As filed with the Securities and Exchange Commission on October 22, 2001

Registration No. 333-70972

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act Of 1933
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CB Richard Ellis Services, Inc.
(Exact name of Registrant as specified in its charter)
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Delaware 6500 52-1616016
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

355 South Grand Avenue, Suite 3295
Los Angeles, CA 90071
(213) 613-3546
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-----------------
Walter V. Stafford, Esq.
Senior Executive Vice President and General Counsel
CB Richard Ellis Services, Inc.
355 South Grand Avenue, Suite 3295
Los Angeles, CA 90071
(213) 613-3546
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------
With a copy to:
William B. Brentani, Esq.
Simpson Thacher & Bartlett
3330 Hillview Avenue
Palo Alto, CA 94304
(650) 251-5000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE

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Maximum Maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered per unit offering price registration fee
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11 1/4% Senior Subordinated Notes Due June 15, 2011 $229,000,000 100% $229,000,000 $57,250(1)
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Guarantees of 11 1/4% Senior Subordinated Notes Due
June 15, 2011 (2)................................. $229,000,000 100% $229,000,000 (1)(3)
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(1) The Registrants previously paid $57,250 upon the original filing of this
Registration Statement on October 4, 2001.

(2) See inside facing page for additional registrant guarantors.

(3) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee for the guarantees is payable.

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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

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TABLE OF ADDITIONAL REGISTRANT GUARANTORS

Primary Address including zip code
Exact name of State or other I.R.S. Standard and telephone number
Registrant guarantor jurisdiction of Employer Industrial including area code
as specified incorporation or Identification Classification of Registrant guarantor's
in its charter organization Number Code Number principal executive offices
-------------------- ---------------- -------------- -------------- ---------------------------

CBRE Holding, Inc. Delaware 94-3391143 6500 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

Bonutto-Hofer Investments California 33-0003584 6799 4000 MacArthur
Suite 7500
Newport Beach, CA 92260
(213) 613-3546

CBRE/LJM Mortgage Company, L.L.C. Delaware 74-2900986 6162 5847 San Felipe
Suite 4400
Houston, TX 77057
(213) 613-3546

CBRE/LJM-Nevada, Inc. Nevada 76-0592505 6162 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

CB Richard Ellis Corporate Facilities Delaware 33-0582062 6500 5000 Birch Street
Management, Inc. Suite 510
Newport Beach, CA 92260
(213) 613-3546

CB Richard Ellis, Inc. Delaware 95-2743174 6500 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

CB Richard Ellis Investors, L.L.C. Delaware 95-3695034 6799 865 South Figueroa Street
Suite 3500
Los Angeles, CA 90017
(213) 613-3546

D.A. Management, Inc. California 95-3242122 6799 5000 Birch Street
Suite 510
Newport Beach, CA 92260
(213) 613-3546

Global Innovation Advisor, LLC Delaware 95-4869925 6799 865 South Figueroa Street
Suite 3500
Los Angeles, CA 90017
(213) 683-4200

Holdpar A Delaware 95-4536362 6799 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

Holdpar B Delaware 95-4536363 6799 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

KEA/1, Inc. Delaware 33-0764441 6500 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

KEA/II, Inc. Delaware 33-0764445 6500 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

Koll Capital Markets Group, Inc. Delaware 33-0556837 6500 4343 Von Karman Avenue
Newport Beach, CA 92260
(213) 613-3546

Koll Investment Management, Inc. California 33-0367147 6799 4343 Von Karman Avenue
Newport Beach, CA 92260
(213) 613-3546

Koll Partnerships I, Inc. Delaware 33-0607113 6500 4000 MacArthur
Suite 7500
Newport Beach, CA 92260
(213) 613-3546

Koll Partnerships II, Inc. Delaware 33-0622656 6500 4000 MacArthur
Suite 7500
Newport Beach, CA 92260
(213) 613-3546

L.J. Melody & Company Texas 76-0590855 6162 5847 San Felipe
Suite 4400
Houston, TX 77057
(213) 613-3546

L J Melody & Company of Texas, L.P. Texas 74-1949382 6162 5847 San Felipe
Suite 4400
Houston, TX 77057
(213) 613-3546

Sol L. Rabin, Inc. California 95-3695029 6799 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

Vincent F. Martin, Jr., Inc. California 95-3695032 6799 355 South Grand Avenue
Suite 3295
Los Angeles, CA 90071
(213) 613-3546

Westmark Real Estate Acquisition Delaware 95-4535866 6799 355 South Grand Avenue
Partnership, L.P. Suite 3295
Los Angeles, CA 90071
(213) 613-3546

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

Subject to Completion, dated October 22, 2001

PROSPECTUS

$229,000,000

[LOGO] CB RICHARD ELLIS
CB Richard Ellis Services, Inc.

Offer to Exchange All Outstanding 11 1/4% Senior Subordinated Notes Due June
15, 2011 for 11 1/4% Senior Subordinated Notes Due June 15, 2011, which have
been registered under the Securities Act of 1933

Unconditionally Guaranteed on a Senior Subordinated Basis by CBRE Holding, Inc.
and Some of our Subsidiaries

The Exchange Offer The Exchange Notes

. We will exchange all outstanding notes that are validly . The exchange notes are being offered in order to
tendered and not validly withdrawn for an equal satisfy certain of our obligations under the registration
principal amount of exchange notes that are freely rights agreements entered into in connection with the
tradeable, except in limited circumstances described placement of the outstanding notes.
below.
. The terms of the exchange notes to be issued in the
. You may withdraw tenders of outstanding notes at any exchange offer are substantially identical to the
time prior to the expiration of the exchange offer. outstanding notes, except that the exchange notes will
be freely tradeable, except in limited circumstances
. The exchange offer expires at 5:00 p.m., New York City described below.
time, on November 21, 2001, unless extended. We do
not currently intend to extend the expiration date. Resales of Exchange Notes

. The exchange of outstanding notes for exchange notes . The exchange notes may be sold in the over-the-
in the exchange offer will not be a taxable event for counter market, in negotiated transactions or through a
U.S. federal income tax purposes. combination of such methods.

. We will not receive any proceeds from the exchange
offer.

If you are a broker-dealer and you receive exchange notes for your own account,
you must acknowledge that you will deliver a prospectus in connection with any
resale of the exchange notes. By making such acknowledgement, you will not be
deemed to admit that you are an "underwriter" under the Securities Act of 1933.
Broker-dealers may use this prospectus in connection with any resale of
exchange notes received in exchange for outstanding notes where the outstanding
notes were acquired by the broker-dealer as a result of market-making
activities or trading activities. We will make this prospectus available to any
broker-dealer for use in any such resale for a period of up to 180 days after
the date of the prospectus. A broker-dealer may not participate in the exchange
offer with respect to outstanding notes acquired other than as a result of
market-making activities or trading activities. See "Plan of Distribution."

If you are an affiliate of CB Richard Ellis Services, Inc. or are engaged in,
or intend to engage in, or have an agreement or understanding to participate
in, a distribution of the exchange notes, you cannot rely on the applicable
interpretations of the Securities and Exchange Commission and you must comply
with the registration requirements of the Securities Act of 1933 in connection
with any resale transaction.

You should consider carefully the risk factors beginning on page 19 of this
prospectus before participating in the exchange offer.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

The date of this prospectus is October , 2001.

TABLE OF CONTENTS

Page
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Prospectus Summary.................. 3
Risk Factors........................ 19
Forward-Looking Statements.......... 33
Use of Proceeds..................... 34
Capitalization...................... 35
The Merger and Related Transactions. 36
Unaudited Pro Forma Combined
Financial Data.................... 38
Selected Historical Consolidated
Financial Data.................... 69
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 72
Business............................ 91
Management.......................... 101

Page
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Related Party Transactions....... 111
Principal Stockholders........... 117
The Exchange Offer............... 120
Description of the Notes......... 130
Book Entry; Delivery and Form.... 174
Description of Other Indebtedness 176
Certain U.S. Federal Income Tax
Consequences................... 179
Plan of Distribution............. 183
Legal Matters.................... 184
Experts.......................... 184
Where You Can Find
More Information................ 184
Index to Consolidated Financial
Statements...................... F-1

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CB Richard Ellis Services, Inc. and the corporate logo of CB Richard Ellis
Services set forth on the cover of this prospectus are the registered
trademarks of CB Richard Ellis Services in the United States. All other
trademarks or service marks are trademarks or service marks of the companies
that use them.

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PROSPECTUS SUMMARY

This summary may not contain all of the information that may be important to
you. You should read this summary together with the entire prospectus,
including the more detailed information in the financial statements and the
accompanying notes appearing elsewhere in this prospectus.

Our Company

CB Richard Ellis Services and its subsidiaries comprise the largest global
commercial real estate services firm in terms of revenue, offering a full range
of services to commercial real estate occupiers, owners, lenders and investors.
Through its 250 offices, CB Richard Ellis Services provides services under the
CB Richard Ellis brand name and, in the United Kingdom, under the CB Hillier
Parker brand name on a local, national and international basis across
approximately 100 markets in 44 countries. During 2000, CB Richard Ellis
Services advised on approximately 25,000 lease transactions involving aggregate
rents, under the terms of leases facilitated, of approximately $26.0 billion
and approximately 7,500 sales transactions with transaction values totaling
approximately $26.0 billion. Also during 2000, CB Richard Ellis Services
managed approximately 516 million square feet of property, provided investment
management services for $10.0 billion of assets, originated nearly $7.2 billion
in loans, serviced $16.7 billion in loans, engaged in approximately 32,000
valuation, appraisal and advisory assignments and serviced approximately 1,400
subscribers with proprietary research. As of June 30, 2001, CB Richard Ellis
Services employed approximately 9,600 employees. CBRE Holding, Inc. is the
parent company of CB Richard Ellis Services and conducts no business other than
being the parent company of CB Richard Ellis Services and its subsidiaries.

CB Richard Ellis Services operates its business through three core business
segments: (1) transaction management--commercial real estate brokerage
services, investment properties and corporate services; (2) financial
services--mortgage banking, investment management, valuation and appraisal
services and real estate market research; and (3) management services--property
management/asset services and facilities management.

Transaction Management

CB Richard Ellis Services is one of the largest competitors in the
commercial brokerage business. The transaction management segment of CB Richard
Ellis Services includes its brokerage services, investment properties and
corporate services divisions. This segment generated $950.3 million of revenue
for the year ended December 31, 2000 and approximately $370.3 million of
revenue for the six-month period ended June 30, 2001.

Brokerage Services. CB Richard Ellis Services represents buyers, sellers,
owners and occupiers in connection with the sale and lease of office space,
industrial buildings, retail property, multi-family residential property and
unimproved land. CB Richard Ellis Services' brokerage services division
generated approximately $606.6 million of revenue for the year ended December
31, 2000 and approximately $232.0 million of revenue for the six-month period
ended June 30, 2001.

Investment Properties. Investment property sales are distinguished by the
nature of the buyer (an investor rather than a user), the size of the
transaction and the breadth of resources that CB Richard Ellis Services
provides. On larger and more complex investment property sales assignments, its
financial consulting professionals provide sophisticated financial and
analytical services to the client, the marketing team and the investor. Its
investment properties division generated approximately $189.4 million of
revenue for the year ended December 31, 2000 and approximately $77.4 million of
revenue for the six-month period ended June 30, 2001.

Corporate Services. CB Richard Ellis Services provides specialist advice to
corporations developing and executing multi-market real estate strategies. Its
objective is to develop long-term relationships with large corporations through
the delivery of high-quality, multi-market management services and strategic
consulting services. CB Richard Ellis Services seeks to relieve its clients of
the burden of managing their own commercial real estate activities and aims to
do so at a lower cost than they could achieve by managing the activities
themselves. Its corporate services division generated $150.8 million of revenue
for the year ended December 31, 2000 and approximately $60.3 million of revenue
for the six-month period ended June 30, 2001.

Financial Services

Mortgage Banking. CB Richard Ellis Services is one of the largest
originators of commercial real estate loans in the United States. The vast
majority of its mortgage banking operation is provided through its wholly-owned
subsidiary, L.J. Melody, which originates mortgages and takes no principal
risk. Its mortgage banking division generated loan origination and servicing
fees of $58.2 million for the year ended December 31, 2000 and $35.8 million
for the six-month period ended June 30, 2001.

Investment Management. Through its wholly-owned subsidiary, CBRE Investors
(CB Hillier Parker Investors in the United Kingdom), CB Richard Ellis Services
sponsors and manages real estate investment funds and programs targeted
primarily for institutional investors. It manages funds on behalf of CalPERS,
CalSTRS and BP Pension Fund, among others, and offers multi-investor funds or
separately managed accounts. As of December 31, 2000, CB Richard Ellis Services
managed $10.0 billion in real estate investment funds, which represents a 49%
increase since 1998. Its investment management division generated investment
management fees of $40.4 million for the year ended December 31, 2000 and $25.3
million for the six-month period ended June 30, 2001.

Valuation and Appraisal Services. CB Richard Ellis Services' valuation and
appraisal services business delivers sophisticated commercial real estate
valuations through a variety of products, including market value appraisals,
portfolio valuation, discounted cash flow analyses, litigation support,
feasibility land use studies and fairness opinions. It operates the business
internationally through offices around the globe, and its clients are generally
corporate and institutional portfolio owners and lenders. Its valuation and
appraisal services division generated appraisal fees of $72.9 million for the
year ended December 31, 2000 and $40.3 million for the six-month period ended
June 30, 2001.

Real Estate Market Research. CB Richard Ellis Services provides real estate
market research services worldwide through Torto Wheaton Research and CB
Richard Ellis/National Real Estate Index. These research services include data
collection and interpretation, econometric forecasting and portfolio risk
analysis. CB Richard Ellis Services' publications and products provide real
estate data for more than 70 of the largest metropolitan statistical areas in
the United States and are sold on a subscription basis to many of the largest
portfolio managers, insurance companies and pension funds in the United States.
The National Real Estate Index also compiles proprietary market research for
over 50 major urban areas within the United States, reports benchmark market
price and rental data for office, light industrial, retail and apartment
properties, and tracks the property portfolios of approximately 150 of the
largest real estate investment trusts.

Management Services

Property Management/Asset Services. CB Richard Ellis Services provides
management services, including maintenance, marketing and leasing services, and
construction management relating to tenant improvements for income producing
properties owned primarily by institutional investors. Management services are
provided for office, industrial, retail and multi-family residential
properties. CB Richard Ellis Services' property management/asset services
division generated property management fees of $83.2 million for the year ended
December 31, 2000 and $61.3 million for the six-month period ended June 30,
2001.

Facilities Management. CB Richard Ellis Services administers, manages and
maintains properties that are occupied by large corporations and institutions,
such as corporate headquarters, regional offices and manufacturing and
distribution facilities. While most of the properties for which CB Richard
Ellis Services provides facilities management services are located within the
United States, it also provides such services in Argentina, Australia, China,
India, Singapore and the United Kingdom. Its facilities management division
generated fees of $23.1 million for the year ended December 31, 2000 and $12.4
million for the six-month period ended June 30, 2001.

Competitive Strengths

We believe our competitive strengths include the following:

. Global brand name.

. Geographic reach.

. Full-service provider.

. High-end commercial brokerage focus.

. Recurring revenue from prior transactions.

. Strong relationships with established customers.

. Experienced senior management with significant equity stake.

Strategy

The strategy of CB Richard Ellis Services is to be the world's leading real
estate services firm offering breadth and quality of services across the globe.
To implement its strategy, CB Richard Ellis Services intends to:

. Increase international revenues.

. Capitalize on increased corporate outsourcing to increase market share.

. Promote further cross-selling and cross-utilization of its services
across the globe.

. Build local market share.

. Grow its investment management business.

. Expand its use of internet-based technology.

Summary of the Merger and Related Transactions

The outstanding notes were issued in connection with the merger of CBRE
Holding, Inc.'s wholly-owned subsidiary, BLUM CB Corp., with and into CB
Richard Ellis Services, which occurred on July 20, 2001. Pursuant to an amended
and restated merger agreement, CB Richard Ellis Services' stockholders at the
time of the merger, other than the buying group described below who received
shares of CBRE Holding Class B common stock instead, received $16.00 in cash
for each share of CB Richard Ellis Services common stock that they owned. As a
result of the merger, all of the outstanding common and preferred stock of CB
Richard Ellis Services is now owned by CBRE Holding, and the common stock of CB
Richard Ellis Services has been delisted from the New York Stock Exchange. The
merger and the other transactions described below, including the contributions
of shares of CB Richard Ellis Services common stock and cash to CBRE Holding,
the incurrence of debt by CBRE Holding, BLUM CB Corp. and CB Richard Ellis
Services and the offering by CBRE Holding of its Class A common stock and
options to acquire its Class A common stock to employees and independent
contractors of CB Richard Ellis Services are referred to in this prospectus as
the "the merger and related transactions."

The following persons are referred to collectively in this prospectus as the
"buying group":

. RCBA Strategic Partners, L.P. and Blum Strategic Partners II, L.P.,
which are affiliates of BLUM Capital Partners, L.P. and Richard Blum and
Claus Moller, each of whom became a director of both CBRE Holding and CB
Richard Ellis Services in connection with the merger;

. FS Equity Partners III, L.P. and FS Equity Partners International, L.P.,
which are affiliates of Freeman Spogli & Co. Incorporated and Bradford
Freeman, who became a director of both CBRE Holding and CB Richard Ellis
Services in connection with the merger;

. Raymond Wirta, who became a director and Chief Executive Officer of both
CBRE Holding and CB Richard Ellis Services in connection with the
merger;

. Brett White, who became a director and President of both CBRE Holding
and CB Richard Ellis Services in connection with the merger;

. The Koll Holding Company, which is controlled by Donald Koll, who was a
director of CB Richard Ellis Services prior to the merger; and

. Frederic Malek, who became a director of both CBRE Holding and CB
Richard Ellis Services in connection with the merger.

Immediately prior to the merger, pursuant to an amended and restated
contribution and voting agreement, each member of the buying group contributed
to CBRE Holding all of the shares of CB Richard Ellis Services common stock
that he or it directly owned. CBRE Holding issued one share of its Class B
common stock in exchange for each share of CB Richard Ellis Services common
stock contributed to it. This resulted in the issuance to the buying group of
an aggregate of 7,967,774 shares of CBRE Holding Class B common stock. Also
pursuant to the contribution and voting agreement, immediately prior to the
merger, RCBA Strategic Partners, L.P. and Blum Strategic Partners, II, L.P.
purchased with cash an aggregate of 4,435,154 shares of CBRE Holding Class B
common stock, Raymond Wirta purchased by delivery of a promissory note 5,000
shares of CBRE Holding Class B common stock and California Public Employees'
Retirement System, or CalPERS purchased with cash 625,000 shares of CBRE
Holding Class A common stock, in each case for a price of $16.00 per share.

Also in connection with the merger, CBRE Holding sold an aggregate of
1,768,791 shares of its Class A common stock and shares underlying stock fund
units in CB Richard Ellis Services' deferred compensation plan to CB Richard
Ellis Services' employees and independent contractors at a price of $16.00 per
share.

CBRE Holding also granted to designated managers of CB Richard Ellis Services
an aggregate of 1,508,057 options to acquire shares of its Class A common
stock. Holders of CBRE Holding Class A common stock are generally entitled to
one vote per share on all matters submitted to CBRE Holding's stockholders,
while holders of CBRE Holding Class B common stock are generally entitled to
ten votes per share on all matters submitted to stockholders. The shares of the
Class A and Class B common stock otherwise have substantially the same rights.

Immediately following consummation of the merger and related transactions,
RCBA Strategic Partners, L.P. and Blum Strategic Partners II, L.P. held
approximately 8,100,925, FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. held approximately 3,402,463, management and employees
collectively held approximately 693,121 and other investors collectively held
approximately 2,195,772, of the outstanding CBRE Holding Class A and Class B
common stock.

In connection with the closing of the merger, the members of the buying
group, together with CBRE Holding, CB Richard Ellis Services, CalPERS, DLJ
Investment Funding, Inc. and Credit Suisse First Boston Corporation entered
into a securityholders' agreement that, among other things, governs the voting
of all shares of CBRE Holding Class B common stock and some shares of CBRE
Holding Class A common stock. As a result of the securityholders' agreement,
RCBA Strategic Partners, L.P. generally has the right to designate a majority
of the directors of each of CBRE Holding and CB Richard Ellis Services and also
is able to control the outcome of most matters decided by CBRE Holding's
stockholders.

Also in connection with the merger, CB Richard Ellis Services entered into a
new senior secured credit agreement with Credit Suisse First Boston and other
lenders, under which CB Richard Ellis Services borrowed $235.0 million in term
loans. The credit agreement also included a $90.0 million revolving credit
facility, which is intended to finance CB Richard Ellis Services' working
capital requirements, $10.0 million of which was drawn upon as of September 10,
2001. The credit agreement is guaranteed by CBRE Holding and many of the
subsidiaries of CB Richard Ellis Services and secured by a pledge of stock of
CB Richard Ellis Services and these subsidiary guarantors, as well as a pledge
of substantially all of the other assets of CB Richard Ellis Services and these
subsidiary guarantors. Also in connection with the merger, CB Richard Ellis
Services assumed, and CBRE Holding and many of CB Richard Ellis Services'
subsidiaries guaranteed, the outstanding notes, which were originally issued
and sold by BLUM CB Corp. for approximately $225.6 million on June 7, 2001. In
addition, CBRE Holding issued and sold to DLJ Investment Funding, Inc. and
other purchasers 65,000 units, which consisted in the aggregate of $65.0
million in aggregate principal amount of its 16% senior notes due 2011 and
339,820 shares of its Class A common stock, for an aggregate price of $65.0
million.

Recent Developments

Beginning in the latter part of the first quarter of 2001, CB Richard Ellis
Services has been adversely affected by a slowdown in the U.S. economy in
general and certain local and regional U.S. economies in particular which have
led to deteriorating commercial real estate market conditions. CB Richard Ellis
Services' operating performance has continued to be effected by the economic
slowdown into the third quarter of 2001. On October 22, 2001, CB Richard Ellis
Services announced its preliminary, unaudited results of operations for the
eight months ended August 31, 2001. For this period, CB Richard Ellis Services'
revenues were approximately $743.6 million, commissions, fees and other
incentives were approximately $352.1 million and operating, administrative and
other expenses were approximately $343.3 million. These results of operations
for the eight months ended August 31, 2001 as compared to the eight months
ended August 31, 2000 indicate that revenues have declined by approximately
6.6%, commissions, fees and other incentives have declined by approximately
5.5% and operating, administrative and other expenses declined by approximately
1.3%. While the decline in revenue has been partially offset by the declines in
commission and operating expenses, CB Richard Ellis Services has experienced a
decline in operating income, cash flow and profitability during the first eight
months of 2001, relative to the same period of 2000.

In addition, on September 11, 2001, a terrorist attack resulted in the
destruction of the World Trade Center Towers in New York City and significant
damage to surrounding buildings and property in lower Manhattan. Due to this
attack and a separate attack on the Pentagon in northern Virginia, as well as
the possibility of related acts of terror and/or an outbreak of hostilities, we
expect a further deterioration of the U.S. economy and commercial real estate
market conditions, which could further adversely affect our transaction
management segment and our other business segments.

-----------------

We are a Delaware corporation, our principal executive offices are currently
located at 355 South Grand Avenue, Suite 3295, Los Angeles, California 90071
and our telephone number is (213) 613-3546.

Summary of Terms of the Exchange Offer

On June 7, 2001, we completed the private offering of the outstanding notes.
References to the "notes" in this prospectus are references to both the
outstanding notes and the exchange notes. This prospectus is part of a
registration statement covering the exchange of the outstanding notes for the
exchange notes.

We and the guarantors entered into a registration rights agreement with the
initial purchasers in the private offering in which we and the guarantors
agreed to deliver to you this prospectus as part of the exchange offer and we
agreed to complete the exchange offer within 220 days after the date of the
merger. You are entitled to exchange in the exchange offer your outstanding
notes for exchange notes, which are identical in all material respects to the
outstanding notes except:

. the exchange notes have been registered under the Securities Act;

. the exchange notes are not entitled to certain registration rights which
are applicable to the outstanding notes under the registration rights
agreement; and

. certain contingent interest rate provisions are no longer applicable.

The Exchange Offer......... We are offering to exchange up to $229,000,000
aggregate principal amount of outstanding notes
for up to $229,000,000 aggregate principal amount
of exchange notes. Outstanding notes may be
exchanged only in integral multiples of $1,000.

Resale..................... Based on an interpretation by the staff of the
Securities and Exchange Commission, or the SEC,
set forth in no-action letters issued to third
parties, we believe that the exchange notes
issued pursuant to the exchange offer in exchange
for outstanding notes may be offered for resale,
resold and otherwise transferred by you, unless
you are an "affiliate" of CB Richard Ellis
Services, Inc. within the meaning of Rule 405
under the Securities Act, without compliance with
the registration and prospectus delivery
provisions of the Securities Act, provided that
you are acquiring the exchange notes in the
ordinary course of your business and that you
have not engaged in, do not intend to engage in,
and have no arrangement or understanding with any
person to participate in, a distribution of the
exchange notes.

Each participating broker-dealer that receives
exchange notes for its own account pursuant to
the exchange offer in exchange for outstanding
notes that were acquired as a result of
market-making or other trading activity must
acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes.
See "Plan of Distribution."

Any holder of outstanding notes who:

. is an affiliate of CB Richard Ellis
Services, Inc.;

. does not acquire exchange notes in the
ordinary course of its business; or

. tenders in the exchange offer with the
intention to participate, or for the
purpose of participating, in a
distribution of exchange notes.

Cannot rely on the position of the staff of the
SEC enunciated in Exxon Capital Holdings
Corporation, Morgan Stanley & Co. Incorporated or
similar no-action letters and, in the absence of
an exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the
resale of the exchange notes.

Expiration Date; Withdrawal
of Tender.................. The exchange offer will expire at 5:00 p.m., New
York City time, on November 21, 2001, or such
later date and time to which we extend it, which
date we refer to as the "expiration date." We do
not currently intend to extend the expiration
date. A tender of outstanding notes pursuant to
the exchange offer may be withdrawn at any time
prior to the expiration date. Any outstanding
notes not accepted for exchange for any reason
will be returned without expense to the tendering
holder promptly after the expiration or
termination of the exchange offer.

Certain Conditions to the
Exchange Offer............. The exchange offer is subject to customary
conditions, which we may waive. Please read the
section of this prospectus captioned "The
Exchange Offer--Certain Conditions to the
Exchange Offer" for more information regarding
the conditions to the exchange offer.

Procedures for Tendering
Outstanding Notes.......... If you wish to participate in the exchange offer,
you must complete, sign and date the accompanying
letter of transmittal, or a facsimile of the
letter of transmittal according to the
instructions contained in this prospectus and the
letter of transmittal. You must also mail or
otherwise deliver the letter of transmittal, or a
facsimile of the letter of transmittal, together
with the outstanding notes and any other required
documents, to the exchange agent at the address
set forth on the cover page of the letter of
transmittal. If you hold outstanding notes
through The Depository Trust Company, or DTC, and
wish to participate in the exchange offer, you
must comply with the Automated Tender Offer
Program procedures of DTC, by which you will
agree to be bound by the letter of transmittal.
By signing, or agreeing to be bound by the letter
of transmittal, you will represent to us that,
among other things:

. any exchange notes that you receive will
be acquired in the ordinary course of your
business;

. you have no arrangement or understanding
with any person or entity to participate
in a distribution of the exchange notes;

. if you are a broker-dealer that will
receive exchange notes for your own
account in exchange for outstanding notes
that were acquired as a result of
market-making activities, that you will
deliver a prospectus, as required by law,
in connection with any resale of such
exchange notes; and

. you are not an "affiliate," as defined in
Rule 405 of the Securities Act, of CB
Richard Ellis Services, Inc. or, if you
are an affiliate, you will comply with any
applicable registration and prospectus
delivery requirements of the Securities
Act.

Special Procedures for
Beneficial Owners.......... If you are a beneficial owner of outstanding
notes that are registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee, and you wish to tender such
outstanding notes in the exchange offer, you
should contact such registered holder promptly
and instruct such registered holder to tender on
your behalf. If you wish to tender on your own
behalf, you must, prior to completing and
executing the letter of transmittal and
delivering your outstanding notes, either make
appropriate arrangements to register ownership of
the outstanding notes in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time and may not be able to be
completed prior to the expiration date.

Guaranteed Delivery
Procedures................. If you wish to tender your outstanding notes and
your outstanding notes are not immediately
available or you cannot deliver your outstanding
notes, the letter of transmittal or any other
documents required by the letter of transmittal
or comply with the applicable procedures under
DTC's Automated Tender Offer Program prior to the
expiration date, you must tender your outstanding
notes according to the guaranteed delivery
procedures set forth in this prospectus under
"The Exchange Offer--Guaranteed Delivery
Procedures."

Effect on Holders of
Outstanding Notes.......... As a result of the making of, and upon acceptance
for exchange of all validly tendered outstanding
notes pursuant to the terms of the exchange
offer, we will have fulfilled a covenant
contained in the registration rights agreement
and, accordingly, there will be no increase in
the interest rate on the outstanding notes under
the circumstances described in the registration
rights agreement. If you are a holder of
outstanding notes and you do not tender your
outstanding notes in the exchange offer, you will
continue to hold such outstanding notes and you
will be entitled to all the rights and
limitations applicable to the outstanding notes
in the indenture, except for any rights under the
registration rights agreement that by their terms
terminate upon the consummation of the exchange
offer.

To the extent that outstanding notes are tendered
and accepted in the exchange offer, the trading
market for outstanding notes could be adversely
affected.

Consequences of Failure to
Exchange................... All untendered outstanding notes will continue to
be subject to the restrictions on transfer
provided for in the outstanding notes and in the
indenture. In general, the outstanding notes may
not be offered or sold, unless registered under
the Securities Act, except pursuant to an
exemption from, or in a transaction not subject
to, the Securities Act

and applicable state securities laws. Other than
in connection with the exchange offer, we do not
currently anticipate that we will register the
outstanding notes under the Securities Act.

Certain Income Tax
Considerations............. The exchange of outstanding notes for exchange
notes in the exchange offer will not be a taxable
event for United States federal income tax
purposes. See "Certain U.S. Federal Income Tax
Considerations."

Use of Proceeds............ We will not receive any cash proceeds from the
issuance of exchange notes pursuant to the
exchange offer.

Exchange Agent............. Street Bank and Trust Company of California, N.A.
is the exchange agent for the exchange offer. The
address and telephone number of the exchange
agent are set forth in the section of this
prospectus captioned "The Exchange
Offer--Exchange Agent."

Summary of Terms of the Exchange Notes

Issuer..................... CB Richard Ellis Services, Inc.

Notes Offered.............. $229,000,000 aggregate principal amount of
11 1/4% senior
subordinated notes due June 15, 2011.

Maturity Date.............. June 15, 2011.

Interest Payment Dates..... June 15 and December 15 of each year, beginning
December 15, 2001.

Optional Redemption........ We cannot redeem the notes prior to June 15,
2006, except as discussed below. Until June 15,
2004, we can choose to redeem the notes in an
amount together with any additional notes issued
under the indenture with money we or CBRE Holding
raise in certain equity offerings, as long as:

. we pay the holders of the notes a
redemption price of 111 1/4% of the
principal amount of the notes, plus
accrued but unpaid interest to the date of
redemption;

. at least 65% of the aggregate principal
amount of the notes, including any
additional notes, remains outstanding
after each such redemption;

. if the money is raised in an equity
offering by CBRE Holding, then CBRE
Holding contributes to us an amount
sufficient to redeem the notes; and

. we redeem the notes within 90 days after
the completion of the related equity
offering.

On or after June 15, 2006, we can redeem some or
all of the notes at the redemption prices listed
under the heading "Description of the
Notes--Optional Redemption," plus accrued but
unpaid interest to the date of redemption.

Change of Control.......... If a change of control occurs, we must give
holders of the notes an opportunity to sell their
notes to us at a purchase price equal to 101% of
the principal amount of the notes, plus accrued
and unpaid interest, subject to certain
conditions. See "Description of the Notes--Change
of Control."

Ranking.................... The notes are our unsecured senior subordinated
obligations, and will rank equally in right of
payment with any of our future senior
subordinated unsecured indebtedness and the notes
will be effectively subordinated to indebtedness
and other liabilities of our subsidiaries that
are not guarantors of the notes. As of June 30,
2001, on a pro forma basis after giving effect to
the merger and related transactions, we,
excluding our subsidiaries, would have had
approximately $276.5 million of senior
indebtedness, consisting of $275.0 million of
secured indebtedness under the new credit
agreement and $1.5 million of other indebtedness;
CBRE Holding, our parent company, would have had
approximately $340.0 million of senior
indebtedness, consisting of 16% senior notes
issued by CBRE Holding and CBRE Holding's
guarantee of our obligations under the new credit
agreement; our guarantor subsidiaries would have
had approximately $293.1 million of senior
indebtedness, consisting of various notes issued
in connection with acquisitions, capital lease
obligations and their guarantees of our
indebtedness under the new credit agreement; and
our non-guarantor subsidiaries would have had
$11.6 million of senior indebtedness.

Guarantees................. Our obligations under the notes are fully and
unconditionally guaranteed on a senior
subordinated basis by CBRE Holding and each of
our restricted subsidiaries that guaranteed the
new credit agreement, on terms provided in the
indenture governing the notes. The guarantees by
the guarantors of the notes are subordinated to
all existing and future senior indebtedness,
including guarantees of the new credit agreement,
of such guarantors. You do not have any claims
against our subsidiaries that have not guaranteed
the notes. The revenues of our non-guarantor
subsidiaries constituted approximately 22.4% and
23.2% of our consolidated revenues for the year
ended December 31, 2000 and the six months ended
June 30, 2001, respectively. The operating income
of our non-guarantor subsidiaries was
approximately $6.4 million for the year ended
December 31, 2000, and the operating loss of our
non-guarantor subsidiaries was approximately $7.4
million for the six months ended June 30, 2001.
The assets of our non-guarantor subsidiaries
constituted approximately 40% and 38% of our
consolidated total assets as of December 31, 2000
and June 30, 2001, respectively. The liabilities
of our non-guarantor subsidiaries were $199.4
million and $179.9 million of our consolidated
liabilities as of December 31, 2000 and June 30,
2001, respectively.

Restrictive Covenants...... The indenture governing the notes contains
covenants that limit our ability and the ability
of certain of our subsidiaries to:

. incur or guarantee additional
indebtedness;

. pay dividends or distributions on capital
stock or redeem or repurchase capital
stock;

. make investments;

. create restrictions on the payment of
dividends or other amounts to us;

. sell stock of our subsidiaries;

. transfer or sell assets;

. incur liens securing indebtedness of CBRE
Holding;

. engage in transactions with affiliates;
and

. consolidate or merge.

At such time as the ratings assigned to the notes
are investment grade ratings by both Moody's
Investors Services and Standard and Poor's Rating
Group, the covenants above will cease to be in
effect with the exception of the covenants that
contain limitations on, among other things, the
designation of restricted and unrestricted
subsidiaries and certain consolidations, mergers
and transfers of assets. All of these
restrictions and prohibitions are subject to a
number of important qualifications and
exceptions. See "Description of the
Notes--Certain Covenants."

Absence of a Public Market
for the Exchange Notes..... The exchange notes generally will be freely
transferable but will also be new securities for
which there will not initially be a market.
Accordingly, we cannot assure you whether a
market for the exchange notes will develop or as
to the liquidity of any market. We do not intend
to apply for a listing of the exchange notes on
any securities exchange or automated dealer
quotation system. The initial purchasers in the
private offering of the outstanding notes have
advised us that they currently intend to make a
market in the exchange notes. However, they are
not obligated to do so, and any market making
with respect to the exchange notes may be
discontinued without notice.

Risk Factors

You should carefully consider the risk factors set forth under the caption
of this "Risk Factors" and the other information included in this prospectus
before tendering your outstanding notes in the exchange offer.

Summary Consolidated Financial Data

CB Richard Ellis Services

The following table is a summary of the historical consolidated financial
data of CB Richard Ellis Services as of and for the periods presented, as well
as unaudited pro forma combined financial data giving effect to the merger and
related transactions as of and for the periods presented. You should read this
data along with the sections of this prospectus titled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Unaudited
Pro Forma Combined Financial Data" and the consolidated financial statements
and related notes included elsewhere in this prospectus. The unaudited pro
forma combined statement of operations data do not purport to represent what
the results of operations of CB Richard Ellis Services would have been if the
merger and related transactions had occurred as of the date indicated or what
its results will be for future periods. The results include the activities of
the following acquired businesses since their respective dates of acquisition:
L.J. Melody and Company from July 1, 1996; Koll Real Estate Services from
August 28, 1997; REI, Ltd. from April 17, 1998; and Hillier Parker May and
Rowden from July 7, 1998.

Pro Forma Pro Forma
for the for the
Six Months Ended Year Six Months
Year Ended December 31, June 30, Ended Ended
------------------------------------------------------ ------------------ December 31, June 30,
1996 1997 1998 1999 2000 2000 2001 2000 2001
-------- -------- ---------- ---------- ---------- -------- -------- ------------ ----------
(in thousands, except ratios and percentages)
Statement of Operations
Data:

Revenue.................. $583,068 $730,224 $1,034,503 $1,213,039 $1,323,604 $578,803 $557,347 $1,323,604 $557,347
Commissions, fees and
other incentives........ 292,266 364,403 458,463 559,289 634,639 267,815 259,203 634,639 259,203
Operating,
administrative and
other................... 228,799 275,749 448,794 536,381 538,481 257,904 263,614 540,920 263,634
Depreciation and
amortization............ 13,574 18,060 32,185 40,470 43,199 21,300 23,142 47,065 23,637
Merger-related and other
nonrecurring charges.... -- 12,924 16,585 -- -- -- 5,608 -- 5,608
-------- -------- ---------- ---------- ---------- -------- -------- ---------- --------
Operating income....... $ 48,429 $ 59,088 $ 78,476 $ 76,899 $ 107,285 $ 31,784 $ 5,780 $ 100,980 $ 5,265
======== ======== ========== ========== ========== ======== ======== ========== ========

Other Financial Data:

EBITDA, excluding
merger- related and
other nonrecurring
charges (a)............. $ 62,003 $ 90,072 $ 127,246 $ 117,369 $ 150,484 $ 53,084 $ 34,530 $ 148,045 $ 34,510
EBITDA margin............ 10.6% 12.3% 12.3% 9.7% 11.4% 9.2% 6.2% 11.2% 6.2%
Capital expenditures..... $ 3,002 $ 9,927 $ 29,715 $ 35,130 $ 26,921 $ 11,451 $ 14,628 $ 26,921 $ 14,628
Acquisition of business
including net assets
acquired, intangibles
and goodwill............ 8,625 (3,216) 189,895 8,931 3,442 669 1,123 3,442 1,123
Pro forma cash interest
expense (b)............. 56,655 26,140
Ratio of earnings to
fixed charges (c)....... 1.75 2.33 2.17 1.79 2.15 1.44 0.61 1.19 0.34
Ratio of pro forma
EBITDA to pro forma
cash interest expense
(b)..................... 2.61 1.32
Ratio of pro forma total
debt to EBITDA.......... 15.41
Ratio of pro forma net
debt to EBITDA.......... 14.50

(footnotes on following page)

Pro
Forma
As of December 31, As of As of
--------------------------------------------- June 30, June 30,
1996 1997 1998 1999 2000 2001 2001
-------- -------- -------- -------- -------- -------- ----------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents............................... $ 49,328 $ 47,181 $ 19,551 $ 27,844 $ 20,854 $ 18,548 $ 31,278
Receivables, less allowance for doubtful accounts....... 40,927 77,358 131,512 168,276 176,908 149,811 149,811
Goodwill, net of accumulated amortization............... 65,362 196,358 445,124 445,010 423,975 412,379 586,583
Other intangible assets, net of accumulated amortization 10,521 43,026 63,913 57,524 46,432 42,526 34,907
Total assets............................................ 278,944 500,100 856,892 929,483 963,105 946,799 1,137,889
Total long-term debt (including current portion)........ 166,353 152,607 388,896 364,637 314,164 429,618 531,802
Total stockholders'equity (deficit)..................... (1,515) 157,771 190,842 209,737 235,339 227,631 297,750

--------
(a) EBITDA, excluding merger-related and other nonrecurring charges, represents
earnings before interest expense, income taxes, depreciation and
amortization and also excludes merger-related and other nonrecurring
charges. Our management believes that the presentation of EBITDA, excluding
merger-related and other nonrecurring charges will enhance a reader's
understanding of our operating performance and ability to service debt as
it provides a measure of cash generated, subject to the payment of interest
and income taxes, that can be used by us to service our debt and for other
required or discretionary purposes. EBITDA, excluding merger-related and
other nonrecurring charges should not be considered as an alternative to
(a) operating income determined in accordance with GAAP or (b) operating
cash flow determined in accordance with GAAP. This calculation of EBITDA,
excluding merger-related and other nonrecurring charges, may not be
comparable to similarly titled measures reported by other companies.

EBITDA, excluding merger related and other nonrecurring charges, is
calculated as follows:

Pro Forma Pro Forma
for the for the
Six Months Year Six Months
Year Ended December 31, Ended June 30, Ended Ended
------------------------------------------ --------------- December 31, June 30,
1996 1997 1998 1999 2000 2000 2001 2000 2001
------- ------- -------- -------- -------- ------- ------- ------------ ----------
(in thousands)

Operating Income........... $48,429 $59,088 $ 78,476 $ 76,899 $107,285 $31,784 $ 5,780 $100,980 $ 5,265
Add:
Depreciation and
amortization............ 13,574 18,060 32,185 40,470 43,199 21,300 23,142 47,065 23,637
Merger-related and other
nonrecurring charges.... -- 12,924 16,585 -- -- -- 5,608 -- 5,608
------- ------- -------- -------- -------- ------- ------- -------- -------
EBITDA, excluding merger-
related and other
nonrecurring charges...... $62,003 $90,072 $127,246 $117,369 $150,484 $53,084 $34,530 $148,045 $34,510
======= ======= ======== ======== ======== ======= ======= ======== =======

(b) Pro forma cash interest expense would have been approximately $48.3 million
for the year ended December 31, 2000 and $24.1 million for the six months
ended June 30, 2001 using the 3-month LIBOR of 3.11% as of September 17,
2001. Also, using the same LIBOR of 3.11%, the ratio of pro forma EBITDA,
excluding merger related and other non-recurring changes, to pro forma cash
interest expense would have been 3.06x for the year ended December 31, 2000
and 1.43x for the six months ended June 30, 2001.

(c) Represents a deficiency of $11.1 million for the six months ended June 30,
2001 and a deficiency of $33.8 million for the pro forma six months ended
June 30, 2001.

CBRE Holding

The following table is a summary of the historical consolidated financial
data of CBRE Holding as of and for the periods presented, as well as pro forma
combined financial data giving effect to the merger and related transactions as
of and for the periods presented. You should read this data along with the
sections of this prospectus titled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Unaudited Pro Forma
Combined Financial Data" and the consolidated financial statements and related
notes included elsewhere in this prospectus. The unaudited pro forma combined
statement of operations data do not purport to represent what CBRE Holding's
results of operations would have been if the merger and related transactions
had occurred as of the date indicated or what its results will be for future
periods.

Pro Forma
Pro Forma for the
Period from for the Six Months
February 20, 2001 Year Ended Ended
(inception) to December 31, June 30,
June 30, 2001 2000 2001
----------------- ------------ ----------
(in thousands, except ratios and percentages)

Statement of Operations Data:
Revenue............................................................. -- $1,323,604 $557,347
Commissions, fees and other incentives.............................. -- 634,639 259,203
Operating, administrative and other................................. -- 540,920 263,634
Depreciation and amortization....................................... -- 47,065 23,637
Merger-related and other nonrecurring charges....................... -- -- 5,608
---- ---------- --------
Operating income................................................ -- $ 100,980 $ 5,265
==== ========== ========
Other Financial Data:
EBITDA, excluding merger-related and other nonrecurring
charges (a)....................................................... -- $ 148,045 $ 34,510
EBITDA margin....................................................... -- 11.2% 6.2%
Capital expenditures................................................ -- $ 26,921 $ 14,628
Acquisition of business including net assets acquired, intangibles
and goodwill...................................................... -- 3,442 1,123
Pro forma cash interest expense (b)................................. 67,055 31,340
Ratio of earnings to fixed charges (c).............................. 0.33 1.39 0.39
Ratio of pro forma EBITDA to pro forma cash interest expense (b).... 2.21 1.10
Ratio of pro forma total debt to EBITDA............................. 17.05
Ratio of pro forma net debt to EBITDA............................... 16.15

(footnotes on following page)

Pro Forma
As of As of
June 30, June 30,
2001 2001
-------- ----------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents.................................. $229,499 $ 31,278
Receivables, less allowance for doubtful accounts.......... -- 149,811
Goodwill, net of accumulated amortization.................. -- 585,853
Other intangible assets, net of accumulated amortization... -- 34,907
Total assets............................................... 238,268 1,139,434
Total long-term debt (including current portion)........... 225,642 588,452
Total stockholders'equity.................................. 3,140 242,645

EBITDA, excluding merger related and other nonrecurring charges, is
calculated as follows:

Pro Forma
Pro Forma for the
Period from for the Six Months
February 20, 2001 Year Ended Ended
(inception) to December 31, June 30,
June 30, 2001 2001 2001
----------------- ------------ ----------
(in thousands)

Operating Income........................ -- $100,980 $ 5,265
Add:
Depreciation and amortization......... -- 47,065 23,637
Merger-related and other nonrecurring
charges.............................. -- -- 5,608
--- -------- -------
EBITDA, excluding merger-related and
other nonrecurring charges............ -- $148,045 $34,510
=== ======== =======

(b) Pro forma cash interest expense would have been approximately $58.7 million
for the year ended December 31, 2000 and $29.3 million for the period six
months ended June 30, 2001 using the 3-month LIBOR of 3.11% as of September
17, 2001. Also, using the same LIBOR of 3.11%, the ratio of pro forma
EBITDA, excluding merger related and other non-recurring changes, to pro
forma cash interest expense would have been 2.52x for the year ended
December 31, 2000 and 1.18x for the six months ended June 30, 2001.

(c) Represents a deficiency of $1.2 million for the period from February 20,
2001 (inception) to June 30, 2001 and a deficiency of $26.3 million for the
pro forma six months ended June 30, 2001.

RISK FACTORS

You should carefully consider the risks described below and the other
information in this prospectus before you decide to participate in the exchange
offer. If any of the following risks or uncertainties actually occurs, our
business, financial condition and operating results would likely suffer.

Risks relating to the exchange offer

If you choose not to exchange your outstanding notes, the present transfer
restrictions will remain in force and the market price of your outstanding
notes could decline.

If you do not exchange your outstanding notes for exchange notes under the
exchange offer, then you will continue to be subject to the transfer
restrictions on the outstanding notes as set forth in the offering circular
distributed in connection with the private offering of the outstanding notes.
In general, the outstanding notes may not be offered or sold unless they are
registered or exempt from registration under the Securities Act and applicable
state securities laws. Except as required by the exchange and registration
rights agreement, we do not intend to register resales of the outstanding notes
under the Securities Act. You should refer to "Prospectus Summary--Summary of
Terms of the Exchange Offer" and "The Exchange Offer" for information about how
to tender your outstanding notes.

The tender of outstanding notes under the exchange offer will reduce the
principal amount of the outstanding notes outstanding, which may have an
adverse effect upon, and increase the volatility of, the market price of the
outstanding notes due to a reduction in liquidity.

Risks relating to our business

The success of our business is significantly related to general economic
conditions, and, accordingly, our business could be harmed by an economic
slowdown or recession.

In the latter part of the first quarter of 2001, CB Richard Ellis Services'
business was adversely affected by a slowdown in the U.S. economy in general,
and certain local and regional U.S. economies in particular, which have led to
deteriorating commercial real estate market conditions. Its first quarter
results reflected a slowdown in its U.S. sales activities beginning in February
and a slowdown in U.S. lease activities beginning in March, as well as lower
than expected revenues in Europe and Asia Pacific. This weakness in sales and
lease activities continued into the second quarter. Revenue from the second
quarter of 2001 was approximately $284.8 million as compared to approximately
$317.9 million during the second quarter of 2000. In addition, our results
during the second quarter of 2001 were adversely affected by approximately $5.6
million of expenses, consisting of:

. severance expenses related to the implementation or our cost savings
strategy;

. merger-related costs; and

. the write-off of our investment in Eziaz.

