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CBRE Group, Inc. (NYSE:CBG)

Annual Business Review Day Conference Transcript

December 6, 2012 9:00 AM ET

Executives

Bob Sulentic - Chief Executive Officer

Gil Borok - Chief Financial Officer

Ray Torto - Chief Economist

Asieh Mansour - Head, Americas Research

Cal Frese - Chief Executive Officer, Americas Business

Mike Strong - President and CEO, EMEA

Rob Blain - President, Asia-Pacific

Matt Khourie - CBRE Global Investors

Bill Concannon - Chief Executive Officer, Global Outsourcing Business

Jack Durburg - President, Brokerage

Mary Ann Tighe - Chief Executive Officer, New York Tri- State Region

Jim Groch - Chief Investment Officer and Head, Strategy

Mike Lafitte - President, Services Business Global

Chris Ludeman - Head, Capital Markets Global

Analysts

Bob Sulentic

We will wait a couple of seconds for. Is this, John, is this on. Can you hear me all right out there? Okay. We’ve got plenty of seats upfront. So, everybody, if anybody else wants to sit down soon.

Okay. Good morning, everyone. And welcome to CBRE’s Annual Business Review Day. Looking around the room, I know, most of you have been here before, so you are familiar with our format. We’ll start with the comprehensive review of the business presented by senior management members from each area of the business, geographic and functional area of the business.

I’m Bob Sulentic, the company’s new CEO. I’ve been with the company for six years and I know many of you from the year when I was the company’s CFO several years ago. I was actually foolish enough to be the CFO in 2009 and Gil took over after that and it’s been uphill from there.

I’ll start with an introduction of our speakers. Gil Borok, the company’s CFO, you want to standup Gil. Ray Torto, our Chief Economist back here. Asieh Mansour, the Head of Americas Research, he is right there, okay. Cal Frese, who runs our Americas Business, our biggest business; Mike Strong runs EMEA for us. Rob Blain, runs Asia-Pacific; Matt Khourie run CBRE Global Investors, over here the left. Bill Concannon is the Chief Executive Officer of our Global Outsourcing Business. Jack Durburg, President of Brokerage for us globally, over here; Mary Ann Tighe, is Mary Ann here, she is the Chief Executive Officer of the New York Tri- State Region and one of the top practitioners in the industry globally.

In addition to that group, we have three other executives here who won’t formerly present but they will be available for Q&A. Jim Groch, our Chief Investment Officer and Head of Strategy; Mike Lafitte, the President of our Services Business globally, which is about 90% of our revenues, 90 plus percent; and Chris Ludeman, who heads up Capital Markets for us globally. Where is Chris? Okay. Thanks.

Okay. With that I’ll dig in and I think the place I had to start given that, I’ve transition this role from Brett, who ran the business for eight years, is to talk to you a little bit about the vision and strategy for the business and where I see that relative to where it’s been.

First of all, we want to have a simple vision and we want to have a simple strategy, so our people and our customers understand it, and we can execute on it with clarity. I very much believe in the vision that we have had for this company. The vision that existed for 20 years, I've been part of that for the last six, as I said, but I observed as a competitor of the companies for the whole 20 years. So I know what’s been happening and I’m very much believe, and I’m going to comment on what it was in a minute.

We need to evolve our vision and our strategy, but we are largely going to stay with it, and by the way, we would need evolve our vision and strategy whether Brett remain here or whether somebody else come in in his place, we always do this to address both the market and our customer needs.

What is our vision; is to be the global leader, integrated across product lines in commercial real estate, services and investment. What defines leader? Very simply for us its three things, quality and value of the service we provide to our customers, to our clients and we test and study that, we don't just talk about it. We test it and study it. We deeply understand where we stand in terms of providing that quality.

Scale, important to us in terms of industry leadership because of the advantages it brings, advantages in terms of geographic and product coverage, advantages in terms of the ability to invest in the business and cost advantages. So scale is a critical part of being industry leader.

And importantly, consistently -- consistent with what we've always done, long-term growth for our shareholders, for our employees, for our customers. We believe growth is important part of industry leadership.

So where is the evolution in this vision? We are going to have considerably more focus on integration across product lines and geographies than we have had historically. And why is that is because that's what our customers want. If you watch this industry over the last 20, 25 years, when I came into the business in the mid-1980s, it was a one-off deal. You did whether you were in real estate services or development or investment. It was largely a one-off business.

Today, the wonders in the business have to integrate for their customers. We work for customers around the world. We work across product lines. We work within a single product line, doing business over and over on an account basis, whether the one-off basis, so we have to integrate. We have to collaborate better than we did before.

Secondly, and very importantly, as an addition to our vision, is that we want to be the leader in real estate investment, as well as services with the acquisition a year plus ago now, four pieces of ING’s investment management business, we’re now the global leader on commercial real estate investment, as well as services. So that's obviously a key element to the new partner -- to our updated version.

Our strategy for getting there historically has included the following, providing clients with the industry's top talent. Secondly, growth through aggressive M&A, identifying great targets, making great deals and doing a great job in integrating those targets, once we bought them, and cost efficiency and margin leadership.

How will this strategy evolve and change? First of all, all three of those elements of our strategy will remain. There is simply nothing more important in filling the top talent in the industry, we’ll never move away from that.

Secondly, M&A will remain a core competency for us, as I read about the transition from Brett to myself. I talk to people sometimes as this question, were we abundant, M&A is a core element of our strategy. The answer is no. There is an enormous opportunity to do in-fill M&A and we have examples of that since we’ve done the ING acquisition. We’ve done in-fill M&A in all three regions of the world.

Secondly, from time-to-time there will still be an opportunity to do large strategic acquisitions and the thing I’d point to you in that regard as an example. If you were to go back six months before we started working on the ING acquisition and Jim Groch led that effort for us.

If you were to go back six months before that, I don't think there was a member of our management team, a member of our Board, a member of our competitive set or a member of the analyst community that follow this would have said [GE], there is an opportunity for CBRE to do this large acquisition of ING’s investment management business.

What we were hearing then was the M&A opportunity played out the strategic opportunity to move the business forward to M&A and play it out. All the big acquisitions have been done. While we did $1 billion acquisition of investment management business and now that we’ve done that acquisition, we’ve positioned ourselves to do other things.

In Europe, after we did the acquisition of ING, they have a big, big pool of investments in malls and retail properties. We’ve acquired two in-fill asset services or property management businesses to help service that portfolio. In Asia-Pacific, we really didn't have a significant investment management business before the acquisition of ING.

Now, that we have that management infrastructure in place in Asia-Pacific, we’ll have other opportunities to do acquisitions, if we chose to in Asia-Pacific on the backs of that management team.

So that’s a very, very important thing to think about, when you think about as such, nothing about our M&A capability or commitment that’s changed and the other thing, I wanted to tell -- talk to you about specifically, now we got Jim Groch, who is right here, our Chief Investment Officer runs that for us.

He’s actually built up our capability in the last year to do that around the world. Jim Groch and Cal Frese, where is Cal. They were the two key guys on either of the Trammell Crow acquisitions. Jim headed up the ING acquisition. We’ve got a team in place. So count on us to continue that part of our strategy.

Cost efficiency and margin leadership, will that remain part of our strategy? Absolutely. There are very, very many things that are good about that but let me talk to you about two most important. Number one, it provides the financial resources that we need to continue to invest in our business. And number two, it allows us to more effectively navigate the cycles that we will inevitably have in this business, financial resources and navigating cycles.

So we will continue to be riveted on our margin and cost efficiency in the business. Where is the evolution in our strategy, we will invest more in the platform that supports our business and operational excellence. It’s a huge opportunity for us given our scale, information systems and technology, research capabilities around talent acquisition and development, we will invest in those things to better serve our clients to better grow our business.

And secondly, we’ll invest more on organic growth than we have historically. We think we have a tremendous opportunity and tremendous upside in the area of organic growth. I’ll give you a couple of examples. No part of our business when you look at, a kind of an aggregated basis has greater than 10% to 15% market share right now globally.

There is a lot of upside in our business in terms of the market share we have versus where we can grow. Asset services, we’re the biggest manager of buildings in the world. We manage three billion square feet of buildings and we manage a lot of office buildings.

If you took all the office buildings we manage everywhere in the world and put them in the New York metropolitan area like here in this market would have a 75% market share in New York. These are rough numbers obviously. We would have a 75% market share in New York. We wouldn’t manage a single square foot of space anywhere else in the world, nowhere else in the U.S., Europe, Asia, 75% market share in Europe, nothing else manage in the world.

There is a lot of upside for growth, a lot of upside for growth. And by some measures, our outsourcing business, which is the industry leader, the biggest in the industry and the bigger than we thought it would get to, there is no more than a 5% to 10% penetration by us and our competitors in that business.

There are a lot of corporations, a lot of hospital systems, a lot of government entities that have yet to outsource their facilities, and that’s a huge opportunity for us. So we think of ourselves as being particularly well positioned to continue to grow this business both organically and through M&A.

So with that, I’m going to turn over to Gil Borok, our Chief Financial Officer.

Gil Borok

Thank you, and good morning. As you know, just a word on logistics, we’ll take -- have a Q&A session, combined Q&A session at the end, most of you know that. The other thing I’ll get right out of the way is, I’m not going to -- the first thing on my map isn’t going to be an update to guidance.

So with that said, let me go through the presentation. And I’m going to go through in a fairly quick order. In part, as many of you know this. I just want to make sure that everybody is at least in the same page with the latest information on our basics and I do know you want to get to all the other speakers that you mostly don’t tend to see as much as you do to me.

So we’ll try and go through this with some speed. We start as we’re familiar to most of you but just a point or two on each one. This is our basic revenue chart and we talk a lot about revenue diversification on this chart. It’s obvious to you that with the largest in the Americas followed by EMEA, followed by Asia-Pacific and then the principle businesses, the EBITDA distribution isn't necessarily the same. It trends the same way.

But when you look at the Americas, we often get the question, [GE] what about expansion globally and so forth. Lot of factors go into consideration but suffice to say and again many of you know that it’s our most mature market, the most mature real estate services market is the U.S. or is the Americas, the U.S. being the biggest piece of it.

And so we are fairly well aligned in terms of where the business is vis-à-vis where our revenues are and obviously that is subject to change over time, should those dynamic shift. These are service dynamic. We’ve done a trailing 12 months. You usually see this on a quarterly basis. At the end of the year, you see it on a full-year basis. So we’ve done a TTM through 9/30. The big thing that jumps out at you obviously is the property and facilities management business being 35% of the total pie. That’s stable recurring revenue.

The business is approximately when you take it all in ex-Transaction Management fees. We don't -- when we talk about this business in this format, we’re talking purely about the fees, not the associated transaction and the transaction revenues, the leasing transaction revenues that come from that business are around 15% percent of the leasing numbers that you see, the ancillary revenue, if you will.

But they’re just a fee businesses. As you can see it, it’s $2.2 billion business, running anywhere between 10% and 12% margin. Then we got the leasing business, which is up to 30% and actually it is pretty much at peak revenues at this point. That sort of indicates that we should see and we normally do see in each successive cycle as we hit a peak. We do see ourselves taking market share and we potentially see the leasing business being bigger than it was in the last peak in ‘07.

We’re already there and so that’s a good dynamic side. And then on the sell side, we know we’re near peak, we’re two-thirds of peak. It’s running at about almost $1 billion. We were at about $1.5 billion at the peak in ‘07.

So there is potential obviously upside there to the extent that the downside, well it’s only 16% of the business. In 2007, globally it was 30% of the business. So when 2008 hit, it had a dramatic impact on our revenues and margins as the capital markets business rose up. That wouldn't be case today. And by that comment, I’m not suggesting that we think that the capital markets are going to fall off the cliff. It’s a different cliff they are talking about these days. But it is to suggest that it’s not nearly they contributed that it was back at the last peak.

And then just a word in diversification, they are many ways to breakout that business between contractual and non-contractual. We’ve chosen one to use here in our investor deck. That it is -- it's not perfect for example, we put commercial mortgage brokerage in the non-contractual bucket. There is a part of commercial mortgage brokerage that actually is contractual, the servicing part of it but by and large, this gives you a sense that today, you are at 50-50.

And we want to -- I want to make the point as we usually do that they are actually we’re much better mix of recurring revenues. Some of them are high margin like -- in our investment management business, the ING business, high-margin, core revenues that that now comes through. Obviously, property management is part of that lower margin but very steady stable revenue. Now, we’re at 50-50 whereas when you go back to 2006, it was 70, 30 split. So, obviously, again a lot more security and a lot more base line revenue that, we wake up January 1st and the revenue avail or about to come in.

