Fee Revenue up 12% (19% in local currency)Normalized EBITDA up 16% (22% in local currency)Adjusted Earnings Per Share up 17% (31% without currency effects)

CBRE Group, Inc. (NYSE:CBG) today reported strong revenue and earnings growth for the second quarter ended June 30, 2015.

Second-Quarter 2015 Results*

  • Revenue for the quarter totaled $2.4 billion, an increase of 12% (19% in local currency1). Fee revenue2 also increased 12% (19% in local currency) to $1.8 billion.
  • On a U.S. GAAP basis, net income rose 19% to $125.0 million. GAAP earnings per diluted share rose 16% to $0.37.
  • Adjusted net income3 rose 18% to $140.0 million, while adjusted earnings per share3 improved 17% to $0.42. For the second quarter of 2015, selected charges (net of income taxes) totaled $15.0 million.
  • Normalized EBITDA4 increased 16% to $303.8 million and EBITDA4 rose 14% to $296.9 million. Normalized EBITDA margin on fee revenue was 17.1%, a 60 basis point increase from the prior-year second quarter.
  • These strong results were achieved despite negative foreign currency effects in the quarter. Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $27.3 million (or $0.05 per share, net of tax) as compared to the prior-year second quarter.

*All percentage changes versus prior-year periods are in U.S. dollars except where noted.

Management Commentary

“We exhibited broad strength in our business during the second quarter, as our talented people, coupled with our high quality, integrated service offering, produced excellent outcomes for our clients and our shareholders,” said Bob Sulentic, CBRE’s president and chief executive officer. “We were especially pleased to achieve outstanding top-line growth, operating leverage and margin expansion in all three regions.”

In EMEA (Europe, the Middle East & Africa), revenue rose 15% (32% in local currency). Growth was vigorous in most EMEA countries and across all business lines. Revenue continued to increase strongly in the Americas, rising 16% (18% in local currency). All Americas business lines posted double-digit revenue growth for the fourth consecutive quarter. In Asia Pacific, revenue improved 9% (21% in local currency). In local currency, Australia and India were strong contributors to the region’s revenue growth.

CBRE continued to capitalize on strong capital flows into commercial real estate. Global property sales revenue surged 23% (32% in local currency) with growth in the vast majority of countries worldwide. Commercial mortgage services revenue growth exceeded 40% for the second consecutive quarter. Loan activity with the U.S. Government-Sponsored Enterprises continued to grow rapidly.

Global leasing revenue rose 9% (15% in local currency). The Americas recorded its eighth consecutive quarter of double-digit leasing revenue growth, led by Brazil, Mexico and the U.S. Australia, Germany and the United Kingdom, among others, also generated significantly higher leasing revenue.

Global Corporate Services, CBRE’s occupier outsourcing business line, continued its long-term secular growth, despite negative foreign currency trends. Global Corporate Services revenue (excluding related transaction revenue, which is accounted for in sales and leasing revenue) improved 9% (17% in local currency). Fee revenue (excluding related transaction revenue) from this business line increased 6% (15% in local currency). CBRE had one of its best quarters for total outsourcing contracts – including 32 expansions of existing client relationships, a new high for the company.

The ongoing growth of Global Corporate Services is being fueled by large space occupiers’ increasing preference for purchasing integrated real estate and facilities services on an account basis. CBRE is extremely well positioned to benefit from this trend. Its service offering for occupiers will be further enhanced with the planned acquisition of the Global Workplace Solutions business of Johnson Controls, Inc., announced on March 31, 2015. The acquisition of Global Workplace Solutions, a leading provider of integrated facilities management services on a global basis, remains on course to be completed later in the third quarter or early in the fourth quarter of 2015, subject to, among other things, receipt of customary regulatory approvals.

The company’s Valuation and Asset Services business lines both achieved strong growth during the second quarter. Valuation revenue rose 23% (35% in local currency) with notable growth in the Americas and EMEA. Asset Services revenue jumped 21% (28% in local currency) while fee revenue from this business line increased 17% (24% in local currency).

Reflecting the company’s strong financial position, Standard & Poor’s raised CBRE’s investment grade credit rating to BBB from BBB- on July 28, 2015.