As a result of the slowdown in revenue and these expenses, we recorded pre-tax
loss of approximately $5.2 million for the second quarter of 2001 as compared
to a pre-tax gain of approximately $11.7 million for the second quarter of
2000.

CB Richard Ellis Services' operating performance has continued to be
effected by the economic slowdown into the third quarter of 2001. On October
22, 2001, CB Richard Ellis Services announced its preliminary, unaudited
results of operations for the eight months ended August 31, 2001. For this
period, CB Richard Ellis Services' revenues were approximately $743.6 million,
commissions, fees and other incentives were approximately $352.1 million and
operating, administrative and other expenses were approximately

$343.3 million. These results of operations for the eight months ended August
31, 2001 as compared to the eight months ended August 31, 2000 indicate that
revenues have declined by approximately 6.6%, commissions, fees and other
incentives have declined by approximately 5.5% and operating, administrative
and other expenses declined by approximately 1.3%. While the decline in revenue
has been partially offset by the declines in commission and operating expenses,
CB Richard Ellis Services has experienced a decline in operating income, cash
flow and profitability during the first eight months of 2001, relative to the
same period of 2000.

Periods of economic slowdown or recession in the United States and in other
countries, rising interest rates or declining demand for real estate, or the
public perception that any of these events may occur, can harm many segments of
our business. These economic conditions could result in a general decline in
rents, which in turn would reduce revenues from property management fees and
brokerage commissions derived from property sales and leases. In addition,
these conditions could lead to a decline in sale prices as well as a decline in
demand for funds invested in commercial real estate and related assets. An
economic downturn or a significant increase in interest rates also may reduce
the amount of loan originations and related servicing by our commercial
mortgage banking business. If our brokerage and mortgage banking businesses are
negatively impacted, it is likely that other segments of our business will also
suffer, due to the relationship among its various business segments. Further,
as a result of our debt level and the terms of the debt instruments we entered
into in connection with the merger and related transactions, our vulnerability
to adverse general economic conditions has become heightened.

The sharp downturn in the commercial real estate market beginning in the
late 1980s in the United States caused, and downturns in the future may again
cause, some property owners to dispose of or lose their properties through
foreclosures and has caused many real estate firms to undergo restructuring or
changes in control. Changes in the ownership of properties may be accompanied
by a change in property and investment management firms and could cause us to
lose management agreements or make the agreements we retain less profitable.

We may not be able to implement our cost savings strategy; and even if we are
able to implement this strategy, it may not reduce our operating expenses by as
much as we anticipate and could even compromise the development of our
business.

In light of the recent slowdown in the U.S. economy and the decline in CB
Richard Ellis Services' operating performance, CB Richard Ellis Services
announced a major cost cutting program in May 2001. As part of this plan, we
intend to reduce our work force, reduce the bonuses we pay to managers and
reduce other operating and back office expenses. While we expect to realize
between approximately $35 and $40 million in cost savings during the remainder
of 2001 after the announcement, excluding one-time severance costs, we cannot
assure you that we will be able to implement the plan during 2001 or at all.
Even if we are able to implement the plan, the plan may yield substantially
less than the expected savings. In fact, the implementation of the plan could
adversely affect our revenue, as it could create inefficiencies in our business
operations, result in labor disruptions and limit our ability to expand and
grow our business. For the six months ended June 30, 2001, after giving effect
to the merger and related transactions, on a pro forma basis, CBRE Holding's
interest expense would have been approximately $33.0 million and CB Richard
Ellis Services interest expense would have been approximately $27.5 million.

Our substantial leverage and debt service obligations could harm our ability to
operate our business and make payments on the notes.

CBRE Holding and CB Richard Ellis Services are highly leveraged and have
significant debt service obligations. As of June 30, 2001, after giving effect
to the merger and related transactions on a pro forma basis, CBRE Holding would
have had total debt of approximately $588.5 million, net of $11.7 million of
unamortized discounts, excluding unused commitments under CB Richard Ellis
Services' new revolving credit facility, which is guaranteed by CBRE Holding,
and total stockholders' equity of approximately $242.6 million, and CB Richard
Ellis Services would have had total debt of approximately $531.8 million, net
of $3.4 million of unamortized discounts, and total stockholders' equity of
approximately $297.8 million. For the year ended December 31, 2000, after
giving effect to the merger and related transactions, on a pro forma basis,
CBRE Holding's interest expense would have been $70.4 million, and CB Richard
Ellis Services' interest expense would have been $59.4 million. For the six
months ended June 30, 2001, after giving effect to the merger and related
transactions, on a pro forma basis, CBRE Holding's interest expenses would have
been approximately $33.0 million and CB Richard Ellis Services' interest
expense would have been approximately $27.5 million. The substantial level of
indebtedness of CBRE Holding and CB Richard Ellis Services increases the
possibility that CBRE Holding and CB Richard Ellis Services may be unable to
generate cash sufficient to pay when due the principal of, interest on or other
amounts due in respect to their indebtedness. In addition, CBRE Holding and CB
Richard Ellis Services may incur additional debt from time to time to finance
strategic acquisitions, investments, joint ventures or for other purposes,
subject to the restrictions contained in the documents governing their
indebtedness.

The substantial debt of CBRE Holding and CB Richard Ellis Services could
have other important consequences to you, including the following:

. CBRE Holding and CB Richard Ellis Services are required to use a
substantial portion, if not all, of their free cash flow from operations
to pay principal and interest on their debt, and their level of debt may
restrict them from raising additional financing on satisfactory terms to
fund working capital, strategic acquisitions, investments, joint
ventures and other general corporate requirements;

. The interest expense of CBRE Holding and CB Richard Ellis Services could
increase if interest rates in general increase, because all of CB
Richard Ellis Services' debt under its new credit agreement, which is
guaranteed by CBRE Holding, including $235 million in term loans and a
revolving credit facility of up to $90 million, will bear interest at
floating rates, generally between LIBOR plus 3.25% and LIBOR plus 3.75%
or between ABR plus 2.25% and ABR plus 2.75%;

. The substantial leverage of CBRE Holding and CB Richard Ellis Services
will increase their vulnerability to general economic downturns and
adverse competitive and industry conditions and could place them at a
competitive disadvantage compared to those of their competitors that are
less leveraged;

. The debt service obligations of CBRE Holding and CB Richard Ellis
Services could limit their flexibility in planning for, or reacting to,
changes in their business and in the real estate services industry
generally; and

. CBRE Holding's and CB Richard Ellis Services' failure to comply with the
financial and other restrictive covenants in the documents governing
their indebtedness, which require them to maintain specified financial
ratios and limit their ability to incur debt and sell assets, could
result in an event of default that, if not cured or waived, could harm
their business or prospects and could result in their bankruptcy.

CBRE Holding and CB Richard Ellis Services cannot be certain that their
earnings will be sufficient to allow them to pay principal and interest on
their debt, including the outstanding notes and the exchange notes, and meet
their other obligations. If CBRE Holding and CB Richard Ellis Services do not
have sufficient earnings, they may be required to refinance all or part of
their existing debt, sell assets, borrow more money or sell more securities.
CBRE Holding and CB Richard Ellis Services cannot guarantee that they will be
able to refinance their debt, sell assets, borrow money or sell more securities
on terms acceptable to them or at all.

We will be able to incur more indebtedness, which may intensify the risks
associated with our substantial leverage, including our ability to service our
indebtedness.

The indenture relating to the outstanding notes and the exchange notes, the
new credit agreement and the indenture relating to the 16% senior notes due
2011 issued by CBRE Holding permit CBRE Holding and CB Richard Ellis Services,
subject to specified conditions, to incur a significant amount of additional
indebtedness. In addition, CB Richard Ellis Services may incur additional
indebtedness under its new $90 million revolving credit facility, which is
guaranteed by CBRE Holding. If CBRE Holding or CB Richard Ellis Services incurs
additional debt, the risks associated with their substantial leverage would
increase.

If the properties that we manage fail to perform, then our financial condition
and results of operations could be harmed.

The revenue we generate from our property management/asset services
division, and to some extent from our facilities management division, is
generally a percentage of aggregate rent collections from properties, with many
management agreements providing for a specified minimum management fee.
Accordingly, our success will be dependent in part upon the performance of the
properties we manage, and the performance of these properties will depend upon
the following factors, among others, many of which are partially or completely
outside of our control:

. our ability to attract and retain creditworthy tenants;

. the magnitude of defaults by tenants under their respective leases;

. our ability to control operating expenses;

. governmental regulations, local rent control or stabilization ordinances
which are or may be put into effect;

. financial conditions prevailing generally and in the areas in which
these properties are located;

. the nature and extent of competitive properties; and

. the real estate market generally.

We are controlled by RCBA Strategic Partners, L.P., whose interests may be
different from yours.

CB Richard Ellis Services is a wholly owned subsidiary of CBRE Holding and
RCBA Strategic Partners and its affiliates, together own approximately 56.3% of
CBRE Holding's outstanding Class A and Class B common stock, taken together. In
addition, RCBA Strategic Partners and Blum Strategic Partners II, L.P. entered
into a securityholders' agreement with the other holders of Class B common
stock and some of the holders of Class A common stock. The Class B and Class A
common stock subject to the voting provisions of the securityholders' agreement
represented as of the date of the merger approximately 76.3% of the voting
power of CBRE Holding's outstanding Class A and Class B common stock, taken
together. As a result of the percentage of CBRE Holding's voting power owned by
RCBA Strategic Partners and Blum Strategic Partners II and the other parties to
the securityholders' agreement and the rights granted to RCBA Strategic
Partners and its affiliates pursuant to the securityholders' agreement, CBRE
Holding is controlled by RCBA Strategic Partners which control has, among other
things, the effects indicated below.

. General Voting: Subject to exceptions in the securityholders' agreement,
RCBA Strategic Partners controls the outcome of all votes of holders of
CBRE Holding's Class A and Class B common stock, taken together.

. Board: RCBA Strategic Partners has the right to designate a majority of
the members of CBRE Holding's board of directors.

. Change of Control: RCBA Strategic Partners generally is able to prevent
any transaction that would result in a change of control of CBRE
Holding. Subject to exceptions in the securityholders' agreement, RCBA
Strategic Partners is also able to cause a change of control.

We cannot assure you that the interests of RCBA Strategic Partners will not
conflict with yours. In particular, RCBA Strategic Partners may cause a change
of control at a time when we do not have sufficient funds to repurchase the
notes as described under "Description of the Notes--Change of Control."

CB Richard Ellis Services has grown significantly during the past five years,
which has placed significant demands on its resources, and it may not be able
to effectively manage this growth or future growth.

CB Richard Ellis Services has grown significantly in recent years from total
consolidated revenues of approximately $583 million in 1996 to approximately
$1.3 billion in 2000. This historical growth and any future growth will
continue to place demands on its resources. Accordingly, our future success and
profitability will depend, in part, on our ability to enhance our management
and operating systems, respond and adapt to rapid changes in technology, obtain
financing for strategic acquisitions and investments, retain employees due to
policy and procedural changes and retain customers due to our ability to manage
change. We may not be able to successfully manage any significant expansion or
obtain adequate financing on favorable terms to manage its growth.

CB Richard Ellis Services' growth has depended significantly upon acquisitions,
and it has experienced difficulties integrating these acquired businesses with
its business.

A significant component of CB Richard Ellis Services' growth from 1996
to 1998 was, and part of its principal strategy for continued growth is,
through acquisitions. CB Richard Ellis Services' strategic acquisitions since
1995 have included Hillier Parker May and Rowden, REI, Ltd., Koll Real Estate
Services, L.J. Melody & Company and Westmark Realty Advisors. Its recent
tactical acquisitions have included Cauble and Company, North Coast Mortgage
and Shoptaw-James. We expect to continue our acquisition program. Any future
growth through acquisitions will be partially dependent upon the continued
availability of suitable acquisition candidates at favorable prices and upon
advantageous terms and conditions. However, future acquisitions may not be
available at advantageous prices or upon favorable terms and conditions. In
addition, acquisitions involve risks that the businesses acquired will not
perform in accordance with expectations and that business judgments concerning
the value, strengths and weaknesses of businesses acquired or the consequences
of any acquisition will prove incorrect.

CB Richard Ellis Services has had, and may experience in the future,
significant difficulties in integrating operations acquired from other
companies, including the diversion of its management's attention from other
business concerns and the potential loss of its key employees or those of the
acquired operations. For example, in the Westmark acquisition, serious
differences in corporate culture resulted in the loss of several key employees.
In the L.J. Melody acquisition, it took over a year to blend its loan servicing
operations with those of L.J. Melody. The integration of Koll and CB Richard
Ellis Services' property, facilities and corporate accounting systems took
almost nine months to complete. We believe that most acquisitions will have an
adverse impact on operating income and net income during the first six months
following the acquisition. In addition, during this time period, there are
generally significant one-time costs relating to integrating information
technology, accounting and management services and rationalizing personnel
levels.

CB Richard Ellis Services has had particular difficulty integrating the
accounting systems of all the businesses that it has acquired. CB Richard Ellis
Services has numerous different accounting systems, each of which reports
results in a different currency. If we are unable to fully integrate the
accounting and other systems of the businesses we own, we may not be able to
effectively manage our acquired businesses. Moreover, the integration process
itself may be disruptive to CB Richard Ellis Services' business as it requires
CB Richard Ellis Services to coordinate geographically diverse organizations
and implement new accounting and information technology systems.

We are parties to several lawsuits, including lawsuits related to the merger
and related transactions, which if determined adversely to us, could result in
the imposition of damages against us and could harm our business and financial
condition.

We have been subject to putative class action lawsuits in Delaware and
California in connection with the announcement of the merger and related
transactions. These actions all alleged that the offering price for shares of
CB Richard Ellis Services' common stock was unfair and inadequate and sought
injunctive relief or rescission of the merger and related transactions and, in
the alternative, money damages. Although parties involved entered into a
settlement agreement with respect to the actions that have been filed in
Delaware that may lead to a settlement, the Delaware court has not yet approved
the settlement agreement. Furthermore, the parties involved in the California
lawsuit have not agreed to a settlement. In addition, we may be subject to
other lawsuits in connection with the merger and related transactions that have
not yet been filed. In the event that the current lawsuits with respect to the
merger and related transactions are not settled or we become subject to
additional suits, these lawsuits could result in the imposition of damages
against us and our business and financial condition could be harmed.

In addition, we are the defendant in numerous lawsuits filed in the ordinary
course of business. Although we are defending these claims, we cannot be
certain that these cases will be resolved in our favor, and our insurance
policies may not cover any such losses. Any losses not covered by insurance
could adversely impact our business.

We have numerous significant competitors, many of which may have greater
financial resources than us.

We compete across a variety of business disciplines within the commercial
real estate industry, including investment management, tenant representation,
corporate services, construction and development management, property asset
management, agency leasing, valuation and mortgage banking. In general, with
respect to each of our business disciplines, we cannot assure you that we will
be able to continue to compete effectively, maintain our current fee
arrangements or margin levels or not encounter increased competition. Each of
the business disciplines in which we compete is highly competitive on an
international, national, regional or local level. Although we are one of the
largest real estate services firms in the world, our relative competitive
position varies significantly across product and service categories and
geographic areas. Depending on the product or service, we face competition from
other real estate service providers, institutional lenders, insurance
companies, investment banking firms, investment managers and accounting firms.
Many of our competitors are local or regional firms, which are substantially
smaller than us. However, those competitors may be substantially larger on a
local or regional basis. We are also subject to competition from other large
national and multinational firms.

In addition to our historical competitors, the advent of the Internet has
introduced new ways of providing real estate services, as well as new entrants
and competitors in our industry. We cannot currently predict who these
competitors will be, nor can it predict what its response to them will be. Our
response to competitive pressures could require significant capital resources,
changes in our organization or technological changes. If we are not successful
in developing a strategy to address the risks and to capture the related
opportunities presented by technological changes and the emergence of
e-business, our business, financial condition or results of operations could be
harmed.

Our international operations subject us to social, political and economic risks
of doing business in foreign countries.

We conduct a substantial portion of our business, and a substantial number
of our employees are located, outside of the United States. In the six-month
period ended June 30, 2001, CB Richard Ellis Services generated approximately
23% of its revenue from operations outside the United States. The international
scope of our operations may lead to volatile financial results and difficulties
in managing our businesses. Circumstances and developments related to
international operations that could negatively affect our business, financial
condition or results of operations include the following factors:

. difficulties and costs of staffing and managing international
operations;

. currency restrictions, such as those in Brazil, India and Malaysia,
which may prevent us from transferring capital and profits to the United
States;

. changes in regulatory requirements;

. potentially adverse tax consequences;

. the burden of complying with multiple and potentially conflicting laws;

. the impact of regional or country-specific business cycles and economic
instability;

. the geographic, time zone, language and cultural differences between
personnel in different areas of the world;

. greater difficulty in collecting accounts receivable in some geographic
regions such as Asia Pacific and Europe;

. political instability; and

. foreign ownership restrictions with respect to operations in countries
such as Indonesia, India and China.

We have committed additional resources to expand our worldwide sales and
marketing activities, to globalize our service offerings and products in
selected markets and to develop local sales and support channels. If we are
unable to successfully implement these plans, to maintain adequate long-term
strategies that successfully manage the risks associated with our global
business or to adequately manage operational fluctuations, our business,
financial condition or results of operations could be harmed.

Our revenues and earnings may be adversely affected by foreign currency
fluctuations.

Our revenues from non-U.S. operations have been primarily denominated in the
local currency where the associated revenues were earned. During the six-month
period ended June 30, 2001, approximately 23% of CB Richard Ellis Services'
business was transacted in currencies of foreign countries, primarily the
British Pound Sterling, the Canadian Dollar, the Euro, the Hong Kong Dollar and
the Australian Dollar. We may experience significant negative fluctuations in
revenues and earnings because of corresponding fluctuations in foreign currency
exchange rates. For example, as a result of exchange rate adjustments, CB
Richard Ellis Services' total net income was reduced by approximately $1.1
million during 2000.

CB Richard Ellis Services has made significant acquisitions of non-U.S.
companies since the beginning of 1998, including Hillier Parker May and Rowden,
REI, Ltd. and CB Commercial Real Estate of Canada, Inc. We may acquire
additional foreign companies in the future as well. As we increase our foreign
operations, fluctuations in the value of the U.S. dollar relative to the other
currencies in which we may generate earnings could have a material adverse
effect on our business, operating results and financial condition. 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. Due to the constantly changing currency exposures to which we will
be subject and the volatility of currency exchange rates, we cannot assure you
that we will not experience currency losses in the future, nor can we predict
the effect of exchange rate fluctuations upon future operating results.

Our management may decide to use currency hedging instruments, including
foreign currency forward contracts, purchased currency options, where
applicable, and borrowings in foreign currency. Economic risks associated with
these hedging instruments include fluctuations in inflation rates impacting
cash flow relative to paying down debt and changes in the underlying net asset
position. These hedging activities may not be effective.

A significant portion of our operations are concentrated in California, and our
business could be harmed if an economic downturn occurs in the California real
estate market.

During the six-month period ended June 30, 2001, approximately $107.5
million, or 30%, of CB Richard Ellis Services' $362.7 million in total sales
and lease revenue, including revenue from investment property sales, was
generated from transactions that originated in the State of California. As a
result of the geographic concentration in California of our transaction
management business, as well as some of our other businesses, a material
downturn in the California commercial real estate market or in the local
economies in San Diego, Los Angeles or Orange County could harm our results of
operations.

Our results of operations vary significantly among quarters, which makes
comparison of our quarterly results difficult.

CB Richard Ellis Services' operating income and earnings have historically
been substantially lower during the first three calendar quarters than in the
fourth quarter. The reasons for the concentration of income and earnings in the
fourth quarter include a general, industry-wide focus on completing
transactions by calendar year end, as well as the constant nature of CB Richard
Ellis Services' non-variable expenses throughout the year versus the
seasonality of its revenue and its policy of paying bonuses in the first
quarter. This has historically resulted in a small operating loss in the first
quarter, a small operating profit or loss in the second and third quarters and
a larger profit in the fourth quarter, excluding the recognition of investment
generated performance fees. As a result, quarter-to-quarter comparisons may be
difficult to interpret.

Our co-investment activities subject us to real estate investment risks that
could cause fluctuations in our earnings and cash flow.

An important part of the strategy of our investment management business
involves investing our own capital in real estate investments with our clients.
As of June 30, 2001, CB Richard Ellis Services had committed an additional
$39.8 million to fund future co-investments. Our participation in real estate
transactions through co-investment activity could increase fluctuations in its
earnings and cash flow. Other risks associated with these activities include:

. loss of investments;

. difficulties associated with international co-investments described in
the risk factors above under the headings "Our international operations
subject it to social, political and economic risks of doing business in
foreign countries" and "Our revenues and earnings may be adversely
affected by foreign currency fluctuations"; and

. potential lack of control over the disposition of any co-investments and
the timing of the recognition of gains, losses or potential incentive
participation fees.

We have invested in a number of non-core, e-commerce businesses and other
Internet-related real estate investments and may never realize a return on
these investments.

We have invested approximately $25.6 million in a number of non-core
e-commerce businesses and other Internet-related real estate investments. These
investments are highly speculative and may never generate any income. In
addition, we may lose all the money we have invested in these businesses. For
example in the second quarter, CB Richard Ellis Services wrote off its $2.9
million investment in Eziaz, which has recently declared bankruptcy. CB Richard
Ellis Services' write-off of Eziaz, and any other write-offs it may take in the
future, will adversely affect our results of operations.

We may incur liabilities related to our subsidiaries being general partners of
numerous general and limited partnerships.

We have subsidiaries that are general partners in numerous general and
limited partnerships that invest in or manage real estate assets in connection
with our co-investments. Any subsidiary that is a general partner is
potentially liable to its partners and for the obligations of its partnership,
including those obligations related to environmental contamination of
properties owned or managed by the partnership. If our exposure as a general
partner is not limited, or if our exposure as a general partner expands in the
future, any resulting losses may harm our business, financial condition or
results of operations. We own our general partnership interests through
special-purpose subsidiaries. We believe this structure will limit our exposure
to the total amount we have invested in and the amount of notes from, or
advances and commitments to, these special-purpose subsidiaries. However, this
limited exposure may be expanded in the future based upon, among other things,
changes in our operating practices, changes in applicable laws or the
application of additional laws to our business.

Our joint venture activities involve unique risks that are often outside of our
control and, if realized, could harm our business.

We have utilized joint ventures for large commercial investments,
initiatives in Internet-related technology and local brokerage partnerships. In
the future, we may acquire interests in additional limited and general
partnerships and other joint ventures formed to own or develop real property or
interests in real property. We have acquired and may acquire minority interests
in joint ventures, and we may also acquire interests as a passive investor
without rights to actively participate in the management of the joint ventures.
Investments in joint ventures involve additional risks, including the
following:

. the other participants may become bankrupt or have economic or other
business interests or goals which are inconsistent with our interests or
goals; and

. we may not have the right or power to direct the management and policies
of the joint ventures, and other participants may take action contrary
to our instructions or requests and against our policies and objectives.

If a joint venture participant acts contrary to our interest, it could harm
our business, results of operations and financial condition.

Our success depends upon the retention of our senior management, as well as our
ability to attract and retain qualified and experienced employees.

Our success is highly dependent upon the efforts of our executive officers
and key employees. The only members of our senior management who are parties to
employment agreements with us are Raymond Wirta, our Chief Executive Officer,
and Brett White, our President. If either of Messrs. Wirta or White leaves or
his services otherwise become unavailable to us, our business and results of
operations may suffer.

In addition, as a decentralized, global commercial real estate services
firm, we rely to a considerable extent on the quality of local management and
the reputation of our employees in the various countries in which we operate.
If we fail to attract and retain key personnel in the foreign countries in
which we operate, particularly in those foreign countries where we have a
limited operating history and brand recognition, our growth may be limited, and
our business and operating results could suffer.

If we fail to comply with laws and regulations applicable to real estate
brokerage and mortgage transactions and other segments of our business, we may
incur significant financial penalties.

Due to the broad geographic scope of our operations and the numerous forms
of real estate services we perform, we are subject to numerous federal, state
and local laws and regulations specific to the services we perform. For
example, our brokerage of real estate sales and leasing transactions requires
us to maintain

brokerage licenses in each state in which we operate. If we fail to maintain
our license or conduct brokerage activities without a license, we may be
required to pay fines, return commissions received or have our license
suspended. In addition, because the size and scope of real estate sale
transactions have increased significantly during the past several years, both
the difficulty of ensuring compliance with the numerous state licensing regimes
and the possible loss resulting from non-compliance have increased. In the
future, the laws and regulations applicable to our business, both in the United
States and in foreign countries, also may change in ways that materially
increase our costs of compliance.

We may have liabilities in connection with real estate brokerage and property
management activities.

As a licensed real estate broker, we and our licensed employees are subject
to statutory due diligence, disclosure and standard-of-care obligations in
connection with brokerage transactions. Failure to fulfill these obligations
could subject us or our employees to litigation from parties who purchased,
sold or leased properties that we brokered or managed. We may become subject to
claims by participants in real estate transactions claiming that we did not
fulfill our statutory obligations as a broker.

In addition, in our property management business, we hire and supervise
third party contractors to provide construction and engineering services for
our properties. While our role generally is limited to that of a supervisor, we
may be subjected to claims for construction defects or other similar actions.
Adverse outcomes of property management litigation could negatively impact our
business, financial condition and results of operations.

Risks relating to the exchange notes

Servicing CBRE Holding's and CB Richard Ellis Services' indebtedness requires a
significant amount of cash, and CBRE Holding's and CB Richard Ellis Services'
ability to generate cash depends on many factors beyond their control.

CBRE Holding and CB Richard Ellis Services expect to obtain from the
operations of CB Richard Ellis Services the cash necessary to make payments on
the outstanding notes and the exchange notes, the senior secured credit
facilities and the 16% senior notes due 2011 issued by CBRE Holding and to fund
CB Richard Ellis Services' working capital, strategic acquisitions,
investments, joint ventures and other general corporate requirements. Our
ability to generate cash from our operations is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control. As a result, we cannot assure you that our business will
generate sufficient cash flow from operations, that we will realize currently
anticipated cost savings, revenue growth and operating improvements on schedule
or at all, or that future borrowings will be available to us under our
revolving credit facility, in each case, in amounts sufficient to enable us to
service CB Richard Ellis Services' and CBRE Holding's debt and to fund our
other liquidity needs. If CBRE Holding and CB Richard Ellis Services cannot
service their debt, they will have to take actions such as reducing or delaying
strategic acquisitions, investments and joint ventures, selling assets,
restructuring or refinancing their debt or seeking additional equity capital.
We cannot assure you that any of these remedies could, if necessary, be
effected on commercially reasonable terms, or at all. In addition, the terms of
existing or future debt instruments, including CB Richard Ellis Services' new
credit agreement, which is guaranteed by CBRE Holding, the indenture for the
outstanding notes and the exchange notes and the indenture for the 16% senior
notes due 2011 issued by CBRE Holding may restrict CBRE Holding and CB Richard
Ellis Services from adopting any of these alternatives. Therefore, because of
these and other factors beyond our control, we may be unable to pay the
principal, premium, if any, interest or other amounts on the outstanding notes
and the exchanges notes.

We conduct a substantial portion of our operations through our subsidiaries and
may be limited in our ability to access funds from these subsidiaries to
service our debt, including the outstanding notes and the exchange notes.

We conduct a substantial portion of our operations through our subsidiaries
and depend to a large degree upon dividends and other intercompany transfers of
funds from our subsidiaries to meet our debt service and

other obligations, including the outstanding notes and the exchange notes. Our
subsidiaries do not have any obligation to pay amounts due on the notes or to
make funds available to us for these payments, unless they are guarantors of
the outstanding notes or the exchange notes. In addition, the ability of our
subsidiaries to pay dividends and make other payments to us may be restricted
by, among other things, applicable corporate and other laws, transfer pricing
regulations, limitations on imports, currency exchange control regulations,
potentially adverse tax consequences and agreements of our subsidiaries.
Although the indenture governing the outstanding notes and the exchange notes
and the indenture governing the 16% senior notes due 2011 issued by CBRE
Holding limit the ability of our subsidiaries to enter into consensual
restrictions on their ability to pay dividends and make other payments, the
limitations are subject to a number of significant qualifications and
exceptions. See "Description of the Notes--Certain Covenants--Limitation on
Restrictions on Distributions from Restricted Subsidiaries."

If we fail to meet our payment or other obligations under the new credit
agreement, the lenders under the credit agreement could foreclose on, and
acquire control of, substantially all of our assets.

In connection with the incurrence of indebtedness under the new credit
agreement, upon the closing of the merger and related transactions, the lenders
under the new credit agreement received a pledge of all of the equity interests
of CB Richard Ellis Services and its significant domestic subsidiaries,
including CB Richard Ellis, Inc., CBRE Investors, L.L.C. and L.J. Melody &
Company, and 65% of the voting stock of CB Richard Ellis Services' foreign
subsidiaries that is held directly by it or its domestic subsidiaries.
Additionally, these lenders generally have a lien on substantially all of CB
Richard Ellis Services' accounts receivables, cash, general intangibles,
investment property and future acquired material property. As a result of these
pledges and liens, if CB Richard Ellis Services fails to meet its payment or
other obligations under the new credit agreement, the lenders under the credit
agreement would be entitled to foreclose on substantially all of its assets and
liquidate these assets. Under those circumstances, we may not have sufficient
funds to pay principal, premium, if any, and interest on the outstanding notes
and the exchange notes. As a result, the holders of the outstanding notes and
the exchange notes may lose a portion of, or the entire value of, their
investment.

The indenture governing the notes, the new credit agreement and the indenture
governing the 16% senior notes due 2011 issued by CBRE Holding impose
significant operating and financial restrictions on us, and in the event of a
default, all of these borrowings would become immediately due and payable.

The indenture governing the outstanding notes and the exchange notes and the
indenture for the 16% senior notes due 2011 issued by CBRE Holding impose, and
the terms of any future debt may impose, operating and other restrictions on
CBRE Holding and CB Richard Ellis Services and many of their subsidiaries.
These restrictions will affect, and in many respects will limit or prohibit
their and their restricted subsidiaries' ability to:

. incur or guarantee additional debt;

. pay dividends or distributions on capital stock;

. repurchase equity interests;

. make investments;

. create restrictions on the payment of dividends or other amounts to us;

. sell or otherwise dispose of assets, including capital stock of
subsidiaries;

. create liens;

. enter into transactions with affiliates; and

. enter into mergers or consolidations.

In addition, the new credit agreement includes other and more restrictive
covenants and prohibits CB Richard Ellis Services from prepaying most of its
other debt while debt under the credit agreement is

outstanding. The new credit agreement also requires CB Richard Ellis Services
to maintain compliance with specified financial ratios. CB Richard Ellis
Services' ability to comply with these ratios may be affected by events beyond
its control.

The restrictions contained in the indentures and the credit agreement could:

. limit CBRE Holdings' and CB Richard Ellis Services' ability to plan for
or react to market conditions or meet capital needs or otherwise
restrict their activities or business plans; and

. adversely affect CBRE Holdings' and CB Richard Ellis Services' ability
to finance their operations, strategic acquisitions, investments or
alliances or other capital needs or to engage in other business
activities that would be in their interest.

A breach of any of these restrictive covenants or the inability to comply
with the required financial ratios could result in a default under the
indenture governing the outstanding notes and the exchange notes, the new
credit agreement and the indenture governing the 16% senior notes due 2011 of
CBRE Holding. If any such default occurs, the lenders under the credit
agreement and the holders of the outstanding notes and the exchange notes and
CBRE Holding's 16% senior notes due 2011, pursuant to the respective
indentures, may elect to declare all outstanding borrowings, together with
accrued interest and other fees, to be immediately due and payable. The lenders
under the credit agreement also have the right in these circumstances to
terminate any commitments they have to provide further borrowings. If CB
Richard Ellis Services is unable to repay outstanding borrowings when due, the
lenders under the credit agreement will have the right to proceed against the
collateral granted to them to secure the debt, which includes CB Richard Ellis
Services' available cash. If the debt under the credit agreement, the
outstanding notes and the exchange notes and the 16% senior notes due 2011 of
CBRE Holding were to be accelerated, we cannot assure you that our assets would
be sufficient to repay in full the outstanding notes and the exchange notes and
our other debt.

The outstanding notes and the exchange notes are contractually junior in right
of payment to our senior debt and the guarantees will be contractually junior
to all senior indebtedness of the guarantors.

The notes are contractually junior in right of payment to all of our senior
indebtedness and the guarantees of the notes are contractually junior in right
of payment to all senior indebtedness of the guarantors. As of June 30, 2001,
on a pro forma basis after giving effect to the merger and related
transactions, CB Richard Ellis Services, excluding its subsidiaries, would have
had approximately $276.5 million of senior indebtedness, consisting of $275.0
million of indebtedness under the new senior credit facilities and $1.5 million
of other indebtedness; CBRE Holding would have had approximately $340 million
of senior indebtedness, consisting of $65.0 million of CBRE Holding's 16%
senior notes due 2011 and $275.0 million of CBRE Holding's guarantee of the new
credit facilities; and the subsidiary guarantors would have had approximately
$293.1 million of senior indebtedness, consisting of $18.1 million in various
notes issued in connection with acquisitions and capital lease obligations and
$275.0 million of their guarantees of our indebtedness under the new credit
facilities.

CB Richard Ellis Services may not pay principal, premium, if any, interest
or other amounts on the outstanding notes and the exchange notes in the event
of a payment default in respect of certain senior indebtedness, including debt
under the new credit agreement, unless the indebtedness has been paid in full
in cash or the default has been cured or waived. In addition, if certain other
defaults regarding CB Richard Ellis Services' senior indebtedness occur, CB
Richard Ellis Services may not be permitted to pay any amount on the
outstanding notes and the exchange notes and its subsidiary guarantors may not
be permitted to pay any amount on the subsidiary guarantees for a designated
period of time. If CB Richard Ellis Services is, or any of the subsidiary
guarantors is, declared bankrupt or insolvent, or if there is a payment default
under, or an acceleration of, any senior indebtedness, CB Richard Ellis
Services is required to pay the lenders under the new credit agreement and any
other creditors who are holders of senior indebtedness in full before CB
Richard Ellis Services applies any of its assets to pay you. Accordingly, CB
Richard Ellis Services may not have enough assets remaining after payments to
holders of its senior indebtedness to pay you.

We may not have the ability to raise the funds necessary to finance a change of
control offer.

Upon the occurrence of certain specific kinds of change of control events
described in the section of this prospectus captioned "Description of the
Notes--Change of Control," we are required to offer to purchase the outstanding
notes and the exchange notes plus accrued and unpaid interest, if any, to the
date of purchase. If a change of control were to occur, we cannot assure you
that we would have sufficient funds to pay the purchase price of the
outstanding notes and the exchange notes, and we expect that we would require
third party financing to do so. We cannot assure you that we would be able to
obtain this financing on favorable terms, if at all. In the event of a
specified kind of change of control, due to specified restrictions in the new
credit agreement, we may have to offer to repay all borrowings under the new
credit agreement or obtain the consent of our lenders under the new credit
agreement to purchase the notes. If we do not obtain such consent or repay such
borrowings, we may be prohibited from purchasing outstanding notes and exchange
notes. In such case, our failure to purchase tendered notes would constitute a
default under the indenture governing the notes, which, in turn, would
constitute a default under the new credit agreement. Accordingly, we cannot
assure you that we will have the financial ability to purchase outstanding
notes and the exchange notes upon the occurrence of a change of control event.

In the event of the bankruptcy or insolvency of any of the subsidiary
guarantors, the subsidiary guarantees of the outstanding notes and exchange
notes could be voided under fraudulent conveyance statutes.

In the event of the bankruptcy or insolvency of any of the subsidiary
guarantors, the subsidiary guarantee of that guarantor would be subject to
review under relevant fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
that guarantor. Under those statutes, if a court were to find that the
subsidiary guarantee was incurred with the intent of hindering, delaying or
defrauding creditors or that the subsidiary guarantor received less than a
reasonably equivalent value or fair consideration for the guarantee and, at the
time of its incurrence, the subsidiary guarantor either:

. was insolvent or rendered insolvent by reason of the guarantee;

. was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital; or

. intended to, or believed that it would, incur debts beyond its ability
to pay as they matured or became due,

then the court could void those obligations.

The measure of insolvency for purposes of a fraudulent conveyance claim will
vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent at a particular time if the sum
of its debts at that time is greater than the then fair value of its assets or
if the fair salable value of its assets at the time is less than the amount
that would be required to pay its probable liability on its existing debts as
they become absolute and mature. We believe that, after giving effect to the
offering of the outstanding notes and the incurrence of the subsidiary
guarantees in connection with the consummation of the merger and related
transactions, each of the subsidiary guarantors was:

. neither insolvent nor rendered insolvent by the incurrence of its
guarantee of the outstanding notes and the exchange notes;

. in possession of sufficient capital to run its business effectively; and

. incurring debts within its ability to pay as the same mature or become
due.

The assumptions and methodologies used by us in reaching our conclusions
about our solvency and the solvency of the subsidiary guarantors may not be
adopted by a court, however, and a court may not concur with these conclusions.
In the event the subsidiary guarantee of the outstanding notes and the exchange
notes by a subsidiary guarantor is voided as a fraudulent conveyance, holders
of the outstanding notes and the exchange notes would effectively be
subordinated to all indebtedness and other liabilities of that guarantor.

The outstanding notes have not been, and the exchange notes will not be,
guaranteed by all of our subsidiaries.

The outstanding notes have not been, and the exchange notes will not be,
guaranteed by a number of our subsidiaries. As a result, if we default on our
obligation under the notes, you will not have any claims against any of our
subsidiaries that do not provide guarantees of the outstanding notes and the
exchange notes. For the year ended December 31, 2000, revenues of our
non-guarantor subsidiaries constituted approximately 22.4% of our consolidated
revenues, operating income of such subsidiaries was $6.4 million and EBITDA of
such subsidiaries was $23.0 million. As of December 31, 2000, the total assets
of such subsidiaries constituted approximately 40.0% of our consolidated total
assets, and the liabilities of such subsidiaries were $199.4 million. For the
six months ended June 30, 2001, revenues of our non-guarantor subsidiaries
constituted approximately 23.2% of our consolidated revenues, operating loss of
such subsidiaries was $7.4 million and EBITDA of such subsidiaries was $0.3
million. As of June 30, 2001, the total assets of such subsidiaries constituted
approximately 38% of our consolidated total assets, and the liabilities of such
subsidiaries were $179.9 million.

We cannot assure you that an active trading market will develop for the
exchange notes.

We do not intend to apply for a listing of the exchange notes on a
securities exchange. There is currently no established market for the exchange
notes and we cannot assure you as to:

. the liquidity of any market that may develop for the exchange notes;

. the ability of holders of exchange notes to sell their exchange notes;
and

. the price at which holders of exchange notes will be able to sell their
exchange notes.

Although the initial purchasers of the outstanding notes have advised us
that they intend to make a market for the exchange notes, the initial
purchasers are not obligated to do so, and may discontinue their market making
at any time without notice to the holders of the exchange notes. In addition,
market making activity may be limited during the pendency of the exchange offer
or the effectiveness of a shelf registration statement. Accordingly, we cannot
assure you as to the development or liquidity of any market for the exchange
notes. If a market for the exchange notes does develop, prevailing interest
rates, the markets for similar securities and other factors could cause the
exchange notes to trade at prices lower than their initial market values or
reduce the liquidity of the exchange notes.

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933. The words "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "plan," "predict," "project,"
"will" and similar terms and phrases are used in this prospectus to identify
forward-looking statements. Forward-looking statements included in this
prospectus include, but are not limited to, statements under the headings
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" regarding our
future financial conditions, prospects, developments and business strategies.
These forward-looking statements relate to analyses and other information that
are based on forecasts of future results and estimates of amounts not yet
determinable and also relate to their future prospects, developments and
business strategies. For the forward-looking statements included in this
prospectus, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are made based on management's expectations
and beliefs concerning future events affecting us and are subject to
uncertainties and factors relating to their operations and business
environment, all of which are difficult to predict and many of which are beyond
their control, that could cause their actual results to differ materially from
those expressed in or implied by these forward-looking statements.

The following factors are among those that may cause our actual results to
differ materially from the forward-looking statements:

. changes in general economic and business conditions, including those
directly and indirectly related to the terrorist attacks in New York
City and at the Pentagon on September 11, 2001;

. the failure of properties managed by us to perform as anticipated;

. competition;

. changes in social, political and economic conditions in the countries in
which we operate;

. foreign currency fluctuations;

. our ability to manage our growth and integrate our decentralized
businesses;

. our ability to reduce operating expenses;

. an economic downturn in real estate markets across the world,
particularly in California;

. acquisitions;

. our co-investment activities;

. our joint venture activities;

. our investments in e-commerce initiatives;

. our ability to retain senior management and other qualified and
experienced employees in the many countries in which they operate;

. our ability to comply with the laws and regulations applicable to real
estate brokerage and mortgage transactions; and

. significant litigation.

All of the forward-looking statements should be considered in light of these
factors. We do not undertake any obligation to update the forward-looking
statements or risk factors contained in this prospectus to reflect new
information, future events or otherwise, except as required by law.

USE OF PROCEEDS

CB Richard Ellis Services, CBRE Holding and the other guarantors of the
outstanding notes will not receive any cash proceeds from the issuance of the
exchange notes. In consideration for issuing the exchange notes as contemplated
in this prospectus, CB Richard Ellis Services will receive in exchange a like
principal amount of outstanding notes, the terms of which are identical in all
material respects to the exchange notes. The outstanding notes surrendered in
exchange for the exchange notes will be retired and canceled and cannot be
reissued. Accordingly, issuance of the exchange notes will not result in any
change in our capitalization.

BLUM CB Corp. received net proceeds of approximately $218.6 million from the
sale of the outstanding notes, after deducting discounts, commissions and other
expenses of the offering of the outstanding notes. The net proceeds from the
outstanding notes, which were received by CB Richard Ellis Services in
connection with the merger, together with cash, borrowings under our new credit
agreement, the proceeds from the 16% senior notes due 2011 issued by CBRE
Holding and the proceeds from the sale of CBRE Holding common equity were used:

. to pay the holders of CB Richard Ellis Services' common stock
immediately prior to the merger, other than the members of the buying
group, consideration of $16.00 per share in the merger;

. to refinance substantially all of CB Richard Ellis Services' outstanding
indebtedness prior to the merger;

. to pay fees and expenses associated with the merger and related
transactions; and

. for working capital and other general corporate purposes.

CAPITALIZATION

The following table sets forth the cash and cash equivalents and
capitalization of CB Richard Ellis Services and CBRE Holding as of June 30,
2001:

. on an actual basis; and

. on a pro forma as adjusted basis to reflect the completion of the merger
and related transactions.

As of June 30, 2001
------------------------------------------------
Actual Pro Forma As Adjusted
----------------------- -----------------------
CB Richard CBRE CB Richard CBRE
Ellis Services Holding Ellis Services Holding
-------------- -------- -------------- --------
(in thousands, except share data)

Cash and cash equivalents.................................. $ 18,548 $229,499 $ 31,278 $ 31,278
-------- -------- -------- --------
Current maturities of long-term debt and short-term
borrowings............................................... 13,146 -- 62,496 62,496
Long-term debt, excluding current portion.................. 416,472 225,642 469,306 525,956
-------- -------- -------- --------
Stockholders' equity:
Preferred stock, $0.01 par value; 8,000,000 shares
authorized; no shares issued or outstanding, actual;
6,250,000 shares issued and outstanding, pro forma as
adjusted.............................................. -- -- 63 --
Class A common stock; $0.01 par value; 75,000,000
shares authorized; no shares issued or outstanding,
actual; 1,742,477 shares issued and outstanding,
pro forma as adjusted................................. -- -- -- 17
Class B common stock; $0.01 par value; 25,000,000
authorized; 241,885 shares issued and outstanding,
actual; 12,649,813 shares issued and outstanding,
pro forma as adjusted................................. -- 2 -- 127
Common stock, $0.01 par value; 100,000,000 shares
authorized; 20,636,051 shares issued and outstanding,
actual; 11,540,755 shares issued and outstanding,
pro forma as adjusted................................. 218 -- 115 --
Additional paid-in capital................................. 367,685 3,868 297,572 243,231
Notes receivable from sale of stock........................ (11,636) -- -- --
Accumulated deficit........................................ (93,464) (730) -- (730)
Accumulated other comprehensive loss....................... (19,328) -- -- --
Treasury stock, at cost.................................... (15,844) -- -- --
-------- -------- -------- --------
Total stockholders' equity.............................. 227,631 3,140 297,750 242,645
-------- -------- -------- --------
Total capitalization................................ $657,249 $228,782 $829,552 $831,097
======== ======== ======== ========

THE MERGER AND RELATED TRANSACTIONS

The Merger

The outstanding notes were offered in connection with the proposed merger of
CBRE Holding's wholly-owned subsidiary, BLUM CB Corp., with and into CB Richard
Ellis Services, which occurred on July 20, 2001. Pursuant to an amended and
restated merger agreement, CB Richard Ellis Services' stockholders at the time
of the merger, other than the buying group described below who received shares
of CBRE Holding Class B common stock instead, received $16.00 in cash for each
share of CB Richard Ellis Services common stock that they owned. As a result of
the merger, all of CB Richard Ellis Services' outstanding common and preferred
stock is owned by CBRE Holding, and CB Richard Ellis Services' common stock was
delisted from the New York Stock Exchange.

Equity Financings

Immediately prior to the merger, pursuant to an amended and restated
contribution and voting agreement, each of the following persons, which we
refer to together as the "buying group," contributed to CBRE Holding all of the
shares of CB Richard Ellis common stock that he or it directly owned:

. Raymond Wirta, who became a director and Chief Executive Officer of both
CBRE Holding and CB Richard Ellis Services in connection with the
merger;

. Brett White, who became a director and President of both CBRE Holding
and CB Richard Ellis Services in connection with the merger;

. The Koll Holding Company, which is controlled by Donald Koll, who was a
director of CB Richard Ellis Services prior to the merger; and

. Frederic Malek, who became a director of both CBRE Holding and CB
Richard Ellis Services in connection with the merger.

Each of these shares was cancelled as a result of the merger. CBRE Holding
issued one share of its Class B common stock in exchange for each share of CB
Richard Ellis Services common stock contributed to it. This resulted in the
issuance to the buying group of an aggregate of 7,967,774 shares of CBRE
Holding Class B common stock in exchange for the contributions. Also pursuant
to the contribution and voting agreement, immediately prior to the merger, RCBA
Strategic Partners, L.P. and Blum Strategic Partners, II, L.P. purchased with
cash in the aggregate 4,435,154 shares of CBRE Holding Class B common stock,
Raymond Wirta purchased by delivery of a promissory note 5,000 shares of CBRE
Holding Class B common stock and California Public Employees' Retirement
System, or CalPERS, purchased with cash 625,000 shares of CBRE Holding Class A
common stock, in each case for a price of $16.00 per share.

In connection with the merger, CBRE Holding sold an aggregate of 1,768,791
shares of its Class A common stock and shares underlying stock fund units in CB
Richard Ellis Services' deferred compensation plan to CB Richard Ellis
Services' employees and independent contractors at a price of $16.00 per share.
Also in connection with the merger, CBRE Holding granted 1,508,057 options to
acquire shares of its Class A common stock to designated managers of CB Richard
Ellis Services. The offering of the shares of Class A common stock and the
options to acquire shares of Class A common stock was made pursuant to an
effective registration

statement under the Securities Act of 1933. Each of the employees who purchased
shares of CBRE Holding Class A common stock entered into a subscription
agreement that contains restrictions on the transfer of the shares, co-sale and
required sale rights applicable in connection with transactions involving the
shares and participation rights regarding future equity issuances. Holders of
the Class A common stock are generally entitled to one vote per share on all
matters submitted to stockholders of CBRE Holding, while holders of the Class B
common stock of CBRE Holding generally are entitled to ten votes per share on
all matters submitted to stockholders of CBRE Holding. The rights of the Class
A and Class B common stock are substantially the same in all other respects.

