Cbre Group Inc · NYSE:CBRE
Cbre — Investor Presentation (December 2017)
42 slides from Cbre's investor presentation, Dec 1, 2017
Slide 1: The Global Market Leader in Commercial Real Estate Services
CBRE group, inc. The Global market leader in commercial real estate services December 2017 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
Market Leadership #1 Leasing #1 Property Sales #1 Outsourcing #1 Appraisal & Valuation $98 billion AUM3 Scale And Diversity 5.3 billion square feet under management1 450+ offices worldwide2 Serves clients in over 100 countries2 Serves over 90% of the Fortune 100 Over 85,000 transactions in 2016 See
Slide 4: 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 5: Growing into a Better Balanced and More Resilient Business
74% of total fee revenue5 See slide 39 for footnotes Growing into a Better Balanced and More Resilient Business $ in millions (%) – share of total fee revenue6 Development & other1 capital markets2 $1,383 (37%) leasing $1,479 (40%) contractual sources 3 $818 (21%) $2,241 (24%) $2,746 (30%) $3,976 (4
Slide 6: Track Record – High-Quality Earnings Growth Materially Outpaced the Market
Track Record – High-Quality Earnings Growth Materially Outpaced the Market See slide 40 for footnotes Source: FactSet, Company filings Cumulative Adjusted EPS Growth – CBRE vs S&P 500 2 While leverage ratio1 declined to 1.2x in 2016 from 2.1x in 2011 (adj. eps)2 120% 90% 60% 30% 0% 2011 2012 2013 20
Slide 7: Robust Liquidity, Long-Dated Debt & Low Leverage Support Opportunistic Investing
Robust Liquidity, Long-Dated Debt & Low Leverage Support Opportunistic Investing ($ in millions) Pro-forma as of September 30, 2017 1, 2, 3 Global Cash Undrawn Revolving Credit Facility Available Revolving Credit Facility Global Cash 1. Proforma cash is calculated with September 30, 2017 available c
Slide 8: CBRE is Positioned for Long-Term Growth
CBRE is Positioned for Long-Term Growth Services industry with strong structural tailwinds CBRE has: a commanding position with a strong competitive moat realized significant earnings growth over two decades increased the resiliency of its business mix Adjusted EBITDA1 CAGR+16% Since 1997 See slide
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: Tailwind – 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 Source: NAREIT, NCREIF, Preqin, and Goldman Sachs Research ($ billions of equity value) 2007 – 2016 ▲160+% Institutional Asset Allocation to Rea
Slide 12: Tailwind – CBRE Holds the 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 13: CBRE Vantage: Industry Leading Suite of Enablement Technology
CBRE Vantage: Industry Leading Suite of Enablement Technology 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
Slide 14: Technology Case Study: Smart Building Technology
Technology Case Study: Smart Building Technology (Energy Services Inc.) CBRE’s over 5 billion square feet of property under management created an advantaged position to acquire and monetize a smart building technology leader Great Outcomes Lowered operating costs Satisfied occupants Informed managem
Slide 15: 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 Q3 2017 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 aga
Slide 16: Continued Economic Growth Possible as Current Expansion is Slow
Continued Economic Growth Possible as Current Expansion is Slow Months of economic expansion following recovery of jobs lost during prior recession Number of Months of Economic Expansion Following Recovery of Jobs Lost in Prior Recession Source: U.S. BLS Current expansion has only realized job growt
Slide 17: CBRE is Positioned for Long-Term Growth
CBRE is Positioned for Long-Term Growth CBRE: Leads a services industry with strong structural tailwinds, has a durable business model with significant free cash flow, and has achieved long-term growth through business cycles, while continuing to significantly diversify its business mix Business Cyc
Slide 18: Business Line Slides
BUSINESS LINE SLIDES CBRE
Slide 19: Occupier Outsourcing: Integrated Global Solutions for Occupiers
Q3 YTD Q3 New 41 97 Expansions 44 139 Renewals 27 88 Historical Revenue1 Overview 2017 Total Contracts Full service offering Facilities Management – approximately 2.2 billion square feet globally as of 12/31/2016 Project Management Transaction Services Strategic Consulting Ranked among the top few o
Slide 20: Property Management: Optimizing Building Operating Performance for Investors
Historical Revenue1 Overview Selected Strategic Accounts ($ in millions) Manages buildings for investors Highly synergistic with property leasing Manages approximately 3.1 billion square feet globally as of 12/31/162 300+ premier properties in major Central Business Districts (approximately 450 mill
Slide 21: Investment Management Performance Across Risk/Return Spectrum Globally
Capital Raised1 Assets under Management (AUM)* $98.3B as of 9/30/2017 Overview ($ in billions) Performance-driven global real estate investment manager More than 500 institutional clients Equity to deploy: approx. $5,200 million1,2 Co-Investment: $155.0 million2 ($ in billions) Investment Management
Slide 22: Appraisal & Valuation Serving Clients Globally
Premier Clients ($ in millions) 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 YTD Q3 $414 $461 $504 $355 $373 2013 201
Slide 23: Leasing: Strategic Advisory and Execution
