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CBRE Group, Inc. Reports Solid Revenue And Earnings Growth For The Second Quarter Of 2013

Revenue Increases by 9%, while Adjusted Earnings Per Share Increases by 15%

Los Angeles, CA – July 25, 2013 CBRE Group, Inc. (NYSE:CBG) today reported solid growth in revenue and earnings for the second quarter ended June 30, 2013. 

Second-Quarter 2013 Results

  • Revenue for the quarter totaled $1.74 billion, an increase of 9% from $1.6 billion in the second quarter of 2012. 
  • Excluding selected charges1, net income2 increased 16% to $101.8 million from $88.0 million in the second quarter of 2012, and earnings per diluted share increased 15% to $0.31 from $0.27 in the prior-year period. For the second quarter, selected charges (net of income taxes), which primarily related to costs associated with the Company’s recent corporate debt refinancing, totaled $31.9 million. For the same period in 2012, selected charges totaled $12.2 million, and were primarily related to the ING REIM businesses acquired in 2011.
  • On a U.S. GAAP basis, net income totaled $69.9 million, compared with $75.9 million for the second quarter of 2012.  GAAP earnings per diluted share totaled $0.21, compared with $0.23 in last year’s second quarter. The costs associated with the Company’s corporate debt refinancing reduced GAAP earnings per diluted share by $0.08 for the quarter
  • Excluding selected charges, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) 3 increased 10% to $243.1 million from $220.9 million in the second quarter of 2012. EBITDA3 (including selected charges) rose 14% to $240.5 million for the second quarter of 2013, from $211.8 million for the same period a year earlier. Selected charges in 2013 related to carried interest incentive compensation expense while selected charges in 2012 related to the integration of the acquired ING REIM businesses.
  • CBRE completed its 2013 corporate debt refinancing program in June, when it paid down all of its 11.625% senior subordinated notes ($450 million aggregate principal amount), due in 2017. As a result of all of its 2013 refinancing actions, the Company has meaningfully extended debt maturities, lowered annual interest expense by approximately $50 million and markedly increased its financial flexibility. 

Management Commentary

“During the quarter, CBRE benefited from our balanced business mix and focus on serving our clients,” said Robert Sulentic, the Company’s president and chief executive officer. “Revenue grew solidly overall with meaningful improvement in all three geographic regions and continued strength in our global capital markets and occupier outsourcing businesses. This performance is especially noteworthy in light of continued weak global economic growth and heightened financial market volatility late in the quarter. In addition, as previously discussed, we also made significant incremental investments in our platform, which are designed to support future growth and better serve our clients.” 

Performance continued to rebound in Asia Pacific, which led the regions with a 16% rise in revenue. Despite slowing economic activity, Greater China saw a significant revenue increase across business lines while property sales drove strong revenue gains in Australia and Singapore. Growth in the Americas remained strong as well, with revenue increasing by 10%. Higher revenue in France and the United Kingdom contributed to a 9% overall revenue rise in EMEA.

Capital Markets businesses continued to help drive CBRE’s growth. Global property sales revenue was up 20%, led by Asia Pacific and the Americas. In EMEA, weakness in continental Europe was offset by solid growth in the United Kingdom, where CBRE held the number one market position in investment sales in the second quarter.  Demonstrating the continued strong interest in premier assets in gateway cities, CBRE’s New York operations negotiated the sale of a 40% interest in the iconic General Motors Building and Coach’s purchase of a 740,000 square foot condominium interest in an office tower to be built at the Hudson Yards development site.

Commercial mortgage brokerage revenue improved 22% as investor appetite for debt financing remained strong throughout the quarter, despite the onset of financial market volatility.  Loan origination activity in the U.S. rose 28% during the quarter to $5.4 billion, with a broad spectrum of capital sources markedly increasing their lending activity. The appraisal and valuation business also stayed strong with global revenue improving 10%, led by Asia Pacific.

