CBRE GROUP, INC. THE GLOBAL MARKET LEADER IN COMMERCIAL REAL ESTATE SERVICES June 2018
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, 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 first quarter earnings release, furnished on Form 8-K and our most recent annual report filed on Form 10-K, 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. INVESTOR DECK | 2
The Global Leader in an Expanding Industry Integrated services to commercial real estate investors and occupiers Scale And Diversity Market Leadership Leading Global Brand #1 #1 Leasing Lipsey’s #1 CRE brand for 17 consecutive years • 5.5 billion square feet under • • management 1 #1 Property Sales One of the World’s Most Ethical Companies • • awarded by Ethisphere Institute for four straight years 450+ offices worldwide 2 • • #1 #1 Outsourcing Serves clients in over 100 countries 2 • S&P 500 company since 2006 • • #1 Appraisal & Valuation #1 Serves over 90% of the Fortune 100 Named a FORTUNE Most Admired Real Estate • • $103 billion AUM 3 $103 • Company for six consecutive years • Over 85,000 transactions in 2017 See slide 48 for footnotes INVESTOR DECK | 3
CBRE is Positioned for Long-Term Growth 1. Services industry with strong structural tailwinds 2. CBRE has: a commanding position with a strong competitive advantage • realized significant earnings growth over two decades • increased the resiliency of its business mix • ($ in millions) Adjusted EBITDA 1 CAGR+16% Since 1997 2,000 Adjusted EBITDA 1,500 1,000 1 st yr. 500 following initial IPO 0 1997 2006 2017 See slide 48 for footnotes INVESTOR DECK | 4
Intense Focus on Client Outcomes Top Talent: Leadership and Production CBRE Premier Platform, Notably Digital & Technology STRATEGIC PRIORITIES Scale, Connectivity and Culture Strategic Investment, Notably M&A and Digital & Tech Thoughtful, Intensive Cost Management INVESTOR DECK | 5
Where Does CBRE Derive Its Revenue? Global market leader across virtually all CBRE business lines Total Fee Revenue 4, 5 $9,389 Development & Other 1 100% Deploy institutional capital into real estate development Capital Markets 2 $2,250 Represent buyers and sellers of real estate; arrange financing 80% (24%) Leasing 60% $2,861 (30%) Represent tenants and landlords in leasing transactions 40% Manage Properties (Over 5 billion square feet): Contractual - Outsourcing – manage facilities and projects for occupiers Sources 3 20% $4,136 (44%) - Property Management – for investor owned property Investment Management – deploy institutional capital into real estate Provide valuations and mortgage servicing 0% 2017 See slide 48 for footnotes INVESTOR DECK | 6
Growing into a Better Balanced and More Resilient Business Contractual revenues today are larger than the entire company in 2006 Total Fee Revenue 4 : $9,389 Development & Other 1 Capital Markets 2 $2,250 (24%) Leasing $2,861 (30%) Total Fee Revenue 4 : $3,742 74% of total fee revenue 5 Development & Other 1 Capital Markets 2 $1,383 (37%) Contractual Sources 3 $4,136 (44%) Leasing 61% of total $1,479 (40%) fee revenue 5 Contractual Sources 3 $818 (21%) 2006 2006 2017 2017 $ in millions (%) – share of total fee revenue 6 See slide 48 for footnotes INVESTOR DECK | 7
Client Size Has Grown as CBRE’s Capabilities Expanded CBRE’s Number of Large Clients Has Increased Dramatically as Ability to Service these Clients Has Expanded 2012 2012 2017 2017 1 17 17 $100 m million ion or m more 5 15 15 $50 t to $100 m millio ion 13 13 50 50 $25 t to $50 m million on Figures in gross revenue. INVESTOR DECK | 8
CBRE’s Financial Flexibility Has Improved Dramatically 2006 2017 ($ in millions) ($ in millions) 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 Debt Maturing in 5 Years Liquidity Debt Maturing in 5 Years Liquidity Note: As of December 31, 2006 and 2017, respectively. Liquidity is defined as cash and cash equivalents plus unused amounts under the revolving credit facility. INVESTOR DECK | 9
Track Record – High-Quality Earnings Growth Materially Outpaced the Market Eight consecutive years of double digit adjusted EPS growth 1 Leverage ratio 2 declined to 0.8x in 2017 from 1.7x in 2012 Cumulative Adjusted EPS Growth – CBRE vs S&P 500 150% 120% 90% 60% 30% 0% 2012 2013 2014 2015 2016 2017 S&P 500 CBRE (Adj. EPS) Source: FactSet, Company filings See slide 49 for footnotes INVESTOR DECK | 10
CBRE Has Increased Profit Margin While Improving Business Mix 10% 9% 8% 7% 6% 5% 4% 2012 2013 2014 2015 2016 2017 2018P Note: Profit margin defined as adjusted net income/fee revenue INVESTOR DECK | 11
Three Structural Tailwinds for Commercial Real Estate Services 1. Outsourcing – Occupier Acceptance of Outsourced Commercial Real Estate Services 2. Asset Allocation – by Institutional Investors to the Commercial Real Estate Asset Class 3. Consolidation – Customers are Driving Consolidation to Global Industry Leaders INVESTOR DECK | 12
Tailwind 1 – Occupiers of Real Estate Increasingly Turn to Outsourcing CBRE’s market leading position driven by both organic growth and strategic M&A • High Barriers to Entry 500+ • 5 Year Contracts Typical Major Accounts • Facilities Management Project Management • Transactions • • Consulting 1990 First CRE 1992 1996 2000 2004 2008 2012 2016 2017 Outsourcing 2006 2013 2015 Contract TCC Norland JCI GWS INVESTOR DECK | 13
Tailwind 2 – Increasing Institutional Ownership of CRE Drives Demand for Services Institutions are more frequent users of CRE services vs. legacy ownership Institutional Asset Allocation to Real Estate has Increased Strongly Over Time 10.0% 8.0% 6.0% 4.0% 2.0% 0% 1980 1990 2000 2010 2016 Source: NAIOP, Federal Reserve Board of Governors, The Conference Board, Pension & Investments, Hodes Weill & Associates INVESTOR DECK | 14
Tailwind 3 – CBRE Holds the Market Leading Position in a Consolidating Industry CBRE has pursued and won 5 of the 12 mergers noted below (did not bid on other 7) Notes: Revenues of private companies are estimated; CBRE 2015 gross revenue includes four months of actual gross revenue from the acquired GWS business while under our ownership, annualized for illustrative purposes; other public companies are as reported, with Savills revenue translated to US Dollars. INVESTOR DECK | 15
We Believe Digital Opportunities Significantly Exceed Disruption Risk We Have Conducted cted a Compre rehens hensive ive Global l Digital l & Techno nolo logy y Strategy egy Review of Opportun uniti ties es & Risks Breadth adth and depth h of d domain in Risk and opportu tunity ty Significa cant t researc arch on experti tise, se, global al collaborat aboration assessm ssment nts s for all lines of emergi ging g trends, ds, fact t business ess and geograph raphie ies based ed appro proac ach INVESTOR DECK | 16
CBRE Vantage: Industry Leading Suite of Enablement Technology • Focused technology investments further differentiating CBRE and its professionals • CBRE can make impactful investments at a smaller percentage of company spend vs others Sample of CBRE Technology Investments CBRE Floored CBRE Deal IQ Forum Analytics SIMMS Platform SaaS Interactive Creation of 3D Floor SaaS CRM and Deal Leading Predictive Analytics Plans and Virtual Environments Management Platform Platform www.cbre.com/vantage INVESTOR DECK | 17
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