Many of you again have seen this chart, just a few points on this. You can see that over the period from 1992 that’s 17, 18 year period, we had revenue growth, there is a CAGR of 16% the top arrow and 21% EBITDA growth.

What this speaks is, obviously revenue mix and as we get to more toward the height of the cycle if you will, transaction revenues build up, the margins in those businesses are higher than in some of the core businesses, the lines with the recurring revenue i.e. property management. So that combination with pretty tight cost control which you know, we are not shy about taking actions to control costs and I think perfect example of that was in the fourth quarter of '11 and again here in the third quarter of '12.

As we managed cost to revenue and we do, proud ourselves on doing that. And this is not investment, this is cost, this is watching our spending vis-à-vis revenue. Revenue dictates how much we spend. So even when we’ve seen a cycle as we have sort of moving forward when we’ve seen pause we’ve managed cost accordingly, we had an example that in Q4 '11 and again now in Europe in the third quarter of ‘12. So we step up to the plate and do what we need to do from a cost perspective.

What that resulting is, is this leverage that you see we call it operating leverage 16% revenue growth overtime, 21% EBITDA growth overtime. EBITDA growing more than revenue is something that’s important to us. It produces industry-leading margins and you can see that at the moment trailing 12 months we are at 14%, which is better than full year '11, which was at 13.6%, and that is sort of consistent with our goal of in a normal year adding, this year could might be higher because of the ING acquisition, but in a normal year adding 50 to 75 basis points of margin as the cycle progresses.

Just a word on the balance sheet, this is not a bad picture, when you think about the liquidity the $1.319 billion that’s a combination of cash and revolver is about $600 million of cash that we had at 9/30, roughly $300 plus million in the U.S., $380 million in the U.S. the rest overseas. Most of it accessible with relative comfort, of course, when you bring cash back from overseas, there are tax consequence that available to us.

And no debt, no significant debt due till 2015. Many of you are aware that there is a call option on the expensive debt the 11.625% bonds that are 0.17% debt is a call option next June. And what I told most of you as we spoke considering what we do with that, but we will call it.

And we've said that publicly, now whether we refinance that, let say the most conservative thing is that we refinance it, it’s our understanding doing a market check that back can be done for half the price. So, we are paying 11.625% today, I don’t think we pay anymore than 6 and probably less. So for modeling purposes for half a year we’ll have that benefit and then obviously ongoing in '14 and beyond.

So a very good picture and nothing significant that we have to do for at least two plus years and we watch this picture very carefully, and we watch it, particularly carefully vis-à-vis the cycle, which at the moment is an up cycle.

And then just a capitalization table that’s the detail all that you’ll have it for reference just easily and convenient, I’m not going to go through it, but it’s a combination of term debt and variable rate debt and fixed rate debt on the bond, plus as many of you aware, we have swap $400 million of the variable rate debt. So we’ve got roughly a 50-50 mix between fixed and variable.

And then as the acquired reconciliation, so that’s -- those are my comments. What I’m going to do now is handed to Ray Torto, our Global Chief Economist and Asieh Mansour, our Head of Americas Research. And what they are going to do is come on up and actually have a dialogue between the two of them on some economic factors that I think you'll find quite interesting. So, Asieh?

Ray Torto

Good morning. You are not awake. Good morning. Good morning.

Unidentified Participant

Good morning.

Ray Torto

Yeah. Good morning. Yeah. Good. Thank you. I’m glad to be here. And we wanted to talk to you little bit. You’ve got to stand over here. Talk to you little bit about what’s going on the economy, obviously commercial real estate is a derived demand and demand for commercial real estates services, investment or occupying services stands greatly on the economy, and for that reason, Gil and Bob keep us around right. Keep track of what’s happening.

So we wanted to talk just briefly about what we are seeing, obviously there has been quite a bit of mixed economic news and we all know what’s happening in terms of economic deployment is really somewhat below none, where they use enormous historic GDP growth, certainly over the last three or four years. The global economy has been growing, but the global economy is not been growing at enormously usually did in the past.

So and we’ve still see that as we kind of go forward with what we call ubiquitous uncertainty that’s out there that is affecting so many investors, as well as occupiers when it comes to making their decisions.

So as we look at the economy, clearly what we see is certainly slow growth but you can still also look at that and say that’s improving growth. I mean it’s not back to the good health that we use to have back in last decade, but it’s certainly improving health in the slow economic growth. Implications of that slow economic growth, commercial real estate are very importantly, we want to kind of demonstrate that to you. You now?

Asieh Mansour

I guess, I’ll just focus on the U.S. and I think for the United States we have been growing sub par our expectation for year end somewhere around 2%, third quarter was a really good number 2.7%, but that was purely inventory driven. Fourth quarter, I think we are going to get the impact of Hurricane Sandy, so it’s probably going to be less than 1%.

Our expectation going forward is very similar, I don’t give a point estimate, but still sub par 1.5% to 2% growth in 2013. The one interesting thing that we were noting and has implications for real estate is that consumers and general are much more of beat than businesses. I think it’s a business factor especially through fixed investment that are really be impacted by the fiscal cliff uncertainty.

Consumers whether it’s the housing lease and housing recovery, they are doing much better, they’ve deleveraged their portfolio. We will get another fiscal fund information today.

But clearly they have deleveraged and the consumer sentiments in sales have been strong. But again for next year, we are cautiously optimistic slow growth. It’s the U.S. economy not really going to gain traction until 2014.

Ray Torto

Yeah. Why we called cautiously optimistic is positive, it’s not negative, and but it’s not of course the pace that we’d like to see it. And that said, if you look back, you look at commercial real estate and this is a data from IPD which tries to measure performance of commercial real estate, particularly prime commercial real estate.

Our commercial real estate over the last year, now this is 2011 data information is only available on the annual basis. So total return for the IPD Global Index is 9.8%, I think we’re ahead of that and so real estate even though economies are not doing well, prime real estate, core real estate is doing quite well in terms of risk performance.

You will also notice here that Canada, United States, Australia sort of the leaders in this in terms of total performance. And also by looking at the light green as suppose to the dark green, done a lot of that performance is due to capital market performance, basically cap rate compression since over that year.

Now, you look at this, you’ll say, well, this is 2011 what about 2012, all the data is not in for all the country, so we can’t put together a global index, but for Canada right now for the first three quarters, the total return has been about 15%, so slightly below the 15% and change. Unites States is, you’ll speak United States, I’ll let you do that. Our strategy is about 9.5%.

So returns that we are starting to see for those two countries on which we do get quarterly information. Clearly that leave us to believe that performance for commercial real estate in 2012 is going to match but we have 2011.

Asieh Mansour

Of course U.S. we have data which is much more updated and I compared it to other asset classes. So we have the REIT’s and the two bars we have 10 year historical annual return, and then the first three quarters, which is a year-to-date number.

So we have the public factor for real estate just a REIT. We have real property, this is unlevered private equity real estate returns from NCREIF and then we have a bond index and equity index and inflation and treasury belt.

And what’s notable is that, real estate is doing very well on risk adjusted basis, because really the volatility is very low. On a historical basis, our expectations for real estate returns in United States unlevered private equity real estate should return somewhere between 6% to 8%. It used to be much higher 9%. But I think, risk premium on real estate has come down as the transparency has increased relative to other sectors.

But I think for today on a one year basis real estate is returning unlevered 11%. REIT’s and general have a 50% debt load on them, so 50% leverage, so you can add the leverage and you get -- of course, you are going to get a higher return.

So from our purposes despite the tough economic environment real estate as an asset class has held up really well and it should typically return somewhere between a bonds 3% to 5% and equities is actually outperforming. So it’s delivered strong performance year-to-date.

Ray Torto

Yeah. That’s one of the reason across the globe we are seeing a lot of capital coming to commercial real estate, certainly the return performance. But also being an old guy, I remember back 20 years ago when there was debate about whether real estate was a diversifier in financial portfolio.

Today, there is no debate about that everybody sees there is a diversifier. And in addition, at least has less volatility than some of those other asset classes. So there is a lot of capital we are seeing globally coming into the -- coming into this sector.

This is looking at some proprietary research that we do globally, putting together what we call Capital Value Index and for those we have by city and by country. But this is aggregated up by region to give you a sense of how capital values have moved overtime.

Reason I wanted to just kind of bring it up was to show you that, what we are seeing is performance of commercial real estate is being doing quite well in the past, but a lot of that has been doing what’s happen in the capital markets.

And as you look at this line, the way I interpret this line is, you see except for the Americas, what we are seeing is that Capital Value Index is starting to flatten out. So that, so the performance coming from the capital side of the market as oppose to leasing side of the market, you could ask the question, well, what’s the future then look like?

And of course, what we are going to argue and point to you is, the value of commercial real estate is driven by NOI, as well as by cap rates. And so the real question becomes what’s going to happen NOI going forward, because you can increase capital value if NOI is going up. Go ahead.

Asieh Mansour

This is a -- this numbers we’ve started to pull together, Jack Durburg, really pointed us, to pull these numbers. This is leasing activity. So we are trying to get a better measure of what’s happen in growth absorption.

So for the United States and Europe, this is just leasing activity. For Asia-Pacific for now just net leasing activity, so net absorption. And just a couple points, activity is still positive.

However, in the U.S. in particular, ones we hit the summer patch the slowdown leasing activity slow and comes back to the point that this is activity, this is our still very cautious, they are very worried about what the regulatory environment going to be next year. We really saw it, especially in the United States where leasing activity did slow in the third quarter and this is just what the numbers are reflecting.

Ray Torto

So when I look at the leasing market, of course, is to look vacancy rates and one caution on the slide, you really don’t want to look at the level of vacancy rates across regions, because each region really has its own like, let say culture, underlying structure. And so the structural level of vacancy rates in a particular region such as Asia versus United States are quite different.

What I really wanted to point out to you is simply, what was the cyclical low, which is light green dot and of course, the cyclical high. And you can see there has been some improvement in vacancy rates across the globe. We’ve been under 116 basis points, a very little improvement as you can see in EMEA in terms of cyclical high, and then improvements in Asia and United States. But this is still growing on the leasing side for further improvements and growth in NOI.

Asieh Mansour

In terms of United States we can dig in a little bit more, in terms of the different sectors, property sectors. This first line of, data for the third quarter, just vacancy availability rates, it’s our latest data as of the third quarter then we have the past cyclical high.

And then the natural rate, the natural rates equilibrium. We do have an equilibrium vacancy rate for every single property sector and then the last column is, how many years, or what is the time that we get back into equilibrium, because that’s important when vacancy rates aren’t equilibrium, that means the landlord can start pushing rents.

And where we are seeing, already an equilibrium, is the multi-housing sector and the full-service sector. Clearly the belle of the ball has been multi-housing. We had a major housing bust and the multi-housing sector has benefited. Multi-housing is the only commercial real estate sector that has a substitute in terms of owner occupied housing. So it’s really benefited. Right now landlords are burning off concessions. There is no more free rent in most of the market.

Office, industrial, retail by contrast, there is still, they are suffering from higher vacancy rate. Where we like or we are seeing improvement, office CBD, clearly there is a recentralization move back into inner cities, gateway markets are doing very well, Class A office in the top 10 markets vacancy rates have come down significantly.

Industrial, it’s a mix bag. Areas that are impacted by small business decisions, flats, business parks, R&D space are not doing very well. The mega warehouse distribution facilities 500,000 square feet and above are really benefitting. Global logistic firms are consolidating and its really benefiting from e-commerce.

Where e-commerce have hurt with some modern retail, we are noticing that, the warehouse distribution centers especially if you are close to inner cities, close to a population density is doing very, very well. We heard that Amazon is going to start doing same delivery. So for warehouses they really want to be in urban centers as well.

Ray Torto

Okay. So you look the vacancy side and then, of course, also when you think about the leasing market, come on look at what’s happen with regard to rents and for the three major property types, that we are, we follow.

This slide is showing year-over-year change in rents against the quarter-over-quarter change which is the light green, so although commercial real estate, leasing market has been improving even in the pace of mix economic news.

What we are seeing in the current quarter is a slowing of that improvement and so it does sort of raise the question whether not this is a pause or this is inflection point for the leasing market, and we don’t think it’s an inflection point. And do you want to throw some light?

Asieh Mansour

And I think the key reason from my perspective, even though the economy has been slow and job gains have been sluggish, and especially in the United States. One of the things that saved the real estate sector in this cycle is low supply.

We had minimum supply. There is no construction financing for speculative development outside of multi-housing. So I think the financing environment for speculative deals that’s really helped us.

