CB Commercial Reports 21% Revenue Gains, 23% Increase in EBITDA for Third Quarter; EPS on an adjusted basis increases 67% to $.40; Reorganizes into three business units.

LOS ANGELES--(BUSINESS WIRE)--Nov. 4, 1997--CB Commercial (NASDAQ:CBCG), the world's leading commercial real estate services provider, today reported third quarter consolidated revenue gains of 20.6%, along with 23.4% growth in earnings before interest, income taxes, depreciation and amortization ("EBITDA") before one-time charges.

For the quarter, adjusted earnings per share increased 67.0% to $.40 per share, before one-time charges which primarily relate to the combination with Koll Real Estate Services ("Koll").

Consolidated results

For the third quarter ended September 30, 1997, consolidated revenues increased 20.6% to $177.5 million versus $147.2 million a year ago. These gains include approximately one month of Koll revenues. EBITDA increased 23.4% to $20.9 million before one-time charges compared with $16.9 million in 1996. Including merger-related charges, the company reported a net loss applicable to common shareholders of $2.9 million, or $.18 per share, versus net income applicable to common shareholders of $43.8 million, or $3.11 per share, in the comparable year-ago quarter. Earnings per common share, adjusted to exclude one-time charges and the effect of a 1996 reduction in tax valuation allowances (which artificially increased net income and earnings per share), increased 67.0% to $.40 per share from $.24 per share in 1996.

For the nine months ended September 30, 1997, consolidated revenues increased 20.1% to $469.5 million versus $390.9 million a year ago. These gains also reflect one month of Koll revenues. EBITDA before one-time charges advanced 27.6% to $46.2 million, versus $36.2 million for the comparable nine month period in 1996. Net income applicable to common shareholders was $2.2 million, or $.15 per share, compared to $45.4 million, or $3.29 per share, in the prior year period. Earnings per common share, adjusted to exclude one-time charges, improved 119.4% to $.79 per share for the nine months ended September 30, 1997, on a fully diluted basis.

Both the quarter and nine month adjusted results for 1996 exclude tax valuation allowance adjustments. The company further noted that total one-time charges of $16.0 million for 1997 included severance, facilities consolidation, accelerated amortization and other costs occasioned by the Koll merger and concurrent refinancing.

Koll integration largely complete

Chairman and Chief Executive Officer James J. Didion said, "We are now operating as one company, though in fact we began marketing our combined strengths even before the transaction closed. For instance, we believe our enhanced competitive position was instrumental in securing the award of more than 30 million square feet of new facilities management contracts over the past three months." CB Commercial continues to expect annual run rate expense synergies of more than $12 million from combining the companies, commencing in 1998.

Market factors

A strong national economy and strengthening real estate markets helped propel the company toward its third quarter financial performance. As an example, in the office space sector, according to preliminary quarterly data from CB Commercial/Torto Wheaton Research ("CBC/TWR"), the company's Boston-based real estate econometric analysis and forecasting firm, demand for office space continues to be high -- a result of positive job creation and generally favorable economic activity -- and, because the growth of new space has been limited, average rents are on the rise.

More specifically, according to CBC/TWR, more office space was absorbed in the third quarter of 1997 than during any period since the third quarter of 1990. This pushed suburban office vacancy rates on a national basis below 10 percent for the first time since 1985, with downtown areas improving as well. In the latest quarter, for example, the office vacancy rate in suburban Los Angeles dropped by two full percentage points, from 17.9% to 15.9%.

Three separate businesses

With the Koll integration, CB Commercial has restructured into three global business units to best serve clients, as well as better reflect market opportunities, and to encourage better investment community understanding of company prospects. The three units are brokerage services, corporate and institutional management services, and financial services. For the current quarter, the company will report business segment data in both the new and old segment formats. Commencing with the fourth quarter, the company will be reporting only on the new basis.

Didion said, "As we are the world's leading and most vertically integrated commercial real estate services company, the sheer number of ways we participate in commercial real estate sometimes makes it difficult for investors to understand and track all but the largest of our growth opportunities. For example, our corporate services and property management business, which is already a market leader, represents a tremendous growth opportunity as the trend of corporate America's outsourcing of non-core activities continues.

"Though it accounts for just over a quarter of the size of our brokerage operation in revenues, we are currently reinvesting the strong profits generated by the brokerage business, in people and technology in Corporate Services, to realize more quickly its growth potential. Similarly, we're investing in people and new products in a number of financial services sectors, and are poised for continued growth as market awareness of our capabilities increases. Our goal in the restructuring is to increase focus on growth opportunities and to breakout more clearly our progress in each area as the investments begin to pay off."

