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CBRE Group, Inc. Reports Adjusted Earnings per Share Growth Of 20% for the Fourth Quarter And 18% for the Full Year Of 2012

Adjusted EPS of $0.55 for the Quarter and $1.22 For The Year; Revenue Up 14% for the Quarter And 10% for the Year

Los Angeles, CA – February 6, 2013 - CBRE Group, Inc. (NYSE:CBG) today reported strong increases in revenue and earnings per share for the fourth quarter and year ended December 31, 2012.

Fourth-Quarter​​ 2012 Results

  • Revenue for the quarter was $2.0 billion, up 14% from $1.8 billion in the fourth quarter of 2011.
  • Excluding selected charges1, net income2 was $181.9 million, or $0.55 per diluted share, for the current quarter, up 22% and 20%, respectively, from $149.3 million, or $0.46 per diluted share, in the fourth quarter of 2011. For the current quarter, selected charges (net of income taxes), which primarily related to the acquisition of the ING REIM businesses (completed in 2011), totaled $8.9 million. For the same period in 2011, selected charges totaled $69.5 million.
  • On a U.S. GAAP basis, net income was $173.0 million, or $0.53 per diluted share, for the fourth quarter of 2012, up 117% and 112%, respectively, from $79.8 million, or $0.25 per diluted share, for the prior-year fourth quarter.
  • Excluding selected charges, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)3 increased 12% to $351.7 million for the fourth quarter of 2012 from $314.9 million a year earlier. EBITDA3 (including selected charges) was $345.7 million for the fourth quarter of 2012, an increase of 47% from $235.1 million for the same period last year. For the current quarter, selected charges were related to the aforementioned acquisition of the ING REIM businesses.
  • Foreign currency translation did not have a significant impact on results in the current quarter.

Full-Year 2012​ Results

  • Revenue for full-year 2012 rose to $6.5 billion, an increase of 10% (12% in local currency) from $5.9 billion in 2011.  The 2012 revenue was the highest ever reported by CBRE.
  • Excluding selected charges, net income for 2012 was $399.4 million, or $1.22 per diluted share, up 19% and 18%, respectively, from $334.5 million, or $1.03 per diluted share in 2011. Selected charges (net of income taxes), which primarily related to the acquisition of the ING REIM businesses, cost containment expenses and the impairment of assets, totaled $83.8 million for full-year 2012 and $95.3 million for the same period in 2011.
  • On a U.S. GAAP basis, net income was $315.6 million, or $0.97 per diluted share, for 2012, up 32% and 31%, respectively, from $239.2 million, or $0.74 per diluted share, for 2011.
  • Excluding selected charges, EBITDA totaled $918.4 million for 2012, up 14% from $802.6 million a year earlier. EBITDA (including selected charges) rose 24% to $861.6 million for 2012, compared with $693.3 million for 2011.  For 2012, selected charges were primarily related to the acquisition of the ING REIM businesses and cost containment expenses.

Managemen​t Commentary

“We are very pleased with our strong finish to 2012,” said Robert Sulentic, president and chief executive officer of CBRE. “Despite continued fiscal and economic uncertainty, all of our global operating regions delivered solid top-line growth in the fourth quarter. This growth was paced by the Americas, which benefited from particularly strong performance in our capital markets businesses. Following a sluggish third quarter, activity globally improved across all business lines in the fourth quarter. This continues a pattern of fluctuating market sentiment that has prevailed throughout the slow-paced recovery.”

For 2012 as a whole, CBRE recorded the highest total revenue in its history and its highest earnings and normalized EBITDA since 2007. Reflecting on 2012 results, Mr. Sulentic said: “Our continued success in a cautious macro environment is a testament to the strength and diversity of our geographic footprint and broad product offering, our brand, and the ability of our professionals to work collaboratively to create value for our clients. We believe these qualities position CBRE very well to drive continued profitable growth, and enable us to invest prudently in our business.”