The only area where we are seeing construction is multi-housing replacement rents in apartment sector at point where we do -- we are seeing construction. But still, we think that construction is needed. There is not only cycle demand for apartments. But I think the way American consume housing. We are moving towards more renting. It’s becoming much more of an acceptable.

So, again, the supply pipeline still pretty minimum.

Ray Torto

Yeah. And one point is looking at the industrial retail and office, those are all below their historic rates currently. And they below what we did back in the early 90s, if you remember that in that time period. So, so to sum up our -- the first real estate, the Congress were guiding were, Rogers, I think his name is, he said, he used to said by lanker, they are not building it anymore or they are not make it anymore, I guess. And so I think that’s a little bit of what we see as a positive story on the commercial real estate side and so that has.

I’ll now turn over to Cal Frese.

Asieh Mansour

I think our next speakers is our CEO for the Americas, Cal Frese.

Cal Frese

Well, thanks, Ray and Asieh. They are clearly some of our most treasured assets, I will tell you and are not so secret weapons. In the investments, we are making in this area and we will talk about just a little bit, I’ll really rank at some of our most important strategic initiatives.

My name is Cal Frese. I’m the CEO of the Americas. I have been in the industry about 30 years. I have been with CB about 15 years. And I came to here -- came to CBRE originally through an acquisition like virtually every one of the speakers are going to hear today, so not so different.

I moved in this position only in the last few months. So on the one level, I’m relatively new. But as some of you may know, I actually had the position right before Mike Lafitte had the position. So, I know the people and in fact, put many of the leaders into their current roles. I certainly and very familiar with strategies and play the key role in their development and believe we’re absolutely on the right course.

So, I just would in summary say I'm thrilled to be back in the seat, leading this important and very large business. I believe we have the leadership team in place and the strategies to maximize our opportunities and to really grow market share in the Americas.

Today, I’m going to provide a brief overview of the Americas businesses and our strengths as well as talk a little bit about our growth opportunities. I have to say given the scale and complexity they are going to be moments where I’m just hitting the treetops so please bear with me.

Okay. This first slide similar to the slide that Gil showed you is the geographic distribution in the Americas. I do want to start off before I get into it by simply saying the Americas is a big and dynamic region with revenues of almost $4 billion, we have five service lines, business lines which include 10 services spread across 200 offices over 20,000 people. We've done over $90 billion of leasing and sales transactions and $20 billion in loan originations. We managed 1.6 billion square feet of properties in this region and have a loan servicing portfolio of over 1 billion as well.

And finally, we concluded 30,000 appraisal assignments during the year. So, this is a big and powerful part of the company's business. While, the Americas business is dominated by the U.S. You can see from the slides that are businesses in Canada and Latin America have grown substantially and have actually doubled inside during this period from 2007 to 2012.

These are growing in full-service operations and include substantial outsourcing contracts with 14 -- Fortune 500 companies throughout the region. This slide shows changes in product mix over this same period and the business has been relatively stable by percentage except for two key areas. The first is our outsourcing business comprised of property and facilities management that's going from 29% to 41%.

And the good news here is that growth is representative really of two factors, one factor and the good news is that that business, the GCS component of that business is our fastest growing business and they've gained real market share. The other factor that’s impacted us has been that the financial crisis and Gil alluded to this a bit during 2000 and 2008 really impacted the revenues in our capital markets businesses and while those businesses are now growing well and we have growing market share in those areas, they’re still not back to peak revenues.

So, I thought it would be helpful to talk a little bit about the five macro trends impacting businesses in the Americas today, all of which, I believe, favor companies like ours. First, the business is increasingly complex, specialized and interdependent requiring depth of service capabilities and integrated delivery.

Secondly, it's imperative. They have strong and deep local market presence. The traditional local market strategy one-off has really evolved to strategic relationships providing multiple services in multiple locations and driving towards consistent and high level services wherever a client might need them.

Third, as players enter our market, new players and there has been tremendous flocks over the last few years. The competition for leadership and sales professionals has grown considerably. And to the extent, there is flocking and I believe there is some flocking there, flocking towards quality firms in the market.

Fourth, in order to manage their businesses efficiently and effectively and we see this throughout industry more of our clients are buying increased numbers of service lines from us and they are buying them from fewer vendors. So there is consolidation on two fronts. This requires companies like us to offer a full array of services in every business location that we are in, in this consolidated buying trend interestingly now is becoming prevalent down the chain, moving from our largest accounts really down now into the middle market, which is a trend I will talk about later.

These trends require the service companies to have scale, distribution, diversified service offerings, the strategy to manage these businesses across platforms and regions in the ability and the willingness to invest. Obviously, I believe CBRE is uniquely qualified to meet these challenges. In the Americas, we are particularly strong and have meaningful advantages.

We have the premier brand, broad capabilities and tremendous scale and diversity. The real estate business interestingly is different from every other service industry in one important factor and hanging there with me. Our product buildings, I think you see at these windows here they don't move, when other industries, consultants and lawyers they can parachute in to provide services into these markets.

You are low to do that in our business, if you really want to understand the depth and complexity of what's going on in those markets and serve your clients well. So therefore, we need to be both deeply embedded into the communities we serve and broadly distributed geographically.

CBRE provides both with the greatest geographic footprint in the industry, we just don't have dots on the map. When you visit one of our offices and I encourage you to walk around here and compare it to offices of our competitors, you will see that we have full-service, substantive operations everywhere we practice.

As I’ll talk about in a minute, we also have a full array of service offerings and have a lead position in each. In order to ensure that we create the best strategies, the trends in local markets, we actually manage these businesses centrally in a metric system with our geographic leaders.

We’ve also been making substantive investments in tools, resources and systems, Bob talked about this, needed for our clients and our professionals to be successful. With the largest real estate services firm in the Americas and believe we are the best. Our scale provides tremendous advantages that we have worked unbelievably hard to convert into service excellence.

And this service excellence will lead to growth in market share gains in every one of our businesses, in every one of our regions. I now want to walk you through our service lines and again I’m going to do this fairly quickly.

The first is leasing. It used to be our largest business and so it was surpassed by our outsourcing businesses. We have over 2500 professionals work done over 30,000 transactions totaling $50 billion of consideration.

As I mentioned earlier this businesses increasingly complex specialized in interdependent. Therefore our best professionals are highly specialized by product type, office, industrial, retail and by practice area, meaning who they represent. So they represent only occupiers or they represent owners.

We’ve also developed over the years of management structure that mirrors the specialization in order to provide leadership and continuous improvement and new strategies for our clients.

Pictures worth 1000 words, I suppose. Here we show market share in the top eight markets in the U.S. as reported by CoStar. We can read it with the light green line on the left.

The next business is our capital markets business. This business comprised of two primary service lines, investment sales and debt and equity finance. In investment sales, we have over 500 professionals involved in over 5000 transactions with the consideration of $45 billion.

This business is also highly segmented by industry type office, industrial, retail and also includes land and multi-housing and size. We have an institutional group for really premier properties and portfolios and we have a private client group, which focus on smaller assets and private more entrepreneurial investors.

In debt and equity finance, we produced almost $20 million in loan originations and have a loan servicing portfolio of over $100 billion. This is a very fast growing business for us and is a meaningful financial contributor in this environment.

Again, the numbers are compelling here. We show sales volumes as reported by real capital analytics. I might also point out on this slide that our primary competitors in this space are specialized capital markets firms, typical full-service global firms are further, much smaller in this regard.

The next slide is global corporate services. It’s become our fastest-growing business and with asset services comprises our largest segment representing 41% of our revenues. You will be hearing a lot about this business directly from Bill Concannon in a few minutes. So I won’t dwell on it but importantly there are four service lines included in global corporate services, transaction management, project management, facilities management and consulting. And this is increasingly an important and powerful integrated service that we leverage to serve our growing demand from mid-market occupiers who need Fortune 500 level services.

Asset services, this business comprises two service lines as well, property management and agency leasing. This also segmented by property type. It's an extremely important component of our offering within our investor owner strategy. This business is including our outsourcing segment and represents approximately 50% of the square footage in that segment in the Americas.

The last business line is appraisal and valuation services. This business operates throughout the Americas and performs well over 30,000 transactions per year with over 400 people in 60 markets. It’s highly specialized and provides services to investors, developers, financial institutions, special services, REITs and pension funds, and has recently expanded to offer services to corporations with their own owned assets and has moved into tax consulting and environmental practice areas.

So now, I’d like to discuss growth opportunities. Again I just want to mention that my CFO has cautioned me to be somewhat circumspect. We have three primary strategies. First is build on our market-leading presence and you’re going to hear a lot about this later from Jack Durburg, Global President of Brokerage.

Second, drive integration, specialization and market segmentation, and third continue to invest in the workplace marketing research business intelligence systems and platforms. Notwithstanding, the leading -- our leading market presence, we continue to believe there is tremendous headroom to grow all of our businesses.

We therefore have initiatives in place using proprietary data in our field expertise to identify and target these key opportunities for growth. We are aggressively recruiting into these market spaces and know that our platform is a significant draw from many of the best people in the industry.

We’re also targeting acquisitions and believe M&A can play a significant role in building out important markets and business segments. I have listed a number of areas here that we are focusing -- continue to focus on our strategic segmentation of our business but really wanted only to describe two items.

First, we’re building a practice in our mid-market space for both investor owners and occupier segments. These are both very large segments and are growing at a fast pace due to increasing need for sophisticated services by these buyers. We've been active in these segments for many years and have a substantial penetration into these businesses already. I believe there are outside returns here.

And we are developing structures and building teams right now in order to quickly grow businesses. Secondly, we have a very mature and sophisticated strategic accounts group, comprised of senior executives focused on our largest accounts and our largest clients. They’ve developed the client care and development process to ensure we are covering and servicing our most important clients in new and innovative ways and look for opportunities for us to develop multi-service relationships and increase share of wallet.

This group and model continues to grow and have a dynamic impact on our integrated service offerings and client satisfaction and has increased our win rates. This is my last slide. The third opportunity is to continue important investments in innovation and systems. You can see this completely partial list here, and I won’t go into any of them individually.

But these are powerful assets that arm our professionals and our clients with unique resources and drive client satisfaction, trust and ultimately lead to meaningful growth opportunities. So with the last word and I’m going to close where I started. I'm thrilled to be back leading this important business and believe we have the leadership team in place and the strategies to maximize our opportunities for future growth.

With that, I’m going to turn it over to Mike Strong, CEO of EMEA.

Mike Strong

Thank you, Cal, and good morning, everybody. I’m going to wonder around if you don’t mind have you contain me. There is obviously a lot written and discussed and reported around what’s happening in Europe, what’s happening in EMEA but Europe in particular.

So what I wanted to try and do in short time available this morning is just to give you a brief overview of what's happening in Europe economically and find yourself what impact that’s having on the real estate markets and what we’re doing in response to market that is quite challenging.

So let me just go to the first slide, which shows a comparison on our business in 2007 and 2012 geographically. There aren’t dramatic changes on this but as you see, the dark green is the U.K. The U.K. is still by far our biggest single business. The reason for that is that the U.K. is by far the most material real estate market in Europe. Its way ahead in terms of intermediation.

The light green is France. But as you’ll see, it’s pretty steady between the peak of the market in 2012. And as you’ll also see we got well diversified geographical spread across lot of the primary markets. And the primary difference between the two is in red sliver which is Switzerland which we acquired since we all were here last year and also we’ve acquired Turkey which doesn’t show yet but will show next year.

In terms of distribution of where revenues come from, there is a similar picture here to the one that come online, which is leasing is broadly similar over the period as is the appraisal and valuation. The big change is sales, the investment market and that’s come under another stress in Europe and I’ll talk about it in a bit more in a moment.

As you’ll see in 2007, 35% of our revenues were investment sales, this year 18%. But the real success story is the outsourcing business, the property and asset management global corporate services which has gone from 19% in 2007 to 35% in 2012 and continuing to grow.

Obviously, the elephant in the room is the economy. I couldn’t present today without talking about the economy. This is the position for this year 2012. The red bits are 0 or 0 minus growth projected for 2012, which really summarizes some of the challenges. And as you’ll see the majority of the developed West European markets are red. Germany is showing some growth but the principal growth areas are Central Europe, Eastern Europe and the Nordics.

But for real estate point of view, they are smaller markets compared to mature markets. The most important, I think is what’s the expectation and what is going to happen. Now, these are the latest forecast from Oxford Economics. There are consensus I haven’t seen in November. Now, these are October. But as you’ll see, they are projecting that for 2013 there will be some mild improvement in growth.

On the left hand side is Southern Europe, Greece through to Italy, which is still showing declines in GDP. The main central group showing just zero to one are over the developed Western European markets, the big market. And on the right-hand side, you’ve got Central Europe, Russia and Turkey, which obviously are growing much more quickly.