Debt Financings

In connection with the merger, CB Richard Ellis Services entered into a new
senior secured credit agreement with Credit Suisse First Boston and other
lenders to borrow $235.0 million in term loans. This credit agreement also
included a $90.0 million revolving credit facility to finance CB Richard Ellis
Services' working capital requirements, $10.0 million of which was drawn upon
as of September 10, 2001. Also in connection with the merger, CB Richard Ellis
Services assumed the $229.0 million in aggregate principal amount of the
outstanding notes, which were issued and sold by BLUM CB Corp. for
approximately $225.6 million on June 7, 2001. In addition, CBRE Holding issued
and sold to DLJ Investment Funding, Inc. and other purchasers 65,000 units,
which consisted in the aggregate of $65.0 million in aggregate principal amount
of its 16% senior notes due 2011 and 339,820 shares of its Class A common
stock, for an aggregate price of $65.0 million. For additional information
regarding the indebtedness CBRE Holding and CB Richard Ellis Services incurred
and assumed in connection with the merger, you should read the sections of this
prospectus titled "Description of the Notes" and "Description of Other
Indebtedness."

The proceeds from the offering by BLUM CB Corp. of the outstanding notes,
the offering by CBRE Holding of its 16% senior notes due 2011 and related
shares of CBRE Holding Class A common stock, the offerings to CB Richard Ellis
Services' employees and independent contractors of CBRE Holding Class A common
stock and the purchase of CBRE Holding Class B and Class A common stock by RCBA
Strategic Partners, L.P., Blum Strategic Partners II, L.P., Raymond Wirta and
CalPERS, together with CB Richard Ellis Services' borrowings under the new
credit agreement, were used (1) to pay the holders of CB Richard Ellis Services
common stock immediately prior to the merger, other than the members of the
buying group, consideration of $16.00 per share in the merger, (2) to refinance
substantially all of CB Richard Ellis Services' former indebtedness, (3) to pay
fees and expenses associated with the merger and related transactions and (4)
for working capital and other general corporate purposes. For additional
information regarding the use of proceeds received in the offering of the
outstanding notes, you should read the section of this prospectus titled "Use
of Proceeds."

UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

CB Richard Ellis Services

The following unaudited pro forma combined balance sheet and the unaudited
pro forma combined statements of operations are based on the historical
consolidated financial statements of CB Richard Ellis Services and BLUM CB
Corp., a wholly owned subsidiary of CBRE Holding, included elsewhere in this
prospectus, as adjusted to give effect to the merger and related transactions
as if they had occurred as of June 30, 2001 in the unaudited pro forma combined
balance sheet and as of January 1, 2000 in the unaudited pro forma combined
statements of operations for the year ended December 31, 2000 and the six
months ended June 30, 2001.

The pro forma adjustments are based upon currently available information and
upon assumptions that our management believes are reasonable. Prior to the
merger and related transactions, RCBA Strategic Partners, L.P. directly owned
2,345,900 shares of outstanding common stock of CB Richard Ellis Services,
which represented approximately 11.5% of CB Richard Ellis Services' outstanding
common stock prior to the merger and related transactions. A group of
investment partnerships and funds, which are related to the general partner of
RCBA Strategic Partners, directly owned 1,077,986 shares of outstanding common
stock of CB Richard Ellis Services, which represented approximately 5.3% of CB
Richard Ellis Services' outstanding common stock prior to the merger and
related transactions. Neither RCBA Strategic Partners nor its general partner
controls these related investment partnerships and funds. Additionally, other
members of the buying group directly owned 4,543,888 shares of outstanding
common stock of CB Richard Ellis Services, which represented approximately
22.3% of CB Richard Ellis Services' outstanding common stock prior to the
merger and related transactions. Therefore, the total combined ownership of
RCBA Strategic Partners, the investment partnerships and funds related to the
general partner of RCBA Strategic Partners and the other members of the buying
group was 7,967,774 shares of outstanding common stock of CB Richard Ellis
Services, or approximately 39.1% of the outstanding common stock prior to the
merger and related transactions. Accordingly, neither RCBA Strategic Partners,
any of the investment partnerships of funds related to the general partner of
RCBA Strategic Partners, any member of the buying group nor any combination of
them controlled CB Richard Ellis Services prior to the merger and related
transactions.

Prior to the merger and related transactions, RCBA Strategic Partners
controlled CBRE Holding through its ownership of 100% of all issued and
outstanding common stock of CBRE Holding. In connection with the merger, Blum
Strategic Partners II, L.P. acquired shares of the outstanding common stock of
CBRE Holding. Blum Strategic Partners II, L.P. is related to the general
partner of RCBA Strategic Partners. Neither RCBA Strategic Partners nor its
general partner controls Blum Strategic Partners II. RCBA Strategic Partners
controls CBRE Holding after completion of the merger and related transactions.
Subsequent to the merger and related transactions, RCBA Strategic Partners has
the right to:

. appoint a majority of the board of directors of CBRE Holding; and

. directly and indirectly control approximately 76.3% of the voting power
of CBRE Holding through the securityholders' agreement entered into with
the other members of the buying group and other stockholders of CBRE
Holding; the other members of the buying group, except for Blum
Strategic Partners II, generally are required to vote their shares of
CBRE Holding common stock in a manner consistent with how RCBA Strategic
Partners votes on matters that are subject to a vote by the stockholders
of CBRE Holding.

Although the other members of the buying group have rights defined in the
securityholders' agreement, management believes that these rights are
consistent with the protective rights defined in EITF 96-16 and do not overcome
the presumption of RCBA Strategic Partners' control over CBRE Holding.

After the merger and related transactions, CB Richard Ellis Services became
a wholly owned subsidiary of CBRE Holding. The purchase accounting adjustments
of CBRE Holding have been recorded in the accompanying unaudited pro forma
financial statements of CB Richard Ellis Services through push down

accounting. However, the $65 million in aggregate principal amount of 16%
senior notes issued by CBRE Holding has not been pushed down to the
accompanying unaudited pro forma financial statements as this debt is an
obligation of CBRE Holding and is not guaranteed by CB Richard Ellis Services.
The net proceeds from the senior notes were contributed to CB Richard Ellis
Services and are included in the accompanying unaudited pro forma financial
statements as equity. The 2,345,900 shares of outstanding common stock of CB
Richard Ellis Services owned by RCBA Strategic Partners prior to the merger
that were contributed to CBRE Holding have been carried over at RCBA Strategic
Partners' book value. The basis of accounting for the shares of CB Richard
Ellis Services common stock acquired by CBRE Holding that were not directly
owned by RCBA Strategic Partners prior to the merger and related transactions
have been accounted for as a purchase transaction by CBRE Holding at a fair
value of $16.00 per share. As such, the merger has been accounted for as a step
acquisition in accordance with Accounting Principles Bulletin 16--"Accounting
for Business Combinations." The acquisition of unvested stock fund units in the
CB Richard Ellis Services deferred compensation plan has been accounted for in
accordance with FASB Interpretation Number 44, as discussed in note (n) to the
accompanying unaudited pro forma combined balance sheet. Management believes
the fair value of the acquired common stock and stock fund units is consistent
with the merger consideration of $16.00 per share. The adjustments included in
the unaudited pro forma financial statements represent the effects of CB
Richard Ellis Services' preliminary determination and allocation of the
purchase price to the fair value of the assets and liabilities acquired, based
upon currently available information. We cannot assure you that the actual
effects will not differ significantly from the pro forma adjustments reflected
in these unaudited pro forma financial statements.

The unaudited pro forma financial statements are not necessarily indicative
of either future results of operations or results that might have been achieved
if the merger and related transactions had been consummated as of the dates
indicated. The unaudited pro forma financial statements should be read in
conjunction with the historical consolidated financial statements and related
notes of CBRE Holding and CB Richard Ellis Services, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.

CB Richard Ellis Services, Inc. and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet as of June 30, 2001
(in thousands, except share data)

As of June 30, 2001
-----------------------------------------------------
CB Richard BLUM CB Pro Forma Pro Forma
Ellis Services Corp. Adjustments Combined
-------------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

ASSETS
Current assets:
Cash and cash equivalents......................... $ 18,548 $229,499 $ 153,600 (a) $ 31,278
(2,707)(b)
(198,305)(c)
235,000 (d)
40,000 (e)
(400,000)(f)
(13,850)(g)
(13,806)(h)
(16,701)(i)
Receivables, less allowance for doubtful accounts
of $11,993...................................... 149,811 149,811
Prepaid expenses.................................. 9,693 9,693
Deferred taxes, net............................... 13,023 13,023
Other current assets(n)........................... 9,132 1,045 1,841 (a) 12,018
-------- -------- --------- ----------
Total current assets.......................... 200,207 230,544 (214,928) 215,823
-------- -------- --------- ----------
Property and equipment, net.......................... 77,590 (7,622)(j) 69,968
Goodwill, net(n)..................................... 412,379 132,526 (a)
205,068 (c)
1,542 (f)
13,850 (g)
16,701 (i)
62,102 (j)
(227,631)(k)
(33,449)(l)
3,495 (m) 586,583
Other intangible assets, net......................... 42,526 (7,619)(j) 34,907
Cash surrender value of insurance policies, deferred
compensation plan.................................. 69,508 (2,344)(a)
6,950 (c) 74,114
Investment in and advances to unconsolidated
subsidiaries....................................... 43,064 (6,972)(j) 36,092
Deferred taxes, net.................................. 35,305 24,442 (l) 59,747
Prepaid pension costs................................ 24,089 (10,401)(j) 13,688
Other assets(n)...................................... 42,131 7,724 2,041 (a)
4,602 (a)
2,707 (b)
(4,101)(c)
13,806 (h)
(21,943)(j) 46,967
-------- -------- --------- ----------
Total assets.................................. $946,799 $238,268 $ (47,178) $1,137,889
======== ======== ========= ==========

CB Richard Ellis Services, Inc. and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet as of June 30, 2001
(in thousands, except share data)

As of June 30, 2001
-------------------------------------------------------
CB Richard BLUM CB Pro Forma Pro Forma
Ellis Services Corp. Adjustments Combined
-------------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........................ $ 68,929 $ 9,486 $ 3,495 (m) $ 81,910
Compensation and employee benefits........................... 64,291 64,291
Accrued bonus and profit sharing............................. 31,049 31,049
Income taxes payable......................................... 6,377 (9,007)(l) (2,630)
Short-term borrowings (p).................................... 12,017 40,000 (e) 52,017
Current maturities of long-term debt (p)..................... 1,129 9,350 (d) 10,479
-------- -------- --------- ----------
Total current liabilities................................. 183,792 9,486 43,838 237,116
Long-term debt:
8 7/8% senior subordinated notes, net of unamortized
discount of $1,542 as of June 30, 2001...................... 173,458 (173,458)(f) --
Revolving credit facility.................................... 225,000 (225,000)(f) --
11 1/4% senior subordinated notes, net of unamortized
discount of $3,358 as of June 30, 2001...................... 225,642 (225,642)(o)
225,642 (o) 225,642
Senior secured term loans.................................... 225,650 (d) 225,650
Other long-term debt......................................... 18,014 18,014
-------- -------- --------- ----------
Total long-term debt (p).................................. 416,472 225,642 (172,808) 469,306
Deferred compensation liability.............................. 87,680 (2,344)(a)
9,612 (c) 94,948
Other liabilities................................................ 28,407 7,545 (j) 35,952
-------- -------- --------- ----------
Total liabilities......................................... 716,351 235,128 (114,157) 837,322
Minority interest............................................ 2,817 2,817
Stockholders' equity:
Preferred stock, $0.01 par value; 8,000,000 shares
authorized; no shares issued or outstanding at June 30,
2001; 6,250,000 shares issued and outstanding at June 30,
2001 pro forma.............................................. -- 63 (a) 63
Common stock, $0.01 par value; 100,000,000 shares
authorized; 20,636,051 shares issued and outstanding at
June 30, 2001; 11,540,755 shares issued and outstanding
at June 30, 2001 pro forma.................................. 218 (218)(k) --
115 (a) 115
Common stock, $0.01 par value; 25,000,000 shares
authorized; 241,885 shares issued and outstanding at
June 30, 2001; no shares issued or outstanding pro forma.... -- 2 (2)(a) --
Additional paid-in capital................................... 367,685 3,868 293,704 (a)
(367,685)(k) 297,572
Notes receivable from sale of stock.......................... (11,636) 11,636 (k) --
Accumulated deficit.......................................... (93,464) (730) 94,194 (a)(k) --
Accumulated other comprehensive loss......................... (19,328) 19,328 (k) --
Treasury stock at cost, 1,072,155 shares at June 30, 2001.... (15,844) 15,844 (k) --
-------- -------- --------- ----------
Total stockholders' equity................................ 227,631 3,140 66,979 297,750
-------- -------- --------- ----------
Total liabilities and stockholders' equity............. $946,799 $238,268 $ (47,178) $1,137,889
======== ======== ========= ==========

Notes to Unaudited Pro Forma Combined Balance Sheet as of June 30, 2001

(a) An amount equal to $293.9 million represents equity contributions received
from CBRE Holding in exchange for 6,250,000 shares of preferred stock at
$16.00 per share and 11,298,870 shares of common stock at $16.00 per share.
This contribution included the net proceeds from CBRE Holding's issuance of
$65.0 million in aggregate principal amount of 16% senior notes due June
15, 2001, which solely CBRE Holding is obligated to repay. We have neither
guaranteed nor pledged any of our assets as collateral for the senior
notes, and we are not obligated to provide cash flow to CBRE Holding for
repayment of these notes. However, CBRE Holding has no substantive assets
or operations other than its investment in us to service this debt. As
such, CBRE Holding will rely on dividends on our preferred stock in order
to be able to meet any required principal and interest payments on the
senior notes. The $100 million in preferred stock carries a 16% cumulative
dividend per year.

Of the $293.9 million, $153.6 million was contributed in cash, $132.5
million was a non-cash contribution representing the value of CB Richard
Ellis Services common stock previously owned by members of the buying group
and the value of vested stock fund units in the CB Richard Ellis Services
deferred compensation plan, $2.0 million was contributed in exchange for
recourse notes from employees and $6.4 million was recorded as a deferred
compensation asset. The deferred compensation asset represents deferred
compensation plan value related to unvested stock fund units held in the CB
Richard Ellis Services deferred compensation plan that remained unvested
after the merger. See note (n) for further details. Approximately $2.3
million of cash contributions were received from designated managers who
elected to purchase new stock fund units in the deferred compensation plan
with their vested participant account funds invested in the insurance
investment options in the deferred compensation plan prior to the merger.
This resulted in a decrease to cash surrender value of insurance policies,
deferred compensation plan, with a corresponding decrease in the deferred
compensation plan liability.

(b) Represents a loan to The Koll Holding Company, which is an affiliate of
Donald Koll, in connection with the merger and related transactions. This
loan, which is secured by a pledge of shares of CBRE Holding Class B common
stock, replaced existing margin loans with a third party that were secured
by shares of CB Richard Ellis Services common stock prior to the merger.
The new loan is full-recourse, accrues interest at a rate of LIBOR plus
1.4%, compounds annually, is payable quarterly and has a stated maturity of
five years. The new loan will be replaced by a margin loan with a third
party when, if ever, CBRE Holding common stock becomes freely tradable on a
national securities exchange or an over-the-counter market.

(c) The following reflects the purchase of CB Richard Ellis Services by CBRE
Holding which is comprised of the following:

. 20,393,450 shares of outstanding common stock of CB Richard Ellis
Services at $16.00 per share (net of treasury stock), less the 7,967,774
shares of common stock owned by members of the buying group that were
contributed to CBRE Holding in exchange for Class B common stock of CBRE
Holding.

. 1,693,424 stock fund units, each consisting of one underlying share of
common stock of CB Richard Ellis Services, in the deferred compensation
plan at $16.00 per unit, less 812,743 unvested stock fund units that
were automatically converted so that the underlying shares became shares
of CBRE Holding Class A common stock and 221,516 vested stock fund units
that employees elected to convert into stock fund units with underlying
CBRE Holding Class A common stock.

. 2,613,663 options to acquire common stock of CB Richard Ellis Services.

The entries to record the cash portion of the purchase price is calculated
as follows:

Increase in Increase in
Increase Cash Surrender Deferred
Decrease in in Value of Insurance Decrease in Compensation
Cash Goodwill Policies, DCP Other Assets Liability
----------- -------- ------------------ ------------ ------------
(in thousands, except share data)

Purchase of 12,425,676 shares of
CB Richard Ellis Services common
stock at $16.00 per share, net of the
repayment of $13.2 million in recourse
and non-recourse employee loans
secured by the common stock (1)........... $(185,578) $189,679 $ -- $(4,101) $ --
Purchase of 666,726 vested stock fund
units, each consisting of one underlying
share of CB Richard Ellis Services
common stock, at $16.00 per share......... (8,006) 10,668 6,950 -- 9,612
Purchase of 2,613,663 options to acquire
common stock of CB Richard Ellis
Services at the greater of intrinsic value
or $1.00 per option....................... (4,721) 4,721 -- -- --
--------- -------- ------ ------- ------
Total...................................... $(198,305) $205,068 $6,950 $(4,101) $9,612
========= ======== ====== ======= ======

-----
(1) Some members of management and highly compensated employees have
historically purchased shares of common stock of CB Richard Ellis
Services under various compensation plans at fair market value on the
date of grant. These purchases were made under the terms of the 1996
Equity Incentive Plan, the 1999 Equity Incentive Plan and the 1990
Stock Option Plan. Payment for a portion of the purchase price of these
shares was made by the employee using either a non-recourse loan
secured by the underlying CB Richard Ellis Services common stock issued
or a recourse loan secured by the underlying CB Richard Ellis Services
common stock issued and the personal assets of the participating
employee. Non-recourse loans were recorded as a reduction to equity,
while recourse loans were included as other assets in the historical
balance sheet of CB Richard Ellis Services. In conjunction with the
merger and related transactions, employees owning stock through these
plans with such secured loans received $16.00 per share in merger
consideration, less the per share equivalent of any unpaid principal,
plus accrued but unpaid interest, under such loans as of the date of
the merger.

(d) Represents the gross proceeds from CB Richard Ellis Services' borrowing
of $235.0 million in senior secured term loans. Current maturities of
long-term debt includes $9.4 million in principal payments due on the
senior secured term loans. The $235.0 million in senior secured term
loans is comprised of two separate facilities. The $50.0 million
Tranche A facility bears interest at the 3-month LIBOR plus 3.25%,
which was 6.36% as of September 17, 2001. The $50.0 million Tranche A
facility will be fully amortized by July 20, 2007 through quarterly
principal payments over 6 years. $7.5 million in total annual principal
payments will be due quarterly during the first two years of the loan,
and $8.75 million in total annual principal payments will be due
quarterly during years 3 through 6 of the loan. The $185.0 million
Tranche B facility bears interest at 3-month LIBOR plus 3.75%, which
was 6.86% as of September 17, 2001. The $185.0 million Tranche B
facility requires quarterly payments of principal of approximately
$462,500, with the remaining outstanding principal balance of $172.5
million due on July 20, 2008.

(e) Represents the gross proceeds from the draw down on the new $90.0
million revolving credit facility. The $90.0 million revolving credit
facility bears interest at 3 month LIBOR plus 3.25%, which was 6.36% as
of September 17, 2001 and matures on July 20, 2007. Under the terms of
the credit agreement, no amounts can be outstanding under the revolving
credit facility for a period of 45 consecutive days commencing on any
day chosen by CB Richard Ellis Services in the month of December of
each year.

(f) Represents the repayment of CB Richard Ellis Services' historical debt
outstanding as of June 30, 2001, which was comprised of $225.0 million
outstanding under CB Richard Ellis Services' former revolving credit
facility and $175.0 million outstanding in aggregate principal amount of CB
Richard Ellis Services' former 8 7/8% senior subordinated notes, net of
unamortized debt discount. The payment of the $1.5 million in unamortized
debt discount was recorded as an increase in goodwill.

(g) Represents the payment of $13.9 million of repayment premiums on CB Richard
Ellis Services' former 8 7/8% senior subordinated notes, which was recorded
as an increase in goodwill.

(h) Represents the payment of $13.8 million in fees and commissions in
connection with the borrowing of the $235.0 million senior secured term
loans by CB Richard Ellis Services, the $229.0 million in aggregate
principal amount of 11 1/4% senior subordinated notes issued by BLUM CB
Corp. and the $90.0 million revolving credit facility of CB Richard Ellis
Services. Annual aggregate maturity of total long term debt, excluding the
revolving credit facility, at June 30, 2001 on an unaudited pro forma basis
is as follows: 2001 - $17.4 million; 2002 - $12.1 million; 2003 - $10.5
million; 2004 - $10.6 million; 2005 - $10.6 million; thereafter - $430.6
million.

(i) Represents estimated transaction fees and related costs incurred in
connection with the acquisition of CB Richard Ellis Services by CBRE
Holding, excluding $27.7 million in financing costs included in notes (g)
and (h) above.

(j) Represents adjustments to reflect the identifiable assets and liabilities
of CB Richard Ellis Services acquired at their estimated current fair
value, which resulted in the following adjustments:

(in thousands)
--------------

Property and equipment, net................................ $ (7,622)
Goodwill, net.............................................. 62,102
Other intangible assets, net............................... (7,619)
Investment in and advances to unconsolidated subsidiaries.. (6,972)
Prepaid pension costs...................................... (10,401)
Other assets............................................... (21,943)
Other liabilities.......................................... (7,545)
--------
$ --
========

The amount of equity interest carried over for RCBA Strategic Partners, L.P.
was calculated as the original cost basis of 2,345,900 shares of CB Richard
Ellis Services common stock purchased by RCBA Strategic Partners, or
approximately $11.54 per share, adjusted for its share of diluted earnings
per share of approximately $1.62 from the date RCBA Strategic Partners
acquired such shares through the merger date.

Following are the calculations of (1) the purchase price of the acquisition
of CB Richard Ellis Services, (2) the allocation of that purchase price to
the assets and liabilities of CB Richard Ellis Services, and (3) the
calculation of goodwill of CB Richard Ellis Services after consummation of
the merger and related transactions.

Calculation of the purchase price of CB Richard Ellis Services:

Shares of CB Richard Ellis Services
--------------------------------------------
RCBA
Stockholder: Strategic Partners Other Total
------------ ------------------ ------------ ------------

Total Shares and Stock Fund Units................. 2,345,900 19,740,974 22,086,874
=========== ============ ============
Value Per Share................................... $ 13.16 $ 16.00 $ --
=========== ============ ============
Fair Value........................................ $30,878,298 $315,855,578 $346,733,876
Fair Value of 255,477.3 warrants to acquire common
stock of CBRE Holding exchanged for warrants to
acquire common stock of CB Richard Ellis
Services common stock at $30 per share valued at
$3.85 per warrant............................... -- 983,588 983,588
Purchase of 2,613,669 options to acquire common
stock of CB Richard Ellis Services.............. -- 4,721,452 4,721,452
----------- ------------ ------------
Total Purchase Price.............................. $30,878,298 $321,560,618 $352,438,916
=========== ============ ============

Allocation of the purchase price to the assets and liabilities of CB Richard
Ellis Services:

Fair Value
--------------
(in thousands)

Assets:
Property and Equipment........................ $ 69,968
Other Intangible Assets....................... 34,907
Other Assets.................................. 20,188
Investments in and Advances to Unconsolidated
Subsidiaries................................ 36,092
Non Current Deferred Taxes, net............... 59,747
Prepaid Pension Costs......................... 13,688
All Other Assets.............................. 268,985
---------
Total Assets.................................. 503,575
Liabilities:
Income Taxes Payable.......................... (2,630)
Other Long Term Liabilities................... 35,952
All Other Liabilities......................... 681,567
---------
Total Liabilities............................. 714,889
Minority Interest................................ 2,817
---------
Net Liabilities in Excess of Identifiable
Assets...................................... $(214,131)
=========

Calculation of CB Richard Ellis Services Goodwill:

Total Purchase Price............................... $352,439
Plus:
Fair Value of Liabilities in Excess of
Assets....................................... 214,131
Repayment of Loans Included as a Reduction
of CB Richard Ellis Services Equity.......... (9,132)
Extinguishment Costs related to CB Richard
Ellis Services Existing Debt................. 15,392
Deal Costs..................................... 16,701
Severance and Facilities Closure Reserves............. 3,495
Less:
Fair Value of Unvested Stock Fund Units
Recorded as Deferred Compensation Asset...... (6,443)
--------
Total Goodwill................................. $586,583
========

(k) Represents the elimination of the historical equity of CB Richard Ellis
Services, which resulted in the following adjustments:

(in thousands)
--------------

Goodwill, net.......................... $(227,631)
Common stock........................... 218
Additional paid-in capital............. 367,685
Notes receivable from sale of stock.... (11,636)
Accumulated deficit.................... (93,464)
Accumulated other comprehensive loss... (19,328)
Treasury stock at cost................. (15,844)
---------
$ --
=========

(l) Represents adjustments to reflect the tax effect of the pro forma
adjustments included in notes (f), (g), (i) and (j), which resulted in the
following adjustments:

(in thousands)
--------------

Goodwill, net.......................... $(33,449)
Deferred taxes, net.................... 24,442
Income taxes payable................... 9,007
--------
$ --
========

(m) Represents an adjustment to accrue as a component of the purchase price
estimated costs associated with severance for CB Richard Ellis Services
employees designated for termination and CB Richard Ellis Services
facilities designated for closure.

(n) Immediately prior to the merger and related transactions, participants held
approximately 880,681 vested stock fund units and 812,743 unvested stock
fund units in the CB Richard Ellis Services Deferred Compensation Plan.
Each stock fund unit entitled the participant to receive one share of CB
Richard Ellis Services common stock upon distribution from his or her
deferred compensation plan participant account. In connection with the
merger and related transactions, a change in control occurred in accordance
with the terms of the deferred compensation plan for approximately 342,593
unvested stock fund units associated with the 1999 company matching
contribution, and these stock fund units became fully vested upon
completion of the merger.

In connection with the merger and related transactions, the deferred
compensation plan was amended so that each stock fund unit thereafter
represented the right to receive one share of the Class A common stock of
CBRE Holding in accordance with the terms and conditions set forth in the
deferred compensation plan. Each participant in the deferred compensation
plan who was a U.S. employee or an independent contractor in specified
states and had stock fund units that were vested and credited to his or her
account as of the merger was required, prior to the merger, to make one of
the following elections with respect to the vested stock fund units: (1)
convert the value of his or her vested stock fund units, based upon the a
value of $16.00 per stock unit, into any of the insurance mutual fund or
interest index fund alternatives provided under the deferred compensation
plan, or (2) continue to hold the vested stock fund units in his or her
account under the deferred compensation plan. As a result of the amendment
of the deferred compensation plan, any vested stock fund units held by
other employees and independent contractors and all stock fund units that
were unvested prior to the merger were automatically converted into the
right to receive one share of Class A common stock of CBRE Holding. After
the merger and related transactions, there were approximately 470,150
unvested stock fund units in the CB Richard Ellis Services deferred
compensation plan. A portion of these unvested stock fund units have been
accounted for as a deferred compensation asset included in other current
assets and other assets in the accompanying unaudited pro forma combined
balance sheet. The deferred compensation asset will be amortized as
compensation expense over the remaining vesting period for such stock fund
units.

Vested stock fund units, including those that vested due to the change in
control, have been included in goodwill in the accompanying unaudited pro
forma combined balance sheet. The above accounting treatment is in
accordance with Financial Interpretation Number 44 "Accounting for Certain
Transactions Involving Stock Compensation." In connection with the merger
and related transactions, all stock fund units, whether vested or unvested,
were valued at $16.00 per share.

(o) Represents the exchange of the exchange notes being offered pursuant to
this prospectus for the outstanding notes. The outstanding notes bear
interest at a fixed rate of 11 1/4% and are due on June 15, 2001. The
outstanding notes were issued at a $3.4 million discount, which is being
amortized over the 10 year life of the notes to yield level amortization.
The exchange notes being offered pursuant to this offering are identical in
all material respects to the outstanding notes except:

. the exchange notes have been registered under the Securities Act;

. the exchange notes are not entitled to certain registration rights which
are applicable to the outstanding notes under the registration rights
agreement; and

. certain contingent interest rate provisions are no longer applicable.

(p) Net debt, defined as total debt outstanding less cash and cash equivalents,
increased by $89.4 million to $500.5 million in the pro forma combined
balance sheet as of June 30, 2001 from $411.1 million as actually reported
by CB Richard Ellis Services as of June 30, 2001.

CB Richard Ellis Services, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
for the Year Ended December 31, 2000
(in thousands, except share and per share data)

Year Ended December 31, 2000
----------------------------------------------------
CB Richard BLUM CB Pro Forma Pro Forma
Ellis Services Corp. Adjustments Combined
-------------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)

Revenue:
Leases.................................. $ 539,419 $ -- $ -- $ 539,419
Sales................................... 389,745 389,745
Property and facilities management fees. 110,654 110,654
Consulting and referral fees............ 78,714 78,714
Appraisal fees.......................... 75,055 75,055
Loan origination and servicing fees..... 58,190 58,190
Investment management fees.............. 42,475 42,475
Other................................... 29,352 29,352
---------- ---- -------- ----------
Total revenues...................... 1,323,604 1,323,604
Costs and Expenses:
Commissions, fees and other incentives.. 634,639 634,639
Operating, administrative, and other.... 538,481 2,439 (a) 540,920
Depreciation and amortization........... 43,199 (23,992)(b)
28,020 (a)
(162)(c) 47,065
---------- ---- -------- ----------
Operating income........................... 107,285 (6,305) 100,980
Interest income............................ 2,554 2,554
Interest expense........................... 41,700 17,710 (d) 59,410
---------- ---- -------- ----------
Income before provision for income tax..... 68,139 (24,015) 44,124
Provision for income taxes................. 34,751 (7,010)(e) 27,741
---------- ---- -------- ----------
Net income................................. $ 33,388 $ -- $(17,005) $ 16,383
========== ==== ======== ==========

Notes to Unaudited Pro Forma Combined Statement of Operations for the Year
Ended December 31, 2000

(a) Reflects amortization of the estimated fair value of CB Richard Ellis
Services' goodwill over 30 years and of identifiable intangible and other
assets over 3 to 10 years. The pro forma financial statements do not
reflect the impact of SFAS No. 142, "Goodwill and Other Intangible Assets."
Under SFAS 142, goodwill will no longer be subject to amortization over its
estimated useful life.

(b) Represents the reversal of CB Richard Ellis Services' historical
amortization related to goodwill and other intangible assets.

(c) Represents the net adjustment to CB Richard Ellis Services' depreciation
expense resulting from fair value adjustments to property and equipment,
which are non-cash charges resulting from purchase accounting entries.

(d) The increase in pro forma interest expense as a result of the merger and
related transactions is summarized as follows:

(in thousands)
--------------

Interest on Tranche A senior secured term loan at 9.81%.. $ 4,905
Interest on Tranche B senior secured term loan at 10.31%. 19,074
Interest on 11 1/4% senior subordinated notes............ 25,763
Interest on the revolving credit facility at 9.81%....... 579
Interest on existing other borrowings (including capital
leases)................................................ 6,334
--------
Cash interest expense.................................... 56,655

Amortization of debt issuance costs:
($4.8 million over a 6-year amortization period)...... 753
($6.4 million over a 7-year amortization period)...... 913
($12.3 million over a 10-year amortization period).... 1,089
--------
59,410

Less: historical cash interest expense................... (39,404)
Less: historical amortization of debt issuance costs..... (2,296)
--------
Net increase............................................. $ 17,710
========

The Tranche A senior secured term loan bears interest at an annual rate of
3-month LIBOR plus 3.25%, the Tranche B senior secured term loan bears
interest at annual rate of 3-month LIBOR plus 3.75% and the revolving
credit facility bears interest on amounts borrowed at an annual rate of
3-month LIBOR plus 3.25%. LIBOR is based on the average 3-month LIBOR for
fiscal year 2000 of 6.56% for purposes of computing pro forma combined
interest expense. As of September 17, 2001, the 3-month LIBOR was 3.11%. At
a LIBOR of 3.11%, the cash component of pro forma combined interest expense
would have been approximately $48.3 million for the year ended December 31,
2000, which would have represented a decrease of $8.3 million from pro
forma interest expense included in the accompanying unaudited pro forma
combined statement of operations. Each 1.0% change in the 3-month LIBOR
would have increased or decreased pro forma combined interest expense by
$2.4 million for the year ended December 31, 2000.

(e) Represents the tax effect of pro forma adjustments included in notes (a)
through (d) above at a combined federal and state statutory tax rate of
38.5%, excluding certain items that are permanently non-deductible for tax
purposes.

CB Richard Ellis Services, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
for the Six Months Ended June 30, 2001
(in thousands, except share and per share data)

Six Months Ended June 30, 2001
------------------------------------------------
CB Richard
Ellis BLUM CB Pro Forma Pro Forma
Services Corp. Adjustments Combined
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue:
Leases........................................ $216,146 $ -- $ -- $216,146
Sales......................................... 146,536 146,536
Property and facilities management fees....... 56,373 56,373
Consulting and referral fees.................. 34,337 34,337
Appraisal fees................................ 38,545 38,545
Loan origination and servicing fees........... 30,936 30,936
Investment management fees.................... 20,254 20,254
Other......................................... 14,220 14,220
-------- ------- -------- --------
Total revenues............................ 557,347 557,347
Costs and Expenses:
Commissions, fees and other incentives........ 259,203 259,203
Operating, administrative and other........... 263,614 20 (a) 263,634
Depreciation and amortization................. 23,142 (11,741)(b)
13,917 (a)
(1,681)(c) 23,637
Merger-related and other nonrecurring charges.... 5,608 5,608
-------- ------- -------- --------
Operating income................................. 5,780 (515) 5,265
Interest income.................................. 1,492 580 (580)(d) 1,492
Interest expense................................. 18,413 1,775 7,339 (e) 27,527
-------- ------- -------- --------
Loss before benefit for income tax............... (11,141) (1,195) (8,434) (20,770)
Benefit for income taxes......................... (6,774) (465) (1,664)(f) (8,903)
-------- ------- -------- --------
Net loss......................................... $ (4,367) $ (730) $ (6,770) $(11,867)
======== ======= ======== ========

Notes to Unaudited Pro Forma Combined Statement of Operations
for the Six Months Ended June 30, 2001

(a) Reflects amortization of the estimated fair value of CB Richard Ellis
Services' goodwill over 30 years and of identifiable intangible and other
assets over 3 to 10 years. The pro forma financial statements do not
reflect the impact of SFAS No. 142, "Goodwill and Other Intangible Assets".
Under SFAS 142, goodwill will no longer be subject to amortization over its
estimated useful life.

(b) Represents the reversal of CB Richard Ellis Services' historical
amortization related to goodwill and other intangible assets.

(d) Represents the reversal of historical interest income earned by BLUM CB
Corp. on the net proceeds from the 11 1/4% senior subordinated notes held
in escrow from June 7, 2001 through July 20, 2001, which was the date of
the merger. The net proceeds held in escrow were released to CB Richard
Ellis Services upon consummation of the merger.

(e) The increase to pro forma interest expense as a result of the merger and
related transactions is summarized as follows:

(in thousands)
--------------

Interest on Tranche A senior secured term loan at 7.95%.... $ 1,988
Interest on Tranche B senior secured term loan at 8.45%.... 7,817
Interest on 11 1/4% senior subordinated notes issued by
BLUM CB Corp............................................. 12,881
Interest on the revolving credit facility at 7.95%......... 914
Interest on other existing borrowings (including capital
leases) 2,540
--------
Cash interest expense...................................... 26,140

Amortization of debt issuance costs:
($4.8 million over a 6-year amortization period)........ 377
($6.4 million over a 7-year amortization period)........ 456
($12.3 million over a 10-year amortization period)...... 554
--------
27,527

Less: historical cash interest expense..................... (17,251)
Less: historical interest expense of BLUM CB Corp.......... (1,775)
Less: historical amortization of debt issuance costs....... (1,162)
--------
Net increase............................................... $ 7,339
========

The Tranche A senior secured term loan bears interest at an annual rate of
3-month LIBOR plus margin of 3.25%, the Tranche B senior secured term loan
bears interest at an annual rate of 3-month LIBOR plus margin of 3.75% and
the revolving credit facility bears interest at an annual rate of 3-month
LIBOR plus 3.25% on amounts borrowed. LIBOR is based on the average three
month LIBOR for the six months ended June 30, 2001 of 4.70% for purposes of
computing pro forma interest expense. As of September 17, 2001, the 3-month
LIBOR was 3.11%. At a LIBOR of 3.11%, the cash component of pro forma
combined interest expense would have been approximately $24.1 million for
the three months ended June 30, 2001, which would be a decrease of $2.1
million. Each 1.0% change in the 3-month LIBOR would have had the impact of
increasing or decreasing pro forma combined interest expense by $1.3
million for the six months ended June 30, 2001.

(f) Represents the tax effect of pro forma adjustments included in notes (a)
through (d) above at a combined federal and state statutory tax rate of
38.5%, excluding certain items that are permanently non-deductible for tax
purposes.

CBRE Holding

The following unaudited pro forma combined balance sheet and the unaudited
pro forma combined statements of operations are based on the historical
consolidated financial statements of CBRE Holding and CB Richard Ellis
Services, included elsewhere in this prospectus, as adjusted to give effect to
the merger and related transactions as if they had occurred as of June 30, 2001
in the unaudited pro forma combined balance sheet and as of January 1, 2000 in
the unaudited pro forma combined statements of operations for the year ended
December 31, 2000 and the six months ended June 30, 2001.

The pro forma adjustments are based upon currently available information and
upon assumptions that our management believes are reasonable. Prior to the
merger and related transactions, RCBA Strategic Partners, L.P. directly owned
2,345,900 shares of outstanding common stock of CB Richard Ellis Services,
which represented approximately 11.5% of CB Richard Ellis Services' outstanding
common stock prior to the merger and related transactions. A group of
investment partnerships and funds, which are related to the general partner of
RCBA Strategic Partners, directly owned 1,077,986 shares of outstanding common
stock of CB Richard Ellis Services, which represented approximately 5.3% of CB
Richard Ellis Services' outstanding common stock prior to the merger and
related transactions. Neither RCBA Strategic Partners nor its general partner
controls these related investment partnerships and funds. Additionally, other
members of the buying group directly owned 4,543,888 shares of outstanding
common stock of CB Richard Ellis Services, which represented approximately
22.3% of CB Richard Ellis Services' outstanding common stock prior to the
merger and related transactions. Therefore the total combined ownership of RCBA
Strategic Partners, the investment partnerships and funds related to the
general partner of RCBA Strategic Partners and the other members of the buying
group was 7,967,774 shares of outstanding common stock of CB Richard Ellis
Services, or approximately 39.1% of the outstanding common stock prior to the
merger and related transactions. Accordingly, neither RCBA Strategic Partners,
any of the investment partnerships or funds related to the general partner of
RCBA Strategic Partners, any member of the buying group nor any combination of
them controlled CB Richard Ellis Services prior to the merger and related
transactions.

. appoint a majority of the board of directors of CBRE Holding; and

After the merger and related transactions, CB Richard Ellis Services became
a wholly owned subsidiary of CBRE Holding. The 2,345,900 shares of outstanding
common stock of CB Richard Ellis Services owned by RCBA Strategic Partners
prior to the merger that were contributed to CBRE Holding have been carried
over at RCBA Strategic Partners' book value. The basis of accounting for the
shares of CB Richard Ellis Services

common stock acquired by CBRE Holding that were not directly owned by RCBA
Strategic Partners prior to the merger and related transactions have been
accounted for as a purchase transaction by CBRE Holding at a fair value of
$16.00 per share. As such, the merger has been accounted for as a step
acquisition in accordance with Accounting Principles Bulletin 16--"Accounting
for Business Combinations." The acquisition of unvested stock fund units in the
CB Richard Ellis Services deferred compensation plan has been accounted for in
accordance with FASB Interpretation Number 44 as discussed in note (n) to the
accompanying unaudited pro forma combined balance sheet. Management believes
the fair value of the acquired common stock and stock fund units is consistent
with the merger consideration of $16.00 per share. The adjustments included in
the unaudited pro forma financial statements represent the effects of CB
Richard Ellis Services' preliminary determination and allocation of the
purchase price to the fair value of the assets and liabilities acquired, based
upon currently available information. We cannot assure you that the actual
effects will not differ significantly from the pro forma adjustments reflected
in these unaudited pro forma financial statements.

CBRE Holding, Inc. and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet
as of June 30, 2001
(in thousands, except share data)

As of June 30, 2001
-----------------------------------------------------
CB Richard CBRE Pro Forma Pro Forma
Ellis Services Holding Adjustments Combined
-------------- -------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)

ASSETS
Current assets:
Cash and cash equivalents............................ $ 18,548 $229,499 $ 90,875 (a) $ 31,278
(2,707)(b)
(198,305)(c)
235,000 (d)
40,000 (e)
65,000 (f)
(400,000)(g)
(13,850)(h)
(16,081)(i)
(16,701)(j)
Receivables, less allowance for doubtful accounts of
$11,993............................................ 149,811 149,811
Prepaid expenses..................................... 9,693 9,693
Deferred taxes, net.................................. 13,023 13,023
Other current assets................................. 9,132 1,045 1,841 (a)(k) 12,018
-------- -------- --------- ----------
Total current assets............................. 200,207 230,544 (214,928) 215,823
-------- -------- --------- ----------
Property and equipment, net............................. 77,590 (7,622)(l) 69,968
Goodwill, net........................................... 412,379 131,796 (a)(k)
205,068 (c)
1,542 (g)
13,850 (h)
16,701 (j)
62,102 (j)
(227,631)(m)
(33,449)(n)
3,495 (o) 585,853
Other intangible assets, net............................ 42,526 (7,619)(l) 34,907
Cash surrender value of insurance policies, deferred
compensation plan..................................... 69,508 (2,344)(a)
6,950 (c) 74,114
Investment in and advances to unconsolidated
subsidiaries.......................................... 43,064 (6,972)(l) 36,092
Deferred taxes, net..................................... 35,305 24,442 (n) 59,747
Prepaid pension costs................................... 24,089 (10,401)(l) 13,688
Other assets............................................ 42,131 7,724
2,041 (a)
4,602 (a)(k)
2,707 (b)
(4,101)(c)
16,081 (i)
(21,943)(l) 49,242
-------- -------- --------- ----------
Total assets..................................... $946,799 $238,268 $ (45,633) $1,139,434
======== ======== ========= ==========

CBRE Holding, Inc. and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet
as of June 30, 2001
(in thousands, except share data)

As of June 30, 2001
--------------------------------------------------
CB Richard CBRE Pro Forma Pro Forma
Ellis Services Holding Adjustments Combined
-------------- -------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........................... $ 68,929 $ 9,486 $ 3,495 (o) $ 81,910
Compensation and employee benefits.............................. 64,291 64,291
Accrued bonus and profit sharing................................ 31,049 31,049
Income taxes payable............................................ 6,377 (9,007)(n) (2,630)
Short-term borrowings (t)....................................... 12,017 40,000 (e) 52,017
Current maturities of long-term debt (t)........................ 1,129 9,350 (d) 10,479
-------- -------- --------- ----------
Total current liabilities.................................... 183,792 9,486 43,838 237,116
Long-term debt:
8 7/8% senior subordinated notes, net of unamortized discount
of $1,542 as of June 30, 2001................................. 173,458 (173,458)(g) --
Revolving credit facility....................................... 225,000 (225,000)(g) --
11 1/4% senior subordinated notes, net of unamortized discount
of $3,358 million as of June 30, 2001......................... 225,642 (225,642)(p)
225,642 (p) 225,642
Senior secured term loans....................................... 225,650 (d) 225,650
16% Senior Notes, net of unamortized discount of
$8,350 million as of June 30, 2001 pro forma.................. -- -- 65,000 (f)
(8,350)(q)
(65,000)(r)
65,000 (r) 56,650
Other long-term debt............................................ 18,014 18,014
-------- -------- --------- ----------
Total long-term debt (t)..................................... 416,472 225,642 (116,158) 525,956
Deferred compensation liability................................. 87,680 (2,344)(a)
9,612 (c) 94,948
Other liabilities.................................................. 28,407 7,545 (l) 35,952
-------- -------- --------- ----------
Total liabilities............................................ 716,351 235,128 (57,507) 893,972
Minority interest............................................... 2,817 2,817
Stockholders' equity:
Class A common stock; $0.01 par value; 75,000,000 shares
authorized; no shares issued or outstanding at June 30,
2001; 1,742,477 shares issued and outstanding at June 30,
2001 pro forma................................................ -- -- 5 (q)
12 (a) 17
Class B common stock; $0.01 par value; 25,000,000
authorized; 241,885 shares issued and outstanding at
June 30, 2001; 12,649,813 shares issued and outstanding at
June 30, 2001 pro forma....................................... -- 2 125 (a) 127
Common stock, $0.01 par value; 100,000,000 shares
authorized; 20,636,051 shares issued and outstanding at
June 30, 2001................................................. 218 (218)(m) --
Additional paid-in capital................................... 367,685 3,868 231,018 (a) --
8,345 (q)
(367,685)(m) 243,231
Notes receivable from sale of stock.......................... (11,636) 11,636 (m) --
Accumulated deficit.......................................... (93,464) (730) 93,464 (m) (730)
Accumulated other comprehensive loss......................... (19,328) 19,328 (m) --
Treasury stock at cost, 1,072,155 shares at June 30, 2001.... (15,844) 15,844 (m) --
-------- -------- --------- ----------
Total stockholders' equity (s)........................... 227,631 3,140 11,874 242,645
-------- -------- --------- ----------
Total liabilities and stockholders' equity............ $946,799 $238,268 $ (45,633) $1,139,434
======== ======== ========= ==========

Notes to Unaudited Pro Forma
Combined Balance Sheet as of June 30, 2001

(a) Consists of cash proceeds from the issuance of an aggregate of 5,679,685
shares of CBRE Holding common stock and stock fund units to RCBA Strategic,
Blum Strategic Partners II, CalPERS and employees and independent
contractors of CR Richard Ellis Services at $16.00 per share. See note (s)
for further detail.

Of the $231.2 million, $90.9 million was contributed in cash, $131.8
million was a non-cash contribution representing the value of 7,967,774
shares of CB Richard Ellis Services common stock previously owned by
members of the buying group and the value of vested stock fund units in the
CB Richard Ellis Services deferred compensation plan, $2.0 million was
contributed in exchange for recourse notes from employees and $6.9 million
was recorded as a deferred compensation asset. The deferred compensation
asset represents deferred compensation plan value related to unvested stock
fund units held in the CB Richard Ellis Services deferred compensation plan
that remained unvested after the merger. See note (k) for further details.
Approximately $2.3 million of cash contributions were received from
designated managers who elected to purchase new stock fund units in the
deferred compensation plan with their vested participant account funds
invested in the insurance investment options in the deferred compensation
plan prior to the merger. This resulted in a decrease to cash surrender
value of insurance policies, deferred compensation plan, with a
corresponding decrease in the deferred compensation plan liability.

(c) The following reflects the purchase of CB Richard Ellis Services by CBRE
Holding which is comprised of the following:

. 1,693,924 stock fund units, each consisting of one underlying share of
common stock of CB Richard Ellis Services, in the deferred compensation
plan at $16.00 per unit, less 812,743 unvested stock fund units that
were automatically converted so that the underlying shares became shares
of CBRE Holding Class A common stock and 221,516 vested stock fund units
that employees elected to convert into stock fund units with underlying
CBRE Holding Class A common stock.

. 2,613,663 options to acquire common stock of CB Richard Ellis Services.

The entries to record the cash portion of the purchase price is calculated
as follows:

Increase in Cash Increase in
Surrender Value Deferred
Decrease Increase in of Insurance Decrease in Compensation
in Cash Goodwill Policies, DCP Other Assets Liability
--------- ----------- ---------------- ------------ ------------
(in thousands, except per share data)

Purchase of 12,425,676 share of
CB Richard Ellis Services common
stock at $16.00 per share, net of the
repayment of $13.2 million in
recourse and non-recourse
employee loans secured by the
common stock (1)..................... $(185,578) $189,679 $ -- $(4,101) $ --
Purchase of 666,726 vested stock fund
units, each consisting of one
underlying share of CB Richard
Ellis Services common stock, at
$16.00 per share..................... (8,006) 10,668 6,950 -- 9,612
Purchase of 2,613,663 options to
acquire common stock of
CB Richard Ellis Services at the
greater of intrinsic value or $1.00
per option........................... (4,721) 4,721 -- -- --
--------- -------- ------ ------- ------
Total............................... $(198,305) $205,068 $6,950 $(4,101) $9,612
========= ======== ====== ======= ======

-----
(1) Some members of management and highly compensated employees have
historically purchased shares of common stock of CB Richard Ellis
Services under various compensation plans at fair market value on the
date of grant. These purchases were made under the terms of the 1996
Equity Incentive Plan, the 1999 Equity Incentive Plan and the 1990 Stock
Option Plan. Payment for a portion of the purchase price of these shares
was made by the employee using either a non-recourse loan secured by the
underlying CB Richard Ellis Services common stock issued or a recourse
loan secured by the underlying CB Richard Ellis Services common stock
issued and the personal assets of the participating employee.
Non-recourse loans were recorded as a reduction to equity, while
recourse loans were included as other assets in the historical balance
sheet of CB Richard Ellis Services. In conjunction with the merger and
related transactions, employees owning stock through these plans with
such secured loans received $16.00 per share in merger consideration,
less the per share equivalent of any unpaid principal, plus accrued but
unpaid interest, under such loans as of the date of the merger.

