EFTA00615013.pdf

Project Cosmo Discussion Materials Proprietary and Confidential Discussion Materials April 2015 PROPRIETARY 8 CONFIDENTIAL OH I C-III Capital Partners EFTA00615013  Cushman & Wakefield Overview ■ Founded in 1917, Cushman & Wakefield ("C&W") is a leading commercial real estate services firm ■ C&W is a global platform operating in 58 countries with 248 offices and has more than 16,000 employees and professionals worldwide ■ C&W has established business segment operations focused on Leasing, Corporate Occupier & Investor Services, Capital Markets, Valuation & Analysis and Consulting ■ The platform lacks critical product offerings to elevate its standing in the marketplace including Investment Fund Management and Lending, and also requires a materially improved Capital Markets platform ■ The C&W brand and broker morale suffered under prior leadership, but the recent market recovery and CEO change in 2013 have steadied the platform ■ A successful turnaround will require a repositioning of the company to gain momentum and turbocharge recruiting efforts A combination with C-111 would provide a major change in the C&W story to both potential clients and brokerage talent by rejuvenating the brand through expanded product offerings and leadership credibility PROPRIETARY & CONFIDENTIAL 1 of C-III Capital Partners EFTA00615014 C-III / Island Can Provide The Compelling "Story Shift" and Executive Expertise A 23-Year History of Capitalizing on Opportunities and Creating Value CHAPTER I: Cla CHAPTER III: 2003: Insignia merges remaining 2010: Island Capital CRE services businesses with recapitalizes CBRE 2011: C-Ill Centerline Holding 2008: acquires loan Co. and creates C-Ill. Island servicing and which acquired Fund III is CDO management 2003: Insignia sells Doug as Centerline's loan formed businesses from Elliman to Prudential 2003: Island servicing and fund JER Capital is management founded businesses 1990: 1998: Insignia 2013: C-Ill Insignia is sells its 2005: Island acquires founded multifamily 2003: Island Global Yachting 2011: Ztide Real Capital businesses to Fund I formed is founded commences Markets AIMCO operations January 1990 — July 2003 July 2003 — February 2010 March 2010 - Present Notable Transactions with 2011: C-Ill 2012: C-III 1993: Insignia 1996: Insignia acquires acquires structures the first becomes the largest Government ofDubai: ENSeC U.S. Residential NM Global rated non-cross owner/manager of Group collateralized non- multi-family housing Co-Investments cross defaulted in the U.S., with 230 Park Avenue 2010: C-Ill multifamily more than 350,000 450 Lexington Avenue Commercial 2015: C-Ill securitization units W Hotel — Union Square Mortgage is founded acquires PZR Mandarin Oriental NYC I Asset Management/Advisory 280 Park Avenue 2010: C- II Realty 1993: Ins gnia goes 1996: Insignia Snowmass, Colorado Services commences public on NYSE acquires the Edward Grand Avenue. Los Angeles operations with ticker symbol S. Gordon Company IFS PROPRIETARY 8. CONFIDENTIAL 3 Oil C-III Capital Partners EFTA00615015  C-III Capital Partners Creation of a Fully Integrated Real Estate Company in Under Five Years Commercial Mortgage Servicing Diversified Investments Real Estate Services C-III Capital Partners Commercial Finance and Real Estate Administration Lending Investment Management Off I C-III Capital Partners PROPRIETARY & CONFIDENTIAL 4 EFTA00615016  Creating A Global Real Estate Services, Investment