Now, this is an improved picture on what we’ve seen in 2012. From our point of view, although we are in the majority of those markets and we are in the southern European markets, we are not heavily exposed to the transaction market. So what we do down there are principally recurring revenues.

I’ll now show you two slides in terms of what impact is all of this had actually on the market. And there is almost the direct correlation between GDP and take up in office space. It's quite uncannily close. And what this slide shows is the tracking from 2001 through today basically. The bars are six months and the breadline is trading for courses.

And as you’ll see, it’s down on the left hand side, you will see the decline in the early part of the last decade with the economic decline of that time and then steadily grew through to a peak in 2007, went down again in the recession down to 2009. It showed quite a strong recovery in ‘10, a more recovery in ‘11 then it tailed off.

So in another words it’s precisely following what GDP is doing in Europe. This is quite helpful because it does enable us to predict more or less what we expect to happen and what this is telling us and what the GDP forecast is telling us is that the market has probably stabilized and we’ll move sideways. And in one or two slip, the markets may take up.

So I think this is a stabilization slide. This is as well -- this is capital markets and this tracks backs to 2000. As you’ll see, early part of the last decade for the first four or five years, the trading volumes in Europe sat between €60 billion and €80 billion. When the deck kicked-in in 2005, you will see we had three very fast growth years and the market topped out in 2007 just over €250 billion. That fell to €60 in 2009. And you will see that it hasn't however recovered.

Its recovered to between €110 billion and €115 billion and it’s been there for four years. So I think it’s fair to say the market has stabilized. There is equity and buying support at this level. And I think it’s reasonable to assume that will continue and may improve very slightly.

I talked about the success story in terms of 2007 today in terms of the big growth story at least, which is outsourcing. This is a slide showing a combined property management and global corporate services revenues which has increased 32% over that period.

There are three reasons for that. These are big corporate wins such as Nestle, Pfizer, Microsoft, Shell, HSBC. Wins for big owners were increasingly managing for the big owners across Europe. Credit Suisse, Henderson, Deka, Prupim and three acquisitions Bob mentioned at the start all exclusively in shopping center management, one in Italy, one in Holland and the other in central Europe.

So combination of these is namely organic growth but some acquisitions has driven significant increase in the size of that business over the period. So to come back to growth opportunities, in an economic environment that is growing but only slightly. Where are the opportunities because we certainly intend to take advantage of them.

Certainly on leasing, we think there is an opportunity for us to exploit some modest increases that we’ll see next year in U.K. Germany but there also we see slight improvement in Paris. There are also markets in which we don't yet have significant market share such as Russia where there is an opportunity for us to grow share.

We do that through strategic hires and we never stop hiring the very best people in the markets to support us in these objectives and also segmentation, which is to ensure that we’re in all segments to the market, not just the big deals but all way down the size curve.

In investment, there is already -- although we’ve got substantial market share in most of the major markets in investment as we have in leasing. There is no market in which we got to a position where we can’t grow shares in lot. And if you take investment, we’ve -- London is the biggest single market in Europe. It takes about -- it takes 70% of all the international capital that goes into Europe, and it represents any one-time 25% to 30% of the trading. And in fact, U.K., Germany and France combined are 70% of the entire market and we are very strong in those markets.

But what we are doing is we growing our teams through strategic hiring in those major markets of France, Germany and the U.K. We are investing in Sweden, which is one of the growth spot and in Russia, another big growth spots in Europe.

And we are collaborating, we are always collaborating around the world, but we’ve really beat that up and as Cal said, the real estate doesn’t move but the capital does, and the capital moves around more than ever. So we are connected up around the globe to make sure that we can capture that capital as it moves particularly now the major markets.

And the big opportunity for us is a change, a progressive change in intermediation levels, to drawing that for a moment, because the U.K. market, which is the biggest market is almost 100% intermediated. There is an advisor on every side of every deal. That is not true with rest of Europe. If you go into France, you go into Germany, you go into Italy, intermediation there is still quite low, to be clear in the 20% to 40% range.

As this changes and particular as the market internationalize, intermediation level should increase and that will give us a big opportunity to take advantage of the market, well, the amount of trading isn’t changing, amount of advise is actually enlarging.

And on outsourcing, much of been said on our outsourcing. But the big opportunity for us is to provide services multi-market, whether that’s owners or corporates, because its complicated to provide property management services in 10 countries in Europe, languages, law and so and so forth. We can do that and there are very, very few, very few firms that can’t. So, we are supremely well-placed to take advantage of that as it, as that market is opens up.

And a few more things, real estate finance, and we’ve been in the space for awhile, but we’ve got a big debt advisory business in America and we’ve just, it’s relatively small in Europe and growing and so opportunity. We have loan servicing platform that go with that, again it's early days and it's growing.

And we have some legal property match, which actually is a screen-based trading system for unlisted real estate securities. We got almost hovered the entire market and that’s an opportunity we can roll it out around the world.

Residential, a massive huge class that we really only just getting into and by that, I mean, the prime end, prime London attracts investment from all around the world, prime residential London.

And it’s growing in -- and it’s growing in value, and we basically set up a residential sales capacity in London. We recently made a small acquisition in the mid part of London to service that as well, we certainly intend to attract the market share held by the traditional residential firms.

And M&A, we never, not looking for M&A, but we are very selective, but we think there are opportunities to in-fill. And then at the bottom, I just mentioned CBRE Global Investors you are going to hear a lot about that later.

But obviously this and this is a massive opportunity for us, because, global investors being the biggest manager of real estate in Europe and that’s being the biggest service provider in Europe, there is a huge opportunity to match those two together.

And I just want to finish by saying this really, this slide encapsulates the biggest opportunity overall, which is our customers. And I have broken down our customer base into three components.

The top triangle is, it says occupiers, but actually it represents the top 100 organizations in Europe as listed by FT Europe. So these are the biggest users of real estate. We already represent 78 of them, 78% penetration in that client group.

The bottom left hand side are investors, these debt and equity providers. We analyze the top 50 debt and equity providers in Europe. We already represent 42 of them, that’s 84% penetration.

And on the right hand side, owners and developers, this is institutions and development companies and REIT’s. We analyze the top 30. We already represent 22 of them that is, what sort of percentage is right there, 71% penetration.

Now the point here is and we already represent the majority of occupiers, big occupiers and owners and funders of real estate in Europe. But we don’t do all that work. We don’t do all that work in every country. We don’t provide every single service line they need in every country. But we could do.

So and a primarily there is will be to increase the number of countries, the number of service lines we provide to this customer base. And the opportunity represented by that even in the market that is economically tight is very substantial indeed.

So thank you very much. I’m going to hand over to my good friend Rob Blain who is CEO of Asia-Pacific.

Rob Blain

Okay. Good morning. And it’s good to be back. This is our second year here. I’ll do my best to provide coverage in the short time allocated to Asia-Pacific. I wish to just comment on similar to the previous speakers on just comparisons with revenue by country and by business line, a few comments on the Asia-Pac economy and then comments on the major trends in four key markets which are Australia, Japan, China and India, and then talk about some growth opportunities.

Today is, yeah, the clarity this morning, Asia-Pac is everything now in definition from Japan to India down to Australia, New Zealand and many thing in between. We have some 87 offices across four different countries and roughly 9,000 odd employees in that space.

Our APAC headquarters’ is based in Hong Kong and I have the privilege of being in the leadership position since 2002. This is just a snapshot here, not too similar to the Americas and the U.K. and the Europe business.

Our product mix, we had fantastic upsides since 2007 in the outsourcing business, 16% up to 36% and similar to the other markets, where we’ve been affected the greatest is in the capital markets on the investment property side from 31% to 17%.

Just on the APAC economy. APAC generally remains reasonably healthy. It’s been know as the global bright spot for the future, a lot of those driven by domestic uptick and domestic consumption and realizing regional trade in between the countries, import, exports, Southeast Asia to China, China to Australia and alike.

However, I’ll turn to some of the activity in Asia-Pac because what is still a bit of forgo or a bit of midst in relation to what is happening in the U.S. and what is happening in the EMEA.

There is multinationals which are slowdown their decision making even though all their strategies going forward a very positive for Asia-Pac and especially greater Asia. But just it tentativeness of decision making at this point, just to the end of the year, such the fiscal cliff and whatever else is going on, is cage what happens is our region.

We believe that our Asia-Pac should probably benefit first, there is abundance of capital, most of the strategic plans from domestic companies or multinationals are in place and there is a lot of work ready to roll in the first and second quarter. So in the medium term, we believe is that we solid growth in particular three markets, which are already been identified.

Just moving quickly on to Australia, and two speed and some economist believe that’s could be two, three, or four speed economy. But in simple terms, it’s been driven with so much investment in the mining sector and notwithstanding commodities moving all being discounted 10% to 20% in recent times, it still will underpin our economy in that space.

It is still creating a lot of infrastructure opportunities and that is being tempered though by this slowdown of the commodity prices that has been slowdown in the employment side within the mining sector, but however 10 to 20 year period we believe that will balance out.

That demand on the straight some of the domestic industries are find a little tough in the retail, et cetera. But having said that, domestic investors law subdued have been making some inroads in quarter four focusing on prime core property.

The RBA, the Reserve Bank of Australia, just 24 bps down this week, 3% bank rate, the arbitrage looking at very cheap investments, you still buy driving this, it is on the East Coast of Australia between 6.5% and 7.5%. It’s becoming very attractive again in relation to justification of global capital, notwithstanding the Aussie dollar is strong, but that’s still safe way to investment in the short-term.

We are seeing diversification of capital as I mentioned from the Southern comes out of Southeast Asia, as well as there are still some Europe and U.S. funds which are becoming quite active across on the eastern seaboard.

Few comments on Japan, the economic prospects recover but over the fiscal stimulus still in play and Japan as we all know are going through the sixth Prime Minister is may release. But having all said that, Japan from CBRE perspective has been a success story during this difficult times. Notwithstanding the national disasters, as well as our business is just doing great job up there especially in core Tokyo.

We are seeing a renewed interest in Tokyo, good quality buildings, the investors are being quite. But the national investors or the Japanese investors are back out in the market and as well as, some foreign investors are definitely in the market again, this is, it was not happening last year.

And the industrial sector as well, attracting good interest, a lot of pressure on large portfolios in play, good yield in the logistics business within Japan and so it continues to increase.

On the China, we can have a full day on China and India, but some of the key points. It remains the second largest economy and is key impact on the global growth. But some of the things which we should take into account and there is a lot of media on China is.

Our variation rates the new central government is in place, a very credible group of individuals put in the political environment and notwithstanding the global, sorry, the economic policies going forward and a lot of the media on that.

There is -- they have renewed so much focus on social stability, with that it focus on education and health, they have remained extremely aggressive in the growth of their infrastructure development and projects, such as high speed rail, train, as systems across the country, ports, airports and alike.

One of the biggest things the new government that will be taking on, may take decades to get this through, but they are tackling corruption in a more aggressive manner than we are seeing.

The curse is in the pudding as we say, but they realize that if they are going to continue to do or wish to increase their business with multinationals enabling with the better domestic, they’ve need to address corruption and the broader issue of corruption throughout China.

Signs of the economy maybe turning the corner and has always been debate subjective of otherwise, this is hard landing, tough landing, software landing, and whatever landing you want to put, but what you need to keep into a mind it is a measured landing. It’s still at 6% and it may go to 7%.

But having said that for quality, quality property across all the Tier 1, Tier 2 and Tier 3 cities, we are finding that actual increase in relation to activity especially over the past quarter, and we believe for the better quality product, that definitely improve over the quarter one and two.

Retail is a massive opportunity for the business in China, luxury brands are expanding, most of brand you know about, they’ve got orders between 50 and 150 stores to be rolled out annually, multiple that by 20, 30 luxury brands in China and if you want to go out there and have a look, it just mind bubble, just a the size of the standards and luxury product is going in.

On to India, growth has slowed as we all know, they had issues and challenges in the government, lack of infrastructure compared to China, they’ve got some very good airports now, but just they are over on infrastructure to grow, the footprint of the industry across China is slow, sorry, across India is slow.

And probably the best analogy one can use is, in the context is China is F1, Formula 1 racing and India is just like days no matter running at 25,000 or 22,500 race just everyday, it will do it at its own pace. It will get there but not as quickly as China.

And the interesting thing with India though is the, we’ve been there recently. The amount of private wealth which is driving so many projects is really underpinning the lack of activity and support by the government sector, and we see India notwithstanding the economy is slowing. It is a growth story for the future.

Just few comments on growth opportunities, like previous the outsoucing expansion, global corporate services has been fantastic opportunity, with the Trammell Crow acquisition and what the expertise that go to the Asia-Pac business.

