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Page 1: TItle page headings1.q4cdn.com/101769452/files/doc_presentations/2013... · Retail QUARTERLY SALES MARKET TRENDS CONTINUE TO IMPROVE 20 Real Capital Analytics commercial sales volumes
Page 2: TItle page headings1.q4cdn.com/101769452/files/doc_presentations/2013... · Retail QUARTERLY SALES MARKET TRENDS CONTINUE TO IMPROVE 20 Real Capital Analytics commercial sales volumes

DISCLAIMER

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ESPEED TRANSACTION DETAILS

3

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SELECT 2Q2013 RESULTS COMPARED TO 2Q2012

4

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2Q2013 GLOBAL REVENUE BREAKDOWN

5

New York Paris

Hong

Kong London

Singapore

EMEA

37.4%Americas

52.1%

APAC

10.5%

2Q2013 Revenues

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2Q2013 PRODUCT DIVERSITY

6

Rates 29.4%

Credit 14.3%

Foreign exchange 12.9%

Equities and other asset

classes 8.6%

Real estate brokerage

22.1%

Real estate management

services 8.5%

Other revenues, interest income &

related parties 3.0%

Market data & software solutions

1.3%

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Financial Services67.1%

Real Estate Services30.5%

Corporate2.3%

2Q2013 SEGMENT DATA

7

2Q2013 Revenues 2Q2013 Revenues Pre-tax

Earnings Pre-tax Margin

Financial $316.3 $56.4 17.8%

Real Estate $143.9 $11.1 7.7%

Corporate $10.9 ($13.7) NMF

In USD millions

2Q2012 Revenues Pre-tax

Earnings Pre-tax Margin

Financial $309.2 $58.5 18.9%

Real Estate $144.1 $14.0 9.7%

Corporate $11.8 ($16.5) NMF

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2Q VOLATILITY SLIGHTLY INCREASED FROM RECENT LOWS

8

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BUSINESS OVERVIEW: RATES

9

Rates29.4%

$0

$100

$200

$300

$400

$500

$600

FY 2011 FY 2012 Q2 2012 Q2 2013

$578.5 $532.4

$134.4 $138.3

(US

D m

illio

ns)

Interest Rate Derivatives

US Treasuries

Global Government Bonds

Agencies

Interest Rate Futures

Dollar Derivatives

Repurchase Agreements

Non-Deliverable Swaps

Interest rate Swaps & Options

Rates Revenue Growth

2.9%

% of 2Q2013 Total Distributable Earnings Revenue Example of Products

Global sovereign and corporate debt issuance cause long-term tailwinds in our Rates business

Near-term headwinds due to quantitative easing

Low interest rates in most major economies holding down volumes

Interest rate volatility increased from recent lows in 2Q 2013 due to uncertainty over the timing of a reduction in quantitative easing

Drivers

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Fed UST

Primary Dealer Volume

BGC Overall Rates Revenue

Eurex Rates Volume

CME Rates Volume

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

BGC ELECTRONIC RATES REVENUES GENERALLY OUTPERFORM

10

33%

7%

(3%)

BGC Fully Electronic

Rates Revenue

excluding eSpeed

8%

3%

24%

BGC Fully Electronic

Rates Revenue

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Credit

14.3%

BUSINESS OVERVIEW: CREDIT

11

Credit Derivatives

Asset-Backed Securities

Convertibles

Corporate Bonds

High yield Bonds

Emerging Market Bonds

Credit Revenue Growth

% of 2Q2013 Total Distributable Earnings Revenue Example of Products

Industry derivatives volumes generally lower

Large bank corporate bond trading activity impacted due in part to Basel 3 capital requirements

Reduced front office headcount and consolidated desks expected to improve long term profitability in this asset class but lowered revenues short-term

Drivers

$0

$100

$200

$300

$400

$500

FY 2011 FY 2012 Q2 2012 Q2 2013

$315.0 $284.6

$70.1 $67.3

(US

D m

illio

ns)

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BGC Total Credit

Revenue

TRACE All Bond Dollar Volumes

-20% -15% -10% -5% 0% 5% 10% 15% 20% 25%

BGC’S CREDIT DESKS REFLECT MIXED INDUSTRY TRENDS

12

20%

Creditex Revenue (14%)

2Q2013 YoY Growth

8% BGC Fully Electronic Credit Revenue

(4%)

Dealer to Dealer

Notional Outstanding (12%)