Second-Quarter 2015 Segment Results

Americas Region (U.S., Canada and Latin America)

  • Revenue rose 16% (18% in local currency) to $1.4 billion. Fee revenue rose 18% (19% in local currency) to $1.06 billion.
  • Normalized EBITDA increased 23% to $207.6 million and EBITDA increased 20% to $203.4 million.
  • Operating income rose 20% to $152.9 million.

EMEA Region (primarily Europe)

  • Revenue improved 15% (32% in local currency) to $585.7 million. Fee revenue rose 14% (33% in local currency) to $409.1 million. Revenue growth was broad-based across the region, led by Germany, Spain and the United Kingdom. Performance in these countries was strong even after the negative effects of currency movement.
  • EBITDA and Normalized EBITDA both totaled $47.8 million, an increase of 75%.
  • Operating income totaled $32.5 million, an increase of 173%.

Asia Pacific Region (Asia, Australia and New Zealand)

  • Revenue increased 9% (21% in local currency) to $261.8 million. Fee revenue rose 3% (17% in local currency) to $200.1 million. Performance improved in several countries, particularly Australia and India.
  • Normalized EBITDA increased 21% to $28.7 million and EBITDA increased 19% to $28.2 million.
  • Operating income totaled $24.3 million, an increase of 19%.

Global Investment Management (investment management operations in the U.S., Europe and Asia Pacific)

  • Revenue totaled $94.1 million, a decrease of 26% (18% in local currency).
  • Normalized EBITDA decreased to $18.4 million and EBITDA decreased to $16.3 million.
  • Operating income decreased to $12.7 million.
  • The decline in revenue and earnings was driven by minimal incentive fees and carried interest achieved in this year’s second quarter, the performance of the Real Estate Investment Trust market in second-quarter 2015 compared with second-quarter 2014, as well as negative foreign currency movement.
  • Assets Under Management (AUM) totaled $88.4 billion. Compared with the second quarter of 2014, AUM was up $2.1 billion in local currency, but down when converted into U.S. dollars.

Development Services (real estate development and investment activities primarily in the U.S.)

  • Revenue increased to $14.4 million.
  • EBITDA decreased to $1.2 million.
  • Operating income improved to $6.3 million.
  • Development projects in process totaled $6.0 billion, up $500 million over the first quarter of 2015. The pipeline inventory totaled $3.7 billion, up $100 million over the first quarter of 2015.

Six-Month Results

  • Revenue for the six months ended June 30, 2015 totaled $4.4 billion, an increase of 11% (18% in local currency). Fee revenue increased 11% (17% in local currency) to $3.2 billion.
  • On a U.S. GAAP basis, net income rose 26% to $218.0 million. GAAP earnings per diluted share rose 25% to $0.65.
  • Adjusted net income rose 22% to $246.0 million, while adjusted earnings per share improved 22% to $0.73. For the six months ended June 30, 2015 selected charges (net of income taxes) totaled $28.0 million.
  • Normalized EBITDA increased 19% to $550.5 million and EBITDA rose 19% to $543.1 million.
  • Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $14.3 million (or $0.03 per share, net of tax) as compared to the prior-year six-month period.

Business Outlook

“At the mid-point of 2015, CBRE is on course for another year of very strong financial performance,” Mr. Sulentic said. “Our business has positive underlying momentum and we are seeing great benefit from the steps we have taken to enhance our service delivery for clients and fortify our market position.”

CBRE believes its full-year 2015 performance is likely to be toward the upper end of its guidance range of $1.90 to $1.95 for adjusted earnings per share.

Conference Call Details

The Company’s second-quarter earnings conference call will be held today (Wednesday, July 29, 2015) at 8:00 a.m. Eastern Time. A webcast, along with an associated slide presentation, will be accessible through the Investor Relations section of the Company’s website at www.cbre.com/investorrelations.

The direct dial-in number for the conference call is 877-407-8037 for U.S. callers and 201-689-8037 for international callers. A replay of the call will be available starting at 1 p.m. Eastern Time on July 29, 2015, and ending at midnight Eastern Time on August 5, 2015. The dial-in number for the replay is 877-660-6853 for U.S. callers and 201-612-7415 for international callers. The access code for the replay is 13612139. A transcript of the call will be available on the Company’s Investor Relations website at www.cbre.com/investorrelations.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