Relative gains

During the quarter ended September 30, 1997, CB Commercial produced revenue increases of 18.2% in Brokerage Services, which reached $102.8 million, 54.6% in Corporate and Institutional Management Services, which reached $26.4 million, and 12.0% in Financial Services, which reached $48.3 million. All benefited from overall market trends and the competitive advantages generated by CB Commercial's vertical integration, with each segment pursuing specific strategies to increase its contribution to consolidated results for the year.

"Strategically," Didion said, "Deal flow and cash flow from our brokerage business are expected to provide meaningful revenue and profit growth, and it will also provide a strong financial base, and market intelligence contribution to support the financial services and corporate services businesses. As a result, we are able to broadly benefit from not only the solid core, but also the expanding new markets for commercial real estate services."

Brokerage Services (58% of revenues; grew 18%)

Well-known as the company's core business, Brokerage Services (commercial property sales and leasing) contributed 57.9% to consolidated revenues for the quarter. The company reported 18.2% higher brokerage revenues versus the third quarter of last year and 20.8% higher revenues for the nine months as lower vacancy rates in most of the U.S. caused rents and sales prices to increase. EBITDA increased 26.6% for the quarter and 50.7% for the nine months.

Corporate and Institutional Management Services (15% of revenues; grew 55%)

Providing a combination of transaction management and advisory services, property management and facilities management on a regional and national basis, this division constitutes a "one-stop shop" for major corporate and institutional clients. Compared to a year-ago, revenues from this unit increased 54.6%, due primarily to the Koll acquisition, to account for 14.9% of total revenues.

As one of the top three players in this segment, CB Commercial manages approximately 300 million square feet and serves over 50 Fortune 500 clients as well as hundreds of institutional investors through the two business units that comprise this division: CB Commercial/Koll Management Services and CB Commercial/Madison Advisory Group. EBITDA for the quarter advanced 173.2% to $1.7 million, while segment EBITDA for the nine months was up 18.4% to $3.8 million.

Gary Beban, President of Corporate Services, noted, "While we are pleased with the way our operations have come together, the full benefits of our integration are not yet apparent financially. Specifically, our greatest area of operational overlap was in property management, and we expect the merger to generate a meaningful portion of the total expense synergies in this area. We have been and are continuing to invest in our corporate services business, which has been further pressuring our margins for the near-term, and anticipate these investments will start to pay-off during 1998."

Financial Services (27% of revenues; grew 12%)

CB Commercial's Financial Services division is a market leader in the delivery of superior financial services and products to Wall Street, institutional, corporate and offshore investors. Services include investment property sales, mortgage banking through L.J. Melody & Company, valuation/appraisal, asset management through Westmark Realty Advisors and real estate market research. Products include hard-asset funds, loan funds, and mutual funds.

Revenue from the Financial Services segment contributed 27.2% to consolidated revenues and increased 12.0% during the current quarter over the comparable prior year period. EBITDA was up 4.4% for the quarter and flat year-to-date, reflecting continued strength in investment property sales and valuation and appraisal activity offset by expected declines in investment management and a more competitive mortgage banking origination environment.

Ray Wirta, President of Financial Services, said, "In mortgage banking, we are experiencing competitive pressures from an enormous influx of capital, which is causing intense competition in the originations arena. In the investment management area, we are experiencing greater competition in acquiring properties, coupled with an anticipated run-off in our existing portfolio.

"Notwithstanding these unexpected negatives in the markets, we anticipate better results in both businesses as the new mortgage professionals mature, and the intensity of the investment markets stabilize somewhat. Additionally, we look forward to the expense synergies from combining the two investment advisory businesses as well as the anticipated revenues we expect to realize from investments we have been making in new financial services products."

Forward-Looking Statements

This release may contain forward-looking statements as well as historical information. Forward looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward- looking statements speak only as of the date of this release. The company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in company expectations or results or any change in events.

Founded in 1906, CB Commercial is America's leading and largest commercial real estate services firm and a global leader in business real estate services. With 6,400 employees and through global strategic alliances, the company serves real estate users, owners and investors in over 200 cities in 35 countries. Services include commercial property sales and leasing, property management, corporate advisory and facilities management services, mortgage banking, realty advisory and investment management, capital markets, appraisal services, financial analysis, market research and human resources. CB Commercial Real Estate Services Group, Inc. had 1996 revenues of $583 million.

