Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Investor Presentation (November 2007)
35 slides from Cbre's investor presentation, Nov 7, 2007
Slide 1: Investor Presentation November 2007
Investor Presentation November 2007
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 2007 and 2008, future operations and future financial performance. These stateme
Slide 3: Company/Market Overview
CB RICHARD ELLIS Company/Market Overview
Slide 4: CBRE at a glance: #1 in commercial real estate services
(1) As of 9/30/2007. (2) Combined Revenue includes $279.3 million for TCC for the period October 1, 2006 through December 20, 2006. (3) EBITDA excludes one-time items, including merger-related costs, integration costs related to acquisitions, and a loss on trading securities acquired in the TCC acqu
Slide 5: Global Reach & Local Leadership
Global Reach & Local Leadership Individuals/ Partnerships 2006 Revenue by Client Type (1) Corporate REITS Insurance Companies/ Banks Pension Funds Government Other Conduits/ Wall St. Firms Equity/ Opportunity Funds Offshore Investors Q3 2007 TTM Combined Revenue by Region Diversified revenue spread
Slide 6: #1 Position in a Fragmented Market
The market is large but still highly fragmented and has grown at a 4.3% CAGR from 1996 to 2006. #1 Position in a Fragmented Market $26 Billion US Commercial Real Estate Services Industry (1) U.S. Market Share Top 4 = 20.7% Share Source: Full year 2006 external public filings and management estimates
Slide 7: 2007 Revenue Breakdown
2007 Revenue Breakdown (1) Excludes Trammell Crow Company’s operations, which were not purchased until 12/20/2006. (2) Includes Trammell Crow Company’s operations prior to the acquisition on 12/20/2006. The financial information including Trammell Crow Company is presented for informational purposes
Slide 8: Segment Revenue Performance
Segment Revenue Performance(1) CAGR: 34% (1) CAGR is for the time period 2004-Q3 2007 TTM. All revenue amounts are in millions. Strong growth across all segments. CAGR: 29% CAGR: 48% CAGR: 69% Global Investment Management 94.0 127.3 228.0 397.7 - 100.0 200.0 300.0 400.0 500.0 2004 2005 2006 Q3 2007
Slide 9: US GDP Growth Supports Positive Leasing Trends
US GDP Growth Supports Positive Leasing Trends GDP Growth(1) (1) Source: Bureau of Economic Analysis and Torto Wheaton Research (2) Source: Torto Wheaton Research We believe future GDP will continue Q3 trend of positive contributions from business investment and trade. Rent growth continues with low
Slide 10: Q3 2007 Global Office Market Rent Cycles
Q3 2007 Global Office Market Rent Cycles(1) Rents Falling Rents Bottoming Out Rental Growth Accelerating Rental Growth Slowing (1) Markets do not necessarily move along the curve in the same direction or at the same speed. The rental cycle reflects the trend in net effective rents, taking into accou
Slide 11: Leasing
Leasing Global economic expansion fuels improved leasing markets and higher rents In U.S., asking office rents increased 10% in YTD 2007(1) High leasing levels in Europe produce strong rent gains in London, Paris, Madrid and a growing number of cities In Asia, market conditions are favorable as sign
Slide 12: Capital Markets Statistics
Capital Markets Statistics Historical 10-year Treasury Rates(1) CMBS Delinquency Rates(2) Both delinquencies and interest rates are very low by historic standards (1) Source: Wall Street Journal (2) Source: TREPP LLC 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 1977 1979 1981 1983 1985 1987 1989 1991 19
Slide 13: Historical Credit Market Recovery
Historical Credit Market Recovery (1) Source: Citigroup Spreads widened sharply, then began to recover within 6 months 1998 Crisis(1) 2001 Crisis(1)
Slide 14: Sales
(1) Source: IREI (2) Includes TCC revenue for the period December 20, 2006 through December 31, 2006. (3) Includes TCC revenue for the period December 20, 2006 through September 30, 2007. (4) Source: Real Capital Analytics (5) Derived from YTD Q3 2007 results. Sales Rising rents continue to underpin
Slide 15: Outsourcing Services
Outsourcing Services 85 of the Fortune 100 Sq. ft. Millions CAGR: 10% Global Property and Facilities Management(1) Global Project Management Global Corporate Services (1) Represents combined data for CBRE and TCC. Does not include joint ventures and affiliates. (2) Management fees include property m
Slide 16: Outsourcing Growth in 2007
Outsourcing Growth in 2007 Strong Account Activity 24 new accounts 12 account expansions 14 account renewals Cross Selling Initiatives Gaining Traction Fifth Third Bank: Transaction Management client added Project Management Services for 11.5 million sq. ft. Regions Bank: 10-year Facilities and Proj
Slide 17: Global Investment Management Performance
99.1 41.4 Global Investment Management Performance Americas EMEA Asia Pacific Investment Management growing faster than the 13% growth in institutional ownership of real estate(1) CBRE’s Assets Under Management ($ in Billions) Revenue ($ in Millions) (1) Source: IREI and ULI CAGR: 41% 127.3 228.0 CA
Slide 18: Global Investment Management Structure