Overview Advise occupiers and investors in formulating and executing leasing strategies Tailored service delivery by property type and industry/market specialization Strategic insight and high-level execution driving significant market share gains #1 global market position – $110.8 billion lease vol
Slide 24: Property Sales: Insight and Execution Across Markets & Property Types
Increased Ownership by Active Portfolio Managers Drives Sales Velocity Strategic advisor (sellers and buyers) in commercial real estate #1 global market share, based on Real Capital Analytics 800 basis point advantage over #2 firm for full year 2016 #1 global market position – $211.4 billion sales v
Slide 25: Commercial Mortgage Origination & Servicing
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 $44.1 billion of global mortgage activity in Q3 TTM 20171 Commercial loan origination w
Slide 26: Development Services: Trammell Crow Company
2 Projects In Process/Pipeline1 Overview Recent Projects A premier brand in U.S. development 65+ year record of excellence Partner with leading institutional capital sources Modest capital required from CBRE $116.7 million of co-investment at the end of Q3 2017 $15.9 million in repayment guarantees
Slide 27: Appendix
APPENDIX CBRE
Slide 28: TTM Q3 2017 Revenue
Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Occupier Outsourcing2 Property Management2 Investment Management Valuation Loan Servicing Leasing Sales Commercial Mortgage Origination3 Development Services Other Total Gross Revenue TTM Q3 2017 $ 6,437 $ 1,101 $ 366
Slide 29: 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 $140B+ Outsourcing Spend Available $ in Billions Market Size1 Market size is as of 2015. CBRE Occupier Leasing Advisory revenue
Slide 30: U.S. Leasing Largely Recurring Business Over Time
U.S. Leasing Largely Recurring Business Over Time1 With Increasing Market Share 2016 CBRE U.S. Leasing Volume - $82 billion See slide 40 for footnotes Asset class client rep 17% 2% 11% 70% 42% 58% retail office industrial other tenant rep landlord rep 30
Slide 31: Commercial Real Estate Leasing – Largely Recurring Over Time
Commercial Real Estate Leasing – Largely Recurring Over Time1 See slide 40 for footnotes Leasing commissions occur when leases expire (tenants renew or move) Long-term growth determined by employment growth and market share Leasing activity is deferred but not lost during a recession ($ in millions)
Slide 32: U.S. Property Sales Highly Diverse Business
2016 CBRE U.S. Sales Transactions U.S. Property Sales Highly Diverse Business Across Transaction Size and Asset Class Transaction value $110b asset class (based on value) 32% 29% 39% 8% 2% 12% 28% 15% 35% under $25m $25-$100m $100m+ retail office industrial multi-housing land other
Slide 33: Historical Perspective on Economic Cycle
Historical Perspective on Economic Cycle The financial crisis was unusually severe – recovery appears to be unusually slow & long See slide 41 for footnotes The Financial Crisis was Unusually Severe Commercial Property Had Unusually High Leverage Into the Financial Crisis Source: U.S. BLS Source: Fe
Slide 34: 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 35: Debt & Leverage
Debt & Leverage Excludes $93.6 million, $73.3 million and $208.1 million of cash in consolidated funds and other entities not available for company use at September 30, 2017, December 31, 2016 and December 31, 2011, respectively. Outstanding amount is reflected net of unamortized debt issuance costs
Slide 36: Adjusted EBITDA Reconciliation
Twelve Months Ended ($ in millions) September 30, 2017 December 31, 2016 December 31, 2011(1) December 31, 2006 December 31, 1997 Adjusted EBITDA $ 1,695.9 $ 1,561.0 $ 802.6 $ 661.1 $ 90.1 Adjustments: Integration and other costs related to acquisitions 79.6 125.7 68.8 7.6 - Cost-elimination expense
Slide 37: Adjusted Net Income Reconciliation
Twelve Months Ended December 31, ($ in millions, except per share amounts) 2016 2015 2014 2013 2012 2011 Net income attributable to CBRE Group, Inc. $ 572.0 $ 547.1 $ 484.5 $ 316.5 $ 315.6 $ 239.2 Integration and other costs related to acquisitions 125.7 48.9 - 12.6 39.2 68.8 Amortization expense re
Slide 38: Fee Revenue Reconciliation
Twelve Months Ended September 30, ($ in millions) 20172 20162 Occupier Outsourcing revenue 1 $ 6,436.9 $ 6,036.1 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 4,034.3 3,784.1 Occupier Outsourcing fee
Slide 39: Footnotes
Footnotes Slide 4 Other includes Development Services revenue (1%) and Other revenue (1%). Capital Markets includes Sales revenue (20%) and Commercial Mortgage Brokerage (excluding Loan Servicing) revenue (4%). Contractual Sources include Occupier Outsourcing and Property Management revenue (32%; ex
Slide 40: Footnotes
Slide 8 Adjusted EBITDA excludes (from EBITDA) certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, cost-elimination expenses, integration and other costs related to acquisitions, and merger-related and other non-recurring charges. Footno
Slide 41: Footnotes
Footnotes Slide 33 CRE Debt defined as total US outstanding commercial mortgages per the Board of Governors of the Federal Reserve System. Slide 26 As of December 31 for each year presented except Q3 2017. In Process figures include Long-Term Operating Assets (LTOA) of $0.2 billion for Q3 2017, $0.2
Slide 42: Footnotes
Footnotes Slide 15 – 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