Note: This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations (including the expected closing date of the Global Workplace Solutions acquisition), financial performance (including adjusted earnings per share expectations) and business outlook. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this release. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: disruptions in general economic and business conditions, particularly in geographies where our business may be concentrated; volatility and disruption of the securities, capital and credit markets; interest rate increases; the cost and availability of capital for investment in real estate; clients’ willingness to make real estate or long-term contractual commitments and other factors affecting the value of real estate assets, inside and outside the United States; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in average cap rates across different property types; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; client actions to restrain project spending and reduce outsourced staffing levels; declines in lending activity of Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the U.S. commercial real estate mortgage market; our ability to diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; our ability to leverage our global services platform to maximize and sustain long-term cash flow; our ability to maintain EBITDA margins that enable us to continue investing in our platform and client service offerings; our ability to control costs relative to revenue growth; variations in historically customary seasonal patterns that cause our business not to perform as expected; changes in domestic and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, currency controls and other trade control laws), particularly in Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; foreign currency fluctuations; our ability to identify, acquire and integrate synergistic and accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of our pending Global Workplace Solutions (“GWS”) acquisition as well as of other companies we may acquire (including our ability to close the GWS acquisition and the timing of that closing), and our ability to achieve expected cost synergies relating to those acquisitions; our and our employees’ ability to execute on, and adapt to, information technology strategies and trends ; the ability of our Global Investment Management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; our leverage and our ability to perform under our credit facilities, indentures and other debt instruments, including additional debt that we may incur in connection with the acquisition of the GWS business; our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; liabilities under guarantees, or for construction defects, that we incur in our Development Services business; the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; our ability to compete globally, or in specific geographic markets or business segments that are material to us; changes in tax laws in the United States or in other jurisdictions in which our business may be concentrated that reduce or eliminate deductions or other tax benefits we receive; our ability to maintain our effective tax rate at or below current levels; our ability to comply with laws and regulations related to our global operations, including real estate licensure, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries; and the effect of implementation of new accounting rules and standards.

Additional information concerning factors that may influence the Company's financial information is discussed under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Quantitative and Qualitative Disclosures About Market Risk” and “Cautionary Note on Forward-Looking Statements” in both our Annual Report on Form 10-K for the year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, as well as in the Company’s press releases and other periodic filings with the Securities and Exchange Commission (the SEC). Such filings are available publicly and may be obtained on the Company’s website at www.cbre.com or upon written request from the CBRE Investor Relations Department at investorrelations@cbre.com.

Note – CBRE has not reconciled the (non-GAAP) adjusted earnings per share guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort.

The terms “fee revenue,” “adjusted net income,” “adjusted earnings per share” (or adjusted EPS), “EBITDA” and “Normalized EBITDA,” all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release for a further explanation of these measures. We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP for those periods.

1 Local currency percentage change is calculated by comparing current period results at prior period exchange rates versus prior period results.

2 Fee revenue excludes both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.

3 Adjusted net income and adjusted earnings per share (or adjusted EPS) exclude the effect of selected charges from U.S. GAAP net income and U.S. GAAP earnings per diluted share. Selected charges during the periods presented included the write-off of financing costs, amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions and certain carried-interest incentive compensation expense.

4 EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization. Amounts shown for Normalized EBITDA further remove (from EBITDA) the impact of certain cash and non-cash charges related to acquisitions and certain carried-interest incentive compensation expense.

           

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Dollars in thousands, except share data)

(Unaudited)

  Three Months Ended

June 30,

Six Months Ended

June 30,

2015       2014 2015       2014   Revenue $ 2,390,506 $ 2,126,806 $ 4,443,009 $ 3,987,648   Costs and expenses: Cost of services 1,487,974 1,314,473 2,778,751 2,475,933 Operating, administrative and other 610,158 566,202 1,141,933 1,094,597 Depreciation and amortization   70,605     63,295   140,451   128,498 Total costs and expenses 2,168,737 1,943,970 4,061,135 3,699,028   Gain on disposition of real estate   6,986     23,170   6,986   29,867   Operating income 228,755 206,006 388,860 318,487   Equity income from unconsolidated subsidiaries 6,693 9,264 22,144 24,264 Other (loss) income (1,069 ) 6,364 18 11,165 Interest income 1,402 1,146 3,699 2,723 Interest expense 26,154 28,470 52,368 56,485 Write-off of financing costs   –     –   2,685   – Income before provision for income taxes 209,627 194,310 359,668 300,154 Provision for income taxes   76,474     64,111   133,377   102,013 Net income 133,153 130,199 226,291 198,141 Less: Net income attributable to non-controlling interests   8,124     24,735   8,325   25,014 Net income attributable to CBRE Group, Inc. $ 125,029   $ 105,464 $ 217,966 $ 173,127     Basic income per share: Net income per share attributable to CBRE Group, Inc. $ 0.38   $ 0.32 $ 0.66 $ 0.52   Weighted average shares outstanding for basic income per share   331,999,935     330,133,061   331,988,489   330,084,525   Diluted income per share: Net income per share attributable to CBRE Group, Inc. $ 0.37   $ 0.32 $ 0.65 $ 0.52   Weighted average shares outstanding for diluted income per share   336,154,524     333,918,620   335,926,626   333,634,342     EBITDA $ 296,860   $ 260,194 $ 543,148 $ 457,400                

