Exhibit 99.1
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[LOGO]
Investor Presentation
March 2006
[LOGO]
Forward Looking Statements
This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements should be considered as estimates only and actual results may ultimately differ from these estimates. Except to the extent required by applicable securities laws, CB Richard Ellis Group, Inc. undertakes no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are filed with the SEC and available at the SECs Web site (http://www.sec.gov), for a full discussion of the risks and other factors, that may impact any estimates that you may hear today. We may make certain statements during the course of this presentation which include references to non-GAAP financial measures, as defined by SEC regulations. As required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are attached hereto within the appendix.
1
Favorable Trends Investment Sales
[CHART]
Investment Sales
Investor demand continues to exceed the available supply of properties globally
Capital flows into commercial real estate continue at high levels
CBREs U.S. market share expanded to 18% in 2005, reflecting a 10.8 percentage point advantage over the number two firm(2)
Expected capital flows to real estate continue to increase
(1) Source: Institutional Real Estate, Inc. 2006 Plan Sponsor Survey conducted by Kingsley Associates
(2) Source: Real Capital Analytics
3
Favorable Trends Leasing
[CHART]
[CHART]
Leasing Markets
Solid corporate hiring and strong net absorption of commercial real estate amid favorable economic and business conditions
Rent increases in most major office markets across the U.S.
Improved market conditions leading to sustained ongoing rent appreciation in the industrial sector
Significant office leasing market share gains within Europe
Strong growth in Asia Pacific due to improving business confidence
Source: Torto Wheaton Research, Winter 2006
4
The World Class Commercial Real Estate Services Provider
Leading Global |
|
100 years |
|
50 countries |
|
|
#1 in key cities in U.S., Europe and Asia |
|
|
|
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Broad |
|
#1 commercial real estate brokerage |
|
#1 appraisal and valuation |
|
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#1 property and facilities management |
|
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#2 commercial mortgage brokerage |
|
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$17.3 billion in investment assets under management |
|
|
|
|
Scale, Diversity |
|
2x nearest competitor |
|
Thousands of clients, more than 70% of Fortune 100 |
|
|
2005 Revenue of $2.9 billion |
|
|
2005 Normalized EBITDA of $461.3 million(1) |
|
|
Strong organic revenue and earnings growth |
(1) Excludes integration related charges.
6
Global Reach & Local Leadership
2005 Revenue |
by Region |
|
[CHART] |
Leading |
Market Positions |
New York |
ý |
|
|
London |
ý |
|
|
Los Angeles |
ý |
|
|
Chicago |
ý |
|
|
Sydney |
ý |
|
|
Paris |
ý |
|
|
Washington, D.C. |
ý |
|
|
Madrid |
ý |
|
|
Singapore |
ý |
CBRE is unique in offering customers global coverage and leading local expertise.
7
Diversified Blue Chip Client Base
2005 Revenue by Client Type
[CHART]
Representative Clients
[LOGO]
Top 20 customers are less than 9% of total revenue.
8
Full Services Platform
Advisory Services |
FY 2005 |
Outsourcing Services |
||||
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
Revenue |
|
|
|
|
|
|
|
Leasing and sales |
|
Commission |
[CHART] |
Manages properties for owners |
|
Contractual |
|
|
|
|
|
|
|
Mortgage brokerage |
|
Commission and Servicing Fees |
|
Comprehensive corporate real estate services |
|
Contractual |
|
|
|
|
|
|
|
Valuations, appraisals, research |
|
Assignment and Subscription Fees |
|
|
|
|
9
Fragmented Industry
$24 Billion US Commercial Real Estate Services Industry (1)
U.S. Market Share
Top
5 = 16.9% Share
[CHART]
The market has grown at a 4.2% CAGR from 1995 to 2005.
Source: External public filings and management estimates as of 12/31/05.
(1) Excluding investment management.
10
Superior Platform Drives Outperformance
Competitive Landscape
[CHART]
FY 2002 - 2005 CAGR
[CHART]
|
|
CBG |
|
JLL |
|
TCC |
|
Business |
|
|
|
|
|
|
|
|
|
|
|
FY06 P/E |
|
19.8 |
x |
19.0 |
x |
17.9 |
x |
20.6 |
x |
(1) Excluding merger-related charges, integration expenses and IPO-related compensation expense.