Revenue from property, facilities and project management services rose 11% globally. Growth was notably strong in EMEA, where revenue increased 22%. The Company’s Global Corporate Services (GCS or occupier outsourcing) business remained a strong growth catalyst, as revenue (generally including commissions on sales and lease transactions associated with GCS accounts) rose 11% globally. CBRE signed a total of 55 GCS contracts during the quarter. Among these were 22 contracts with new clients, including an agreement to manage J.C. Penney’s 112 million sq. ft. U.S. real estate portfolio, and 20 expansions of existing contracts, including those with AT&T, Citigroup, Dell and Oracle.

Global leasing revenue rose 4% amid soft market conditions in much of the world. The leasing business continued to be challenged by a high degree of occupier caution and weak economic activity globally. Nevertheless, revenue improved 5% in the Americas and 3% in EMEA while edging down 1% in Asia Pacific. A major contributor to the decline in Asia Pacific was the yen’s continued depreciation against the dollar. In local currency, Asia Pacific leasing revenue increased 3%. 

Second-Quarter 2013 Segment Results

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

  • Revenue rose 10% to $1.1 billion, compared with $1.0 billion for the second quarter of 2012.
  • EBITDA totaled $163.3 million, up 9% from $149.3 million in last year’s second quarter.
  • Operating income rose 3% to $132.0 million, compared with $127.9 million for the prior-year second quarter.   

EMEA Region (primarily Europe)

  • Revenue rose 9% to $270.3 million, compared with $248.2 million for the second quarter of 2012.  The increase was primarily driven by improved performance in France and the United Kingdom, most notably in property, facilities and project management
  • EBITDA totaled $11.7 million, compared with $15.7 million for last year’s second quarter.
  • Operating income totaled $8.3 million compared with $12.6 million for the same period in 2012.
  • Business performance in the second quarter reflected a shift in revenue mix toward lower-margin property, facilities and project management services as well as approximately $5 million of severance in continental Europe and other expenses.   

Asia Pacific Region (Asia, Australia and New Zealand)

  • Revenue was $233.1 million, an increase of 16% from $201.2 million for the second quarter of 2012.  The increase reflects improved overall performance in nearly all countries within the region, particularly Australia, Greater China and Singapore.  
  • EBITDA improved to $26.0 million, up 12% from $23.3 million for last year’s second quarter.
  • Operating income rose 12% to $23.2 million, compared with $20.7 million for the second quarter of 2012.

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

  • Revenue totaled $115.1 million compared with $119.7 million in the second quarter of 2012. 
  • Excluding selected charges, EBITDA increased 16% to $34.6 million from $29.8 million in the prior-year second quarter.  EBITDA (including selected charges) rose 55% to $32.0 million compared with $20.7 million in the second quarter of 2012
  • Operating income totaled $23.1 million, up 79% from $12.9 million for the second quarter of 2012.  The prior-period operating income was impacted by $9.1 million of expenses related to the acquisition of the ING REIM businesses.
  • EBITDA and operating income in the second quarter benefited from improved co-investment results as well as lower provisions for bad debt and legal matters, as compared with the prior-year period.
  • Assets under management (AUM) totaled $88.2 billion at the end of the second quarter, a 4% decrease from year-end 2012. The decrease was primarily due to property dispositions (net of acquisitions) and negative foreign currency effects, which reduced AUM by $2.3 billion and $1.8 billion, respectively. This was partly offset by gains of $0.3 billion in the value of the investment portfolio.

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

  • Revenue totaled $9.9 million, compared with $17.8 million for the second quarter of 2012.  The revenue decline was attributable to lower rental revenue resulting from property dispositions.
  • EBITDA improved to $7.4 million, compared with $2.8 million reported in the prior-year period. The increase was largely driven by higher gains on the sale of properties (reflected in both gain on disposition of real estate and equity income from unconsolidated subsidiaries) partially offset by non-controlling interests activity.
  • Operating income totaled $1.0 million compared with an operating loss of $1.4 million for the same period in 2012.
  • Development projects in process totaled $4.7 billion, up 12% from year-end 2012, and the inventory of pipeline deals totaled $1.7 billion, down 19% from year-end 2012

