Cbre Group Inc · NYSE:CBRE
Cbre — Investor Presentation (September 2018)
50 slides from Cbre's investor presentation, Sep 11, 2018
Slide 1: CBRE Group, Inc. Investor Overview September 2018
CBRE group, inc. Investor Overview September 2018 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: Market Leadership: The Global Leader in an Expanding Industry
Market Leadership #1 Leasing #1 Property Sales #1 Outsourcing #1 Appraisal & Valuation #1 Property Management #1 US Commercial Developer $102 billion AUM3 Scale And Diversity 5.5 billion square feet under management1 450+ offices worldwide2 Serves clients in over 100 countries2 Serves over 90% of th
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: Why Reorganize? Advances CBRE's Client-Focused Strategy
Why Reorganize? Advances CBRE’s Client-Focused Strategy Streamline lines of responsibility; flatter organization with potential operating efficiencies Elevate most talented executives into most impactful roles Increase financial transparency and accountability REAL ESTATE INVESTMENTS ADVISORY SERVIC
Slide 6: Where Does CBRE Derive Its Revenue?
Where Does CBRE Derive Its Revenue? Global market leader across virtually all CBRE business lines Manage Properties (Over 5 billion square feet): - Outsourcing – manage facilities and projects for occupiers - Property Management – for investor owned property Investment Management – deploy institutio
Slide 7: Growing into a Better Balanced and More Resilient Business
74% of total fee revenue5 See slide 47 for footnotes Growing into a Better Balanced and More Resilient Business $ in millions (%) – share of total fee revenue6 Note: 2017 fee revenue has been restated by $20M, or 0.2% of total fee revenue, in conjunction with ASC 606. We have not made a similar rest
Slide 8: CBRE's Financial Flexibility Has Improved Dramatically
CBRE’s Financial Flexibility Has Improved Dramatically ($ in millions) ($ in millions) Note: As of December 31, 2006 and 2017, respectively. Liquidity is defined as cash and cash equivalents plus unused amounts under the revolving credit facility. Debt maturing in 5 years Liquidity 4,00 3,000 2,000
Slide 9: Client Size Has Grown as CBRE's Capabilities Expanded
Client Size Has Grown as CBRE’s Capabilities Expanded Number of Large Clients Has Increased as Ability to Service these Clients Has Expanded $100 million or more $50 to $100 million $25 to $50 million 2012 2017 13 50 5 1 15 17 Figures in gross revenue, not adjusted for ASC 606.
Slide 10: Track Record – High-Quality Earnings Growth Outpaced the Market
Track Record – High-Quality Earnings Growth Materially Outpaced the Market Eight consecutive years of double-digit adjusted EPS growth1 Leverage ratio2 declined to 0.8x in 2017 from 1.7x in 2012 Source: FactSet, Company filings Note: 2016 and 2017 adjusted EPS were restated for ASC 606. 2016 adjuste
Slide 11: CBRE Has Increased Profit Margin While Improving Business Mix
CBRE Has Increased Profit Margin While Improving Business Mix Note: Profit margin defined as adjusted net income/fee revenue. Note: 2016 and 2017 profit margin figures were restated for ASC 606. We have not made a similar restatement for 2012-2015, and profit margin figures for such periods continue
Slide 12: 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 13: 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 14: Tailwind – Increasing Institutional Ownership of CRE Drives Demand
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 15: Tailwind – CBRE Holds Market Leading Position in a Consolidating Industry
Tailwind 3 – 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; oth
Slide 16: Focused Technology Investments 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 17: CBRE 360: Connecting Tenant Experience to CBRE Managed Properties
CBRE 360 experience operating system connects tenants with CBRE teams, services & amenities CBRE 360: Connecting Tenant Experience to CBRE Managed Properties BRANDED HOME SCREEN VISITOR MANAGEMENT VIRTUAL ASSISTANT TENANT SERVICES MOBILE BUILDING ACCESS
Slide 18: 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 19: CBRE is Positioned for Long-Term Growth
CBRE is Positioned for Long-Term Growth CBRE holds a commanding competitive position, In a services industry supported by strong structural tailwinds, CBRE has achieved significant earnings growth over two decades, While increasing the resiliency of its business mix and the strength of its balance s
Slide 20: Business Line Slides