(2) Average based on ABM, ACN, ADP, CEN, FDC, KELYA, MAN, PAYX, RHI, and RMK.
Our full-service, global platform has allowed us to outperform competitors.
11
Growth Drivers
INDUSTRY TRENDS |
|
RELATED STRATEGY |
|
|
|
|
|
Increased capital allocations to real estate |
|
|
Leverage demographic-driven investment trends and globalization of capital flows |
|
|
Leverage expertise across all property types |
|
|
|
Aggregate the fragmented private client market |
|
|
|
|
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Institutional ownership of real estate |
|
|
Match risk/return profiles |
|
|
Develop innovative investment vehicles |
|
|
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Grow assets under management |
|
|
|
Capitalize on feet on the ground global platform |
|
|
|
|
|
Improving leasing fundamentals |
|
|
Customer Relationship Management initiative |
|
|
Expanded dash-board for landlord/agency and tenant rep specialists |
|
|
|
Foster cross-market referrals and multi-market business development |
13
INDUSTRY TRENDS |
|
RELATED STRATEGY |
|
|
|
|
|
Corporate outsourcing |
|
|
Single point-of-contact management |
|
|
Emphasize multi-market/cross-border capabilities |
|
|
|
Focus on Fortune 500 penetration |
|
|
|
Invest in enabling IT platforms |
|
|
|
|
|
Increased vendor consolidation |
|
|
Capitalize on cross-selling opportunities |
|
|
Leverage geographic diversity of platform |
|
|
|
Capitalize on breadth of service offerings |
|
|
|
|
|
Capital markets solutions |
|
|
Single-brand and single-source debt and equity offerings |
|
|
Increase mortgage origination referrals from other CBRE businesses (up 56% in 2005) |
|
|
|
More joint debt-equity business development initiatives |
|
|
|
|
|
Continued industry consolidation |
|
|
Selective in-fill acquisitions to round out service-delivery platform |
|
|
Buy-in partner/affiliate companies |
14
Expanding Global Platform Through In-Fill Acquisitions
[GRAPHIC]
Purchase price for these acquisitions was approximately $101 million.
Associated 2006 revenue increase estimated to be approximately $179 million, which includes consolidation of revenue resulting from the now majority owned IKOMA.
EBITDA margins expected to be consistent with CBRE margins upon full integration.
15
Grow Investment Management Business
|
|
($ in billions) |
|
|
|
[CHART] |
|
Source: Institutional Real Estate, Inc.
Note: Ownership shown as of June 30th.
2005 includes $29.9 billion in public untraded funds, a new category starting in 2005.
CBREs Assets Under Management |
($ in billions) |
|
[CHART] |
Note: Assets under management for 1998-2005 shown as of December 31st.
Substantial cross-selling of services currently drives approximately $60 million in revenue for CBRE.
16
Investment Management Business
Global Strategy / Fund Matrix
DEDICATED TEAMS |
|
MANAGED ACCOUNTS |
|
STRATEGIC PARTNERS |
|
SPECIAL SITUATIONS |
|
|
|
|
|
|
|
|
|
MAIN CHARACTERISTICS Strategy |
|
CORE/CORE + |
|
VALUE ADDED |
|
VALUE ADDED/OPPORTUNISTIC |
|
|
|
|
|
|
|
|
|
% Debt |
|
0 - 50% |
|
50- 70% |
|
75% |
|
|
|
|
|
|
|
|
|
Typical Structure |
|
Separate
Accounts |
|
Closed End Funds |
|
Closed End
Funds |
|
|
|
|
|
|
|
|
|
Coinvestment |
|
No |
|
Yes |
|
Yes |
|
|
|
|
|
|
|
|
|
Compounded Annual Growth Rate for Assets Under Management(1) |
|
6% |
|
24% |
|
50% |
|
|
|
|
|
|
|
|
|
CBRE Income Stream |
|
Acquisition
Fees |
|
Acquisition
Fees |
|
Acquisition
Fees |
|
(1) 2000 2005 CAGR.
17
Consistent Long Term Growth
[CHART]
(1) Normalized EBITDA excludes merger-related and other non-recurring costs, Insignia integration costs and one-time IPO-related compensation expense.
CBRE has consistently outpaced industry growth.
