This Quarterly Report on Form 10-Q for CB Richard Ellis Group, Inc. for the three months ended September 30, 2008, represents an update to the more detailed and comprehensive disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2007. Accordingly, you should read the following discussion in conjunction with the information included in our Annual Report on Form 10-K as well as the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.

In addition, some of the statements and assumptions in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects and estimates of industry growth for the fourth quarter and beyond. See "Forward-Looking Statements."

Overview

We are the world's largest commercial real estate services firm, based on 2007 revenue, with leading full-service operations in major metropolitan areas throughout the world. We offer a full range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate. As of December 31, 2007, excluding affiliate offices, we operated more than 300 offices worldwide with over 29,000 employees providing commercial real estate services under the "CB Richard Ellis" brand name and development services under the "Trammell Crow" brand name. Our business is focused on several service competencies, including tenant representation, property/agency leasing, property sales, commercial property and corporate facilities management, valuation, real estate investment management, development services, commercial mortgage origination and servicing, capital markets (equity and debt) solutions and proprietary research. We generate revenues on a per project or transactional basis and from contractual management fees. In 2006, we became the first commercial real estate services company included in the S&P 500. In both 2007 and 2008, we were included on both the Fortune list of Fastest Growing U.S. Companies and the Business Week list of 50 "Best in Class" companies across all industries. In 2008, we also became the first commercial real estate services company in the Fortune 500, debuting at #404.

When you read our financial statements and the information included in this section, you should consider that we have experienced, and continue to experience, several material trends and uncertainties that have affected our financial condition and results of operations that make it challenging to predict our future performance based on our historical results. We believe that the following material trends and uncertainties are most crucial to an understanding of the variability in our historical earnings and cash flows and the potential for such variances in the future:

Economic trends and government policies directly affect our operations as well as global and regional commercial real estate markets generally. These include: overall economic activity and employment growth, interest rate levels, the availability of credit to finance transactions and the impact of tax and regulatory policies. Recently, concerns over the availability and cost of credit, the U.S. mortgage market, a declining real estate market in the United States, unemployment, the prospects of a global recession and geopolitical issues have contributed to increased volatility and diminished expectations for the economy and the credit, mortgage and real estate markets. Periods of economic slowdown or recession, significantly rising interest rates, a declining employment level, a declining demand for real estate or the public perception that any of these events may occur, has affected and may continue to negatively affect the performance of many of our business lines. Weak economic

conditions have resulted and may continue to result in a general decrease in transaction activity and decline in rents and property values, which, in turn, has reduced and may continue to reduce revenue from property management fees and from brokerage commissions derived from property sales and leases. In addition, these conditions could lead to continued declines in funds invested in commercial real estate and related assets. A sustained economic downturn or a significant increase in interest rates or the absence of reasonably priced debt financing has reduced and may continue to reduce the amount of loan originations and related servicing by our commercial mortgage brokerage business.

Adverse changes in economic conditions would also affect our compensation expense, which is structured to decrease in line with any decrease in revenues. Compensation is our largest expense and the sales and leasing professionals in our largest line of business, advisory services, generally are paid on a commission and bonus basis that correlates with our revenue performance. As a result, the negative effect on our operating margins during difficult market conditions is partially mitigated. In addition, in circumstances when economic conditions are particularly severe, our management can look to improve operational performance by reducing discretionary bonuses, curtailing capital expenditures, adjusting overall staffing levels and implementing other measures to cut operating expenses. Notwithstanding these approaches, adverse global and regional economic changes remain one of the most significant risks to our financial condition and results of operations.

Beginning in 2003, economic conditions in the Americas, our largest segment in terms of revenue, rebounded from the economic downturn in 2001 and 2002. The recovery, which positively impacted the commercial real estate market generally, continued through the second quarter of 2007, helping our Americas segment's revenue, particularly leasing and sales revenue, to improve. Since the third quarter of 2007, U.S. economic activity has progressively weakened due initially to stresses in the residential housing and financial sectors, but eventually encompassing virtually all segments of the economy. These stresses led to a severe global financial dislocation late in the third quarter of 2008, which caused credit markets to freeze and assets of all types-the riskiest to the most secure-to significantly decrease in value due to the pervasive loss of investor confidence. These conditions have also led to increasingly negative job growth thus far in 2008, and a contraction of overall economic activity in the third quarter, resulting in a general decline in leasing activity and an accelerating increase in vacancy rates across the United States. U.S. investment sales activity declined sharply beginning in late 2007 and has remained at weak levels to date in 2008 due to the absence of reasonably priced debt financing, and growing investor reluctance to commit to purchase property in the face of market uncertainty. These adverse conditions also began to affect our Development Services and Global Investment Management businesses in the United States beginning in 2008 as opportunities for dispositions of assets held by these business segments were markedly reduced. A rebound of the U.S. sales, leasing, Development Services and Global Investment Management businesses will depend upon credit markets returning to more normalized conditions, and the U.S. economy resuming its growth.