(d) Represents the gross proceeds from CB Richard Ellis Services' borrowing of
$235.0 million in senior secured term loans. Current maturities of
long-term debt includes $9.4 million in principal payments due on the
senior secured term loans. The $235.0 million in senior secured term loans
is comprised of two separate facilities. The $50.0 million Tranche A
facility bears interest at the 3 month LIBOR plus 3.25%, which was 6.36% as
of September 17, 2001. The $50.0 million Tranche A facility will be fully
amortized by July 20, 2007 through quarterly principal payments over 6
years. $7.5 million in total annual principal payments will be due
quarterly during the first two years of the loan, and $8.75 million in
total annual principal payments will be due quarterly during years 3
through 6 of the loan. The $185.0 million Tranche B facility bears interest
at 3 month LIBOR plus 3.75%, which was 6.86% as of September 17, 2001. The
$185.0 million Tranche B facility requires quarterly payments of principal
of approximately $462,500, with the remaining outstanding principal balance
of $172.5 million due on July 20, 2008.

(e) Represents the gross proceeds from the draw down on the new $90.0 million
revolving credit facility. The $90.0 million revolving credit facility
bears interest at 3-month LIBOR plus 3.25%, which was 6.36% as of September
17, 2001 and matures on July 20, 2007. Under the terms of the credit
agreement, no amounts can be outstanding under the revolving credit
facility for a period of 45 consecutive days commencing on any day chosen
by CB Richard Ellis Services in the month of December of each year.

(f) Represents the gross proceeds from our issuance of $65.0 million in 16%
senior notes and related Class A common stock. The $65 million in senior
notes will be due on July 20, 2011 and bear interest at a fixed rate of
16%.

(g) Represents the repayment of CB Richard Ellis Services' historical debt
outstanding as of June 30, 2001, which was comprised of $225.0 million
outstanding under CB Richard Ellis Services' former revolving credit
facility and $175.0 million outstanding in aggregate principal amount of CB
Richard Ellis Services' former 8 7/8% senior subordinated notes, net of
unamortized debt discount. The payment of the $1.5 million in unamortized
debt discount was recorded as an increase in goodwill.

(h) Represents the payment of $13.9 million of repayment premiums on CB Richard
Ellis Services' former 8 7/8% senior subordinated notes, which was recorded
as an increase in goodwill.

(i) Represents the payment of $16.1 million in fees and commissions in
connection with the $65 million in aggregate principal amount of 16% senior
notes issued by CBRE Holdings, the borrowing of the $235.0 million senior
secured term loans by CB Richard Ellis Services, the $229.0 million in
aggregate principal amount of 11 1/4% senior subordinated notes issued by
BLUM CB Corp. and the $90.0 million revolving credit facility of CB Richard
Ellis Services. Annual aggregate maturity of total long term debt,
excluding the revolving credit facility, at June 30, 2001 on an unaudited
pro forma basis is as follows: 2001 - $17.4 million; 2002 - $12.1 million;
2003 - $10.5 million; 2004 - $10.6 million; 2005 - $10.6 million;
thereafter - $487.2 million.

(j) Represents estimated transaction fees and related costs incurred in
connection with the acquisition of CB Richard Ellis Services by CBRE
Holding, excluding $29.9 million in financing costs included in notes (h)
and (i) above.

(k) Immediately prior to the merger, participants held approximately 880,681
vested stock fund units and 812,743 unvested stock fund units in the CB
Richard Ellis Services Deferred Compensation Plan. Each stock fund unit
entitled the participant to receive one share of CB Richard Ellis Services
common stock upon distribution from his or her deferred compensation plan
participant account. In connection with the merger and related
transactions, a change in control occurred in accordance with the terms of
the deferred compensation plan for approximately 342,593 unvested stock
fund units associated with the 1999 company matching contribution, and
these stock fund units became fully vested upon completion of the merger.

In connection with the merger, the deferred compensation plan was amended
so that each stock fund unit thereafter represented the right to receive
one share of the Class A common stock of CBRE Holding in accordance with
the terms and conditions set forth in the deferred compensation plan. Each
participant in the deferred compensation plan who was a U.S. employee or an
independent contractor in specified states and had stock fund units that
were vested and credited to his or her account as of the merger was
required, prior to the merger, to make one of the following elections with
respect to the vested stock fund units: (1) convert the value of his or her
vested stock fund units, based upon the a value of $16.00 per stock unit,
into any of the insurance mutual fund or interest index fund alternatives
provided under the deferred compensation plan, or (2) continue to hold the
vested stock fund units in his or her account under the deferred
compensation plan. As a result of the amendment of the deferred
compensation plan, any vested stock fund units held by other employees and
independent contractors and all stock fund units that were unvested prior
to the merger were automatically converted into the right to receive one
share of Class A common stock of CBRE Holding. Of the 880,681 vested stock
fund units outstanding prior to the merger, employees elected to receive
the value of $16.00 per unit for 666,726 stock fund units, which they
invested in the insurance index funds and the Interest Index Fund II
options under the deferred compensation plan, and elected to hold 221,516
vested stock fund units in the deferred compensation plan. All stock fund
units

that were unvested prior to the merger remained as stock fund units in the
deferred compensation plan. After the merger, there were approximately
470,150 unvested stock fund units in the CB Richard Ellis Services deferred
compensation plan. A portion of these unvested stock fund units have been
accounted for as a deferred compensation asset included in other current
assets and other assets in the accompanying unaudited pro forma combined
balance sheet. The deferred compensation asset will be amortized as
compensation expense over the remaining vesting period for such stock fund
units. Vested stock fund units, including those that vested due to the
change in control, have been included in goodwill in the accompanying
unaudited pro forma combined balance sheet. The above accounting treatment
is in accordance with Financial Interpretation Number 44 "Accounting for
Certain Transactions Involving Stock Compensation." In connection with the
merger and related transactions, all stock fund units, whether vested or
unvested, were valued at $16.00 per share.

(l) Represents adjustments to reflect the identifiable assets and liabilities
of CB Richard Ellis Services acquired at their estimated current fair
value, which resulted in the following adjustments:

(in thousands)
--------------

The amount of interest carried over for RCBA Strategic Partners, L.P. was
calculated as the original cost basis of 2,345,900 shares of CB Richard
Ellis Services common stock purchased by RCBA Strategic Partners, or
approximately $11.54 per share, adjusted for its share of diluted earnings
per share of approximately $1.62 from the date RCBA Strategic Partners
acquired such shares through the merger date.

Calculation of the purchase price of CB Richard Ellis Services:

Shares of CB Richard Ellis Services
-------------------------------------
RCBA
Strategic
Stockholder: Partners Other Total
------------ ----------- ------------ ------------

Total Shares and Stock Fund Units........................ 2,345,900 19,740,974 22,086,874
=========== ============ ============
Value Per Share.......................................... $ 13.16 $ 16.00 $ --
=========== ============ ============
Fair Value............................................... $30,878,298 $315,855,578 $346,733,876
Fair Value of 255,477.3 warrants to acquire common stock
of CBRE Holding exchanged for warrants to acquire
CB Richard Ellis Services common stock at $30 per share
valued at $3.85 per warrant............................ -- 983,588 983,588
Purchase of 2,613,669 options to acquire common stock of
CB Richard Ellis Services.............................. -- 4,721,452 4,721,452
----------- ------------ ------------
Total Purchase Price..................................... $30,878,298 $321,560,618 $352,438,916
=========== ============ ============

Allocation of the purchase price to the assets and liabilities of CB Richard
Ellis Services:

Fair Value
--------------
(in thousands)

Assets:
Property and Equipment........................... $ 69,968
Other Intangible Assets.......................... 34,907
Other Assets..................................... 20,188
Investments in and Advances to Unconsolidated
Subsidiaries................................... 36,092
Non Current Deferred Taxes, net.................. 59,747
Prepaid Pension Costs............................ 13,688
All Other Assets................................. 269,715
---------
Total Assets..................................... 504,305
Liabilities:
Income Taxes Payable............................. (2,630)
Other Long Term Liabilities...................... 35,952
All Other Liabilities............................ 681,567
---------
Total Liabilities................................ 714,889
Minority Interest................................... 2,817
---------
Net Liabilities in Excess of Identifiable Assets. $(213,401)
=========

Calculation of CB Richard Ellis Services Goodwill:

Total Purchase Price........................................... $352,439
Plus:
Fair Value of Liabilities in Excess of Assets........... 213,401
Repayment of Loans Included as a Reduction of
CB Richard Ellis Services Equity...................... (9,132)
Extinguishment Costs related to CB Richard Ellis
Services Existing Debt................................ 15,392
Deal Costs.............................................. 16,701
Severance and Facilities Closure Reserves............... 3,495
Less:
Fair Value of Unvested Stock Fund Units Recorded as
Deferred Compensation Asset........................... (6,443)
--------
Total Goodwill................................................. $585,853
========

(m) Represents the elimination of the historical equity of CB Richard Ellis
Services, which resulted in the following adjustments:

Amount
--------------
(in thousands)

Goodwill, net.............................................. $(227,631)
Common stock............................................... 218
Additional paid-in capital................................. 367,685
Notes receivable from sale of stock........................ (11,636)
Accumulated deficit........................................ (93,464)
Accumulated other comprehensive loss....................... (19,328)
Treasury stock at cost..................................... (15,844)
---------
$ --
=========

(n) Represents adjustments to reflect the tax effect of the pro forma
adjustments included in notes (f), (g), (i) and (j), which resulted in the
following adjustments:

Amount
--------------
(in thousands)

Goodwill, net.............................................. $(33,449)
Deferred taxes, net........................................ 24,442
Income taxes payable....................................... 9,007
--------
$ --
========

(o) Represents an adjustment to accrue as a component of the purchase price
estimated costs associated with severance for CB Richard Ellis Services
employees designated for termination and CB Richard Ellis Services
facilities designated for closure.

(p) Represents the exchange of 11 1/4% senior subordinated notes being offered
by CB Richard Ellis Services pursuant to a separate prospectus for the
existing 11 1/4% senior subordinated notes initially issued by BLUM CB
Corp, a wholly owned subsidiary of CBRE Holding, which were assumed by CB
Richard Ellis in connection with the merger. The existing senior
subordinated notes bear interest at a fixed rate of 11 1/4% and are due on
June 15, 2001. The existing senior subordinated notes were issued at a $3.4
million discount, which is being amortized over the 10 year life of the
notes to yield level amortization. The exchange notes being offered
pursuant to a separate offering are identical in all material respects to
the existing senior subordinated notes except:

. the exchange notes have been registered under the Securities Act;

. the exchange notes are not entitled to certain registration rights which
are applicable to the existing senior subordinated notes under a
registration rights agreement; and

. certain contingent interest rate provisions are no longer applicable.

(q) Represents the issuance of 521,847 shares of CBRE Holding Class A common
stock at $0.01 per share, with a fair value of $16.00 per share, in
conjunction with the issuance of the $65.0 million in aggregate principal
amount of our 16% senior notes.

(r) Represents the exchange of the exchange notes being offered pursuant to
this prospectus for the outstanding notes. The exchange notes being offered
pursuant to this offering are identical in all material respects to the
outstanding notes except:

. the exchange notes have been registered under the Securities Act;

. the exchange notes are not entitled to certain registration rights which
are applicable to the outstanding notes under the registration rights
agreement; and certain contingent interest rate provisions are no longer
applicable.

(s) The following table reflects the actual results from the merger and related
transactions. The pro forma combined equity of CBRE Holding is calculated
as follows:

Class of Basis Number of Pro Forma
Common Per Shares/ Combined
Stock Share Warrants Equity
-------- ------ ---------- ------------
Description of Shareholder
--------------------------

Stock Issued in Conjunction with the Voting and
Contribution Agreement:
Stock issued in exchange for contribution of common
stock of CB Richard Ellis Services owned directly by
RCBA Strategic Partners, L.P.(1)......................... B $13.16 2,345,900 $ 30,878,298
Stock issued in exchange for contribution of common
stock of CB Richard Ellis Services acquired by
RCBA Strategic Partners at $16.00 per share from
entities related to the general partner of RCBA Strategic
Partners................................................. B 16.00 1,077,986 17,247,776
Stock issued in exchange for contribution of common
stock of CB Richard Ellis Services owned by other
members of the buying group.............................. B 16.00 4,543,888 72,702,208
Stock issued to RCBA Strategic Partners and Blum
Strategic Partners II, L.P. in exchange for cash......... B 16.00 4,677,039 74,832,624
Stock issued to CalPERS in exchange for cash............... A 16.00 625,000 10,000,000
Issuance of 255,477.3 warrants to FS Equity Partners III,
L.P. and FS Equity Partners International, L.P. in
exchange for formerly outstanding warrants to acquire
common stock of CB Richard Ellis Services................ B 3.85 -- 983,588
---------- ------------
Subtotal--buying group and CalPERS...................... 13,269,813 206,644,494

Other Stock and Stock Fund Units Issued in
Connection with the Merger and Related
Transactions:
Stock underlying existing stock fund units in the
CB Richard Ellis Services deferred compensation plan..... A 16.00 1,026,698 16,427,168
Stock underlying stock fund units in the deferred
compensation plan in exchange for amounts transferred
from the insurance index fund............................ A 16.00 146,472 2,343,552
Stock issued to CB Richard Ellis Services' employees and
independent contractors for direct ownership in
exchange for cash, assignment of net merger proceeds
and recourse notes....................................... A 16.00 425,240 6,803,840
Stock issued for cash proceeds from the merger and held
in the CB Richard Ellis 401(k) plan for direct
ownership................................................ A 16.00 175,390 2,806,240
---------- ------------
Subtotal--CB Richard Ellis Services' employees and
independent contractors............................... 1,773,800 28,380,800
Stock issued to DLJ Investment Funding, Inc. and the
other purchasers of CBRE Holding units consisting of
CBRE Holding's 16% senior notes and Class A
common stock............................................. A 16.00 521,847 8,349,552
---------- ------------
Subtotal--stockholders other than buying group and
CalPERS............................................... 2,295,647 36,730,352
---------- ------------
Total stockholders equity........................... 15,565,460 $243,374,846
========== ============

-----
(1) Basis per share for RCBA Strategic Partners is comprised of its average
per share purchase price of CB Richard Ellis Services common stock of
$11.54, plus an average of $1.33 per share in earnings from the date the
shares were acquired through the merger date.

(t) Net debt, defined as total debt outstanding less cash and cash equivalents,
increased by $150.0 million to $557.1 million in the pro forma combined
balance sheet as of June 30, 2001 from $411.1 million as actually reported
by CB Richard Ellis Services and CBRE Holding as of June 30, 2001.

CBRE Holding, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement Of Operations
For The Year Ended December 31, 2000
(in thousands, except share and per share data)

Year Ended December 31, 2000
----------------------------------------------------
CB Richard CBRE Pro Forma Pro Forma
Ellis Services Holding Adjustments Combined
-------------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)

Revenue:
Leases............................................. $ 539,419 $ -- $ -- $ 539,419
Sales.............................................. 389,745 389,745
Property and facilities management fees............ 110,654 110,654
Consulting and referral fees....................... 78,714 78,714
Appraisal fees..................................... 75,055 75,055
Loan origination and servicing fees................ 58,190 58,190
Investment management fees......................... 42,475 42,475
Other.............................................. 29,352 29,352
----------- -------- -------- -----------
Total revenue.................................. 1,323,604 1,323,604

Costs and Expenses:
Commissions, fees and other incentives............. 634,639 634,639
Operating, administrative, and other............... 538,481 2,439 (a) 540,920
Depreciation and amortization...................... 43,199 (23,992)(b)
28,020 (a)
(162)(c) 47,065
----------- -------- -------- -----------
Operating income...................................... 107,285 (6,305) 100,980
Interest income....................................... 2,554 2,554
Interest expense...................................... 41,700 28,694 (d) 70,394
----------- -------- -------- -----------
Income before provision for income tax................ 68,139 (34,999) 33,140
Provision for income taxes............................ 34,751 (9,980)(e) 24,771
----------- -------- -------- -----------
Net income............................................ $ 33,388 $ -- $(25,019) $ 8,369
=========== ======== ======== ===========
Net income applicable to common stockholders.......... $ 33,388 $ 8,369
=========== ===========
Basic earnings per share.............................. $ 1.60 $ 0.55
=========== ===========
Weighted average shares outstanding for basic earnings
per share........................................... 20,931,111 15,277,829(f)
=========== ===========
Diluted earnings per share............................ $ 1.58 $ 0.55
=========== ===========
Weighted average shares outstanding for diluted
earnings per share.................................. 21,097,240 15,277,829(f)
=========== ===========

Notes to Unaudited Pro Forma Combined Statement of Operations
for the Year Ended December 31, 2000

(a) Reflects amortization of the estimated fair value of CB Richard Ellis
Services' goodwill over 30 years and of identifiable intangible and other
assets over 3 to 10 years. The pro forma financial statements do not
reflect the impact of SFAS No. 142, "Goodwill and Other Intangible Assets".
Under SFAS 142, goodwill will no longer be subject to amortization over its
estimated useful life.

(b) Represents the reversal of CB Richard Ellis Services' historical
amortization related to goodwill and other intangible assets.

(d) The increase in pro forma interest expense as a result of the merger and
related transactions is summarized as follows:

(in thousands)
--------------

Interest on Tranche A senior secured term loan at 9.81%.............. $ 4,905
Interest on Tranche B senior secured term loan at 10.31%............. 19,074
Interest on 11 1/4% senior subordinated notes........................ 25,763
Interest on the revolving credit facility at 9.81%................... 579
Interest on existing other borrowings (including capital leases)..... 6,334
Interest on 16% senior notes......................................... 10,400
--------
Cash interest expense................................................ 67,055

Amortization of debt issuance costs:
($4.8 million over a 6-year amortization period).................. 753
($6.4 million over a 7-year amortization period).................. 913
($23.0 million over a 10-year amortization period)................ 1,673
--------
70,394
Less: historical cash interest expense............................... (39,404)
Less: historical amortization of debt issuance costs................. (2,296)
--------
Net increase......................................................... $ 28,694
========

The Tranche A senior secured term loan bears interest at an annual rate of
3-month LIBOR plus 3.25%, the Tranche B senior secured term loan bears
interest at annual rate of 3-month LIBOR plus 3.75% and the revolving
credit facility bears interest on amounts borrowed at an annual rate of
3-month LIBOR plus 3.25%. LIBOR is based on the average 3-month LIBOR for
fiscal year 2000 of 6.56% for purposes of computing pro forma combined
interest expense. As of September 17, 2001, the 3-month LIBOR was 3.11%. At
a rate of 3.11%, the cash component of pro forma combined interest expense
would have been approximately $58.7 million for the year ended December 31,
2000, which would have represented a decrease of $8.3 million from pro
forma interest expense included in the accompanying unaudited pro forma
combined statement of operations. Each 1.0% change in the 3-month LIBOR
would have increased or decreased pro forma combined interest expense by
$2.4 million for the year ended December 31, 2000.

(f) Reflects the pro forma number of weighted average shares giving effect to
the CBRE Holding common stock and stock fund units issued in connection
with CBRE Holding's purchase of CB Richard Ellis Services and the offerings
by CBRE Holding to employees and independent contractors of CB Richard
Ellis Services for purposes of computing basic earnings per share.

The warrants issued to FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. in connection with the contribution and voting agreement
and the options granted to designated managers and non-management employees
in connection with the offerings are anti-dilutive and have been excluded
from the calculation of dilutive earnings per share. The weighted average
number of shares outstanding is calculated as follows:

Weighted average shares (including vested stock fund units) outstanding for basic
earnings per share:
Expected shares to be issued...................................................... 15,277,829
==========
Weighted average shares (including vested stock fund units) outstanding for dilutive
earnings per share:
Expected shares to be issued...................................................... 15,277,829
Dilutive effect of unvested shares underlying stock fund units in the deferred
compensation plan.................................................................. ---
----------
Weighted average shares outstanding for diluted earnings per share................... 15,277,829
==========

CBRE Holding, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
for the Six Months Ended June 30, 2001
(in thousands, except share and per share data)

Six Months Ended June 30, 2001
-------------------------------------------------
CB Richard CBRE Pro Forma Pro Forma
Ellis Services Holding Adjustments Combined
-------------- ------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)

Revenue:
Leases......................................... $ 216,146 $ -- $ -- $ 216,146
Sales.......................................... 146,536 146,536
Property and facilities management fees........ 56,373 56,373
Consulting and referral fees................... 34,337 34,337
Appraisal fees................................. 38,545 38,545
Loan origination and servicing fees............ 30,936 30,936
Investment management fees..................... 20,254 20,254
Other.......................................... 14,220 14,220
----------- ------- -------- -----------
Total revenues................................ $ 557,347 $ 557,347
Costs and Expenses:
Commissions, fees and other incentives......... 259,203 259,203
Operating, administrative and other............ 263,614 20 (a) 263,634
Depreciation and amortization.................. 23,142 (11,741)(b)
13,917 (a)
(1,681)(c) 23,637
Merger-related and other nonrecurring charges.... 5,608 5,608
----------- ------- -------- -----------
Operating income................................. 5,780 (515) 5,265
Interest income.................................. 1,492 580 (580)(d) 1,492
Interest expense................................. 18,413 1,775 12,854 (e) 33,042
----------- ------- -------- -----------
Loss before benefit for income tax............... (11,141) (1,195) (13,949) (26,285)
Benefit for income taxes......................... (6,774) (465) (3,156)(f) (10,395)
----------- ------- -------- -----------
Net loss......................................... $ (4,367) $ (730) $(10,793) $ (15,890)
=========== ======= ======== ===========
Net loss applicable to common stockholders....... $ (4,367) $ (730) $ (15,890)
=========== ======= ===========
Basic loss per share............................. $ (0.20) (16.48) $ (1.04)
=========== ======= ===========
Weighted average shares outstanding for basic
loss per share................................. 21,318,949 44,323 15,335,355(g)
=========== ======= ===========
Diluted loss per share........................... $ (0.20) $(16.48) $ (1.04)
=========== ======= ===========
Weighted average shares outstanding for diluted
loss per share................................. 21,318,949 44,323 15,335,355(g)
=========== ======= ===========

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001

(a) Reflects amortization of the estimated fair value of CB Richard Ellis
Services' goodwill over 30 years and of identifiable intangible and other
assets over 3 to 10 years. The pro forma financial statements do not
reflect the impact of SFAS No. 142, "Goodwill and Other Intangible Assets".
Under SFAS 142, goodwill will no longer be subject to amortization over its
estimated useful life.

(b) Represents the reversal of CB Richard Ellis Services' historical
amortization related to goodwill and other intangible assets.

(d) Represents the reversal of historical interest income earned by CBRE
Holding on the net proceeds from the 11 1/4% senior subordinated notes held
in escrow from June 7, 2001 through July 20, 2001, which was the date of
the merger. The net proceeds held in escrow were released to CB Richard
Ellis Services upon consummation of the merger.

(e) The increase to pro forma interest expense as a result of the merger and
related transactions is summarized as follows:

(in thousands)
--------------

Interest on Tranche A senior secured term loan at 7.95%.. $ 1,988
Interest on Tranche B senior secured term loan at 8.45%.. 7,817
Interest on 11 1/4% senior subordinated notes issued by
BLUM CB Corp........................................... 12,881
Interest on the revolving credit facility at 7.95%....... 914
Interest on 16% senior notes............................. 5,200
Interest on other existing borrowings (including capital
leases)................................................ 2,540
--------
Cash interest expense.................................... 31,340
Amortization of debt issuance costs:
($4.8 million over a 6-year amortization period)...... 377
($6.4 million over a 7-year amortization period)...... 456
($23.0 million over a 10-year amortization period).... 869
--------
33,042
Less: historical cash interest expense................... (17,251)
Less: holding interest expense........................... (1,775)
Less: historical amortization of debt issuance costs..... (1,162)
--------
Net increase............................................. $ 12,854
========

The Tranche A senior secured term loan bears interest at an annual rate of
3-month LIBOR plus margin of 3.25%, the Tranche B senior secured term loan
bears interest at an annual rate of 3-month LIBOR plus margin of 3.75% and
the revolving credit facility bears interest at an annual rate of 3-month
LIBOR plus 3.25% on amounts borrowed. LIBOR is based on the average 3-month
LIBOR rate for the six months ended June 30, 2001 of 4.70% for purposes of
computing pro forma interest expense. As of September 17, 2001, the 3-month
LIBOR was 3.11%. At a rate of 3.11%, the cash component of pro forma
combined interest expense would have been approximately $29.3 million for
the three months ended June 30, 2001, which would be a decrease of $2.1
million. Each 1.0% change in the 3-month LIBOR would have had the impact of
increasing or decreasing pro forma combined interest expense by $1.3 million
for the three months ended June 30, 2001.

(g) Reflects the pro forma number of weighted average shares giving effect to
the CBRE Holding common stock and stock fund units issued in connection
with CBRE Holding's purchase of CB Richard Ellis Services and the offerings
by CBRE Holding to employees and independent contractors of CB Richard
Ellis Services for purposes of computing basic earnings per share. The
warrants issued to FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. in connection with the contribution and voting
agreement and the options granted to designated managers and non-management
employees in connection with the offerings are anti-dilutive and have been
excluded from the calculation of dilutive earnings per share. The weighted
average number of shares outstanding is calculated as follows:

Weighted average shares (including vested stock fund units)
outstanding for basic earnings per share:
Expected shares to be issued............................... 15,335,355
==========
Weighted average shares (including vested stock fund units)
outstanding for dilutive earnings per share:
Expected shares to be issued............................... 15,335,355
Dilutive effect of unvested shares underlying stock fund units
in the deferred compensation plan............................ --
----------
Weighted average shares outstanding for diluted earnings per
share........................................................ 15,335,355
==========

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial
information of CB Richard Ellis Services for each of the five years in the
period ended December 31, 2000 and for the six-month periods ended June 30,
2000 and June 30, 2001 and of CBRE Holding, Inc. for the period from February
20, 2001 (inception) to June 30, 2001. The statement of operations data of CB
Richard Ellis Services for the six-month periods ended June 30, 2000 and June
30, 2001 and the balance sheet data of CB Richard Ellis Services as of June 30,
2001 were derived from the unaudited consolidated financial statements of CB
Richard Ellis Services included elsewhere in this prospectus. The statement of
operations data of CB Richard Ellis Services for each of the three years in the
period ended December 31, 2000 and the balance sheet data of CB Richard Ellis
Services as of December 31, 1999 and 2000 were derived from the audited
consolidated financial statements of CB Richard Ellis Services included
elsewhere in this prospectus. The statement of operations data of CB Richard
Ellis Services for the two years ended December 31, 1996 and 1997 and the
balance sheet data of CB Richard Ellis Services as of December 31, 1996, 1997
and 1998 were derived from audited consolidated financial statements of CB
Richard Ellis Services that are not included in this prospectus. The statement
of operations data of CBRE Holding for the period from February 20, 2001
(inception) to June 30, 2001 and the balance sheet data of CBRE Holding as of
June 30, 2001 were derived from the audited consolidated financial statements
of CBRE Holding included elsewhere in this prospectus. This table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and related
notes included elsewhere in this prospectus. CB Richard Ellis Services' and
CBRE Holding's historical results are not necessarily indicative of our future
results.

CBRE
CB Richard Ellis Services Holding
---------------------------------------------------------------------- --------------
Six Months Ended February 20,
Year Ended December 31, June 30, 2001
--------------------------------------------------- ------------------ (inception) to
1996 1997 1998 1999 2000 2000 2001 June 30, 2001
-------- -------- ---------- ---------- ---------- -------- --------- --------------
(in thousands)

Statement of Operations Data(a):
Revenue:
Leases......................... $227,623 $274,816 $ 371,300 $ 448,091 $ 539,419 $240,204 $ 216,146 $ --
Sales.......................... 233,444 281,332 357,718 394,718 389,745 159,954 146,536 --
Property and facilities
management fees............... 20,579 39,208 86,379 110,111 110,654 50,925 56,373 --
Consulting and referral fees... 28,882 45,776 72,586 73,569 78,714 35,829 34,337 --
Appraisal fees................. 16,733 22,460 48,082 71,050 75,055 35,366 38,545 --
Loan origination and servicing
fees.......................... 17,368 27,120 39,402 45,940 58,190 23,040 30,936 --
Investment management fees..... 30,540 27,566 33,145 28,929 42,475 17,155 20,254 --
Other.......................... 7,899 11,946 25,891 40,631 29,352 16,330 14,220 --
-------- -------- ---------- ---------- ---------- -------- --------- -------
Total revenue................ 583,068 730,224 1,034,503 1,213,039 1,323,604 578,803 557,347 --
Commissions, fees and other
incentives...................... 292,266 364,403 458,463 559,289 634,639 267,815 259,203 --
Operating, administrative and
other........................... 228,799 275,749 448,794 536,381 538,481 257,904 263,614 --
Depreciation and amortization.... 13,574 18,060 32,185 40,470 43,199 21,300 23,142 --
Merger-related and other
nonrecurring charges............ -- 12,924 16,585 -- -- -- 5,608 --
-------- -------- ---------- ---------- ---------- -------- --------- -------
Operating income................. 48,429 59,088 78,476 76,899 107,285 31,784 5,780 --
Interest income.................. 1,503 2,598 3,054 1,930 2,554 581 1,492 580
Interest expense................. 24,123 15,780 31,047 39,368 41,700 20,670 18,413 1,775
-------- -------- ---------- ---------- ---------- -------- --------- -------
Income (loss) before provision
(benefit) for income tax........ 25,809 45,906 50,483 39,461 68,139 11,695 (11,141) (1,195)
Provision (benefit) for income
tax............................. (44,740) 20,558 25,926 16,179 34,751 6,198 (6,774) (465)
Extraordinary items, net......... -- 951 -- -- -- -- -- --
-------- -------- ---------- ---------- ---------- -------- --------- -------
Net income (loss)................ $ 70,549 $ 24,397 $ 24,557 $ 23,282 $ 33,388 $ 5,497 $ (4,367) $ (730)
======== ======== ========== ========== ========== ======== ========= =======

(footnotes on following pages)

CBRE
CB Richard Ellis Services Holding
---------------------------------------------------------------------- --------------
Six Months Ended February 20,
Year Ended December 31, June 30, 2001
------------------------------------------------- ------------------- (inception) to
1996 1997 1998 1999 2000 2000 2001 June 30, 2001
-------- -------- --------- -------- -------- -------- --------- --------------
(in thousands, except ratios and percentages)

Other Financial Data:
Cash flow from operating activities.. $ 65,694 $ 80,835 $ 76,614 $ 74,011 $ 84,112 $(51,017) $(107,254) $ --
Cash flow from investing activities.. (10,906) (18,018) (223,520) (26,767) (35,722) (12,117) (10,568) --
Cash flow from financing activities.. (28,505) (64,964) 119,438 (37,721) (53,523) 55,338 116,917 229,499
EBITDA, excluding merger-related and
other nonrecurring charges(b)....... 62,003 90,072 127,246 117,369 150,484 53,084 34,530 --
EBITDA, excluding merger-related and
other nonrecurring charges, margin.. 10.6% 12.3% 12.3% 9.7% 11.4% 9.2% 6.2% --
Capital expenditures................. 3,002 9,927 29,715 35,130 26,921 11,451 14,628 --
Acquisition of business including net
assets acquired, intangibles and
goodwill............................ 8,625 (3,216) 189,895 8,931 3,442 669 1,123 --
Ratio of earnings to fixed charges(c) 1.75 2.33 2.17 1.79 2.15 1.44 0.61 0.33

CBRE
CB Richard Ellis Services Holding
------------------------------------------------------ --------
As of
As of December 31, June 30, As of
--------------------------------------------- -------- June 30,
1996 1997 1998 1999 2000 2001 2001
-------- -------- -------- -------- -------- -------- --------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents............................... $ 49,328 $ 47,181 $ 19,551 $ 27,844 $ 20,854 $ 18,548 $229,499
Receivables, less allowance for doubtful accounts....... 40,927 77,358 131,512 168,276 176,908 149,811 --
Goodwill, net of accumulated amortization............... 65,362 196,358 445,124 445,010 423,975 412,379 --
Other intangible assets, net of accumulated amortization 10,521 43,026 63,913 57,524 46,432 42,526 --
Total assets............................................ 278,944 500,100 856,892 929,483 963,105 946,799 238,268
Total long-term debt (including current portion)........ 166,353 152,607 388,896 364,637 314,164 429,618 225,642
Total stockholders' equity (deficit).................... (1,515) 157,771 190,842 209,737 235,339 227,631 3,140

--------
(a) The CB Richard Ellis Services results include the activities of the
following acquired businesses since their respective dates of acquisition:
L.J. Melody and Company--July 1, 1996, Koll Real Estate Services--August
28, 1997, REI Ltd.--April 17, 1998, and CB Hillier Parker Limited--July 7,
1998. For the year ended December 31, 1996, net income includes a tax
benefit of $55.9 million due to a reduction in CB Richard Ellis Services'
deferred tax asset valuation allowance.

(b) EBITDA, excluding merger-related and other nonrecurring charges, represents
earnings before interest expense, income taxes, depreciation and
amortization and nonrecurring charges. Nonrecurring charges consisted of
$12.9 million in 1997 relating to CB Richard Ellis Services' acquisition of
Koll Real Estate Services, $16.6 million in 1998 relating to its
acquisitions of REI, Ltd. and Hillier Parker May and Rowden and $5.9
million for the six months ended June 30, 2001 consisting of the write-down
of an investment, severance payments, and expenses incurred in connection
with CBRE Holding's acquisition of CB Richard Ellis Services. Our
management believes that the presentation of EBITDA, excluding
merger-related and other nonrecurring charges, will enhance a reader's
understanding of our operating performance and ability to service debt as
it provides a measure of cash generated, subject to the payment of interest
and income taxes, that we can use to service debt and for other required or
discretionary purposes. EBITDA, excluding merger-related and other
nonrecurring charges, should not be considered as an alternative to (1)
operating income determined in accordance with GAAP or (2) operating cash
flow determined in accordance with GAAP. This calculation of EBITDA,
excluding merger-related and other nonrecurring charges, may not be
comparable to similarly titled measures reported by other companies.

EBITDA, excluding merger-related and other nonrecurring charges, is
calculated as follows:

CB Richard Ellis Services CBRE Holding
----------------------------------------------------------- -----------------
Six Months Ended
Year Ended December 31, June 30, February 20, 2001
------------------------------------------ ---------------- (inception) to
1996 1997 1998 1999 2000 2000 2001 July 20, 2001
------- ------- -------- -------- -------- ------- ------- -----------------
(in thousands)

Operating Income...... $ --
$48,429 $59,088 $ 78,476 $ 76,899 $107,285 $31,784 $ 5,780
Add:
Depreciation and
amortization....... 13,574 18,060 32,185 40,470 43,199 21,300 23,142 --
Merger-related and
other nonrecurring
charges............ -- 12,924 16,585 -- -- -- 5,608 --
------- ------- -------- -------- -------- ------- ------- ------
EBITDA, excluding
merger-related and
other nonrecurring
charges.............. $62,003 $90,072 $127,246 $117,369 $150,484 $53,084 $34,530 $ --
======= ======= ======== ======== ======== ======= ======= ======

(c) Represents a deficiency of $11.1 million for CB Richard Ellis Services for
the six months ended June 30, 2001 and a deficiency of $1.2 million for
CBRE Holding for the period from February 20, 2001 (inception) to June 30,
2001.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in forward-looking statements for many reasons, including the risks
described in "Risk Factors" and elsewhere in this prospectus. You should read
the following discussion with the sections of the prospectus titled "Unaudited
Pro Forma Combined Financial Data," "Selected Historical Consolidated Financial
Data" and our financial statements and related notes included elsewhere in this
prospectus.

Basis of Presentation

CBRE Holding itself does not conduct any business or have any operations and
was formed to be the parent holding company of CB Richard Ellis Services.
Accordingly, the business and operations of CBRE Holding and its subsidiaries
is the same as that conducted by CB Richard Ellis Services and its
subsidiaries.

Results of Operations

CBRE Holding

The following table sets forth items derived from CBRE Holding's
consolidated financial statements for the period from February 20, 2001
(inception) to June 30, 2001:

Period from
February 20,
2001
(inception) to
June 30, 2001
--------------

Interest income............................................ $ 579,845
Interest expense........................................... 1,775,175
Loss before benefit for income tax......................... (1,195,330)
Benefit for income tax..................................... (464,983)
Net loss................................................... (730,347)
Basic loss per share....................................... (16.48)
Weighted average shares outstanding for basic loss per
share.................................................... 44,323
Diluted loss per share..................................... $ (16.48)
Weighted average shares outstanding for diluted loss per
share.................................................... 44,323

CBRE Holding reported a consolidated net loss of $0.7 million, or $16.48
diluted loss per share for the period from February 20, 2001 (inception) to
June 30, 2001 primarily due to interest expense on the $229 million in
aggregate principal 11 1/4% senior subordinated notes due 2011 issued by BLUM
CB Corp. Consolidated interest income of $0.6 million represents primarily
interest earned on the $229.5 million in net proceeds from the issuance of the
$229 million in aggregate principal 11 1/4% senior subordinated notes and $3.9
million in common stock held in escrow from June 7, 2001 to June 30, 2001.
Consolidated interest expense of $1.8 million consists of interest on the $229
million in aggregate principal 11 1/4% senior subordinated notes from June 7,
2001 to June 30, 2001.

The income tax benefit on a consolidated basis was $0.5 million for the
period from February 20, 2001 to June 30, 2001. The benefit was the result of
the pre-tax loss.

CB Richard Ellis Services

The following table sets forth items derived from CB Richard Ellis Services'
consolidated statements of operations for the years ended December 31, 1998,
1999 and 2000 and the six months ended June 30, 2000 and 2001:

(unaudited)
Year Ended December 31, Six Months Ended June 30,
---------------------------------------------------- -------------------------------
1998 1999 2000 2000 2001
---------------- ---------------- ---------------- -------------- ---------------
(dollars in thousands)

Revenue:
Leases................................ $ 371,300 35.9% $ 448,091 36.9% $ 539,419 40.8% $240,204 41.5% $216,146 38.8%
Sales................................. 357,718 34.6 394,718 32.5 389,745 29.4 159,954 27.6 146,536 26.3
Property and facilities management
fees................................. 86,379 8.4 110,111 9.1 110,654 8.4 50,925 8.8 56,373 10.1
Consulting and referral fees.......... 72,586 7.0 73,569 6.1 78,714 5.9 35,829 6.2 34,337 6.2
Appraisal fees........................ 48,082 4.6 71,050 5.9 75,055 5.7 35,366 6.1 38,545 6.9
Loan origination and servicing fees... 39,402 3.8 45,940 3.8 58,190 4.4 23,040 4.0 30,936 5.5
Investment management fees............ 33,145 3.2 28,929 2.4 42,475 3.2 17,155 3.0 20,254 3.6
Other................................. 25,891 2.5 40,631 3.3 29,352 2.2 16,330 2.8 14,220 2.6
---------- ----- ---------- ----- ---------- ----- -------- ----- -------- -----
Total revenue......................... 1,034,503 100.0 1,213,039 100.0 1,323,604 100.0 578,803 100.0 557,347 100.0
Costs and expenses:
Commissions, fees and other
incentives........................... 458,463 44.3 559,289 46.1 634,639 47.9 267,815 46.3 259,203 46.5
Operating, administrative and other... 448,794 43.4 536,381 44.2 538,481 40.7 257,904 44.5 263,614 47.3
Depreciation and amortization......... 32,185 3.1 40,470 3.4 43,199 3.3 21,300 3.7 23,142 4.2
Merger-related and other nonrecurring
charges.............................. 16,585 1.6 -- -- -- -- -- -- 5,608 1.0
---------- ----- ---------- ----- ---------- ----- -------- ----- -------- -----
Operating income........................ 78,476 7.6 76,899 6.3 107,285 8.1 31,784 5.5 5,780 1.0
Interest income......................... 3,054 0.3 1,930 0.2 2,554 0.2 581 0.1 1,492 0.3
Interest expense........................ 31,047 3.0 39,368 3.2 41,700 3.2 20,670 3.6 18,413 3.3
---------- ----- ---------- ----- ---------- ----- -------- ----- -------- -----
Income (loss) before provision (benefit)
for income tax......................... 50,483 4.9 39,461 3.3 68,139 5.1 11,695 2.0 (11,141) (2.0)
Provision (benefit) for income tax...... 25,926 2.5 16,179 1.4 34,751 2.6 6,198 1.1 (6,774) (1.2)
---------- ----- ---------- ----- ---------- ----- -------- ----- -------- -----
Net income (loss)....................... $ 24,557 2.4% $ 23,282 1.9% $ 33,388 2.5% $ 5,497 0.9% $ (4,367) (0.8)%
========== ===== ========== ===== ========== ===== ======== ===== ======== =====
EBITDA, excluding merger-related and
other nonrecurring charges(1).......... $ 127,246 12.3% $ 117,369 9.7% $ 150,484 11.4% $ 53,084 9.2% $ 34,530 6.2%
========== ===== ========== ===== ========== ===== ======== ===== ======== =====

--------
(1) EBITDA, excluding merger-related and other nonrecurring charges, (a) for
the year ended December 31, 1998 is calculated as the sum of operating
income of $78.5 million, plus merger-related and other nonrecurring charges
of $16.6 million and depreciation and amortization of $32.2 million and (b)
for the six months ended June 30, 2001 is calculated as the sum of
operating income of $5.8 million, plus merger-related and other
nonrecurring charges of $5.6 million and depreciation and amortization of
$23.1 million.

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

CB Richard Ellis Services reported consolidated net loss of $4.4 million, or
$0.20 diluted loss per share for the six months ended June 30, 2001 on revenues
of $557.3 million compared to consolidated net income of $5.5 million, or $0.26
diluted earnings per share, on revenues of $578.8 million for the six months
ended June 30, 2000.

Revenues on a consolidated basis decreased by $21.5 million or 3.7% for the
current year, mainly due to decreased lease revenue of $24.1 million. Sales
revenue also declined by $13.4 million during the current year. The lower
revenues are primarily attributable to CB Richard Ellis Services' North
American operation. However, the European and Asian operations also experienced
lower sale and lease revenues. These decreases were slightly offset by a $7.9
million increase in loan origination and servicing fees, as well as a $5.4
million increase in property and facilities management fees.

Commissions, fees and other incentives on a consolidated basis totaled
$259.2 million, a decrease of $8.6 million or 3.2% from prior year. This
decrease is primarily due to the lower sales and lease revenues within the
North American operation. The decline in revenues also resulted in lower
variable commission expense within this division as compared to prior year.
These declines were slightly offset by higher insurance and benefit costs for
producers in the United States, which is included as a component of commission
expense. In addition, producer compensation within the international operations
is typically fixed in nature compared to the North American operations and did
not decrease as a result of the lower revenues. As a result, commission as a
percentage of revenue remained fairly constant at 46.5% for the current year,
up slightly from 46.3% for prior year.

Operating, administrative and other on a consolidated basis was $263.6
million, an increase of $5.7 million or 2.2%, compared to the six months ended
June 30, 2000. The increase is attributable to increased compensation expense
of $1.8 million related to CB Richard Ellis Services' deferred compensation
plan as well as lower earnings from unconsolidated subsidiaries during the
current year. These increases were slightly offset by lower bonus incentives
due to the lower results.

Merger-related and other nonrecurring charges were $5.6 million for the six
months ended June 30, 2001, with no charges incurred in the prior year. This
included merger-related costs of $1.3 million, the write-off of an e-business
investment of $2.9 million, as well as severance costs of $1.4 million related
to CB Richard Ellis Services' cost reduction program instituted in May 2001.

Consolidated interest expense was $18.4 million, a decrease of $2.3 million
or 10.9% in the current year. This decrease was primarily a result of the
revolving credit facility being renewed at lower average borrowing rates during
the current year as compared to the prior year. In addition, CB Richard Ellis
Services had lower average borrowing levels during the current year due to the
pay-down of the revolving credit facility during December 2000.

The income tax benefit on a consolidated basis was $6.8 million for the six
months ended June 30, 2001, as compared to a provision for income tax of $6.2
million for the six months ended June 30, 2000. The current year benefit was a
result of the year-to-date pre-tax loss. The effective tax rate was 60.8% for
the six months ended June 30, 2001 as compared to 53.0% for the six months
ended June 30, 2000. CB Richard Ellis Services calculates its effective tax
rate based on an estimate of its annual earnings for the entire year.

EBITDA, excluding merger-related and other nonrecurring charges, was $34.5
million for the six months ended June 30, 2001, as compared to $53.1 for the
six months ended June 30, 2000, with EBITDA, excluding merger-related and other
nonrecurring charges, as a percentage of revenue decreasing from 9.2% for the
six months ended June 30, 2000 to 6.2% for the six months ended June 30, 2001.
There were no merger-related or other nonrecurring charges for the six months
ended June 30, 2000. EBITDA, excluding merger-related and other nonrecurring
charges, represents earnings before net interest expense, income taxes,
depreciation and amortization of intangible assets and also excludes
merger-related and other nonrecurring charges. Management believes that the
presentation of EBITDA, excluding merger-related and other nonrecurring
charges, will enhance a reader's understanding of our operating performance and
ability to service debt as it provides a measure of cash generated, subject to
the payment of interest and income taxes, that we can use to service our debt
and for other required or discretionary purposes. Additionally, many of CB
Richard Ellis Services' debt covenants are based upon EBITDA. EBITDA, excluding
merger-related and other nonrecurring charges, should not be considered as an
alternative to (a) operating income determined in accordance with GAAP or (b)
operating cash flow determined in accordance with GAAP. This calculation of
EBITDA, excluding merger-related and other nonrecurring charges, may not be
comparable to similarly titled measures reported by other companies.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

CB Richard Ellis Services reported consolidated net income of $33.4 million
for the year ended December 31, 2000, on revenues of $1,323.6 million, compared
to consolidated net income of $23.3 million on

revenues of $1,213.0 million for the year ended December 31, 1999. The 2000
results include a $4.7 million nonrecurring pre-tax gain from CB Richard Ellis
Services' sale of select non-strategic assets. The 1999 results include
nonrecurring pre-tax gains from the sale of five non-strategic offices and a
risk management operation totaling $8.7 million, as well as one time charges of
approximately $10.2 million, the majority of which were severance costs related
to CB Richard Ellis Services' reduction in workforce.

Revenue on a consolidated basis increased by $110.6 million or 9.1% during
the year ended December 31, 2000, compared to the year ended December 31, 1999.
The real estate market in the United States remained healthy in 2000, with
relatively low interest and vacancy rates. As a result, lease revenue increased
by $91.3 million or 20.4% during 2000. Investment management fees increased by
$13.5 million or 46.8% and loan origination and servicing fees were higher by
$12.3 million or 26.7%. In addition, other revenue decreased by $11.3 million
primarily due to the contribution of an engineering services group into a
separately owned joint venture, as well as the loss of revenue due to the sale
of assets previously included in the management services segment.

Commissions, fees and other incentives on a consolidated basis totaled
$634.6 million, an increase of $75.4 million or 13.5% for the year ended
December 31, 2000, compared to the year ended December 31, 1999. Lease
commissions increased significantly due to higher lease revenue. In addition,
the overall revenue growth resulted in higher variable commission expense as
compared to the prior year. Variable commissions increase as a percentage of
revenue as select earnings levels are met. During 2000, a greater number of
high level producers earned a larger proportion of total revenue. This
contributed to an increase in commissions as a percentage of revenue from 46.1%
to 47.9% for 2000.

Operating, administrative and other on a consolidated basis was $538.5
million, an increase of $2.1 million or 0.4% for the year ended December 31,
2000, compared to the prior year. This increase is due to higher bonus
incentives and profit share driven by the improved current year results, offset
by lower salary requirements in North America. As a percentage of revenue,
operating, administrative and other was 40.7% for the year ended December 31,
2000, compared to 44.2% for the year ended December 31, 1999. The decreased
percentage is due to CB Richard Ellis Services' focus on higher margin lines of
business, as well as an improvement in its operational efficiency through cost
containment measures.