19
2005 Business Performance Highlights
(In millions, except EPS)
Revenue |
|
Normalized EBITDA(1) |
[CHART] |
|
[CHART] |
|
|
|
Net Income, as adjusted(1) |
|
EPS, as adjusted(1),(2) |
[CHART] |
|
[CHART] |
|
|
|
Record 2005 Performance |
(1) Normalized EBITDA, net income, as adjusted and earnings per share, as adjusted exclude one-time items related to the Insignia acquisition, IPO-related compensation expense, certain costs of extinguishment of debt and tax expense related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004.
(2) Diluted earnings per share.
20
2005 Revenue Breakdown
[CHART]
|
|
Year ended December 31, |
|
||||
($ in millions) |
|
2005 |
|
2004 |
|
% Change |
|
|
|
|
|
|
|
|
|
Sales |
|
1,077.8 |
|
807.4 |
|
33 |
|
|
|
|
|
|
|
|
|
Leasing |
|
1,105.8 |
|
986.3 |
|
12 |
|
|
|
|
|
|
|
|
|
Property and Facilities Management |
|
208.6 |
|
185.3 |
|
13 |
|
|
|
|
|
|
|
|
|
Appraisal and Valuation |
|
202.4 |
|
156.4 |
|
29 |
|
|
|
|
|
|
|
|
|
Commercial Mortgage Brokerage |
|
140.4 |
|
106.7 |
|
32 |
|
|
|
|
|
|
|
|
|
Investment Management |
|
127.7 |
|
90.7 |
|
41 |
|
|
|
|
|
|
|
|
|
Other |
|
47.9 |
|
32.3 |
|
48 |
|
|
|
|
|
|
|
|
|
Total |
|
2,910.6 |
|
2,365.1 |
|
23 |
|
21
Normalized EBITDA Margins
[CHART]
2005 EBITDA margin improved 24% compared to 2004
Notes:
Normalized EBITDA and normalized EBITDA margins exclude one-time merger-related and other non-recurring costs, Insignia integration costs and one-time IPO-related compensation expense.
22
Debt Highlights
[CHART]
Notes:
Normalized EBITDA excludes merger-related and other non-recurring costs, Insignia integration costs and one-time IPO-related compensation expense.
Total debt excludes non-recourse debt.
23
Capitalization
|
|
As of |
|
|
|
||
($ in millions) |
|
12/31/2005 |
|
12/31/2004 |
|
Variance |
|
Cash |
|
449.3 |
|
256.9 |
|
192.4 |
|
|
|
|
|
|
|
|
|
Senior secured term loan tranche B |
|
265.2 |
|
277.1 |
|
(11.9 |
) |
11 1/4% senior subordinated notes |
|
163.0 |
|
205.0 |
|
(42.0 |
) |
9 3/4% senior notes |
|
130.0 |
|
130.0 |
|
|
|
Other debt(1) |
|
19.0 |
|
22.5 |
|
(3.5 |
) |
Total debt |
|
577.2 |
|
634.6 |
|
(57.4 |
) |
Stockholders equity |
|
793.7 |
|
560.0 |
|
233.7 |
|
Total capitalization |
|
1,370.9 |
|
1,194.6 |
|
176.3 |
|
Total net debt |
|
127.9 |
|
377.7 |
|
(249.8 |
) |
Excludes $256.0 million and $138.2 million of warehouse facility at December 31, 2005 and 2004, respectively.
24
2005 Normalized Internal Cash Flow
[CHART]
Strong cash flow generator
$110 million, or 82.7% improvement from prior year
Low capital intensity
Utilization of internal cash flow
Debt reduction
Co-investment activities
In-fill acquisitions
(1) Represents capital expenditures, net of concessions.
25
Key Drivers of Earnings Growth
Revenue |
|
Margin |
|
Deleveraging |
|
Significant |
|
|
|
|
|
|
|
|
|
Market |
+ |
Operating |
+ |
Redemption of high interest rate bonds |
= |
15% to 20% |
|
|
|
|
|
|
|
|
|
Market share gains |
|
Fixed cost controls |
|
|
|
|
|
|
|
|
|
|
|
|
|
In-fill acquisitions |
|
Scalable overhead structure |
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 revenue |
|
2005 Normalized |
|
2005 debt |
|
2005 Adjusted EPS |
|
Revenue growth, margin expansion and deleveraging allow CBRE to achieve substantial earnings growth.