We’ve really concentrated on setting up centers of excellence across Asia-Pac but focus on Asia since the last 12 months I was here, that is mainly having groups of individuals with mandates in with center of excellence in Tokyo, one in Hong Kong and one in Singapore.

We’ve concentrated on APAC hires. We’ve hired some very senior people in work place solutions. We’ve -- recently we’ve hired some expertise in the data center space and we using the leverage of that expertise across country, across regions for a particular clients who are expanding rapidly.

The other area of growth to the company is definitely China which is got a just an appetite for retail and a measured for retail in India with the Foreign Direct Investment law is changing, which is encouraging investment and luxury brands doing joint ventures more reasonably on the terms that are fair to both parties and we see that continuing.

Organic expansion of capital markets and the main problem as you’ve seen with the -- in Asia-Pac on one of the earlier slide is we’ve got a long jam out there. There is still plenty of capital, there is a lot of capital sitting on the fence looking for core assets whether it’s using in office, retail or logistics, but the issue out there is sellers who would sell, say for $100 million, they say to us what if we go for 200 because we have made the 100. It’s not a distress situation out there on direct quality assets.

So until there is a velocity of transactions to pick up and some benchmarking that’s a reason of it slowing down. But we are taking upon for 2013, and we are investing in some great people.

You might have read that over the last month, we’ve secured for one of their major competitors a whole team in the real estate finance area, including later with that business. They commenced their employment with us in February and that will be a massive adjunct to the existing capital market business and then six of those people coming on Board with two existing from somewhere else.

So they will have two specialists in Tokyo, two in Hong Kong, two in Singapore and two in Sydney. An now we will link into the variable capital advisors we have here in the U.S. and a strong market positioning we have with the real estate finance in the U.K. That will be a virtual group of guys with the specialist skills, which we complement in this investment properties’ divisions over the capital market positions all around the world. And that in itself is going to create lot of opportunity for us.

Residential project marketing, we’ve taken the initiative about a year ago that we’ve got a team which runs from Sydney throughout Singapore, Hong Kong and into London. We’ve got projects in Australia being market into Asia, like many projects which will be highly successful out of the U.K. We’ve got a separate team in that space and notwithstanding that being a success story within itself that would continue to build. It is giving us a great database on network individuals who are in that space of moving their capital around the world in major cities.

So we -- there will be more on that. You got anything attached to the side of this. We’ve had great successes residential mortgage valves in our space, especially in Pacific, Australia and New Zealand and lot of the residential valves are driven by the banks and not by the borrowers themselves. We’ve got the technology in place to do this mortgage valves to give you and idea. We do roughly 200,000 valves a year in Australia for the full major banks and they’ve just done on an IT template. It’s a great -- unbelievable if you want to see me afterwards and that will continue to grow.

Other regions in the U.S. and U.K. strategic in-fills will continue. But just as we are focusing on great impact players, who can take as a leadership position or add value to existing teams. It’s not just looking at in-fill companies but looking at individuals who have got the skill sets to actually blend or lay businesses we already have. And that is in some market, I must say ingratiatory challenge. There is a talent shortage in some of the markets.

Collaboration and talent transfer, I mean we do work extremely well on the global metrics. Well, Jack Durburg coming on as in Global Transaction to join many of the dots across the EMEA, the Americas and Asia-Pac. Tony Long who is in the Asset Services global linked over the whole umbrella of the Global Asset Services; Bill Concannon bringing in the whole metrics of Global, sorry, Corporate Services and it’s a very close working relationship. And since we’ve been in this space of collaboration for adding leverage and better execution for clients across multi markets in Asia-Pac that in itself to get that execution right is a challenge and maybe improve data set, ladies and gentlemen, in the last 12 to 18 months.

And that thanks to the support of these global leaders who have linked into our own people on the ground. CBRE global investors have opportunity once again for ourselves. We did not have an investment business in Asia to any extent but Richard Price, he is the CEO of that business. We had a great working relationship, you can see that blend. And the other thing we’re very excited about is the client care programs, which we’re enrolling at the top 200 to 300 clients across the world and making sure that we’ve got consistency across region, particularly importantly where we are concentrating more and more is up bound capital, out of China and Japan and India, going global.

I have always been doing it but to spin it a bit under the door, dialing direct but they always been active. We will have people doing it for and we are now getting groups of people working a lot more closer with the appropriate skill sets to attract that capital.

Ladies and gentlemen thank you for your time. I would like to ask Matt Khourie, the CEO of CBRE Global Investors to come forward. Thank you.

Matt Khourie

Good morning, everybody, pleasure to be here and it’s been an exciting year for me. It’s been just about a year -- a little over year actually since we closed our merger with ING that was referred to couple of times earlier today. And I have to report, it’s been a very successful merger, a very successful integration and it’s been a game changer for us. So we’re really excited about what that acquisition did for our business.

Here is a quick snapshot of what the combine firm looks like active in 27 countries with investments slightly over $90 billion of AUM, 1100 employees which is about 10% down from what the total was of each of the companies when we combined but they were efficiencies that we’re able to capture that allowed us to get more efficient work force.

600 clients globally and we’re really active in all the forward groups of the real estate investment management business. You could see core, core plus, value-add opportunistic on the funds and securities. We’ve got a big portfolio of products 56 direct funds, 72 direct accounts -- separate accounts. Of those 56 direct funds, about 20 are now active for new capital.

Here is a snapshot over our growth and obviously in 2011 is when we purchased ING the last piece occurred at the end of October '11 but a big jump as you can see in our revenue number on the left, that’s 83%. The dark green is asset management fee which are largely recurring. So as Gil and, I think, Cal mentioned in increasing our recurring fee revenue really happened in our business here with that kind of mix. And then you can see our year-to-date normalized EBITDA number that’s through the third quarter. So significant increase, needles to say.

Here is our snapshot of our AUM. The end of last year, we are just slightly over $94 billion -- over $90 billion slightly as we speak today. Cal, let me just point out a couple of changes. We made this strategic decision to get out of the private REIT business here in the U.S. early this year and that was about a $3 billion loss of AUM but we really felt that was the right strategic decision for us.

It’s been a great time to sell core assets in many markets specially the gateway markets around the world. So we’ve been very active sellers of core assets for our clients to enable and get the great returns they have been able to get on these assets. That was about $2 billion of AUM decrease and then another $2 billion of AUM was reduced due to both valuations and foreign exchange in EMEA.

So, that’s about $7 billion of the decrease and then obviously we brought that back up with about $3 billion of new capital deployment that we did last year, this year, I should say. Here is a cut of our AUM, on the left is by program type, the light green, the $23.1 billion that’s our separate account business. That today is actually our fastest growing business. Many global clients really want to invest dollars in separate accounts.

So, we’re seeing a lot of activity today in that area, the other big part of the price took $32.6 billion of our fund business. As we have bought ING, one of the real attractive elements of that acquisition was there. Our securities business that’s $22 billion in blue and then if you go to the right by strategy, you can see over 75% of our AUM is in the core space and it’s good from the number of reasons. It’s good to get through some of these cycles especially in Europe to have core product.

We are going to talk about that a little bit later and it’s also very good margin business for us. So before ING, we were much smaller weighted in core and today we’ve got a nicer a core rating.

Our equity raised, here you can see how our equity raise has been over the last few years. A couple of added elements to this, of the $5.9 billion of gross capital inflows year-to-date, about 2.5 of that’s been raised in our direct and fund-to-funds business. We’ve deployed $1.9 billion of capital year-to-date that’s fresh capital deployed. And then going into next year, we’ve got a bit over 3 billion of dry powder. So we’re in good shape to take advantage of opportunities in 2013.

I wanted also just comment on the capital raising environment around the globe. In most part of the globe, it hasn’t been an easy year to raise capital due to a lot of the uncertainty that was talked about earlier in the program. I would say though that there are some high spots for raising capital some bright spots. U.S. has actually been a pretty good place to raise capital. Many of the U.S. capital sources are back allocating capital and the separate account business as I said is attracting a lot of capital around the world. So, I actually expect 2013 to be better. I don’t know how much better, slightly better. It’s much better as it relates to capital raising, just in our industry.

I wanted to just highlight some things that happened with global investors in 2012. I won’t go through every bullet point but I’ll hit a few of these. The first one there, we landed a $675 million separate account mandate from a U.K. insurance company to invest in the U.K. And this was significant for couple of reasons, number one, it was one of the biggest mandates awarded in Europe last year. And secondly it diversifies us in Europe away from what I’d say the traditional, the fine benefit plans are there.

So it was nice to get that win. As Mike Strong mentioned London has been very active this year. A lot of capital has come there. We represented Korea Public Officials Benefit Association and bought a real prime asset in London, $155 million asset. And they’re still strong. We’ve got two or three clients that are looking to place dollars in London right now. Its really in their mind just a haven for safety. And I would expect that we’re going to do a lot more business in London next year.

In APAC, we were active there. We purchased almost $200 million office building in Hong Kong and that we combined a couple of our funds to do that. And then in Seoul, Korea, we purchased $175 million office building from HP. And that was significant on a number of fronts. It really demonstrates the activity in Asia of Korean capital. We’ve got a lot of activity now with some of our Korean clients. We put together five clients for this deal and they were also active with a number of other Korean clients, not just in Korea but around the globe.

U.S., very successful year here in the U.S. You know, the market was better here than it was in most parts of the world. We raised over a $1 billion for our new value-add strategy and we already have deployed about a third of that equity so about $300 million that related to buying $900 million a product here in the U.S. for this new fund.

On the fund that was the vintage, we’ve been active sellers. And we’ve turned a lot of what we bought as value add buildings in their core, a lot of with CBRE’s health. And now those core building, we’re trying to sell and getting great pricing on and the returns on our sales of this fund have been great and we expect a great result for our investors there.

We’ve been very active in the multifamily space. And I know they were spoken earlier today that how that’s been a good product type here in the U.S. We are one of the very first with the help of research to make the call to get into multifamily. So we were buying multifamily here in 2009 mid, even early 2009 when a lot other folks weren’t and we had a lot of success. And we are now under multifamily development business, big time with about a $100 million of equity raised and much of that deployed in new multifamily deals. We own a majority interest and were partners and that’s a vehicle by which we are doing most of our development.

Globally, our Clarion Securities business has been a real plus for us this year. We’ve raised $300 million in a new long/short product that team has done. I thought I spend just a couple of minute or two on Europe because there is obviously lot of focus on that with the European cycle and I wanted to cut it a few different ways.

Here you can see, this is our global investors. European business, they’re going to sliced by region within Europe. And as you can see, we are biggest in western Europe and in the U.K. and fortunately have a fairly small exposure in Southern Europe, which for us is Spain, Italy and Portugal, just about 14% of our asset based within Southern Europe, 86% of our asset based is in those what I would say more resilient European regions.

Here you can see another cut of that same $35 billion of AUM and this is by product type. And we’re heavily weighted in retail and this was not the case by the way before the acquisition. And about 50% of our business in Europe is retail and that’s significant for a couple of reasons.

One is the retail product we have is 97% leased, so we really don’t have a leasing exposure. It’s bigger core retail, pretty much ablative, which is held up putting down well across Europe. And when you look at all property types, about 95% of our businesses is core in Europe. So again that helps us be able to ride up the cycle in Europe a little bit better.

Some additional commentary on Europe, I’d say is that our investors based in Europe are quite cautious and most of them are still on the sideline. So it does not allow new capital coming from Europe a bit but not a lot. I will say though that just in the last few months Asia and U.S. investors are now starting to study Europe and many of them are trying to pick their time. They go in and take advantage of -- and really more the enhanced risk strategy, take advantage of some acquisitions in Europe.

So we see that happening next year in a much bigger way than that’s happened this year. International capital as I mentioned earlier is really anxious for London. So we’re continuing to trying to fill that appetite and product type core office and large retail are really the stated bets in Europe and have held up the best. So that’s what we’ve active in and probably will be active in over the next quarter or so.

And then my final slides, growth opportunities in my business, we’ve got -- we segmented them by investment strategy. In the core space, we think acquiring prime industrial in U.S., Asia-Pacific and some select, really northern European markets is a very good strategy right now.

We like retail. This has been said earlier, retail in Asia, there is a ton of growth that needs to happen to bring that up to what I would say western standards. And so we’re actively looking at retail in Asia and also selectively in the other parts of the world.

We’re concerned the core pricing in the U.S. for office in key markets like New York, San Francisco et cetera has just gotten to too high. And so we like buying Class A product, office product but in other markets and some of these overheated gateway cities and we do like some of the top APAC markets.

