Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — FY2007 Earnings Presentation
44 slides from Cbre's earnings presentation, Feb 6, 2008
Slide 1: Fourth Quarter and Full Year 2007 Earnings Conference Call
CB Richard Ellis Group, Inc. February 6, 2008 Fourth Quarter and Full Year 2007 Earnings Conference Call
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 2008, future operations, future expenses, and future financial performance. Thes
Slide 3: Conference Call Participants
CB Richard Ellis | Page 3 Conference Call Participants Brett White Chief Executive Officer Kenneth J. Kay Senior Executive Vice President & Chief Financial Officer Vance G. Maddocks President, CB Richard Ellis Investors Nick Kormeluk Senior Vice President, Investor Relations
Slide 4: 2007 Business Overview
CB Richard Ellis | Page 4 2007 Business Overview Extended lead as the largest, most diversified global commercial real estate services firm • #1 in Outsourcing • #1 in Transactions (Sales & Leasing) • #1 in Advisory (Consulting & Valuation) • $38 billion in assets under management Leading firm in to
Slide 5: 2007 Performance Highlights
CB Richard Ellis | Page 5 2007 Performance Highlights $317.6 million, or 49% higher than the prior year $970.1 million Normalized EBITDA $180.7 million, or 28% higher than the prior year $834.3 million EBITDA Increased 23% as compared to $1.35 for the prior year Increased 43% as compared to $1.48 fo
Slide 6: Q4 2007 Financial Results
CB Richard Ellis | Page 6 Q4 2007 Financial Results 1. Includes activity reported as “discontinued operations” including $2.1 million of revenue, $0.8 million of operating expenses, $2.7 million of minority interest expense, and $7.9 million of gain on disposition of real estate. 2. Includes Trammel
Slide 7: Full Year 2007 Financial Results
CB Richard Ellis | Page 7 Full Year 2007 Financial Results 1. Includes activity reported as “discontinued operations” including $2.1 million of revenue, $0.8 million of operating expenses, $2.7 million of minority interest expense and $7.9 million of gain on disposition of real estate. 2. Includes T
Slide 8: Normalized EBITDA Margin
CB Richard Ellis | Page 8 8.4% 9.6% 10.1% 11.3% 14.4% 16.2% 16.1% 17.1% 20.0% 2001 2002 2003 2004 2005 2006 2007 2007 Target Normalized1 EBITDA Margin 1. Normalized EBITDA margin excludes merger-related and other non-recurring costs, integration costs related to acquisitions, one-time IPO-related c
Slide 9: Capitalization
CB Richard Ellis | Page 9 Capitalization 1. Represents notes payable on real estate in Development Ser vices that are recourse to the Company. Excludes non-recourse notes payable on real estate of $459.4 million and $329.6 million at December 31, 2007 and December 31, 2006, respectively. 2. Excludes
Slide 10: 2007 Normalized Internal Cash Flow
CB Richard Ellis | Page 10 Internal Cash Flow Integration & merger related costs Net Proceeds from Savills disposition Development gains impacted by purchase accounting Cap Ex D&A Net Income, as adjusted ($ millions) 2007 Normalized Internal Cash Flow Strong cash flow generator Low capital intensity
Slide 11: Revenue Breakdown
CB Richard Ellis | Page 11 3 3 % 2 6 % 2 3 % 6 % 4 % 4 % 2 % 2 % Revenue Breakdown 1. Includes revenue from discontinued operations, which totaled $2.1 million for the quarter and year ended December 31, 2007. 2. Includes Trammell Crow Company’s operations, for the period from the 12/20/2006 acquisi
Slide 12: Segment Contribution
CB Richard Ellis | Page 12 Segment Contribution FY 2007 Revenue1 FY 2007 Normalized2 EBITDA Americas 61% EMEA 22% Asia Pacific 9% Global Investment Management 6% Development Services 2% Americas 51% EMEA 27% Asia Pacific 9% Global Investment Management 12% Development Services 1% 1. Includes revenue
Slide 13: Full Year 2007 Segment Performance
CB Richard Ellis | Page 13 Full Year 2007 Segment1 Performance Americas EMEA Asia Pacific 47% 41% 55% 37% 38% 89% $2,506.9 $3,689.7 $933.5 $1,314.0 $354.8 $548.7 $362.6 $497.2 $191.4 $264.6 $43.8 $82.9 Revenue Normalized EBITDA2 1. Excludes Development Ser vices and Global Investment Management. 2.