Management and Credit Platform Without Equal Corporate Occupier Valuation & Advisory Leasing / Consulting & Investor Svcs Capital Markets ("V&A") ("CIS") • Landlord Representation • Account Management • Investment Sales & • Appraisal • Tenant Representation • Transaction Management Acquisitions • Appraisal Management • Industrial Leasing • Lease Administration • Equity. Debt & • Dispute Analysis & • Transaction Consulting • Facilities Management Structured Finance Litigation Support ar Core • Retail Leasing • Agency / Landlord • Corporate Finance & • Portfolio Valuation L) Services • Global Supply Chain Leasing Investment Banking • Property Tax Services Solutions • Property / Asset Mgt • FINRA Broker / Dealer • Valuation For Financial • Global Consulting & • Risk Management Reporting Specialty Practice • Project Management Specialty Practices Groups Employees 3.158 1.188 646 844 Commercial Mortgage Commercial Real Investment Diversified Real Servicing Estate Lending Management Estate Services • Special Servicing • Fixed Rate Lending • Real Estate Equity Funds • C-Ill Realty Services • Portfolio Oversight • Floating Rate Lending (incl. Fair Value • Real Capital Markets • Primary Servicing • Conduit & Balance Sheet Purchase Option) • USRG • Real Estate Debt Funds • NM Core • Zodiac Title Services • PZR Employees 174 16 22 167 PROPRIETARY 8 CONFIDENTIAL 5 Ott I C-III Capital Partners EFTA00615017  Platform with Tremendous US Market Depth and Strong Global Reach C&W C-III CAPITAL PARTNERS • • • • • • ,fe-4, to, a.• • e • • •• ••t O 7 • 4 Cyst. •• • • • 248 0ffx• • •• • • s• S8 Courts • Offices 248 Offices") 406 Employees 16,468 Employees 1,300 O) Includes II corporate offices, 20 USRG regional locations and 375 NAI member offices. PROPRIETARY & CONFIDENTIAL 6 OR I C-III Capital Partners EFTA00615018  Tremendous Synergy Opportunities Revenue Synergy Opportunities Key Participants ■ Incremental leasing and investment sales fee capture from special C-III Asset Mgt, C-III Realty, C&W servicing resolutions ■ Strategic capital deployment plan will require a compelling change in C-III Executive Leadership, C-III talent attraction dynamics Asset Mgt Volumes ■ Sizeable lending opportunity / expansion via C&W client base C-III Commercial Mortgage, C&W ■ Investment Management AUM expansion C-III Investment Mgt, C&W • Far reaching product expansion with C&W property management and leasing expertise • C-III can raise material additional capital from existing investors with C&W capabilities ■ USRG, NAI & RCM business expansion opportunities could prove USRG, NAI, RCM, C&W material Expense Synergies ■ Real estate cost savings through office consolidation ■ Compensation cost savings through relocation and rehiring of selected functions ■ Executive level cost saving opportunities ■ Corporate back office rationalization opportunities ■ NAI cost savings Note: Confirmation of anticipated synergies will require diligence access not yet available to C-Ill. OH C-III Capital Partners PROPRIETARY & CONFIDENTIAL 7 EFTA00615019  Pro Forma Financial Overview 3.0% Growth/Margin Constant $ in millions Reference 2H2015E I 2016E 2017E 2018E C&W Adjusted EBITDA A $98.5 $255.7 $310.2 $319.5 $329.1 C-Ill EBITDA B 32.9 117.1 195.5 322.1 206.5 Revenue Synergy Benefits 12.5 25.0 25.0 25.0 25.0 Cost Synergy Benefits 12.5 25.0 25.0 25.0 25.0 Proforma Company FB1TDA $156.4 $422.8 $555.7 $691.6 $585.6 Less: Interest Expense C (47.2) (94.4) (90.9) (87.4) (87.4) Proforma