The weakening capital markets trend experienced in the United States began to manifest in the United Kingdom in late 2007, and in continental Europe beginning in early 2008. As a result, investment sales and global investment management activities in Europe slowed markedly and worsened further in the third quarter of 2008. Declining economic activity in Europe also resulted in lower levels of leasing activity beginning in the second quarter of 2008. The markets in Asia Pacific also began to experience progressively more severe effects from the global credit market difficulties and worldwide economic slowdown, as reflected in lower investment sales activity beginning in the second quarter of 2008 and further softening in the third quarter of 2008.

On December 5, 2006, in connection with our acquisition of Trammell Crow Company, we successfully tendered substantially all of our remaining 93/4% senior notes due in 2010, with the remainder repaid in May of 2007. Although we paid down our high-interest debt in 2006, we borrowed

approximately $2.1 billion under our new senior secured term loan facilities in December 2006 to finance our acquisition of Trammell Crow Company. On March 27, 2008, we exercised the accordion provision of our Credit Agreement, which added an additional $300.0 million term loan. As a result, we are highly leveraged and have significant debt service obligations.

Although our management believes that the incurrence of long-term indebtedness has been important in the development of our business, including facilitating our acquisitions of Insignia and Trammell Crow Company, the cash flow necessary to service this debt is not available for other general corporate purposes, which may limit our flexibility in planning for, or reacting to, changes in our business and in the commercial real estate services industry. Our management seeks to mitigate this exposure both through the refinancing of debt when available on attractive terms and through selective early repayment and retirement of indebtedness. For example, in June 2006, we entered into a new $600.0 million revolving credit facility, which fully replaced our former credit agreement on more favorable terms. Additionally, we repaid $286.0 million of our senior secured term loans during the year ended December 31, 2007. Our management generally expects to continue to look for opportunities to reduce our debt in the future.

Notwithstanding the actions described above, however, our level of indebtedness and the operating and financial restrictions in our debt agreements both place constraints on the operation of our business. Our Credit Agreement contains financial covenants that currently require us to maintain a minimum coverage ratio of interest of 2.25x and a maximum leverage ratio of EBITDA (as defined in our Credit Agreement) to total debt less available cash of 3.75x. Our ability to meet these financial ratios can be affected by events beyond our control, and we cannot assure that we will be able to meet those ratios when required. If our EBITDA continues to decline in future periods as it has in recent periods, we may be unable to comply with these financial covenants under our Credit Agreement.

Our management historically has made significant use of strategic acquisitions to add new service competencies, to increase our scale within existing competencies and to expand our presence in various geographic regions around the world. For example, we enhanced our mortgage brokerage services through our 1996 acquisition of L.J. Melody & Company (now known as CBRE Melody) and we significantly increased the scale of our investment management business through our 1995 acquisition of Westmark Realty Advisors (now known as CB Richard Ellis Investors), our 1997 acquisition of Koll Real Estate Services and our 1998 acquisition of the London-based firm Hillier Parker May & Rowden. Our 2003 acquisition of Insignia Financial Group, Inc. (Insignia) significantly increased the scale of our real estate advisory services and outsourcing services business lines in our Americas segment and also significantly increased our presence in the New York, London and Paris metropolitan areas.

In December 2006, we completed our largest acquisition to date in acquiring Trammell Crow Company. The acquisition of Trammell Crow Company deepened our offering of outsourcing services for corporate and institutional clients, especially project and facilities management, strengthened our ability to provide integrated management solutions across geographies, and established people, resources and expertise to offer real estate development services throughout the United States.