Slide 14: Q4 2007 Segment Performance
CB Richard Ellis | Page 14 Q4 2007 Segment1 Performance Americas EMEA Asia Pacific 33% 20% 69% 31% 7% 49% $791.0 $1,049.1 $362.5 $437.6 $117.7 $198.4 $108.0 $141.9 $96.0 $89.6 $20.9 $31.2 Revenue Normalized EBITDA2 1. Excludes Development Ser vices and Global Investment Management. 2. Normalized EBI
Slide 15: Sales and Leasing Revenue - Americas
CB Richard Ellis | Page 15 Sales and Leasing Revenue - Americas 7% (14%) 3% 0% Sales Leasing Full Year Full Year Fourth Quarter Fourth Quarter 1. Includes Trammell Crow Company’s operations prior to the acquisition on Dec ember 20, 2006. T he financial information including Trammell Crow Company is
Slide 16: Sales and Leasing Revenue - EMEA
CB Richard Ellis | Page 16 Sales and Leasing Revenue - EMEA 44% 11% 32% 7% Sales Leasing Full Year Full Year Fourth Quarter Fourth Quarter ($ in millions) $317.7 $458.3 $142.6 $158.9 $322.9 $426.4 $131.9 $141.6 2006 2007
Slide 17: Sales and Leasing Revenue – Asia Pacific
CB Richard Ellis | Page 17 Sales and Leasing Revenue – Asia Pacific 115% 104% 13% 21% Sales Leasing Full Year Full Year Fourth Quarter Fourth Quarter ($ in millions) $80.6 $173.1 $29.7 $60.6 $177.7 $201.1 $63.2 $76.4 2006 2007
Slide 18: US Market Statistics
CB Richard Ellis | Page 18 US Market Statistics 9.8% 9.4% 12.5% 2007 8.7% 9.9% 13.7% 2008F 9.5 122.0 53.4 2007 12.0 10.1 8.7% Retail 94.0 208.0 9.4% Industrial 13.6 79.8 12.6% Office 2008F 2006 2006 US Absorption Trends (in millions of square feet) Q4 Office Vacancy Source: TWR Outlooks 2008 Spring
Slide 19: GCS Strength in 2007
CB Richard Ellis | Page 19 GCS Strength in 2007 17 account renewals 18 account expansions 26 new accounts Strong Account Activity Cross Selling Examples Nielsen: Nielsen: Transaction Management account added Facilities and Project Management in the U.S. BB&T: BB&T: Facilities Management client has a
Slide 20: CBRE Recent Wins
CB Richard Ellis | Page 20 CBRE Recent Wins NEW YORK Broadway Partners Selected CBRE as exclusive leasing agent for two trophy office towers in Midtown Manhattan for a total of 2.2 million sq ft. INDIANA Medco Health Solutions Retained CBRE to assist in site selection and development of the world’s
Slide 21: 2005-2007 In-Fill Acquisitions
CB Richard Ellis | Page 21 2005-2007 In-Fill Acquisitions Advocate Consulting Group, Inc. CB Richard Ellis Charlotte LLC Columbus Commercial Realty Project Advantage, Inc. The Polacheck Company CB Richard Ellis Hawaii Marshall & Stevens’ Cost Segregation Businesses Krombach Partners CB Richard Ellis
Slide 22: Development Services
CB Richard Ellis | Page 22 Annual Normalized EBITDA 15.9 31.3 34.8 3 7.3 73.9 2003 2004 2005 2006 2007 Development Services 1. Includes Trammell Crow Company’s operations prior to the acquisition on 12/20/06. 2. Reflects full year pro-forma results for Development Services, including the impact of 2
Slide 23: CBRE Investors
CB Richard Ellis | Page 23 CBRE Investors Global real estate investment manager. $38 billion in assets under management. 120 institutional investor partners and clients. Diversified geographically with more than 50% of assets outside of the U.S. Focus Area: INVESTMENT MANAGEMENT
Slide 24: Global Investment Programs
CB Richard Ellis | Page 24 Global Investment Programs 8.0 US, UK, Europe, Asia Strategic Partners Sponsored Funds Global Global US, UK, Asia US, UK Region 37.8 2.0 2.4 4.5 20.9 12/31/07 AUM ($B) Global Real Estate Securities Total Global Multi Manager Indirect Investment Other Separate Accounts Dire
Slide 25: Global Growth Strategies
CB Richard Ellis | Page 25 Global Growth Strategies Expand Strategic Partners value added and opportunistic fund series. Continue expanding global strategic relationships. Expand indirect investment programs including real estate securities and fund of funds. Focus Area: INVESTMENT MANAGEMENT
Slide 26: Assets Under Management Growth
CB Richard Ellis | Page 26 Assets Under Management Growth 14 15 17 29 38 2003 2004 2005 2006 2007 Compound Annual Growth Rate 28 % ($ in billions) Focus Area: INVESTMENT MANAGEMENT
Slide 27: Revenue By Region
CB Richard Ellis | Page 27 Revenue By Region Europe 22% Asia 16% North America 62% Europe 37% Asia 5% North America 56% Global Securities 2% 2003 $68.4M 2007 $259.2M Focus Area: INVESTMENT MANAGEMENT Investment Management Fees
Slide 28: Investment Management Fee Growth
CB Richard Ellis | Page 28 Investment Management Fee Growth 68 94 99 126 259 2003 2004 2005 2006 2007 Compound Annual Growth Rate 40% ($ in millions) Focus Area: INVESTMENT MANAGEMENT
Slide 29: 2007 Capital Raised - $9.6 Billion
