CBRE GROUP, INC. Second Quarter 2019: Earnings Conference Call AUGUST 1, 2019
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, capital deployment, acquisition integration and financial performance expectations. These statements are estimates only and actual results may ultimately differ from them. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our second quarter earnings release, furnished on Form 8-K and our most recent annual report filed on Form 10-K and our most recent quarterly report filed on Form 10-Q, and in particular any discussion of risk factors or forward-looking statements therein, which are available on the SEC’s website (www.sec.gov), for a full discussion of the risks and other factors that may impact any forward-looking statements 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. Where 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. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 2
CONFERENCE CALL PARTICIPANTS Bob Sulentic President and Chief Executive Officer Leah Stearns Chief Financial Officer Brad Burke SVP, Corporate Finance & Investor Relations CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 3
2Q 2019 FINANCIAL RESULTS $ in millions except per share figures Revenue Fee Revenue 1 Adj. EBITDA 2 EPS 3 Adj. EPS 3,4 2Q19 5,714 2,849 468 $0.66 $0.81 2Q18 5,111 2,536 439 $0.67 $0.74 ▲ 12% ▲ 12% ▲ 7% ▼ -1% ▲ 11% USD Local ▲ 15% ▲ 15% ▲ 8% ◄► 0% ▲ 13% Currency • Double-digit revenue growth in leasing, outsourcing and U.S. capital markets – Leasing benefiting from healthy market conditions and CBRE’s increasingly differentiated capabilities • Margin improvement in Advisory Services and GWS benefiting from reorganization • REI segment Adj. EBITDA and margin decline was expected; mostly due to development timing See slide 21 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 4
ADVISORY SERVICES $ in millions Fee Revenue 1 2Q19 Fee 1,935 Revenue by Geography +11% 1,750 APAC 12% Contractual Sources 511 (27%) EMEA Contractual 18% Sources 485 (28%) Americas 70% Capital Markets 606 (31%) Capital Markets 578 (33%) Adjusted EBITDA 2 +15% 334 290 Advisory Advisory Leasing 16.6% 17.2% Leasing 818 (42%) 687 (39%) Margin Margin 2Q18 2Q19 2Q18 2Q19 See Slide 13 for revenue detailed by line of business. See slide 21 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 5
GLOBAL WORKPLACE SOLUTIONS $ in millions 2Q 2019 HIGHLIGHTS Fee Revenue 1 • Biggest “go-live” day ever 764 +14% ‒ Onboarded 100 million square feet in a single day 668 • FacilitySource acquisition supporting penetration of key sectors • Clients utilizing multiple GWS services have increased as percentage of business pipeline for six consecutive quarters 2Q18 2Q19 2Q19 REPRESENTATIVE CLIENTS Adjusted EBITDA 2 Continued momentum in client wins driving growth 104 +32% 79 11.8% 13.6% Margin Margin 2Q18 2Q19 See slide 21 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 6
REAL ESTATE INVESTMENTS $ in millions DEVELOPMENT Adjusted Revenue 1 Strong pipeline, positioned for continued strong results 216.3 ($ in billions) 13.1 12.7 169.0 10.8 10.6 2.5 10.3 9.4 3.7 99.0 19.3 4.2 3.8 3.6 4.0 48.0 10.6 18.4 9.0 6.8 6.7 6.6 5.4 101.7 98.9 2014 2015 2016 2017 2018 2Q19 3 4 In Process Pipeline 2Q18 2Q19 Investment Management Development INVESTMENT MANAGEMENT Equity Income/Other Improved performance with higher AUM vs. last year Adjusted EBITDA 2 ($ billions) 107.2 106.7 105.5 104.5 104.2 69.9 101.7 30.9 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 FLEXIBLE-SPACE SOLUTIONS (HANA) Expect first location to open in Dallas in 3Q 2019 2Q18 2Q19 See slide 21 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 7
FINANCIAL SUMMARY ADJUSTED EPS 3 LEVERAGE SUMMARY Net Debt 1 to TTM Adj. EBITDA 2 $3.75 4 $3.28 1.10x $2.73 $2.30 0.79x $2.05 $1.68 2Q18 2Q19 2014 2015 2016 2017 2018 2019E • Increasing 2019 Adj. EPS outlook to a range of $3.70 to $3.80 – Improved outlook driven by better than expected business momentum, most notably in the Americas – Adj. EPS more weighted to Q4 than in prior year due to development timing • Nearly $1B of capital available to invest in remainder of 2019 taking into account planned acquisitions 5 See slide 22 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 8
