Cbre Group Inc · NYSE:CBRE
Cbre — Q3 2013 Earnings Presentation
27 slides from Cbre's earnings presentation, Oct 29, 2013
Slide 1: Third Quarter 2013: Earnings Conference Call
CBRE GROUP, INC. Third Quarter 2013: Earnings Conference Call October 29, 2013
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, including statements regarding our future growth momentum, operations, financial performance and business outlook. These statements should be considered as estim
Slide 3: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Bob Sulentic PRESIDENT AND CHIEF EXECUTIVE OFFICER Gil Borok CHIEF FINANCIAL OFFICER Mike Strong CHAIRMAN & CHIEF EXECUTIVE OFFICER, EMEA Nick Kormeluk INVESTOR RELATIONS
Slide 4: Business Overview: Q3 2013 Region Highlights
Asia Pacific Revenue 1% Asia Pacific Revenue 13% local currency Growth in property sales (30% in local currency), led by Australia and Japan Q3 2013 Region Highlights BUSINESS OVERVIEW EMEA Revenue25% Paced by resurgent property sales Double-digit growth across all major business lines Americas Reve
Slide 5: Business Overview: Q3 2013 Business Line Highlights
BUSINESS OVERVIEW Contains recurring revenue aggregating approximately 62% of total revenue for both of the three month periods ended September 30, 2013 and 2012. Revenue ($ in millions) % Change Y-O-Y Q3 2013 % of Q3 2013 Total Q3 2012 USD Local Currency Property, Facilities & Project Management1 6
Slide 6: Q3 2013 Performance Overview
Q3 2013 PERFORMANCE OVERVIEW Revenue EBITDA Normalized EBITDA1 Normalized EBITDA Margin1 Net Income2 EPS2,3 Q3 2013 $1,733.9 M $224.4 M $225.2 M 13.0% GAAP $94.4 M Adjusted $99.7M GAAP $0.28 Adjusted $0.30 Q3 2012 $1,557.1 M $163.6 M $195.3 M 12.5% GAAP $39.7 M Adjusted $83.6 M GAAP $0.12 Adjusted $
Slide 7: Americas Revenue: Major Components
Total Q3 2013 revenue up 11% AMERICAS REVENUE: MAJOR COMPONENTS 19% 8% 9% 26% 12% 9% ($ in millions) YTD Q3 Q3 SALES LEASING PROPERTY, FACILITIES & PROJECT MANAGEMENT
Slide 8: U.S. Market Statistics and Cap Rates
U.S. VACANCY U.S. ABSORPTION TRENDS (in millions of square feet) 3Q12 2Q13 3Q13 4Q13F 4Q14F 2011 2012 2013F 2014F 3Q12 3Q13 Office 15.6% 15.2% 15.1% 15.0% 14.3% 24.7 28.9 30.5 41.1 8.2 8.1 Industrial 13.0% 12.0% 11.7% 11.5% 11.4% 128.3 134.3 194.1 101.0 24.4 55.4 Retail 12.9% 12.5% 12.2% 11.6% 10.6%
Slide 9: Asia Pacific Revenue: Major Components
Total Q3 2013 revenue up 1% in USD or 13% in local currency ASIA PACIFIC REVENUE: MAJOR COMPONENTS 43% or 52% in local currency (4%) or 1% in local currency 5% or 11% in local currency YTD Q3 15% or 30% in local currency (3%) or 6% in local currency 0% or 10% in local currency Q3 ($ in millions) SAL
Slide 10: EMEA Revenue and Normalized EBITDA
EMEA +$56.8 +$110.0 +$10.5 +$13.1 YTD Q3 Q3 ($ in millions) Revenue and Normalized EBITDA REVENUE NORMALIZED EBITDA 25% 16% 83% 146%
Slide 11: EMEA Revenue: Major Components
Total Q3 2013 revenue up 25% EMEA REVENUE: MAJOR COMPONENTS ($ in millions) YTD Q3 50% Q3 SALES LEASING PROPERTY, FACILITIES & PROJECT MANAGEMENT 27% 10% 20% 19% 19%
Slide 12: EMEA Revenue by Service Line
EMEA Revenue by service line 2007 YTD Q3 2013 Contractual Revenue1 = 33% Contractual Revenue1 = 50% Sales Leasing Property, Facilities & Project Management Appraisal & Valuation Other Contractual revenue includes Property, Facilities & Project Management, Appraisal & Valuation and Other. Non-contrac
Slide 13: EMEA Growth: Newer Service Lines
Growth EMEA NEWER SERVICE LINES Real Estate Finance Debt origination and advisory Equity finance Property Match trading platform Residential CBD Project Marketing M&A Strategic infill: Geography Service lines Where we can build scale ORGANIC Significant market share headroom in all service lines Str
Slide 14: Capital Markets EMEA
Capital Markets EMEA KEY FACTS MARKET SHARE YTD Q3 2013 NOTABLE TRANSACTIONS Paddington Central LONDON, UK Tour Adria PARIS, FRANCE Tower 185 FRANKFURT AM MAIN, GERMANY Market volumes increasing (+21% on Q3 2012): Confidence improving and extending into secondary markets and property types Debt rest
Slide 15: Leasing EMEA