In the enhanced space, reposition in office, we’ve had a really good run and had a great expertise in this, which are buy and subleased our offices that have a lower leasing than they should. Coming in remodeling, lobbies doing renovation et cetera that’s been a big win for us, so we want to continue to do that in the U.S., Europe and APAC.

Development of logistics, we think is good in certain markets in Asia-Pacific and U.S. We still like the multifamily space. So we are active in the development business there. We are watching that closely though because of the development products, the product types in the U.S. that one has gotten started and so they’re probably going to be the first one that have to stop.

So we’re going to monitor it closely. But so far, we are still comfortable than in many markets. It’s a good place to be. And then there is still the play out of the debt model and there are a lot of good opportunity we’re seeing really around the globe, particularly here in the U.S. on buying debt, taking advantage of loan maturities that are occurring.

So we’re on those two. From a platform standpoint, I think Rob just mentioned it here you know deploying capital around the world and having a kind of frictionless weight, migrate capital is important for us and we’ve actively done that. That once would have been one of the product bright spots with the merger. There were a lot of relationships that ING folks had with capital around the world that were serving in a number of different markets.

We’re expanding some of our product offerings, filling some gaps there. We do think we can increase our footprint in certain geographies. France and Germany were in but we can be bigger there. We really like China. So we’re going to try and expand in Asia-Pacific.

We have put together what we call enterprise clients, which are our top five global clients and we’re providing them a value proposition that many of our competitors cannot do because of our global scale now. And so we’re trying to further penetrate the business of these enterprise clients and focusing on five that were really excited about growing with.

And then as I said separate accounts is a big growth area for us. Again, because of our platform, we can create a global separate account business with some of these major capital sources that a lot of our other clients can. And then CBRE collaboration, we’ve taken this to the next level.

As it was mentioned, I think Rob and Mike mentioned with the ING acquisition, we now have the ability to work more closely with CBRE in our lot of different assets that we didn't have control of before. So we have a lot of initiatives underway around the globe to have further collaboration penetration with CBRE. It’s been a great -- it's been a great alliance.

And I think I’ll end it there. I believe we’re almost right on time, Gil. So that’s the good news. The next part of the program is a break and after the break, Bill Concannon, CEO of our Global Corporate Services will speak. So I think everybody should be back here by 55 after the hour. Okay. Thanks.

[Break]

Bill Concannon

We’re going to kick off here shortly. Take your seats. Gil got us stand scheduled right. I’m Bill Concannon and I’m the President and CEO of our global corporate services business that you’ve heard about already today in several presentations. If you leave here with one thought, it would be certainly that the matrix model and leadership model around our business is alive and well. You’ve heard a lot about it from the geographic leaders today. So it’s a great focus of our company.

I’m going to run through our business. The focus of GCS is an outsourcing business has not changed. It’s a contracts business. It’s very stable and as I say, it’s all about contracts with large occupiers of space. It includes Fortune 500. It includes large healthcare institutions, acute care hospital systems and includes governmental agencies. And our entire focus again is around putting contracts in place to help these large organizations, manage their real estate.

Structurally on the top left, you can see in this chart. We report typically to a Head of real estate position, in some fashion a Head of -- Director of corporate real estate, Vice President of real estate construction and so forth. And that individually usually reports into the C-suite in the large organization, again, whether it’s Fortune 500 or a large hospital system.

And basically they hire us to manage and oversee four main functions you see there in the green. The first is strategic planning for real estate and that includes increasingly consulting around the workplace that includes all types of portfolio strategy. It includes analysis from where they should be located in the path of growth for their business. So a very consulting intensive real estate operation.

The second is obviously transaction management and that’s buying real estate, selling real estate, subleasing et cetera, Leasing, sub-leasing, purchase acquisition. Third would be construction and project management which includes move management and design and finally facilities management which is our biggest business, It’s running, building operations of these large occupiers of space.

Again in this capacity, many times we’re brought in to help them change management process, maybe it’s at the end of M&A, maybe it's through some sort of change in their business strategy but change management is becoming an increasing part of what we get us to get involved in, virtually all the cases we partner with the internal staff, okay, inside the corporation or inside the hospital system.

Our momentum continues to be driven by pretty simple factors that have been around for the last decade. One is these large organizations are not staffing up internally to run their real estate operations. They are going to outside providers like ourselves because we have the expertise. We can help to manage their cost. We can help them drive predictability in their spend.

There is only a handful of firms that have this capability particularly when you start thinking about around the globe. In 70% of the cases today, we manage more than one service for our clients and that obviously helps us with our margins. So a big driver, you heard Mike Strong talk about it in his presentation, a big driver is to do more things with the client base that we have.

And then as I mentioned earlier big factor for us is the fact that the business has globalized. That our clients have become global. Only a few companies in our sector can work with client in the Americas, in EMEA and across Asia-Pacific. So that’s kind of our overview on the outsourcing structure. It is a growth business. We’re excited about that. It will continue to be a growth business for CBRE.

We’ve had double-digit revenue growth for the past several years. It also generates very importantly, you heard the metrics talked about today, you’ve heard collaboration. It drives revenue into our local offices particularly around our brokerage business. You will hear from Jack Durburg next. But we will manage transaction management at the headquarters. The field we’ll execute in the local offices, that’s our model. And so it does drive revenue into the other offices of parts of CBRE.

We've executed 179 contracts through the third quarter of 2012. That’s more than we executed all of 2011. So nice growth. It’s not the only metric we look at for growth but the important metric is contract growth.

We did a study last year, a good study with McKinsey. This is a quote at the bottom from their report that just basically says lots of headroom for growth. There is upside in the structure of this whole part of the business and obviously our 3 billion square feet. We believe there is a lot of growth in that as well, both on the facilities management side and on the property and asset management side.

This is an important chart in the sense that when Bob opened this morning, he talked about organic growth and that continues to be a big part of our mission. These are five levers or five components to how we drive organic growth in the business for GCS, really important. The first is terms. So we’re renewing and extending term with our clients.

You see here AT&T and Cigna both renewed in 2012, both very large clients but when we renew them, it’s for three years, it’s for five years, it for seven years. This is really important component to, not only are we renewing but many times they are coming back to us and saying can you do this. So we’re renewing with some other expansion.

Secondly would be services. So you see Microsoft and the provincial government of Canada in Ontario has hired us for facilities management. Year ago, they came back and said can you do our transaction. So now, we have 11 million square feet. Once again we’re doing the buying and selling and leasing for the provincial government there, a very important client and again we’re adding services.

Geography would be the easiest, right. We hear from EMEA, we hear from Asia-Pacific this morning. You will see the examples will show in Prudential. Last week, I was over in New York with Mike Strong. Mike talked about his business earlier and we had a discussion last week. Two America’s clients AIG and State Street Corporation in 2012, again America's customers signed contracts with us 2012 to grow into EMEA.

Very exciting, very core to our growth strategy, good customers in the Americas, happy with our service, client set is critical and said we want you to now take over the ability to run our buildings across EMEA. And so geographic expansion is a critical component to, once again the organic growth in that case.

In each case in State Street’s case and then in AIG’s case, in one case we took over for the incumbent organization, for the incumbent service provider, in the other case it wasn't outsourced, so it was the first generation outsource.

Industry would be an example of healthcare. So for us vertical market and healthcare, very powerful opportunity, the top 50 hospitals in the U.S. today have over 2 billion square feet. You see two examples here Sutter Health and Catholic Health both top 15 systems in the country, once again plenty of room for growth.

And then finally the asset type waste management and the state of Florida, we have 12 U.S. states now under contract. This is kind of a new phenomena where the U.S. states right there is cost pressure. They are going out looking at their real estate. They are looking at ways to drive more efficiency.

So five key levers to sustain our growth. I would say this slide represents what's different, what's been changing over the last few years. Certainly, the corporate sector trends are --things we’re all aware of the economic uncertainty, decentralization and globalization of the economies in world businesses, access to technology and mobility. So they are changing nature of how people work is a big economic change in the corporate sector.

And then finally, the whole area of access to talent. So what we've done over the last several years, you see the second column under consulting expertise is put in place a very robust consulting operation again around the world where we’re helping clients that are looking at trying to drive cost out, address these opportunities. So they take the shape of some of these expense reduction, changing how their organization is set up, how they are organized, looking at their workplace strategies.

So in the past when we had our first-generation outsourcer, they would say, can you help us with our facilities management. Today, they’ll come and they’ll say we don’t believe our workforce is in the path of growth for our business. Can you help us think through where we need to be located because our business is changing. It starts with a consulting engagement. It can lead them to a portfolio assignment or a transaction contract or facilities management contract, same kind of thing.

So we’ve invested heavily in this consulting area. When we talk about it internally, we really talk to our teams about the model moving from a management model to a consulting model that has management model tied to it that leads once again to this broader outsourcing opportunity. So at the end of the day, these customers are looking for predictability in their spend and predictability in the outcomes we generate. So this is a fundamental shift in our how we go to market, how our consulting business operates with our business development teams.

Now, I’ve got two quick spotlights one on healthcare. We’ve talked about the factors underway, the macro forces in healthcare and they include obviously the rising cost, the regulatory change, the aging population and then there is consolidation of the healthcare providers. Well, you see here there are number of acute care hospitals under management has basically doubled since ‘09 for CBRE, lot of focus there from 25 to 51 and then we expect to surpass 10,000 beds, licensed beds under management by the end of 2012.

So big focus on this, big area of opportunity for our company, obviously, a big area of need for our country. The second is on India. Rob mentioned we were just out in India. I’ll tell you there is -- India is a great source of pride for CBRE. We have a phenomenal business there, nine full-service offices.

So when I say full-service offices, everything we virtually do with the company, we’re doing in these offices in India, our 2700 employees, 108 million square feet under management. And the project management business has doubled. If you see the number of project managers, it’s actually doubled almost to 557 today.

So we’re working with some of the best companies around the world. We see GE, HP, Dell and HSBC. And when we’re talking to USA-based multinationals, what they want, they want governance. They want standard process and it’s actually even more important in India than it would be in other places. So this is a very, very significant trend for us.

Last couple of slides here. This is a really important one I think to get across. There is four, I’d say high-level market attributes in the GCS business that are very favorable for our continued growth. And the first is something I alluded to earlier, it’s the underpenetrated market. It’s -- McKinsey estimated $60 billion market. We’ve estimated with them generally, about $10 billion is penetrated.

Most of that remaining is in-sourced wide open market for opportunity. The second is emerging markets that includes healthcare but it also includes Europe and Asia. It includes government agencies. So we’re still in the early innings in this market opportunity. We’re very excited about that. We’re very focused on it and there is just a lot of excitement around opportunities to grow that.

The third is centralization. There are two or three Fortune 25 companies today going out to the market for the first time to outsource because they were centralized. And you can’t outsource until you've got your real estate operations at least consolidated or centralized. So as these real estate departments become more centralized, it puts them in a position to say here is how our operations are set up, here is what it cost us, what can you do to help.

And so that market factor is playing into our favor as well. And then finally, supply chain. The massive part of what we do is obviously run buildings. So the energy, the janitorial, the repairs and maintenance, the entire supply chain, billions of dollars of cost is under our stewardship in these contracts, elevator maintenance, all the rest.

So what we're doing with tier 1 and tier 2 providers is rationalizing that down and then driving more efficiency, more standardization in our contracts, in our value proposition with our clients. That is a very big market factor. Once again because of our global scale, because of our work with other corporations around the world, we’re in a unique position to take advantage of the supply chain rationalization that exists in our industry.

And Cal said on that with the scale and size of the Americans. We have one new client in 8000 locations just in the Americas 8000 locations. We've taken a number of vendors they had from 12,000 down to less than 5000, just by consolidating your supply chain, bringing millions of cost out. That’s does get the attention of the C-suite.

My final slide is basically the way we think about our key priorities for 2013. So very simply, we’re going to take really good care of our existing customers. Obviously, when we renew these clients, we keep our base of business in place. Operating excellence that Bob talked about operating excellence that is our monster in this business. The renewal is critical. We measure customer satisfaction with an independent third-party survey. So it’s a very, very important customer milestone.

We talk about our customers in terms of being dark green, not just green. So dark green, and again in this economy, in this age of uncertainty, a high level of predictability for our customers is what they want.

Secondly, we’re going to continue investing in the platform you see here, not just in technology but in this consulting offering I talked about, in energy, in sourcing, in driving that supply chain advantage, we give our customers on the FM side. And we’re going to continue to focus on these vertical markets like healthcare in Europe, very focused on that. Again more of our clients are buying globally. That puts us in a very strong position, competitive position.

