CB Richard Ellis Group, Inc. Reports First Quarter 2008 Revenue of $1.2 Billion and Earnings Per Share of $0.15

Business Wire, April 29, 2008

LOS ANGELES -- CB Richard Ellis Group, Inc. (NYSE:CBG) today reported revenue of $1.2 billion for the first quarter of 2008, a slight increase over the first quarter of 2007. The Company reported net income of $20.5 million, or $0.10 per diluted share, for the first quarter of 2008, compared with net income of $12.0 million, or $0.05 per diluted share, for the same quarter last year.

Excluding one-time charges1, the Company would have earned net income2 of $31.7 million, or $0.15 per diluted share, in the first quarter of 2008 compared with net income of $65.0 million, or $0.27 per diluted share, in the first quarter of 2007. This decrease was driven by two factors: the timing of carried interest revenue recognition in the Global Investment Management segment and the combined impact, in the EMEA segment, of a revenue mix shift and planned increase of costs associated with investment in growth of the business. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)3 totaled $88.5 million for the first quarter of 2008, an increase of $4.2 million, or 5%, from the same quarter last year.

CB Richard Ellis' first-quarter results were paced by significant growth in its outsourcing business activities. Reflecting the increasing strength of this business line following the December 2006 acquisition of Trammell Crow Company, revenue from this business line rose by 34% and accounted for approximately one-third of global revenue - up from approximately 25% in the same period of 2007. During the first quarter, the Company won 11 new outsourcing accounts, expanded its services for 10 existing customers and renewed its relationship with 11 others.

"Generally, first-quarter 2008 results were in line with our expectations," said Brett White, president and chief executive officer of CB Richard Ellis. "As anticipated, the weaker economy as well as the unsettled credit market environment materially impacted our capital markets businesses. Investment sales activity declined in the Americas and Europe due to limited credit availability. On the other hand, the quarter underscored our continuing success in diversifying the firm's revenue streams. Our outsourcing business grew substantially in every region worldwide.

"In addition, the global leasing business produced strong growth. Leasing revenue rose significantly in every region although continued economic weakness in the U.S. and EMEA could reduce future leasing results. Asia Pacific performed exceptionally well during the quarter, with more than 40% top- and bottom-line growth, reflecting both the relatively muted effect, thus far, of credit market uncertainty as well as market share gains and an expansion of our service offering throughout the region."

Americas Segment Results

First quarter revenue for the Americas region, including the U.S., Canada and Latin America, was $783.5 million, compared with $791.9 million for the first quarter of 2007. The continued growth of our outsourcing business as well as stronger leasing performance compared to the prior year quarter almost entirely mitigated the impact of lower sales and commercial mortgage brokerage activity brought about by the continued challenges in the credit markets.

Operating income for the Americas region totaled $62.4 million for the first quarter of 2008, compared with $21.6 million for the first quarter of 2007. The Americas region's EBITDA totaled $66.3 million for the first quarter of 2008, an increase of $59.1 million from last year's first quarter, largely due to the inclusion of higher Trammell Crow Company merger and acquisition related expenses in the prior year quarter. Excluding the impact of one-time items, operating income for the Americas region would have totaled $70.7 million for the first quarter of 2008, as compared to $74.5 million for the first quarter of last year.

In the current quarter, the Company recorded an equity loss from unconsolidated subsidiaries of $10.6 million due to a write-down of its investment in CBRE Realty Finance attributable to a declined market valuation.

EMEA Segment Results

Revenue for the EMEA region, which mainly consists of operations in Europe, increased 7.7% to $242.8 million for the first quarter of 2008, compared with $225.4 million for the first quarter of 2007. This revenue increase reflects the continued strength of the Company's platform across most business lines and various countries, including the Netherlands, France, the United Kingdom and Russia and the benefit from the strong Euro and British pound sterling against the U.S. dollar.

Operating income for the EMEA segment totaled $8.0 million for the first quarter of 2008, compared with $33.6 million for the same period last year. EBITDA for the EMEA region totaled $11.7 million for the first quarter of 2008 compared to $36.8 million for last year's first quarter. The current year quarter's lower operating income and EBITDA is mainly due to a shift in revenue mix from investment sales to outsourcing. Approximately half of the revenue increase was due to higher reimbursements associated with our property and facilities management contracts that are included in revenue with a largely corresponding increase in reimbursable expenses, which therefore does not translate into noticeably increased operating income or EBITDA. In addition, higher compensation costs driven by investments in headcount and acquisitions as a result of our efforts to grow and diversify operations in this region impacted the current quarter's results. The EMEA results were consistent with our expectations and support our current view that this business should post good results in 2008.