Q4 2016 Real-Time Call Brief

Highlights

CBRE recorded double-digit adjusted earnings growth for the fourth quarter and the year with excellent performance in all three regional services businesses.

We set new records for the company in 2016 with more than $13 billion of revenue and nearly $1.6 billion of adjusted EBITDA

Credit for this belongs to our more than 75,000 professionals around the globe, who are deeply committed to producing great outcomes for our clients day in and day out.

We achieved double-digit adjusted EBITDA growth in 2016 for the company overall and for each of our regional services businesses.

Our 17.9% margin of adjusted EBITDA on fee revenue exceeded the 17% target we established at the beginning of the year.

In 2016, we achieved a 17.8% return on invested capital.

In 2016, revenue rose 20% to $13.1 billion. Fee revenue increased 13% to $8.7 billion. Organic fee revenue growth was 5% in local currency, excluding contributions from all acquisitions.

Adjusted EBITDA rose 10% to $1.6 billion with 13% excluding the impact of currency movement and hedging.

Adjusted EPS was up 12% to $2.30 per share or up 15% excluding the impact of currency movements and hedging.

Full year adjusted EBITDA of approximately $1.6 billion excludes $78.5 million for the cost elimination program that ended in Q3 2016 and $125.7 million of integration cost related to the Global Workplace Solutions acquisition including $52.2 million that occurred in Q4.

We ended 2016 with more than $3.5 billion of available liquidity, including nearly $700 million of cash and $2.8 billion of undrawn capacity on our revolver credit facility.

At year-end net debt was 1.2 times adjusted EBITDA.

Occupier Outsourcing revenue rose 55% in local currency to $6.1 billion, while fee revenue increased 62% in local currency to $2.3 billion. The growth rate was 14% for both revenue and fee revenue without contributions from the acquired Global Workplace Solutions business.

Leasing revenue reached $2.7 billion, up 7% in local currency.

Our capital markets business, property sales and mortgage services totaled $2.3 billion in revenue, reflecting 5% growth in local currency.

Our business mix continued to shift towards more recurring revenue, with contractual fee revenue comprising approximately 42% of total fee revenue for the company, up from 37% in 2015.

Fee revenue in Q4 increased 6% to $2.7 billion.

Organic growth in fee revenue was 5%, comprising the vast majority of our growth for the quarter.

Adjusted EBITDA for the quarter rose 10%, to $568 million, or 13% without the impact of all currency movements. This increase is notable coming on top of 26% growth in Q4 of 2015.

Adjusted EBITDA margin of 21.4% on fee revenue improved 110 basis points from Q4 2015.

Adjusted earnings per share in US dollars increased 15% to $0.93 for the quarter on top of 19% growth in Q4 2015.

In addition, currency movement including hedges had a negative impact of $15.8 million to adjusted EBITDA, and $0.03 to adjusted earnings per share when comparing current quarter results with Q4 2015.

Without this impact from currency movement adjusted earnings per share would have increased 19% in the quarter.

Fee revenue including from our acquisition of Global Workplace Solutions, which is now included in both the current and the prior quarter a year increased to 10% globally.

Global Property sales revenue increased 8%.

Asia-Pacific sales revenue rose 35%, reflecting strength in Australia, Greater China and Singapore as well as an especially large transaction in Japan.

We outperformed the market in the US investment sales with 140 basis points increase in market share in Q4 liquidating to real capital analytics.

The Commercial Mortgage services business continued to perform very well with revenue rising 32%.

Our loan servicing portfolio stood at $145 billion at year-end, up $10 billion from 2015

Global leasing revenue increased 6%.

Asia-Pacific posted double-digit growth with revenue gains in nearly all countries, most notably we had a China, Japan and Singapore. EMEA saw solid growth of 6% led by Germany, Italy and Poland. US leasing revenue rose 4%.

Valuation revenue increased 6% for the fourth quarter paced by EMEA. Both revenue and fee revenue from property management services were up 4%.

The Americas, our largest business segment posted a fee revenue increase of 7%. Asia-Pacific, our fastest growing region in Q4 achieved fee revenue growth of 21% with strong performance across most of the region. EMEA produced fee revenue growth of 9%. The United Kingdom performed well with fee revenue of 7% led by occupier outsourcing.

In US dollars, adjusted EBITDA increased 83% in Asia-Pacific, 28% in EMEA, and 22% in the Americas. After removing the effect of all foreign currency movements on year-to-year comparisons, adjusted EBITDA increased 74% in Asia-Pacific, 46% in EMEA, and 22% in the Americas.

Fee revenue for this business was up 14% in 2016 excluding the direct contributions from the acquired Global Workplace Solutions business.

We achieved combined fee revenue growth of 10% in local currency in Q4.

In Q4, we signed 47 new outsourcing contracts and 40 expansions steady gains in the healthcare sector continued as well as we signed 9 total contracts with hospital systems.

Regarding our global investment management segment, adjusted EBITDA for this business totaled $15 million for Q4 2016, down from a particularly strong prior year Q4.

Q4 2015, included approximately $30 million of carried interest revenue versus almost none in the current period.

Assets under management ended the year at $86.6 billion. In local currency AUM for the year was up $2.1 billion, but was down $2.4 billion when measured in US dollars. Approximately 60% of our AUM, excluding securities, is denominated in Euros or British pound sterling.

Equity commitments in Q4 rose to $2.6 billion, bringing total capital raise in 2016 to $8.3 billion, one of our strongest capital raises in recent years.

Development Services Segment: For Q4 2016, this business produced $48 million of EBITDA

Development projects in process totaled $6.6 billion, down $100 million from year end 2015. The pipeline totaled $4.2 billion, up $600 million from a year ago.

Our regional services businesses performed very well with 9% growth in fee revenue in local currency and 33% growth in adjusted EBITDA excluding currency effects including hedging.

Our leasing and capital markets businesses outperformed the market with revenue growth in local currency of 6% and 13% respectively.

We expect the Occupier outsourcing business to achieve approximately 10% fee revenue growth in local currency with the waiting to the second half of the year.

Our adjusted EBITDA margin on fee revenue is expected to remain strong at approximately 17.5% to 18%.

Overall, we expect to achieve adjusted earnings per share for 2017 in the range of $2.35 to $2.45.

We anticipate growth could be constrained by a $0.06 per share headwind from adverse foreign currency movement.

At the midpoint of our guidance range the growth rate for earnings per share would by 4% in US dollars or 7% in local currency.