Global Investment Management Structure Global Strategy / Fund Matrix 100% 62% 15% Compounded Annual Growth Rate for Assets Under Management(1) No Yes No Coinvestment Asset Management Fees Incentive Fees Acquisition Fees Asset Management Fees LP Profits Carried Interest Acquisition Fees Asset Managem
Slide 19: Global Investment Management Benchmark Comparison
Global Investment Management Benchmark Comparison U.K. DISCRETIONARY ACCOUNTS(1) U.S. DISCRETIONARY ACCOUNTS(1) (1) As of December 31, 2006 (%) (%) 10 12 14 16 18 20 Five Years Three Years One Year NCREIF Benchmark Total Gross Return 10 12 14 16 18 20 Five Years Three Years One Year IPD Index Benchm
Slide 20: Development Services Overview
Development Services Overview Development Services is a merchant development business Co-invests alongside equity of institutional partners Develops properties for user/investor clients on a fee basis without co-investing in the projects Does not seek to own development projects long term Revenue an
Slide 21: In-Fill Acquisitions 2005 – 2007 YTD
Purchase price for these 42 acquisitions was approximately $344 million Associated annual revenue estimated to be approximately $541 million which includes the consolidation of revenue from CBRE Technical Services and CBRE Alberta and the now majority owned IKOMA, CBRE India and Project Marketing EB
Slide 22: Financial Overview
CBRE CB RICHARD ELLIS Financial Overview 24
Slide 23: Consistent Long Term Growth
Consistent Long Term Growth(1) CBRE has consistently outpaced industry growth. (1) No reimbursements are included for the period 1992 through 1996 as amounts were immaterial. Reimbursements for 1997 through 2001 have been estimated. For 2002 through Q3 2007 TTM combined, reimbursements are included.
Slide 24: YTD Q3 2007 Record Business Performance Highlights
YTD Q3 2007 Record Business Performance Highlights(1) 2006 2007 60% (In millions, except EPS) 72% Revenue Normalized EBITDA(2) 65% 64% Net income, as adjusted(2) EPS, as adjusted(2)(3) (1) YTD Q3 2006 does not include TCC activity. (2) Normalized EBITDA, net income, as adjusted and earnings per shar
Slide 25: Normalized EBITDA Margins
Normalized EBITDA Margins(1) CBRE has consistently improved its EBITDA margin. (1) Normalized EBITDA margins exclude merger-related and other non-recurring costs, integration costs related to acquisitions, one-time IPO-related compensation expense and gains/losses on trading securities acquired in t
Slide 26: Debt Highlights
($ in millions) Debt Highlights Notes: Normalized EBITDA excludes merger-related and other non-recurring costs, integration costs related to acquisitions, one-time IPO-related compensation expense and gains/losses on trading securities acquired in the TCC acquisition. 2006 combined normalized EBITDA
Slide 27: Q3 2007 TTM Normalized Internal Cash Flow
Q3 2007 TTM Normalized Internal Cash Flow Strong cash flow generator Low capital intensity Utilization of internal cash flow Debt reduction Co-investment activities Development In-fill acquisitions (1) Represents capital expenditures, net of concessions. ($ millions) 487 Net Income, as adjusted D&A
Slide 28: 2007 Key Drivers of Earnings Growth
2007 Key Drivers of Earnings Growth Revenue Growth Margin Expansion Market growth Market share gains Cross selling In-fill acquisitions Synergy savings Operating leverage Fixed cost controls Deleveraging Balance Sheet Term loan pay down Revenue growth, margin expansion and deleveraging allow CBRE to
Slide 29: Key Investment Points
Diversified global platform with the most extensive service lines in the industry Unmatched expertise to service real estate owner and occupier needs Strong beneficial trends for real estate services Outsourcing continues to gain momentum Client needs becoming more international Increased cross bord
Slide 30: Appendix
CBRE CB RICHARD ELLIS Appendix
Slide 31: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in millions) Q3 2007 TTM 2006 2005 2004 2003 2002 Normalized EBITDA 938.1 652.5 461.3 300.3 183.2 130.7 Less: Merger-related and other non-recurring charges 39.8 - - 25.6 36.8 - Loss (Gain) related to trading securities acquired i
Slide 32: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income Nine Months Ended September 30, ($ in millions) 2007 2006 Normalized EBITDA 684.2 398.6 Adjustments: Integration costs related to acquisitions 34.3 5.5 Loss on sale of trading securities acquired in the Trammell Crow Company acquisition 33.
Slide 33: Reconciliation of Net Income to Net Income, As Adjusted
Reconciliation of Net Income to Net Income, As Adjusted ($ in millions) 2007 2006 Net income 268.1 193.5 Amortization expense related to net revenue backlog, incentive fees and customer relationships acquired, net of tax 18.6 2.8 Integration costs related to acquisitions, net of tax 20.9 3.4 Loss on
Slide 34: Reconciliation of Net Income to Net Income, As Adjusted TTM
(a) Amortization expense related to net revenue backlog, incentive fees and customer relationships acquired(1) (b) Integration costs related to acquisitions(1) (c) Loss on trading securities acquired in the Trammell Crow Company acquisition(1) (d) Merger-related costs(1) (e) Costs of extinguishment
Slide 35: CB Richard Ellis
CBRE CB RICHARD ELLIS 34
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