Six-Month Result

  • Revenue for the six months ended June 30, 2013 totaled $3.2 billion, an increase of 9% from $3.0 billion in the six months ended June 30, 2012. 
  • Excluding selected charges, net income increased 14% to $153.3 million for the six months ended June 30, 2013 from $133.9 million in the six months ended June 30, 2012, and earnings per diluted share increased 12% to $0.46 compared with $0.41 for the prior-year period. For the six months ended June 30, 2013, selected charges (net of income taxes), which primarily related to costs associated with the Company’s recent corporate debt refinancing and the ING REIM businesses acquired in 2011, totaled $45.9 million. For the same period in 2012, selected charges totaled $31.1 million, and were primarily related to the acquired ING REIM businesses.
  • On a U.S. GAAP basis, net income rose 4% to $107.4 million for the six months ended June 30, 2013 from $102.8 million for the same period of 2012.  GAAP earnings per diluted share totaled $0.32 in both periods. The aforementioned costs associated with the Company’s corporate debt refinancing reduced GAAP earnings per diluted share by $0.10 for the six months of 2013.
  • Excluding selected charges, EBITDA increased 9% to $404.4 million in the current six-month period from $371.4 million in the first six months of 2012. EBITDA (including selected charges) rose 14% to $400.2 million for the first six months of 2013, from $352.3 million for the same period a year earlier. Selected charges in 2013 related to the integration of the acquired ING REIM businesses and carried interest incentive compensation expense. For the same period in 2012, selected charges related to the integration of the acquired ING REIM businesses.

Business Outlook

“CBRE’s strengths – our brand, people, financial flexibility, and balanced service offering – leave us well positioned for continued success amid this slow and uneven market recovery,” said Mr. Sulentic. “We remain highly focused on continuing to improve margins while making operational investments that will help us to better serve our clients and execute our growth strategy.”

CBRE continues to believe that it will meet its previously-announced expectations for full-year 2013 earnings per share, as adjusted, in the range of $1.40 to $1.45.  However, in light of the current strong sales environment and the opportunity this affords for realizing gains in its investment management portfolio, the Company now believes earnings could modestly exceed its original expectations for the full year.

Conference Call Details

The Company’s second-quarter earnings conference call will be held today (Thursday, July 25, 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 612-234-9959 for international callers.  A replay of the call will be available starting at 10 p.m. Eastern Time on July 25, 2013, and ending at midnight Eastern Time on August 2, 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 294951.  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 European sovereign debt issues and recessionary to flat economic growth in many European countries as well as U.S. fiscal uncertainty; 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 commercial 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; fluctuations in currency; changes in 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 “Cautionary Note on Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2012, 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 March 31, 2013, 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 the write-off of financing costs, amortization expense related to incentive fees and customer relationships acquired in the ING REIM and Trammell Crow Company (TCC) acquisitions, certain carried interest incentive compensation expense and integration and other costs related to acquisitions.  

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, write-off of financing costs, 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 as well as certain carried interest incentive compensation expense.  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 SIX MONTHS ENDED JUNE 30, 2013 AND 2012
 (Dollars in thousands, except share data)
(Unaudited)

 
 
Three Months Ended
 June 30,
 
Six Months Ended
June 30,
 
 2013
 
 2012
 
 2013
 
 2012
Revenue
$ 1,742,014
 
$ 1,601,117
 
 $ 3,217,077
 
 $ 2,951,106
 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
    Cost of services
1,018,827
 
908,143
 
1,880,043
 
1,695,699
    Operating, administrative and other
499,458
 
482,377
 
968,999
 
923,099
    Depreciation and amortization
43,601
 
38,336
 
89,882
 
84,793
Total costs and expenses
1,561,886
 
1,428,856
 
2,938,924
 
2,703,591
 
 
 
 
 
 
 
 
Gain on disposition of real estate
7,496
 
439
 
10,645
 
1,248
 
 
 
 
 
 
 
 
Operating income
187,624
 
172,700
 
288,798
 
248,763
 
 
 
 
 
 
 
 
Equity income from unconsolidated subsidiaries
6,544
 
2,609
 
16,293
 
16,995
Other income (loss)
1,533
 
(2,104)
 