Strategic in-fill acquisitions have also played a key role in expanding our geographic coverage and broadening and strengthening our service offering. Our acquirees have generally been quality regional firms or niche specialty firms that complement our existing platform within a region, or affiliates which, in some cases, held an equity interest. During the nine months ended September 30, 2008, we completed 14 acquisitions with an aggregate purchase price of approximately $139 million. These included two notable acquisitions within our EMEA segment: the acquisition of Eurisko Consulting SRL, the largest independent commercial real estate services company in Romania, which extends our ability to deliver the premier commercial real estate services offering across Central and Eastern

Europe; and the acquisition of CB Richard Ellis Cederholm A/S, an affiliate company in Denmark, which significantly strengthens our platform in Scandinavia by giving us a wholly-owned position in one of the region's most active property markets. In 2007, we completed 14 acquisitions with an aggregate purchase price of approximately $108 million.

Although our management believes that strategic acquisitions can significantly decrease the cost, time and commitment of management resources necessary to attain a meaningful competitive position within targeted markets or to expand our presence within our current markets, our management also believes that most acquisitions will initially have an adverse impact on our operating and net income, both as a result of transaction-related expenditures and the charges and costs of integrating the acquired business and its financial and accounting systems into our own. For example, through December 31, 2007, we incurred $200.9 million of transaction-related expenditures in connection with our acquisition of Insignia in 2003 (the Insignia Acquisition) and $196.6 million of transaction-related expenditures in connection with our acquisition of Trammell Crow Company in 2006. Transaction-related expenditures included severance costs, lease termination costs, transaction costs, deferred financing costs and merger-related costs, among others. We incurred our final transaction expenditures with respect to the Insignia Acquisition in the third quarter of 2004 and the Trammell Crow Company Acquisition in the fourth quarter of 2007. In addition, through September 30, 2008, we have incurred expenses of $41.9 million related to Insignia and $49.9 million related to Trammell Crow Company in connection with the integration of these companies' business lines, as well as accounting and other systems, into our own. During the nine months ended September 30, 2008, we incurred $11.4 million related to the acquisitions of Insignia and Trammell Crow Company, as well as $1.1 million of integration expenses associated with other acquisitions completed in 2005 through 2008. We expect to incur total integration expenses of approximately $16 million during 2008, which include residual Insignia-related integration costs, integration costs associated with our acquisition of Trammell Crow Company as well as similar costs related to our strategic in-fill acquisitions in 2005 through 2008.

We have made significant acquisitions of non-U.S. companies and we may acquire additional foreign companies in the future. As we increase our foreign operations through either acquisitions or organic growth, fluctuations in the value of the U.S. dollar relative to the other currencies in which we may generate earnings could adversely affect our business, financial condition and operating results. Our management team generally seeks to mitigate our exposure by balancing assets and liabilities that are denominated in the same currency and by maintaining cash positions outside the United States only at levels necessary for operating purposes. In addition, from time to time we enter into foreign currency exchange contracts to mitigate our exposure to exchange rate changes related to particular transactions and to hedge risks associated with the translation of foreign currencies into U.S. dollars. Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, our management cannot predict the effect of exchange rate fluctuations upon future operating results. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations.

Our international operations also are subject to, among other things, political instability and changing regulatory environments, which may adversely affect our future financial condition and results of operations. Our management routinely monitors these risks and related costs and evaluates the appropriate amount of resources to allocate towards business activities in foreign countries where such risks and costs are particularly significant.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and

assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may differ from those estimates. Critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, our consolidation policy, goodwill and other intangible assets, real estate and income taxes can be found in our Annual Report on Form 10-K for the year ended December 31, 2007. There have been no material changes to these policies as of this Quarterly Report on Form 10-Q for the three months ended September 30, 2008.

Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible Assets," requires us to perform at least an annual assessment of impairment of goodwill and other intangible assets deemed to have indefinite useful lives based on assumptions and estimates of fair value and future cash flow information. We are currently in the process of performing our annual assessment as of October 1, 2008. Based on our preliminary review, we believe that there may be impairment charges forthcoming, most likely in our Americas and Development Services segments, in the fourth quarter of 2008. Given the complexity of this assessment, the final results are not yet completed and therefore any impairment is not yet probable or estimable. This assessment will be completed by December 31, 2008 and we will record impairment charges, if any, as required by such assessment once it is finalized.

Basis of Presentation

On December 20, 2006, pursuant to an Agreement and Plan of Merger dated October 30, 2006 (the Trammell Crow Company Acquisition Agreement), by and among us, A-2 Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (Merger Sub), and Trammell Crow Company, the Merger Sub was merged with and into Trammell Crow Company (the Trammell Crow Company Acquisition). Trammell Crow Company was the surviving corporation in the Trammell Crow Company Acquisition and upon the closing of the Trammell Crow Company Acquisition became our indirect wholly-owned subsidiary.

