This Quarterly Report on Form 10-Q for CB Richard Ellis Group, Inc. for the three months ended June 30, 2009, 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, 2008. 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 as well as estimates of industry growth for the second quarter and beyond. See "Forward-Looking Statements."

Overview

We are the world's largest commercial real estate services firm, based on 2008 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, 2008, we operated more than 300 offices worldwide, excluding affiliate offices, with approximately 30,000 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 commercial property and corporate facilities management, tenant representation, property/agency leasing, property sales, valuation, real estate investment management, commercial mortgage origination and servicing, capital markets (equity and debt) solutions, development services and proprietary research. We generate revenues from contractual management fees and on a per project or transactional basis. In 2006, we became the first commercial real estate services company included in the S&P 500. In 2007, 2008 and 2009, we were included on the Business Week list of 50 "Best in Class" companies across all industries, and the Fortune list of Fastest Growing U.S. Companies in 2007 and 2008 and its list of Most Admired Companies in 2009. In 2008, we became the first commercial real estate services firm to be included in the Fortune 500 and we remain the only commercial real estate services company on this list in 2009. In 2009, the International Association of Outsourcing Professionals ranked us the #1 outsourcing company in commercial real estate services.

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 crucial to an understanding of the variability in our historical earnings and cash flows and the potential for continued variability in the future:

Economic trends and government policies affect global and regional commercial real estate markets as well as our operations directly. These include: overall economic activity and employment growth, interest rate levels, the cost and availability of credit and the impact of tax and regulatory policies. Periods of economic weakness or recession, significantly rising interest rates, declining employment levels, declining demand for real estate, or the public perception that any of these events may occur, have negatively affected and may continue to negatively affect the performance of many of our business lines. Recently, the severe global economic downturn and credit market crisis have had

significant adverse effects on our businesses globally. Weak economic conditions have resulted in, and may continue to result in, a general decrease in transaction activity, declines in occupancy levels, rental rates and property values as well as restrained corporate spending. These trends, in turn, have reduced, and may continue to reduce, revenue from property management fees and brokerage commissions derived from property sales, leasing, valuation and financing, and funds available to invest in commercial real estate and related assets.

Adverse changes in economic conditions have also affected, and will continue to affect, our compensation expense, which is generally structured to decrease in line with any fall 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 of difficult market conditions on our operating margins is partially mitigated by the inherent variability of our compensation cost structure. In addition, at times when negative economic conditions are particularly severe, as they recently have been, our management has taken decisive actions to improve operational performance by, among other actions, reducing discretionary bonuses, curtailing capital expenditures and adjusting overall staffing levels. Notwithstanding these actions, adverse global and regional economic changes remain one of the most significant risks to our financial condition and results of operations.

Economic conditions in the Americas, our largest segment in terms of revenue, began to rebound in 2003 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 to improve our Americas segment's revenue, particularly leasing and sales revenue. Since the third quarter of 2007, U.S. economic activity has progressively weakened due initially to stresses in the residential housing and financial sectors and the impact of sharply higher energy costs. The weakening economic activity developed into a recession, affecting all segments of the economy, in early 2008, as both consumer and business spending dropped. This weakening economic activity, coupled with capital market stresses, led to a global financial disruption in the third quarter of 2008, the consequences of which have continued through the first half of 2009. This disruption caused credit markets to freeze up, investors to become more risk averse and assets of all types, from the riskiest to the most secure, to lose value. These conditions also caused the economy to contract further and job losses to accelerate throughout 2008 and continuing through the first half of 2009. This has resulted in a decline in leasing activity and space absorption, rising vacancy rates and decreasing rents across the United States. Investment sales activity in the United States has been falling sharply from peak levels in 2007 and has continued to decline through the second quarter of 2009. This decline is the result of an absence of debt financing, weakening property fundamentals, and the re-pricing of risk in the face of economic and market uncertainty.

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 investment management activities in Europe worsened progressively throughout 2008 and the first half of 2009. The major European economies also entered into a recession in 2008, which continued through the first half of 2009, resulting in lower levels of leasing activity. The markets in Asia Pacific have also been affected, albeit generally to a lesser degree than the United States and Europe, by the global credit market dislocation and economic difficulties, as reflected in lower investment sales and leasing activity in 2008 and the first half of 2009. The deteriorating conditions have also adversely affected our Global Investment Management and Development Services businesses beginning in late 2007 and continuing through the first half of 2009 as property values decreased sharply and disposition opportunities have been markedly reduced.

