CBRE Group, Inc. (NYSE:CBG) today announced that it has refinanced its existing credit facilities by amending and restating its senior secured credit agreement, which now provides for a $715 million term loan facility and a $1.2 billion revolving credit facility. This refinancing, coupled with the $800 million of 10-year senior unsecured notes issued earlier this month and cash on hand, has enabled the Company to replace the majority of its indebtedness with new indebtedness at lower interest rates, shift certain indebtedness from floating rate to fixed rate, extend maturity dates, and reduce overall indebtedness. “Our refinancing activities have positioned CBRE for further growth,” said Robert Sulentic, the Company’s chief executive officer. “Our balance sheet is well structured to support our growth initiatives while also providing us the flexibility to navigate a continued uncertain market environment.” Among the Company’s plans is to pay down its $450 million, 11.625% senior subordinated notes in June 2013. Following all of its refinancing actions, CBRE will have lowered its total corporate indebtedness by nearly $500 million. On a pro forma basis, CBRE would have reduced its annual interest expense by approximately $50 million in 2012, and its total indebtedness, net of cash, would have been approximately 1.8 times trailing 12-month Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) 1, excluding selected charges 2, at December 31, 2012. The new senior secured credit agreement includes a 5-year, $500 million term loan A facility (of which $300 million is on a delayed-draw basis up to 120 days from closing), at an initial interest rate of LIBOR+200 basis points, and an 8-year, $215 million term loan B facility, at an interest rate of LIBOR+275 basis points. The borrowing capacity under the Company’s 5-year, revolving credit facility has been increased to $1.2 billion from $700 million. At closing, minimal incremental borrowings will be drawn on this facility, which will have an initial interest rate of LIBOR+200 basis points.
About CBRE Group, Inc.CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com. “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements related to the refinancing activities in connection with our new amended and restated senior secured credit agreement and senior unsecured notes. These forward-looking statements involve known and unknown risks, uncertainties and other factors discussed in CBRE Group, Inc.’s filings with the Securities and Exchange Commission (the “SEC”). Any forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable securities laws, CBRE Group, Inc. expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If CBRE Group, Inc. does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. For additional information concerning risks, uncertainties and other factors that may cause actual results to differ from those anticipated in the forward-looking statements, and risks to CBRE Group Inc.’s business in general, please refer to its SEC filings, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2012. 1 EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization, while amounts shown for EBITDA, as adjusted (or normalized EBITDA), remove the impact of certain cash and non-cash charges related to acquisitions, cost containment and asset impairments. Our management believes that both of these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculations of EBITDA and EBITDA, as adjusted, generally eliminate the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses these measures to evaluate operating performance and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA and EBITDA, as adjusted, are useful to investors to assist them in getting a more complete picture of our results from operations. However, EBITDA and EBITDA, as adjusted, are not recognized measurements under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, readers should use EBITDA and EBITDA, as adjusted, in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA and EBITDA, as adjusted, may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA and EBITDA, as adjusted, are not intended to be measures of free cash flow for our management’s discretionary use, as they do not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA and EBITDA, as adjusted, also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
EBITDA and EBITDA, as adjusted for selected charges, for the year ended December 31, 2012, are calculated as follows (dollars in thousands):
|Net income attributable to CBRE Group, Inc.||$||315,555|
|Depreciation and amortization(a)||170,905|
|Non-amortizable intangible asset impairment||19,826|
|Provision for income taxes(c)||186,333|
|Integration and other costs related to acquisitions||39,240|
|Cost containment expenses||17,578|
|EBITDA, as adjusted (d)||$||918,439|
|(a)||Includes depreciation and amortization expense related to discontinued operations of $1.3 million for the year ended December 31, 2012.|
|(b)||Includes interest expense related to discontinued operations of $1.6 million for the year ended December 31, 2012.|
|(c)||Includes provision for income taxes related to discontinued operations of $1.0 million for the year ended December 31, 2012.|
|(d)||Includes EBITDA related to discontinued operations of $5.6 million for the year ended December 31, 2012.|