CB Richard Ellis | Page 29 2007 Capital Raised - $9.6 Billion Equity By Investment Location Europe 46% Global Securities 16% North America 33% Asia 5% By Vehicle Separate Accounts 62% Funds 38% By Investment Strategy Indirect 42% Direct 58% Focus Area: INVESTMENT MANAGEMENT
Slide 30: 2008 Capital Availability
CB Richard Ellis | Page 30 2008 Capital Availability Total Capital 24.7 4.7 1.3 8.4 10.3 Asia Total Global Indirect Europe North America ($ in billions) Focus Area: INVESTMENT MANAGEMENT
Slide 31: Investment Management Growth
CB Richard Ellis | Page 31 13.0 18.0 26.8 35.5 52.7 113.1 2002 2003 2004 2005 2006 2007 57.1 68.4 94.0 99.3 126.3 259.2 28.0 101.7 88.7 347.9 127.3 228.0 2002 2003 2004 2005 2006 2007 Carried Interest Investment Management Investment Management Growth Annual Revenue1. ($ in millions) CAGR 43.5% CAGR
Slide 32: Global Investment Management Carried Interest
CB Richard Ellis | Page 32 Global Investment Management Carried Interest Carried interest pertains to certain real estate investment funds from which CBRE earns an additional share of the profits, once its performance meets certain financial hurdles. Dedicated fund team leaders and executives in our
Slide 33: Market Environment
CB Richard Ellis | Page 33 Market Environment Global liquidity and strong economic growth in first half of 2007. Reduced liquidity and weakening U.S. economy by the fourth quarter of 2007. Market conditions likely to worsen before they improve. Expect normalized rates of growth to return when positi
Slide 34: 2008 Opportunities
CB Richard Ellis | Page 34 2008 Opportunities CBRE Growth Uniquely positioned to thrive in tough environment: • Most diversified revenue base (geography & services) • Variable cost structure • Strong balance sheet • Solid cash flow generation Opportunity to gain share through: • Cross selling • Indu
Slide 35: 2008 Business Outlook
CB Richard Ellis | Page 35 2008 Business Outlook Earnings per share could approach a $2.00 range, although this is variable depending upon assumptions about the economic downturn and timing of a recovery Other businesses are positioned to meet their growth trends Businesses most impacted will be cap
Slide 36: Appendix
CB Richard Ellis | Page 36 Appendix
Slide 37: Consolidated Balance Sheets
CB Richard Ellis | Page 37 Consolidated Balance Sheets 1. In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” certain assets and liabilities at December 31, 2006 have been reclassified to conform to the presentatio
Slide 38: Consolidated Balance Sheets (cont'd)
CB Richard Ellis | Page 38 Consolidated Balance Sheets (cont’d) 1. In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” certain assets and liabilities at December 31, 2006 have been reclassified to conform to the pr
Slide 39: GAAP Reconciliation Tables
CB Richard Ellis | Page 39 GAAP Reconciliation Tables
Slide 40: Reconciliation of Net Income to Net Income, As Adjusted
CB Richard Ellis | Page 40 Reconciliation of Net Income to Net Income, As Adjusted ($ in millions) 2007 2006 Net Income 390.5 $ 318.6 $ Amortization expense related to net revenue backlog, incentive fees, and customer relationships acquired, net of tax 24.9 9.7 Integration costs related to acquisiti
Slide 41: Reconciliation of Normalized EBITDA to EBITDA to Net Income
CB Richard Ellis | Page 41 Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) 2007 2006 2007 2006 Normalized EBITDA 285.8 $ 254.0 $ 970.1 $ 652.5 $ Adjustments: Integration costs related to acquisitions 10.8 2.2 45.2 7.6 Gain on trading securities acquired in the - (8.6) 33.
Slide 42: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
CB Richard Ellis | Page 42 Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in millions) 2005 2004 2003 2002 Normalized EBITDA 461.3 $ 300.3 $ 183.2 $ 130.7 $ Less: Merger-related and other non-recuring charges - 25.6 36.8 - Integration costs related to acquisitions 7.1 14.4 13.
Slide 43: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
CB Richard Ellis | Page 43 Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in mil lions) America s EMEA Asia Pacific Global Investment Management Development Services1 Normalized EBITDA 49 7.2 $ 26 4.6 $ 8 2.9 $ 11 3.1 $ 12.3 $ Less: Merger -related and other n on-recuring char
Slide 44: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
CB Richard Ellis | Page 44 Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in millions) Americas EMEA Asia Pacific Global Investment Management Development Services1 Normalized EBITDA 141.9 $ 89.6 $ 31.2 $ 9.8 $ 13.3 $ Less: Merger-related and other non-recuring charges 16.6 0.
CB Richard Ellis Group — FY2007 Earnings Presentation on 6ix