And then finally, we want to continue to enhance our industry leadership position. You saw on your earlier slide that we were ranked number four in the outsourcing 100 this year in 2012, which means not just real estate outsourcing but the entire world of outsourcing, IT outsourcing. Accenture was number one, we were number four.

So the market is turning now to look at CBRE and our brand and our leadership position and the scale that we have to be a real competitive advantage in this outsourcing space which once again gives us visibility with the global 500.

So, with that, I will say thank you for your attention and now turn it to Jack Durburg, our Global President of Brokerage.

Jack Durburg

Thanks Bill. Global Transaction Services is a relatively new role for CBRE and for me. I’ve been in the business for 24 years and at CBRE for 12. I started out running our Chicago operation then I ran the middle part of the U.S. and our central division. And then Bob Sulentic asked me to take on this new role, in March of this year running Global Transaction Services, which encompasses our leasing business, our sales business and our transaction management business globally.

So I’m going to talk briefly about global leasing trends, global sales trends and strategy and opportunities to take advantage of the growth opportunities there.

Global leasing trends, incremental market activity improving gradually across markets as you might imagine, performance varies depending on the geography. In the U.S. vacancy continues to edge down slightly. There is just enough job growth to create just enough positive absorption to take vacancy down slightly. We are projecting slow as Asieh mentioned, slow to gradual market recovery across product types going forward.

In EMEA there is a dearth of large transaction, occupiers are cautious, they are focus on cost-cutting and they are really taking a wait and see attitude here. But notwithstanding, vacancy and rents have held stable given the lack of development activity.

The economic yields in the U.S. and in EMEA have had its impact in Asia-Pacific and so demand has been reduced slightly there. However there is healthy activity from the domestic firms within APAC. Vacancy has kicked down slightly in Asia-Pacific.

And then generally, as Asieh mentioned, there is a general lack of new development activity which is helped keep the market across regions relatively stable. What you see here at the bottom of the graph is our global leasing revenue and you can see that we’re tracking fairly well, but you can also see a little bit of the softening in the third quarter.

U.S. office leases which you are seeing here on this slide, this is the number of leases that are signed in any particular year up to Q3 and ’12, and what you can see here is we’re tracking nicely. However, you can also see a little bit of the softening in the third quarter and an average lease size is relatively unchanged.

Global sales trends, the story here is it core assets in core markets the safe haven that’s drawing all of the investment activity and there is abundant debt financing to also drive that activity.

The gateway markets in the U.S. are leading the way particularly on the coasts, the favorite asset class, as Asieh mentioned, is multifamily, given historic lows in vacancy, also rental appreciation and a tremendous amount of debt financing to drive that activity.

In EMEA the markets are somewhat polarized with majority of the activity in the U.K. and Germany and in the Nordics, and of course, southern Europe is not quite a strong.

In Asia-Pacific investment activity is relatively stable. However most of the buy side activity is coming from domestic buyers. We’re about 80% of that, the buying activity is coming from domestics.

Notwithstanding, that cross-boarder activity is very healthy and the theme again there is you have investors looking for core assets in core markets chasing safety. A good example of that is the flow of Asian capital going into London.

So what’s the growth opportunity given that backdrop? Well, of course, there is market lift, right, and in some markets we have it and others, we don't. But the reality is we can't control market lift. So we are really focused on this middle band here, and increasing market share across geographies via recruiting, in-fill M&A and organic growth strategies which are essentially how do we take a disproportionate share of the business.

Our strategy, it all starts with leadership. We have metric leadership structure. As many of you know, we’ve got geographical leaders and the metrics with our business line leaders and those business line leaders across geographies within regions.

We are also focus on our go-to-market strategies, recruiting and in-fill M&A in those regions and across geographies and of course global connectivity. There is great ideas that flow through CBRE and the more connected we are, the more we are going to take those great ideas, make sure that they don't stay in market or in country or in region, but that they bubble up and we institutionalize them and then drive them back down to the organization.

So service line structure or our business line structure. This is what we would call the winning structure. So this is not the geographic leadership structure. This is our service line structure.

And it starts with our clients. We organize around our clients. We have two types of clients. We have our investor clients and we have our occupier clients. We organize around them. So in the top there you see our agency brokerage business, our landlord leasing business, across product types, office, retail and industrial.

Our capital markets business that includes our sales business, our financing business and our advisory business and our sales business across the five full groups office, industrial, retail, multifamily and hotel.

And then in the lower half organizing around our occupier clients we have our occupier brokerage business, which is our tenant rep business, our one-off business, as well as the mid-cap business.

Those middle market firms that have need across geographies and then we organize around the product types office, retail and industrial, and that we marry that with the GCS transaction management business, which is really the transaction management business serving major and large corporate clients. And we have this structure in the Americas, in EMEA and in Asia-Pacific.

You can have the best strategy in the world, but if you don't have a great structure with A players in every single one of those seats then the strategy doesn’t mean as much.

So one of the reasons that Bob made this role global is that Strategy Transcends Geography. We have two types of clients, we have occupier clients and we have investor clients.

Service delivery, they expect the same service from us regardless of the geography whether you are in New York, Chicago, Hong Kong, Singapore, London, Paris, those clients expect the same service from us, regardless of geography.

Our go-to-market strategies, those are the strategies that we deploy to attack the market, maximize our opportunity in that local market, give us the opportunity to be number one and grow the revenue. Those go-to-market strategies also transcend geography.

What works in New York? How we've become the market leader here in New York? You can take those same principles and you can drop them down in the Hong Kong and Singapore and in Paris and drive results.

So example of some of our strategies here, you can see that we’re running similar strategies across the three regions. So let’s take our leasing strategies. Now we have global brokerage plans for our three regions to grow the business and take advantage of the opportunity that’s out there.

Starts with managed brokerage, managed brokerage is an operating model that we believe in and essentially it’s making sure that we have the right team on the field in order to best serve our clients or in order to give us the best chance to win a mandate.

We have occupier playbooks and agency playbooks, and those are simple seven-step processes that when followed will allow you to become number one in the market leader in each and every market that we choose to be use to be in.

And as I mentioned earlier, Strategy Transcend Geography, so those playbooks can be run regardless of geography. And then finishing first that’s the process that frankly was developed in India. And again, that’s a very simple process to increase our winning percentage and make sure that we’re winning a disproportionate share of business that’s out there.

And then on our market side, we have strategies to drive our and grow our capital markets business, also very similar across the three regions, and it starts with doing a gap analysis.

I talked about the five full groups, office, industrial, retail, multifamily or residential and hotel. How well represented in those five full groups are we across markets, across the globe, whether our gaps, then we need to fill those gaps and we need to go out and make sure that we’re bringing in the A talent to fill those gaps.

Managed brokerage, again, making sure we have the right team on the field in order to best serve our clients or to give us the best chance to win business, have application across leasing and sales.

And then once again finishing first, we want to win and we generally do a disproportionate share of the business and we have a process to ensure that we’re doing that and we wrap these strategies around our global CRM, a global recruiting process, which allows our leaders across regions to have insights into our competitors, across regions.

And then also to make sure that our M&A process is not only regional but it's also global to make sure that our leaders see the movements and can learn from one another across regions.

So that’s the end of my presentation. I have the privilege of introducing Mary Ann Tighe, who is the CEO of our New York Tri- State Region. Mary Ann?

Mary Ann Tighe

Thanks, Jack. Good morning, everybody. This is the segment we do in our business for few days, where we try to show you our platform and action. And typically, I do it by telling you a story of something that I’ve been involved in the prior 12 months.

So with that, we are going to talk today and by the way I always do it with the New York story, because that’s my geography. So that’s my bias. Last year we did a Downtown deal this time we are going to do Midtown deal.

And the story really begins with the customer, Y&R. And to go to Bill Concannon point, this is a global corporate service customer and we are servicing them here in the New York region. And we service them from a number of different service lines.

Y&R is a global company and you can see they have 6500, a 186 offices, et cetera. They are subsidiary of a company called WPP, which is the largest conglomerate of advertising and marketing companies in the world and our GCS relationship is with the parent.

So we were introduced and again, well, actually we weren’t introduce to these guys at old or not, this is 1926, the year of Mr. Young and Mr. Rubicam founded their agency and they started by taking one floor at the building that you are going to hear about a bit, 285 Madison Avenue, just down street here, pointing in the direction on 40th Street.

And as I said, they started in the single floor. And then as time went on and by the way follow the timelines, we’ve got been going in two directions, below and later on we are going to switch to above, because we are trying to tell the story that has a lot of layers and haven’t make sense in a very distill version.

Okay. We need as GCS representative. We need them into 2006. They occupy 100% of this building, 285 Madison, 500,000 square feet. They’ve actually owned the building since 1953 and it is home, and by the way they occupy it in a real comfort way, the way you would occupy home.

By which I mean it looks like mad man is shot there. It looks by the way this is one of the most attractive views of the building I’m showing you right now. When we first entered it I immediately had this reaction, Oh, my God, it’s just exactly, remember, with Madison Avenue, it was all the things in advertising agency was and of course Y&R is one of the great advertising agency.

But as time launches on, the thing about buildings, and here I go first to my colleague, let me just, go back for a second. Bill Concannon made very interesting point. We typically now begin with consulting. When we met Y&R in 2006, they love the mothership. This is their global headquarters. As I say, they’ve been there forever. So we didn’t show up on the scene with the notion of moving them anywhere.

And what happened however is that they new the building had shall we say physical and infrastructure challenges of different kinds. So then we bring our property management people and begin the analysis process of what did they need, but the first thing they tell us is we are not moving.

Because it’s costing them $20 a square foot to be in midtown. Why is this? They bought the building in ’53. They’ve never put any debt on it. The taxes are relative low. Operating costs were reasonably high. But they’ve been able to turn, they see this all the time in owner occupied buildings. When things are good, they put a little bit into the capital -- CapEx to the building. When things are bad, they turn facet off and the building declines in that period of time.

So we need them in 2006 and between 2006 and ’07 our project management people take a hard look at the building. This is the small exterior view. They are deferred maintenance issues. I want to put this in the nicest way.

And it’s clear that their infrastructure cost looming and again, people tend to be reasonably delusional about what it is going to cost to keep a building going overtime and so we quantify this for them.

But when there was this one particular thing, that’s by the way the sprinkler had in case you don’t know. They never look as good as that in real life. I can tell you that, New York had become very fire sensitive, as it, another ways then going back to Triangle Shirt Factory.

But they keep ratcheting up the requirements and they announced some years back actually in 2007 that all buildings needed to be sprinklered. This building was so old that with, something we call compartmentalize, where fundamentally it was not sprinklered in the event of a fire.

So they, what the city said in ’07 is, all buildings in New York City need to be sprinklered or commercial building need to be sprinklered and it has to be completed by 2018, but by 2011 you’ve got to have a plan, and you’ve got to be in progress and show what that progress is.

Now what this entails is not just running water up the side of the building in a variety of risers. It means basically you are going to rip out the ceiling of the building and do all kinds of repiping to the building. And this is a mighty expensive thing but it is also very disruptive of business.

So what happens next is, something is happening in the community, this is the year and I think represented this deal to you few years back. We did the Grey advertising deal. Grey ad in 2008. Grey advertising is also a WPP subsidiary, so it’s a sister company if you will to Y&R.

And we took them also from space they have been in forever and we move them down to a building that build 1913 and was completed converted from the Toy Center into what is now by the way one of the most successful reconvergence ever Grey was the anchor tenant.

Suddenly this is what advertising space looks like. It doesn’t look like mad man anymore. It looks like these casual encounter areas where people have outdoor space and where essentially individual space is open and has been reduced but common area space and amenities have been increased. And Y&R is noticing.

Why are they noticing? Is not that their customers are demanding, you need to have better offices, it’s because they are beginning to loose talent to people who with much rather work in this environment.

It’s a very powerful thing. If you’re creative person and you enter a space, that space impacts you in a way visually. It helps to give you energy. It stimulates you. And at the end of the day, young people are visual people who go into this kind of world. So, by 2008, Y&R was saying it’s going to cost us a lot of money to stay here. We are going to need to redo the whole place for sprinkling and also we need to end up looking like this, can we do that in our building.

So, growing capital costs, business interruption, this is what happens. We put all the executive team on our bus, we begin to start it over and by the way this is over a two-year period, which we’re distilling down between 2008 and 2010, we tour heavily down in the city. And I tell you that we do it in this kind of meandering way, because they have no lease exploration, they own the building. There is no pressure to do this deal.

We're just looking and seeing if there is an opportunity. I didn’t want to highlight however one aspect of this. The very first building we visited was this building 250 West Street, we visited in 2008. It’s entry décor right on the Westside drive and they see the building, the first thing you see, whoever wants, the first thing they see the IO. We need to be in Midtown. We’re coming from Grand Central. Please take us away from this place.