Consolidated interest expense was $41.7 million, an increase of $2.3 million
or 5.9% for the year ended December 31, 2000, as compared to the year ended
December 31, 1999. The increase resulted from higher interest rates for the
revolving credit facility, offset in part by lower average borrowing levels
during 2000. Overall, CB Richard Ellis Services reduced its outstanding
long-term debt by $50.5 million or 13.8% as compared to December 31, 1999,
helping to minimize the impact of the increased interest rates during 2000.

Provision for income tax on a consolidated basis was $34.8 million for the
year ended December 31, 2000, as compared to the provision for income tax of
$16.2 million for the year ended December 31, 1999. The increase is mainly due
to higher pre-tax income and a lower release of valuation allowance during the
current year. The effective tax rate was 51.0% for the current year as compared
to 41.0% for the prior year. The increase in the effective tax rate is
primarily due to a decrease in the release of valuation allowances from $6.3
million to $3.0 million in 2000. Valuation allowances over the past two years
have been released as it has become more likely than not that CB Richard Ellis
Services would realize additional deferred tax assets.

EBITDA, excluding merger-related and other nonrecurring charges was $150.5
million for the year ended December 31, 2000, as compared to $117.4 million for
the year ended December 31, 1999, with EBITDA, excluding merger-related and
other nonrecurring charges as a percentage of revenue increasing from 9.7% to
11.4% for 2000. There were no merger-related or other nonrecurring charges in
1999 and 2000.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

CB Richard Ellis Services reported a consolidated net income of $23.3
million for the year ended December 31, 1999, on revenue of $1,213.0 million
compared to a consolidated net income of $24.6 million on revenue of $1,034.5
million for the year ended December 31, 1998. However, including the $32.3
million deemed dividend resulting from the accounting treatment of the
preferred stock repurchase, the 1998 net loss applicable to common stockholders
was $7.7 million. The 1999 result includes nonrecurring gains of $8.7 million
from the sale of five non-strategic offices and a risk management operation and
one-time charges of approximately $10.2 million, the majority of which were
severance costs related to our reduction in workforce.

Revenue on a consolidated basis was $1,213.0 million, an increase of $178.5
million or 17.3% for the year ended December 31, 1999, compared to the year
ended December 31, 1998. The overall increase related to the continued
improvement in commercial real estate markets across the United States as
reflected in increased lease transactions, as well as the full contribution
from REI, Hillier Parker and various other 1998 acquisitions. Additionally, CB
Richard Ellis Services continued to benefit from its global market presence by
leveraging our ability to deliver comprehensive real estate services into new
businesses.

Commissions, fees and other incentives on a consolidated basis were $559.3
million, an increase of $100.8 million or 22.0% for the year ended December 31,
1999, compared to the year ended December 31, 1998. The increase in these costs
is attributable to an increase in revenue and includes the impact of a new
commission-based program, which enables sales professionals to earn additional
commission over a particular revenue threshold. The increase is also due to the
full year contribution from REI and Hillier Parker and various other 1998
acquisitions.

Operating, administrative and other on a consolidated basis was $536.4
million, an increase of $87.6 million or 19.5% for the year ended December 31,
1999, compared to the year ended December 31, 1998. As a percentage of revenue,
operating, administrative and other increased slightly to 44.2% for the year
ended December 31, 1999, compared to 43.4% for the year ended December 31,
1998. The increase is due primarily to the acquisitions of REI and Hillier
Parker.

Consolidated interest expense was $39.4 million, an increase of $8.3 million
or 26.8% for the year ended December 31, 1999, as compared to the year ended
December 31, 1998. The increase resulted from the renewal of select senior term
loans at a higher borrowing rate as well as higher borrowing levels during
1999.

Provision for income tax on a consolidated basis was $16.2 million for the
year ended December 31, 1999, as compared to the provision for income tax of
$25.9 million for the year ended December 31, 1998. The decrease is primarily
due to the decrease in income before provision for income tax. In addition, CB
Richard Ellis Services released $6.3 million in valuation allowances as it
became evident that it was more likely than not that CB Richard Ellis Services
would realize additional deferred tax assets, resulting in a decrease in its
effective tax rate. In early 1998, CB Richard Ellis Services repurchased its
outstanding preferred stock which triggered a limitation on the annual amount
of net operating losses it can use to offset future U.S. taxable income. This
limitation does not affect the way taxes are reported for financial reporting
purposes, but it does affect the timing of the actual amount of taxes paid on
an annual basis.

EBITDA, excluding merger-related and other nonrecurring charges was $117.4
million for the year ended December 31, 1999, as compared to $127.2 million for
the year ended December 31, 1998. EBITDA excludes the merger-related charges of
$16.6 million in 1998 relating to CB Richard Ellis Services' acquisitions of
REI, Ltd. and Hillier Parker May and Rowden.

CB Richard Ellis Services Segment Operations

CB Richard Ellis Services provides integrated real estate services through
three global business segments: transaction management, financial services and
management services. The factors for determining the reportable

segments were based on (1) the type of service and client and (2) the way the
chief operating decision-makers organize segments internally for making
operating decisions and assessing performance. The transaction management
segment consists of sales, leasing and consulting services in connection with
commercial real estate, transaction management and advisory services for large
corporate clients and investment property services, including brokerage
services for commercial real estate property marketed for sale to institutional
and private investors. The financial services segment consists of commercial
loan origination and servicing through CB Richard Ellis Services wholly-owned
subsidiary, L.J. Melody, investment management services through CB Richard
Ellis Services wholly-owned subsidiary, CBRE Investors, and valuation and
appraisal services. Management services provides facilities, property and
construction management services. Results for the six months ended June 30,
2001 for the financial services segment includes a $5.6 million nonrecurring
pre-tax gain from the sale of mortgage fund management contracts. For the six
months ended June 30, 2000, the management services segment results included a
$4.7 million nonrecurring pre-tax gain from the sale of certain non-strategic
assets. The 2000 results for the financial services segment include a $5.3
million pre-tax gain from the sale of loan servicing rights. The 1999 results
include a nonrecurring pre-tax gain from the sale of five non-strategic offices
and a risk management operation totaling $8.7 million. In July 1999, we changed
our segment reporting from four segments to three segments. Prior periods have
been restated to conform to the new segmentation. The following table
summarizes CB Richard Ellis Services' revenue, operating income, EBITDA,
excluding merger-related and other nonrecurring charges and EBITDA margin by
operating segment for the years ended December 31, 1998, 1999 and 2000, and for
the six months ended June 30, 2000 and June 30, 2001:

(unaudited)
Year Ended December 31, Six Months Ended June 30,
---------------------------------------------- -------------------------------
1998 1999 2000 2000 2001
-------------- -------------- -------------- -------------- ---------------
(dollars in thousands)

Transaction Management
Revenue:
Leases................................. $352,811 46.2% $426,108 48.4% $510,287 53.7% $227,225 55.3% $203,804 55.0%
Sales.................................. 330,206 43.3 383,726 43.5 378,486 39.8 154,701 37.7 140,718 38.0
Other consulting and referral fees (1). 79,934 10.5 71,095 8.1 61,479 6.5 28,627 7.0 25,797 7.0
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total revenue........................ 762,951 100.0 880,929 100.0 950,252 100.0 410,553 100.0% 370,319 100.0%
Costs and expenses:
Commissions, fees and other
incentives............................ 405,393 53.1 477,057 54.2 542,248 57.1 226,759 55.2 211,330 57.0
Operating, administrative and other.... 262,604 34.4 314,814 35.7 303,357 31.9 150,831 36.8 148,743 40.2
Depreciation and amortization.......... 13,722 1.8 20,676 2.3 21,342 2.2 9,988 2.4 11,030 3.0
Merger-related and other nonrecurring
charges............................... -- -- -- -- -- -- -- -- 1,827 0.5
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Operating income (2)..................... $ 81,232 10.7% $ 68,382 7.8% $ 83,305 8.8% $ 22,975 5.6% $ (2,611) (0.7)%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
EBITDA, excluding merger-related and
other nonrecurring changes.............. $ 94,954 12.5% $ 89,058 10.1% $104,647 11.0% $ 32,963 8.0% $ 10,246 2.8%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
Financial Services
Revenue:
Appraisal fees......................... $ 48,090 33.1% $ 69,007 38.9% $ 72,861 34.0% $ 34,618 38.1% $ 37,779 33.4%
Loan origination and servicing fees.... 39,402 27.1 45,938 25.9 58,188 27.2 23,037 25.3 30,936 27.4
Investment management fees............. 32,591 22.4 27,323 15.4 40,433 18.9 15,758 17.3 19,236 17.0
Other (1).............................. 25,167 17.4 35,059 19.8 42,622 19.9 17,487 19.3 25,079 22.2
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total revenue........................ 142,250 100.0 177,327 100.0 214,104 100.0 90,900 100.0% 113,030 100.0%
Costs and expenses:
Commissions, fees and other
incentives............................ 41,491 28.6 59,294 33.5 65,058 30.4 28,397 31.3 34,777 30.8
Operating, administrative and other.... 85,885 59.1 100,201 56.5 119,333 55.7 51,095 56.2 60,552 53.6
Depreciation and amortization.......... 11,025 7.6 10,719 6.0 12,001 5.6 6,025 6.6 6,462 5.7
Merger-related and other nonrecurring
charges............................... -- -- -- -- -- -- -- -- 3,303 2.9
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Operating income (2)..................... $ 6,849 4.7% $ 7,113 4.0% $ 17,712 8.3% $ 5,383 5.9% $ 7,936 7.0%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
EBITDA, excluding merger-related and
other nonrecurring changes.............. $ 17,874 12.3% $ 17,832 10.1% $ 29,713 13.9% $ 11,408 12.6% $ 17,701 15.7%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
Management Services
Revenue:
Property management fees............... $ 67,300 53.3% $ 79,994 51.7% $ 83,251 52.3% $ 39,622 51.2% $ 39,908 53.9%
Facilities management fees............. 17,219 13.6 25,597 16.5 23,069 14.5 9,830 12.7 14,538 19.7
Other (1).............................. 41,783 33.1 49,192 31.8 52,928 33.2 27,898 36.1 19,552 26.4
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total revenue........................ 126,302 100.0 154,783 100.0 159,248 100.0 77,350 100.0% 73,998 100.0%
Costs and expenses:
Commissions, fees and other
incentives............................ 11,579 9.2 22,938 14.8 27,333 17.2 12,659 16.4 13,096 17.7
Operating, administrative and other.... 100,305 79.4 121,366 78.4 115,791 72.7 55,978 72.4 54,319 73.4
Depreciation and amortization.......... 7,438 5.9 9,075 5.9 9,856 6.2 5,287 6.8 5,650 7.6
Merger-related and other nonrecurring
charges............................... -- -- -- -- -- -- -- -- 478 0.7
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Operating income (2)..................... $ 6,980 5.5% $ 1,404 0.9% $ 6,268 3.9% $ 3,426 4.4% 455 0.6%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
EBITDA, excluding merger-related and
other nonrecurring changes.............. $ 14,418 11.4% $ 10,479 6.8% $ 16,124 10.1% $ 8,713 11.3% $ 6,583 8.9%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
Merger-related and other nonrecurring
charges................................. $ 16,585 $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Total operating income................... $ 78,476 $ 76,899 $107,285 $ 31,784 $ 5,780
======== ======== ======== ======== ========
Total EBITDA, excluding merger-
related and other nonrecurring
charges (3)............................. $127,246 $117,369 $150,484 $ 53,084 $ 34,530
======== ======== ======== ======== ========

(footnotes on following page)

--------
(1) Revenue is allocated by material line of business specific to each segment.
"Other" includes types of revenue that have not been broken out separately
due to their immaterial balances and/or nonrecurring nature within each
segment. Certain revenue types disclosed on the consolidated statements of
operations may not be derived directly from amounts shown in this table.

(2) Segment operating income excludes merger-related and other nonrecurring
charges.

(3) EBITDA, excluding merger-related and other nonrecurring charges, (a) for
the year ended December 31, 1998 is calculated as the sum of operating
income of $78.5 million, merger-related and other nonrecurring charges of
$16.6 million and depreciation and amortization of $32.2 million and (b)
for the six months ended June 30, 2001 is calculated as the sum of
operating income of $5.8 million, merger-related and other nonrecurring
charges of $5.6 million and depreciation and amortization of $23.1 million.

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Transaction Management

Revenue decreased by $40.2 million or 9.8% for the six months ended June 30,
2001, compared to the six months ended June 30, 2000. The decrease was
primarily due to a $23.4 million decrease in lease revenues and a $14.0 million
decline in sales revenues. The lower revenues are mainly attributable to the
North American operations. Sales and lease revenues also decreased in the
European operations. Commissions, fees and other incentives decreased by $15.4
million or 6.8% for the six months ended June 30, 2001, compared to the six
months ended June 30, 2000, primarily due to the lower lease and sales revenues
within North America. The decline in revenues also resulted in lower variable
commission expense within this division as compared to prior year. These
declines were offset by higher insurance and benefit costs for producers in the
U.S., which is included as a component of commissions expense. In addition,
producer compensation within the international operations is typically fixed in
nature and does not decrease as a result of lower revenues. These factors
contributed to an increase in commissions as a percentage of revenues from
55.2% to 57.1% for the current year. Operating, administrative, and other
decreased by $2.1 million or 1.4% as a result of lower bonus incentives.
Depreciation and amortization increased by $1.0 million or 10.4% in the current
year, primarily as a result of additional investments in computer hardware and
software.

Financial Services

Revenue increased by $22.1 million or 24.3% for the six months ended June
30, 2001, compared to the six months ended June 30, 2000. Loan origination and
servicing fees increased by $7.9 million. Excluding any acquisitions, loan
origination fees increased by $6.2 million or 33.0%, while loan servicing fees
were up slightly compared to prior year. Investment management fees increased
by $3.5 million due to higher average assets under management, as well as
increased incentive fees resulting from a greater number of sold properties.
Appraisal fees increased by 9.1% compared to prior year. Other revenues
increased by $7.6 million due to the gain on the sale of mortgage fund
management contracts and the gain on sale of loans servicing rights during the
current year. Commissions, fees and other incentives increased by $6.4 million
or 22.5% for the six months ended June 30, 2001, compared to the six months
ended June 30, 2000. This increase is mainly due to the increase in loan and
appraisal commissions. In addition, producer costs increased in the mortgage
banking operations in order to handle the higher business volume. Operating,
administrative, and other increased by $9.5 million or 18.5% for the six months
ended June 30, 2001, compared to the six months ended June 30, 2000. This is
due to the start-up of the investment management operations in Asia during
2000. The mortgage banking line of business had higher bonus and long-term
incentive costs attributable to the more favorable current year results.

Management Services

Revenue decreased by $3.4 million or 4.3% for the six months ended June 30,
2001, compared to the six months ended June 30, 2000. Other revenues decreased
by $8.3 million primarily due to the gain on the sale of

certain non-strategic assets in the prior year. Operating, administrative, and
other decreased by $1.7 million or 3.0% for the six months ended June 30, 2001
compared to the six months ended June 30, 2000. The decrease is primarily due
to lower personnel requirements, mainly in North America.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Transaction Management

Revenue increased by $69.3 million or 7.9% for the year ended December 31,
2000, compared to the year ended December 31, 1999. This increase was primarily
due to higher lease revenue in North America as a result of a greater number of
total transactions executed during 2000, as well as a larger dollar average per
transaction. Europe reported increased lease revenues primarily due to strong
performances in France and the United Kingdom, as well as expanded operations
in The Netherlands and Spain. Increased lease revenue in Asia Pacific was due
to a better overall economy in China, as well as improved financial performance
in Australia. Sales revenue decreased slightly from the prior year, primarily
due to higher interest rates and a weak currency in Australia. Commissions,
fees and other incentives increased by $65.2 million or 13.7% for the year
ended December 31, 2000, compared to the year ended December 31, 1999,
primarily due to an increase in lease revenue. In addition, the overall revenue
growth resulted in a higher variable commission expense compared to the prior
year. Commissions are directly correlated to revenue in the transaction
management segment. During 1999, CB Richard Ellis Services' commission program
was amended to increase the percentage of revenue a producer can earn as
commission as the producer meets certain revenue targets. Under the new
program, when a producer achieves a revenue target, the percentage of
commission increases on a retroactive basis. This motivates producers to reach
higher revenue targets. During 2000, a greater number of producers generated a
larger proportion of revenue at the higher revenue targets. This contributed to
an increase in commissions as a percentage of revenue from 54.2% to 57.1% for
2000. Operating, administrative and other decreased by $11.5 million or 3.6%
for the year ended December 31, 2000, compared to the year ended December 31,
1999. This decrease is mainly related to lower personnel requirements in North
America due to cost containment measures, as well as higher equity income from
unconsolidated subsidiaries during 2000. This is slightly offset by increased
bonus incentives and profit share due to the more favorable results.

Financial Services

Revenue increased by $36.8 million or 20.7% for the year ended December 31,
2000, compared to the year ended December 31, 1999. Investment management fees
grew by 48.0% due to a higher volume of managed assets, as well as increased
incentive fees from several properties in North America and Asia Pacific. Loan
origination and servicing fees increased by $12.3 million, of which $3.7
million is attributable to the acquisitions of Boston Mortgage Capital
Corporation in late 2000 and Eberhardt Company in late 1999. In addition,
excluding any acquisitions, loan production fees increased by $5.9 million or
18.4% over prior year, while loan servicing fees increased by $2.6 million or
21.7%. Other revenue increased due to the acquisition of several small
consulting companies in late 1999 and early 2000. Commissions, fees and other
incentives increased by $5.8 million or 9.7% for the year ended December 31,
2000, compared to the year ended December 31, 1999, due primarily to higher
loan commissions. Operating, administrative and other increased by $19.1
million or 19.1% for the year ended December 31, 2000, compared to the year
ended December 31, 1999, mainly due to increased personnel requirements as a
result of expanded investment management operations in North America and Asia
Pacific and higher bonus incentives and profit share attributable to the more
favorable current year results. In addition, earnings from unconsolidated
subsidiaries decreased for 2000 as compared to the same period in the prior
year. The 2000 results for the financial services segment include a $5.3
million pre-tax gain from the sale of loan servicing rights.

Management Services

Revenue increased by $4.5 million or 2.9% for the year ended December 31,
2000, compared to the year ended December 31, 1999, due to higher lease and
sales revenue. In addition, property management fees

increased primarily due to higher square footage managed in India and
Australia. This was slightly offset by lower facilities management fees due to
the loss of a major client at the beginning of 2000. Commissions, fees and
other incentives increased by $4.4 million or 19.2% for the year ended December
31, 2000, compared to the year ended December 31, 1999, attributable mainly to
the higher sales and lease commissions. Operating, administrative and other
decreased $5.6 million or 4.6% for the year ended December 31, 2000, compared
to the year ended December 31, 1999. The decline is mainly due to lower
personnel requirements due to cost containment measures and higher equity
income in unconsolidated subsidiaries in North America. As a percentage of
revenue, operating expenses decreased from 78.4% during 1999 to 72.7% during
2000. The 2000 results include a $4.7 million pre-tax gain from the sale of
certain non-strategic assets.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Transaction Management

Revenue increased by $118.0 million or 15.5% for the year ended December 31,
1999, compared to the year ended December 31, 1998, mainly due to the continued
improvement of the real estate market, mainly in brokerage leasing services and
the full year contribution of REI, Hillier Parker and the various other 1998
acquisitions. Commissions, fees and other incentives increased by $71.7 million
or 17.7% for the year ended December 31, 1999, compared to the year ended
December 31, 1998, primarily due to the increase in revenue. This also includes
the impact of a new commission-based program which enables sales professionals
to earn additional commission over a particular revenue threshold, as well as
the full year contribution from REI, Hillier Parker and the various other 1998
acquisitions. Operating, administrative and other increased by $52.2 million or
19.9% for the year ended December 31, 1999, compared to the year ended December
31, 1998, primarily due to the full year inclusion of REI, Hillier Parker, and
the various other 1998 acquisitions. Depreciation and amortization increased by
$7.0 million or 50.7% for the year ended December 31, 1999, as compared to the
year ended December 31, 1998, primarily as a result of additional investments
in computer hardware and software to support the increase in new business.

Financial Services

Revenue increased by $32.1 million or 22.1% for the year ended December 31,
1999, compared to the year ended December 31, 1998. The increase in revenue is
primarily due to the full year contribution of REI, Hillier Parker and the
various other 1998 acquisitions, resulting in increased appraisal and valuation
fees. Commissions, fees and other incentives increased by $17.8 million or
42.9% for the year ended December 31, 1999, compared to the year ended December
31, 1998. The increase is primarily a result of the revenue increase.
Operating, administrative and other increased by $14.3 million or 16.7% for the
year ended December 31, 1999, compared to the year ended December 31, 1998,
mainly as a result of the integration of REI, Hillier Parker and the various
other 1998 acquisitions.

Management Services

Revenue increased by $28.5 million or 22.5% for the year ended December 31,
1999, compared to the year ended December 31, 1998, primarily due to growth in
the facilities management businesses, as well as the full contribution of REI,
Hillier Parker and the various other 1998 acquisitions. Commissions, fees and
other incentives increased by $11.4 million or 98.1% for the year ended
December 31, 1999, compared to the year ended December 31, 1998, due to the
higher revenues as a result of the REI, Hillier Parker acquisitions and the
various other 1998 acquisitions. Operating, administrative and other increased
$21.1 million or 21.0% for the year ended December 31, 1999, compared to the
year ended December 31, 1998, primarily related to the acquisitions of REI and
Hillier Parker and the investment in infrastructure to expand the business.
Depreciation and amortization increased by $1.6 million or 22.0% for the year
ended December 31, 1999, as compared to the year ended December 31, 1998,
primarily as a result of the acquisitions of REI, Hillier Parker and the
various other 1998 acquisitions.

Quarterly Financial Information

A significant portion of CB Richard Ellis Services' revenue is seasonal.
Historically, this seasonality has caused its revenue, operating income, net
income and cash flow from operating activities to be substantially lower in the
first three calendar quarters and higher in the fourth calendar quarter. The
concentration of earnings and cash flow in the fourth quarter is due to an
industry wide focus on completing transactions at year-end while incurring
constant, non-variable expenses throughout the year. This has historically
resulted in a small operating loss in the first quarter, a small operating
profit or loss in the second and third quarters, and a larger profit in the
fourth quarter.

The following table presents CB Richard Ellis Services' revenue, gross
profit, operating income and EBITDA by operating segment for each of the nine
quarters in the period from January 1, 1999 through June 30, 2001. The
information for each of these quarters is unaudited and has been prepared on
the same basis as CB Richard Ellis Services' audited consolidated financial
statements appearing elsewhere in this prospectus. In the opinion of
management, all necessary adjustments, consisting only of normal recurring
adjustments, have been included to present fairly the unaudited quarterly
results when read in conjunction with our audited consolidated financial
statements and related notes appearing elsewhere in this prospectus.

Quarter Ended
----------------------------------------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30,
1999 1999 1999 1999 2000 2000 2000 2000 2001 2001
-------- -------- --------- -------- -------- -------- --------- -------- -------- --------
(dollars in thousands)

Revenue
Transaction management..... $159,135 $198,171 $225,099 $298,524 $178,459 $230,222 $232,695 $308,876 $179,981 $190,338
Financial services......... 37,945 41,802 42,923 54,657 41,397 51,375 56,139 65,193 55,919 57,111
Management services........ 36,121 37,194 38,996 42,472 41,063 36,287 37,687 44,211 36,598 37,400
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenue.............. $233,201 $277,167 $307,018 $395,653 $260,919 $317,884 $326,521 $418,280 $272,498 $284,849
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Year to year revenue growth
percentage................ 33.1% 8.6% 12.1% 19.8% 11.9% 14.7% 6.4% 5.7% 4.4% (10.4%)
Operating Income (Loss)
Transaction management..... $ 2,337 $ 13,776 $ 20,826 $ 31,443 $ 4,631 $ 18,344 $ 17,261 $ 43,069 $ (4,130) $ 1,519
Financial services......... 2,955 1,753 (344) 2,749 805 4,578 6,590 5,739 6,849 1,087
Management services........ (216) 1,051 (436) 1,005 3,803 (377) 1,033 1,809 (394) 849
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total operating income..... $ 5,076 $ 16,580 $ 20,046 $ 35,197 $ 9,239 $ 22,545 $ 24,884 $ 50,617 $ 2,325 $ 3,455
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Operating margin
percentage................ 2.2% 6.0% 6.5% 8.9% 3.5% 7.1% 7.6% 12.1% 0.9% 1.2%
EBITDA, excluding
merger-related and
other nonrecurring
charges
Transaction management..... $ 6,951 $ 19,139 $ 26,595 $ 36,373 $ 9,582 $ 23,381 $ 23,213 $ 48,471 $ 2,017 $ 8,229
Financial services......... 5,725 4,771 1,766 5,570 3,785 7,623 9,513 8,792 10,095 7,606
Management services........ 2,394 2,638 1,686 3,761 6,441 2,272 2,992 4,419 1,909 4,674
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total EBITDA, excluding
merger-related and other
nonrecurring charges...... $ 15,070 $ 26,548 $ 30,047 $ 45,704 $ 19,808 $ 33,276 $ 35,718 $ 61,682 $ 14,021 $ 20,509
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
EBITDA margin
percentage................ 6.5% 9.6% 9.8% 11.6% 7.6% 10.5% 10.9% 14.7% 5.1% 7.2%

Liquidity and Capital Resources

Cash Flows of CBRE Holding. Net cash provided by financing activities was
$229.5 million for the period from February 20, 2001 (inception) to June 30,
2001, due to the net proceeds from the issuance by BLUM CB Corp. of the $229.0
million aggregate principal amount of 11 1/4% senior subordinated notes and the
issuance by CBRE Holding of 241,885 shares of common stock to RCBA Strategic
Partners.

Cash Flows of CB Richard Ellis Services. Net cash used in operating
activities for the six months ended June 30, 2001 was $107.3 million, compared
to $51.0 million for the six months ended June 30, 2000, mainly due to
increased payments for the 2000 bonus and profit sharing, made in the current
year. This increase was due to the better financial results for 2000 as
compared to 1999. In addition, CB Richard Ellis Services had less cash from
operations due to a net loss in the current year compared to net earnings in
the prior year. CB Richard Ellis Services' operating cash flow increased by
$10.1 million in 2000 over the year ended 1999, primarily due to higher net
income adjusted for non-cash items. In addition, receivables increased at a
lower rate during 2000, due to a greater emphasis on receivable collections.

CB Richard Ellis Services utilized $10.6 million for investing activities
for the six months ended June 30, 2001, compared to $12.1 million for the six
months ended June 30, 2000. During the year ended December 31, 2000, CB Richard
Ellis Services utilized $35.7 million for investing activities, an increase of
$9.0 million over the prior year. This increase was primarily due to its $21.0
million investment in several technology companies as part of our overall
e-business strategy. CB Richard Ellis Services' e-investment strategy is
designed to improve internal business operations with resulting cost savings
through paperwork reduction, to improve service delivery to clients and to
create value in growth businesses that will flow back to the company. In
addition, as of June 30, 2001, CB Richard Ellis Services had committed an
additional $39.8 million to fund future co-investments. Its participation in
real estate transactions through co-investment activity could increase
fluctuations in its earnings and cash flow.

During the year ended December 31, 2000, CB Richard Ellis Services received
$17.5 million in proceeds primarily from the sale of select assets within the
management services segment, the sale of loan servicing rights and the receipt
of proceeds in 2000 from the 1999 sale of a risk management operation. This was
slightly lower than the 1999 proceeds of $19.4 million received. This included
$7.4 million received from the sale of inventoried property, plus $12.1 million
primarily received from the sale of the headquarters building in downtown Los
Angeles, California, and a small office building in Phoenix, Arizona.

In addition, capital expenditures increased by $3.2 million from the six
months ended June 30, 2000 compared to the six months ended June 30, 2001.
However, capital expenditures decreased from $35.1 million for the year ended
December 31, 1999, to $26.9 million in the year ended December 31, 2000.
Capital expenditures for 1998 totaled $29.7 million. Expenditures in 2000
mainly related to the purchase of computer hardware and software. Higher
purchases in 1999 as compared to 2000 and 1998 related to our efforts to
prepare for year 2000 computer hardware and software systems issues. CB Richard
Ellis Services expects to have capital expenditures ranging from $20 to $25
million in 2001.

Net cash provided by financing activities was $116.9 million for the six
months ended June 30, 2001, compared to $55.3 million for the six months ended
June 30, 2000, and was mainly attributable to an increased balance in CB
Richard Ellis Services' prior revolving credit facility, used primarily to fund
the payment of bonus and profit sharing, as well as working capital. Net cash
used in financing activities was $53.5 million for the year ended December 31,
2000, compared to $37.7 million for the year ended December 31, 1999, and was
mainly attributable to the repayment of debt. From time to time, CB Richard
Ellis Services has purchased stock on the open market to fulfill its
obligations under stock option, deferred compensation and other similar
stock-based compensation plans. For the year ended December 31, 2000, CB
Richard Ellis Services repurchased 185,800 shares of its common stock for $2.0
million in order to minimize the dilutive effect of its obligation to issue
stock under its deferred compensation plan. During 1999, CB Richard Ellis
Services repurchased a total of 397,450 shares of its common stock for $5.0
million to minimize the dilution from the grant of options and stock purchase
rights. The 1999 stock repurchase program was completed on January 5, 2000. As
a result of the merger and the related adjustments to the deferred compensation
plan, neither CBRE Holding nor CB Richard Ellis Services currently has any
plans to make future purchases of shares of its common stock to fulfill
obligations under the employee compensation plans.

Recent Developments. During the first quarter of 2001, the U.S. economy in
general and certain local and regional U.S. economies in particular continued
to experience economic softness. Many businesses, including

CB Richard Ellis Services' customers, have implemented staff reductions and
delayed or curtailed their plans and commitments with respect to their
commercial real estate needs. Additionally, lease rates in various regions,
particularly those with a concentration in the telecommunication and technology
industries, began to decline.

CB Richard Ellis Services' first quarter results reflected a strong January
followed by a slowdown in its U.S. sales activities beginning in February and a
slowdown in U.S. lease activities beginning in March, as well as lower than
expected revenues in Europe and Asia Pacific. This weakness in sales and lease
activities continued into the second and third quarters of 2001. On October 22,
2001, CB Richard Ellis Services announced its preliminary, unaudited results of
operations for the eight months ended August 31, 2001. For this period, CB
Richard Ellis Services' revenues were approximately $743.6 million,
commissions, fees and other incentives were approximately $352.1 million and
operating, administrative and other expenses were approximately $343.3 million.
These results of operations for the eight months ended August 31, 2001 as
compared to the eight months ended August 31, 2000 indicate that revenues have
declined by approximately 6.6%, commissions, fees and other incentives have
declined by approximately 5.5% and operating, administrative and other expenses
declined by approximately 1.3%. While the decline in revenue has been partially
offset by declines in commission and operating expenses, CB Richard Ellis
Services has experienced a decline in operating income, cash flow and
profitability during the first eight months of 2001, relative to the same
period of 2000.

Cost Reduction Programs. Following CB Richard Ellis Services' last major
cost reduction program in 1999, it has continued to evaluate its operating
expenses relative to the performance of our company. In response to the
continued weakness described above, CB Richard Ellis Services formulated a new
cost reduction program in May 2001 to reduce operating expenses. This program
was implemented with work force reductions that began in June 2001 and have
continued into the third quarter of 2001. This program is expected to reduce
budgeted expenses between approximately $35 to $40 million for 2001, excluding
one-time severance costs. Expense reductions are occurring in three areas with
the following estimate cost reductions for 2001:

. a reduction in work force combined with a hiring freeze, which are
expected to yield a savings of approximately $8 to $10 million;

. a reduction in the bonuses for senior managers worldwide, which is
expected to yield a savings of approximately $20 million; and

. a reduction in other operating and back office expenses, which is
expected to yield a savings of approximately $7 to $10 million.

In addition, in the second quarter, CB Richard Ellis Services wrote off our
$2.9 million investment in Eziaz, which has recently declared bankruptcy.

CB Richard Ellis has continued to refine and supplement its cost reduction
initiatives during the third quarter of 2001. Through August 31, 2001, CB
Richard Ellis Services had achieved a greater level of cost savings up to that
date than had initially been anticipated. In addition, CB Richard Ellis
Services remains confident that it will meet or exceed its cost reduction
targets outlined in its cost savings program for the remainder of the year.

Merger and Related Transactions. Effective July 20, 2001, BLUM CB Corp.,
which was a wholly owned subsidiary of CBRE Holding, merged with and into CB
Richard Ellis Services, which survived the merger as a wholly owned subsidiary
of CBRE Holding. The merger was approved by CB Richard Ellis Services'
stockholders on July 18, 2001.

In connection with the merger, CB Richard Ellis Services entered into a
$325.0 million senior secured credit agreement with Credit Suisse First Boston,
or CSFB, and other lenders and borrowed $235.0 million in term

loans under this agreement, which were comprised of a $50.0 million Tranche A
term facility and a $185.0 million Tranche B term facility. The credit
agreement also includes a $90.0 million revolving line of credit, $10.0 million
of which was drawn upon September 10, 2001. Borrowings under the senior secured
credit facilities bear interest at varying rates based, at CB Richard Ellis
Services' option, on either LIBOR plus 3.25% or the alternate base rate plus
2.25%, in the case of the Tranche A facility and the revolving line of credit,
and LIBOR plus 3.75% or the alternate base rate plus 2.75%, in the case of the
Tranche B facility. The alternate base rate is the higher of (1) CSFB's prime
rate or (2) the Federal Funds Effective Rate plus one-half of one percent.
After delivery of CB Richard Ellis Services' consolidated financial statements
for the year ending December 31, 2001, the amount added to the LIBOR or the
alternate base rate under the Tranche A and revolving line of credit will vary,
from 2.50% to 3.25% for the LIBOR and from 1.50% to 2.25% for the alternate
base rate, as determined by reference to CB Richard Ellis Services' ratio of
total debt less available cash to EBITDA. EBITDA represents earnings before net
interest expense, income taxes, depreciation and amortization and
merger-related and other nonrecurring charges.

Also in connection with the merger, CB Richard Ellis Services assumed $229.0
million in aggregate principal amount of 11 1/4% senior subordinated notes,
which were issued and sold by BLUM CB Corp. for approximately $225.6 million on
June 7, 2001. The net proceeds from the sale of the 11 1/4% senior subordinated
notes by BLUM CB Corp. were held in an escrow account and were released to CB
Richard Ellis Services upon completion of the merger. Also on July 20, 2001,
CBRE Holding and many subsidiaries of CB Richard Ellis Services guaranteed the
11 1/4% senior subordinated notes.

Also in connection with the merger, CBRE Holding issued and sold to DLJ
Investment Funding, Inc. and other purchasers 65,000 units, which consisted in
the aggregate of $65.0 million in aggregate principal amount of its 16% senior
notes due 2011 and 339,820 shares of its Class A common stock, for an aggregate
price of $65.0 million. Interest on the senior notes will accrue at a rate of
16% per year and be payable quarterly in cash in arrears. Until June 29, 2006,
interest in excess of 12% may be paid in kind, and at any time, interest may be
paid in kind to the extent that CB Richard Ellis Services' ability to pay cash
dividends to CBRE Holding is restricted by the terms of the senior secured
credit agreement. The 16% senior notes are redeemable in whole or in part at
116.0% percent of the principal amount, plus accrued and unpaid interest during
2001 and at declining prices thereafter. The 16% senior notes are effectively
subordinated to all current and future indebtedness of CB Richard Ellis
Services and its wholly owned subsidiaries.

In total, CBRE Holding and CB Richard Ellis Services incurred or assumed an
aggregate of $569.0 million of indebtedness to consummate the merger and
related transactions.

Also in connection with the merger, RCBA Strategic Partners, L.P. and its
affiliate, Blum Strategic Partners, II, L.P., purchased with cash 4,435,154
shares of CBRE Holding Class B common stock, Raymond Wirta purchased by
delivery of a promissory note 5,000 shares of CBRE Holding Class B common stock
and California Public Employees' Retirement System purchased with cash 625,000
shares of CBRE Holding Class A common stock, in each of these cases for cash
price of $16.00 per share. In addition, CBRE Holding offered shares of its
Class A common stock to employees and independent contractors of CB Richard
Ellis Services. CBRE Holding also sold an aggregate of 1,768,791 shares of its
Class A common stock and shares underlying stock fund units in CB Richard Ellis
Services' deferred compensation plan to CB Richard Ellis Services' employees
and independent contractors at a price of $16.00 per share.

Using a portion of the proceeds from the sale of the 11 1/4% senior
subordinated notes and the 16% senior notes, the borrowings under the new
credit facility and the proceeds from the sale of CBRE Holding Class B common
stock and CBRE Holding Class A common stock, CB Richard Ellis Services repaid
substantially all of its long-term indebtedness that was outstanding
immediately prior to the merger. This repaid indebtedness included all amounts
outstanding under its prior credit agreement and its formerly outstanding
8 7/8% Senior Subordinated Notes.

Also using a portion of the proceeds described above, CB Richard Ellis
Services paid $16.00 in cash per share of CB Richard Ellis Services common
stock and vested stock fund units in CB Richard Ellis Services' Deferred
Compensation Plan, that was outstanding at the time of the merger, other than
those shares held by members of the buying group, as well as cash to holders of
options to acquire shares of CB Richard Ellis Services common stock that agreed
to have their options cancelled in exchange for a cash payment. The aggregate
amount of cash due to holders of CB Richard Ellis Services common stock and
options in connection with the merger was approximately $201.0 million.

Financing Operations and Future Obligations. We expect to finance our
operations, non-acquisition related capital expenditures, employee compensation
plan obligations and long-term indebtedness repayment obligations described
below primarily with internally generated cash flow and borrowings under the
new revolving credit facility. We expect to fund our future acquisitions, if
any, that require cash with internally generated cash flow, but any such
acquisitions may require new sources of capital such as the issuance of
additional debt or equity. We anticipate that our existing sources of
liquidity, including cash flow from operations, will be sufficient to meet our
anticipated non-acquisition cash requirements for the foreseeable future and in
any event for at least the next twelve months.

During the year 2002, we estimate that our non-operations capital
expenditures will be no greater than $20.0 million and that we will fund
approximately $20.0 million of co-investments in connection with our real
estate investment management business. We anticipate that our existing sources
of liquidity, including cash flow from operations, will be sufficient to fund
these capital expenditures and co-investments.

Restrictions in Documents Governing Long-Term Indebtedness. The terms of the
documents governing our current long-term indebtedness impose significant
restrictions on the operation of our businesses, including our financing
activities. The new credit agreement contains numerous restrictive covenants
that, among other things, limit the ability to incur or repay other
indebtedness, make advances or loans to subsidiaries and other entities, make
capital expenditures, incur liens securing indebtedness, enter into mergers or
effect other fundamental corporate transactions, sell assets or declare
dividends. In addition, CB Richard Ellis Services will be required to meet
financial ratios relating to its adjusted net worth, level of indebtedness,
fixed charges and interest coverage. The indenture for the 11 1/4% senior
subordinated notes and the indenture for the 16% senior notes also include
limitations on our ability to incur or repay indebtedness, make advances or
loans to subsidiaries and other entities, incur liens securing indebtedness,
enter into mergers or effect other fundamental corporate transactions, sell
assets or declare dividends. In addition, if either CBRE Holding or CB Richard
Ellis Services were to engage in a change of control transaction, as defined in
the indentures for the 11 1/4% senior subordinated notes and the indenture for
the 16% senior notes, CB Richard Ellis Services would be required to make an
offer to purchase all of the 11 1/4% senior subordinated notes and CBRE Holding
would be required to make an offer to purchase all of its outstanding 16%
senior notes, in each case at a price equal to 101% of the outstanding
principal amounts, together with any accrued and unpaid interest.

Limitations on Dividends to CBRE Holding. CBRE Holding is a holding company.
Its only significant assets are and will be the shares of its subsidiaries. It
conducts all of its business operations through its subsidiaries. Its only
source of cash to pay interest on, and the principal of, the 16% senior notes
is from distributions with respect to its ownership interests in its
subsidiaries. These subsidiaries may not be able to generate sufficient
additional cash flow to pay dividends or distributions, or otherwise make
payments or transfer funds to CBRE Holding, and applicable law and contractual
restrictions, including negative covenants contained in the debt instruments of
its subsidiaries, may not permit such dividends, distributions or payments. In
particular, the senior credit facilities and the indenture governing the
11 1/4% senior subordinated notes due 2011 of CB Richard Ellis Services
restrict the ability of CB Richard Ellis Services to pay dividends,
distributions or make other payments to CBRE Holding that may be necessary for
CBRE Holding to pay cash interest on the 16% senior notes.

Seasonal Working Capital Requirements. Our working capital borrowing
requirements are very seasonal because our cash flow from operating activities
has historically been substantially lower in the first three calendar

quarters than in the fourth calendar quarter. The seasonal variation in
operating cash flow and working capital borrowing requirements results in part
from a focus at year-end on completing sales and lease transactions that is
consistent with the real estate industry and in part from the timing of the
payment of cash bonuses to sales professionals and managers. While compensation
expenses are accrued throughout the year, a substantial portion of the actual
cash payments are made in the first quarter of the following fiscal year. As a
result, working capital borrowing requirements are highest in the first two
quarters of the fiscal year and have historically decreased beginning in the
third quarter. In addition, CB Richard Ellis Services' new $90.0 million
revolving credit facility requires that it have no outstanding borrowings under
the facility during a period of 45 days commencing on any day chosen by it in
the month of December of each year.

Deferred Compensation Plan Obligations. CB Richard Ellis Services has
obligations under its deferred compensation plan that will require future cash
expenditures. Under the deferred compensation plan, each participant may defer
a portion of his or her compensation for distribution generally either after
his or her employment with CB Richard Ellis Services ends or on a future date
at least three years after the deferral election date.

The investment alternatives available to participants under the plan
currently include, among others, two interest index fund alternatives and an
insurance fund alternative. Under the first interest index fund alternative,
all such allocations are credited with interest at the rate payable by CB
Richard Ellis Services under its principal credit agreement. New deferrals are
no longer permitted into that fund. Under the second interest index fund
alternative, which began accepting new deferrals prior to the merger, all
deferrals are credited with interest at 11 1/4% per year for five years, or
until distributed if earlier, and thereafter at a rate no lower than the rate
CB Richard Ellis Services pays under its principal credit agreement. Under the
insurance fund alternative, the participant can elect to have gain or loss on
deferrals measured by one or more of approximately 30 mutual funds.
Historically, CB Richard Ellis Services has elected to transfer to a rabbi
trust the full amount of deferrals into the insurance fund alternative and then
hedge its obligations to the participants under the insurance fund alternative
by actually buying a contract of insurance within which it has premiums
invested in the mutual funds which participants have elected to measure the
value of their deferred compensation.

We expect to fund the after-tax cost of these future distributions under the
two interest index alternatives with internally generated cash flow and
borrowings under the new revolving credit facility. With respect to existing
deferrals under the insurance fund alternative, we expect future distributions
to be satisfied by the contracts of insurance that we have purchased. However,
in the future, to the extent we do not fully fund our obligations under the
insurance fund alternative with an insurance contract and transfers into the
rabbi trust, we would need to fund future distributions with internally
generated cash flow and borrowings under the new credit facility.

Because a substantial majority of the deferrals under the deferred
compensation plan have a distribution date based upon the end of the relevant
participant's employment with CB Richard Ellis Services, we have an on-going
obligation to make distributions to these participants as they leave our
employment. Because the level of employee departures is not predictable, the
timing of these obligations is also not predictable. Accordingly, CB Richard
Ellis Services may face significant unexpected cash funding obligations in the
future under its deferred compensation plan if a larger number of its employees
leave its employment than it expects.

401(k) Plan Obligations. CB Richard Ellis Services may be required to make
future cash expenditures as a result of legal requirements applicable to its
401(k) plan. Under the 401(k) plan, generally upon a participant's termination
of employment with CB Richard Ellis Services, including as a result of
retirement, the participant may elect to receive the cash value of his or her
investments in the plan. Accordingly, if a participant owns shares of CBRE
Holding Class A common stock that are held in the plan and becomes entitled to
receive a distribution under the plan, the participant may require the plan
trustee to sell those shares and distribute the cash proceeds. However, there
currently is no market for CBRE Holding Class A common stock, so CB Richard
Ellis Services currently would be obligated under applicable law to purchase
the shares at fair market value so the required cash distribution could occur.

Repayment of Long-Term Indebtedness. The $65.0 million principal amount of
the 16% senior notes of CBRE Holding will become due and payable on July 20,
2011. The $229.0 million principal amount of 11 1/4% senior subordinated notes
will become due and payable on June 15, 2011. Any amounts outstanding under the
revolving line of credit under the new credit facility will be due and payable
on July 20, 2007, and in addition, no amounts can be outstanding under that
facility for a period of 45 consecutive days commencing on any day in the month
of December of each year. The principal amount of the $235.0 million of term
loans under the new credit agreement will become due and payable on the
following schedule:

Year Amount Due
---- --------------

2001............................................. $ 4.7 million
2002............................................. 9.3 million
2003............................................. 10.0 million
2004............................................. 10.6 million
2005............................................. 10.6 million
2006............................................. 10.6 million
2007............................................. 6.2 million
2008............................................. 173.0 million

Recent Acquisitions

During 2000, CB Richard Ellis Services acquired five companies with an
aggregate purchase price of $3.4 million in cash and $0.7 million in notes,
plus additional payments over the next five years based on acquisition earnout
agreements. These payments will supplement the purchase price and be recorded
as additional goodwill. The most significant acquisition in 2000 was the
purchase of Boston Mortgage Capital Corporation through L.J. Melody for $2.1
million plus supplemental payments based on an acquisition earnout agreement.
Boston Mortgage provides further mortgage banking penetration into the
northeast. It services approximately $1.8 billion in loans covering roughly 175
commercial properties throughout New England, New York and New Jersey.

During 1999, CB Richard Ellis Services acquired four companies with an
aggregate purchase price of approximately $13.8 million. The two significant
acquisitions were Eberhardt Company, which was acquired in September 1999
through L.J. Melody for approximately $7.0 million, and Profi Nordic, which was
acquired in the first quarter of 1999 through CBRE Profi Acquisition Corp.,
formerly Koll Tender III, for approximately $5.5 million.

In 1998, CB Richard Ellis Services made several large acquisitions. In April
1998, it purchased all of the outstanding shares of REI, an international
commercial real estate services firm operating under the name Richard Ellis in
major commercial real estate markets worldwide, excluding the United Kingdom.
The acquisition was accounted for as a purchase. The purchase price has largely
been allocated to goodwill, which is amortized on a straight line basis over an
estimated useful life of 30 years. The purchase price for REI was approximately
$104.8 million of which approximately $53.3 million was paid in cash and notes
and approximately $51.5 million was paid in shares of CB Richard Ellis
Services' common stock. In addition, CB Richard Ellis Services assumed
approximately $14.4 million of long-term debt and minority interest. CB Richard
Ellis Services incurred a one-time charge of $3.8 million associated with the
integration of REI's operations and systems into its own.

CB Richard Ellis Services also acquired the business of Hillier Parker in
July 1998. This was a commercial property services partnership operating in the
United Kingdom. The acquisition was accounted for as a purchase. The purchase
price for Hillier Parker included approximately $63.6 million in cash and $7.1
million in shares of our common stock. In addition, CB Richard Ellis Services
assumed a contingent payout plan for key Hillier Parker employees with a
potential payout over three years of approximately $13.9 million and assumed
various annuity obligations of approximately $15.0 million. The purchase price
has largely been allocated to goodwill which is amortized on a straight line
bases over its estimated useful life of 30 years.

In September of 1998, CB Richard Ellis Services purchased the approximately
73.0% interest that it did not already own in CB Commercial Real Estate Group
of Canada, Inc., now CB Richard Ellis Limited. CB Richard Ellis Services
acquired the remaining interest for approximately $14.3 million in cash. The
acquisition was accounted for as a purchase. The purchase price has been
largely allocated to intangibles and goodwill which are amortized on a straight
line basis over their estimated useful lives ranging up to 30 years.