For more information on CB Commercial (via facsimile and at no cost), simply call 1-800-PRO-INFO and dial client code "CBCG." If you are calling from outside the United States, please dial 908-544-2850. -0-

CB Commercial Real Estate Services Group, Inc.

Operating Results For the Three Months ended September 30, 1997 with comparative figures

for the similar periods in 1996

                                       Quarter ended September 30,
                                  1997       1996    Difference  % Change

Consolidated
Revenue                        $ 177,520  $ 147,168   $ 30,352   $ 20.6%
Costs and expenses:
  Commissions, fees and other
   incentives                     87,825     74,196     13,629     18.4%
  Operating, administrative
   and other                      68,809     56,042     12,767     22.8%
  Merger related and other
   non-recurring charges          12,924          0     12,924       n/a
  Depreciation and
   amortization                    6,098      3,431      2,667     77.7%
Operating income                   1,864     13,499    (11,635)   -86.2%
Interest income                      740        286        454    158.7%
Interest expense                   4,158      6,196     (2,038)   -32.9%
Income (loss) before provision
 (benefit) for income tax and
   extraordinary items            (1,554)     7,589     (9,143)      n/a
Provision (benefit) for income tax  (569)     4,220     (4,789)      n/a
Reduction of valuation allowances      0    (40,400)    40,400       n/a
Net provision (benefit) for
 income tax                         (569)   (36,180)    35,611       n/a
Net income (loss) before
 extraordinary items                (985)    43,769    (44,754)      n/a
Extraordinary items                  951          0        951       n/a
Net income (loss)               $( 1,936)   $43,769   $(45,705)      n/a
Net income (loss) applicable to
 common shareholders            $ (2,936)   $43,769   $(46,705)      n/a

Primary earnings (loss) per
 share                          $  (0.18)   $  3.11   $  (3.29)      n/a
Number of shares used in
 computing primary
  earnings (loss) per share   16,231,033 14,060,957  2,170,076     15.4%
Fully diluted earnings (loss)
 per share                      $  (0.18)   $   3.11  $  (3.29)      n/a
Number of shares used in
 computing fully diluted
  earnings (loss) per
   share                      16,244,001  14,060,957  2,183,044    15.5%
EBITDA excluding merger related
 and other non-recurring
  charges                       $ 20,886      16,930      3,956    23.4%

CB Commercial Real Estate Services Group, Inc.

Operating Results

For the Nine Months ended September 30, 1997 with comparative figures

for the similar periods in 1996

                                   Nine Months ended September 30,
                                1997       1996     Difference    %
                                                               Change
 Consolidated
 Revenue                     $ 469,542   $ 390,863   $ 78,679   20.1%
 Costs and expenses:
  Commissions, fees and
 other incentives              237,953     195,465     42,488   21.7%

  Operating, administrative    185,405     159,196     26,209   16.5%
 and other
  Merger related and other      12,924           0     12,924     n/a
 non-recurring charges

  Depreciation and
 amortization                   12,272       9,749      2,523   25.9%
 Operating income               20,988      26,453     (5,465) -20.7%
 Interest income                 1,959       1,035        924   89.3%
 Interest expense               12,007      17,883     (5,876) -32.9%
 Income (loss) before
  provision (benefit) for
   income tax and
    extraordinary items         10,940       9,605      1,335   13.9%

 Provision (benefit) for
 income tax                      4,786       4,610        176    3.8%
 Reduction of valuation
 allowances                          0     (40,400)    40,400     n/a

 Net provision (benefit) for
 income tax                      4,786     (35,790)    40,576     n/a

 Net income (loss) before
 extraordinary items             6,154      45,395    (39,241) -86.4%
 Extraordinary items               951           0        951     n/a
 Net income (loss)           $   5,203   $  45,395   $(40,192) -88.5%

 Net income (loss) applicable
 to common shareholders      $   2,203   $  45,395   $(43,192) -95.1%

 Primary earnings (loss) per
 share                       $    0.15   $    3.29   $  (3.14) -95.4%
 Number of shares used in
 computing primary
  earnings (loss) per share 14,663,028  13,815,434    847,594    6.1%