We go again in 2010. I don’t even remember why. To tell you the truth, we went back. When we get off the bus in 2010, the same exact people who we took in 2008 say, this is fantastic. Why didn’t you show this to us. And we say, you don’t know we showed it to you in 2008. They are like no, no, we’ve never been here. We literally spent the first 10 minutes on the site to dating whether they had been in the building or not, fortunately we had evidence.

But what was so interesting is to watch how their own thinking had evolved over those years. Also the second thing I want to tell you is about this building is, they focus on it, they’re interested, they take the whole building. It’s about 400,000 square feet. It kind of worked for them.

And in the first theme of this talk emerges. As we’re negotiating to make it an office building, along comes somebody who wants to take it numbers empty, by the way, Citibank had occupied the building back office space. They raised the floor, drop the ceiling and made it look like the dullest office building alive. But in fact, it was a very interesting building that was built in the first quarter of the last century.

Guy comes along says, I’m going to make this into condos. It so much more valuable for residential. Again the theme you heard this morning, so much more valuable for residential that’s the end of the story, good bye Y&R and we are back out on the street again.

Interestingly enough, we end up in this location, Madison’s Square Park. Now we moving back uptown. Notice by the way how geography is fluent now in Manhattan. If you’re a major tenant and you are out looking and you say, I want to be in Midtown, I want to be in Midtown, guess what, you’re going to go everywhere. You are going to look at every part of Manhattan, South of the 60th Street basically at this point east to west.

Now, we are up in Madison Square Park, who could object to Madison Square Park. It’s a hot location. People live, work. play there. Grey Advertising there, able enough, the idea that occurs to us is this building that is directly connect -- do you see that sky bridge. We are looking at the building behind the tree with orange leafs on it.

The building south of that, there are building, that’s great advertising building. It’s address is 200 Fifth Avenue. Now remember I told you that Green and Y&R are sister companies. But I didn’t mention is they’re also competitors. They compete for the same business often. This is a -- if you will feature of the WPP business plan.

It could never be that we could have two competitors having the same address or being right next to each other. But through the year ago, of Manhattan real estate, the building to the north address is 1107 Broadway and the one to the South is 200 Fifth. So it’s like they are not even connected to each other.

And so fantastic, we look at 1107, we say to ourselves look here is a completely empty building. I will tell you a story in a second. And it’s 350,000 square feet and by 2010, we began to realize that the standard of amount of square footage individuals will occupy has shrunk and we can take people who are in 500,000 square feet today and put them in 2010.

Although, we have to keep in mind, we’ve got the keep the run rate low, because they are used to paying $20 a foot as I mentioned earlier, okay. So, here we are. We have this brilliant idea. The building is controlled by the Lehman estate and here now I mention our capital markets folk, because we are in the year 2010 becoming very dependent on hearing from our people in capital markets, what’s going on with the debt on buildings.

This building have been purchased in 2007 indeed CBRE sold it to this guy Joe Chetrit and the Tessler family. And they get a joint venture for of course residential conversion. They girded the building completely and then defaulted on the loan. And so, I mean, this obviously transpires over time.

And at this point, Lehman has now gotten control of it. Our capital market people, I alert myself and my partner on this transaction. Gregory Tosko, guess what 1107, it’s a great one in their mind, was this great one who expanded. I said no, instead we got somebody for this building. So we are thrilled with ourselves.

And we say to ourselves, who is the logical person to get involved with us. The guy who owned 200 Fifth, because they did to 200 Fifth, so we want them to do 1107 and take this building that is really, needs everything and fix it up. So, we decide to go to L&L and say, hi, here we are, we want to buy this building, because remember we owned 285 free and clear. We are going to 1031 exchange into 1107, bingo where we’ve got ourselves the beautiful run rate we want. We’re just doing -- we’re pleased with ourselves.

So, what happens next is L&L says, this is not an exciting proposition for us. Because all they are going to be is your free developer at this point. We need to figure out how to make this. If you’re asked to do this, you need to figure out how to make this work. So, we come up with a structure that looks like this.

We can seize the idea of making the building into condominium raising where the top part of the building will be owned by Y&R and the bottom part of the building will be leased by Y&R. The money that purchases Y&R’s condo interest is the equity. The lease backs up the deck on the building and with that we have a structure that the Lehman estate says perfect, we reach agreement on a price. We are so good to go on this deal and Y&R is thrilled this location, this building et cetera.

I do want to mention however one little point in all of this. By 2011, it took us a year by the way to come to this structure. I always love how this makes everything seem like it’s so obvious, none of this was. And here, we are doing this, there is one little thing the building is locked up in litigation with Joe Chetrit/the Tesslers and the Lehman estate and its locked down, you can’t get in.

We negotiate the entire deal without ever entering the building. And it is actually, it entered the round of humorous because every showoff and with deals with Y&R at 285 and David Sable, the CEO and one of the Senior Executives would run into us and say am I ever going to get to enter that building, am I crossed stuff this building is perfect for you. I keep going, keep going but on the basis of floor plan, they allowed us to negotiate this entire deal.

So, eventually of course we enter the building and indeed it’s really great opportunity for them. Here we are now in 2011, guess what the Lehman estate, say and by the way, fully negotiating condominium document on and on and on, partnership agreement, you can’t even imagine. Lehman estate says, this is going to be the first building they are selling in the post 2008 debacle at Lehman. We kind of think we should bring it to auction instead of sole sourcing it to you. Like has this thought not occurred to you before we spent a year negotiating all of this? Apparently not.

And they are obviously looking on behalf of their landholder. They just needed to do this. So, in 2011, we become the bid against which everyone competes. They give us a $3 million Kelsey, if we lose a bid then that’s it. But essentially everybody knows that this thing is set up to go with L&L and Y&R in a JV.

And one day, I think was in June, because as I was on vacation the day that this happened. They call the bankruptcy judges chamber everybody was going to bid with around the conference table. In the conference room bids occur, no deal.

Guess what? Steve Witkoff, Morgan Stanley, get the building. They paid $30 million more than we were going to pay and they are turning it right now you can see it in process into residential condominiums. Why should we’d be surprised? The ongoing themes, space in Manhattan is worth more is residential, especially on the condo side then it is as office space.

We are in 2011. We started this in 2006. Okay, now we go to a different timeline. Now, we are at 1999 step back in time. Can you see where we are here? I just want to point out we are in different geography again. Columbus Circle, you all know Time Warner Center, you know that little building using a garden design, the short building that’s there. This is a building that’s right behind it next to Time Warner Center and it becomes important in the story.

That I -- when I did the deal for Newsweek there in many months ago in 90s -- early 90s. It was called 1775 Broadway you are going to see we change the name of the process of this deal.

Anyway 99 Joe Moinian buys the building. He pays $140 million. He buys this from the guy name Lester Weindling. And it’s fully tenanted and the rents are really, really low. Just to give you a sense in 1991 when I did the Newsweek deal that we -- starting rent was 17 bucks a foot for this space, okay.

In 2004, Joe buys out his partner [Archant] valuing the building at $250 million, okay. In 2006, Joe refinanced it. He is getting ready now, lucky Joe, 400,000 square feet, expiring the building in 2008. He has been waiting for this moment, since he bought the building in 1999, because he didn’t be able to retain at a much higher number Time Warner, the whole neighborhood 15th Central Park West. This is really a fancy neighborhood now and he is going to completely retrofit this building.

In 2007, he announced 3 Columbus Circle will be the new name of this building and that’s what it’s going to look like. He is got 400,000 square feet worth of space coming up in 2008 and he spent the better part of $60 million.

Did I remind you what happens in 2008? This was not the optimal year to have leases expiring new building and for Joe it all hits exactly the same time. So in 2009, he is not renting and his performer is completely shocked on this building.

In 2010, this is what the building looks like, and it look like this for a couple of years. It half the way it used to be, when it was 70, 75, not even half and it got some skin from the new thing and then it’s the account -- the loan is in default, construction has stopped, it is a delight upon the city, and nobody is bringing tenants to this building because for obvious reasons, you have no confidence anything good is going to happen here.

So who appears on the scene at this moment, the ever cleaver related, who was I pointed out you in the earlier slide, they are the people who were the developers and own a chunk of Time Warner Center. They also are trouble by looking out their window, I actually stood many days with Steve Ross with him pointing at the window and saying, is that building disgusting, I’m going to knock it down.

And his notion was, he working with Deutsche Bank went and they bought a loan from the special servicer. His plan was demolish, put nodes at the base, residential above, a very good plan, not so much for Joe Moinian. Joe Moinian says, I’m going to take you to court. I’m going to put – I'm going to engage in a legal battle and I’m going to present you from foreclosing on me and did he does.

Because he finds a White Knight, he finds Marc Holliday and Andrew Mathias, new team at SL Green. And they come in. They payoff the loan and basically, they stopped the foreclosure which related. It takes a while but you see what did the timeline.

Now we have a partnership between SL Green paid off the loan, Joe Moinian negotiates with related. He is able as prepayment on penalty, on mortgage, he basically settled with them on that and all sudden at the very same time that we have lost 1107 Broadway, the most interesting thing happened.

This building which as far as we were concern was somewhere frozen in time and it wasn’t era of frozen buildings, is viable for the right tenant. And 3 Columbus is relaunched. We are however ready to go and this is why I -- we talk about being prepared, because in 2011 all of it came together for us.

We realize the property value had been written down. So we could do an incredibly aggressive deal for Y&R. We had an SL Green and engaged and well-capitalized owner, and the building had a significant chunk of vacancy.

So what we did is we showed up at Marc Holliday’s door and we said, how would you like it, by the way, this was as soon as he want, I mean instantly. He said, how would you like to do this deal? And we took the structure we had created at 1107 Broadway and we brought it to him. We had all the documents. We knew what this deal look like, where Y&R would own a condo interest. They will also lease a chunk of the space.

Now, SL Green is not in the business of selling real estate. But Marc had and his team had just done this purchase, and he said to us and you will take comfort in this. He said, I know this won’t, so the thing, he said, in seven weeks I have an analyst presentation. If you can get this deal done in seven weeks, so that when I walk into that analyst presentation, I start by announcing the fact, that I eliminated most of the vacancy, does this sound, those of you know Marc Holliday, does this sound like him, so you know, I’m not making it up.

I will eliminate most of this vacancy, you can have this deal. But it has to be done in that period time. But we were ready. We have been practicing this deal. So, here is what happens next.

We have a file of paper because we are going to do a condo engine, we are going to do the purchase and sale agreement, we are going to do a lease agreement, also by the way the building needed everything in terms of engineers, I mean, actually whatever you can see just lots of people involved.

And CBRE and our project management people and our capital markets everybody was involved, there was the full fast, I can say. We have one delicate moment. The way the building work, we were taking 11 down effectively.

And then the guy who is a CEO of Y&R who is a fantastic guy David Sable says to me. I want a view of the park for our executive floor with conference, it happen to be the only four that would have been available with 19, but Mr. Moinian would lived through hell with this building, within a process of building his own companies offices on the 19th floor.

So, effectively what we had to do and Joe was great about it ultimately, is we had to stop him building his offices, we have to take this floor and actually I saw Joe just this morning and he is only commencing his offices, which are on 18th. He said they are not as nice as the 19th, which also has a terrace overlooking Central Park whatever. But all I can tell you everybody was happy, happy, happy.

So, the deal gets done, 340,000 square feet, remember they used to be in 500. They lease the whole chunk of space. They bought a condo interest and Marc gets the standup. We get the deal in six weeks. So we had a time to get his presentation together, look like a hero to the analyst community and indeed he should be a hero to analyst community and this was done.

So, meanwhile, we are in the -- if you will the cleanup sweep here and go back 285, because now we have to sell the building because we’re 1031 and exchange again to the condo interest. We put the property on the market. We close next week with A.B. Rosen, selling it 23% above the pro forma we carried for Y&R during this period of time. And I can also tell you that we are delighted to report as well that we will be the agents leasing up the building for A.B. Rosen.

So just a moment on our GCS relationship with WPP, we have the relationships since 2007. We’ve done 246 deals with their transaction peoples, as well as other service lines in this hemisphere. We’ve done 5.6 million square feet, and Y&R was just the latest in all of this. So that’s our story. Thanks.

Bob Sulentic

That was outstanding Mary Ann and thank you very much. Before we start Q&A, which we are going to do right now, I'd like to thank the entire management team that presented here today. You’ll did a phenomenal job, very well prepared, I think you told our story well. So thank you. And with that, let’s go ahead and take whatever question…

Question-and-Answer Session

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