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BUSINESS OVERVIEW: FOREIGN EXCHANGE

13

Foreign Exchange Revenue Growth

% of 2Q2013 Total Distributable Earnings Revenue Example of Products

FX volume returned to normal levels globally during the quarter

BGC had strong performance during 2Q in voice and electronic FX

Drivers

FX

12.9%

$0

$25

$50

$75

$100

$125

$150

$175

FY 2011 FY 2012 Q2 2012 Q3 2013

$218.4 $208.0

$53.2 $60.7

(US

D m

illio

ns)

14.0%

In virtually all currency pairs

Options

Exotics

Spot

Forwards

Non-deliverable forwards

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BGC’S FULLY ELECTRONIC FX REVENUES OUTPERFORMED MARKET

14

2Q2013 YoY Growth

3%

12% 13% 14%

27%

38%

0%

5%

10%

15%

20%

25%

30%

35%

40%

(Grow

th)

CME FX Futures

Volumes

EBS FX

Average Daily

Volumes

BGC’s Spot

FX Revenue

Reuters Spot

FX Volumes

BGC Total FX

Revenue

BGC’s Fully Electronic

FX Volume

40%

6%

15%

0%

10%

20%

30%

40%

50%

UK Singapore NorthAmerica

(AD

V G

row

th)

April 2013 YoY OTC

Central Bank FX Average

Daily Volume Growth

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BUSINESS OVERVIEW: EQUITIES & OTHER ASSET CLASSES

15

Equity Derivatives

Cash Equities

Index Futures

Commodities

Energy Derivatives

Other Derivatives and Futures

Equities & Other Asset Classes Revenue Growth

% of 2Q2013 Total Distributable Earnings Revenue Example of Products

Lower global equity cash & derivatives volumes industry-wide

Reduced front office headcount and consolidated desks expected to improve long term profitability in this asset class but lowered revenues short-term

Drivers

Equities

& Other

8.6%

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

FY 2011 FY 2012 Q2 2012 Q2 2013

$214.5

$156.1

$41.7 $40.7

(US

D m

illi

on

s)

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“EQUITIES AND OTHER”: REFLECTS LOWER EUROPEAN VOLUMES

16

2Q2013 YoY Change

-42%

-18%

-18%

-3%

12%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Euronext

EquityDerivative

Volume

Eurex Equity

DerivativeVolume

Deutsche

Borse's XetraVolume

BGC Equity &

Other AssetClasses

Revenues

OCC Equity

OptionVolume

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BUSINESS OVERVIEW: REAL ESTATE SERVICES

17

Leasing Advisory

Global Corporate Services

Retail Services

Property & Facilities Management

Consulting

Program and Project Management

Industrial Services

Valuation

Property Sales

Capital Markets (Includes: Debt & Equity Raising, Mortgage)

Real Estate Services Revenue

% of 2Q2013 Total Distributable Earnings Revenue Example of Products

Average rents and vacancies improve YoY

Real Capital Analytics commercial sales volumes up 13% YoY in 2Q

Low interest rates make Real Estate a more attractive investment class

CoStar Value Weighted Composite Index up 9.4% YoY (May)

Excluding non-core Grubb & Ellis purchased assets, NGKF up 8% YoY*

Drivers

Management

Services 8.5%

Real Estate

Brokerage

22.1%

$0

$25

$50

$75

$100

$125

$150

Q2 2012 Q2 2013

$105.6 $104.0

$37.9 $39.8

Real Estate

Brokerage Rev

(Purple)

Management

Services

(Grey)

$143.5 (total) $143.8 (total)

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NGKF REVENUE ANALYSIS

18

($ in millions) 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013

Actual Revenues $144.1 $141.1 $148.7 $114.2 $143.8

Actual YoY Revenue Change NA NA $91.6 $66.3 ($0.2)

Actual YoY % Change NA NA 160% 139% 0%

Adjusted Revenues $132.1 $135.9 $144.2 $112.4 $142.5

Adjusted YoY Revenue Change NA NA $87.1 $64.5 $10.5

Adjusted YoY % Change NA NA 152% 135% 8%

Note: Grubb & Ellis Acquisition closed April 13, 2012.

