CBRE : Q2 2020 Webcast Slides(opens in new window)

July 31, 2020

Q2 2020 EARNINGS CALL

F O R W A R D - LOOKING STATEMENTS

This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding the impact of the Covid-19 pandemic on our business operations and financial position, CBRE's future growth momentum, operations, market share, business outlook, capital deployment, acquisition integration and financial performance expectations. These statements are estimates only and actual results may ultimately differ from them. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our second quarter earnings release, furnished on Form 8-K, our most recent annual report filed on Form 10-K and our most recent quarterly report filed on Form 10-Q, and in particular any discussion of risk factors or forward-looking statements therein, which are available on the SEC's website (www.sec.gov), for a full discussion of the risks and other factors that may impact any forward-looking statements that you may hear today. We may make certain statements during the course of this presentation, which include references to "non-GAAP financial measures," as defined by SEC regulations. Where required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are included in the appendix.

CBRE GROUP, INC.

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CONFERENCE CALL PARTICIPANTS

Bob Sulentic

President and Chief Executive Officer

Leah Stearns

Chief Financial Officer

Kristyn Farahmand

Vice President, Investor Relations & Corporate Finance

CBRE GROUP, INC.

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CONSOLIDATED RESULTS SUMMARY

$ IN MILLIONS EXCEPT PER SHARE FIGURES

	2Q20	2Q19	USD	Local Currency1
Revenue	$5,381	$5,714	▼ (6%)	▼ (4%)
Fee Revenue	$2,256	$2,849	▼ (21%)	▼ (19%)
Adjusted EBITDA	$267	$468	▼ (43%)	▼ (42%)
Earnings Per Diluted Share	$0.24	$0.66	▼ (63%)	▼ (62%)
Adjusted Earnings Per Diluted Share	$0.35	$0.81	▼ (57%)	▼ (56%)

• Second quarter results impacted by Covid-19 pandemic issues across major markets
• • Results include $25 million in Covid-related costs and $16 million from Covid- relief fund donation
  • Reduced EPS and Adjusted EPS by approximately $0.10
• Strength in GWS offset pressure in more cyclical Advisory and REI segments

1.Local currency percent changes versus prior year is calculated by comparing current year results at prior year exchange rates versus prior year results.

CBRE GROUP, INC.

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Definitions and reconciliations are provided at the end of this presentation.

BOB SULENTIC

CHIEF EXECUTIVE OFFICER

FORTIFIED BUSINESS WELL POSITIONED TO WITHSTAND COVID - 19

Resiliency Improvements

• Double-digitGWS Adj. EBITDA growth points to resiliency of GWS business
• US Development business well positioned; expect to earn 2x more this year and next as compared to previous peak
• $245B loan servicing portfolio generates recurring revenue
• Investment management earns significant majority of adj. EBITDA from recurring asset management fees

Emerging Occupier Trends

• Greater employee flexibility, expect increase in hybrid work
• Physical office remains important in hybrid work models
• Decades long densification trend to likely reverse
• Occupiers seeking guidance to navigate uncertain environment

CBRE GROUP, INC.

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LEAH STEARNS

CHIEF FINANCIAL OFFICER

ADVISORY SERVICES

$ IN MILLIONS, TOTALS MAY NOT SUM DUE TO ROUNDING

Fee Revenue

$1,935
$818	$1,339
	$510
$607	$342
$511	$487
2Q19	2Q20

Advisory Leasing

Capital Markets

Property & Advisory Proj. Mgt., Valuation & Loan Servicing

Adjusted EBITDA

$334

	$133
17.2%	9.9%
Fee Margin	Fee Margin
2Q19	2Q20

• Leasing contracted 38%

and 43% globally and in

the US, respectively

• Property sales fell 48%

globally and 51% in

the US

• Loan servicing revenue

climbed 15% partially

offsetting more cyclical

2Q20 Sales Revenue By Property Type	2Q20 Leasing Revenue By Property Type
Other &		Other &
Office	Consulting
Consulting	15%
27%
22%
Multifamily		Industrial	Office
Retail	26%	53%
19%
	12%
Industrial		Retail
21%
		6%

CBRE GROUP, INC.

business lines

• Adjusted EBITDA includes

$19M in incremental costs

related to Covid and

donation allocation

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Definitions and reconciliations are provided at the end of this presentation.