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Dollars in thousands)

(Unaudited)

  Three Months Ended

June 30,

Six Months Ended

June 30,

2015       2014 2015       2014

Americas

Revenue $ 1,434,489 $ 1,235,720 $ 2,662,105 $ 2,257,401 Costs and expenses: Cost of services 924,509 802,311 1,711,626 1,462,581 Operating, administrative and other 312,471 270,477 570,633 511,144 Depreciation and amortization   44,591   35,187     87,541     69,345   Operating income $ 152,918 $ 127,745   $ 292,305   $ 214,331     EBITDA $ 203,411 $ 169,404   $ 390,732   $ 295,166    

EMEA

Revenue $ 585,714 $ 510,987 $ 1,079,738 $ 1,029,666 Costs and expenses: Cost of services 400,947 360,190 763,450 731,737 Operating, administrative and other 137,628 123,571 262,523 248,104 Depreciation and amortization   14,607   15,319     29,399     32,782   Operating income $ 32,532 $ 11,907   $ 24,366   $ 17,043     EBITDA $ 47,810 $ 27,369   $ 55,388   $ 50,734    

Asia Pacific

Revenue $ 261,828 $ 241,214 $ 470,194 $ 436,857 Costs and expenses: Cost of services 162,518 151,972 303,675 281,615 Operating, administrative and other 71,190 65,487 127,849 123,236 Depreciation and amortization   3,783   3,371     7,629     6,439   Operating income $ 24,337 $ 20,384   $ 31,041   $ 25,567     EBITDA $ 28,154 $ 23,765   $ 38,704   $ 32,006    

Global Investment Management

Revenue $ 94,053 $ 126,314 $ 204,277 $ 238,777 Costs and expenses: Operating, administrative and other 74,334 93,960 148,252 178,958 Depreciation and amortization 7,061 8,452 14,672 17,818 Gain on disposition of real estate   –   23,028     –     23,028   Operating income $ 12,658 $ 46,930   $ 41,353   $ 65,029     EBITDA $ 16,304 $ 38,129   $ 51,184   $ 66,392    

Development Services

Revenue $ 14,422 $ 12,571 $ 26,695 $ 24,947

Costs and expenses:

Operating, administrative and other

14,535 12,707 32,676 33,155 Depreciation and amortization 563 966 1,210 2,114 Gain on disposition of real estate   6,986   142     6,986     6,839   Operating income (loss) $ 6,310 $ (960 ) $ (205 ) $ (3,483 )   EBITDA $ 1,181 $ 1,527   $ 7,140   $ 13,102      

Non-GAAP Financial Measures

As noted above, the following measures are considered “non-GAAP financial measures” under SEC guidelines:

              (i) Fee revenue (ii) Net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as “adjusted net income”) (iii) Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (which we also refer to as “adjusted earnings per share” or “adjusted EPS”) (iv) EBITDA and EBITDA, as adjusted (the latter of which we also refer to as “Normalized EBITDA”)  

None of these measures is a recognized measurement under U.S. generally accepted accounting principles, or U.S. GAAP, and when analyzing our operating performance, readers should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes, and the Company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The Company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.

With respect to fee revenue: The Company believes that investors may find this measure useful to analyze the financial performance of our Global Corporate Services (GCS) and Asset Services business lines and our business generally because it excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business.