The recovery of our sales, leasing and investment management and development services businesses is contingent on, among other things, the U.S. and global economies resuming their growth and credit markets attaining stability and predictability over a sustained period.

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 Capital Markets) 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 acquired Trammell Crow Company, our largest acquisition to date. 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, added our Development Services business and provided additional people, resources and expertise to offer real estate 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 offerings. Our acquirees have generally been quality regional firms or niche specialty firms that complement our existing platform within a region, or affiliates in which, in some cases, we held an equity interest. In 2008, we completed 16 acquisitions with an aggregate purchase price of approximately $181 million. In light of the current economic environment, no acquisitions were completed during the six months ended June 30, 2009.

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, 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 June 30, 2009, we have incurred expenses of $41.9 million related to Insignia and $56.6 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 six months ended June 30, 2009, we incurred $3.5 million of integration expenses, the majority of which were related to the acquisition of Trammell Crow Company. We expect to incur total integration expenses relating to past acquisitions of approximately $7 million during 2009, which include residual integration costs associated with our acquisition of Trammell Crow Company as well as similar costs related to a strategic in-fill acquisition in 2006.

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.

We are highly leveraged and have significant debt service obligations. As of June 30, 2009, our total debt, excluding our notes payable on real estate and warehouse lines of credit, was approximately $2.3 billion. Our level of indebtedness and the operating and financial restrictions in our debt agreements both place constraints on the operation of our business. 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 repayment and retirement of indebtedness.

Following the successful amendment to our Credit Agreement in the first quarter of 2009, which gave us increased flexibility, in the second quarter of 2009, we issued $450.0 million of 11.625% senior subordinated notes due June 15, 2017. During the three months ended June 30, 2009, we also prepaid $145.8 million of our tranche A term loan facility and $42.3 million of our tranche A-1 term loan facility. These actions significantly extended the weighted average maturity of our outstanding debt. In addition, on July 16, 2009, we initiated a loan modification program with our lenders for participants in our Credit Agreement, which is designed to provide us additional flexibility relative to our Credit Agreement debt amortization schedule and maturities.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, 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, 2008. There have been no material changes to these policies as of this Quarterly Report on Form 10-Q for the three months ended June 30, 2009.

Basis of Presentation

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 our consolidated
statements of operations for the three and six months ended June 30, 2009 and
2008 presented in dollars and as a percentage of revenue (dollars in thousands):

                                Three Months Ended June 30,                      Six Months Ended June 30,
                               2009                    2008                    2009                     2008
Revenue                 $ 955,667     100.0 %  $ 1,314,873     100.0 % $ 1,846,116     100.0 %  $ 2,545,798     100.0 %
Costs and expenses:
     Cost of services     566,831      59.3        737,205      56.1     1,120,250      60.7      1,441,651      56.6
     Operating,
     administrative
     and other            328,671      34.4        468,839      35.7       634,830      34.4        901,184      35.4
     Depreciation and
     amortization          24,166       2.5         25,022       1.8        49,558       2.7         48,824       1.9

     Total costs and
     expenses             919,668      96.2      1,231,066      93.6     1,804,638      97.8      2,391,659      93.9
Gain on disposition
of real estate              2,925       0.3          4,042       0.3         2,925       0.2          4,042       0.1

Operating income           38,924       4.1         87,849       6.7        44,403       2.4        158,181       6.2
Equity loss from
unconsolidated
subsidiaries                1,743       0.2         11,752       0.9        11,940       0.6         22,514       0.9
Other loss                      -         -          4,607       0.3             -         -          4,607       0.2
Interest income             1,237       0.1          4,481       0.3         3,542       0.2          9,707       0.4
Interest expense           47,418       4.9         41,560       3.2        82,216       4.5         84,565       3.3
Write-off of
financing costs                 -         -              -         -        29,255       1.6              -         -

(Loss) income before
provision (benefit)
for income taxes           (9,000 )    (0.9 )       34,411       2.6       (75,466 )    (4.1 )       56,202       2.2
Provision (benefit)
for income taxes            4,706       0.5         20,330       1.5        (7,341 )    (0.4 )       26,792       1.0