GLOBAL WORKPLACE SOLUTIONS (GWS)

$ IN MILLIONS, TOTALS MAY NOT SUM DUE TO ROUNDING

Fee Revenue	Adjusted EBITDA
$764	$755
$161	$108
	$116

YTD Q2 2020 Revenue By Industry

Other Financial

18% Services

	$104
$603	$647

Retail

6%

26%

			13.6%	15.4%
			Fee	Fee
			Margin	Margin
2Q19	2Q20	2Q19	2Q20
Project Management & Transactions
Facilities Management

Life Sciences &	Tech.,
Healthcare	Media &
17%	Telecom.
Indust. &	22%
Manuf.
12%

• Facilities management (FM) grew gross and fee revenue 13% and 7%, respectively
• Disciplined cost management drove Adjusted EBITDA growth of over 11% despite $20M in incremental costs related to Covid and relief fund donation allocation
• Business well diversified across client types
• Pipeline weighted towards logistics, financial services and technology

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Definitions and reconciliations are provided at the end of this presentation.

REAL ESTATE INVESTMENTS

$ IN MILLIONS, TOTALS MAY NOT SUM DUE TO ROUNDING
Adjusted Revenue1	Adjusted EBITDA

$169

$31

$154

$18

2Q19

2Q20

2Q19

2Q20

Development

• Well positioned for current environment; nearly 80% of in-process inventory related to industrial, multifamily, healthcare and office properties at least 90% leased
• Strong demand for high-quality assets despite challenging conditions

Investment Management

• Adjusted EBITDA grew 62% over the prior year driven by higher recurring fees and carried interest
• Focus on core and core plus strategies has been highly advantageous

Flexible Space Solutions (Hana)

• Impacted by mandatory shut-down driving lower revenue and longer ramp-up periods for new units
• New unit pipeline building partially reflecting higher demand for asset-light opportunities

1. Adjusted Revenue for Development is shown net of cost of sales.

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Definitions and reconciliations are provided at the end of this presentation.

2020 OUTLOOK: PROVIDING QUALITATIVE GUIDANCE FOR THE YEAR

% Change in # of Signed Confidentiality

Agreements

60%	Y-o-Y,4-week moving average
40%
20%
0%
(20)%
(40)%
(60)%
(80)%
	2020	2019	2018

• of Confidentiality Agreements in June 2020 vs. Previous 2-Year Average

Industrial

Multifamily

All

Retail

Hotel

Office

0%

10%

20%

30%

40%

50%

Y-o- Y % Change in US Transaction

Count & Revenue

Leasing & Property Sales

20%

10%

0%

(10)%

(20)%

(30)%

(40)%

(50)%

(60)%

Jan-20Feb-20Mar-20Apr-20May-20Jun-20Jul-20

Transaction Count		Transaction Revenue

• Robust pipeline built pre-Covid onset drove stronger than expected Q2 results
• • Future leasing and sales performance requires pipeline replenishment
  • Carefully monitoring forward-looking indicators to gauge pipeline rebuilding
  • Improving transaction count trend but weighted to smaller deals
• Industrial and multifamily lead recovery in June; shift to e-commerce continuing to boost industrial transactions

CBRE GROUP, INC.

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ENHANCED FINANCIAL RESILIENCY POSITIONS US WELL

Net Debt to TTM Adj. EBITDA

0.8x
	0.6x	0.6x
	0.2x below Q2'19
Q2 2019	Q1 2020	Q2 2020

Total Liquidity

$ Billions

	$3.4	$3.5
$3.0
$0.5B above Q2'19
Q2 2019	Q1 2020	Q2 2020

• Continued to strengthen balance sheet and liquidity position despite challenging macroeconomic conditions
• Expect to continue prioritizing liquidity preservation over pursuing large, discretionary capital outlays
  - Seek more visibility on the timing and strength of the economic recovery

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Definitions and reconciliations are provided at the end of this presentation.