With respect to adjusted net income, adjusted EPS, EBITDA and Normalized EBITDA: The Company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, and – in the case of EBITDA and Normalized EBITDA – the effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of EBITDA and Normalized EBITDA, these measures are not intended to be measures of free cash flow for our management’s discretionary use because they do not consider cash requirements such as tax and debt service payments. The EBITDA and Normalized EBITDA measures calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. The Company also uses Normalized EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

Fee revenue is calculated as follows (dollars in thousands):

      Three Months Ended

June 30,

      Six Months Ended

June 30,

2015       2014 2015       2014  

Consolidated

Revenue $ 2,390,506 $ 2,126,806 $ 4,443,009 $ 3,987,648 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   610,283   535,082   1,207,646   1,067,576 Fee revenue $ 1,780,223 $ 1,591,724 $ 3,235,363 $ 2,920,072      

Global Corporate Services

Revenue (excluding related transaction revenue) $ 745,773 $ 682,501 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   477,042   428,582 Fee revenue (excluding related transaction revenue) $ 268,731 $ 253,919  

Asset Services

Revenue (excluding related transaction revenue) $ 254,650 $ 210,444 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   133,241   106,500 Fee revenue (excluding related transaction revenue) $ 121,409 $ 103,944      

Americas

Revenue $ 1,434,489 $ 1,235,720 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   371,976   334,629 Fee revenue $ 1,062,513 $ 901,091  

EMEA

Revenue $ 585,714 $ 510,987 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   176,578   153,154 Fee revenue $ 409,136 $ 357,833  

Asia Pacific

Revenue $ 261,828 $ 241,214 Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients   61,729   47,299 Fee revenue $ 200,099 $ 193,915  

Net income attributable to CBRE Group, Inc., as adjusted (or adjusted net income), and adjusted diluted net income per share attributable to CBRE Group, Inc. shareholders, as adjusted (or adjusted EPS), are calculated as follows (dollars in thousands, except per share data):

      Three Months Ended

June 30,

      Six Months Ended

June 30,

2015       2014 2015       2014   Net income attributable to CBRE Group, Inc. $ 125,029 $ 105,464 $ 217,966 $ 173,127   Adjustments: Amortization expense related to certain intangible assets attributable to acquisitions, net of tax 10,766 11,681 21,875 25,440 Integration and other costs related to acquisitions, net of tax 2,926 – 4,886 – Carried interest incentive compensation, net of tax 1,291 1,564 (400 ) 2,516 Write-off of financing costs, net of tax – – 1,638 –         Net income attributable to CBRE Group, Inc., as adjusted $ 140,012 $ 118,709 $ 245,965   $ 201,083   Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted $ 0.42 $ 0.36 $ 0.73   $ 0.60   Weighted average shares outstanding for diluted income per share   336,154,524   333,918,620   335,926,626     333,634,342  

EBITDA and EBITDA, as adjusted (or Normalized EBITDA) are calculated as follows (dollars in thousands):

     

Three Months Ended

June 30,

     

Six Months Ended

June 30,

2015       2014 2015       2014   Net income attributable to CBRE Group, Inc. $ 125,029 $ 105,464 $ 217,966 $ 173,127   Add: Depreciation and amortization 70,605 63,295 140,451 128,498 Interest expense 26,154 28,470 52,368 56,485 Write-off of financing costs – – 2,685 – Provision for income taxes 76,474 64,111 133,377 102,013   Less: Interest income   1,402   1,146   3,699     2,723   EBITDA 296,860 260,194 543,148 457,400   Adjustments: Integration and other acquisition related costs 4,805 – 8,018 –

Carried interest incentive compensation to match current period revenue

  2,115   2,567   (657 )   4,130   EBITDA, as adjusted $ 303,780 $ 262,761 $ 550,509   $ 461,530  

EBITDA and EBITDA, as adjusted (or Normalized EBITDA) for segments are calculated as follows (dollars in thousands):

      Three Months Ended

June 30,

      Six Months Ended

June 30,

2015       2014 2015       2014  

Americas

Net income attributable to CBRE Group, Inc. $ 96,857 $ 92,304 $ 192,059 $ 162,770 Adjustments: Depreciation and amortization 44,591 35,187 87,541 69,345 Interest expense (income), net 4,247 (226 ) 7,793 8,960 Write-off of financing costs – – 2,685 – Royalty and management service expense (income) 2,370 (2,843 ) 2,478 (3,707 ) Provision for income taxes   55,346     44,982     98,176     57,798   EBITDA 203,411 169,404 390,732 295,166   Integration and other costs related to acquisitions   4,195     –     7,408     –   EBITDA, as adjusted $ 207,606   $ 169,404   $ 398,140   $ 295,166    

