CB Richard Ellis Group, Inc. Reports Third Quarter Revenue Increase of 54% and Earnings Per Share Rise of 38%; Company Maintains Earnings Guidance

Business Wire, Oct 29, 2007

LOS ANGELES -- CB Richard Ellis Group, Inc. (NYSE:CBG) today reported third quarter 2007 revenue increased 54.2% to $1.5 billion and diluted earnings per share increased 23.1% to $0.48 compared to the third quarter of 2006. Excluding one-time charges1, third quarter 2007 diluted earnings per share was $0.55, representing an increase of 37.5% from the third quarter of 2006.

The strong earnings growth was achieved despite a $32.9 million increase in interest expense associated with the financing of the Trammell Crow Company acquisition and the exclusion of $8.4 million of gains from Development Services activities, which cannot be recognized under purchase accounting rules.

Management's Commentary

"Third quarter results clearly showed the economic and strategic benefits of our highly diversified business line and revenue base. During a period of extremes in the global credit markets as well as uneasiness about the U.S. economy generally, CBRE posted very impressive year over year gains in both revenue and profitability. These gains were ahead of our internal projections and support our view of achieving full year guidance," said Brett White, President and Chief Executive Officer of CB Richard Ellis. "Our professionals, supported by the industry's most extensive global platform and most admired brand, continue to fashion innovative solutions that enable us to expand our range of services for clients and build market share.

"Our success was evident throughout the world last quarter, most notably in the international marketplace. In Europe, we continue to realize the benefits of the fully integrated service offering that we have rolled out across the continent as the region's preeminent full-service commercial real estate services provider. Asia Pacific remains our fastest-growing geography, and our increased investments in countries like China, Japan and Australia have produced noteworthy returns. Global Investment Management also continues to perform exceptionally well, both by harvesting gains on property sales and growing assets under management.

"In the Americas, we benefited from the acquisition of Trammell Crow Company combined with organic revenue gains. Investment sales activity showed solid growth despite a pullback in property valuations, reduced availability of debt financing for larger asset sales, and tighter underwriting standards. We expect the changed market conditions to have more of an impact on our investment sales performance in the fourth quarter. While non-U.S. leasing performance was quite strong, U.S. leasing results were affected by uncertainty surrounding domestic economic growth, and the generally slower pace of activity in selected markets. However, office and industrial leasing market fundamentals remain positive, with higher rents, flat-to-lower vacancies and continued absorption.

"Meanwhile, the integration of the Trammell Crow Company has enabled us to sharply expand our fee-based services for Global Corporate Services clients. Revenues associated with outsourcing have increased to 23% of total revenues in the third quarter of 2007 from 14% in the year ago quarter. This provides a steady source of revenues that strongly complements our transaction-based businesses."

Since the beginning of the year, CB Richard Ellis has added 24 new corporate outsourcing accounts, expanded its service offering with 12 existing corporate clients, and renewed its relationship with 14 others. Recent notable account additions and expansions/renewals in our corporate outsourcing business include Chrysler Corporation, McKesson Corporation, Fifth Third Bank and Diageo.

Third Quarter Highlights

For the third quarter of 2007, the Company generated revenue of $1.5 billion, up 54.2% over the $967.9 million posted in the third quarter of 2006. Strong growth globally drove the Company's performance for the quarter. The Company reported net income of $114.9 million, or $0.48 per diluted share, in the third quarter of 2007 compared with net income of $92.3 million, or $0.39 per diluted share, in the third quarter of 2006.

Excluding one-time items, the Company would have earned net income2 of $130.2 million, or $0.55 per diluted share, in the third quarter of 2007, an increase of 37.8% and 37.5%, respectively, compared with net income of $94.5 million, or $0.40 per diluted share, in the third quarter of 2006.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)3 totaled $239.9 million for the third quarter of 2007, an increase of $76.4 million, or 46.7%, from the same quarter last year despite the inclusion of $14.8 million4 of acquisition-related expenses.

The integration of Trammell Crow Company is continuing to progress well and as previously announced, is ahead of schedule with regard to the timing and attainment of synergy savings. The Company is still forecasting annualized net expense synergy savings of approximately $90 million, and expects to realize about 60% of those savings in calendar year 2007.