CBRE’s capital markets businesses – property sales and commercial mortgage brokerage -- were top performers in the fourth quarter.  Global property sales revenue rose 22% as the Company completed single-asset and portfolio sales valued at more than $1 billion in the following  markets: Berlin/Frankfurt, Moscow, New York, Seattle and Silicon Valley.  Sales activity was especially strong in the Americas, rising 32%. Despite Europe’s weakening economic growth and continued financial stresses, property sales in EMEA rose 13%, aided by robust performance  in the UK. Commercial mortgage brokerage, predominantly a U.S. business, saw revenue improve 38% for the quarter, as loan origination activity remained strong. For the full year, total mortgage activity (loan originations and sales) climbed to $22.5 billion.

Notwithstanding soft market conditions, leasing revenue rose 5% globally during the quarter, bringing full-year 2012 revenue for this business in line with the 2011 leasing revenue total. This fourth quarter performance was driven by the Americas and Asia Pacific.

Outsourcing also grew significantly during the quarter, with revenue rising 13% globally. All three global regions posted double-digit revenue increases. In Global Corporate Services, 61 long-term contracts were signed during the quarter, and CBRE continued to aggressively expand its scope of services for existing clients: 21 of these 61 contracts were expansions – a new Company record.

Revenue from global investment management rose 18% for the quarter, while adjusted EBITDA improved 48%. CBRE continues to see benefits from the integration of the ING REIM businesses acquired in 2011, which added  higher margin revenue streams that are recurring in nature to the Company’s business mix. The current quarter benefited from higher incentive fees and a full quarter of contribution from the ING REIM Europe business. 

Geographically, the Americas was CBRE’s best-performing region during the fourth quarter. The strength of the Company’s Americas capital markets businesses – coupled with its leading position in central business districts across the region -- led to a 16% overall revenue increase. All business lines in the Americas posted double-digit percentage gains, except leasing, which still posted solid growth of 7%.  EMEA and Asia Pacific both posted 7% overall revenue increases for the quarter, with outsourcing providing the strongest gains in both regions. As noted, property sales also showed strong growth in EMEA, while Asia Pacific benefited from solid growth in the valuation and leasing business lines.

Fourth-Quarter 2​012 Segment Results

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

  • Revenue rose 16% to $1.2 billion, compared with $1.1 billion for the fourth quarter of 2011.
  • EBITDA rose 40% to $199.3 million from $142.5 million for the prior-year fourth quarter. Excluding selected charges incurred in 2011, EBITDA improved 26%.
  • Operating income rose 43% to $169.8 million compared with $119.1 million in last year’s fourth quarter.  Prior-period operating income was impacted by $15.6 million of cost containment expenses.

EMEA Region (primarily Europe)

  • Revenue rose 7% to $357.5 million, compared with $334.6 million in the fourth quarter of 2011.  The increase was primarily driven by improved performance in the United Kingdom, particularly in property sales.
  • EBITDA rose 28% to $53.8 million from $42.1 million for the prior-year fourth quarter. Excluding selected charges incurred in 2011, EBITDA rose 1%.
  • Operating income rose 15% to $45.0 million compared with $39.0 million in last year’s fourth quarter.  Prior-period operating income was impacted by $11.1 million of cost containment expenses.

Asia Pacific Region (Asia, Australia and New Zealand)

  • Revenue was $248.8 million, an increase of 7% from $231.7 million in the fourth quarter of 2011.  This increase reflects improved performance in several countries, particularly Australia and Singapore.
  • EBITDA rose 26% to $38.6 million from $30.5 million for the prior-year fourth quarter. Excluding selected charges incurred in 2011, EBITDA rose 10%.
  • Operating income rose 32% to $36.0 million compared with $27.3 million in last year’s fourth quarter.  Prior-period operating income was impacted by $4.4 million of cost containment expenses.

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

  • Revenue rose 18% to $123.4 million from $104.8 million in the fourth quarter of 2011, largely driven by higher asset management and incentive fees. The fourth quarter of 2012 included an additional month of contribution from ING REIM Europe.
  • EBITDA improved to $18.4 million from an EBITDA loss of $29.4 million in the fourth quarter of 2011. Excluding selected charges, EBITDA rose 48% to $24.4 million from $16.5 million in the prior-year fourth quarter.
  • Operating income improved to $7.3 million, compared with an operating loss of $41.4 million for the fourth quarter of 2011.  Current-period and prior-period operating income was affected by $5.9 million and $45.0 million, respectively, of expenses related to the acquisition of ING REIM.
  • Assets under management totaled $92.0 billion at year-end 2012, up 2% from the third quarter of 2012, but down 2% from year-end 2011.  The decrease from 2011 was driven, in part, by a non-traded REIT’s decision to internalize its management, as reported in the second quarter of 2012, while the gain over the third quarter reflected increased values and favorable foreign currency effects.