4,227
 
4,484
Interest income
1,490
 
1,585
 
3,518
 
3,888
Interest expense
37,532
 
44,411
 
79,927
 
88,392
Write-off of financing costs
42,715
 
-
 
56,295
 
-
Income from continuing operations before provision for income taxes
116,944
 
130,379
 
176,614
 
185,738
Provision for income taxes
45,815    
 
54,780    
 
64,819
 
80,193
Income from continuing operations
71,129
 
75,599
 
    111,795    
 
    105,545    
Income from discontinued operations, net of income taxes
3,105    
 
-    
 
24,294
 
-
Net income
74,234
 
75,599
 
    136,089   
 
    105,545    
Less:  Net income (loss) attributable to non-controlling interests
 
4,332
 
 
(274)
 
 
28,641
 
 
2,697
Net income attributable to CBRE Group, Inc.
$    69,902
 
$    75,873
 
$    107,448
 
$    102,848
 
 
$      57,038
 
 
$      57,038
 
 
 
 
Basic income per share attributable to CBRE Group, Inc. shareholders
 
 
 
 
 
 
 
Income from continuing operations attributable to CBRE Group, Inc.
$         0.21 
 
$         0.24 
 
$        0.32
 
$        0.32
Income from discontinued operations attributable to CBRE Group, Inc.
-
 
-
 
0.01
 
-
Net income attributable to CBRE Group, Inc.
$         0.21   
 
$         0.24   
 
$        0.33   
 
$        0.32   
 
 
 
 
 
 
 
 
Weighted average shares outstanding for basic income per share
 
327,423,589
 
 
320,852,344
 
 
327,093,358
 
 
320,761,873
 
 
 
 
 
 
 
 
Diluted income per share attributable to CBRE Group, Inc. shareholders
 
 
 
 
 
 
 
Income from continuing operations attributable to CBRE Group, Inc.
$         0.21 
 
$         0.23 
 
$        0.31
 
$        0.32
Income from discontinued operations attributable to CBRE Group, Inc.
-
 
-
 
0.01
 
-
Net income attributable to CBRE Group, Inc.
$         0.21   
 
$         0.23  
 
$        0.32   
 
$        0.32   
 
 
 
 
 
 
 
 
Weighted average shares outstanding for diluted income per share
331,631,185
 
326,081,681
 
 
331,218,705
 
 
325,910,274
 
 
 
 
 
 
 
 
EBITDA (1)
$    240,480  
 
$    211,815  
 
$    400,234  
 
$    352,338  
 

(1) Includes EBITDA related to discontinued operations of $3.0 million and $7.4 million for the three and six months ended June 30, 2013, respectively

 

CBRE GROUP, INC.
SEGMENT RESULTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012
(Dollars in thousands)
(Unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2013

 

 2012

 

 2013

 

 2012

Americas

 

 

 

 

 

 

 

Revenue 

$     1,113,601

 

$     1,014,193

 

$     2,039,573

 

$     1,859,519

Costs and expenses:

 

 

 

 

 

 

 

Cost of services 

713,143

 

637,624

 

       1,307,164

 

       1,180,024

Operating, administrative and other

241,746

 

229,212

 

       471,232

 

       433,049

Depreciation and amortization

26,724

 

19,485

 

         54,557

 

         37,811

Operating income

$       131,988

 

$       127,872

 

$       206,620

 

$       208,635

EBITDA

 $       163,306

 

 $       149,318

 

 $       269,657

 

 $       250,555

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

Revenue 

$         270,277

 

$         248,244

 

$       498,911

 

$       445,630

Costs and expenses:

 

 

 

 

 

 

 

Cost of services 

163,531

 

145,625

 

309,223

 

275,757

Operating, administrative and other

94,895

 

86,823

 

178,671

 

162,089

Depreciation and amortization

3,511

 

3,202

 

8,907

 

6,493

Operating income

 $            8,340

 

 $           12,594

 

$          2,110

 

$           1,291

EBITDA

 $          11,740

 

 $           15,745

 

 $        11,195

 

 $           8,648

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

Revenue 

$         233,130

 

$         201,245

 

$      414,561

 

$      368,446

Costs and expenses:

 

 

 

 

 

 

 

