Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Investor Day (May 2007)
23 slides from Cbre's investor day presentation, May 18, 2007
Slide 1: Business Review Day: U.S. Real Estate: Healthy Moderation
Business Review Day U.S. Real Estate: Healthy Moderation Raymond G. Torto, Ph.D CBRE Principal and Chief Strategist Torto Wheaton Research May 18, 2007 Exhibit 99.7
Slide 2: What Did We Say Last Year?
What Did We Say Last Year? Economy healthy but wide variance across cities Single family housing and condo oversupply a developing issue for economy Capital will continue to flow to real estate on diversification merits Cap rates were unlikely to go much lower, the direction of interest rates is up
Slide 3: CBRE
CBRE CB RICHARD ELLIS
Slide 4: GDP Growth Slows and Shifts: Consumers to Business
-1 Household Business Trade Government 3.9% 3.2% 3.4% 2.8% Source: Moody’s Economy.com GDP Growth Slows and Shifts: Consumers to Business Real GDP Growth
Slide 5: As One Part of the Economy Slows, Another Keeps Going
As One Part of the Economy Slows, Another Keeps Going Source: BLS -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Service-producing Goods-producing Employment, % change year ago
Slide 6: Notice the Diversity and High-Quality of Jobs Being Produced
Notice the Diversity and High-Quality of Jobs Being Produced Source: BLS -2 Durable mfg. Nondurable mfg. Federal gov't. Construction Retail trade Utilities Legal services Information Other services Admin. services Financial State gov't. Local gov't. Wholesale trade Distribution Education HQ Healthca
Slide 7: CBRE
CBRE CB RICHARD ELLIS
Slide 8: This Is No Coincidence!
This Is No Coincidence! 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 Retail Space Absorption ( L ) House Prices ( R ) Retail space absorption, Sum of markets, 4-qtr moving sum, mil sqft Existing single family house price, % change year ago Source: OFHEO, BEA
Slide 9: New Condo Supply is Concentrated
New Condo Supply is Concentrated * Units underway with target completion in 2007. Source: TWR/Dodge Pipeline West Palm Beach Miami Tampa Orlando Phoenix Las Vegas Fort Lauderdale 2006 2007* Condo Units Completed, Ths.
Slide 10: CBRE
CBRE CB RICHARD ELLIS
Slide 11: 2006 Actual Returns and 2007 Return Expectations by Sector
2006 Actual Returns** Sector 2007 Return Expectations Expected Performance Moderating 10.2 8.5 3.8 13.0 4.9 11.1 8.8 11.9 Other Hedge Funds Money Market Funds/Cash Equivalents Venture Capital/Private Equity Fixed Income Foreign Equities U.S. Stocks All Real Estate 8.2 8.5 4.0 12.3 5.4 9.5 8.5 9.3 **
Slide 12: Efficient Frontiers with and without Real Estate
Efficient Frontiers with and without Real Estate Selected Asset Classes for the Twenty-eight Year Period 1978–2005 An Illustration of “Free Lunch” 2.40% Free Lunch Prior to the last three years the “free lunch” was 1.74%
Slide 13: Institutional Intentions Moderating: New Money Flow Receding
37 31 28 34 44 51 59 46 Institutional Intentions Moderating: New Money Flow Receding Expected Capital Flows to Real Estate $0 $10 $20 $30 $40 $50 $60 Source: Kingsley Associates 2007 Plan Sponsor Survey
Slide 14: Market Velocity Remains Strong
Market Velocity Remains Strong Source: Real Capital Analytics, April 2007 2007 1Q Chg Yr Ago 2006 ($) Office $76.4B 225% $137.3B Retail $17.5B 96% $51.7B Industrial $9.8B -20% $41.7B Multi-Housing $19.0B -28% $89.6B Total $122.7B 73% $320.3B
Slide 15: Return-Risk Tradeoffs
Return-Risk Tradeoffs USA Canada UK Australia Ireland Sweden More Volatile
Slide 16: Incoming Capital
Incoming Capital (2006 Top Investors in U.S. Real Estate) Source: Real Capital Analytics, April 2007 Incoming Capital (2006 top investors in U.S. real estate) $0 $1 $2 $3 $4 $5 $6 Other United Kingdom Europe Germany Canada Pacific Rim Australia Middle East ($ in Billions)
Slide 17: CBRE
CBRE CB RICHARD ELLIS
Slide 18: Cap Rate Compression…
Source: NCREIF, Torto Wheaton Research Cap Rate Compression… 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 95Q1 96Q1 97Q1 98Q1 99Q1 00Q1 01Q1 02Q1 03Q1 04Q1 05Q1 06Q1 Office Industrial Retail Multi-housing 10yr. Treasury (4-qtr. MAVE) Cap rate, % Multi-housing
Slide 19: …Is Across the Globe
Sources: CBRE, NCREIF, IPD, Torto Wheaton Research …Is Across the Globe 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Western Europe Oceania North America Southeast Asia Japan Mexico Central Europe Cap Rates/Prime Yield, %
Slide 20: The Easy Money Has Been Made!
The Easy Money Has Been Made! Office, Industrial, Retail, Multi-Housing: NCREIF Weighted Source: TWR Investment Database, Fall 2006 5.4% 11.3% 5.7% 0% 2% 4% 6% 8% 10% 12% 14% Total Return Yield NOI Growth Cap Rate Contribution 5 Year Hold
Slide 21: Fundamental Matters!
Fundamental Matters!
Slide 22: Nevertheless Rents Will Do Better Than Inflation
Nevertheless Rents Will Do Better Than Inflation Percentage Increase in Rents by Property Type Source: TWR Outlook XL, Spring 2007 5.2% (1999) 2.8% 3.3% 3.8% Retail 10.8% (2000) 3.7% 4.8% 1.4% Industrial 13.6% (2000) 3.8% 5.3% 5.3% Office 8.0% (2001) 3.1% 3.1% 4.4% Multi- Housing Last High 5 Year Fo
Slide 23: Trusted Advice. Proven Performance.
Trusted Advice. Proven Performance. Sign up for our free weekly commentary “About Real Estate” at www.tortowheatonresearch.com Torto Wheaton Research 200 High Street, 3rd Floor Boston, MA 02110 Tel: 617.912.5200 Fax: 617.912.5240