the business cycle Plateau Expansion Lower Leverage (<1.0x): Comfortable with lower leverage later in the business
Slide 40: Mandatory Amortization and Maturity Schedule
Mandatory Amortization and Maturity Schedule $2,800 million revolving credit facility matures in March 2024. As of June 30, 2019, the revolving credit facility balance was $230 million. Global Cash Available Revolving Credit Facility ($ in millions) As of June 30, 20191 3,500 3,000 2,500 2,000 1,500
Slide 41: Non-GAAP Financial Measures
Non-GAAP Financial Measures The following measures are considered “non-GAAP financial measures” under SEC guidelines: fee revenue contractual fee revenue adjusted revenue for the Real Estate Investments segment net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as “adju
Slide 42: Debt & Leverage
Debt & Leverage Excludes $141.8 million, $155.2 million and $94.6 million of cash in consolidated funds and other entities not available for company use at June 30, 2019, December 31, 2018 and December 31, 2012, respectively. Outstanding amount is reflected net of unamortized debt issuance costs. Ex
Slide 43: Reconciliation of Net Income to Adjusted EBITDA
Twelve Months Ended ($ in millions) June 30, 2019 December 31, 2018 December 31, 20121 Net income attributable to CBRE Group, Inc. $ 1,072.4 $ 1,063.2 $ 315.6 Add: Depreciation and amortization 442.7 452.0 170.9 Interest expense, net of interest income 93.9 98.7 169.0 Write-off of financing costs on
Slide 44: Reconciliation of Revenue to Fee Revenue and Adjusted Revenue by Segment
Twelve Months Ended December 31, 2018 Twelve Months Ended December 31, 2017 ($ in millions) Advisory Services Global Workplace Solutions Real Estate Investments Global Workplace Solutions Consolidated revenue $ 8,440.0 $ 12,365.4 $ 534.7 $ 10,792.0 Less: Client reimbursed costs largely associated wi
Slide 45: Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS
Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings Per Share Twelve Months Ended December 31, ($ in millions, except per share amounts) 2018 2017 2016 2015 2014 20132 20122 Net income attributable to CBRE Group, Inc. $ 1,063.2 $ 697.1 $ 573.1 $ 547.1 $ 484.5 $ 316.5 $ 315.6 On
Slide 46: Reconciliation of Revenue to Fee Revenue
Twelve Months Ended December 31, ($ in millions) 2018 2017 2016 2015 2014 2006 Consolidated revenue $ 21,340.1 $ 18,628.8 $ 17,369.1 $ 10,855.8 $ 9,049.9 $ 4,032.0 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed f
Slide 47: Reconciliation of Revenue to Fee Revenue for Largest Clients
($ in millions) Twelve Months Ended December 31, 2018 Americas EMEA & APAC Revenue: 100 Largest Americas Clients Advisory & GWS $ 6,082.8 $ 1,957.8 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 3,988
Slide 48: Footnotes
Footnotes NOTES: Local currency percent changes versus prior year are non-GAAP financial measures noted on slide 38. These percent changes are calculated by comparing current year results versus prior year results, in each case at prior year exchange rates. In the first quarter of 2018, the company
Slide 49: Footnotes
Footnotes Slide 16 Adjusted EPS excludes a one-time non-cash gain associated with remeasuring CBRE’s investment in an unconsolidated subsidiary in New England to fair value as of the date it acquired the remaining controlling interest, depreciation and amortization expense related to certain assets
Slide 50: Footnotes
Slide 33 As of June 30, 2019. AUM refers to the fair market value of real asset-related investments with respect to which CBRE Global Investors provides, on a global basis, oversight, investment management services and other advice and which generally consist of investments in real assets; equity in
Slide 51: Footnotes
Footnotes Slide 8 – The metrics included in the CBRE Cycle Radar are derived as follows: Transaction Velocity – Total dollar value of US commercial real estate transactions per Real Capital Analytics divided by the Moody’s/RCA US National All-Property Composite Price Index per Real Capital Analytics