We report our operations through five segments. The segments are as follows:
(1) Americas, (2) EMEA, (3) Asia Pacific, (4) Global Investment Management and
(5) Development Services. The Americas consists of operations located in the United States, Canada and selected parts of Latin America. EMEA mainly consists of operations in Europe, while Asia Pacific includes operations in Asia, Australia and New Zealand. The Global Investment Management business consists of investment management operations in the United States, Europe and Asia. The Development Services business consists of real estate development and investment activities primarily in the United States, which were acquired in the Trammell Crow Company Acquisition.

Results of Operations

    The following table sets forth items derived from the consolidated
statements of operations for the three and nine months ended September 30, 2008
and 2007 presented in dollars and as a percentage of revenue (dollars in
thousands):

                              Three Months Ended September 30,                 Nine Months Ended September 30,
                                2008                    2007                    2008                    2007
Revenue                 $ 1,299,735     100.0 % $ 1,492,809     100.0 % $ 3,845,533     100.0 % $ 4,197,133     100.0 %
Costs and expenses:
    Cost of services        755,362      58.1       791,852      53.0     2,197,013      57.1     2,233,130      53.2
    Operating,
    administrative
    and other               420,352      32.3       468,375      31.4     1,321,536      34.4     1,350,066      32.2
    Depreciation and
    amortization             25,412       2.0        28,311       1.9        74,236       1.9        83,190       2.0
    Merger-related
    charges                       -         -         5,092       0.4             -         -        39,824       0.9

    Total costs and
    expenses              1,201,126      92.4     1,293,630      86.7     3,592,785      93.4     3,706,210      88.3
Gain on disposition
of real estate                9,766       0.7        16,075       1.1        13,808       0.3        16,075       0.4

Operating income            108,375       8.3       215,254      14.4       266,556       6.9       506,998      12.1
Equity (loss) income
from unconsolidated
subsidiaries                 (3,408 )    (0.3 )       6,020       0.4       (25,922 )    (0.7 )      36,184       0.9
Minority interest
(income) expense               (772 )    (0.1 )       9,692       0.6        (8,379 )    (0.2 )      12,427       0.3
Other loss                        -         -             -         -         4,607       0.1        37,534       0.9
Interest income               4,400       0.3         7,937       0.5        14,107       0.4        20,922       0.5
Interest expense             42,290       3.2        40,417       2.7       126,855       3.3       124,572       3.0

Income from
continuing operations
before provision for
income taxes                 67,849       5.2       179,102      12.0       131,658       3.4       389,571       9.3
Provision for income
taxes                        37,701       2.9        64,155       4.3        64,493       1.7       121,512       2.9

Income from
continuing operations        30,148       2.3       114,947       7.7        67,165       1.7       268,059       6.4
Income from
discontinued
operations, net of
income taxes                 10,225       0.8             -         -        10,225       0.3             -         -

Net income              $    40,373       3.1 % $   114,947       7.7 % $    77,390       2.0 % $   268,059       6.4 %

EBITDA (1)              $   148,036      11.4 % $   239,893      16.1 % $   335,527       8.7 % $   576,411      13.7 %

EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses EBITDA as a measure to evaluate the operating performance of our various business lines and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs.

However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash

requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

EBITDA is calculated as follows (dollars in thousands):

                                            Three Months Ended       Nine Months Ended
                                              September 30,            September 30,
                                             2008        2007        2008        2007
    Net income                             $  40,373   $ 114,947   $  77,390   $ 268,059
    Add:
      Depreciation and amortization (1)       25,504      28,311      74,328      83,190
      Interest expense (2)                    42,939      40,417     127,504     124,572
      Provision for income taxes (3)          43,744      64,155      70,536     121,512
    Less:
      Interest income (4)                      4,524       7,937      14,231      20,922

    EBITDA (5)                             $ 148,036   $ 239,893   $ 335,527   $ 576,411

º (2)
º Includes interest expense related to discontinued operations of $0.6 million for the three and nine months ended September 30, 2008.

º (3)
º Includes provision for income taxes related to discontinued operations of $6.0 million for the three and nine months ended September 30, 2008.

º (4)
º Includes interest income related to discontinued operations of $0.1 million for the three and nine months ended September 30, 2008.

º (5)
º Includes EBITDA related to discontinued operations of $16.9 million for the . . .