EMEA

Net income (loss) attributable to CBRE Group, Inc. $ 19,929 $ (6,967 ) $ 1,443 $ (13,957 ) Adjustments: Depreciation and amortization 14,607 15,319 29,399 32,782 Interest expense, net 11,375 17,184 22,822 24,343 Royalty and management service income (4,975 ) (3,070 ) (6,192 ) (6,955 ) Provision for income taxes   6,874     4,903     7,916     14,521   EBITDA $ 47,810 $ 27,369 $ 55,388 $ 50,734   Integration and other costs related to acquisitions   30     –     30     –   EBITDA, as adjusted $ 47,840   $ 27,369   $ 55,418   $ 50,734    

Asia Pacific

Net income attributable to CBRE Group, Inc. $ 10,949 $ 8,246 $ 13,608 $ 4,002 Adjustments: Depreciation and amortization 3,783 3,371 7,629 6,439 Interest expense, net 991 768 1,889 1,103 Royalty and management service expense 1,586 4,623 1,649 8,262 Provision for income taxes   10,845     6,757     13,929     12,200   EBITDA $ 28,154 $ 23,765 $ 38,704 $ 32,006   Integration and other costs related to acquisitions   580     –     580     –   EBITDA, as adjusted $ 28,734   $ 23,765   $ 39,284   $ 32,006    

Global Investment Management

Net (loss) income attributable to CBRE Group, Inc. $ (2,688 ) $ 12,234 $ 8,020 $ 15,062 Adjustments: Depreciation and amortization 7,061 8,452 14,672 17,818 Interest expense, net 7,818 8,745 15,502 17,586 Royalty and management service expense 1,019 1,290 2,065 2,400 Provision for income taxes   3,094     7,408     10,925     13,526   EBITDA 16,304 38,129 51,184 66,392   Carried interest incentive compensation   2,115     2,567     (657 )   4,130   EBITDA, as adjusted $ 18,419   $ 40,696   $ 50,527   $ 70,522    

Development Services

Net (loss) income attributable to CBRE Group, Inc. $ (18 ) $ (353 ) $ 2,836 $ 5,250 Adjustments: Depreciation and amortization 563 966 1,210 2,114 Interest expense, net 321 853 663 1,770 Provision for income taxes   315     61     2,431     3,968   EBITDA $ 1,181   $ 1,527   $ 7,140   $ 13,102                              

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

  June 30, December 31, 2015 2014 Assets: Cash and cash equivalents1 $ 336,422 $ 740,884 Restricted cash 66,011 28,090 Receivables, net 1,604,620 1,736,229 Warehouse receivables2 750,816 506,294 Property and equipment, net 484,032 497,926 Real estate assets3 36,984 45,604 Goodwill and other intangibles, net 3,119,921 3,136,181 Investments in and advances to unconsolidated subsidiaries 222,539 218,280 Other assets, net   838,914   737,617 Total assets $ 7,460,259 $ 7,647,105   Liabilities: Current liabilities, excluding debt $ 1,834,768 $ 2,303,948 Warehouse lines of credit2 743,592 501,185 Revolving credit facility – 4,840 5.00% senior notes 800,000 800,000 Senior secured term loans 496,875 645,613 5.25% senior notes 426,774 426,813 Other debt 2,296 2,808 Notes payable on real estate4 24,819 42,843 Other long-term liabilities   627,607   617,657 Total liabilities   4,956,731   5,345,707   Equity: CBRE Group, Inc. stockholders’ equity 2,459,592 2,259,830 Non-controlling interests   43,936   41,568 Total equity   2,503,528   2,301,398 Total liabilities and equity $ 7,460,259 $ 7,647,105  

(1)

   

Includes $58.4 million and $58.0 million of cash in consolidated funds and other entities not available for Company use as of June 30, 2015 and December 31, 2014, respectively.

(2)

Represents loan receivables, the majority of which are offset by related warehouse lines of credit facilities.

(3)

Includes real estate and other assets held for sale, real estate under development and real estate held for investment.

(4)

Represents notes payable on real estate (none of which is recourse to the Company).

 

CBRE Group, Inc.Steve IacoSenior Managing DirectorInvestor Relations & Corporate Communications212-984-6535

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