Net (loss) income         (13,706 )    (1.4 )       14,081       1.1       (68,125 )    (3.7 )       29,410       1.2
Less: Net loss
attributable to
non-controlling
interests                  (7,069 )    (0.7 )       (2,482 )    (0.2 )     (24,799 )    (1.4 )       (7,607 )    (0.3 )

Net (loss) income
attributable to
CB Richard Ellis
Group, Inc.             $  (6,637 )    (0.7 )% $    16,563       1.3 % $   (43,326 )    (2.3 )% $    37,017       1.5 %

EBITDA                  $  68,416       7.2 %  $    98,994       7.5 % $   106,820       5.8 %  $   187,491       7.4 %

EBITDA represents earnings before net interest expense, write-off of financing costs, 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 would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall

operating performance. As a result, our management uses EBITDA as a measure to evaluate the operating performance of our various business segments and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

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       Six Months Ended
                                                 June 30,                June 30,
                                             2009         2008       2009        2008
    Net (loss) income attributable to
    CB Richard Ellis Group, Inc.           $   (6,637 ) $ 16,563   $ (43,326 ) $  37,017
    Add:
       Depreciation and amortization           24,166     25,022      49,558      48,824
       Interest expense                        47,418     41,560      82,216      84,565
       Write-off of financing costs                 -          -      29,255           -
       Provision (benefit) for income
       taxes                                    4,706     20,330      (7,341 )    26,792
    Less:
       Interest income                          1,237      4,481       3,542       9,707

    EBITDA                                 $   68,416   $ 98,994   $ 106,820   $ 187,491

Three Months Ended June 30, 2009 Compared to the Three Months Ended June 30, 2008

We reported a consolidated net loss of $6.6 million for the three months ended June 30, 2009 on revenue of $955.7 million as compared to consolidated net income of $16.6 million on revenue of $1.3 billion for the three months ended June 30, 2008.

Our revenue on a consolidated basis for the three months ended June 30, 2009 decreased by $359.2 million, or 27.3%, as compared to the three months ended June 30, 2008. This decrease was primarily driven by weak worldwide sales and leasing activity as well as lower appraisal revenue, all resulting from the continuation of challenging global economic conditions. While our outsourcing business continued to add new clients and expand existing relationships, its revenue also declined slightly in the current year period as a result of client actions to restrain spending and a rise in vacancy rates as well as loss of clients due to consolidations. We expect this trend in our outsourcing business to continue in the near term. Foreign currency translation had a $69.9 million negative impact on total revenue during the three months ended June 30, 2009.

Our cost of services on a consolidated basis decreased by $170.4 million, or 23.1%, during the three months ended June 30, 2009 as compared to the three months ended June 30, 2008. Our sales and leasing professionals generally are paid on a commission and bonus basis, which substantially

correlates with our revenue performance. Accordingly, the decrease in revenue led to a corresponding decrease in commissions and bonuses. Foreign currency translation had a $40.9 million positive impact on cost of services during the three months ended June 30, 2009. Cost of services as a percentage of revenue increased from 56.1% for the three months ended June 30, 2008 to 59.3% for the three months ended June 30, 2009. This increase was primarily driven by the large decrease in overall revenue and a shift in the mix of revenues with outsourcing, including reimbursables, comprising a materially greater portion of the total than in the prior year period.

Our operating, administrative and other expenses on a consolidated basis decreased by $140.2 million, or 29.9%, during the three months ended June 30, 2009 as compared to the three months ended June 30, 2008. This decrease was driven by cost reduction measures taken in response to weakened macroeconomic market conditions that started in 2008 and continued through the second quarter of 2009, which led to lower overall operating costs, particularly payroll-related, travel and marketing costs. The decrease was also driven by reduced incentive compensation expense, including bonuses and carried interest expense (within our Global Investment Management segment), resulting from lower business performance. Foreign currency translation had a $22.3 million positive impact on total operating expenses during the three months ended June 30, 2009. As a result of cost reduction efforts, operating expenses as a percentage of revenue decreased from 35.7% for the three months ended June 30, 2008 to 34.4% for the three months ended June 30, 2009. We are continuing to look for ways to realize further operational efficiencies and cost savings in order to maximize our operating margins and cash flow in the future.

Our depreciation and amortization expense on a consolidated basis was . . .