Company EBTDA $109.1 $328.4 $464.8 $604.2 $498.2 Less: C&W Cap Ex D (137.5) (137.0) (104.0) (50.0) (50.0) Less: C-III Cap Ex (Bond Investments) E (8.0) (9.0) (8.0) 0.0 0.0 Plus: C&W Share-Based Compensation 4.0 8.5 8.3 8.6 8.8 Plus: C-III Bond Cash Flow F 19.7 36.6 25.3 32.4 21.2 Plus: C-111 1M Other ('ash Flow C 0.6 1.4 1.7 18.5 1.4 Proforma Conmany Pre-Tax Operating Cash How ($12.0) $228.8 $388.1 S613.6 $479.6 PROPRIETARY & CONFIDENTIAL 8 Cp C-III Capital Partners EFTA00615020  C&W Financial Projections Summary $ in millions 2014 I 2015 I 2016 I 2017 I 2018 I 2019 14.'17 CAGR Leasing Brokerage $739.6 I $797.0 $845.3 $911.1 7.2% Capital Markets 187.8 304.0 372.6 405.3 29.2% Corporate Occupier & Inv. Services 394.5 I 436.1 458.6 493.9 7.8% Valuation & Advisory 136.8 I 160.2 178.4 193.8 12.3% Consulting 6.1 9.0 10.8 12.3 26.2% Americas Total Rewnue $1,46-1.8 I 51,706.2 51.865.6 52.016.3 52,076.8 $2,139.1 11.2% EMTA Leasing Brokerage $156.8 $156.5 5180.4 5197.5 8.0% Capital Markets 100.9 108.9 148.2 173.2 19.7% Corporate Occupier & Inv. Services 130.3 132.3 160.5 177.0 10.7% Valuation & Advisory 56.4 57.1 66.4 73.6 9.3% Consulting 14.2 12.7 13.7 15.1 2.0% E\IFt Total Rewnue $458.6 I $467.5 $5693 $636.3 $655.4 $675.1 11.5% Leasing Brokerage $59.0 $64.2 S86.0 $99.9 19.2% Capital Markets 21.1 31.4 41.9 49.8 33.3% Corporate Occupier & Inv. Services 89.9 107.0 122.2 15.2% 799 Valuation & Advisory 9.2 10.1 16.0 22.6 34.8% Consulting :.6 I 3.6 4.4 4.9 11.2% APAC Total Rewnue $172.8 1 $199.2 $255.3 $299.5 $308.5 $317.8 20.1% C&W Total Rewnue $2,096.1 $2,372.9 $2,690.2 $2,952.1 $3,040.7 $3,131S 12.1% Note: 2014.2017 C&Wprojections receivedfrom management and presented without adjustment: 2018-2019 projections assume a constant growth rate and margin. PROPRIETARY & CONFIDENTIAL 9 O B C-III Capital Partners EFTA00615021  C&W Financial Projections Summary $ in millions 2014 2015 2016 I 2017 2018 2019 C&W Revenue $2,096.1 I $2,372.9 $2,690.2 $2,952.1 $3,040.7 $3,131.9 Commissions and Cost of Sales $933.5 I $1,055.9 $1,140.3 $1,239.8 % ofRevenue 44.5% i 44.5% 42.4% 42.0% Net Resenue $1,162.6 $1,317.1 $1,549.9 $1,712.3 % Margin 55.5% 55.5% 57.6% 58.0% Operating Expenses $863.9 1 $974.8 $1,116.1 $1,201.8 % ofRevenue 41.2% I 41.1% 41.5% 40.7% Incentive Plan & Other Expenses $126.0 i $145.4 $178.1 $200.3 % ofRevenue 6.0% 6.1% 6.6% 6.8% FB1TDAf11 $172.7 1 $196.9 $255.7 $310.1 $319.4 $329.0 % Margin 8.2% 83% 9.5%. 10.5% 10.5% 10.5% Note: 2014-2017 Ci&Wprojections receivedfrom management andpresented without adjustment; 2018-2019 projections assume a constant growth rate and margin. t1 1 EB1TDA corresponds to reference "A" on the Proftmna Financial Overview. PROPRIETARY & CONFIDENTIAL 10 O f I C-III Capital Partners EFTA00615022  C-III Financial Projections Summary $ in millions 2112015 2016 2017 2018 2019 C-HIEBIIDA C-Ill Asset Management $24.8 $92.0 $157.9 $227.3 $154.8 C-HI Commercial Mortgage 9.0 21.2 22.7 24.2 24.7 C-III Realty Services 7.1 23.9 40.5 71.4 38.6 RCM (@, 80%) 2.9 8.4 13.8 23.9 14.8 U.S. Residential Group 1.2 23 3.0 3.5 4.0 NAI Global 2.0 4.4 4.8 5.1 5.4 Zodiac Title 0.5 1.5 2..2 3.1 1.9 Investment Management (1.2) (6.3) (0.9) (1.9) (2.8) Business Line EBITDA $463 $147.8 $244.0 $356-5 $241.4 Corporate Accounting ($0.7) ($1.5) ($1.6) ($1.7) ($1.8) Executive Administration (7.2) (18.1) (21.0) (21.2) (21.3) Corporate Overhead ($7.9) ($19.6) ($22.6) ($22.9) ($232) Business Contribution $38.4 $1282 $2213 $333.6 $2182 