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

  • Revenue rose 35% to $28.4 million compared with $21.1 million for the fourth quarter of 2011. 
  • Operating loss narrowed to $25.3 million, from $27.3 million for the fourth quarter of 2011.
  • EBITDA was $35.6 million in the current-year period, compared with $49.4 million for the same period in 2011. The weaker results reflect higher gains on the sale of properties in the fourth quarter of 2011, the majority of which was reported as equity income from unconsolidated subsidiaries and income from discontinued operations. These gains were partially offset by non-controlling interests activity. Equity income from unconsolidated subsidiaries, income from discontinued operations and activity associated with non-controlling interests are all included in the calculation of EBITDA, but not in revenue or operating income.
  • Development projects in process totaled $4.2 billion, down $0.4 billion from the third quarter of 2012 and $0.7 billion from year-end 2011.  The inventory of pipeline deals totaled $2.1 billion, up $0.2 billion from the third quarter of 2012 and $0.9 billion from year-end 2011.

2013 O​utlook

“As the market enters its fourth year of a slow recovery, we expect conditions to continue to improve gradually, tracking the performance of the global economy,” Mr. Sulentic said.  “We are encouraged by positive underlying trends in the U.S. economy – and thus expect the Americas to remain the biggest near-term catalyst for our growth. We also expect to benefit from the recent strengthening in China, and the easing of credit-market tensions in Europe. However, fiscal and economic uncertainties remain high, particularly in Europe, and the overall pace of the recovery continues to be subpar.

“Assuming the global economy plays out as anticipated, we expect to drive solid revenue and earnings increases in 2013. Further, we should see some margin expansion, even as we make greater investments in our people and platform that will enhance our competitive position and bolster long-term, profitable growth.”

In light of the foregoing, CBRE expects to generate earnings per share, as adjusted, in the range of $1.40 to $1.45 for full-year 2013.

Conferenc​e Call Details

The Company’s fourth-quarter earnings conference call will be held on Wednesday, February 6, 2013 at 5:00 p.m. Eastern Time.  A webcast 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 800-230-1059 for U.S. callers and 612-234-9960 for international callers.  A replay of the call will be available starting at 10 p.m. Eastern Time on February 6, 2013, and ending at midnight Eastern Time on February 12, 2013. The dial-in number for the replay is 800-475-6701 for U.S. callers and 320-365-3844 for international callers.  The access code for the replay is 280622.  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 2012 revenue).  The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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, financial performance, 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: general conditions of financial liquidity for real estate transactions, including the impact of the European sovereign debt crisis and U.S. fiscal issues; our leverage and our ability to perform under our credit facilities; commercial real estate vacancy levels; employment conditions and their effect on vacancy rates; property values; rental rates; interest rates; our ability to leverage our platform to grow revenues and capture market share; continued growth in trends toward use of outsourced real estate services; our ability to control costs relative to revenue growth and expand EBITDA margins; our ability to retain and incentivize producers; our ability to identify, acquire and integrate synergistic and accretive businesses; expected levels of interest, depreciation and amortization expense resulting from completed acquisitions; maintaining our effective tax rate; realization of values in investment funds to offset related incentive compensation expense; a decline in asset values in, or a reduction in earnings or cash flow from, our investment programs, as well as related litigation, liabilities and reputational harm; and our ability to comply with laws and regulations related to our international operations, including the anti-corruption laws of the U.S. and other countries.

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 “Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2011, and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Quantitative and Qualitative Disclosures About Market Risk” and “Forward-Looking Statements” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, as well as in the Company’s press releases and other periodic filings with the Securities and Exchange Commission.  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

1 Selected charges include integration and other costs related to acquisitions, amortization expense related to incentive fees and customer relationships acquired in the ING REIM and Trammell Crow Company (TCC) acquisitions, cost containment expenses and the write-down of impaired assets, including a non-amortizable intangible asset.  