       Cost of services 

142,153

 

124,894

 

263,656

 

239,918

       Operating, administrative and other

64,811

 

52,817

 

118,935

 

102,641

       Depreciation and amortization

3,001

 

2,814

 

5,883

 

5,553

Operating income

$           23,165

 

$            20,720

 

$        26,087

 

$        20,334

EBITDA

 $           26,013

 

 $            23,316

 

 $        31,860

 

 $        25,599

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

Revenue

$         115,109

 

$         119,674

 

$       241,751

 

$     244,874

Costs and expenses:

 

 

 

 

 

 

 

Operating, administrative and other

82,734

 

96,719

 

170,488

 

191,294

Depreciation and amortization

9,280

 

10,054

 

18,091

 

29,279

Operating income

$           23,095

 

$           12,901

 

$         53,172

 

$       24,301

EBITDA(1)

 $           32,001

 

 $           20,674

 

 $         72,327

 

 $       55,267

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

Revenue

$             9,897

 

$           17,761

 

$         22,281

 

$        32,637

Costs and expenses:

 

 

 

 

 

 

 

       Operating, administrative and other

15,272

 

16,806

 

29,673

 

34,026

       Depreciation and amortization

1,085

 

2,781

 

2,444

 

5,657

Gain on disposition of real estate

7,496

 

439

 

10,645

 

1,248

Operating income (loss)

$             1,036

 

$          (1,387)

 

$              809

 

$        (5,798)

EBITDA(2)

 $             7,420

 

 $             2,762

 

 $         15,195

 

 $        12,269

 

 

 

 

 

 

 

 

 

 

_________________________

(1)     Includes EBITDA related to discontinued operations of $0.8 million and $1.4 million for the three and six months ended June 30, 2013, respectively.

(2)     Includes EBITDA related to discontinued operations of $2.2 million and $6.0 million for the three and six months ended June 30, 2013, respectively.

 

Non-GAAP Financial Measures

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

(i)                 Net income attributable to CBRE Group, Inc., as adjusted for selected charges

(ii)               Diluted income per share attributable to CBRE Group, Inc, as adjusted for selected charges

(iii)             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

 June 30,

 

Six Months Ended

June 30,

 

 2013

 

 2012

 

 2013

 

 2012

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$       69,902

 

$       75,873

 

$     107,448

 

$     102,848

Write-off of financing costs, net of tax

25,752

 

-

 

34,010

 

-

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

4,592

 

4,906

 

9,224

 

16,361

Carried interest incentive compensation, net of tax

1,598

 

-

 

1,598

 

-

Integration and other costs related to acquisitions, net of tax

 

(62)

 

 

7,254

 

1,031

 

14,737

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

$     101,782   

 

$      88,033   

 

$     153,311

 

$     133,946

 

 

 

 

 

 

 

 

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

$           0.31 

 

$           0.27 

 

$           0.46

 

$           0.41

 

 

 

 

 

 

 

 

Weighted average shares outstanding for

diluted income per share

 

331,631,185

 

 

326,081,681

 

 

331,218,705

 

 

325,910,274

 

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

 

 

 

 

 

 

 

 

 

Three Months Ended

 June 30,

 

Six Months Ended

June 30,

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

$     69,902

 

$     75,873

 

$      107,448

 

$      102,848

Add:

 

 

 

 

 

 

 

Depreciation and amortization(1)

44,215

 

38,336

 

90,752

 

84,793

     Interest expense(2)

38,898

 

44,411

 

83,074

 

88,392

Write-off of financing costs

42,715

 

-

 

56,295

 

-

Provision for income taxes(3)

46,240

 

54,780

 

66,183

 

80,193

Less:

 

 

 

 

 

 

 

     Interest income

1,490

 

1,585

 

3,518

 

3,888

 

 

 

 

 

 

 

 

EBITDA(4)

$   240,480

 

$   211,815

 

$    400,234

 

$    352,338

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Carried interest incentive compensation

2,644

 

-

 

2,644

 

-

Integration and other costs related to acquisitions

-

 

9,133

 

1,525

 

19,098

 

 

 

 

 

 

 

 

EBITDA, as adjusted (4)

$   243,124

 

$   220,948

 

$    404,403

 

$    371,436

________________________

(1)       Includes depreciation and amortization expense related to discontinued operations of $0.6 million and $0.9 million for the three and six months ended June 30, 2013, respectively.