ACCELERATING DIVERSITY AND INCLUSION INITIATIVES

Diverse Leadership		Accelerate Progress

• Increased diversity meaningfully within Board of Directors and Executive Management Committee since 2015
• Put more women into key leadership positions
• Need to do more with ethnic diversity, particularly in management and brokerage ranks

• Appointed first Chief Diversity Officer, Tim Dismond, to accelerate progress on diversity and inclusion
• • Tim is a long-tenured senior leader at CBRE
  • Previously served as President of the GWS South Division
• Joins 12-member Global Executive Committee and reports to CEO
• Committed to resources/support to accelerate gains

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NON-GAAP MEASURES AND DEFINITIONS

N O N - GAAP FINANCIAL MEASURES

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

1. fee revenue
2. contractual fee revenue
3. adjusted revenue for the Real Estate Investments segment
4. net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as "adjusted net income")
5. 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")
6. adjusted EBITDA and adjusted EBITDA on fee revenue margin
7. net debt

These measures are not recognized measurements under United States generally accepted accounting principles, or "GAAP." When analyzing our operating performance, investors should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with 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. 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 these measures useful to analyze the financial performance of our Global Workplace Solutions segment and Property & Advisory Project Management business line and our business generally. Fee revenue excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business.

With respect to contractual fee revenue: the company believes that investors may find this measure useful to analyze our overall financial performance because it identifies revenue streams that are typically more stable over time.

With respect to adjusted revenue: the company believes that investors may find this measure useful to analyze the financial performance of our Real Estate Investments segment because it is more reflective of this segment's total operations.

With respect to adjusted net income, adjusted EPS, adjusted EBITDA and adjusted EBITDA on fee revenue margin: 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 adjusted EBITDA and adjusted EBITDA on revenue and fee revenue margin-the effects of financings and income tax and the accounting effects of capital spending. All of these measures and adjusted revenue may vary for different companies for reasons unrelated to overall operating performance. In the case of adjusted EBITDA, this measure is not intended to be a measure 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 adjusted 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. The company also uses adjusted EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

With respect to net debt the company believes that investors use this measure when calculating the company's net leverage ratio.

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D E F I N I T I O N S

Adjusted EBITDA: EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation, amortization and asset impairments. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of costs primarily associated with workforce optimization efforts in response to the Covid-19 pandemic, fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, and costs associated with our reorganization, including cost-savings initiatives, costs incurred in connection with a litigation settlement and a one-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired.

Adjusted EBITDA Margin: the percentage that results from dividing Adjusted EBITDA by Revenue or Fee Revenue.

Adjusted Net Income: excludes the effect of select items from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes for such charges. Adjustments during the periods presented included costs primarily associated with workforce optimization efforts in response to the Covid-19 pandemic, asset impairments, non-cash depreciation and amortization expense related to certain assets attributable to acquisitions, the impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, and costs associated with our reorganization, including cost-savings initiatives.

Adjusted Earnings Per Diluted Share: adjusted net income divided by the weighted average diluted shares outstanding.

Adjusted Revenue for the Real Estate Investments segment: reflects revenue for this segment, less the direct cost of revenue, along with equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests. Adjusted revenue also removes the impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period.

Fee Revenue: gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.

Liquidity: includes cash available for company use, which is cash and cash equivalents excluding restricted cash and cash in consolidated affiliates not available for company use, as well as availability under the Company's revolving credit facilities.

Net Debt: calculated as total debt (excluding non-recourse debt) less cash available for company use.