Leasing EMEA KEY FACTS MARKET SHARE YTD Q3 2013 NOTABLE TRANSACTIONS Tour Blanche PARIS, FRANCE The Place LONDON, UK Plus+ WARSAW, POLAND Increased occupier confidence yet to be reflected in take-up (lag) 4 quarter rolling market share increases every quarter through 2013 Extending our leadership po
Slide 16: Global Corporate Services EMEA
Global Corporate Services EMEA xxx KEY EMEA FACTS 2013 GLOBAL WINS NEW EMEA CLIENTS Q3 YTD Q3 New 20 64 Expansions 13 43 Renewals 21 48 8 new clients in 2013 9 clients renewed and/or expanded Client satisfaction up Secured 17 strategic hires
Slide 17: Asset Services EMEA
Asset Services EMEA KEY FACTS 2013 M&A YTD Q3 2013 NOTABLE ASSIGNMENTS Country Acquisition Date Czech Republic Impact Corti March Belgium Sogesmaint June Sweden Basale September Centro Sicilia SICILY, ITALY 30 St Mary Axe (The Gherkin) LONDON, UK Sun Plaza Shopping Centre BUCHAREST, ROMANIA Gaining
Slide 18: Global Investment Management
GLOBAL INVESTMENT MANAGEMENT Includes revenue from discontinued operations of $1.5 million for the nine months ended September 30, 2013. Includes revenue from discontinued operations of $0.8 million and $5.5 million for the twelve months ended December 31, 2012 and 2011, respectively. Investment Man
Slide 19: Global Investment Management: Pro-forma Normalized EBITDA
Pro-forma Normalized EBITDA GLOBAL INVESTMENT MANAGEMENT As of September 30, 2013, the Company maintained a cumulative remaining accrual of carried interest compensation expense of approximately $42 million, of which $36 million pertains to anticipated future carried interest revenue. The Company be
Slide 20: Global Investment Management: Assets Under Management
As of 12/31/2012 Acquisitions Dispositions Foreign Currency Net Value Decline As of 9/30/2013 92.0 3.0 7.4 0.5 0.5 87.6 GLOBAL INVESTMENT MANAGEMENT Assets Under Management (AUM) YTD Q3 AUM CHANGE ($ IN BILLIONS) AUM ($ IN BILLIONS) CAGR = 21% Co-investments $183.1 million New equity raised $2.5 bil
Slide 21: Development Services
DEVELOPMENT SERVICES In Process figures include Long-Term Operating Assets (LTOA) of $1.0 billion for 3Q 13, $1.2 billion for 4Q 12, $1.5 billion for 4Q 11, $1.6 billion for 4Q 10, $1.4 billion for 4Q 09 and $0.4 billion for 4Q 08. LTOA are projects that have achieved a stabilized level of occupancy
Slide 22: Mandatory Amortization and Maturity Schedule
As of September 30, 2013 MANDATORY AMORTIZATION AND MATURITY SCHEDULE $ in millions $1,200.0 million revolver facility matures in March 2018. As of September 30, 2013, the outstanding revolver balance was $89.9 million. 1 Global Cash Available Revolver 1,549 10 40 40 68 255 170 2 352 198 800 - 250.0
Slide 23: Capitalization
CAPITALIZATION Excludes $52.2 million and $94.6 million of cash in consolidated funds and other entities not available for Company use at September 30, 2013 and December 31, 2012, respectively. Net of original issue discount of $9.5 million at December 31, 2012. Represents notes payable on real esta
Slide 24: Business Outlook
Strong financial results through Q3 CBRE is well positioned to drive further revenue and EBITDA growth Plan to continue strategic investments in people, technology and M&A Anticipate full year revenue growth in the mid to high single digits Continued healthy property sales activity Steady, double-di
Slide 25: GAAP Reconciliation Tables
GAAP RECONCILIATION TABLES CBRE
Slide 26: Reconciliation of Normalized EBITDA to EBITDA to Net Income
RECONCILIATION OF NORMALIZED EBITDA TO EBITDA TO NET INCOME Carried interest incentive compensation is related to a fund that began recording carried interest expense in Q2 2013. ($ in millions) 2013 2012 Normalized EBITDA 225.2 $ 195.3 $ Adjustments: Carried interest incentive compensation expense
Slide 27: Reconciliation of Net Income to Net Income, As Adjusted
RECONCILIATION OF NET INCOME TO NET INCOME, AS ADJUSTED Carried interest incentive compensation is related to a fund that began recording carried interest expense in Q2 2013. ($ in millions, except for per share data) 2013 2012 Net income attributable to CBRE Group, Inc. 94.4 $ 39.7 $ Amortization e