BUSINESS LINE SLIDES CBRE
Slide 21: Occupier Outsourcing
2017 YTD Q2 2018 New 148 77 Expansions 193 115 Renewals 128 61 Historical Fee Revenue1 Overview Total Contracts Full service offering Facilities Management – approximately 2.4 billion square feet globally as of 12/31/2017 Project Management Transaction Services Strategic Consulting Ranked among the
Slide 22: Property Management
Historical Fee Revenue1 Overview Selected Strategic Accounts Manages buildings for investors Highly synergistic with property leasing Manages approximately 3.1 billion square feet globally as of 12/31/172 See slide 48 for footnotes Property Management Optimizing Building Operating Performance for In
Slide 23: Investment Management
Capital Raised1 Assets under Management (AUM)3 $103.2B as of 12/31/2017 Overview ($ in billions) Performance-driven global real estate investment manager 45 year track record Global platform, 21 countries More than 500 institutional clients Equity to deploy: approx. $6,100 million1,2 Co-Investment:
Slide 24: Appraisal & Valuation
Premier Clients Euromoney Global Valuation Advisor of the Year for five consecutive years Clients include lenders, life insurance companies, special servicers and REITs Overview Historical Revenue Appraisal & Valuation Serving Clients Globally ($ in millions) $504 $528 $246 $265
Slide 25: Leasing
Advise occupiers and investors in executing lease strategies 2017 US consideration 59% tenant rep/41% landlord rep1 Overview Historical Revenue Leasing Strategic Advisory and Execution Trammell Crow Company Acquisition See slide 48 for footnotes ($ in millions) Leasing commissions occur when leases
Slide 26: Property Sales
Historical Revenue #1 global market share, based on Real Capital Analytics Increased Ownership by Active Portfolio Managers Drives Sales Velocity Overview Source: NAREIT, NCREIF, Preqin, and Goldman Sachs Research ($ billions of equity value) 2007 – 2016 ▲160+% Property Sales Insight and Execution A
Slide 27: Commercial Mortgage Origination & Servicing
Historical Revenue Recent Transactions A leading strategic advisor for debt and structured finance solutions Highly synergistic with property sales Key services: Loan origination / debt placement Portfolio loan sales Loan servicing $46.6 billion of global mortgage activity in 20171 Commercial loan o
Slide 28: Development Services
2 Projects In Process/Pipeline1 Overview Recent Projects A premier brand in U.S. development 70 year record of excellence Partner with leading institutional capital sources Modest capital required from CBRE $99.7 million of co-investments as of Q2 2018 $9.8 million in repayment guarantees on outstan
Slide 29: Appendix
APPENDIX CBRE
Slide 30: 2017 Revenue
Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Occupier Outsourcing2 Property Management2 Investment Management Valuation Loan Servicing Leasing Sales Commercial Mortgage Origination Development Services Other Total Gross Revenue 2017 $ 11,146 $ 1,155 $ 378 $ 528 $
Slide 31: Q2 2018 Revenue
Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Occupier Outsourcing2 Property Management2 Investment Management Valuation Loan Servicing Leasing Sales Commercial Mortgage Origination Development Services Other Total Gross Revenue Q2 2018 $ 3,184 $ 304 $ 99 $ 138 $
Slide 32: 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 33: Mandatory Amortization and Maturity Schedule
Mandatory Amortization and Maturity Schedule $2,800 million revolving credit facility matures in October 2022. As of June 30, 2018, the revolving credit facility balance was $598 million. Global Cash Available Revolving Credit Facility ($ in millions) As of June 30, 20181
Slide 34: Broad Market Leadership Increases Client Value
Advisory & Transaction Capital Markets Facilities Management Project Management Property Management Valuation Client 1 ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ Client 2 ˜ ˜ ˜ ˜ ˜ ˜ ˜ Client 3 ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ Client 4 ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ Client 5 ˜ ˜ ˜ ˜ ˜ ˜ Client 6 ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ ˜ Client 7 ˜ ˜ ˜ ˜
Slide 35: Largest Clients Growing in Importance and Diversity
Largest Clients Growing in Importance and Diversity Large Clients Now Represent Larger Share of Total Revenue Industry Diversity of Top 50 Clients Has Increased Over Time Percentage of CBRE Total Revenue Figures in gross revenue, not adjusted for ASC 606. Client Diversity Has Increased as CBRE Has E