In October 1998, CB Richard Ellis Services purchased the remaining ownership
interests that we did not already own in the Richard Ellis Australia and New
Zealand businesses. The cost for the remaining interest was $20.0 million in
cash. Virtually all of the revenue of these locations is derived from brokerage
and appraisal services. The acquisition was accounted for as a purchase. The
purchase price has largely been allocated to intangibles and goodwill which are
amortized on a straight line basis over their estimated useful lives ranging up
to 30 years.

CB Richard Ellis Services also made various smaller acquisitions throughout
1998.

Net Operating Loss

CB Richard Ellis Services had U.S. federal income tax net operating losses,
or NOLs, of approximately $16.3 million at both June 30, 2001 and December 31,
2000.

CB Richard Ellis Services' ability to utilize NOLs has been limited by
Section 382 of the Internal Revenue Code because in previous years it
experienced an ownership change within the meaning of Section 382. CB Richard
Ellis Services anticipates that the remaining $16.3 million of NOLs will be
utilized before they expire.

Recent Accounting Pronouncements

In September 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities. SFAS 140 revises the
standards for accounting for securitizations and other transfers of financial
assets and collateral established by SFAS 125. In addition, this statement is
effective for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. CB Richard Ellis Services does not
perform these types of transactions. This statement is effective for all
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. The adoption of SFAS 140 did not have a
material impact on CB Richard Ellis Services' results of operations and
financial position.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations", which
supersedes APB Opinion No. 16, "Business Combinations" and SFAS No. 38,
"Accounting for Pre-acquisition Contingencies of Purchased Enterprises." SFAS
No. 141 eliminates the pooling-of-interests method of accounting for business
combinations and requires all business combinations to be accounted for by a
single method--the purchase method. This statement is effective for all
business combinations completed after June 30, 2001. Accordingly, we will
account for the merger using the purchase method. CB Richard Ellis Services is
in the process of determining the impact of the adoption of this statement on
its results of operations and financial position.

In July 2001, the FASB also issued SFAS No. 142, "Goodwill and Other
Intangibles Assets", which supersedes APB Opinion No. 17, "Intangible Assets".
Under SFAS 142, goodwill is no longer subject to amortization over its
estimated useful life. Rather, goodwill will be subject to at least an annual
assessment for impairment applying a fair-value based test. Additionally, an
acquired intangible asset should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented, or exchanged,
regardless of the acquirer's intent to do so. This statement is effective for
fiscal years beginning after December 15, 2001, although early application is

permitted for entities with fiscal years beginning after March 15, 2001. CB
Richard Ellis Services is in the process of determining the impact of the
adoption of this statement on its results of operations and financial position.

Quantitative and Qualitative Disclosures About Our Market Risk

Our exposure to market risk consists of foreign currency exchange rate
fluctuations related to its international operations and changes in interest
rates on most of its debt obligations.

During the six months ended June 30, 2001, approximately 23% of CB Richard
Ellis Services business was transacted in local currencies of foreign
countries. In the past, CB Richard Ellis Services has attempted to manage, and
in the future it expects to continue to manage, this exposure primarily by
balancing monetary assets and liabilities and maintaining cash positions only
at levels necessary for operating purposes in those countries. While CB Richard
Ellis Services international results of operations as measured in dollars are
subject to foreign exchange rate fluctuations, it does not consider the related
risk to be material to its financial condition or results of operations. In the
past, CB Richard Ellis Services has routinely monitored, and in the future it
expects to continue to monitor, its transaction exposure to currency rate
changes and it has entered, and expects to continue to enter, into currency
forward and option contracts to limit the exposure, as appropriate. Gains and
losses on contracts are deferred until the transaction being hedged is
finalized. As of June 30, 2001, CB Richard Ellis Services had no outstanding
contracts. CB Richard Ellis Services does not engage in any speculative
activities.

After the merger, much of our long-term debt will bear variable interest
rates. Consistent with past practices we will utilize sensitivity analysis to
assess the potential effect of its variable rate debt. If interest rates were
to increase by 1% per year, the net impact would be a decrease of approximately
$2.86 million on our annual pre-tax income and cash flow. Our fixed and
variable long-term debt as of June 30, 2001, including the effects of CBRE
Holdings' 16% senior notes, CB Richard Ellis Services' 11 1/4% senior
subordinated notes and the senior secured credit facilities, are as follows:

Sterling
LIBOR LIBOR EONIA LIBOR
Plus Plus Plus Minus
Year of Maturity Fixed Rate 3.25% 3.75% 1.75% 1.5% Total
---------------- ---------- ------- -------- ------ -------- --------
(dollars in thousands)

2001.............................. $ 2,908 $43,750 $ 925 $9,830 $ 57,413
2002.............................. 1,249 7,500 1,850 $1,500 12,099
2003.............................. 520 8,125 1,850 10,495
2004.............................. 18 8,750 1,850 10,618
2005.............................. 18 8,750 1,850 10,618
Thereafter........................ 297,409 13,125 176,675 487,209
-------- ------- -------- ------ ------ --------
Total.......................... $302,122 $90,000 $185,000 $9,830 $1,500 $588,452
======== ======= ======== ====== ====== ========
Weighted average interest rate. 12.82% 7.09% 7.59% 6.47% 4.4% 10.2%
======== ======= ======== ====== ====== ========

Estimated fair values for our liabilities are not presented because they
either are based on variable rates that approximate terms that we could obtain
currently from other sources or they are liabilities that were entered into in
connection with the merger which have recently negotiated rates that we believe
represent the fair value of the related liabilities.

BUSINESS

We are the largest global commercial real estate services firm in terms of
revenue offering a full range of services to commercial real estate occupiers,
owners, lenders and investors. Through our 250 offices, we provide, under the
CB Richard Ellis brand name and the CB Hillier Parker brand name in the United
Kingdom, services on a local, national and international basis across
approximately 100 markets in 44 countries. During 2000, CB Richard Ellis
Services advised on approximately 25,000 lease transactions involving aggregate
rents, under the terms of leases facilitated, of approximately $26.0 billion
and approximately 7,500 sales transactions with transaction values totaling
approximately $26.0 billion. Also during 2000, CB Richard Ellis Services
managed approximately 516 million square feet of property, provided investment
management services for $10.0 billion of assets, originated nearly $7.2 billion
in loans, serviced $16.7 billion in loans, engaged in approximately 32,000
valuation/appraisal and advisory assignments and serviced approximately 1,400
subscribers with proprietary research. In addition, at June 30, 2001 CB Richard
Ellis Services employed approximately 9,600 employees.

History. CB Richard Ellis Services was founded in 1906. It was formerly
known as CB Commercial Real Estate Services Group, Inc., or CB Commercial, a
holding company, organized on March 9, 1989 under the laws of the State of
Delaware to acquire Coldwell Banker Commercial Group, Inc. This acquisition
occurred on April 19, 1989. On November 25, 1996, CB Commercial completed an
initial public offering of 4,347,000 shares of common stock. Prior to this
public offering, CB Commercial was a reporting company as a result of an
offering to employees under the Securities Act. On May 19, 1998, CB Commercial
changed its name to CB Richard Ellis Services, Inc. On July 20, 2001, BLUM CB
Corp., a wholly owned subsidiary of CBRE Holding, Inc., merged with and into CB
Richard Ellis Services, with CB Richard Ellis Services surviving the merger as
a wholly owned subsidiary of CBRE Holding. After the merger and related
transactions, CBRE Holding became a public reporting company under the
Securities Exchange Act of 1934 and CB Richard Ellis Services continued to be a
public reporting company.

As part of its growth strategy, CB Richard Ellis Services has undertaken
various strategic acquisitions. In 1995, CB Richard Ellis Services purchased
Westmark Realty Advisors, L.L.C., which has been renamed CB Richard Ellis
Investors, L.L.C., or CBRE Investors. CBRE Investors is a management and
advisory business with approximately $10.0 billion of assets under management.
In 1996, CB Richard Ellis Services acquired L.J. Melody & Company, or L.J.
Melody, a nationally known mortgage banking firm. Then in 1997, CB Richard
Ellis Services acquired Koll Real Estate Services, or Koll, a real estate
services company primarily providing property management services, corporate
and facilities management services and asset and portfolio management services.
The following year, CB Richard Ellis Services purchased all of the outstanding
stock of REI Limited, or REI, which owned and operated the internationally
known real estate services firm of Richard Ellis in all the major commercial
real estate locations in the world, other than the United Kingdom. REI's
principal operations were in The Netherlands, France, Spain, Brazil, Australia,
Hong Kong, including Taiwan, the People's Republic of China, and Singapore. In
1998, CB Richard Ellis Services also acquired the business of Hillier Parker
May and Rowden, now known as CB Hillier Parker Limited, or Hillier Parker, a
commercial property services partnership operating in the United Kingdom. That
same year, CB Richard Ellis Services purchased the approximately 73.0% interest
that it did not already own in CB Commercial Real Estate Group of Canada, Inc.
In 1998, CB Richard Ellis Services acquired the remaining ownership interests
in Richard Ellis Australia and New Zealand.

Nature of Operations. CB Richard Ellis Services is a holding company that
conducts operations primarily through approximately 75 direct and indirect
operating subsidiaries. In the United States, CB Richard Ellis Services
operates through CB Richard Ellis, Inc. and L.J. Melody; in the United Kingdom,
it operates through Hillier Parker; and in Canada, it operates through CB
Richard Ellis Limited. CBRE Investors and its foreign affiliates conduct
business in the United States, Europe and Asia Pacific. CB Richard Ellis
Services operates through various subsidiaries in approximately 44 countries
and pursuant to cooperation agreements in several additional countries. For the
quarter ended June 30, 2001, approximately 76% of our revenue was from the
United States and 24% from the rest of the world.

CB Richard Ellis Services' operations are reported through three geographic
divisions:

. The Americas, which consists of the United States, Canada, Mexico and
operations located in Central and South America. CB Richard Ellis
Services also refers to the operations in Mexico, Central and South
America as the Latin America operations.

. EMEA, which is an acronym for Europe, the Middle East and Africa. This
operating group became part of CB Richard Ellis Services through a
series of acquisitions, most significantly Hillier Parker and REI.

. Asia Pacific, which consists of operations in Asia, Australia and New
Zealand. These operations were acquired in part through the REI
acquisition and in total through subsequent acquisitions.

A significant portion of CB Richard Ellis Services' revenue is seasonal.
Historically, this seasonality has caused revenue, operating income, net income
and cash flow from operating activities to be lower in the first two calendar
quarters and higher in the third and fourth calendar quarters of each year. The
concentration of earnings and cash flow in the fourth quarter is due to an
industry wide focus of completing transactions by year-end, while incurring
constant, non-variable expenses throughout the year. This has historically
resulted in lower profits or a loss in the first quarter, with profits growing
in each subsequent quarter.

Business Segments

In July 1999, CB Richard Ellis Services undertook a reorganization to
streamline its U.S. operations, which resulted in a change in its segment
reporting from four to three segments. CB Richard Ellis Services has eight
primary lines of business which are aggregated, reported and managed through
these three segments: transaction management, financial services and management
services. The transaction management segment is the largest generator of
revenue and operating income and includes brokerage services, corporate
services and investment property activities. Total revenues generated by the
transaction management segment relating to the leasing of real estate were
approximately $227.2 million and $203.8 million for the six months ended June
30, 2000 and 2001, respectively. Total revenues generated by the transaction
management segment relating to the sales of commercial real estate were
approximately $154.7 million and $140.7 million for the six months ended June
30, 2000 and 2001, respectively. Total revenues generated by the transaction
management segment relating to the leasing of commercial real estate were
approximately $510.3 million for the year ended December 31, 2000, $426.1
million for the year ended December 31, 1999 and $352.8 million for the year
ended December 31, 1998. Total revenues generated by the transaction management
segment relating to the sales of commercial real estate were approximately
$378.5 million for the year ended December 31, 2000, $383.2 million for the
year ended December 31, 1999 and $330.2 million for the year ended December 31,
1998. The financial services segment provides commercial mortgage, valuation,
investment management and consulting and research services. The management
services segment provides facility management services to corporate real estate
users and property management and related services to owners.

Transaction Management

Under transaction management, CB Richard Ellis Services operates the
following lines of business:

Brokerage Services. The brokerage services line of business provides sales,
leasing and consulting services relating to commercial real estate. Brokerage
services is the largest business unit in terms of revenue, earnings and cash
flow. This business is built upon relationships that CB Richard Ellis Services'
employees establish with customers and because of this, it strives to retain
top revenue producers through an attractive compensation program that motivates
the sales force to achieve higher revenue production. Therefore, the most
significant cost is commission expense, which can be as high as approximately
70% of the revenue generated by brokerage services. CB Richard Ellis Services
is the largest competitor in the commercial brokerage business in terms of
revenue and it believes that its brand provides it with a competitive operating
advantage. As of June 30, 2001, CB Richard Ellis Services employed
approximately 2,220 individuals in its brokerage services line in offices
located in most of the largest metropolitan areas in the United States and
approximately 1,300 individuals in the rest of the world.

Operations. CB Richard Ellis Services maintains a decentralized approach
to transaction management other than investment properties by bringing
significant local knowledge and expertise to each assignment. Each local
office draws upon the broad range of support services provided by the other
business groups around the world, including an international network of
market research, client relationships and transaction referrals which it
believes provide it with significant economies of scale over local, national
and international competitors. While day-to-day operations are
decentralized, most accounting and financial functions are centralized.

Compensation. Under a typical brokerage services agreement, brokerage
services is entitled to receive sale or lease commissions. Sale commissions,
which are calculated as a percentage of sales price, are generally earned by
this business line at the close of escrow. Internationally, sales
commissions are earned upon completion of work with no existing
contingencies. Sale commissions in the United States typically range from
approximately 1% to 6% with the rate of commission declining as the price of
the property increases. In the case of large investment properties of over
$20 million, the commission is generally not more than 2%, declining to 0.5%
for properties greater than $75 million. In the United Kingdom, commissions
of 0.5% for a sale to 0.75% for a purchase are typical. Lease commissions in
the United States and Canada, typically calculated either as a percentage of
the minimum rent payable during the term of the lease or based upon the
square footage of the leased premises, are generally earned by brokerage
services at the commencement of a lease, which typically occurs on the
tenant move-in date unless significant future contingencies exist. In cases
where a third-party brokerage firm is not involved, lease commissions earned
by brokerage services for a new lease typically range between 2% and 6% of
minimum rent payable under the lease depending upon the value of the lease.
In the United Kingdom, the leasing commission is typically 10% of the first
year's rent. For renewal of an existing lease, these fees are generally 50%
of a new lease commission. In sales and leases where a third-party broker is
involved, brokerage services must typically share at least 50% of the
commission with the third-party broker. For 2000, in the United States,
Canada and much of Australia, brokerage sales professionals received a 40%
to 60% share of commissions before costs and expenses. In most other parts
of the world, brokerage professionals receive a salary and a bonus,
profit-share or a small commission, which in the aggregate approximate a 45%
share of commissions earned by this business line.

Investment Properties. The investment properties line of business provides
brokerage services for commercial real estate property marketed for sale to
institutional and private investors.

Operations and Compensation. At June 30, 2001, this line of business
employed approximately 500 individuals in offices located in the United
States and about 240 individuals in the rest of the world. Compensation for
this operation is similar to the brokerage line of business.

Corporate Services. The corporate services line of business focuses on
building relationships with large corporate clients. The objective is to
establish long-term relationships with clients that could benefit from
utilizing corporate services broad suite of services and/or global presence.
These clients are offered the opportunity to be relieved of the burden of
managing their commercial real estate activities at a lower cost than they
could achieve by managing it themselves. During 2000, the facilities management
unit began operating under the same leadership as corporate services. See the
section below titled "Management Services" for a description.

Operations. At June 30, 2001, this line of business employed
approximately 415 individuals within the United States and approximately 85
individuals in the rest of the world. Corporate services include research
and consulting, structured finance, project management, lease administration
and transaction management. These services can be delivered on a bundled or
unbundled basis involving other lines of business in a single market or in
multiple markets around the globe. A typical corporate services agreement
includes a stated term of at least one year and normally contains provisions
for extension of the agreement.

Compensation. A typical corporate services agreement gives CB Richard
Ellis Services the right to execute some or all of the client's future sales
and leasing transactions and to receive other fees on a negotiated basis.
The commission rate with respect to these transactions frequently reflects a
discount for

the captive nature and large volume of the business. This business line is
developing worldwide pricing to maximize integrated service delivery.

All of these business lines provide sales brokerage and leasing and real
estate consulting services. Additionally, these business lines are motivated to
cross-sell products and services from other business segments.

Financial Services

The financial services business segment is focused on providing commercial
mortgage, valuation, investment advisory and research and consulting services.
CB Richard Ellis Services believes that these business lines are complementary
to the core businesses in the transaction management segment, offering reliable
returns. A description of the principal lines of business in the financial
services segment are as follows:

Mortgage Banking. The commercial mortgage business line provides commercial
loan origination and loan servicing through CB Richard Ellis Services'
wholly-owned subsidiary, L.J. Melody. The commercial mortgage business focuses
on the origination of commercial mortgages without incurring principal risk. As
part of its activities, L.J. Melody has established correspondent and conduit
arrangements with investment banking firms, national banks, credit companies,
insurance companies, pension funds and government agencies.

Under these arrangements, L.J. Melody originates mortgages into conduit
programs where it makes limited representations and warranties based upon
representations made by the borrower or another party. In some situations, L.J.
Melody originates mortgages in its name and immediately sells them into a
conduit program, referred to as "table funding," without principal risk.
Mortgages originated for conduits may or may not have servicing rights. L.J.
Melody originates mortgages in its name, without principal risk. It also
services loans for Federal Home Loan Mortgage Corporation, Freddie Mac and
Federal National Mortgage Association, Fannie Mae. L.J. Melody is also a major
mortgage originator for insurance companies and pension funds having the right,
as correspondent, to originate loans in their names and subsequently services
the mortgage loans it originates. At June 30, 2001, L.J. Melody serviced
mortgage loan portfolios of approximately $17.3 billion.

Operations. At June 30, 2001, L.J. Melody employed approximately 280
people located in 32 offices in the United States. L.J. Melody has no
material mortgage banking operations outside of the United States. Its
mortgage loan originations take place throughout the United States with
support from L.J. Melody's headquarters in Houston, Texas. The mortgage loan
servicing is handled primarily from the Houston, Texas headquarters with
support from regional offices in Atlanta, Georgia; Minneapolis, Minnesota;
Seattle, Washington; Boston, Massachusetts and Los Angeles, California.

Compensation. L.J. Melody typically receives origination fees, ranging
from 0.5% for large insurance company and pension fund mortgage loans to
1.0% for most conduit and agency mortgage loans. In situations where L.J.
Melody services the mortgage loans it originates, L.J. Melody also receives
a servicing fee between 0.03% and 0.25%, calculated as a percentage of the
outstanding mortgage loan balance. These servicing agreements generally
contain an evergreen provision that provides that the agreement remains in
effect for an indefinite period, but enables the lender to terminate the
agreement upon 30 days prior written notice, which L.J. Melody believes to
be a customary industry termination provision. During 2000, a majority of
the mortgage loan origination revenue was from agreements which entitled
L.J. Melody to both originate and service mortgage loans. L.J. Melody also
originates mortgage loans on behalf of conduits and insurance companies for
whom it does not perform servicing. Its client relationships have
historically been long-term. L.J. Melody pays its mortgage banking
professionals a combination of salary, commissions and incentive-based
bonuses, which typically average approximately 50% of loan origination fees
earned.

Investment Management. The investment management line of business provides
investment management and advisory services through CB Richard Ellis Services'
wholly-owned affiliate CBRE Investors. It focuses on pension plans, investment
funds, insurance companies and other organizations seeking to generate returns
through investment in real estate related assets. CBRE Investors is often
requested to "co-invest" with its clients for a percentage of the total fund.
These co-investments generally range from 2 to 10% of the fund.

Operations. Operationally, each investment strategy is executed by a
dedicated team with the requisite skill sets. At the present time there are
seven dedicated teams. In the United States, they are: (1) Fiduciary
Services, which uses low risk/return strategies, (2) Strategic Partners,
which is a value-added fund, (3) Corporate Partners, which uses corporate
real estate strategies, and (4) Global Innovation Partners, which uses
technology driven real estate and entry level strategies. Internationally,
they are: (1) CB Hillier Parker Investors (UK), which uses low risk/return
strategies, (2) CBRE Investors Asia, which is a value-added fund, and (3)
CBRE Investors Europe, which is a value-added fund. Each team's compensation
is driven largely by the investment performance of its particular
strategy/team. This organizational structure is designed to align the
interests of team members with those of its investor clients/partners,
determine accountability and make performance the priority.

Dedicated teams share resources such as accounting, financial controls,
information technology, investor services and research. In addition to the
research within CB Richard Ellis Services' platform, which focuses primarily
on market conditions and forecasts, CBRE Investors has an in-house team of
research professionals that focuses on investment strategy and underwriting.
At June 30, 2001, CBRE Investors and its foreign affiliates had
approximately 125 employees located in the Los Angeles headquarters and in
the regional office in Boston and approximately 35 employees
internationally.

We believe that this business line provides strategic benefits to all of
the lines of business by providing brokerage opportunities for assets under
management and by being a natural fit for the full range of services that it
offers, including mortgage lending, appraisal and property management.

A key validation of this business occurred during the fourth quarter of
2000 when CBRE Investors was awarded the assignment to manage the California
Public Employees' Retirement Systems, or CalPERS, $500 million Global
Innovation Partners Fund in which CB Richard Ellis Services will be making a
co-investment of approximately $25 million. Under the program, the fund will
make investments in real estate and real estate-related entities and
capitalize on opportunities created from the convergence of the technology
and real estate industries. We anticipate that we may benefit from the
opportunity in several ways, including fees, return on our co-investment,
return on a carried interest and significant cross-selling of services in
relation to this program.

Compensation. Investment management fees can have up to three components.
In chronological order, they are: (1) acquisition fees, (2) annual portfolio
management fees and (3) incentive fees or profit sharing. Each fund or
account will have two or three of these components. Fees are typically
higher for sponsoring funds or joint ventures than managing separate
accounts. Acquisition and annual portfolio management fees usually range
between 0.5 and 1.0% of the purchase price in the United States and Asia
Pacific. In the United Kingdom, annual fees on separate accounts are
typically 0.05 to 0.1% of asset value. Incentive fees usually range between
10 and 20% of profit in excess of an agreed upon threshold return. With
respect to CBRE Investors' new funds in the United States and all
international investments, CB Richard Ellis Services also derives fees for
ancillary services including purchase and sale brokerage, mortgage
origination, property management and leasing brokerage.

Valuation and Appraisal Services. The valuation line of business provides
valuation and appraisal services and market research. These services include
market value appraisals, litigation support, discounted cash flow analysis and
feasibility and fairness opinions.

Operations. The valuation business is one of the largest in its industry
in the United States. Additional valuation services are provided
internationally. At June 30, 2001, this business line had approximately 180
employees on staff in the United States and approximately 360
internationally. During 2000, it developed proprietary technology for
preparing and delivering valuation reports to its clients. We believe that
this technology provides the valuation business line with competitive
advantages over our rivals.

Compensation. The valuation business line earns most of its fees on a
fixed-fee basis. Some consulting revenue is earned on an hourly basis.

Real Estate Market Research. CB Richard Ellis Services provides real estate
market research services worldwide through CB Richard Ellis/Torto Wheaton
Research and CB Hillier Parker. CB Richard Ellis Services research services
include data collection and interpretation, econometric forecasting and
portfolio risk analysis. Its publications and products provide real estate data
for more than 70 of the largest metropolitan statistical areas in the United
States and are sold on a subscription basis to many of the largest portfolio
managers, insurance companies and pension funds. At June 30, 2001, this
business line had approximately 200 researchers in the United States and
internationally.

Management Services

The management services segment provides property, facility and construction
management services, through two lines of business:

Property Management/Asset Services. The asset services line of business
provides value-added asset and related services for income-producing properties
owned primarily by institutional investors and, at June 30, 2001, managed
approximately 190 million square feet of commercial space in the United States
and approximately 210 million square feet in the rest of the world. Asset
services include maintenance, marketing and leasing services for investor-owned
properties, including office, industrial, retail and multi-family residential
properties. Additionally, asset services provides construction management
services, which relate primarily to tenant improvements. Asset services works
closely with its clients to implement their specific goals and objectives,
focusing on the enhancement of property values through maximization of cash
flow. Asset services markets its services primarily to long-term institutional
owners of large commercial real estate assets. An asset services agreement puts
CB Richard Ellis Services in a position to provide other services for the owner
including refinancing, appraisal and lease and sales brokerage services.

Operations. At June 30, 2001, asset services employed approximately 1,000
individuals in the United States and approximately 760 individuals
internationally, part of whose compensation is reimbursed by the client.
Most asset services are performed by management teams located on-site or in
the vicinity of the properties they manage. This provides property owners
and tenants with immediate and easily accessible service, enhancing client
awareness of manager accountability. All personnel are trained and are
encouraged to continue their education through both internally-sponsored and
outside training. CB Richard Ellis Services provides each local office with
centralized corporate resources including investments in computer software
and hardware. Asset services personnel generally utilize state-of-the-art
computer systems for accounting, marketing and maintenance management.

Compensation. Under a typical property management agreement, CB Richard
Ellis Services receives a monthly managerial fee and reimbursement for the
cost of wages for on-site employees. Payments for reimbursed expenses are
netted against those expenses and not included in revenue.

Facilities Management. The facilities management line of business, now under
the same leadership as corporate services, specializes in the administration,
management and maintenance of properties that are occupied by large
corporations and institutions, including corporate headquarters, regional
offices, administrative offices and manufacturing and distribution facilities,
as well as tenant representation, capital asset disposition, project
management, strategic real estate consulting and other ancillary services for
corporate clients. At June 30, 2001, facilities management had approximately
120 million square feet under management in the United States and it also
manages approximately 28 million square feet internationally. We expect the
facilities management business both inside and outside of the United States to
continue growing in 2001.

Operations. At June 30, 2001, the facilities management business line
employed approximately 1,030 individuals in facilities management services
business in the United States and approximately 125 individuals
internationally, most of whose compensation is reimbursed by the client. The
facilities management operations in the United States are organized into
three geographic regions in the Eastern, Western and Central areas, with
each geographic region comprised of consulting, corporate services and

team management professionals who provide corporate service clients with a
broad array of financial, real estate, technological and general business
skills. Facilities management teams are also in place internationally. In
addition to providing a full range of corporate services in a contractual
relationship, the facilities management group will respond to client
requests generated by CB Richard Ellis Services' other business lines for
significant, single-assignment acquisition, disposition and consulting
assignments that may lead to long-term relationships.

Compensation. Under a typical facilities management agreement, CB Richard
Ellis Services is entitled to receive management fees and reimbursement for
its costs including costs of wages of on-site employees, capital
expenditures, field office rent, supplies and utilities that are directly
attributable to management of the facility. Payments for reimbursed expenses
are netted against those expenses and not included in revenue. Under
particular facilities management agreements, it may also be entitled to an
additional incentive fee which is paid if it meets select performance
criteria, for example, a reduction in the cost of operating the facility,
which is established in advance with the client.

Competitive Strengths

We believe our strong position within the real estate services industry is
based on our global brand recognition, broad service offerings, ability to
scale these offerings and geographic reach.

. Global Brand Name. We are the largest commercial real estate services
provider in the world and, together with our predecessors, have been in
existence for 95 years. We are a global firm operating in 44 countries
across six continents through 250 offices. We believe we are one of the
leading commercial real estate services firms in most major U.S. markets
and in many other important real estate markets around the world. CB
Richard Ellis is the brand name under which we operate in all of our
markets, except in the United Kingdom, where we operate under the brand
name CB Hillier Parker.

. Geographic Reach. We possess in-depth knowledge of local and regional
markets and can provide a full range of real estate services in most
major markets across the globe. Our geographical coverage enables us to
better serve our multinational clients and manage funds for
institutional investors on a global basis.

. Full Service Provider. We provide a full range of real estate services
to meet the needs of our clients. These services include commercial real
estate brokerage services, investment properties, corporate services,
mortgage banking, investment management, valuation and appraisal
services, real estate market research, property management/asset
services and facilities management. We believe our combination of
significant local market presence and diversified line of business
platforms differentiates us from our competitors and provides us with a
competitive advantage.

. High End Commercial Brokerage Focus. Our expertise, breadth of services
and strong client relationships enable us to derive a large proportion
of our commercial brokerage revenues from large, high end transactions.
For example, during 1999, CB Richard Ellis Services derived more than
half of its sales commissions in the United States and more than
one-third of its lease commissions in the United States from
transactions exceeding $5.0 million in deal size.

. Recurring Revenue from Prior Transactions. We believe we are well
positioned to generate recurring revenues through the turnover of leases
and properties for which we have previously acted as transaction
manager. Our many years of strong local market presence have allowed us
to develop significant repeat client relationships which are responsible
for a large part of its business. CB Richard Ellis Services estimates
that during 2000 approximately 68% of its landlord listing assignments
were with clients with whom it had done business previously.

. Strong Relationships with Established Customers. We have long-standing
relationships with a number of the major real estate investors,
including Equity Residential Trust, Lend Lease, MetLife and RREEF. Our
broad national and international presence has enabled us to develop
extensive

relationships with many leading corporations, including Ford Motor
Company, GE Capital, JP Morgan Chase, Kodak, Lucent Technologies and
Washington Mutual.

. Experienced Senior Management with Significant Equity Stake. We are led
by an experienced management team. Our Chief Executive Officer, Raymond
Wirta, has 33 years of experience in the real estate industry with CB
Richard Ellis Services, Bank of America, Koll Management Services and
Koll Real Estate Services. Raymond Wirta beneficially owns approximately
4.3% of the outstanding common stock of CBRE Holding. In addition, our
other employees acquired a total of approximately 4.1% of the
outstanding CBRE Holding common stock in connection with the merger and
related transactions.

Despite these competitive advantages, CB Richard Ellis Services also
experiences competitive disadvantages in the commercial real estate industry.
These disadvantages include:

. Higher Leverage. CB Richard Ellis Services incurred substantial
additional indebtedness in connection with the merger transactions, and
its debt service obligations could limit its flexibility in planning
for, or reacting to, changes in its business and in the real estate
services industry generally and therefore could place it at a
competitive disadvantage compared to those of its competitors that are
less leveraged.

. Brokerage Competition in Smaller Markets. CB Richard Ellis Services'
competitors in smaller markets are often able to act more quickly in
response to local trends due to their size and lack of centralized
control. In addition, because these competitors also do not have to
support corporate overhead, these businesses are often able to pay
larger percentage commissions to their real estate brokerage employees,
which gives them a competitive advantage in attracting and retaining
employees that CB Richard Ellis Services may not be able to match.

. Support of Numerous Business Segments. Due to the significant number of
business segments in which CB Richard Ellis Services conducts business
and the geographic breadth within these segments, it is less able to
focus its resources on any particular segment, which may place it at a
competitive disadvantage to those of its competitors who have less
diverse operations.

L.J. Melody competes in the United States with a large number of mortgage
banking firms and institutional lenders, as well as regional and national
investment banking firms and insurance companies, in providing its mortgage
banking services. Appraisal and valuation services are provided by other
international, national, local and regional appraisal firms and some
international, national and regional accounting firms. CBRE Investors has
numerous competitors including other fund managers, investment banks and
commercial banks.

CB Richard Ellis Services' management services business competes for the
right to manage properties controlled by third parties. The competitor may be
the owner of the property, who is trying to decide on the efficiency of
outsourcing, or another management services company. Increasing competition in
recent years has resulting in having to provide additional services at lower
rates, thereby eroding margins. However, management services enjoys synergies
with CB Richard Ellis Services' other lines of business, especially those
within the transaction management segment.

Our Strategy

CB Richard Ellis Services' strategy is to be the world's leading real estate
services firm offering unparalleled breadth and quality of services across the
globe. To implement our strategy, it intends to:

. Increase International Revenues. CB Richard Ellis Services aims to
continue to grow its international business by further penetrating the
local markets where it currently operates and by leveraging its global
platform to meet the global needs of its clients. Its focus will be on
the large commercial real estate markets of Europe and Asia Pacific.

. Capitalize on Increased Corporate Outsourcing to Increase Market Share.
CB Richard Ellis Services plans to use its global presence and breadth
of services to gain market share. It believes that major corporations
are increasingly outsourcing their real estate activities and that it is
one of the few companies with the geographic reach and service offering
to handle these large and complex outsourcing opportunities. CB Richard
Ellis Services believes corporate outsourcing will contribute
significantly to its revenue growth in future years.

. Promote Further Cross-Selling and Cross-Utilization of our Services
across the Globe. CB Richard Ellis Services intends to further
cross-sell and cross-utilize its services through education and
incentive programs that encourage individuals in one business unit to
market the services of other business units to their clients.

. Build Local Market Share. We intend to build upon our strong local
presences to generate more business from our existing customers and to
develop new relationships with growing companies that have increasing
real estate service needs.

. Grow our Investment Management Business. We intend to continue to grow
our assets under management from the $10.0 billion managed by CBRE
Investors as of December 31, 2000, which represents a 49% increase over
the assets under management by CBRE Investors on December 31, 1998. In
funds where we are the general partner, we will typically co-invest
2%-10% if required to do so by our clients. Historically, CB Richard
Ellis Services has generated significant revenues through the provision
of services on an arm's-length basis to funds managed by CBRE Investors
and expects to continue this in the future.

. Expand our Use of Internet-Based Technology. We intend to utilize
Internet-based technology to improve the delivery systems in all of our
businesses to create internal operating efficiencies, especially in
smaller transactions.

Employees

At June 30, 2001, CB Richard Ellis Services had approximately 9,600
employees located in 44 countries. The breakdown of employees by segment is as
follows:

Transaction Management 3,135 employees in the United States.
1,630 employees internationally.

Financial Services

Mortgage banking 280 mortgage banking employees.
Investment management 160 employees in the United States and internationally.
Valuation and appraisals 540 employees.
Global research and
consulting 200 employees in the United States and internationally.

Management Services
Property management 1,000 employees in the United States and 760 employees internationally.
Facilities management 1,155 employees in the United States and internationally.

Other
Administrative support
and other 740 employees in the United States and internationally.

We believe that relations with our employees are good.

Facilities

We lease the following offices:

Sales Corporate
Location Offices Offices Total
-------- ------- --------- -----

North America.................................... 170 4 174
Latin America.................................... 4 -- 4
Europe, Middle East and Africa................... 42 1 43
Asia Pacific..................................... 28 1 29
--- -- ---
Total......................................... 244 6 250
=== == ===

CB Richard Ellis Services' total rental expense under noncancelable
operating leases, less proceeds received from sublease rentals for the year
ended December 31, 2000 was approximately $54.9 million and for the six-month
period ended June 30, 2001 was approximately $30.6 million.

We do not own any offices, which is consistent with our strategy to lease
instead of own. In general, these offices are fully utilized. There is adequate
alternative office space available at acceptable rental rates to meet our
needs, although rental rates in some markets may negatively affect its profits
in those markets.

Legal Proceedings

We are party to a number of pending or threatened lawsuits arising out of,
or incident to, our ordinary course of business. Currently, we are the
defendant in several lawsuits filed by employees. These suits include claims of
wrongful termination, failure to promote or other similar claims resulting from
alleged gender discrimination or age discrimination. Management believes that
any liability imposed on us that may result from disposition of these lawsuits
or other lawsuits arising out of our ordinary course of business will not have
a material effect on our consolidated financial position or results of
operations.

In connection with the announcement of the merger and related transactions,
each of CBRE Holding, CB Richard Ellis Services and BLUM CB Corp. have been
subject to putative class action lawsuits. Between November 12 and December 6,
2000, five putative class actions were filed in the Court of Chancery of the
State of Delaware in and for New Castle County by various stockholders against
CB Richard Ellis Services, its directors and the buying group and their
affiliates. A similar action was also filed on November 17, 2000, in the
Superior Court of the State of California in and for the County of Los Angeles.
These actions all alleged that BLUM CB Corp.'s offering price was unfair and
inadequate and sought injunctive relief or rescission of the merger and related
transactions and, in the alternative, money damages.

The five Delaware actions were subsequently consolidated and a lead counsel
appointed. As of October 2, 2001, the parties to the Delaware litigation
entered into a settlement agreement that was filed with the appropriate court
in Delaware. However, the Delaware court has not yet approved the settlement
agreement. Furthermore, the parties involved in the California lawsuit have not
agreed to a settlement. In the event that these lawsuits are not settled, the
lawsuits could result in damages against us and our business and our financial
condition could be harmed.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth information about the directors and executive
officers of CBRE Holding and CB Richard Ellis Services, as of September 18,
2001:

Name Age Position
---- --- --------

Raymond Wirta............. 57 Chief Executive Officer of CBRE Holding and CB Richard Ellis Services and
a Director of CBRE Holding and CB Richard Ellis Services

Brett White............... 41 President of CBRE Holding and CB Richard Ellis Services and a Director of
CBRE Holding and CB Richard Ellis Services

James Leonetti............ 42 Chief Financial Officer of CBRE Holding and CB Richard Ellis Services

Walter Stafford........... 61 Senior Executive VP, Secretary and General Counsel of CBRE Holding and
CB Richard Ellis Services

Richard Blum.............. 66 Chairman of the Board of CBRE Holding and CB Richard Ellis Services

Jeffrey Cozad............. 36 Director of CBRE Holding and CB Richard Ellis Services

Catherine Delcoco......... 44 Director of CBRE Holding and CB Richard Ellis Services

Bradford Freeman.......... 59 Director of CBRE Holding and CB Richard Ellis Services

Frederic Malek............ 64 Director of CBRE Holding and CB Richard Ellis Services

Claus Moller.............. 38 Director of CBRE Holding and CB Richard Ellis Services

Gary Wilson............... 61 Director of CBRE Holding and CB Richard Ellis Services

Raymond Wirta has been CB Richard Ellis Services' Chief Executive Officer
since May 1999 and a CB Richard Ellis Services director since August 1997. He
has been the Chief Executive Officer of CBRE Holding since July 2001 and a CBRE
Holding director since September 2001. He served as CB Richard Ellis Services'
Chief Operating Officer from May 1998 to May 1999. Mr. Wirta was Chief
Executive Officer and a Director of Koll Real Estate Services from November
1994 to August 1997. Prior to that, Mr. Wirta held various management positions
with Koll Management Services, Inc. since 1981. Mr. Wirta was a member of the
board of directors and served as Chief Executive Officer from June 1992 to
November 1996 of Koll Real Estate Group, Inc., which filed for Chapter 11
bankruptcy protection on July 14, 1997 with a reorganization plan pre-approved
by its bondholders. Mr. Wirta holds a B.A. degree from California State
University, Long Beach and an M.B.A. degree in International Management from
Golden Gate University.

Brett White has been a director of CB Richard Ellis Services since July 2001
and its President since September 2001. He was CB Richard Ellis Services'
Chairman of the Americas from May 1999 to September 2001 and was President of
Brokerage Services from August 1997 to May 1999. He has been a director of CBRE
Holding and its President since September 2001. Previously, he was Executive
Vice President from March 1994 to July 1997, and Managing Officer of CB Richard
Ellis Services' Newport Beach, California office from 1992 to March 1994. Mr.
White received his B.A. degree from the University of California, Santa Barbara
which he attended from 1979 through 1984.

James Leonetti has been CB Richard Ellis Services' Chief Financial Officer
since September 2000. He has been the Chief Financial Officer of CBRE Holding
since September 2001. Mr. Leonetti spent five years as an Assistant Controller
with Far West Financial and eight years with California Federal Bank, most
recently as its Senior Vice President and Controller. In 1997, when CalFed was
sold to First Nationwide, Mr. Leonetti became Chief Financial Officer of Long
Beach Mortgage Company, where he remained until mid-2000 after the sale of the
company to Washington Mutual. Mr. Leonetti holds a B.S. degree in business
administration from the University of Southern California.

101

Walter Stafford has served as CB Richard Ellis Services' Senior Executive
Vice President and General Counsel since July 1995 and Secretary since May
1998. He has been the Senior Executive Vice President and General Counsel of
CBRE Holding since September 2001. Mr. Stafford was a partner at the law firm
Pillsbury Madison & Sutro LLP from November 1988 to June 1995 and from January
1973 to March 1982. From March 1982 to November 1988, he was Executive Vice
President and General Counsel at Diasonics, Inc., a medical device
manufacturer, and from 1982 to 1994, he was a director of that company. Mr.
Stafford holds a B.A. degree from the University of California, Berkeley and a
J.D. degree from Boalt Hall, University of California at Berkeley.

Richard Blum has been the Chairman of the Board of CB Richard Ellis Services
since September 2001 a director of CB Richard Ellis Services since 1993. He has
been the Chairman of the Board of CBRE Holding since September 2001 and a
director of CBRE Holding since July 2001. He is the Chairman and President of
BLUM Capital Partners, L.P., a merchant banking firm he founded in 1975. Mr.
Blum is a member of the board of directors of Northwest Airlines Corporation,
Glenborough Realty, URS Corporation and Playtex Products, Inc. Mr. Blum also
serves as Vice Chairman of URS Corporation. Mr. Blum holds a B.A. degree from
the University of California, Berkeley, a graduate degree from the University
of Vienna and an M.B.A. from the University of California, Berkeley.

Jeffrey Cozad has been a director of CBRE Holding and CB Richard Ellis
Services since September 2001. Mr. Cozad has been a Partner of BLUM Capital
Partners, L.P. since 2000. Prior to joining BLUM Capital Partners, Mr. Cozad
was a Managing Director of Security Capital Group Incorporated, a global real
estate research, investment and operating management company. Mr. Cozad holds a
B.A. degree from Depauw University and an M.B.A. degree from The University of
Chicago Graduate School of Business.

Catherine Delcoco has been a director of CBRE Holding and CB Richard Ellis
Services since September 2001. Ms. Delcoco is a Senior Vice President in CB
Richard Ellis' Corporate Group. Ms. Delcoco holds a bachelor's degree from the
University of Maryland.

Bradford Freeman has been a director of CB Richard Ellis Services since
August 1997. He has been a director of CBRE Holding since July 2001. Mr.
Freeman was a Director of Koll Real Estate Services and Koll Management
Services, Inc. from November 1994 to August 1997. Mr. Freeman is a founding
principal of Freeman Spogli & Co. Incorporated, a private investment company,
and its affiliated investment partnerships or companies, founded in 1983. Mr.
Freeman is also a member of the board of directors of RDO Equipment Company, an
agricultural and industrial equipment distributor. Mr. Freeman holds a B.A.
from Stanford University and an M.B.A. from Harvard Business School.

Frederick Malek has been a director of CBRE Holding and CB Richard Ellis
Services since September 2001. He previously served as a director of CB Richard
Ellis Services from 1989 to July 2001 and served as Co-Chairman of the Board of
Directors of CB Richard Ellis Services from April 1989 to November 1996. He has
served as Chairman of Thayer Capital Partners, a merchant banking firm he
founded, since 1993. He was President of Marriott Hotels and Resorts from 1981
through 1988 and was Executive Vice President of Marriott Corp. from 1978
through 1988. He was Senior Advisor to the Carlyle Group, L.P., a merchant
banking firm, from November 1988 through December 1991. From September 1989
through June 1990, he was President of Northwest Airlines and, from June 1990
through December 1991, he served as Vice Chairman of Northwest Airlines. From
December 1991 through November 1992, Mr. Malek served as Campaign Manager for
the 1992 Bush/Quayle presidential campaign. He also serves on the Board of
Directors of American Management Systems, Inc.; Automatic Data Processing
Corp.; FPL Group, Inc.; Manor Care, Inc.; Northwest Airlines Corporation; Paine
Webber Funds; Sega Systems, Inc. and Global Vacation Group, and Aegis
Communications Co., Inc. Mr. Malek holds a B.S. degree from the United States
Military Academy at West Point and an M.B.A. degree from the Harvard University
Graduate School of Business.

102

Claus Moller has been a director of CBRE Holding since February 2001 and a
director of CB Richard Ellis Services since July 2001. Mr. Moller has been a
Managing Partner of BLUM Capital Partners, L.P. since 1999. Prior to joining
BLUM Capital, Mr. Moller was a Managing Director at AEA Investors, a New York
based private equity investment firm. Prior to joining AEA, Mr. Moller was an
investment banking associate at Morgan Stanley in New York. Mr. Moller
currently serves as a director for Smarte Carte Inc. Mr. Moller has a cand.
oecon. degree from Aarhus University, Denmark and an M.B.A. from Harvard
Business School.

Gary Wilson has been a director of CBRE Holding and CB Richard Ellis
Services since September 2001. He previously served as a director of CB Richard
Ellis Services from 1989 to July 2001. Since April 1997, Mr. Wilson has been
Chairman of Northwest Airlines Corporation, for which he served as Co-Chairman
from January 1991 to April 1997. From 1985 until January 1990, Mr. Wilson was
an Executive Vice President, Chief Financial Officer and Director for The Walt
Disney Company and remains a Director of The Walt Disney Company. Mr. Wilson
also serves on the Board of Directors of On Command Corporation and Veritas
Holdings GmbH. From 1974 until 1985, he was Executive Vice President and Chief
Financial Officer of Marriott Corporation. Mr. Wilson holds a B.A. degree from
Duke University and an M.B.A. degree from the Wharton Graduate School of
Business and Commerce at the University of Pennsylvania.

Board Composition

Pursuant to a securityholders' agreement entered into in connection with the
merger, prior to an underwritten initial public offering following which CBRE
Holding's common stock is listed on a national securities exchange or the
Nasdaq National Market, each holder of CBRE Holding's Class B common stock
agreed to vote all of its or his shares of voting capital stock to elect the
following representatives to CBRE Holding's board of directors:

. three directors designated by RCBA Strategic Partners, L.P. and one
director designated by Blum Strategic Partners II, L.P., unless at any
time there ceases to be a real estate brokerage employee as a director
of CBRE Holding's board, in which case two directors may be designated
by RCBA Strategic Partners and one director may be designated by Blum
Strategic Partners II;

. one director designated by FS Equity Partners III, L.P. and FS Equity
Partners International, L.P., acting together;

. Raymond Wirta;

. Brett White; and

. one director who is a real estate brokerage employee of CB Richard Ellis
Services.

In addition, RCBA Strategic Partners has the right at any time to require
that CBRE Holding's board of directors be increased by one to three directors
and that the resulting vacancies be filled by a person designated by RCBA
Strategic Partners. In September 2001, RCBA Strategic Partners exercised this
right, expanded the CBRE Holding board of directors by one and designated who
would fill the vacancy. The Class B common stock subject to the
securityholders' agreement will represent a majority of the votes entitled to
be cast for the election of CBRE Holding's directors and will therefore have
the power to elect the designees described above to CBRE Holding's board of
directors. Pursuant to the securityholders' agreement, CBRE Holding has agreed
to cause CB Richard Ellis Services' board of directors to be comprised of the
same persons as CBRE Holding's board of directors.

FS Equity Partners III and FS Equity Partners International, acting
together, are entitled to have two non-voting observers, DLJ Investment
Funding, Inc. is entitled to one non-voting observer and California Public
Employee's Retirement System, or CalPERS, is entitled to have one non-voting
observer at all meetings of CBRE Holding's board of directors as long as FS
Equity Partners III and FS Equity Partners International, together, own at
least 7.5% of CBRE Holding's outstanding common stock, DLJ Investment Funding
and its

103

affiliates own 1.0% of CBRE Holding's common stock and a majority of the 16%
senior notes issued by CBRE Holding and CalPERS owns any of CBRE Holding's
outstanding common stock, respectively. CBRE Holding's board of directors are
elected by its stockholders annually for one-year terms.

The executive officers of CB Richard Ellis Services and the executive
officers of CBRE Holding are appointed by the board of directors of CBRE
Holding and serve at the discretion of CBRE Holding's board until their
successors have been duly elected and qualified. There are no family
relationships among any of CBRE Holding's or CB Richard Ellis Services'
directors or executive officers.

Board Committees

The following describes the purpose and membership of each of the board
committees that have been formed by both CBRE Holding and CB Richard Ellis
Services:

. Executive: The members of the executive committees are Raymond Wirta,
Claus Moller and Brett White. The purpose of these committees is to
manage and direct the day-to-day business and affairs of the companies,
subject to the direction and control of the boards of directors and
applicable law.

. Audit: The members of the audit committee are Claus Moller, Jeffrey
Cozad and Frederic Malek. The purpose of these committees is to assist
the boards of directors in fulfilling its fiduciary responsibilities
relating to accounting policies and auditing and reporting practices and
to ensure the independence of the companies' public accountants, the
integrity of management and the adequacy of public disclosure.