2 A reconciliation of net income attributable to CBRE Group, Inc. to net income attributable to CBRE Group, Inc., as adjusted for selected charges, is provided in the section of this press release entitled “Non-GAAP Financial Measures.”

3 EBITDA represents earnings before net interest expense,  income taxes, depreciation and amortization, while amounts shown for EBITDA, as adjusted (or normalized EBITDA), remove the impact of certain cash and non-cash charges related to acquisitions, cost containment and asset impairments.  Our management believes that both of these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculations of EBITDA and EBITDA, as adjusted, generally eliminate the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance.  As a result, our management uses these measures to evaluate operating performance and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA and EBITDA, as adjusted, are useful to investors to assist them in getting a more complete picture of our results from operations.

However, EBITDA and EBITDA, as adjusted, are not recognized measurements under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, readers should use EBITDA and EBITDA, as adjusted, in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA and EBITDA, as adjusted, may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA and EBITDA, as adjusted, are not intended to be measures of free cash flow for our management’s discretionary use, as they do not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA and EBITDA, as adjusted, also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

For a reconciliation of EBITDA and EBITDA, as adjusted to net income attributable to CBRE Group, Inc., the most comparable financial measure calculated and presented in accordance with GAAP, see the section of this press release titled “Non-GAAP Financial Measures.”

CBRE GROUP, INC.
OPERATING RESULTS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
 (Dollars in thousands, except share data)

Three Months Ended
 December 31,

Twelve Months Ended
December 31,

 2012

 2011

 2012

 2011

Revenue

$ 2,005,846

 

 

$ 1,763,625

 

 $ 6,514,099

 

 $ 5,905,411

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

    Cost of services

1,131,570

 

1,008,946

 

3,742,514

 

3,457,130

    Operating, administrative and other

597,453

 

603,647

 

2,002,914

 

1,882,666

    Depreciation and amortization

44,750

 

35,848

 

169,645

 

115,719

Non-amortizable intangible asset impairment

-

 

-

 

19,826

 

-

Total costs and expenses

1,773,773

 

1,648,441

 

5,934,899

 

5,455,515

 

 

 

 

 

 

 

 

Gain on disposition of real estate

650

 

1,372

 

5,881

 

12,966

 

 

 

1

 

 

 

 

Operating income

232,723

 

116,556

 

585,081

 

462,862

 

 

 

 

 

 

 

 

Equity income from unconsolidated subsidiaries

40,859

 

65,815

 

60,729

 

104,776

Other income

6,458

 

8,515

 

11,093

 

2,706

Interest income

1,860

 

2,380

 

7,643

 

9,443

Interest expense

43,025

 

43,235

 

175,068

 

150,249

Income from continuing operations before provision for income taxes

238,875

 

150,031

 

489,478

 

429,538

Provision for income taxes

82,969   

 

72,071

 

185,322

 

189,103

Income from continuing operations

155,906

 

    77,960    

 

    304,156    

 

    240,435    

Income from discontinued operations, net of income taxes

631    

 

32,979

 

631

 

49,890

Net income

156,537

 

    110,939    

 

    304,787    

 

    290,325    

Less:  Net (loss) income attributable to non-controlling interests

 

(16,461)

 

 

31,176

 

 

(10,768)

 

 

51,163

Net income attributable to CBRE Group, Inc.

$    172,998

 

$    79,763

 

$    315,555

 

$    239,162

 

 

$      57,038

 

Basic income per share attributable to CBRE Group, Inc. shareholders

Income from continuing operations attributable to CBRE Group, Inc.

$         0.52 

$         0.23   

$        0.97

$        0.73

Income from discontinued operations attributable to CBRE Group, Inc.

0.01

 

0.02

 

0.01

 

0.02

Net income attributable CBRE Group, Inc.

$         0.53   

$         0.25   

$        0.98  

$        0.75   

 

 

 

 

 

 

Weighted average shares outstanding for basic income per share

 

325,372,928

 

 

320,638,316

 

 

322,315,576

 

 

318,454,191

 

 

 

 

 

 

 

 

Diluted  income per share attributable to CBRE Group, Inc. shareholders

 

 

 

 

 

Income from continuing operations attributable to CBRE Group, Inc.