(2)     Includes interest expense related to discontinued operations of $1.4 and $3.2 million for the three and six months ended June 30, 2013, respectively.

(3)       Includes provision for income taxes related to discontinued operations of $0.4 million and $1.3 million for the three and six months ended June 30, 2013, respectively.

(4)       Includes EBITDA related to discontinued operations of $3.0 million and $7.4 million for the three and six months ended June 30, 2013, respectively

EBITDA and EBITDA, as adjusted for selected charges for segments are calculated as follows (dollars in thousands): 
 
 Three Months Ended
June 30,
 
 Six Months Ended
June 30,
 
2013
 
2012
 
2013
 
2012
Americas
 
 
 
 
 
 
 
Net income attributable to CBRE Group, Inc.
$     51,075
 
$     60,664
 
$      80,613
 
$       94,231
Add:
 
 
 
 
 
 
 
   Depreciation and amortization
26,724
 
19,485
 
54,557
 
37,811
   Interest expense
35,019
 
35,363
 
72,158
 
70,964
Write-off of financing costs
42,715
 
-
 
56,295
 
-
Royalty and management service income
(9,187)
 
(7,241)
 
(19,410)
 
(13,858)
   Provision for income taxes
27,503
 
41,964
 
42,156
 
63,717
Less:
 
 
 
 
 
 
 
   Interest income
10,543
 
917
 
16,712
 
2,310
EBITDA
$   163,306             
 
$   149,318             
 
$     269,657             
 
$     250,555             
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
Net (loss) income  attributable to CBRE Group, Inc.
$        (864)         
 
$       8,313         
 
$      (6,664)
 
$      (1,063)
Add:
 
 
 
 
 
 
 
   Depreciation and amortization
3,511
 
3,202
 
8,907
 
6,493
   Interest expense
1,233
 
2,095
 
3,238
 
4,563
Royalty and management service expense
3,889
 
3,176
 
8,030
 
5,784
   Provision for income taxes
3,975
 
3,544
 
1,941
 
2,134
Less:
 
 
 
 
 
 
 
   Interest income
4
 
4,585
 
4,257
 
9,263
EBITDA
$    11,740             
 
$    15,745             
 
$       11,195
 
$        8,648
 
 
 
 
 
 
 
 
Asia Pacific
 
 
 
 
 
 
 
Net income attributable to CBRE Group, Inc.
$     10,731         
 
$     10,804         
 
$         9,282
 
$         7,669
Add:
 
 
 
 
 
 
 
   Depreciation and amortization
3,001
 
2,814
 
5,883
 
5,553
   Interest expense
1,083
 
1,203
 
1,755
 
2,064
Royalty and management service expense
4,114
 
4,034
 
8,777
 
7,996
   Provision for income taxes
7,485
 
4,834
 
6,676
 
2,835
Less:
 
 
 
 
 
 
 
   Interest income
401
 
373
 
513
 
518
EBITDA
$    26,013
 
$    23,316
 
$       31,860             
 
$       25,599             
 
 
 
 
 
 
 
 
Global Investment Management
 
 
 
 
 
 
 
Net income (loss) attributable to CBRE Group, Inc.
$      6,495         
 
$     (1,925)         
 
$       19,616         
 
$        1,666         
Add:
 
 
 
 
 
 
 
   Depreciation and amortization (1)
9,638
 
10,054
 
18,567
 
29,279
   Interest expense (2)
9,451
 
7,460
 
19,941
 
13,819
Royalty and management service expense
1,184
 
31
 
2,603
 
78
   Provision for income taxes
5,405
 
5,293
 
11,996
 
10,945
Less:
 
 
 
 
 
 
 