SUMMARY • Financial performance reflects strong strategic position and business momentum • Commercial real estate market fundamentals remain healthy – The Americas, our largest market, is particularly strong • Ongoing investments in people, capabilities and technology to drive great client outcomes • Telford acquisition, if approved, would expand development business internationally – The U.K. market is in early stages of secular shift in institutionally owned urban rental housing • CBRE is well-positioned to drive strong, consistent growth CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 9
SUPPLEMENTAL SLIDES, GAAP RECONCILIATION TABLES AND FOOTNOTES
MANDATORY AMORTIZATION AND MATURITY SCHEDULE AS OF JUNE 30, 2019 1 ($ in millions) 3,500 2,962 3,000 2,500 Available Revolving Credit Facility 2,000 1,500 1,000 530 500 Global 600 Global Cash 455 425 Cash 0 Liquidity 2018 2019 2020 2021 2022 2023 2024 2025 2026 Cash USD Term Loan Senior Notes - 5.25% Revolving Credit Facility Euro Term Loan Senior Notes - 4.875% 1. $2,800 million revolving credit facility matures in March 2024. As of June 30, 2019, the revolving credit facility balance was $230 million. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 11
DEBT & LEVERAGE June 30 2019 2018 ($ in millions) Cash 1 $ 394 $ 419 Revolving credit facility 230 598 Senior term loans 2 750 744 Senior notes 2 1,016 1,015 Other debt 3,4 3 5 $ 1,999 $ 2,362 Total debt Total net debt 5 $ 1,605 $ 1,943 TTM Adjusted EBITDA 6 $ 2,037 $ 1,772 Net debt to TTM Adjusted EBITDA 0.79x 1.10x 1. Excludes $141.8 million and $112.7 million of cash in consolidated funds and other entities not available for company use at June 30, 2019 and 2018, respectively. 2. Outstanding amount is reflected net of unamortized debt issuance costs. 3. Excludes $1,350.0 million and $1,471.6 million of warehouse facilities for loans originated on behalf of the FHA and other government sponsored enterprises outstanding at June 30, 2019 and 2018, respectively, which are non-recourse to CBRE Group, Inc. 4. Excludes non-recourse notes payable on real estate, net of unamortized debt issuance costs, of $10.1 million and $3.1 million at June 30, 2019 and 2018, respectively. 5. Total net debt is calculated as total debt (excluding non-recourse debt) less cash available for company use, as disclosed above. 6. Adjusted EBITDA excludes (from EBITDA) the impact of a one-time non-cash gain associated with remeasuring CBRE’s investment in an unconsolidated subsidiary in New England to fair value as of the date it acquired the remaining controlling interest, costs associated with our reorganization, including cost-savings initiatives, costs incurred in connection with a litigation settlement, integration and other costs related to acquisitions, and certain carried interest incentive compensation expense to align with the timing of associated revenue. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 12
Q2 2019 BUSINESS LINE REVENUE CONTRACTUAL REVENUE AND LEASING, WHICH IS LARGELY RECURRING OVER TIME 1 , IS 77% OF FEE REVENUE ($ in millions) Contractual Revenue & Leasing Property & Investment Global Advisory Management Commercial Workplace Project (excl. Carried Loan Advisory Advisory Mortgage Development Carried Solutions Management Interest) Valuation Servicing Leasing Sales Origination Services Interest Total Revenue Q2 2019 $ 3,385 $ 556 $ 100 $ 149 $ 50 $ 818 $ 467 $ 140 $ 48 $ 1 $ 5,714 Fee Revenue 2 Q2 2019 $ 764 $ 312 $ 100 $ 149 $ 50 $ 818 $ 467 $ 140 $ 48 $ 1 $ 2,849 77% of total fee revenue % of Q2 2019 Total Fee 100% 27% 11% 3% 5% 2% 29% 16% 5% 2% <1% Revenue Fee Revenue Growth Rate (Change Q2 2019-over-Q2 2018) ▲ 13% ▲ 19% ▲ 2% ▲ 14% ▲ 7% ▲ 1% ▲ 1% ▲ 16% ▲ 160% ▲ 12% USD n/a Local ▲ 14% ▲ 21% ▲ 4% ▲ 19% ▲ 10% ▲ 6% ▲ 5% ▲ 16% ▲ 160% ▲ 15% n/a Currency See slide 22 for footnotes. CBRE CBRE GROUP, INC. | 2Q 2019 EARNINGS CONFERENCE CALL 13
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