$         0.52   

 

$         0.23   

$        0.96

$        0.72

Income from discontinued operations attributable to CBRE Group, Inc.

0.01

 

0.02

 

0.01

 

0.02

Net income attributable to CBRE Group, Inc.

$         0.53 

 

$         0.25   

$        0.97  

$        0.74   

 

 

 

 

Weighted average shares outstanding for diluted income per share

329,012,910

324,117,111

 

327,044,145

323,723,755

 

 

 

EBITDA (1)

$    345,730  

 

$    235,130  

 

$    861,621

 

$    693,261  

(1) Includes EBITDA related to discontinued operations of $5.6 million and $12.2 million for the three months ended December 31, 2012 and 2011, respectively, and $5.6 million and $14.1 million for the twelve months ended December 31, 2012 and 2011, respectively.

CBRE GROUP, INC.
SEGMENT RESULTS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
 (Dollars in thousands)

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

 

2012

 2011

 2012

 2011

Americas

 

 

 

 

 

 

 

Revenue 

$     1,247,703

 

$   1,071,525

 

$     4,103,602

 

$     3,673,681

Costs and expenses:

 

 

 

 

 

 

 

Cost of services 

788,867

 

681,129

 

       2,607,029

 

       2,325,964

Operating, administrative and other

264,793

 

252,604

 

       929,950

 

       898,675

Depreciation and amortization

24,286

 

18,721

 

         82,841

 

         62,238

Operating income

$       169,757

 

$      119,071

 

$       483,782

 

$        386,804

EBITDA

 $       199,345

 

 $      142,508

 

 $       578,649

 

 $        462,167

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

Revenue 

$        357,451

 

$      334,555

 

$    1,031,818

 

$     1,076,568

Costs and expenses:

 

 

 

 

 

 

 

Cost of services 

198,012

 

185,890

 

624,498

 

       638,351

Operating, administrative and other

109,945

 

106,474

 

358,696

 

351,304

Depreciation and amortization

4,524

 

3,239

 

14,198

 

10,945

 Non-amortizable intangible asset impairment

-

 

-

 

19,826

 

-

Operating income

 $          44,970

 

 $        38,952

 

$         14,600

 

$         75,968

EBITDA

 $          53,792

 

 $        42,057

 

 $         54,299

 

 $         87,527

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

Revenue 

$        248,845

 

$       231,653

 

$       817,241

 

$        788,754

Costs and expenses:

 

 

 

 

 

 

 

       Cost of services 

144,691

 

141,927

 

510,987

 

492,815

       Operating, administrative and other

65,125

 

59,747

 

224,558

 

212,548

       Depreciation and amortization

3,017

 

2,704

 

11,475

 

9,654

Operating income

$          36,012

 

$         27,275

 

$        70,221

 

$          73,737

EBITDA

 $          38,583

 

 $        30,530

 

 $        80,630

 

 $          82,226

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

Revenue

$        123,409

 

$       104,763

 

$      482,589

 

$        290,065

Costs and expenses:

 

 

 

 

 

 

 

Operating, administrative and other

104,640

 

137,852

 

387,592

 

313,120

Depreciation and amortization

11,487

 

8,324

 

51,290

 

21,271

Gain on disposition of real estate

-

 

-

 

-

 

345

Operating income (loss)

$            7,282

 

$      (41,413)

 

$        43,707

 

$        (43,981)

EBITDA(1)

 $          18,434

 

 $      (29,386)

 

 $        96,359

 

 $        (14,772)

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

Revenue

$          28,438

 

$         21,129

 

$        78,849

 

$           76,343

Costs and expenses:

 

 

 

 

 

 

 

       Operating, administrative and other

52,950

 

46,970

 

102,118

 

107,019

       Depreciation and amortization

1,436

 

2,860

 

9,841

 

11,611

Gain on disposition of real estate

650

 

1,372

 

5,881

 

12,621

Operating loss

$        (25,298)

 

$       (27,329)

 

$       (27,229)

 

$         (29,666)

EBITDA(2)

 $          35,576

 

 $         49,421

 

 $        51,684

 

 $           76,113

(1) Includes EBITDA related to discontinued operations of $0.5 million and $2.1 for the three months ended December 31, 2012 and 2011, respectively and $0.5 million and $4.0 million for the twelve months ended December 31, 2012 and 2011, respectively.