 Fully diluted earnings (loss)
 per share                   $    0.15   $    3.29   $  (3.14) -95.4%
 Number of shares used in
  computing fully
   diluted earnings (loss)
    per share               14,753,539  13,815,434    938,105    6.8%
 EBITDA excluding merger
  related and other
   non-recurring charges        46,184      36,202      9,982   27.6%


              CB Commercial Real Estate Services Group, Inc.
                   Condensed Consolidated Balance Sheet
                          (Dollars in thousands)


                               September       December
                                  30,            31,
                                 1997           1996
                              (Unaudited)

  Assets

  Cash and cash
  equivalents                  $  43,623        $ 49,328
  Other current assets            97,088          63,593
  Property and equipment, net     43,098          37,064

  Goodwill and other
  intangible assets, net         246,735          75,883
  Other assets, net               67,277          52,045
       Total assets             $497,821        $277,913

  Liabilities and
  Stockholders' Equity

  Current maturities of
  long-term debt                $  9,135        $ 15,314
  Other current liabilities      122,169          89,660
 Long-term debt, less
  current maturities             182,286         148,529
 Other long-term liabilities      33,426          25,830
       Total liabilities         347,016         279,333

  Minority Interest               12,390              95

  Stockholders' Equity

  Contributed capital           $328,026        $193,090
  Accumulated deficit           (189,611)       (194,605)
   Total stockholders' equity    138,415          (1,515)
   Total liabilities
  and stockholders' equity      $497,821        $277,913

CB Commercial Real Estate Services Group, Inc.

Operating Results by

Business Segment

            For the Three Months ended September 30, 1997 with
           comparative figures for the similar periods in 1996
                        NEW SEGMENT FORMAT

                                    Quarter ended September 30,
                                1997       1996    Difference    %
                                                               Change

  Brokerage Services

  Revenue
                             $ 102,760   $ 86,911    $ 15,849   18.2%

  Costs and expenses:
  Commissions, fees and
  other incentives              57,280     47,969       9,311   19.4%
  Operating,
  administrative and other      33,228     29,264       3,964   13.5%
  Depreciation and
  amortization                   3,636      1,834       1,802   98.3%
  Operating income           $   8,616   $  7,844    $    772    9.8%


  Corporate  & Institutional
  Management Services

  Revenue                    $  26,433   $ 17,094    $  9,339   54.6%

  Costs and expenses:
  Commissions, fees and
  other incentives               9,878      7,766       2,112   27.2%
  Operating,
  administrative and other      14,834      8,698       6,136   70.5%
  Depreciation and amortization    850        217         633  291.7%

  Operating income           $     871   $    413    $    458  110.9%


  Financial Services

  Revenue                    $  48,327   $ 43,163    $  5,164   12.0%

  Costs and expenses:
  Commissions, fees and
  other incentives              20,667     18,461       2,206   11.9%
  Operating,
  administrative and other      20,747     18,080       2,667   14.8%
  Depreciation and
  amortization                   1,612      1,380         232   16.8%

  Operating income           $   5,301    $ 5,242    $     59    1.1%


  Merger Related and Other
  Non-recurring Costs        $  12,924   $      0    $ 12,924     n/a

CB Commercial Real Estate Services Group, Inc.

Operating Results by

Business Segment

       For the Nine Months ended September 30, 1997 with comparative
                figures for the similar periods in 1996
                           NEW SEGMENT FORMAT

                                  Nine Months ended September 30,
                               1997      1996   Difference  % Change


 Brokerage Services

 Revenue                     $ 282,126   $  233,490  $  48,636  20.8%

 Costs and expenses:
  Commissions, fees            157,977      130,076     27,901  21.4%
 and other incentives
  Operating,
 administrative and other       96,174       84,856     11,318  13.3%

 Depreciation and
 amortization                    6,560        5,512      1,048  19.0%
 Operating income            $  21,415   $   13,046  $   8,369  64.1%


 Corporate  &
 Institutional Management
 Services

 Revenue
                                60,571     47,015     13,556    28.8%

 Costs and expenses:
  Commissions, fees
 and other incentives           25,873     20,713      5,160    24.9%
  Operating,
 administrative and other       30,878     23,075      7,803    33.8%
  Depreciation and
 amortization                    1,292        684        608    88.9%
 Operating income            $   2,528   $  2,543    $   (15)   -0.6%


 Financial Services

 Revenue                     $ 126,845  $ 110,358    $16,487    14.9%

 Costs and expenses:
  Commissions, fees
 and other incentives           54,103     44,676      9,427     21.1%