. Compensation: The members of the compensation committee are Claus
Moller, Frederic Malek and Bradford Freeman. The purpose of these
committees is to determine the compensation of various senior executives
of the companies, to authorize the adoption and implementation of
various types of benefit and compensation programs and to consider and
make recommendations to the boards of directors regarding compensation
matters.

. Acquisition/Investment Committee: The members of the
acquisition/investment committee are Richard Blum, Bradford Freeman,
Frederic Malek and Gary Wilson. The purpose of these committees is to
evaluate and approve acquisitions and investments recommended by the
management of the companies and their subsidiaries.

Pursuant to the terms of the securityholders' agreement, prior to an
underwritten initial public offering following which CBRE Holding's common
stock is listed on a national securities exchange or the Nasdaq National
Market, each of RCBA Strategic Partners and Blum Strategic Partners II,
together, and FS Equity Partners III, L.P. and FS Equity Partners
International, L.P., together, is entitled to designate one member on any
committee of the board of directors of CBRE Holding and CB Richard Ellis
Services.

Compensation Committee Interlocks and Insider Participation

The members of the compensation committees of both CBRE Holding and CB
Richard Ellis Services are identified in the caption immediately above titled
"Board Committees." None of the executive officers of CBRE Holding or CB
Richard Ellis Services serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on CBRE Holding's or CB Richard Ellis Services' board of directors or
compensation committee, other than those executive officers and directors
serving in these capacities for both CBRE Holding and CB Richard Ellis
Services.

Director Compensation

CBRE Holding and CB Richard Ellis Services reimburse their non-employee
directors for all out-of-pocket expenses incurred in the performance of their
duties as directors. CBRE Holding and CB Richard Ellis Services do not pay fees
to directors for attendance at meetings or for their services as members of the
board of directors.

104

Executive Compensation

Summary Compensation Table

The following table indicates information concerning compensation of CB
Richard Ellis Services' Chief Executive Officer and its most highly compensated
executive officers, other than the Chief Executive Officer, whose salary and
bonus exceeded $100,000 for the year ended December 31, 2000. All information
set forth in this table reflects compensation earned by these individuals for
services with CB Richard Ellis Services for the years ended December 31, 2000,
1999 and 1998. These executive officers are referred to as the "named executive
officers" elsewhere in this prospectus.

Annual Compensation Long Term Compensation
----------------------------------- ------------------------------------------
Securities
Restricted Underlying
CB Richard CB Richard
Other Annual Ellis Services Ellis Services All Other
Compensation Stock Stock Compensation
Name and Principal Position Year Salary Bonus(1) (2)(3) Awards(3) Options (4)
--------------------------- ---- -------- -------- ------------ -------------- -------------- ------------

Raymond Wirta..................... 2000 $500,000 $972,000 $ 20,251 30,000 35,000 $ --
Chief Executive Officer 1999 412,523 300,000 12,000 -- -- --
1998 384,387 395,920 12,000 -- 80,000(5) --

James Didion...................... 2000 506,308 -- 12,000 -- -- --
Chairman of the Board 1999 496,795 -- 131,718 -- -- 860
1998 500,000 657,218 131,718 -- -- --

Brett White....................... 2000 375,000 714,601 49,692 20,000 20,000 --
Chairman of the Americas 1999 331,846 225,000 45,342 -- 52,000 860
1998 281,250 318,908 45,342 25,000 48,000 --

James Leonetti.................... 2000 72,115 82,500 -- -- 25,000 --
Senior Executive Vice President 1999 -- -- -- -- -- --
and Chief Financial Officer 1998 -- -- -- -- -- --

Walter Stafford................... 2000 300,000 244,375 58,406 -- 10,000 --
Senior Executive President, 1999 298,077 120,000 58,406 -- 20,000 860
Secretary and General Counsel 1998 300,000 257,550 58,001 -- -- --

--------
(1) Bonus for each year is paid pursuant to the Annual Management Bonus Plan in
the first quarter of the following year. The bonus shown for 2000 was paid
in March of 2001.

(2) With respect to Other Annual Compensation paid in 1998, 1999 and 2000, the
amounts listed for everyone except Mr. Leonetti include a $12,000
automobile allowance. For Messrs. Wirta, Didion, Stafford and White, the
amounts also include interest accrued and forgiven under the promissory
notes delivered by them pursuant to CB Richard Ellis Services' 1996 Equity
Incentive Plan, or EIP.

(3) Pursuant to the 1996 EIP, Messrs. Didion and Stafford purchased
respectively in 1996, 175,027 and 48,640 shares of common stock of CB
Richard Ellis Services for a purchase price of $10 per share, the appraised
value of the common stock at the time of such purchase, which were paid by
delivery of full recourse promissory notes. Pursuant to the 1996 EIP, Mr.
White purchased 25,000 shares of common stock of CB Richard Ellis Services
in 1998 for a purchase price of $38.50 and 20,000 shares of common stock of
CB Richard Ellis Services in 2000 for a purchase price of $12.875. Pursuant
to the 1996 EIP, Mr. Wirta purchased 30,000 shares of common stock of CB
Richard Ellis Services in 2000 at a purchase price of $12.875. All of these
purchases were paid for by the delivery of full recourse promissory notes.
The Didion and Stafford notes bear interest at a rate of 6.84% per annum,
the White notes bear interest at rates of 5.94% and 7.4%, respectively, and
Mr. Wirta's note bears interest at a rate of 7.4%. All such interest for
any year is forgiven if the executive's performance produces a high enough
level of bonus, such that approximately $7,500 in interest is forgiven for
each $10,000 bonus. A first amendment to Mr. White's 1998 Promissory Note
provides that the portion of the then outstanding principal in excess of
the fair market value of the shares will be forgiven in the event that Mr.
White is an employee of CB Richard Ellis Services or its subsidiaries on
November 16, 2002 and the fair market value of a share of common stock of
CB Richard Ellis Services is less

105

than $38.50 on November 16, 2002. In the event of any such principal
forgiveness, CB Richard Ellis Services will pay to Mr. White an amount
equal to any federal, state or local income tax liability resulting from
such principal forgiveness. The aggregate number and value of such shares
held by the individuals named above as of December 31, 2000, net to the
purchase price of such shares was as follows: Mr. Didion--175,027
($809,500); Mr. Stafford--48,640 ($224,965); Mr. White--45,000 (negative
$561,875); and Mr. Wirta--30,000 ($52,500). The shares vest at the rate of
5 percent per quarter, commencing December 31, 1995 in the case of Messrs.
Didion and Stafford, March 31, 1998 and September 30, 2000 in the case of
Mr. White and at September 30, 2000 in the case of Mr. Wirta. As a result
of bonuses paid in 1999, 2000 and in 2001, all interest on Mr. Stafford's
and Mr. White's promissory notes for 1998, 1999 and 2000 was forgiven. As a
result of a bonus paid in 1999, all interest on Mr. Didion's promissory
note for 1998 was forgiven. As a result of the decision of the Compensation
Committee in February of 2000, Mr. Didion's interest for 1999 was also
forgiven. Interest on Mr. Didion's promissory note was not forgiven in
2000. As a result of a bonus paid in 2001, all interest on Mr. Wirta's note
for 2000 was forgiven.

(4) Consists of each individual's allocable share of profit sharing
contributions made by CB Richard Ellis Services to its Capital Accumulation
Plan, a qualified profit sharing 401(k) plan.

(5) In each of 1997 and 1998, Mr. Wirta received an option to purchase 100,000
shares of common stock of CB Richard Ellis Services for a total of 200,000
shares, pursuant to an option agreement which was amended on December 15,
1998. Pursuant to the amendment, the options were repriced to $20 and the
number of shares of common stock of CB Richard Ellis Services underlying
each option was reduced by 20% from 100,000 to 80,000 shares for a total of
160,000 shares.

Option Grants In Last Fiscal Year

The following table provides information concerning grants of options to
purchase shares of common stock of CB Richard Ellis Services made during the
year ended December 31, 2000, to CB Richard Ellis Services' named executive
officers.

In the fiscal year ended December 31, 2000, options to purchase up to an
aggregate of 487,710 shares of common stock of CB Richard Ellis Services were
granted to employees, directors and independent contractors. Most of these
options were granted under CB Richard Ellis Services' various stock option
plans at exercise prices equal to the fair market value of common stock of CB
Richard Ellis Services on the date of grant, as determined in good faith by the
board of directors. All options have a term of ten years. Generally, these
options vest 20% per year over 5 years beginning August 31, 2001. These assumed
rates of appreciation comply with the rules of the SEC and do not represent CB
Richard Ellis Services' estimate of future stock price. Actual gains, if any,
on stock option exercises will be dependent on the future performance of the
underlying common stock.

CB Richard Ellis Services Option Grants in 2000

Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Exercise Price Appreciation for
Underlying Granted to Price Option Term
Options Employees in Per Expiration ----------------------
Name Granted 2000 Share Date 5% 10%
---- ---------- ------------- -------- ---------- -------- --------

Raymond Wirta................ 35,000 7.2% $12.875 8/31/10 $283,395 $718,200
James Didion................. -- -- -- -- -- --
Brett White.................. 20,000 4.1 12.875 8/31/10 161,940 410,400
James Leonetti............... 25,000 5.1 12.875 8/31/10 202,425 513,000
Walter Stafford.............. 10,000 2.1 12.875 8/31/10 80,970 205,200

CB Richard Ellis Services has agreed to pay James Leonetti $2.375 in cash
for each option he exercises which has the effect of reducing his exercise
price per share to $10.50.

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Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values

The following table describes for the named executive officers the
exercisable and unexercisable options for shares of common stock of CB Richard
Ellis Services held by them as of December 31, 2000. There were no option
exercises by named executive officers in the last fiscal year. The "Value of
Unexercised In-the-Money Options at Fiscal Year End" is based on the deemed
value of CB Richard Ellis Services common stock as of December 31, 2000, less
the per share exercise price, multiplied by the number of shares issued upon
exercise of the option.

Fiscal Year End CB Richard Ellis Services Option Values

Number of Securities
Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at December 31, 2000 at December 31, 2000
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------

Raymond Wirta................ 32,000 163,000 $ -- $61,250
James Didion................. 200,000 -- -- --
Brett White.................. 29,600 90,400 3,900 50,600
James Leonetti............... -- 25,000 -- 43,750
Walter Stafford.............. 4,000 26,000 1,500 23,500

Cancellation of Options in the Merger

At the effective time of the merger, each holder of an option to purchase
shares of common stock of CB Richard Ellis Services outstanding under any of CB
Richard Ellis Services' stock option or compensation plans or arrangements,
whether or not vested, had the right to have the option cancelled and in
exchange CB Richard Ellis Services paid to each holder that elected to have his
or her options cancelled an amount per share that was subject to the option,
equal to the greater of (A) the amount by which $16.00 exceeded the exercise
price of the option, if any, and (B) $1.00, reduced in each case by applicable
tax withholding.

Each holder of an option that did not elect to receive the consideration
described in the previous paragraph continued to hold his or her options to
acquire common stock of CB Richard Ellis Services after the merger. However,
after the merger, CB Richard Ellis Services became a wholly-owned subsidiary of
CBRE Holding and the common stock of CB Richard Ellis Services was delisted
from the New York Stock Exchange. Accordingly, if any of these holders exercise
their options after the merger, the shares of common stock of CB Richard Ellis
Services that the holders will receive will be difficult, if not impossible, to
sell.

Incentive Plans

CB Richard Ellis Services' Deferred Compensation Plan

CB Richard Ellis Services' deferred compensation plan permits a select group
of management employees, as well as highly compensated employees, to elect
immediately prior to the beginning of each calendar year to defer receipt of
some or all of their compensation for the next year until a future distribution
date and have it credited to one or more of several funds in the deferred
compensation plan. From time to time CB Richard Ellis Services has also granted
deferred compensation awards in connection with its incentive programs. The
three funds in which deferred compensation amounts may be credited are:

. The Insurance Fund. A participant may elect to have his or her deferred
compensation allocated to the Insurance Fund. Within the Insurance Fund,
the employee can elect to have gain or loss on deferrals measured by one
or more of approximately 30 mutual funds. CB Richard Ellis Services
hedges its obligations to the participants under the Insurance Fund by
actually buying a contract of insurance

107

within which it has premiums invested in the mutual funds which
participants have elected to measure the value of their deferred
compensation. Historically, CB Richard Ellis Services has held the
insurance contract in a Rabbi Trust. The participants have no interest
in or claim to the Rabbi Trust, the insurance contract or the mutual
funds within the insurance contract; they are general unsecured
creditors of CB Richard Ellis Services. The insurance contract and the
Rabbi Trust are assets of CB Richard Ellis Services available to its
general creditors, including the deferred compensation plan
participants, in the event of the bankruptcy or insolvency of CB Richard
Ellis Services. While in the past CB Richard Ellis Services has elected
to deposit in the Rabbi Trust the full amount of deferrals into the
Insurance Fund, CB Richard Ellis Services is not obligated to do so in
the future, and CB Richard Ellis Services anticipates that any future
funding will be limited so that it maintains cash equal to the
incremental tax it must pay because deferred compensation plan
allocations are not deductible of tax purposes.

. The Stock Fund. A participant may elect to have his or her deferrals
allocated to CB Richard Ellis Services' stock fund, except that after
the effective date of the merger such allocations may only be made with
CB Richard Ellis Services' consent. Each stock fund unit has a value
equal to one share of CBRE Holding Class A common stock.

. Interest Index Fund. From the deferred compensation plan's inception in
1994 until May of 1999, participants could elect to have their deferrals
allocated to an Interest Index Fund, which CB Richard Ellis Services
refers to as "Interest Index Fund I." All these allocations are credited
with interest at the rate payable by CB Richard Ellis Services under CB
Richard Ellis Services' principal credit agreement. Effective June 1,
2001 a new Interest Index Fund, which CB Richard Ellis Services refers
to as "Interest Index Fund II," was established. All deferrals allocated
to Interest Index Fund II will be credited with interest at 11 1/4% per
year for five years or until distributed if earlier, and after that time
at a rate no lower than the rate CB Richard Ellis Services pays under
its principal credit agreement. The deferrals to Interest Index Fund II
will not be funded with a Rabbi Trust or otherwise. Interest Index Fund
II will only accept up to $20 million in deferrals, other than pursuant
to the 2000 Company Match Program. A participant may elect to move
allocations from the Insurance Fund--but not the Stock Fund or Interest
Index Fund I--into Interest Index Fund II. After five years CB Richard
Ellis Services reserves the right to terminate Interest Index Fund II.
In that event a participant's account balance in Interest Fund II either
will be distributed in cash to the participant or invested in the
Insurance Fund: If a participant's account balance in Interest Index
Fund II is to be invested in the Insurance Fund, CB Richard Ellis
Services will transfer cash equal to the account balance into the Rabbi
Trust for the Insurance Fund. The choice between a cash distribution and
a new investment in the Insurance Fund is that of the participant, but
the choice must be made prior to January 1, 2002. If a participant does
not make a choice prior to January 1, 2000, he or she will be deemed to
have elected a cash distribution.

Distributions. The deferred compensation plan permits participants to elect
in-service distributions, which may not begin less than three years following
the election, and post-employment distributions. These distributions may be (a)
in the form of a lump sum payment on a date selected by the participant or (b)
in a series of quarterly installment payments, or annual installment payments
in the case of stock fund units. Stock fund units are distributed only in the
form of shares of CBRE Holding Class A common stock. Separate distribution
elections are permitted with respect to the deferrals for each year. There is
limited flexibility to change distribution elections once made. A participant
may elect to receive a distribution of his or her vested accounts at any time
subject to a charge equal to 10% of the amount to be distributed, or 7.5% of
the amount to be distributed from the Interest Index Fund II.

CB Richard Ellis Services' Capital Accumulation Plan

CB Richard Ellis Services maintains the Capital Accumulation Plan, which is
a tax qualified retirement plan that CB Richard Ellis Services generally refers
to as the 401(k) plan. Generally, an employee of CB Richard Ellis Services is
eligible to participate in the plan if the employee is at least 21 years old.

108

The plan provides for participant contributions as well as discretionary
employer contributions. A participant is allowed to contribute to the plan from
1% to 15%, in whole percentages, of his or her compensation, subject to limits
imposed by the U.S. Internal Revenue Code. Each year, CB Richard Ellis Services
determines an amount of employer contributions, if any, it will contribute to
the plan, which CB Richard Ellis Services refers to as "CB Richard Ellis
Services' contributions," based on the performance and profitability of CB
Richard Ellis Services' consolidated U.S. operations. CB Richard Ellis
Services' contributions for a year are allocated to participants who are
actively employed on the last day of the plan year in proportion to each
participant's pre-tax contributions for that year, up to 5% of the
participant's compensation.

In connection with the merger, each share of common stock of CB Richard
Ellis Services formerly held by the Capital Accumulation Plan and credited to
participant accounts was exchanged for $16.00 in cash, and the plan was amended
to eliminate common stock of CB Richard Ellis Services as an investment option
within the plan. The cash received for the shares of CB Richard Ellis Services'
common stock was available for reinvestment in one or more of the investment
alternatives contained within the plan in accordance with the terms of the
plan, including CBRE Holding Class A common stock under a new plan investment
alternative. All of CB Richard Ellis Services' active U.S. employees
participating in the plan at the time of the merger were offered the
opportunity to direct the trustee of the 401(k) plan to purchase for allocation
to their account balance shares of CBRE Holding Class A common stock. After the
merger, participants are no longer entitled to purchase additional shares of
CBRE Holding Class A common stock for allocation to their account balance.

A participant may elect to receive a distribution in a single lump sum
payment of his or her Capital Accumulation Plan account balance following
termination of the participant's employment with CB Richard Ellis Services.
However, if the participant has an account balance in CBRE Holding Class A
common stock fund, the participant may receive all or a portion of his or her
balance in that fund either in shares or in cash.

Employment Agreements

Raymond Wirta and Brett White. In connection with the merger and related
transactions, Raymond Wirta and Brett White entered into three-year employment
agreements with CB Richard Ellis Services, which agreements became effective on
the closing of the merger. Following the three-year term, it is expected that
the employment agreements will be automatically extended for successive
twelve-month periods if notice is not received by either party within 120 days
prior to the expiration of the initial term or any renewal term.

Raymond Wirta became a member of CBRE Holding's board of directors and its
Chief Executive Officer following the merger and continued to hold the
identical positions with CB Richard Ellis Services. Pursuant to the employment
agreement, he will receive an annual base salary of $519,000 and will be
eligible for an annual bonus of up to 200% of his target bonus based upon the
achievement of performance goals established by CBRE Holding's board of
directors.

Brett White became a member of CBRE Holding's board of directors and its
Chairman of the Americas following the merger and continued to hold the
identical positions with CB Richard Ellis Services. Pursuant to the employment
agreement, he will receive an annual base salary of $395,000 and will be
eligible for an annual bonus of up to 200% of his target bonus based upon the
achievement of performance goals established by CBRE Holding's board of
directors.

At the time of the merger, CBRE Holding granted Mr. Wirta 176,153 options
and granted Mr. White 141,782 options, each having the same terms as the
options granted to other designated managers at the time of the merger.
Pursuant to their employment agreements, all unvested options held by Messrs.
Wirta and White will automatically vest if there is a change of control, as
defined in these agreements, of CBRE Holding prior to termination of that
executive's employment with CB Richard Ellis Services.

Each employment agreement provides that the executive's employment by CB
Richard Ellis Services may be terminated by either party at any time. If during
the term of the agreement CB Richard Ellis Services

109

terminates the executive's employment without cause or the executive terminates
his employment for good reason, the executive is entitled to the following
severance payments and benefits:

. any earned or accrued but unpaid salary, bonus, business expenses and
employee benefits;

. continued payment of base salary and average annual bonus based on the
previous two fiscal years for a period of two years following the
termination of employment; and

. continued coverage under CB Richard Ellis Services' medical plans on the
same basis as its active executives until the earlier of the second
anniversary of the termination of employment and the date the executive
becomes eligible for comparable coverage under any future employer's
medical plan.

If during the term of the agreement the executive's employment is terminated
due to his death or disability, the executive is entitled to the following
severance payments:

. any earned or accrued but unpaid salary, bonus, business expenses and
employee benefits; and

. a pro rata portion of any annual bonus that the executive would have
been entitled to receive in the year of termination, payable at the time
the bonus would otherwise have been paid.

Each employment agreement also contains a customary provision regarding
confidentiality, a non-solicitation provision applicable for a period of two
years following the executive's termination of employment for any reason and a
noncompetition provision applicable for a period of two years following the
executive's termination of employment with CB Richard Ellis Services without
cause or by the executive with good reason.

James Didion. In 1999, CB Richard Ellis Services and James Didion entered
into an amended and restated ten-year employment agreement which provides for
an annual salary of $500,000 with no incentive compensation or bonus
anticipated. The agreement provides that he will act as a senior advisor to CB
Richard Ellis Services during the term of his employment. For as long as he is
employed, CB Richard Ellis Services will provide medical and other benefits
generally made available to senior officers and an office, a secretary and
clerical help. The amended agreement is terminable by CB Richard Ellis Services
for cause. Cause includes conviction of a felony, fraud and willful and
substantial failure to render services; provided, in the latter case, that Mr.
Didion is given notice of his failure to render service and does not remedy
such failure. If the agreement is terminated without cause or in the event of
his death or total disability, he, or his estate, will continue to be entitled
to the salary and will be fully vested in any unvested stock options or stock
purchase rights. Following the merger, Mr. Didion ceased to serve as CB Richard
Ellis Services' Chairman or as a member of the board of directors. Mr. Didion
has agreed, for the duration of his ten-year employment agreement, not to
engage in any business within the United States that competes with CB Richard
Ellis Services' business or the business of any of CB Richard Ellis Services'
affiliates.

Limitation of Liability and Indemnification

Each of CBRE Holding's and CB Richard Ellis Services' respective restated
certificates of incorporation includes a provision that eliminates the personal
liability of their directors for monetary damages for breach of fiduciary duty
as a director, except to the extent such limitation is not permitted under the
Delaware General Corporation Law.

CBRE Holding's and CB Richard Ellis Services' respective restated
certificates of incorporation and bylaws further provide for the
indemnification of their directors and officers to the fullest extent permitted
by Section 145 of the Delaware General Corporation Law, including circumstances
in which indemnification is otherwise discretionary. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to their
directors, officers and controlling persons under the foregoing provisions, or
otherwise, they have been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In addition, CB Richard Ellis Services maintains
and CBRE Holding may in the future obtain directors' and officers' liability
insurance.

110

RELATED PARTY TRANSACTIONS

Since January 1, 1998, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which CB Richard Ellis
Services or CBRE Holding both prior to and as of the merger was, or is, or will
be a party in which the amount involved exceeds $60,000 and in which any
director, executive officer or holder of more than 5% of common stock, or an
immediate family member of any of the foregoing, had or will have a direct or
indirect interest other than compensation arrangements, which are described
under the section of the offering circular titled "Management," and the
transactions described below.

Participation of Directors, Officers and Principal Stockholders in the Merger
and Related Transactions

On February 23, 2001, BLUM CB Corp., CBRE Holding and CB Richard Ellis
Services entered into an agreement and plan of merger pursuant to which CB
Richard Ellis Services became the direct, wholly-owned subsidiary of CBRE
Holding. The merger agreement was amended and restated on April 24, 2001 and on
May 31, 2001. Both CBRE Holding and BLUM CB Corp. were formed by RCBA Strategic
Partners, L.P. to effect the transactions contemplated by the merger agreement.
As a result of the merger and the related transactions described in the section
of this prospectus titled "The Merger and Related Transactions," RCBA Strategic
Partners, L.P. is entitled to designate a majority of the board of directors of
CBRE Holding and CB Richard Ellis Services. Richard Blum and Claus Moller, each
of whom is a director of CBRE Holding and CB Richard Ellis Services, are
managing members of the general partners of RCBA Strategic Partners, L.P. and
Blum Strategic Partners II, L.P. Jeffrey Cozad, who is a director of CBRE
Holding and CB Richard Ellis Services, is a member of the general partners of
RCBA Strategic Partners, L.P. and Blum Strategic Partners II, L.P. Also as a
result of the merger and related transactions, FS Equity Partners III, L.P.
acquired beneficial ownership of more than 5% of the Class B common stock of
CBRE Holding. Bradford Freeman, who is a director of CBRE Holding and CB
Richard Ellis Services, is an affiliate of FS Equity Partners III, L.P. and its
affiliate FS Equity Partners International, L.P.

Contribution and Voting Agreement

In connection with the execution of the merger agreement on February 23,
2001, CBRE Holding and BLUM CB Corp. entered into a contribution and voting
agreement and the following other parties, each of which held shares of CB
Richard Ellis Services' common stock prior to the merger and which are referred
to together throughout this prospectus as the "buying group":

. Raymond Wirta, who became a director of CBRE Holding and CB Richard
Ellis Services and the Chief Executive Officer of CBRE Holding and CB
Richard Ellis Services in connection with the merger;

. Brett White, who became a director of CBRE Holding and CB Richard Ellis
Services and the President of CBRE Holding and CB Richard Ellis Services
in connection with the merger;

. The Koll Holding Company, which is controlled by Donald Koll, who was a
director of CB Richard Ellis Services prior to the merger; and

. Frederic Malek, who became a director of both CBRE Holding and CB
Richard Ellis Services in connection with the merger.

111

Pursuant to this agreement, which was amended and restated on May 31, 2001
and amended on July 19, 2001, each of the members of the buying group
contributed to CBRE Holding all of the shares of common stock of CB Richard
Ellis Services that he or it directly owned. Each of these shares contributed
to CBRE Holding were cancelled as a result of the merger, and neither CBRE
Holding nor BLUM CB Corp. received any consideration for those shares of common
stock of CB Richard Ellis Services. CBRE Holding issued one share of its Class
B common stock in exchange for each share of common stock of CB Richard Ellis
Services contributed to it. This resulted in the issuance to the buying group
of an aggregate of 7,967,774 shares of CBRE Holding Class B common stock in
exchange for these contributions. In addition, pursuant to the contribution and
voting agreement, RCBA Strategic Partners and Blum Strategic Partners II
purchased with cash 4,435,154 shares of CBRE Holding Class B common stock,
Raymond Wirta purchased by delivery of a promissory note 5,000 shares of CBRE
Holding Class B common stock and California Public Employees' Retirement
System, or CalPERS, purchased with cash 625,000 shares of CBRE Holding Class A
common stock, in each case for a price of $16.00 per share.

Treatment of CB Richard Ellis Services Common Stock, Options and Warrants in
the Merger

Common Stock and Options. Pursuant to the merger agreement, CB Richard Ellis
Services' stockholders at the time of the merger, other than the buying group
described above who received shares of CBRE Holding Class B common stock
instead, received $16.00 in cash for each share of CB Richard Ellis Services
common stock that they owned. Also, pursuant to the merger agreement, each
person that held options to acquire CB Richard Ellis Services common stock was
entitled to receive in connection with the merger an amount in cash for each
option they owned equal to the greater of (A) the amount by which $16.00
exceeded the exercise price of the option, if any, and (B) $1.00, reduced in
each case by applicable tax withholding.

Accordingly, the members of the buying group, persons affiliated with
members of the buying group and individuals who are directors and executive
officers of CBRE Holding and CB Richard Ellis Services received the following
amounts in connection with the merger for options they formerly held, reduced
in each case by applicable tax withholding:

. Raymond Wirta received $269,375 for options to purchase an aggregate of
195,000 shares of common stock of CB Richard Ellis Services;

. Brett White received $201,750 for options to purchase an aggregate of
120,000 shares of common stock of CB Richard Ellis Services;

. Richard Blum received $62,268 for options to purchase an aggregate of
18,872 shares of common stock of CB Richard Ellis Services;

. James Leonetti received $78,125 for options to purchase an aggregate of
25,000 shares of common stock of CB Richard Ellis Services;

. Walter Stafford received $1,030,368 for 64,398 shares of common stock of
CB Richard Ellis Services, which amount was reduced to repay the loan
from CB Richard Ellis Services to purchase the shares, and $58,750 for
options to purchase an aggregate of 30,000 shares of common stock of CB
Richard Ellis Services;

. Donald Koll received $366,315 for options to purchase an aggregate of
317,480 shares of common stock of CB Richard Ellis Services; and

. Frederic Malek received $159,737 for options to purchase an aggregate of
15,777 shares of common stock of CB Richard Ellis Services.

Warrants. Under the contribution and voting agreement, warrants beneficially
owned by Donald Koll and The Koll Holding Company to purchase 84,988 shares of
common stock of CB Richard Ellis Services were each converted at the time of
the merger into the right to receive $1.00. Mr. Wirta had the right to acquire
up to 55,936

112

of these warrants under the terms of an option agreement among himself, Mr.
Koll, The Koll Holding Company and Koll Real Estate Services. Also pursuant to
the contribution and voting agreement, upon the consummation of the merger,
CBRE Holding issued to FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. warrants to purchase an aggregate of 255,477.3 shares of
CBRE Holding Class B common stock.

Securityholders' Agreement

In connection with the closing of the merger, the members of the buying
group, together with CalPERS, DLJ Investment Funding, Inc. and Credit Suisse
First Boston Corporation entered into a securityholders' agreement. This
agreement defines various rights of the parties to the agreement related to
their ownership and governance of CBRE Holding, including voting of the shares
of CBRE Holding common stock, a right of first offer for potential sales of
some of their shares, co-sale and required sale rights applicable in connection
with transactions involving CBRE Holding shares, participation rights regarding
future issuances of CBRE Holding's shares of common stock and registration
rights.

Governance. Each of the members of the buying group agreed to vote each of
the shares of CBRE Holding's Class B common stock it or he beneficially owns to
elect to CBRE Holding's board of directors individuals designated by various
members of the buying group. A majority of the directors of CBRE Holding
generally may be designated by RCBA Strategic Partners at any time. Pursuant to
the securityholders' agreement, the board of directors of CB Richard Ellis
Services will be comprised of the same members as CBRE Holding's board of
directors. Accordingly, CBRE Holding's and CB Richard Ellis Services' board of
directors generally is controlled by RCBA Strategic Partners after the merger.
In addition, FS Equity Partners III, L.P. and FS Equity Partners International
L.P., together, generally may designate one of CBRE Holding's directors and
Raymond Wirta and Brett White also are designated as directors. The
securityholders' agreement also provides that CBRE Holding is prohibited from
taking certain actions without the consent of the director nominated by FS
Equity Partners III and FS Equity Partners International, including incurring
certain indebtedness, consummating certain acquisitions or dispositions or
issuing stock or options to its employees, subject to certain exceptions.

Subject to exceptions, each of the members of the buying group agreed to
vote the shares of CBRE Holding common stock it or he beneficially owns on
matters to be decided by CBRE Holding stockholders in the same manner as RCBA
Strategic Partners votes the shares of CBRE Holding Class B common stock that
it beneficially owns. As a result, on most matters to be decided by CBRE
Holding stockholders, RCBA Strategic Partners is able to control the outcome.

Also pursuant to the securityholders' agreement, FS Equity Partners III and
FS Equity Partners International, together, are entitled to have two non-voting
observers, DLJ Investment Funding is entitled to one non-voting observer and
CalPERS is entitled to have one non-voting observer at all meetings of CBRE
Holding's board of directors as long as, respectively, Freeman Spogli owns at
least 7.5% of CBRE Holding's outstanding common stock, DLJ Investment Funding
and its affiliates own 1.0% of CBRE Holding's outstanding common stock and a
majority of the 16% senior notes issued by CBRE Holding and CalPERS owns any of
CBRE Holding's outstanding common stock.

Registration Rights. Pursuant to the securityholders' agreement, CBRE
Holding has agreed, at the request of RCBA Strategic Partners and Blum
Strategic Partners II, FS Equity Partners III and FS Equity Partners
International or DLJ Investment Funding to initiate the registration under the
Securities Act of shares held by that party. In addition, CBRE Holding has also
agreed that each member of the buying group, as well as DLJ Investment Funding,
has limited "piggyback" registration rights on specified types of registration
statements that CBRE Holding files. These piggyback registration rights
generally will not apply until after CBRE Holding has completed, if ever, an
underwritten initial public offering of shares of its common stock after which
these shares are listed on a national securities exchange or on the Nasdaq
National Market. Piggyback rights will not apply to an underwritten initial
public offering unless registrable securities of RCBA Strategic Partners and
Blum Strategic Partners II are sold in that offering.

113

Loans to The Koll Holding Company and Ray Wirta

In connection with the merger and related transactions, CBRE Holding
extended a loan of approximately $2.7 million to The Koll Holding Company,
which is controlled by Donald Koll, to replace its former margin loan with a
third party that was secured by shares of CB Richard Ellis Services common
stock. The new loan is full-recourse, accrues interest at LIBOR plus 1.4%,
compounds annually, is payable quarterly, and has a stated maturity of five
years. This new loan will be replaced by a margin loan from a third party when,
if ever, CBRE Holding common stock becomes freely tradable on a national
securities exchange or an over-the-counter market.

In the event, however, that CBRE Holding common stock is not freely tradable
as described above by June 2004, then CBRE Holding has agreed to loan Raymond
Wirta up to $3.0 million on a full-recourse basis to enable him to exercise an
existing option to acquire shares held by The Koll Holding Company, if Raymond
Wirta is employed by CBRE Holding at the time of exercise or was terminated
without cause or resigned for good reason. This loan will become repayable upon
the earliest to occur of: (1) 90 days following termination of his employment,
other than by CBRE Holding without cause or by him for good reason, (2) seven
months following the date CBRE Holding's common stock becomes freely tradable
as described above and (3) the receipt of proceeds from the sale of the pledged
shares as described below. This loan will bear interest at the prime rate in
effect on the date of the loan, compounded annually, and will be repayable to
the extent of any net proceeds received by him upon the sale of any shares of
CBRE Holding common stock. Raymond Wirta will pledge the shares received upon
exercise of the option as security for the loan.

In connection with Raymond Wirta's obligation to purchase 5,000 shares of
CBRE Holding Class B common stock for $16.00 per share pursuant to the
contribution and voting agreement, Raymond Wirta delivered to CBRE Holding an
$80,000 promissory note, which bears interest at 10% per year and is payable
upon the same date as the loan described in the immediately preceding paragraph
above.

Participation in the Offerings of CBRE Holding Class A Common Stock and Options
to Acquire Class A Common Stock

General. In connection with the merger and related transactions, CBRE
Holding sold to CB Richard Ellis Services' employees and independent
contractors 1,768,791 shares of CBRE Holding Class A common stock for a price
of $16.00 per share, including shares owned directly, shares held in CB Richard
Ellis Services' 401(k) plan and shares underlying vested stock fund units in CB
Richard Ellis Services' deferred compensation plan. In addition, in connection
with the offering of shares of CBRE Holding Class A common stock to designated
managers of CB Richard Ellis Services, CBRE Holding also granted to eligible
designated managers an aggregate of 1,508,057 options to acquire shares of CBRE
Holding Class A common stock.

Purchase of Stock and Grants of Stock Options. In connection with the
offering of shares for direct ownership, each designated manager was entitled
to receive a grant of options to purchase shares of CBRE Holding Class A common
stock if he or she subscribed for at least the percentage of 625,000 shares
allocated to the designated manager by CBRE Holding's board of directors. The
number of shares that a designated manager was required to subscribe for in
order to receive a grant of options was reduced by the number of deferred
compensation plan stock fund units acquired by the designated manager at the
closing of the employee offerings by the transfer of account balances then
allocated to the deferred compensation plan insurance fund. The aggregate
number of options available for grant to the designated managers equaled
approximately 10% of the number of fully diluted shares of CBRE Holding Class A
common stock and Class B common stock outstanding at the time of the merger,
including all shares issuable upon exercise of outstanding options and
warrants. The options issued to designated managers have an exercise price of
$16.00 per share and have a term of 10 years. Twenty percent of the options
vest on each of the first five anniversaries of the merger and all unvested
options vest if there is a change in control of CBRE Holding. The number of
shares that were purchased by each executive officer were as follows:

. Raymond Wirta--64,063 shares;

114

. Brett White--26,563 shares; and

. James Leonetti--6,250 shares.

As a result, the executive officer received the following grants of options:

. Raymond Wirta--176,153 stock options;

. Brett White--141,782 stock options; and

. James Leonetti-- 17,186 stock options.

Full-Recourse Note. In connection with the offering of shares of CBRE
Holding common stock for direct ownership, under specified circumstances, each
designated manager was allowed to deliver to CBRE Holding a full-recourse note
as payment for a portion of the offering price for shares that he or she
purchased. The maximum amount of the full-recourse note that could be delivered
by a designated manager was be reduced by the amount, if any, of the manager's
deferred compensation plan account balance then allocated to the insurance fund
that he or she transferred to stock fund units. Unless CBRE Holding's board of
directors determined otherwise, each designated manager was able to use a
full-recourse note if the designated manager subscribed for at least the
percentage of the 625,000 shares that was allocated to the designated manager
by CBRE Holding's board of directors.

Accordingly, based upon each of their participation in the employee
offerings, the amount of the full-recourse notes that each of the executive
officers delivered to CBRE Holding as payment for a portion of the shares he
purchased in the offering of shares for direct ownership was the following:

. Raymond Wirta--$512,504;

. Brett White--$210,000; and

. James Leonetti--$23,000.

Each of these executive officers pledged as security for his full-recourse
note a number of shares having an offering price equal to 200% of the amount of
the note.

Deferred Compensation Plan. CB Richard Ellis Services' designated managers
had the right to transfer into stock fund units an aggregate of up to $2.6
million of deferred compensation plan account balances that were then allocated
to the insurance fund under the deferred compensation plan. Pursuant to this
right, Brett White transferred $400,000 from his deferred compensation plan
account balance that was allocated to the insurance fund at the time of the
merger into 25,000 stock fund units.

Retention Bonuses

In connection with the merger and related transactions, CBRE Holding awarded
cash retention bonuses to the designated managers employed by CB Richard Ellis
Services at the time of the merger in order to provide an incentive and a
reward for the designated managers' continued service up to and including the
merger. The aggregate amount of the retention bonuses was approximately $1.6
million. The following executive officers were among the designated managers
that received cash retention bonuses in excess of $60,000: Raymond
Wirta--$164,000 and Brett White--$132,000.

Forgiveness of Loans

Pursuant to CB Richard Ellis Services' Equity Incentive Plan, a restricted
stock purchase plan, shares of CB Richard Ellis Services' common stock were
purchased in 1998 and 2000 by some of its executive officers and directors for
a purchase price equal to the fair market value, which was paid by delivery of
full-recourse promissory notes. The notes bear interest at the minimum federal
rate, which may be forgiven if the executive's performance results in the award
of a bonus, with approximately $7,500 in interest forgiven for each $10,000

115

bonus. The aggregate number, purchase price, interest rate, value and net value
of the shares of CB Richard Ellis Services common stock held by the individuals
named below as of June 30, 2001, were as follows:

Number of Aggregate Interest Aggregate Value
Name Shares Purchase Price Rate of Shares Net Value
---- --------- -------------- -------- --------------- ---------

Brett White.................. 25,000 $962,500 5.94% $365,625 $(596,875)
Brett White.................. 20,000 257,500 7.40 292,500 35,000
Raymond Wirta................ 30,000 386,250 7.40 438,750 52,500

The shares vest at the rate of 5% per quarter commencing on the purchase
date. As a result of bonuses paid in 2001, all interest on Brett White's and
Raymond Wirta's promissory notes for 2000 were forgiven. In 1998, Brett White
purchased 25,000 shares of common stock at a purchase price of $38.50 per share
and in 2000, he purchased 20,000 shares of common stock for $12.875 per share,
which were each paid for by the delivery of promissory notes. The notes bear
interest at a rate of 5.94% and 7.4% per annum, respectively, which may be
forgiven as previously described. As of December 31, 2000, Brett White held
45,000 shares which, net of the purchase price, had a negative value. The
shares are subject to a right of repurchase by CB Richard Ellis Services, which
right terminates with respect to 5% of the total number of shares each quarter
commencing March 31, 1998, as to the 25,000 shares and September 30, 2000, as
to the 20,000 shares. A first amendment to the 1998 Promissory Note provides
that the portion of the then outstanding principal in excess of the fair market
value of the shares will be forgiven in the event that Brett White is an
employee of CB Richard Ellis Services on November 16, 2002, and the fair market
value of a share of CBRE Holding's Class A and Class B common stock is less
than $38.50 on November 16, 2002. In the event of any principal forgiveness,
CBRE Holding will pay to Brett White an amount equal to any federal, state or
local income tax liability resulting from the principal forgiveness. In August
2000, CB Richard Ellis Services loaned Brett White $75,000, which he repaid in
March 2001 with interest at 9% per year.

Employment Agreements

In connection with the merger transactions, CB Richard Ellis Services
entered into three-year employment agreements with Raymond Wirta and Brett
White. For more information concerning the terms of these employment
agreements, see "Management--Employment Agreements."

Transaction Fees

Under the terms of the contribution and voting agreement, in connection with
advisory services related to the merger, the general partner of RCBA Strategic
Partners, L.P. received from CBRE Holding a transaction fee of $3.0 million and
Freeman Spogli & Co. Incorporated or its designee received a transaction fee of
$2.0 million upon closing of the merger. The advisory services provided
included, among other things, transaction and structuring analysis, financing
analysis and the arrangement and negotiation of debt and equity financing. Each
of Richard Blum, Jeffrey Cozad and Claus Moller, who are members of CBRE
Holding's board of directors after the merger, owns a beneficial interest in
the general partner of RCBA Strategic Partners and therefore has an interest in
the transaction fee paid to this entity. Bradford Freeman, who is one of CBRE
Holding's directors after the merger, owns a beneficial interest in Freeman
Spogli & Co. Incorporated and therefore has an interest in the transaction fee
paid to Freeman Spogli & Co. Incorporated or its designee.

Debt Financing Fees

In connection with the merger and the related financings, Credit Suisse
First Boston and its affiliates, including DLJ Investment Funding, Inc.,
received customary fees and reimbursement of expenses with respect to the
closing of the new senior secured credit facilities, the offering and initial
purchase of the outstanding notes, the offering and initial purchase of the
65,000 units that included 16% senior notes due 2011 of CBRE Holding and shares
of Holding Class A common stock and the tender offer and consent solicitation
by CB Richard Ellis Services with respect to its former 8 7/8% senior
subordinated notes due 2006.

116

PRINCIPAL STOCKHOLDERS

The table below sets forth information regarding the estimated beneficial
ownership of the shares of CBRE Holding Class A common stock and CBRE Holding
Class B common stock as of September 21, 2001. The table sets forth the number
of shares beneficially owned, and the percentage ownership, for:

. each person that beneficially owns 5% or more of CBRE Holding's Class A
common stock or CBRE Holding's Class B common stock;

. each of CBRE Holding's directors;

. the named executive officers; and

. all of the directors and executive officers of CBRE Holding as a group.

Information with respect to beneficial ownership has been furnished by each
director, executive officer or 5% stockholder, as the case may be. Except as
otherwise noted below, the address for each person listed on the table is c/o
CB Richard Ellis Services, Inc., 355 South Grand Avenue, Suite 3295, Los
Angeles, California 90071.

Beneficial ownership is determined in accordance with the rules of the SEC,
which generally attributes beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with respect to those
securities. In computing the number of shares beneficially owned by a person
and the percent of ownership of that person, shares subject to options or
warrants held by that person that were exercisable as of September 21, 2001 or
will become exercisable within 60 days after such date are deemed outstanding,
while the shares are not deemed outstanding for purposes of computing percent
ownership of any other person. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, subject to
applicable community property laws.

Number of Shares Percentage of Shares
Beneficially Owned Beneficially Owned
------------------------------- ---------------------------
Class A Class B Both Classes Class A Class B Both Classes
Common Common of Common Common Common of Common
Name of Beneficial Owner Stock Stock Stock Stock Stock Stock
------------------------ ------- ---------- ------------ ------- ------- ------------

5% Stockholders:
RCBA Strategic Partners, L.P...................
Blum Strategic Partners II, L.P. (1)(2)........ -- 8,100,925 8,100,925 -- % 64.0% 56.3%
FS Equity Partners III, L.P....................
FS Equity Partners International, L.P. (1)(3).. -- 3,402,463 3,402,463 -- 26.9 23.6
Donald Koll (1)(4)............................. -- 656,052 656,052 -- 5.2 4.6
Credit Suisse First Boston (5)................. 490,479 -- 490,479 28.1 -- 3.4
Directors and Named Executive Officers:
Richard Blum (1)(2)............................ -- 8,100,925 8,100,925 -- 64.0 56.3
Jeffrey Cozad (1)(2)........................... -- 8,100,925 8,100,925 -- 64.0 56.3
James Didion................................... 20,000 -- 20,000 1.1 -- *
Catherine Delcoco.............................. -- -- -- -- -- --
Bradford Freeman (1)(3)........................ -- 3,402,463 3,402,463 -- 26.9 23.6
James Leonetti................................. 6,250 -- 6,250 * -- *
Frederic Malek (1)(6).......................... -- 397,873 397,873 -- 3.1 2.8
Claus Moller (1)(2)............................ -- 8,100,925 8,100,925 -- 64.0 56.3
Walter Stafford................................ -- -- -- -- -- --
Brett White (1)(7)............................. 26,563 57,500 84,063 1.5 * *
Gary Wilson.................................... -- -- -- -- -- --
Raymond Wirta (1)(8)........................... 64,063 556,590 620,653 3.7 4.4 4.3
All directors and executive officers as a group
(includes 12 persons)........................ 116,876 12,515,351 12,632,227 6.7 98.9 87.8

(footnotes on following pages)

117

--------
* Less than 1%

(1) As a result of the securityholders' agreement to which this party or its
affiliate is a party, this party, together with the other holders of Class
B common stock, may be deemed to constitute a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934. Accordingly, each
of the members of this group may be deemed to beneficially own 12,649,813
shares of CBRE Holding Class B common stock, which represents 100% of the
CBRE Holding Class B common stock and approximately 91.2% of all
outstanding shares of CBRE Holding common stock.

(2) Consists of 5,223,418 shares of Class B common stock owned by RCBA
Strategic Partners, L.P. and 2,877,507 shares of Class B common stock owned
by Blum Strategic Partners II, L.P. The sole general partner of RCBA
Strategic Partners, L.P. is RCBA GP, L.L.C., and the sole general partner
of Blum Strategic Partners II, L.P. is Blum Strategic GP II, L.L.C. Richard
Blum and Claus Moller, each of whom is a director of CBRE Holding and CB
Richard Ellis Services, are managing members of RCBA GP, L.L.C. and Blum
Strategic GP II, L.L.C Jeffrey Cozad, who is a director of CBRE Holding and
CB Richard Ellis Services, is a member of RCBA GP, L.L.C. and Blum
Strategic GP II, L.L.C. Except as to any pecuniary interest, each of
Messrs. Blum, Cozad and Moller disclaims beneficial interest of all of
these shares. The business address of RCBA Strategic Partners, L.P., Blum
Strategic Partners II, L.P., RCBA G.P. L.L.C., Blum Strategic GP II,
L.L.C., Richard Blum, Jeffrey Cozad and Claus Moller is 909 Montgomery
Street, Suite 400, San Francisco, California 94133. RCBA Strategic
Partners, L.P. and Blum Strategic Partners II, L.P. have sole dispositive
power over 8,100,925 of the indicated shares. As a result of the
securityholders' agreement, RCBA Strategic Partners, L.P. and Blum
Strategic Partners II, L.P. have shared voting power over 8,100,925 of the
indicated shares.

(3) Includes 3,278,447 shares of CBRE Holding Class B common stock held by FS
Equity Partners III, L.P. and 124,016 shares of CBRE Holding Class B common
stock to be held by FS Equity Partners International, L.P. As general
partner of FS Capital Partners, L.P., which is general partner of FSEP III,
FS Holdings, Inc. has power to vote and dispose of the shares owned by FSEP
III. As general partner of FS&Co. International, L.P., which is the general
partner of FSEP International, FS International Holdings Limited has the
power to vote and dispose of the shares owned by FSEP International.
Bradford Freeman, who is a director of CBRE Holding and CB Richard Ellis
Services, Ronald Spogli, Frederick Simmons, William Wardlaw, John Roth and
Charles Rullman, Jr. are the directors, officers and shareholders of FS
Holdings and FS International Holdings, and may be deemed to be the
beneficial owners of the shares of CBRE Holding Class B common stock, and
rights to acquire common stock, owned by FSEP III and FSEP International.
The business address of FSEP III, FS Capital Partners, L.P. and FS Holdings
and their directors, officers and beneficial owners is 11100 Santa Monica
Boulevard, Suite 1900, Los Angeles, California 90025. The business address
of FSEP International, FS&Co. International and FS International Holdings
is c/o Paget-Brown & Company, Ltd., West Winds Building, Third Floor, Grand
Cayman, Cayman Islands, British West Indies. As a result of the
securityholders' agreement, FS Equity Partners III, L.P. and FS Equity
Partners International, L.P. have shared voting power and shared
dispositive power over 3,402,463 of the indicated shares.