(2) Includes EBITDA related to discontinued operations of $5.1 million and $10.1 million for the three months ended December 31, 2012 and 2011, respectively and $5.1 million and $10.1 million for the twelve months ended December 31, 2012 and 2011, respectively.

Non-GAAP Financial Measures

The following measures are considered “non-GAAP financial measures” under SEC guidelines:

  1. Net income attributable to CBRE Group, Inc., as adjusted for selected charges
  2. Diluted income per share attributable to CBRE Group, Inc, as adjusted for selected charges
  3. EBITDA and EBITDA, as adjusted for selected charges

The Company believes that these non-GAAP financial measures provide a more complete understanding of ongoing operations and enhance comparability of current results to prior periods as well as presenting the effects of selected charges in all periods presented.  The Company believes that investors may find it useful to see these non-GAAP financial measures to analyze financial performance without the impact of selected charges that may obscure trends in the underlying performance of its business.

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

Three Months Ended
December 31,

Twelve Months Ended
December 31,

 2012

 2011

 2012

 2011

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$    172,998

 

$    79,763

 

$   315,555

 

$   239,162

Integration and other costs related to acquisitions, net of tax

4,473

 

42,863

 

29,891

 

59,632

Amortization expense related to ING REIM and TCC incentive fees and customer relationships acquired, net of tax

 

4,437

 

 

3,868

 

25,421

 

9,396

Non-amortizable intangible asset impairment, net of tax

-

 

-

 

15,018

 

-

Cost containment expenses, net of tax

-

 

20,559

 

13,521

 

20,559

Write-down of impaired assets, net of tax

-

 

2,216

 

-

 

5,748

Net income attributable to CBRE Group, Inc., as adjusted

$    181,908   

 

$    149,269   

 

$   399,406

 

$     334,497

 

Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted

$          0.55 

 

$          0.46 

 

$         1.22

 

$           1.03

 

 

 

 

 

 

Weighted average shares outstanding for
diluted income per share

 

329,012,910

 

 

324,117,111

 

327,044,145

 

 

323,723,755

 

 

 

 

 

 

 

 

EBITDA and EBITDA, as adjusted for selected charges are calculated as follows (dollars in thousands):

 

 

 

 

 

 

 

 

Three Months Ended
 December 31,

Twelve Months Ended
December 31,

 

2012

 

2011

2012

 

2011

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$    172,998

 

$     79,763

$      315,555

 

$      239,162

Add:

 

 

 

 

 

 

Depreciation and amortization(1)

46,010

 

36,534

170,905

 

116,930

Non-amortizable intangible asset impairment

-

 

-

19,826

 

-

     Interest expense(2)

44,606

 

45,130

176,649

 

153,497

Provision for income taxes(3)

83,980

 

76,083

186,333

 

193,115

Less:

 

 

 

 

 

 

     Interest income

1,864

 

2,380

7,647

 

9,443

 

 

 

 

 

 

 

EBITDA(4)

$   345,730

 

$   235,130

$    861,621

 

$    693,261

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

Integration and other costs related to acquisitions

5,927

 

45,084

39,240

 

68,788

Cost containment expenses

-

 

31,139

17,578

 

31,139

Write-down of impaired assets

-

 

3,558

-

 

9,447

 

 

 

 

 

 

 

EBITDA, as adjusted (4)

$   351,657

 

$   314,911

$    918,439

 

$    802,635

 

 

 

 

 

 

 

_________________________

(1) Includes depreciation and amortization expense related to discontinued operations of $1.3 million and $0.7 million for the three months ended December 31, 2012 and 2011, respectively and $1.3 million and $1.2 million for the twelve months ended December 31, 2012 and 2011, respectively.

(2) Includes interest expense related to discontinued operations of $1.6 million and $1.9 million for the three months ended December 31, 2012 and 2011, respectively and $1.6 million and $3.2 million for the twelve months ended December 31, 2012 and 2011, respectively.

(3) Includes provision for income taxes related to discontinued operations of $1.0 million and $4.0 million for the three months ended December 31, 2012 and 2011, respectively and $1.0 million and $4.0 million for the twelve months ended December 31, 2012 and 2011, respectively.