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REAL ESTATE MARKET IMPROVING NATIONALLY

19

US Office & Industrial Market Asking Rent & Vacancy

Asking Rent & Vacancy (Office) Asking Rent & Vacancy (Industrial)

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$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'06 '07 '08 '09 '10 '11 '12 '13

billions

Entity Portfolio

Individual

Suburban Office

Industrial

CBD Office

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

'06 '07 '08 '09 '10 '11 '12 '13

Apartment

Retail

QUARTERLY SALES MARKET TRENDS CONTINUE TO IMPROVE

20

Real Capital Analytics commercial sales volumes up 13% YoY in 2Q 2013

Cap rates remain well above 10-year UST yields.

Average Cap Rates by Sector

Transaction Volume

U.S. Composite Indices: Equal- and Value-Weighted Data

Through May 2013

Value-Weighted up 9.4% YoY

Equal-Weighted up 8.0% YoY

0

25

50

75

100

125

150

175

200

225

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ind

ex V

alu

e (2

00

0 D

ec

= 1

00

)

U.S. Composite - Value Weighted U.S. Composite - Equal Weighted

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BGC’S FRONT OFFICE OVERVIEW

21

Front Office Productivity (in thousands) Front Office Headcount

1,757 1,735 1,721 1,641 1,587

854 840 830 894 898

0

500

1,000

1,500

2,000

2,500

2Q2012 3Q2012 4Q2012 1Q2013 2Q2013Real Estate Financial Brokerage

$0

$200

$400

$600

$800

$1,000

$1,200

2011 2012 2Q2012 2Q2013

$776

$639

$157$169

($ t

ho

usa

nd

s)

Y-on-Y change: (4.8%)

(Fro

nt O

ffic

e E

mplo

yees) 2,611 2,551 2,575

2,535 2,485 total

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$10

$15

$20

$25

$30

$35

$40

$45

2Q2012 3Q2012 4Q2012 1Q2013 2Q2013

$36.6$35.8

$33.3

$39.6$38.6

($ m

illi

on

s)

$5

$10

$15

2Q2012 3Q2012 4Q2012 1Q2013 2Q2013

$13.4

$11.6

$9.7

$13.2

$14.4

($ t

rill

ion

s)BGC’S FULLY ELECTRONIC BROKERAGE METRICS

22

Fully Electronic Brokerage Notional Volumes (in trillions)

Fully Electronic Revenues (in millions)*

* This includes fees captured in both the “total brokerage revenues” and “ fees from related party” line items related to fully electronic trading within the Financial Services

Segment.

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23

BGC’S TECHNOLOGY-BASED BUSINESSES HAVE HIGHER

MARGINS

Percentage of fully electronic from each of ≈110 e-brokered desks range from <10% to 100%

Profit margins = highest for US Treasuries, spot FX, Market Data and Software Solutions

Profit margins for retained electronic products vary, though are generally higher than for voice-

brokered products

Over time, we believe margins for newer e-brokered products should expand as their markets mature

• “

*BGC sold only its on-the-run, benchmark 2-, 3-, 5-, 7-, 10-, and 30-year fully electronic trading platform for U.S. Treasury

Notes and Bonds. For the purposes of this analysis, the assets being sold to NASDAQ OMX are referred to as “eSpeed.”

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Voice/Hybrid 85.9%

RetainedTech***

6.9%

eSpeed*7.3%

24

BGC WILL RETAIN NEARLY HALF OF TECHNOLOGY-BASED REVENUES

Technology-Based Products** = 14.2% of 2Q2013

Financial Services Segment Revenues

*BGC sold its on-the-run, benchmark, 2-, 3-, 5-, 7-, 10-, and 30-year fully electronic trading platform for U.S. Treasury Notes and Bonds. For the purposes of this

analysis, the assets sold to NASDAQ OMX are referred to as “eSpeed.” See our 7/1/2013 8-K for more details.

**Technology-Based Products = fully electronic brokerage, fees from related parties related to fully electronic trading, market data, and software solutions.

*** Retained Tech = businesses remaining with BGC post-eSpeed transaction.

Note: These figures are those recorded in the Financial Services segment and exclude those revenues and expenses included in corporate items.

Pre-tax margin

≈ 45%

Pre-tax margin

≈60%

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$19.5

$21.9

2Q2012 2Q2013

$23.4 $22.9

0

5

10

15

20

25

30

2Q2012 2Q2013

0

20

40

60

80

100

120

FY2010 FY2011 FY2012 FY2010 FY2011 FY2012

RETAINED TECH-BASED PRODUCTS HAVE GROWN FASTER

25

Note: These eSpeed figures are only those recorded in the Financial Services segment and exclude those included in corporate items

$97.9 $104.3

$93.6

$48.3

$71.4

$77.7

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26

TECH-BASED PRODUCTS HAVE MUCH HIGHER MARGINS

In $MM

Note: For all periods, “Technology Based” revenues includes fully electronic trading in the “total brokerage revenues” GAAP income statement line item, the

portion of “fees from related parties” line item related to fully electronic trading, all “market data” revenues , and all “software solutions” revenues. Real Estate

revenues are included in Voice/Hybrid.