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SUPPLEMENTAL SLIDES, GAAP RECONCILIATION TABLES

MANDATORY AMORTIZATION AND MATURITY SCHEDULE

AS OF JUNE 30, 20201

($ in millions)

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Available

Revolving

Credit

Facility

2,347

Cash2
1,135
449	751	425	600

Liquidity	2020	2021	2022	2023	2024	2025	2026
	Cash		USD Term Loan		Senior Notes - 5.25%		Revolving Credit Facility		Euro Term Loan		Senior Notes - 4.875%

1. $2,800 million revolving credit facility matures in March 2024. As of June 30, 2020, revolving credit facility availability balance was $451.0 million.
2. Excludes $79.1 million of cash in consolidated funds and other entities not available for company use.

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DEBT, LEVERAGE AND LIQUIDITY

TOTALS MAY NOT ADD DUE TO ROUNDING

($ in millions)	June 30, March 31, June 30,
			2020	2020	2019
Cash1	$1,135	$560	$394
Revolving credit facility	451	-	230
Senior term loans2	746	738	750
Senior notes2	1,017	1,017	1,016
Other debt3,4		9	8	3
Total debt		$2,223	$1,762	$1,999
Less: Cash1	$1,135	$560	$394
Total net debt		$1,088	$1,202	$1,605
TTM Adjusted EBITDA	$1,843	$2,044	$2,037
Net debt to TTM Adjusted EBITDA	0.59x	0.59x	0.79x

Cash1

Revolving credit facility availability

Total liquidity

June 30, March 31, June 30,

2020 2020 2019

$1,135 $560 $394

2,347 2,798 2,568

$3,482 $3,358 $2,962

1. Excludes $79.1 million, $68.4 million and $141.8 of cash in consolidated funds and other entities not available for company use at June 30, 2020, March 31, 2020 and June 30, 2019, respectively.
2. Outstanding amounts for 2020 reflected net of unamortized debt issuance costs.
3. Excludes $753.9 million, $1,258.8 million and $1,350.0 million of warehouse facilities for loans originated on behalf of the FHA and other government sponsored enterprises outstanding at June 30, 2020, March 31, 2020 and June 30, 2019, respectively, which are non-recourse to CBRE Group, Inc.
4. Excludes non-recourse notes payable on real estate, net of unamortized debt issuance costs, of $31.0 million, $10.8 million and $10.1 million at June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

CBRE GROUP, INC.

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SUMMARIZED CASH FLOW ACTIVITY

T O T A L S M A Y N O T A D D D U E T O R O U N D I N G

Six Months Ended June,

($ in millions)	2020	2019
Net cash provided by (used in) operating activities	$6	($293)
Net cash used in investing activities	(136)	(148)
Net cash provided by financing activities	377	186
Effect of FX rate changes on cash and cash equivalents and restricted cash	(27)	5
Net decrease in cash and cash equivalents and restricted cash		$220	($251)

CBRE GROUP, INC.

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OTHER FINANCIAL METRICS

($ in thousands)

OMSR Gains

Amortization

($ in thousands)

OMSR Gains

Amortization

($ in billions)

Loan Servicing Balance

Three Months Ended

	June 30,	March 31,	December 31,	September 30,	June 30,	March 31,
2020	2020	2019	2019	2019	2019
	$37,729	$35,596	$40,301	$59,562	$44,309	$38,270
($31,903)	($30,503)	($33,244)	($32,784)	($29,282)	($27,698)

Q2 2020 over	Q1 2020 over	Q4 2019 over	Q3 2019 over	Q2 2019 over	Q1 2019 over
Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
($6,580)	($2,674)	($16,459)	$13,939	$5,072	$6,153
($2,621)	($2,805)	($1,295)	($2,504)	($2,658)	($805)

As of

	June 30,	March 31,	December 31,	September 30,	June 30,	March 31,
2020	2020	2019	2019	2019	2019
	$245.3	$240.0	$230.1	$223.0	$210.3	$201.6

CBRE GROUP, INC.

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RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

T O T A L S M A Y N O T A D D D U E T O R O U N D I N G

($ in millions, except per share amounts) Net income attributable to CBRE Group, Inc.