26
Remember Who We Are
We are:
A growth-oriented business services enterprise with more than 200 offices around the world
A full service provider with a diverse suite of services to address any commercial real estate need
More than 2X the size of our nearest competitor in terms of 2005 revenue
Focused on growing existing client relationships through cross-selling opportunities and a multi-market approach
Focused on outperforming the industry in terms of margin expansion and market penetration
Able to significantly leverage our operating structure
A strong cash flow generator
We are not:
Asset intensive
Capital intensive
A REIT or direct property owner
Dependent on a few markets, producers or clients
Interest rate dependent
27
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
|
|
Year Ended December 31, |
|
||||||||
($ in millions) |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
|
2001(1) |
|
Normalized EBITDA |
|
461.3 |
|
300.3 |
|
183.2 |
|
130.7 |
|
115.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Merger-related and other non-recurring charges |
|
|
|
25.6 |
|
36.8 |
|
|
|
28.6 |
|
Integration costs related to the Insignia acquisition |
|
7.1 |
|
14.4 |
|
13.6 |
|
|
|
|
|
IPO-related compensation expense |
|
|
|
15.0 |
|
|
|
|
|
|
|
EBITDA |
|
454.2 |
|
245.3 |
|
132.8 |
|
130.7 |
|
86.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
9.3 |
|
6.9 |
|
3.6 |
|
3.2 |
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
45.5 |
|
54.8 |
|
92.6 |
|
24.6 |
|
37.9 |
|
Interest expense |
|
54.4 |
|
68.1 |
|
71.3 |
|
60.5 |
|
50.0 |
|
Loss on extinguishment of debt |
|
7.4 |
|
21.1 |
|
13.5 |
|
|
|
|
|
Provision (benefit) for income taxes |
|
138.9 |
|
43.5 |
|
(6.3 |
) |
30.1 |
|
19.1 |
|
Net income (loss) |
|
217.3 |
|
64.7 |
|
(34.7 |
) |
18.7 |
|
(16.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
2,910.6 |
|
2,365.1 |
|
1,630.1 |
|
1,170.3 |
|
1,170.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA Margin |
|
15.8 |
% |
12.7 |
% |
11.2 |
% |
11.2 |
% |
9.8 |
% |
(1) The results of operations for the year ended December 31, 2001 have been derived by combining the results of operations of the company for the period from February 20, 2001 (inception) to December 31, 2001, with the results of operations of CB Richard Ellis Services, Inc. prior to the MBO merger of the two, from January 1, 2001 to July 20, 2001, the date of the merger.
29
Reconciliation of Net Income to Net Income, As Adjusted
|
|
Year Ended Dec. 31, |
|
||||
($ in millions) |
|
2005 |
|
2004 |
|
||
Net income |
|
217.3 |
|
64.7 |
|
||
|
|
|
|
|
|
||
Less: |
|
|
|
|
|
||
|
|
|
|
|
|
||
Amortization expense related to net revenue backlog acquired in the Insignia acquisition, net of tax |
|
|
|
8.2 |
|
||
|
|
|
|
|
|
||
Merger-related charges related to the Insignia acquisition, net of tax |
|
|
|
16.0 |
|
||
|
|
|
|
|
|
||
Integration costs related to the Insignia acquisition, net of tax |
|
4.5 |
|
9.0 |
|
||
|
|
|
|
|
|
||
One-time compensation expense related to the initial public offering, net of tax |
|
|
|
9.4 |
|
||
|
|
|
|
|
|
||
Loss on extinguishment of debt, net of tax |
|
4.6 |
|
10.6 |
|
||
|
|
|
|
|
|
||
Tax expense related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004 |
|
3.5 |
|
|
|
||
|
|
|
|
|
|
||
Net income, as adjusted |
|
229.9 |
|
117.9 |
|
||
|
|
|
|
|
|
||
Diluted income per share, as adjusted |
|
$ |
3.00 |
|
$ |
1.65 |
|
|
|
|
|
|
|
||
Weighted average shares outstanding for diluted income per share, as adjusted |
|
76,618,352 |
|
71,345,073 |
|
||
30