   Interest income
172
 
293
 
396
 
520
EBITDA (3)
$     32,001
 
$     20,674
 
$       72,327
 
$      55,267
Carried interest incentive compensation
2,644
 
-
 
2,644
 
-
Integration and other costs related to acquisitions
-
 
9,133
 
1,525
 
19,098
EBITDA, as adjusted (3)
$    34,645
 
$     29,807
 
$       76,496
 
$      74,365
 
 
 
 
 
 
 
 
Development Services
 
 
 
 
 
 
 
Net income (loss) attributable to CBRE Group, Inc.
$      2,465
 
$     (1,983)         
 
$         4,601
 
$           345
Add:
 
 
 
 
 
 
 
   Depreciation and amortization (4)
1,341
 
2,781
 
2,838
 
5,657
   Interest expense (5)
1,819
 
2,939
 
4,552
 
5,911
   Provision for (benefit of) income taxes (6)
1,872
 
(855)
 
3,414
 
562
Less:
 
 
 
 
 
 
 
   Interest income
77
 
120
 
210
 
206
EBITDA(7)
$    7,420
 
$       2,762
 
$       15,195             
 
$      12,269             
 
 
_________________________
 

(1)     Includes depreciation and amortization expense related to discontinued operations of $0.4 million and $0.5 million for the three and six months ended June 30, 2013, respectively.

(2)     Includes interest expense related to discontinued operations of $0.5 million and $1.0 million for the three and six months ended June 30, 2013, respectively.

(3)     Includes EBITDA related to discontinued operations of $0.8 million and $1.4 million for the three and six months ended June 30, 2013, respectively.

(4)     Includes depreciation and amortization expense related to discontinued operations of $0.2 million and $0.4 million for the three and six months ended June 30, 2013, respectively.

(5)     Includes interest expense related to discontinued operations of $0.9 million and $2.2 million for the three and six months ended June 30, 2013, respectively.

(6)     Includes provision for income taxes related to discontinued operations of $0.4 million and $1.3 million for the three and six months ended June 30, 2013, respectively.

(7)     Includes EBITDA related to discontinued operations of $2.2 million and $6.0 million for the three and six months ended June 30, 2013, respectively.

 
 
CBRE GROUP, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
 
 
 
June 30,
 
December 31,
 
 
2013
 
2012
 
Assets:
 
 
 
 
    Cash and cash equivalents (1)
$      485,495
 
$      1,089,297
 
    Restricted cash
59,482
 
73,676
 
Receivables, net
1,222,364
 
1,262,823
 
    Warehouse receivables (2)
536,319
 
1,048,340
 
Real estate assets (3)
167,188
 
392,860
 
Goodwill and other intangibles, net
2,638,549
 
2,676,395
 
Investments in and advances to unconsolidated subsidiaries
209,205
 
206,798
 
Other assets, net
1,029,686
 
1,059,353
 
Total assets
$     6,348,288
 
$     7,809,542
 
 
Liabilities:
 
 
 
 
    Current liabilities, excluding debt
$     1,355,765
 
$     1,663,022
 
    Warehouse lines of credit (2)
525,842
 
1,026,381
 
Revolving credit facility
140,308
 
72,964
 
5.00% senior notes
800,000
 
-
 
    Senior secured term loans
705,088
 
1,627,746
 
    6.625% senior notes
350,000
 
350,000
 
    Senior subordinated notes, net
-
 
440,523
 
    Other debt
22,711
 
9,352
 
Notes payable on real estate (4)
148,837
 
326,012
 
Other long-term liabilities
588,288
 
611,730
 
Total liabilities
4,636,839
 
6,127,730
 
 
 
 
 
 
CBRE Group, Inc. stockholders’ equity
1,620,100
 
1,539,211
 
Non-controlling interests
91,349
 
142,601
 
Total equity
1,711,449
 
1,681,812
 
 
 
 
 
 
Total liabilities and equity
$     6,348,288
 
$     7,809,542
 
 
 
 
 
 
 
 
 
 

(1) Includes $109.9 million and $94.6 million of cash in consolidated funds and other entities not available for Company use

    as of June 30, 2013 and December 31, 2012, 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 $14.0 million and $13.9 million are recourse to the Company as of

June 30, 2013 and December 31, 2012, respectively.

 
 

 

 

 

 

 

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