 Operating,
 administrative and other       58,353     51,265      7,088     13.8%
 Depreciation and
 amortization                    4,420      3,553        867     24.4%
 Operating income            $   9,969   $ 10,864    $  (895)    -8.2%


 Merger Related and Other Non-
 recurring Costs             $  12,924   $      0    $ 12,924     n/a


              CB Commercial Real Estate Services Group, Inc.
                   Operating Results by Business Segment
  For the Three Months ended September 30, 1997 with comparative figures
                      for the similar periods in 1996
                             OLD SEGMENT FORMAT


                                  Quarter ended September 30,
                               1997      1996   Difference  % Change


 Property & User Services
 Revenue:

 Brokerage                  $  102,772   $ 82,768    $ 20,004    24.2%
 Investment properties          34,281     33,105       1,176     3.6%
 Corporate services/
 Facilities management           9,811      8,032       1,779    22.1%
 Property management             7,713      5,040       2,673    53.0%
  Other                          2,345        518       1,827   352.7%
                               156,922    129,463      27,459    21.2%

 Costs and expenses:
 Commissions, fees
 and other incentives           82,325     69,293      13,032    18.8%
 Operating,
 administrative and other       57,155     46,333      10,822    23.4%
 Depreciation and
 amortization                    4,640      2,309       2,331   101.0%

 Operating income            $  12,802   $ 11,528     $ 1,274    11.1%



 Investor Services

Mortgage Banking
 Revenue                     $   6,577   $  6,790    $  (213)    -3.1%
 Costs and expenses:
 Commissions, fees
 and other incentives            2,627      2,772       (145)    -5.2%
 Operating,
 administrative and other        3,107      3,191        (84)    -2.6%
  Depreciation and
 amortization                      354        254        100     39.4%
  Operating income
                             $     489   $    573    $   (84)   -14.7%


              CB Commercial Real Estate Services Group, Inc.
                  Operating Results by Business Segment
  For the Three Months ended September 30, 1997 with comparative figures
                     for the similar periods in 1996
                             OLD SEGMENT FORMAT


                                  Quarter ended September 30,
 Investor Services
 (Continued)                   1997      1996     Difference % Change

Investment Management
 and Advisory Revenue        $ 7,592     $  6,238    $ 1,354     21.7%

Costs and expenses:
Commissions, fees
 and other incentives             26            0         26      n/a
Operating,
administrative and other       6,182        4,719      1,463    31.0%
Depreciation and
amortization                   1,073          832        241     29.0%
Operating income             $   311     $    687    $  (376)   -54.7%


Valuation & Appraisal Services

 Revenue                     $ 6,429     $  4,677    $ 1,752    37.5%

Costs and expenses:
Commissions, fees
 and other incentives          2,847        2,131        716    33.6%

Operating,
 administrative and other      2,365        1,799        566    31.5%

Depreciation and
 amortization                     31           36         (5)  -13.9%

Operating income             $ 1,186     $    711    $   475    66.8%

Total Investor Services

Revenue                      $20,598     $ 17,705    $ 2,893    16.3%

Costs and expenses:

Commissions, fees
 and other incentives          5,500        4,903        597    12.2%

Operating,
 administrative and other     11,654        9,709      1,945    20.0%

Depreciation and
 amortization                  1,458        1,122        336    29.9%

Operating income             $ 1,986     $  1,971    $    15     0.8%



 Merger Related & Other Non-
 Recurring Costs             $12,924     $     0    $ 12,924     n/a

CB Commercial Real Estate Services Group, Inc.

Operating Results by Business Segment

For the Nine Months ended September 30, 1997 with comparative figures for

the similar periods in 1996

                              OLD SEGMENT FORMAT


                                   Nine Months ended September 30,
                               1997      1996     Difference % Change


Property & User Services
Revenue:
Brokerage                   $274,940    $227,756      47,184    20.7%
Investment properties         95,605      80,406      15,199    18.9%
  properties
Corporate services/
Facilities management         22,589      17,436       5,153    29.6%

Property management           17,361      14,705       2,656     18.1%
Other                          3,174       1,198       1,976    164.9%
                             413,669     341,501      72,168     21.1%

Costs and expenses:
Commissions, fees            222,842     183,731      39,111     21.3%
and other incentives

Operating,                   153,115     130,764      22,351     17.1%
administrative and other

Depreciation and               8,658       7,050       1,608     22.8%
amortization

Operating income              29,054      19,956       9,098     45.6%

Investor Services