Costs associated with workforce optimization efforts1

Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions

Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period Costs incurred related to legal entity restructuring

Integration and other costs related to acquisitions

Carried-interest incentive compensation expense (reversal) to align with the timing of associated revenue Costs associated with our reorganization, including cost-savings initiatives 2

Tax impact of adjusted items

Adjusted net income

Adjusted diluted earnings per share

Weighted average shares outstanding for diluted income per share (millions)

Three Months Ended June 30,

2020	2019
$81.9	$223.7
37.6	-
18.5	19.6
1.2	-
0.7	-
0.2	9.0
(7.5)	8.3
-	33.8
(14.9)	(17.4)
$117.7	$277.1
$0.35	$0.81
337.4	340.5

1. Represents costs incurred primarily related to workforce optimization initiated and executed in the second quarter of 2020 as part of management's cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort.
2. Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

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RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

T O T A L S M A Y N O T A D D D U E T O R O U N D I N G

	Three Months Ended June,			Trailing Twelve Months Ended
			June 30,	March 31,	June 30,
($ in millions)	2020	2019		2020	2020	2019
Net income attributable to CBRE Group, Inc.	$81.9	$223.7	$1,148.3	$1,290.1	$1,072.4
Add:
Depreciation and amortization	116.4	106.5	457.1	447.2	442.7
Interest expense, net of interest income	18.0	24.6	73.9	80.6	93.9
Write-off of financing costs on extinguished debt	-	-	-	-	2.6
Provision for income taxes	18.8	62.5	33.5	77.2	303.0
Asset impairments	-	-	75.9	75.9	89.0
EBITDA	$235.1	$417.3	$1,788.7	$1,971.0	$2,003.6
Adjustments:

Costs associated with workforce optimization efforts1

Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period

Costs incurred related to legal entity restructuring

Integration and other costs related to acquisitions

Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue

Costs associated with our reorganization, including cost-savings initiatives 2 Costs incurred in connection with litigation settlement

One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired

Adjusted EBITDA

37.6	-	37.6	-	-
1.2	-	16.3	15.1	-
0.7	-	10.8	10.1	-
0.2	9.0	7.3	16.1	18.2
(7.5)	8.3	(17.8)	(2.0)	18.9
-	33.8	-	33.8	87.5
-	-	-	-	8.8
-	-	-	-	(100.4)
$267.3	$468.5	$1,842.9	$2,044.1	$2,027.8

1. Represents costs incurred primarily related to workforce optimization initiated and executed in the second quarter of 2020 as part of management's cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort.
2. Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

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R E C O N C I L I A T I O N O F R E V E N U E T O F E E R E V E N U E

T O T A L S M A Y N O T A D D D U E T O R O U N D I N G ( $ I N M I L L I O N S )

Three Months Ended June 30,

Global Workplace Solutions revenue

Less:

Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients

Global Workplace Solutions fee revenue

2020 2019

$3,666.8 $3,385.5

2,911.5 2,621.1

$755.3 $764.3

Property & Advisory Project Management revenue

Less:

Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients

Property & Advisory Project Management fee revenue

Three Months Ended June 30,

2020 2019

$512.2 $555.8

$213.8 $243.5

$298.4 $312.4

Consolidated revenue

Less:

Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients

Consolidated fee revenue

Three Months Ended June 30,

2020 2019

$5,381.4 $5,714.1

3,125.3 2,864.6

$2,256.0 $2,849.5

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RECONCILIATION OF REAL ESTATE INVESTMENTS REVENUE TO ADJUSTED REVENUE

	Three Months Ended June 30,
($ in millions), totals may not sum due to rounding	2020	2019
Real Estate Investments Revenue	$161.6	$149.7
Adjustments
Less: Cost of revenue	30.0	-
Add: Gain on disposition of real estate	(0.5)	-
Add: Equity income from unconsolidated subsidiaries	21.3	19.0
Less: Net loss attributable to non-controlling interests	-	(0.3)
Add: Impact of fair value adjustments to real estate assets acquired in	1.2	-
the Telford Acquisition (purchase accounting) that were sold in period
Net adjustments	(8.0)	19.3
Real Estate Investments Adjusted Revenue	$153.6	$169.0

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