Management Fees ($2.5) ($8.9) ($20.9) ($35.5) ($21.5) Less: Management Fee Adjustment 0.0 3.9 15.9 30.5 16.5 Adjusted Management Fee ($2.5) ($5.0) ($5.0) ($5.0) ($5.0) Placement Fees $0.0 $0.0 ($14.5) $0.0 $0.0 Investment Banking Group (1.1) (2.3) (23) (2.4) (2.5) Bond Evaluation Group (1.9) (3.8) (4.0) (4.1) (4.2) Total Parent Bcpenses ($5.5) ($11.1) ($25.8) ($11.5) ($11.7) " 2.9 l'; I EBITDA corresponds to reference "B" on the Proforma Financial Overview. Of I C-III Capital Partners PROPRIETARY & CONFIDENTIAL 11 EFTA00615023  C-III Financial Projections Summary $ in millions 2H2015 2016 2017 2018 2019 &HI Cap Esc (Bond Investments) Defensive Bond Acquisition Expenditures $5.0 55.0 55.0 S0.0 S0.0 Offensive Bond Acquisition Expenditures 3.0 4.0 3.0 0.0 0, Bond Cash Flows - Currently Owned Bonds $11.4 $15.5 517.S S I s.6 Incremental Cash Flow From Defensive Bond Purchases $0.8 $4.5 $3.4 52.3 50.4 Incremental Cash Flow From Offensive Bond Purchases 0.7 3.5 2.4 1.1 0.0 Bond Cash Flows - Incremental Bonds Acquired $1.5 $8.0 $5.8 $3.5 $0.4 Bond Cash Flows - TIAA $6.9 $13.2 51.8 510. SI I . I `I) Total Bond Investments corresponds to reference "E" on the Proforma Financial Overview. (2) Total C-Ill Bond Cash Flow corresponds to reference "F" on the Proforma Financial Overview. PROPRIETARY & CONFIDENTIAL 12 O1 I C-III Capital Partners EFTA00615024  C-III Financial Projections Summary $ in millions 2112015 2016 2017 2018 2019 GIQ imestment Management Other Cash Flow Payment of C3IM Pronx8e (Cash Portion) $o Sponsored Equity & Debt Funds - Current Income 0.4 ).9 I I Total GIll imeshnent Management Other Cash Hovel) $0.6 $1.4 $1.7 $18.5 S1.4 'n Investment Management Other Cash Flow corresponds to reference "G" on the Profortna Financial Overview. PROPRIETARY & CONFIDENTIAL 13 O1 I C-III Capital Partners EFTA00615025  Pro Forma Debt Assumptions S in millions Assumed Debt Summary _Aafl Amount Assumed Rate Coupon Maturity Lewraget2) C&W 1st Lien TLB $795.0 5.25% (1) L+400-425 bps 7 yrs. 2.58x CALI TLB 400.0 6.20% 3.88x C&W 2nd Lien TLB 220.0 9.50% (1) L+800-825 bps 8 yrs. 4.60x C-III Northstar Loan 50.0 14.00% 4.76x Total Debt/Merage IR $1,465.0 6.45% Annual Interest Expense $94.4 Debt Cash nous 2H 2015 2016E 2017E 2018E 2019E C&W 1st Lien TLB $20.9 $41.7 $41.7 $41.7 $41.7 CALI TLB 12.4 24.8 24.8 24.8 24.8 C&W 2nd Lien TLB 10.5 20.9 20.9 20.9 20.9 Norths tar than 3.5 7.0 3.5 0.0 0.0 Total Interest Expense (3) $47.2 $94.4 $90.9 $87.4 $87.4 (1) Loan yields assume OID is discounted across a four year average life. (2) Based on a combined C&W and C-111 Proforma LTM 6/30/15 EBITDA of$307.8nun. (3) Total Interest Expense corresponds to reference "C" on the Proforma Financial Overview. PROPRIETARY & CONFIDENTIAL 14 O 1 C-III Capital Partners EFTA00615026  C&W CapEx Summary $ in millions 2014A 2015E 2016E 2017E 2018E 2019E 2015-2017] Information Technology $26.0 I $46.0 $27.0 $27.0 $100.0 Data Initiative 0.0 8.0 10.0 13.0 31.0 Leasehold and FF&E 7.0 I 36.0 17.0 7.0 60.0 Broker Retention 1.0 I 59.0 11.0 10.0 80.0 Broker Acquisition 12.0 63.0 45.0 19.0 127.0 Acquisitions 74.0 64.0 28.0 29.0 121.0 I Total Capital Expenciture(i) $120.0 I $276.0 $138.0 $105.0 $50.0 $50.0 $519.0 Note :2018 and 2019 Capital Expenditures are an estimate and will be confirmed upon farther diligence. (1) Total Capital Expenditure corresponds to reference "D" on the Profonna Financial Overview. PROPRIETARY & CONFIDENTIAL 15 O1 I C-III Capital Partners EFTA00615027