TO OUR SHAREHOLDERS


Robert E. Sulentic  President and Chief Executive Officer

CBRE had another strong year in 2016 with double-digit growth in revenue and adjusted earnings, paced by excellent performance in all three of our regional services businesses. For the year:

  • Revenue rose 20% (23% local currency1) to $13.1 billion, while fee revenue1 increased 13% (15% local currency) to $8.7 billion.  
  • Adjusted Earnings Per Share1 increased 12% (15% excluding the impact of currency movement including hedging) to $2.30.
  • Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)1 rose 10% (13% excluding the impact of currency movement including hedging) to nearly $1.6 billion.

Each of these totals represents new highs for the company and our 17.9% adjusted EBITDA margin on fee revenue was above the 17% target we established at the beginning of 2016.  These results are particularly noteworthy in a year of generally softer market-wide property sales volumes, virtually no carried-interest income from our global investment management business and tepid global economic growth.  Credit for our performance in 2016 belongs to our more than 75,000 professionals, who now serve clients with distinction in more than 100 countries.  

2016 was also the year in which we completed the very challenging work of integrating our acquisition of JCI-Global Workplace Solutions.  This was one of the largest integrations and possibly the most complex ever in our sector involving massive transformations of client-facing, line of business and back-office activities.   As a result of this effort, our occupier outsourcing business is now much larger, more capable of producing strong client outcomes and better positioned for long-term growth.

In the midst of this transformational integration, we also continued to advance the key elements of our value proposition – our market-leading team of professionals around the globe and the operating platform that supports them.  Our talent pool was enriched by attracting new professionals to our company, focusing on training programs for our existing people and fostering a more collaborative culture.  Our operating platform benefited from concerted efforts to strengthen our technology and data analytics, research, marketing and other critical functions.  Our scale, willingness and ability to invest and the depth of our leadership team allow us to make gains in our operating platform that our competitors find difficult to match.  These gains, in turn, support our efforts to attract the best talent in the industry.

In addition, we continued to make progress in sustainable business practices, where we have been included in the Dow Jones Sustainability Index (which recognizes corporations for environmental, social, ethical and governance leadership) for three consecutive years and led our sector in the management of LEED-certified buildings.  We are very proud that our workplace initiative and increasingly collaborative culture prompted Forbes to name CBRE America’s 15th Best Employer in 2016.

As we do every few years, in 2016 we completed an in-depth analysis of our sector and CBRE’s competitive position.  This work confirmed that we are operating in markets with enduringly attractive macro fundamentals. There are three reasons for this:

    1. Demand for commercial real estate from investors continues to increase.  Real estate has become an increasingly transparent and accepted institutional asset class, and the base of assets is growing. 
    2. Occupiers are continuing to outsource real estate functions, rather than self-perform these services.
    3. Both investors and occupiers are consolidating their work with the largest, most capable service providers.  

All three of these trends play to our strength with top-tier, connected capabilities in virtually every market around the world. 

Our analysis also underscored that despite our position as the world’s largest commercial real estate services and investment firm, our market share globally does not exceed 10% in any business line.   Therefore, we continue to enjoy significant headroom for growth.  

To seize this opportunity, we made updates to CBRE’s strategy and confirmed it with our Board of Directors.  Delivering consistently superior client outcomes remains the foundation of our strategy.  Going forward, we will now place greater emphasis on measuring these outcomes throughout our company and we have identified specific mechanisms of accomplishing our strategy.  These mechanisms center around three concepts:

    1. Offering products (the services we make available to our clients) that are highly differentiated from those our competitors provide.  
    2. Maintaining the most robust operating platform in our sector, including a particular focus on technology and data analytics (where we can capitalize on the vast amounts of information and experience we possess).  
    3. Leveraging our long-standing advantages of talent, scale and increasingly collaborative culture.

CBRE enters 2017 in a great position.  Our business has positive underlying momentum, as the global economy continues to grow – albeit at a modest pace – and commercial real estate fundamentals remain sound.  Our market standing is bolstered by the many advantages CBRE holds as the sector leader.  Our talent base is deep, our operating platform is becoming stronger and our people are aligned with our strategy and energized by the opportunities these advantages afford us.  Our client base continues to expand and satisfaction levels are high and improving.  Finally, our highly flexible investment-grade balance sheet allows us to capitalize on opportunities as they present themselves. 

We are deeply indebted to our clients for entrusting their business to us, and to you, our shareholders, for the confidence you place in CBRE.  With the support of our people, clients and shareholders, we have great confidence in CBRE’s future.

Sincerely,

Bob Sulentic Autograph

Robert E. Sulentic
President & Chief Executive Officer

1 These are non-GAAP financial measures. Please refer to the "Financial Results" page of this Annual Report for reconciliation to GAAP measures.



CBRE 2016 Annual Report


This document is not an “annual report” as that term is used in the Securities and Exchange Act of 1934. For a copy of our annual report as governed by SEC rules, please click here. Note that this document is not a supplement or substitute for our Securities-and-Exchange-Act-compliant annual report.