(4) Includes EBITDA related to discontinued operations of $5.6 million and $12.2 million for the three months ended December 31, 2012 and 2011, respectively and $5.6 million and $14.1 million for the twelve months ended December 31, 2012 and 2011, respectively.

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

 

 Three Months Ended
December 31,

 Twelve Months Ended
December 31,

 

2012

2011

2012

2011

Americas

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$   124,679

 

$     45,675

 

$     267,313

 

$      182,107

Add:

 

 

 

 

 

 

 

   Depreciation and amortization

24,286

 

18,721

 

82,841

 

62,238

   Interest expense

18,266

 

37,147

 

124,633

 

118,916

Royalty and management service income

(11,435)

 

(9,026)

 

(32,214)

 

(29,729)

   Provision for income taxes

44,634

 

53,280

 

140,634

 

136,803

Less:

 

 

 

 

 

 

 

   Interest income

1,085

 

3,289

 

4,558

 

8,168

EBITDA

$   199,345

 

$   142,508

 

$     578,649

 

$      462,167

Integration and other costs related to acquisitions

-

 

10

 

-

 

126

Cost containment expenses

-

 

15,646

 

-

 

15,646

EBITDA, as adjusted

$   199,345             

 

$   158,164             

 

$     578,649             

 

$      477,939             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$    28,802         

 

$     22,834

 

$        9,846

 

$        37,155

Add:

 

 

 

 

 

 

 

   Depreciation and amortization

4,524

 

3,239

 

14,198

 

10,945

Non-amortizable intangible asset impairment

-

 

-

 

19,826

 

-

   Interest expense

2,414

 

1,446

 

9,152

 

1,633

Royalty and management service expense

3,688

 

4,482

 

12,654

 

14,142

   Provision for income taxes

18,509

 

12,785

 

7,170

 

27,253

Less:

 

 

 

 

 

 

 

   Interest income

4,145

 

2,729

 

18,547

 

3,601

EBITDA

$     53,792

 

$    42,057

 

$       54,299   

 

$       87,527

Cost containment expenses

-

 

11,089

 

15,331

 

11,089

EBITDA, as adjusted

$     53,792             

 

$    53,146             

 

$       69,630

 

$       98,616

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$     17,370

 

$    17,143

 

$       35,040

 

$       32,815

Add:

 

 

 

 

 

 

 

   Depreciation and amortization

3,017

 

2,704

 

11,475

 

9,654

   Interest expense

1,453

 

911

 

4,641

 

3,535

Royalty and management service expense

3,688

 

4,352

 

15,388

 

14,666

   Provision for income taxes

13,187

 

5,552

 

14,840

 

22,637

Less:

 

 

 

 

 

 

 

   Interest income

132

 

132

 

754

 

1,081

EBITDA

$     38,583

 

$    30,530

 

$       80,630

 

$        82,226

Cost containment expenses

-

 

4,404

 

2,247

 

4,404

Integration and other costs related to acquisitions

-

 

36

 

-

 

1,932

EBITDA, as adjusted

$    38,583

 

$    34,970

 

$      82,877             

 

$        88,562             

 

   Three Months Ended
December 31,
   Twelve Months Ended
December 31,
  2012   2011   2012   2011

Global Investment Management

 

 

 

 

 

 

 

Net loss attributable to CBRE Group, Inc.

$  (16,829)

 

$  (32,689)         

 

$    (14,872)

 

$     (44,938)

Add:

 

 

 

 

 

 

 

   Depreciation and amortization(1) 

11,754

 

8,952

 

51,557

 

22,424

   Interest expense(2) 

23,837

 

6,706

 

44,818

 

20,892

Royalty and management service expense

4,059

 

192

 

4,172

 

921

   (Benefit of) provision for income taxes

(4,106)

 

(12,181)

 

11,805

 

(13,404)

Less:

 

 

 

 

 

 

 

   Interest income

281

 

366

 

1,121

 

667

EBITDA(3) 

$    18,434

 

$  (29,386)

 

$      96,359

 

$     (14,772)

Integration and other costs related to acquisitions

5,927

 

45,038

 

39,240

 

66,730

Write-down of impaired assets

-

 

846

 

-

 

5,301

EBITDA, as adjusted(3) 

