CBRE

CBRE Group, Inc. Form 8-K Summary

Business Context and Reporting Period

CBRE Group, Inc. (the "Company") filed this Current Report on Form 8-K on March 28, 2013, to disclose the entry into a Material Definitive Agreement. The Company, along with its subsidiary CBRE Services, Inc. and other subsidiaries, amended and restated its existing Credit Agreement with Credit Suisse AG as the Administrative Agent.

Key Financial Metrics and Debt Structure

The new Credit Agreement establishes the following credit facilities, the proceeds of which were used to repay the Existing Credit Agreement in full:

• Tranche A Term Loan: $500.0 million senior secured facility. On the closing date, $200.0 million was borrowed, with an accordion option to borrow an additional $300.0 million by July 26, 2013.
• Tranche B Term Loan: $215.0 million senior secured facility. The full amount was borrowed on the closing date.
• Revolving Credit Facility: Up to $1,200.0 million. Approximately $141.4 million was borrowed on the closing date. This includes sub-facilities for multicurrency borrowings ($150.0 million) and U.K. revolving loans ($150.0 million).
• Letters of Credit: Capacity of up to $100.0 million.
• Swingline Loans: Capacity of $55.0 million for short-term borrowing.

Interest Rates and Fees: Borrowings bear interest based on a base rate or LIBOR plus an applicable margin. Initial margins for Tranche A loans range from 1.00% to 2.00%, and for Tranche B loans from 1.75% to 2.75%. The facility fee for the revolving credit facility is initially 0.375%. Future rates and fees will be determined by the Company's credit rating or leverage ratio.

Material Changes Versus Prior Period

The Amendment and Restatement replaced the Credit Agreement dated November 10, 2010. Key changes include:

• Increased limits on indebtedness permitted for non-guarantor subsidiaries.
• Increased limits on permitted liens.
• Expanded ability to make investments, including in joint ventures and foreign restructuring transactions.
• Increased limits on permitted asset sales.
• Increased limits on restricted payments, particularly those related to foreign restructuring transactions.

Outlook, Covenants, and Risks

Amortization and Maturity:

• Tranche A Term Loans mature on March 28, 2018, with quarterly amortization increasing from 1.875% to 15.625% of the outstanding principal over time.
• Tranche B Term Loans mature on March 28, 2021, with quarterly amortization of 0.25%.
• The Revolving Credit Facility and Swingline Loans mature on March 28, 2018.

Prepayment Requirements: The Company must prepay term loans with 100% of net cash proceeds from asset sales and certain debt issuances. Additionally, 50% of annual excess cash flow must be used for prepayment, subject to reduction to 25% or 0% if certain leverage tests are met. Covenants: The agreement includes financial covenants requiring the maintenance of a maximum leverage ratio and a minimum interest coverage ratio, alongside customary affirmative and negative covenants. Security: Obligations are secured by a first-priority pledge of 100% of the capital stock of the U.S. Borrower and certain subsidiaries, and up to 65% of the capital stock of material first-tier non-U.S. subsidiaries.

Investor Verification Checklist

• Verify the Company's current leverage ratio to determine the applicable interest rate margin and facility fee under the new grid.
• Confirm the status of the $300.0 million accordion option for the Tranche A Term Loan, which must be exercised by July 26, 2013.
• Review the specific definitions of "excess cash flow" to understand the mandatory prepayment obligations.
• Assess the impact of the increased limits on foreign restructuring transactions and asset sales on the Company's strategic flexibility.
• Monitor compliance with the maximum leverage ratio and minimum interest coverage ratio covenants.