Slide 36: CBRE Has Taken Share in Leasing and Property Sales
CBRE Has Taken Share in Leasing and Property Sales Sources: Global property sales is based on RCA (Real Capital Analytics), US average office rent is based on data from CBRE Econometric Advisors Note: 2017 Americas leasing revenue has been restated by $2M, or 0.1% of total Americas leasing revenue,
Slide 37: CBRE Attracts and Retains Top Talent in the Industry
CBRE Attracts and Retains Top Talent in the Industry 3-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 22% of producers lost to competitors
Slide 38: GWS Revenue is Balanced and Diversified
CONSULTING AND ANALYTICS GWS Revenue is Balanced and Diversified Typical 3-5 year contract terms 90%+ renewal rate on expiring contracts Many 20+ year clients in portfolio Growth in each phase of economic cycle Exploring software as a service Fees generally based on a percentage of capital project c
Slide 39: Significant Total Addressable Opportunity for Real Estate Outsourcing Services
Occupier Leasing Advisory2 Advisory services on transactions, leasing, labor analytics, etc. Significant Total Addressable Opportunity for Real Estate Outsourcing Services $ in Billions Market Size1 Market size is as of 2015. CBRE Occupier Leasing Advisory revenue reported in leasing. CBRE Integrate
Slide 40: 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 net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as “adjusted net income”) diluted income per share attributable t
Slide 41: Debt & Leverage
Debt & Leverage Excludes $23.8 million and $94.6 million of cash in consolidated funds and other entities not available for company use at December 31, 2017 and December 31, 2012, respectively. Outstanding amount is reflected net of unamortized debt issuance costs. Excludes $910.8 million and $1,026
Slide 42: Adjusted EBITDA Reconciliation
Twelve Months Ended December 31, ($ in millions) 2017 20121 2006 1997 Adjusted EBITDA $ 1,716.7 $ 918.4 $ 653.5 $ 90.1 Adjustments: Integration and other costs related to acquisitions 27.3 39.2 7.6 - Cost-elimination expenses - 17.6 - - Carried interest incentive compensation (reversal) expense to a
Slide 43: Adjusted Net Income Reconciliation
Twelve Months Ended December 31, ($ in millions, except per share amounts) 2017 2016 2015 2014 20132 20122 Net income attributable to CBRE Group, Inc. $ 697.1 $ 573.1 $ 547.1 $ 484.5 $ 316.5 $ 315.6 Amortization expense related to certain intangible assets attributable to acquisitions 112.9 111.1 86
Slide 44: Reconciliation of Revenue to Fee Revenue and Contractual Fee Revenue
Twelve Months Ended December 31, ($ in millions) 2017 2016 2015 2014 20131 20121 2006 Consolidated revenue $ 18,628.8 $ 17,369.1 $ 10,855.8 $ 9,049.9 $ 7,194.2 $ 6,519.8 $ 4,032.0 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor
Slide 45: Quarterly Revenue to Fee Revenue Reconciliation
Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2018 20171 2018 20171 Consolidated revenue $ 5,111.4 $ 4,439.6 $ 9,785.4 $ 8,490.6 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients
Slide 46: Reconciliation of Revenue to Fee Revenue
Twelve Months Ended December 31, ($ in millions) 20171 20161 Occupier Outsourcing revenue 2 $ 11,145.6 $ 10,373.9 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 8,619.5 8,093.9 Occupier Outsourcing fe
Slide 47: Footnotes
Footnotes Slide 6 Other includes Development Services revenue (1%) and Other revenue (1%). Capital Markets includes Sales revenue (19%) and Commercial Mortgage Origination (excludes Loan Servicing) revenue (5%). Contractual Sources include Occupier Outsourcing and Property Management revenue (33%; e
Slide 48: Footnotes
Footnotes Slide 21 Historical revenue for Occupier Outsourcing line of business excludes associated sales and leasing revenue, most of which is contractual. Per International Association of Outsourcing Professionals (IAOP). Slide 22 Property Management (also known as Asset Services) revenue excludes
Slide 49: Footnotes
Footnotes Slide 28 As of December 31 for each year presented. In Process figures include Long-Term Operating Assets (LTOA) of $0.2 billion for Q4 2017, $0.2 billion for Q4 2016, $0.1 billion for Q4 2015, $0.3 billion for Q4 2014 and $0.9 billion for Q4 2013. LTOA are projects that have achieved a st
Slide 50: Footnotes: Cycle Radar Methodology
Footnotes Slide 18 – 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 Analytic