*Before Corporate allocations

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Revenue $45 $415 $11 $471 $43 $410 $12 $465

Pre-Tax DE $23 $44 ($14) $54 $21 $51 ($17) $56

Pre-tax DE Margin 52% 11% NMF 11% 50% 12% NMF 12%

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Revenue $171 $1,532 $48 $1,751 $176 $1,251 $50 $1,476

Pre-Tax DE $85 $173 ($62) $196 $90 $208 ($61) $237

Pre-tax DE Margin 50% 11% NMF 11% 51% 17% NMF 16%

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Technology

- Based

Voice /

Hybrid

Corporate /

Other Total

Revenue $46 $392 $12 $450 $46 $347 $11 $404

Pre-Tax DE $25 $41 ($21) $45 $24 $53 ($19) $58

Pre-tax DE Margin 54% 10% NMF 10% 53% 15% NMF 14%

Q2 2013 Q2 2012

FY2012 FY2011

Q1 2013 Q1 2012

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BGC PARTNERS COMPENSATION RATIO

27

$713.3 $749.8 $793.5$1,036.8

$565.2

60.9%

56.2% 53.8%

59.2% 61.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

2009 2010 2011 2012 1H 2013

($ m

illio

ns)

Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue

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NON-COMPENSATION EXPENSES & PRE-TAX MARGIN

28

9.8%13.8%

16.1%11.2% 10.7%

29.2% 30.0% 30.2% 29.6%27.9%

0%

10%

20%

30%

40%

50%

Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue

FY 2009 FY 2010 FY 2011 FY 2012

1H 2013

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ADJUSTED EBITDA

29

BGC Partners, Inc

Reconciliation of GAAP Income to Adjusted EBITDA

(and Comparison to Pre-Tax Distributable Earnings, in $000s)

Q2 2013 Q2 2012

Income from operations before income taxes 208,251$ 4,450$

Add back:

Employee loan amortization 10,223 7,418

Interest expense 9,989 7,578

Fixed asset depreciation and intangible asset amortization 12,284 12,237

Impairment of fixed assets 351 218

Exchangeability charges (1) 12,900 38,131

Redemption of partnership units, issuance of restricted shares and compensation

related partnership loans 464,594 -

Losses on equity investments 1,224 2,652

Adjusted EBITDA 719,816$ 72,684$

Pre-Tax distributable earnings 53,835$ 55,929$

(1) Represents non-cash, non-economic, and non-dilutive charges relating to grants of exchangeability to limited partnership units.

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118

108

122

113

119

105

97

107

122

115 115

93

$122

$112

$131

$107

$129 $129

$114

$134 $132

$112 $112

$84

50

75

100

125

150

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2010 Revenue

2011 Revenue

116120 120

100

118

10499

93

112108

100

80

$127

$107 $102

108113

106

50

75

100

125

150

175

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012 Revenue

2013 Revenue

MONTHLY REVENUE EXCLUDING REAL ESTATE SERVICES ($MM)

30

BG

C M

on

thly

Dis

trib

uta

ble

Ea

rnin

gs

Re

ve

nu

es

($

MM

)

First 21 trading days of

July down about 8% per

day excluding eSpeed

Revenue for August

2010 included $11.6M in

“other revenues” as the

result of a favorable

arbitration ruling

pertaining to Refco

Securities.

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BGC’S ECONOMIC OWNERSHIP AS OF 6/30/13

31

Public

42%Cantor

24%

Employees,

Executives, & Directors

34%

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AVERAGE EXCHANGE RATES

32

Average

2Q2013 2Q2012 July 1- 30th, 2013 July 1- 30th, 2012

US Dollar 1 1 1 1

British Pound 1.536 1.583 1.518 1.560

Euro 1.306 1.285 1.308 1.231

Hong Kong Dollar 0.129 0.129 0.129 0.129

Singapore Dollar 0.801 0.791 0.789 0.793

Japanese Yen* 98.770 80.130 99.740 79.060

* Inverted

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DISTRIBUTABLE EARNINGS