CB Richard Ellis Group, Inc. Reports Higher Results for First Quarter 2005 and Raises Full Year Guidance

Business Wire, May 4, 2005

LOS ANGELES -- CB Richard Ellis Group, Inc. (NYSE:CBG):

--Improved Performance in all Business Lines and Geographies

--Q1 Revenue Increased 22% to $538.3 Million

--Significant Q1 Earnings Per Share Improvement

CB Richard Ellis Group, Inc. (NYSE:CBG) today reported first quarter 2005 diluted earnings per share of $0.19, compared with a loss of $0.26 in the first quarter of 2004. Excluding one-time Insignia related and debt buy-back charges, first quarter 2005 diluted earnings per share was $0.25, compared with a loss per diluted share of $0.03 for the same quarter a year earlier.

Based on continued strength seen in all of the Company's lines of business and geographies, CB Richard Ellis raised its full year guidance for diluted earnings per share to a range of $2.10 to $2.20, excluding one-time Insignia related and debt buy-back charges.

First Quarter Highlights

For the first quarter of 2005, the Company generated revenue of $538.3 million, a 22.1% increase over the $441.0 million posted in the first quarter of 2004. The Company reported first quarter net income of $14.6 million, or $0.19 per diluted share, compared with a net loss of $16.6 million in the first quarter of 2004, or a loss per diluted share of $0.26.

Excluding one-time items related to the Insignia acquisition and debt buy-back charges, which totaled $7.4 million (or $4.4 million after-tax), the Company would have earned net income(1) of $19.0 million, or $0.25 per diluted share in the first quarter of 2005, compared with a net loss of $2.6 million, or a loss per diluted share of $0.03 in the first quarter of 2004.

Revenue

The first quarter revenue increase of 22.1% reflects improved performance across virtually all business lines. Additionally, all three of our geographic regions posted strong year over year gains.

EBITDA(2)

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) totaled $50.2 million for the first quarter of 2005, an increase of $40.2 million, or 398.2%, from the same quarter last year. The increase was primarily driven by strong revenue growth combined with improved operating margins and the absence of Insignia related costs in the current quarter, which significantly impacted first quarter 2004 results.

Interest Expense

Interest expense totaled $13.6 million for the first quarter of 2005, a decrease of $6.0 million, or 30.8%, compared with the same quarter last year. The decrease was driven by the interest savings realized from the repayment of higher interest rate debt throughout 2004 and into 2005.

During the first quarter of 2005, the Company repurchased $26.4 million in aggregate principal amount of its 11 1/4% senior subordinated notes in the open market at a premium of $4.0 million. Subsequently, in April 2005, the Company repurchased an additional $10.1 million in aggregate principal amount of its outstanding 11 1/4% senior subordinated notes in the open market at a premium of $1.2 million. These repurchases will further reduce annual interest expense by approximately $4.0 million.

Management's Commentary

"Our first quarter results were very strong, reflecting continued favorable trends in our core business lines," said Brett White, president of CB Richard Ellis. "The U.S. investment market remains robust as equity capital continues to flow into real estate at a high level, and investors show an appetite for all property types. Despite increases in short-term interest rates, long-term rates remain near historic lows and capital is plentiful.

"Meanwhile, the U.S. leasing market continues to recover with surplus office space being absorbed in many major metropolitan areas. Notably, office rents rose modestly on a national basis, and landlords have curbed concessions in the face of reduced availability of space.

"In Europe, investment markets also remain strong and leasing trends continue to improve. Major central business districts such as London, Paris and Madrid remain attractive for foreign and domestic capital as real estate offers compelling risk-adjusted cash-yields as compared with alternative income-producing investments."

Americas Region

First quarter revenue for the Americas region, including the U.S., Canada, Mexico and Latin America, increased 19.6% to $381.1 million, compared with $318.6 million for the first quarter of 2004. This increase was attributable to higher investment sales transactions, strong commercial mortgage brokerage and appraisal/valuation activities, increased property and facilities management fees and the continued strengthening of the leasing market.

Operating income for the Americas region totaled $33.6 million for the first quarter of 2005, compared with $1.1 million for the first quarter of 2004. The $32.5 million increase was driven by double-digit revenue growth as well as the lack of amortization expense related to Insignia net revenue backlog(3) and merger-related costs in the current quarter, both of which significantly impacted the prior year quarter. Excluding the impact of these one-time items, operating income for the Americas region would have been $35.4 million for the first quarter of 2005, a healthy increase of $18.5 million as compared to the first quarter of last year. The Americas region's EBITDA totaled $43.4 million for the first quarter of 2005, an increase of $30.6 million or 239.2% from last year's first quarter.