$    24,361

 

$     16,498

 

$    135,599             

 

$       57,259             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$    18,976         

 

$     26,800         

 

$      18,228

 

$        32,023

Add:

 

 

 

 

 

 

 

   Depreciation and amortization(4) 

2,429

 

2,918

 

10,834

 

11,669

   Interest expense(5) 

2,686

 

3,183

 

11,288

 

12,784

   Provision for income taxes(6) 

11,756

 

16,647

 

11,884

 

19,826

Less:

 

 

 

 

 

 

 

   Interest income

271

 

127

 

550

 

189

EBITDA(7) 

$    35,576

 

$     49,421

 

$      51,684

 

$       76,113

Write-down of impaired assets

-

 

2,712

 

-

 

4,146

EBITDA, as adjusted(7) 

$    35,576         

 

$     52,133         

 

$      51,684         

 

$       80,259         

(1)Includes depreciation and amortization expense related to discontinued operations of $0.3 million and $0.6 million for the three months ended December 31, 2012 and 2011, respectively and $0.3 million and $1.2 million twelve months ended December 31, 2012 and 2011, respectively.

(2)Includes interest expense related to discontinued operations of $0.2 million and $1.5 million for the three months ended December 31, 2012 and 2011, respectively and $0.2 million and $2.8 million for the twelve months ended December 31, 2012 and 2011, respectively.

(3) Includes EBITDA related to discontinued operations of $0.5 million and $2.1 million for the three months ended December 31, 2012 and 2011, respectively and $0.5 million and $4.0 million for the twelve months ended December 31, 2012 and 2011, respectively.

(4) Includes depreciation and amortization expense related to discontinued operations of $1.0 million and $0.1 million for the three months ended December 31, 2012 and 2011, respectively and $1.0 million and $0.1 million for the twelve months ended December 31, 2012 and 2011, respectively.

(5) Includes interest expense related to discontinued operations of $1.4 million and $0.4 million for the three months ended December 31, 2012 and 2011, respectively and $1.4 million and $0.4 million for the twelve months ended December 31, 2012 and 2011, respectively.

(6) Includes provision for income taxes related to discontinued operations of $1.0 million and $4.0 million for the three months ended December 31, 2012 and 2011, respectively and $1.0 million and $4.0 million for the twelve months ended December 31, 2012 and 2011, respectively.

(7) Includes EBITDA related to discontinued operations of $5.1 million and $10.1 million for the three months ended December 31, 2012 and 2011, respectively and $5.1 million and $10.1 million for the twelve months ended December 31, 2012 and 2011, respectively.


CBRE GROUP, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

December 31,

December 31,

2012

2011

Assets:

    Cash and cash equivalents (1)

$      1,089,297

$     1,093,182

    Restricted cash

73,676

67,138

Receivables, net

1,262,823

1,135,371

    Warehouse receivables (2)

1,048,340

720,061

Real estate assets (3)

392,860

464,468

Goodwill and other intangibles, net

2,676,395

2,622,732

Investments in and advances to unconsolidated subsidiaries

206,798

166,832

Other assets, net

1,059,353

949,359

Total assets

$     7,809,542

$     7,219,143

 

Liabilities:

    Current liabilities, excluding debt

$     1,663,022

$     1,688,034

    Warehouse lines of credit (2)

1,026,381

713,362

Revolving credit facility

72,964

44,825

    Senior secured term loans

1,627,746

1,683,561

Senior subordinated notes, net

440,523

439,016

    Senior notes

350,000

350,000

    Other debt

9,352

125

Notes payable on real estate (4)

326,012

372,912

Other long-term liabilities

611,730

510,145

Total liabilities

6,127,730

 

5,801,980

 

 

 

CBRE Group, Inc. stockholders’ equity

1,539,211

1,151,481

Non-controlling interests

142,601

265,682

Total equity

1,681,812

1,417,163

 

 

 

Total liabilities and equity

$     7,809,542

$     7,219,143

(1) Includes $94.6 million and $208.1 million of cash in consolidated funds and other entities not available for Company use
at December 31, 2012 and December 31, 2011, 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 of which $13.9 million and $13.6 million are recourse to the Company as of December 31, 2012 and December 31, 2011, respectively.

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