(4) Consists of 656,052 shares of CBRE Holding Class B common stock owned by
The Koll Holding Company. Mr. Koll is the sole trustee of the Donald M.
Koll Separate Property Trust, which wholly owns The Koll Company, which
wholly owns The Koll Holding Company. Raymond Wirta, who is the Chief
Executive Officer and a director of CBRE Holding and CB Richard Ellis
Services, holds an option granted by The Koll Holding Company to acquire up
to 521,590 of these shares. As a result of the securityholders' agreement,
Mr. Koll has shared voting power and share dispositive power over 656,052
of the indicated shares.

(5) Credit Suisse First Boston, or CSFB, reports beneficial ownership on behalf
of itself and its subsidiaries, to the extent that they constitute part of
the Credit Suisse First Boston business unit, or the CSFB business unit.
The CSFB business unit is engaged in the corporate and investment banking,
trading, including equity, fixed income and foreign exchange, private
equity investment and derivatives businesses on a worldwide basis. CSFB and
its subsidiaries engage in other separately managed activities, most of
which constitute the independently operated Credit Suisse Asset Management
business unit; the Credit Suisse Asset

118

Management business unit provides asset management and investment advisory
services to institutional investors worldwide. The indicated shares are held
by one or more indirect subsidiaries of the CSFB business unit. The
business address of CSFB and the CSFB business unit is 11 Madison Avenue,
New York, New York 10010.

The ultimate parent company of CSFB is Credit Suisse Group, or CSG, a
corporation formed under the laws of Switzerland. The principal business of
CSG is acting as a holding company for a global financial services group
with five distinct specialized business units that are independently
operated. In addition to the two business units referred to above, CSG and
its consolidated subsidiaries, other than CSFB and its subsidiaries, are
comprised of (a) the Credit Suisse Private Bank business unit that engages
in the global private banking business, (b) the Credit Suisse business unit
that engages in the Swiss domestic banking business and (c) the Winterthur
business unit that engages in the global insurance business. CSG's business
address is Paradeplatz 8, Postfach 1, CH-8070, Zurich, Switzerland.

CSG, for purposes of federal securities laws, may be deemed ultimately to
control the Bank, and the CSFB business unit. CSG, its executive officers
and directors, and its direct and indirect subsidiaries, including all of
the business units except the CSFB business unit, may beneficially own
securities issued by CBRE Holding or related derivative securities, and any
such securities are not publicly reported by CSG. Due to the separate
management and independent operation of its business units, CSG disclaims
beneficial ownership of any such securities beneficially owned by its
direct and indirect subsidiaries, including the CSFB business unit. The
CSFB business unit disclaims beneficial ownership of any such securities
beneficially owned by CSG and any of CSG's and CSFB's other business units.

The CSFB business unit disclaims beneficial ownership of securities held
directly by any entity described in this footnote or otherwise in this
prospectus except with respect to the CSFB business unit's proportionate
interest in or ownership of such entity.

(6) Includes 98,000 shares owned by a trust for which Mr. Malek is the trustee.
As a result of the securityholders' agreement, Mr. Malek has shared voting
power and shared dispositive power over 397,873 of the indicated shares.

(7) As a result of the securityholders' agreement, Mr. White has shared voting
power and shared dispositive power over 84,063 of the indicated shares.

(8) Includes 521,590 shares owned by The Koll Holding Company that Mr. Wirta
has the right to acquire under an option granted by The Koll Holding
Company to Mr. Wirta. As a result of the securityholders' agreement, Mr.
Wirta has shared voting power and shared dispositive power over 620,653 of
the indicated shares.

119

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

We have entered into a registration rights agreement with the initial
purchasers of the outstanding notes in which we agreed, under some
circumstances, to file a registration statement relating to an offer to
exchange the outstanding notes for exchange notes. We also agreed to use our
reasonable best efforts to cause the exchange offer registration statement to
become effective under the Securities Act within 180 days after the closing
date of the merger and keep the exchange offer registration statement effective
for not less than 30 days after the date notice of the registered exchange
offer is mailed to the holders. The exchange notes will have terms
substantially identical to the outstanding notes, except that the exchange
notes will not contain terms with respect to transfer restrictions,
registration rights and liquidated damages for failure to observe certain
obligations in the registration rights agreement. The outstanding notes were
issued on June 7, 2001.

Under the circumstances set forth below, we will use our reasonable best
efforts to cause the SEC to declare effective a shelf registration statement
with respect to the resale of the outstanding notes and keep the statement
effective for up to two years after the effective date of the shelf
registration statement. These circumstances include:

. because of any change in law or applicable interpretations of those laws
by the staff of the SEC do not permit us to effect the exchange offer as
contemplated by the registration rights agreement;

. if any outstanding notes validly tendered in the exchange offer are not
exchanged for exchange notes within 220 days after the closing date of
the merger;

. if any initial purchaser of the outstanding notes so requests, but only
with respect to any outstanding notes not eligible to be exchanged for
exchange notes in the exchange offer; or

. if any holder of the outstanding notes notifies us that it is not
permitted to participate in the exchange offer or would not receive
fully tradable exchange notes in the exchange offer and so requests a
shelf registration statement.

If we fail to comply with certain obligations under the registration rights
agreement, we will be required to pay additional interest to holders of the
outstanding notes.

Each holder of outstanding notes that wishes to exchange outstanding notes
for transferable exchange notes in the exchange offer will be required to make
the following representations:

. any exchange notes will be acquired in the ordinary course of its
business;

. the holder will have no arrangements or understanding with any person to
participate in the distribution of the outstanding notes or the exchange
notes within the meaning of the Securities Act;

. the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of ours or if it is an affiliate, that it will comply
with applicable registration and prospectus delivery requirements of the
Securities Act to the extent applicable;

. if the holder is not a broker-dealer, that it is not engaged in, and
does not intend to engage in, the distribution of the exchange notes;
and

. if the holder is a broker-dealer, that it will receive exchange notes
for its own account in exchange for outstanding notes that were acquired
as a result of market-making activities or other trading activities and
that it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of the exchange notes. See
"Plan of Distribution."

120

Resale of Exchange Notes

Based on interpretations of the SEC staff set forth in no-action letters
issued to unrelated third parties, we believe that exchange notes issued under
the exchange offer in exchange for outstanding notes may be offered for
resale, resold and otherwise transferred by any exchange note holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act, if:

. the holder is not an "affiliate" of ours within the meaning of Rule 405
under the Securities Act;

. the exchange notes are acquired in the ordinary course of the holder's
business; and

. the holder does not intend to participate in the distribution of the
exchange notes.

Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the exchange notes:

. cannot rely on the position of the staff of the SEC enunciated in Exxon
Capital Holdings Corporation or similar interpretive letters; and

. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.

This prospectus may be used for an offer to resell, for the resale or for
other retransfer of exchange notes only as specifically set forth in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired
the outstanding notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives exchange notes for its own account in exchange for outstanding notes,
where the outstanding notes were acquired by the broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
Please read the section captioned "Plan of Distribution" for more details
regarding the transfer of exchange notes.

Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept for exchange any
outstanding notes properly tendered and not withdrawn prior to the expiration
date. We will issue $1,000 principal amount of exchange notes in exchange for
each $1,000 principal amount of outstanding notes surrendered under the
exchange offer. Outstanding notes may be tendered only in integral multiples of
$1,000.

The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes except the exchange notes will be
registered under the Securities Act, will not bear legends restricting their
transfer and will not provide for any liquidated damages upon our failure to
fulfill our obligations under the registration rights agreement to file, and
cause to be effective, a registration statement. The exchange notes will
evidence the same debt as the outstanding notes. The exchange notes will be
issued under and entitled to the benefits of the same indenture that authorized
the issuance of the outstanding notes.

The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered for exchange.

As of the date of this prospectus, $229.0 million aggregate principal amount
of the outstanding notes are outstanding. This prospectus and a letter of
transmittal are being sent to all registered holders of outstanding notes.
There will be no fixed record date for determining registered holders of
outstanding notes entitled to participate in the exchange offer.

121

We intend to conduct the exchange offer in accordance with the provisions of
the exchange offer and registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934 and
the rules and regulations of the SEC. Outstanding notes that are not tendered
for exchange in the exchange offer will remain outstanding and continue to
accrue interest and will be entitled to the rights and benefits the holders
have under the indenture relating to the outstanding notes, except for any
rights under the registration rights agreement that by their terms terminate
upon the consummation of the exchange offer.

We will be deemed to have accepted for exchange properly tendered
outstanding notes when we have given oral or written notice of the acceptance
to the exchange agent. The exchange agent will act as agent for the tendering
holders for the purposes of receiving the exchange notes from us and delivering
exchange notes to the holders. Under the terms of the registration rights
agreement, we reserve the right to amend or terminate the exchange offer, and
not to accept for exchange any outstanding notes not previously accepted for
exchange, upon the occurrence of any of the conditions specified below under
the caption "--Certain Conditions to the Exchange Offer."

Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. It is
important that you read the section labeled "--Fees and Expenses" below for
more details regarding fees and expenses incurred in the exchange offer.

Expiration Date; Extensions; Amendments

The exchange offer will expire at 5:00 p.m., New York City time on November
21, 2001, unless in our sole discretion we extend it.

In order to extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the registered holders of
outstanding notes of the extension no later than 9:00 a.m., New York City time,
on the business day after the previously scheduled expiration date.

We reserve the right, in our sole discretion:

. to delay accepting for exchange any outstanding notes;

. to extend the exchange offer or to terminate the exchange offer and to
refuse to accept outstanding notes not previously accepted if any of the
conditions set forth below under "--Certain Conditions to the Exchange
Offer" have not been satisfied, by giving oral or written notice of the
delay, extension or termination to the exchange agent; or

. under the terms of the registration rights agreement, to amend the terms
of the exchange offer in any manner.

Any delay in acceptance, extension, termination, or amendment will be
followed as promptly as practicable by oral or written notice to the registered
holders of outstanding notes. If we amend the exchange offer in a manner that
we determine constitutes a material change, we will promptly disclose the
amendment in a manner reasonably calculated to inform the holder of outstanding
notes of the amendment.

Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the exchange offer, we will have no obligation to publish, advertise, or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.

122

Certain Conditions to the Exchange Offer

Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any exchange notes for, any outstanding notes,
and we may terminate the exchange offer as provided in this prospectus before
accepting any outstanding notes for exchange if in our reasonable judgment:

. the exchange notes to be received will not be tradable by the holder,
without restriction under the Securities Act, the Securities Exchange
Act and without material restrictions under the blue sky or securities
laws of substantially all of the states of the United States;

. the exchange offer, or the making of any exchange by a holder of
outstanding notes, would violate applicable law or any applicable
interpretation of the staff of the SEC; or

. any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offer.

In addition, we will not be obligated to accept for exchange the outstanding
notes of any holder that has not made to us:

. the representations described under "--Purpose and Effect of the
Exchange Offer," "--Procedures for Tendering" and "Plan of
Distribution"; and

. such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available
to it an appropriate form for registration of the exchange notes under
the Securities Act.

We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we
may delay acceptance of any outstanding notes by giving oral or written notice
of the extension to their holders. During any such extensions, all notes
previously tendered will remain subject to the exchange offer, and we may
accept them for exchange. We will return any outstanding notes that we do not
accept for exchange for any reason without expense to their tendering holder as
promptly as practicable after the expiration or termination of the exchange
offer.

We expressly reserve the right to amend or terminate the exchange offer, and
to reject for exchange any outstanding notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the exchange offer
specified above. We will give oral or written notice of any extension,
amendment, nonacceptance, or termination to the holders of the outstanding
notes as promptly as practicable.

Those conditions are for our sole benefit and we may assert them regardless
of the circumstances that may give rise to them or waive them in whole or in
part at any or at various times in our sole discretion. If we fail at any time
to exercise any of the foregoing rights, this failure will not constitute a
waiver of this right. Each right will be deemed an ongoing right that we may
assert at any time or at various times.

In addition, we will not accept for exchange any outstanding notes tendered,
and will not issue exchange notes in exchange for any outstanding notes, if at
the time any stop order will be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act.

Procedures for Tendering

Only a holder of outstanding notes may tender the outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must:

. complete, sign and date the accompanying letter of transmittal, or a
facsimile of the letter of transmittal; have the signature on the letter
of transmittal guaranteed if the letter of transmittal so

123

requires; and mail or deliver the letter of transmittal or facsimile to
the exchange agent prior to the expiration date; or

. comply with DTC's Automated Tender Offer Program procedures described
below.

In addition, either:

. the exchange agent must receive the outstanding notes along with the
accompanying letter of transmittal;

. the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of the outstanding notes into the
exchange agent's account at DTC according to the procedures for
book-entry transfer described below or a properly transmitted agent's
message; or

. the holder must comply with the guaranteed delivery procedures described
below.

To be tendered effectively, the exchange agent must receive any physical
delivery of a letter of transmittal and other required documents at the address
set forth below under "--Exchange Agent" prior to the expiration date.

The tender by a holder that is not withdrawn prior to the expiration date
will constitute an agreement between the holder and us in accordance with the
terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal.

The method of delivery of outstanding notes, the letter of transmittal and
all other required documents to the exchange agent is at the holder's election
and risk. Rather than mail these items, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. Holders should not send the letter of transmittal or outstanding notes to
us. Holders may request their respective brokers, dealers, commercial banks,
trust companies or other nominees to effect the above transactions for them.

Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owner's behalf. If the beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the accompanying letter
of transmittal and delivering its outstanding notes either:

. make appropriate arrangements to register ownership of the outstanding
notes in such owner's name; or

. obtain a properly completed bond power from the registered holder of
outstanding notes.

The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.

Signatures on a letter of transmittal or a notice of withdrawal described
below must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another "eligible institution" within the meaning of Rule
17Ad-15 under the Exchange Act, unless the outstanding notes are tendered:

. by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the
accompanying letter of transmittal; or

. for the account of an eligible institution.

If the accompanying letter of transmittal is signed by a person other than
the registered holder of any outstanding notes listed on the outstanding notes,
the outstanding notes must be endorsed or accompanied by a

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properly completed bond power. The bond power must be signed by the registered
holder as the registered holder's name appears on the outstanding notes and an
eligible institution must guarantee the signature on the bond power.

If the accompanying letter of transmittal or any outstanding notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, these persons should so indicate when signing. Unless
waived by us, they should also submit evidence satisfactory to us of their
authority to deliver the accompanying letter of transmittal.

The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
program to tender. Participants in the program may, instead of physically
completing and signing the accompanying letter of transmittal and delivering it
to the exchange agent, transmit their acceptance of the exchange offer
electronically. They may do so by causing DTC to transfer the outstanding notes
to the exchange agent in accordance with its procedures for transfer. DTC will
then send an agent's message to the exchange agent. The term "agent's message"
means a message transmitted by DTC, received by the exchange agent and forming
part of the book-entry confirmation, to the effect that:

. DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering outstanding notes that
are the subject of the book-entry confirmation;

. the participant has received and agrees to be bound by the terms of the
accompanying letter of transmittal, or, in the case of an agent's
message relating to guaranteed delivery, that the participant has
received and agrees to be bound by the applicable notice of guaranteed
delivery; and

. the agreement may be enforced against that participant.

We will determine in our sole discretion all outstanding questions as to the
validity, form, eligibility, including time of receipt, acceptance of tendered
outstanding notes and withdrawal of tendered outstanding notes. Our
determination will be final and binding. We reserve the absolute right to
reject any outstanding notes not properly tendered or any outstanding notes the
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the
accompanying letter of transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
outstanding notes must be cured within such time as we will determine. Although
we intend to notify holders of defects or irregularities with respect to
tenders of outstanding notes, neither we, the exchange agent nor any other
person will incur any liability for failure to give the notification. Tenders
of outstanding notes will not be deemed made until any defects or
irregularities have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to the exchange
agent without cost to the tendering holder, unless otherwise provided in the
letter of transmittal, as soon as practicable following the expiration date.

In all cases, we will issue exchange notes for outstanding notes that we
have accepted for exchange under the exchange offer only after the exchange
agent timely receives:

. outstanding notes or a timely book-entry confirmation of the outstanding
notes into the exchange agent's account at DTC; and

. a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.

By signing the accompanying letter of transmittal or authorizing the
transmission of the agent's message, each tendering holder of outstanding notes
will represent or be deemed to have represented to us that, among other things:

. any exchange notes that the holder receives will be acquired in the
ordinary course of its business;

125

. the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;

. if the holder is not a broker-dealer, that is not engaged in and does
not intend to engage in the distribution of the exchange notes;

. if the holder is a broker-dealer that will receive exchange notes for
its own account in exchange for outstanding notes that were acquired as
a result of market-making activities or other trading activities, that
it will deliver a prospectus, as required by law, in connection with any
resale of any exchange notes. See "Plan of Distribution"; and

. the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of ours or, if the holder is an affiliate, it will
comply with any applicable registration and prospectus delivery
requirements of the Securities Act.

Book-Entry Transfer

The exchange agent will make a request to establish an account with respect
to the outstanding notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution participating in
DTC's system may make book-entry delivery of outstanding notes by causing DTC
to transfer the outstanding notes into the exchange agent's account at DTC in
accordance with DTC's procedures for transfer. Holders of outstanding notes who
are unable to deliver confirmation of the book-entry tender of their
outstanding notes into the exchange agent's account at DTC or all other
documents required by the letter of transmittal to the exchange agent on or
prior to the expiration date must tender their outstanding notes according to
the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

Holders wishing to tender their outstanding notes but whose outstanding
notes are not immediately available or who cannot deliver their outstanding
notes, the accompanying letter of transmittal or any other required documents
to the exchange agent or comply with the applicable procedures under DTC's
Automated Tender Offer Program prior to the expiration date may tender if:

. the tender is made through an eligible institution;

. prior to the expiration date, the exchange agent receives from the
eligible institution either a properly completed and duly executed
notice of guaranteed delivery, by facsimile transmission, mail or hand
delivery, or a properly transmitted agent's message and notice of
guaranteed delivery:

1. setting forth the name and address of the holder, the registered
number(s) of the outstanding notes and the principal amount of
outstanding notes tendered;

2. stating that the tender is being made thereby; and

3. guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the accompanying letter of transmittal, or
facsimile thereof, together with the outstanding notes or a
book-entry confirmation, and any other documents required by the
accompanying letter of transmittal will be deposited by the eligible
institution with the exchange agent; and

. the exchange agent receives the properly completed and executed letter
of transmittal, or facsimile thereof, as well as all tendered
outstanding notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the accompanying
letter of transmittal, within three New York Stock Exchange trading days
after the expiration date.

Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.

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Withdrawal of Tenders

Except as otherwise provided in this prospectus, holders of outstanding
notes may withdraw their tenders at any time prior to the expiration date.

For a withdrawal to be effective:

. the exchange agent must receive a written notice of withdrawal, which
notice may be by telegram, telex, facsimile transmission or letter of
withdrawal at one of the addresses set forth below under "--Exchange
Agent;" or

. holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.

Any notice of withdrawal must:

. specify the name of the person who tendered the outstanding notes to be
withdrawn;

. identify the outstanding notes to be withdrawn, including the principal
amount of the outstanding notes; and

. where certificates for outstanding notes have been transmitted, specify
the name in which the outstanding notes were registered, if different
from that of the withdrawing holder.

If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of the
certificates, the withdrawing holder must also submit:

. the serial numbers of the particular certificates to be withdrawn; and

. a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless the holder is an eligible institution.

If outstanding notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn
outstanding notes and otherwise comply with the procedures of that facility. We
will determine all questions as to the validity, form and eligibility,
including time of receipt, of the notices, and our determination will be final
and binding on all parties. We will deem any outstanding notes so withdrawn not
to have been validly tendered for exchange for purposes of the exchange offer.
Any outstanding notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder, or, in the case of outstanding notes tendered by book-entry transfer
into the exchange agent's account at DTC according to the procedures described
above, the outstanding notes will be credited to an account maintained with DTC
for outstanding notes, as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn, outstanding
notes may be retendered by following one of the procedures described under
"--Procedures for Tendering" above at any time on or prior to the expiration
date.

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Exchange Agent

State Street Bank and Trust Company of California, N.A. has been appointed
as exchange agent for the exchange offer. You should direct questions and
requests for assistance, requests for additional copies of this prospectus or
for the letter of transmittal and requests for the notice of guaranteed
delivery to the exchange agent as follows:

By Registered, Certified Mail, By Facsimile Transmission
Overnight Courier or Hand: (for Eligible Institutions only):
c/o State Street Bank and Trust Company (617) 662-1452
2 Avenue de Lafayette Attn: Ralph Jones
Corporate Trust Window, 5th Floor
Boston, MA 02111-1724 To Confirm by Telephone:
Attn: Ralph Jones (617) 662-1548
Attn: Ralph Jones

Delivery of the letter of transmittal to an address other than as set forth
above or transmission via facsimile other than as set forth above does not
constitute a valid delivery of the letter of transmittal.

Fees and Expenses

We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telephone or in person by our officers and regular employees and those of our
affiliates.

We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptance of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.

We will pay the cash expenses to be incurred in connection with the exchange
offer. The expenses are estimated in the aggregate to be approximately
$450,000. They include:

. SEC registration fees;

. fees and expenses of the exchange agent and, trustee;

. accounting and legal fees and printing costs; and

. related fees and expenses.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. The tendering holder, however, will
be required to pay any transfer taxes, whether imposed on the registered holder
or any other person, if:

. certificates representing outstanding notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered;

. tendered outstanding notes are registered in the name of any person
other than the person signing the letter of transmittal; or

. a transfer tax is imposed for any reason other than the exchange of
outstanding notes under the exchange offer.

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If satisfactory evidence of payment of the taxes is not submitted with the
letter of transmittal, the amount of the transfer taxes will be billed to that
tendering holder.

Holders who tender their outstanding notes for exchange will not be required
to pay any transfer taxes. However, holders who instruct us to register
exchange notes in the name of, or request that outstanding notes not tendered
or not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be required to pay any applicable transfer
tax.

Consequences of Failure to Exchange

Holders of outstanding notes who do not exchange their outstanding notes for
exchange notes under the exchange offer will remain subject to the restrictions
on transfer of the outstanding notes:

. as set forth in the legend printed on the outstanding notes as a
consequence of the issuance of the outstanding notes under the exemption
from, or in transactions not subject to, the registration requirements
of the Securities Act and applicable state securities laws; and

. otherwise as set forth in the offering circular distributed in
connection with the private offering of the outstanding notes.

In general, you may not offer or sell the outstanding notes unless they are
registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the registration rights agreement, we do not intend to
register resales of the outstanding notes under the Securities Act. Based on
interpretations of the SEC staff, exchange notes issued under the exchange
offer may be offered for resale, resold or otherwise transferred by their
holders, other than any holder that is our "affiliate" within the meaning of
Rule 405 under the Securities Act, without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the holders
acquired the exchange notes in the ordinary course of the holders' business and
the holders have no arrangement or understanding with respect to the
distribution of the exchange notes to be acquired in the exchange offer. Any
holder who tenders in the exchange offer for the purpose of participating in a
distribution of the exchange notes:

. cannot rely on the applicable interpretations of the SEC; and

. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.

Accounting Treatment

We will record the exchange notes in our accounting records at the same
carrying value as the outstanding notes, which is the aggregate principal
amount, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will record the expenses of the exchange
offer as incurred. The expenses of the exchange after will be deferred and
amortized over the term of the related notes.

Other

Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that
are not tendered in the exchange offer or to file a registration statement to
permit resales of any untendered outstanding notes.

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DESCRIPTION OF THE NOTES

BLUM CB Corp. ("Merger Sub") issued the Notes under an Indenture (the
"Indenture") between itself, CBRE Holding, Inc. ("Parent") and State Street
Bank and Trust Company of California, N.A., as trustee (the "Trustee").
Pursuant to the Merger Agreement, Merger Sub merged with and into CB Richard
Ellis Services, Inc. ("CB Richard Ellis Services"), with CB Richard Ellis
Services surviving the merger as a wholly owned subsidiary of Parent. For
purposes of this section only, the words "we," "us," "our" and "Company" refer
to Merger Sub prior to the Merger and to CB Richard Ellis Services after giving
effect to the Merger, and do not refer to any of its subsidiaries. Certain
terms used in this description are defined under the subheading "--Certain
Definitions." The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (the "Trust Indenture Act").

The following description is only a summary of the material provisions of
the Indenture and the Registration Rights Agreement. We urge you to read the
Indenture and the Registration Rights Agreement because they, not this
description, define your rights as holders of these Notes. You may request
copies of these agreements at our address set forth under the heading "Where
You Can Find More Information."

Brief Description of the Notes

These Notes:

. are unsecured senior subordinated obligations of the Company;

. are subordinated in right of payment to all existing and future Senior
Indebtedness of the Company;

. are senior in right of payment to any future Subordinated Obligations of
the Company;

. are guaranteed by Parent and each Subsidiary Guarantor on a senior
subordinated basis; and

. are subject to registration with the SEC pursuant to the Registration
Rights Agreement.

Principal, Maturity and Interest

We issued the Notes initially with a maximum aggregate principal amount of
$229.0 million. We issued the Notes in denominations of $1,000 and any integral
multiple of $1,000. The Notes will mature on June 15, 2011. Subject to our
compliance with the covenant described under the subheading "--Certain
Covenants--Limitation on Indebtedness," we are permitted to issue more Notes
under the Indenture in an unlimited aggregate principal amount (the "Additional
Notes"). The Notes and the Additional Notes, if any, will be treated as a
single class for all purposes of the Indenture, including waivers, amendments,
redemptions and offers to purchase. Unless the context otherwise requires, for
all purposes of the Indenture and this "Description of the Notes," references
to the Notes include any Additional Notes actually issued.

Interest on these Notes accrues at the rate of 11 1/4% per annum and will be
payable semiannually in arrears on June 15 and December 15, commencing on
December 15, 2001. We will make each interest payment to the holders of record
of these Notes on the immediately preceding June 1 and December 1.

Interest on these Notes accrues from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.

Additional interest may accrue on the Notes in certain circumstances
pursuant to the Registration Rights Agreement.

Optional Redemption

Except as set forth below, we will not be entitled to redeem the Notes at
our option prior to June 15, 2006.

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On and after June 15, 2006, we will be entitled at our option to redeem all
or a portion of these Notes upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed in percentages of principal amount
on the redemption date), plus accrued interest to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the related interest payment date), if redeemed during the
12-month period commencing on June 15 of the years set forth below:

Redemption
Period Price
------ ----------

2006................................... 105.625%
2007................................... 103.750
2008................................... 101.875
2009 and thereafter.................... 100.000

In addition, before June 15, 2004, we may at our option on one or more
occasions redeem Notes (which includes Additional Notes, if any) in an
aggregate principal amount not to exceed 35% of the aggregate principal amount
of the Notes (which includes Additional Notes, if any) originally issued at a
redemption price (expressed as a percentage of principal amount) of 111 1/4%,
plus accrued and unpaid interest to the redemption date, with the net cash
proceeds from one or more Public Equity Offerings (provided that if the Public
Equity Offering is an offering by Parent, a portion of the Net Cash Proceeds
thereof equal to the amount required to redeem any such Notes is contributed to
the equity capital of the Company); provided that:

(1) at least 65% of such aggregate principal amount of Notes (which includes
Additional Notes, if any) remains outstanding immediately after the
occurrence of each such redemption (other than Notes held, directly or
indirectly, by the Company or its Affiliates); and

(2) each such redemption occurs within 90 days after the date of the related
Public Equity Offering.

Selection and Notice of Redemption

If we are redeeming less than all the Notes at any time, the Trustee will
select Notes on a pro rata basis, by lot or by such other method as the Trustee
in its sole discretion shall deem to be fair and appropriate.

We will redeem Notes of $1,000 or less in whole and not in part. We will
cause notices of redemption to be mailed by first-class mail at least 30 but
not more than 60 days before the redemption date to each holder of Notes to be
redeemed at its registered address.

If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note will state the portion of the principal amount thereof to
be redeemed. We will issue a new Note in a principal amount equal to the
unredeemed portion of the original Note in the name of the holder thereof upon
cancellation of the original Note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.

No Sinking Fund; Open Market Purchases

We are not required to make any sinking fund payments with respect to the
Notes. We may at any time and from time to time purchase Notes in the open
market or otherwise.

Guaranties

Parent and each Subsidiary Guarantor jointly and severally guaranteed, on a
senior subordinated basis, our obligations under these Notes. The obligations
of each Subsidiary Guarantor under its Subsidiary Guaranty are limited as
necessary to prevent that Subsidiary Guaranty from constituting a fraudulent
conveyance under applicable law. See "Risk Factors--In the event of bankruptcy
or insolvency of any of the guarantors, the guarantees of the notes could be
voided under fraudulent conveyance statutes."

131

Each Subsidiary Guarantor that makes a payment under its Subsidiary Guaranty
will be entitled upon payment in full of all guaranteed obligations under the
Indenture to a contribution from each other Subsidiary Guarantor in an amount
equal to such other Subsidiary Guarantor's pro rata portion of such payment
based on the respective net assets of all the Subsidiary Guarantors at the time
of such payment determined in accordance with GAAP.

If a Subsidiary Guaranty were rendered voidable, it could be subordinated by
a court to all other indebtedness (including guarantees and other contingent
liabilities) of the applicable Subsidiary Guarantor, and, depending on the
amount of such indebtedness, a Subsidiary Guarantor's liability on its
Subsidiary Guaranty could be reduced to zero. See "Risk Factors--In the event
of bankruptcy or insolvency of any of the guarantors, the guarantees of the
notes could be voided under fraudulent conveyance statutes."

The Subsidiary Guaranty of a Subsidiary Guarantor will be released:

(1) upon the sale or other disposition (including by way of consolidation or
merger) of a Subsidiary Guarantor;

(2) upon the sale or disposition of all or substantially all the assets of a
Subsidiary Guarantor;

(3) at such time as such Subsidiary Guarantor no longer Guarantees any other
Indebtedness of the Company; or

(4) upon the designation of such Subsidiary Guarantor as an Unrestricted
Subsidiary pursuant to the terms of the Indenture,

in the case of clause (1) or (2), other than to the Company or an Affiliate of
the Company and as permitted by the Indenture.

Ranking

Senior Indebtedness versus Notes and Guaranties

The payment of the principal of, premium, if any, and interest on the Notes
and the payment of any Guaranty is subordinate in right of payment to the prior
payment in full of all Senior Indebtedness of the Company or the relevant
Guarantor, as the case may be, including the obligations of the Company and
such Guarantor under the Credit Agreement.

As of June 30, 2001, after giving pro forma effect to the Transactions:

(1) the Company's Senior Indebtedness (excluding its subsidiaries) would
have been $276.5 million consisting of $275.0 million of secured
indebtedness under the Credit Agreement and $1.5 million of other
indebtedness;

(2) Parent's Senior Indebtedness would have been approximately $340.0
million, $65.0 million of which would have been represented by the
Parent Senior Notes and the remainder of which would have represented
Parent's senior guarantee of the obligations under the Credit Agreement;
and

(3) the Senior Indebtedness of the Subsidiary Guarantors would have been
approximately $293.1 million, $275.0 million of which consists of their
guarantees of the Company's indebtedness under the Credit Agreement and
$18.1 million of which is comprised of various notes issued in
connection with acquisitions and of capital lease obligations.

In addition, the Company would have had additional availability of $50.0
million for borrowing of Senior Indebtedness under the Credit Agreement after
completion of the Merger. Although the Indenture contains limitations on the
amount of additional Indebtedness that the Company and the Subsidiary
Guarantors may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness. See "--Certain Covenants--Limitation on Indebtedness."

132

Liabilities of Subsidiaries versus Notes and Guaranties

A substantial portion of our operations are conducted through our
subsidiaries. Some of our subsidiaries are not guaranteeing the Notes. Claims
of creditors of such non-guarantor subsidiaries, including trade creditors
holding indebtedness or guarantees issued by such non-guarantor subsidiaries,
and claims of preferred stockholders of such non-guarantor subsidiaries
generally will have priority with respect to the assets and earnings of such
non-guarantor subsidiaries over the claims of our creditors, including holders
of the Notes, even if such claims do not constitute Senior Indebtedness.
Accordingly, the Notes and each Guaranty will be effectively subordinated to
creditors (including trade creditors) and preferred stockholders, if any, of
such non-guarantor subsidiaries.

At December 31, 2000 and June 30, 2001, after giving pro forma effect to the
Transactions, the total liabilities of our subsidiaries (other than the
Subsidiary Guarantors) would have been approximately $199.4 million and $179.9
million, respectively, including trade payables in each case. Although the
Indenture limits the incurrence of Indebtedness and preferred stock of certain
of our subsidiaries, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any limitation on the
incurrence by such subsidiaries of liabilities that are not considered
Indebtedness under the Indenture. See "--Certain Covenants--Limitation on
Indebtedness."

Other Senior Subordinated Indebtedness versus Notes

Only Indebtedness of the Company or a Guarantor that is Senior Indebtedness
will rank senior to the Notes and the relevant Guaranty in accordance with the
provisions of the Indenture. The Notes and each Guaranty will in all respects
rank pari passu with all other Senior Subordinated Indebtedness of the Company
and the relevant Guarantor, respectively.

We and the Guarantors have agreed in the Indenture that we and they will not
Incur, directly or indirectly, any Indebtedness that is contractually
subordinate or junior in right of payment to our Senior Indebtedness or the
Senior Indebtedness of such Guarantors, unless such Indebtedness is Senior
Subordinated Indebtedness of the applicable Person or is expressly subordinated
in right of payment to Senior Subordinated Indebtedness of such Person. The
Indenture does not treat unsecured Indebtedness as subordinated or junior to
Secured Indebtedness merely because it is unsecured.

Payment of Notes

We are not permitted to pay principal of, premium, if any, or interest on
the Notes or make any deposit pursuant to the provisions described under
"--Defeasance" below and may not purchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if either of the following occurs (a "Payment
Default"):

(1) any Designated Senior Indebtedness of the Company is not paid in full in
cash when due; or

(2) any other default on Designated Senior Indebtedness of the Company
occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms;

unless, in either case, the Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash. Regardless of the foregoing, we are permitted to pay
the Notes if we and the Trustee receive written notice approving such payment
from the Representatives of all Designated Senior Indebtedness with respect to
which the Payment Default has occurred and is continuing.

During the continuance of any default (other than a Payment Default) with
respect to any Designated Senior Indebtedness pursuant to which the maturity
thereof may be accelerated without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, we are not permitted to pay the Notes for a period (a "Payment
Blockage Period") commencing upon the receipt by the

133

Trustee (with a copy to us) of written notice (a "Blockage Notice") of such
default from the Representative of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter. The Payment Blockage Period will end earlier if such Payment
Blockage Period is terminated:

(1) by written notice to the Trustee and us from the Person or Persons who
gave such Blockage Notice;

(2) because the default giving rise to such Blockage Notice is cured, waived
or otherwise no longer continuing; or

(3) because such Designated Senior Indebtedness has been discharged or
repaid in full in cash.

Notwithstanding the provisions described above, unless the holders of such
Designated Senior Indebtedness or the Representative of such Designated Senior
Indebtedness have accelerated the maturity of such Designated Senior
Indebtedness, we are permitted to resume paying the Notes after the end of such
Payment Blockage Period. The Notes shall not be subject to more than one
Payment Blockage Period in any consecutive 360-day period irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period, except that if any Blockage Notice is delivered to the Trustee by or on
behalf of holders of Designated Senior Indebtedness (other than holders of the
Bank Indebtedness), a Representative of holders of Bank Indebtedness may give
another Blockage Notice within such period. However, in no event may the total
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360-day consecutive period, and
there must be 181 days during any 360-day consecutive period during which no
Payment Blockage Period is in effect.

Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the Company or its property:

(1) the holders of Senior Indebtedness of the Company will be entitled to
receive payment in full in cash of such Senior Indebtedness before the
holders of the Notes are entitled to receive any payment;

(2) until the Senior Indebtedness of the Company is paid in full in cash,
any payment or distribution to which holders of the Notes would be
entitled but for the subordination provisions of the Indenture will be
made to holders of such Senior Indebtedness as their interests may
appear, except that holders of Notes may receive certain Capital Stock
and subordinated debt obligations; and

(3) if a distribution is made to holders of the Notes that, due to the
subordination provisions, should not have been made to them, such
holders of the Notes are required to hold it in trust for the holders of
Senior Indebtedness of the Company and pay it over to them as their
interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee must promptly notify the holders of Designated Senior
Indebtedness or the Representative of such Designated Senior Indebtedness of
the acceleration. If any Designated Senior Indebtedness is outstanding, neither
the Company nor any Subsidiary Guarantor may pay the Notes until five Business
Days after the Representatives of all the issues of Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Notes only if the Indenture otherwise permits payment at that time.

The obligations of Parent under the Parent Guaranty and of a Subsidiary
Guarantor under its Subsidiary Guaranty are senior subordinated obligations. As
such, the rights of noteholders to receive payment by Parent or by a Subsidiary
Guarantor pursuant to its Guaranty will be subordinated in right of payment to
the rights of holders of Senior Indebtedness of Parent or such Subsidiary
Guarantor, as the case may be. The terms of the subordination provisions
described above with respect to the Company's obligations under the Notes apply
equally to Parent and a Subsidiary Guarantor and the obligations of Parent and
such Subsidiary Guarantor under its Guaranty.

By reason of the subordination provisions contained in the Indenture, in the
event of a liquidation or insolvency proceeding, creditors of the Company,
Parent or a Subsidiary Guarantor who are holders of Senior

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Indebtedness of the Company, Parent or a Subsidiary Guarantor, as the case may
be, may recover more, ratably, than the holders of the Notes, and creditors of
ours who are not holders of Senior Indebtedness may recover less, ratably, than
holders of Senior Indebtedness and may recover more, ratably, than the holders
of the Notes.

The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in
trust by the Trustee for the payment of principal of and interest on the Notes
pursuant to the provisions described under "--Defeasance," if the foregoing
subordination provisions were not violated at the time the respective amounts
were deposited pursuant to such defeasance provisions.

Same-Day Payment

The Indenture requires us to make payments in respect of Notes (including
principal, premium and interest) by wire transfer of immediately available
funds to the U.S. dollar accounts with banks in the U.S. specified by the
holders thereof or, if no such account is specified, by mailing a check to each
such holder's registered address.

Registered Exchange Offer; Registration Rights

We have agreed pursuant to the Registration Rights Agreement that we will,
subject to certain exceptions,

(1) within 90 days after the Merger Date, file a registration statement (the
"Exchange Offer Registration Statement") with the SEC with respect to a
registered offer (the "Registered Exchange Offer") to exchange the Notes
for new notes of the Company (the "Exchange Notes") having terms
substantially identical in all material respects to the Notes (except
that the Exchange Notes will not contain terms with respect to transfer
restrictions);

(2) use our reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 180
days after the Merger Date;

(3) as soon as practicable after the effectiveness of the Exchange Offer
Registration Statement (the "Effectiveness Date"), offer the Exchange
Notes in exchange for surrender of the Notes; and

(4) keep the Registered Exchange Offer open for not less than 20 Business
Days (or longer if required by applicable law) after the date notice of
the Registered Exchange Offer is mailed to the holders of the Notes.

For each Note tendered to us pursuant to the Registered Exchange Offer, we
will issue to the holder of such Note an Exchange Note having a principal
amount equal to that of the surrendered Note. Interest on each Exchange Note
will accrue from the last interest payment date on which interest was paid on
the Note surrendered in exchange therefor, or, if no interest has been paid on
such Note, from the date of its original issue.

Under existing SEC interpretations, the Exchange Notes will be freely
transferable by holders other than our affiliates after the Registered Exchange
Offer without further registration under the Securities Act if the holder of
the Exchange Notes represents to us in the Registered Exchange Offer that it is
acquiring the Exchange Notes in the ordinary course of its business, that it
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes and that it is not an affiliate of the
Company, as such terms are interpreted by the SEC; provided, however, that
broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in the
Registered Exchange Offer will have a prospectus delivery requirement with
respect to resales of such Exchange Notes. The SEC has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to Exchange Notes (other than a resale of an unsold allotment from
the original sale of the Notes) with the prospectus contained in the Exchange
Offer Registration Statement.

Under the Registration Rights Agreement, the Company is required to allow
Participating Broker-Dealers and other persons, if any, with similar prospectus
delivery requirements to use the prospectus contained in the

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Exchange Offer Registration Statement in connection with the resale of such
Exchange Notes for 180 days following the effective date of such Exchange Offer
Registration Statement (or such shorter period during which Participating
Broker-Dealers are required by law to deliver such prospectus).

A holder of Notes (other than certain specified holders) who wishes to
exchange such Notes for Exchange Notes in the Registered Exchange Offer will be
required to represent that any Exchange Notes to be received by it will be
acquired in the ordinary course of its business and that at the time of the
commencement of the Registered Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes and that it is not an
"affiliate" of the Company, as defined in Rule 405 of the Securities Act, or if
it is an affiliate, that it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable.

In the event that:

(1) applicable interpretations of the staff of the SEC do not permit us to
effect such a Registered Exchange Offer; or

(2) for any other reason we do not consummate the Registered Exchange Offer
within 220 days of the Merger Date; or

(3) an Initial Purchaser shall notify us following consummation of the
Registered Exchange Offer that Notes held by it are not eligible to be
exchanged for Exchange Notes in the Registered Exchange Offer; or

(4) certain holders are prohibited by law or SEC policy from participating
in the Registered Exchange Offer or may not resell the Exchange Notes
acquired by them in the Registered Exchange Offer to the public without
delivering a prospectus,

then, we will, subject to certain exceptions:

(A) as promptly as practicable, file a shelf registration statement (the
"Shelf Registration Statement") with the SEC covering resales of the
Notes or the Exchange Notes, as the case may be;

(B) (i) in the case of clause (1) above, use our reasonable best efforts to
cause the Shelf Registration Statement to be declared effective under
the Securities Act on or prior to the 180th day after the Merger Date
and (ii) in the case of clause (2), (3) or (4) above, use our reasonable
best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act on or prior to the 90th day after the
date on which the Shelf Registration Statement is required to be filed;
and

(C) use our reasonable best efforts to keep the Shelf Registration Statement
effective, subject to certain exceptions, until the earliest of (i) the
time when the Notes covered by the Shelf Registration Statement can be
sold pursuant to Rule 144 without any limitations under clauses (c),
(e), (f) and (h) of Rule 144, (ii) two years from the effective date of
the Shelf Registration Statement and (iii) the date on which all Notes
registered thereunder are disposed of in accordance therewith.

We will, in the event a Shelf Registration Statement is filed, among other
things, provide to each holder for whom such Shelf Registration Statement was
filed copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement has
become effective and take certain other actions as are required to permit
unrestricted resales of the Notes or the Exchange Notes, as the case may be. A
holder selling such Notes or Exchange Notes pursuant to the Shelf Registration
Statement generally would be required to be named as a selling security holder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement that are applicable to such holder (including
certain indemnification obligations).

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We will pay additional cash interest on the applicable Notes and Exchange
Notes, subject to certain exceptions:

(1) if the Company fails to file an Exchange Offer Registration Statement
with the SEC on or prior to the 90th day after the Merger Date;

(2) if the Exchange Offer Registration Statement is not declared effective
by the SEC on or prior to the 180th day after the Merger Date or, if
obligated to file a Shelf Registration Statement because applicable
interpretation of the SEC staff do not permit us to effect a Registered
Exchange Offer, a Shelf Registration Statement is not declared effective
by the SEC on or prior to the 180th day after the Merger Date;

(3) if the Exchange Offer is not consummated on or before the 40th day after
the Exchange Offer Registration Statement is declared effective;

(4) if obligated to file the Shelf Registration Statement, the Company fails
to file the Shelf Registration Statement with the SEC on or prior to the
90th day after the date (the "Shelf Filing Date") on which the
obligation to file a Shelf Registration Statement arises;

(5) if obligated to file a Shelf Registration Statement for any reason other
than the fact that applicable interpretations of the SEC staff do not
permit us to effect a Registered Exchange Offer, the Shelf Registration
Statement is not declared effective on or prior to the 90th day after
the Shelf Filing Date; or

(6) after the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is declared effective, such
Registration Statement thereafter ceases to be effective or usable
(subject to certain exceptions) (each such event referred to in the
preceding clauses (1) through (6) a "Registration Default");

from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.

The rate of the additional interest will be 0.50% per annum for the first
90-day period immediately following the occurrence of a Registration Default,
and such rate will increase by an additional 0.50% per annum with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum additional interest rate of 2.0% per annum. We will pay such
additional interest on regular interest payment dates. Such additional interest
will be in addition to any other interest payable from time to time with
respect to the Notes and the Exchange Notes.

All references in the Indenture, in any context, to any interest or other
amount payable on or with respect to the Notes shall be deemed to include any
additional interest pursuant to the Registration Rights Agreement.

If we effect the Registered Exchange Offer, we will be entitled to close the
Registered Exchange Offer 20 Business Days after the commencement thereof
provided that we have accepted all Notes theretofore validly tendered in
accordance with the terms of the Registered Exchange Offer.

Change of Control

Upon the occurrence of any of the following events (each a "Change of
Control"), each noteholder shall have the right to require that the Company
purchase such noteholder's Notes at a purchase price in cash equal to 101% of
the principal amount thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):

(1) prior to the earlier to occur of (A) the first underwritten public
offering of common stock of Parent or (B) the first public offering of
common stock of the Company, (x) the Permitted Holders cease to be

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the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate of
the total voting power of the Voting Stock of the Company, whether as a
result of issuance of securities of Parent or the Company, any merger,
consolidation, liquidation or dissolution of Parent or the Company, or
any direct or indirect transfer of securities by Parent or otherwise and
(y) RCBA ceases to (i) be the beneficial owner, directly or indirectly,
of at least 35% of the total voting power of the Voting Stock of the
Company or (ii) have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors (for purposes of this clause (1) and clause (2) below, the
Permitted Holders shall be deemed to beneficially own any Voting Stock
of a Person (the "specified person") held by any other Person (the
"parent entity") so long as the Permitted Holders beneficially own (as
so defined), directly or indirectly, (1) in the case of a parent entity
that is Parent, in the aggregate at least 35% of the voting power of the
Voting Stock of Parent, and have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the Board of Directors or (2) in the case of any other parent entity, in
the aggregate a majority of the voting power of the Voting Stock of such
parent entity);

(2) any "person"(as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in clause (1) above, except that for
purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time, and except that any Person that is deemed to have
beneficial ownership of shares solely as the result of being part of a
group pursuant to Rule 13d-5(b)(1) shall be deemed not to have
beneficial ownership of any shares held by a Permitted Holder forming a
part of such group), directly or indirectly, of more than 35% of the
total voting power of the Voting Stock of the Company; provided,
however, that the Permitted Holders beneficially own (as defined in
clause (1) above, except that in the event the Permitted Holders are
part of a group pursuant to Rule 13d-5(b)(1), the Permitted Holders
shall be deemed not to have beneficial ownership of any shares held by
persons other than Permitted Holders forming a part of such group),
directly or indirectly, in the aggregate a lesser percentage of the
total voting power of the Voting Stock of the Company than such other
person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this clause (2), such other person shall
be deemed to beneficially own any Voting Stock of a specified person
held by a parent entity, if such other person is the beneficial owner
(as defined in this clause (2)), directly or indirectly, of more than
35% of the voting power of the Voting Stock of such parent entity and
the Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent entity and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such
parent entity);

(3) individuals who on the Merger Date constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors on the Issue Date
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office;

(4) the adoption of a plan relating to the liquidation or dissolution of the
Company; or

(5) the merger or consolidation of the Company with or into another Person
or the merger of another Person with or into the Company, or the sale of
all or substantially all the assets of the Company (determined on a
consolidated basis) to another Person (other than, in all such cases, a
Person that is controlled by the Permitted Holders), other than a
transaction following which (A) in the case of a merger or consolidation
transaction, holders of securities that represented 100% of the Voting
Stock of the Company immediately prior to such transaction (or other
securities into which such securities are

138

converted as part of such merger or consolidation transaction) own
directly or indirectly at least a majority of the voting power of the
Voting Stock of the surviving Person in such merger or consolidation
transaction immediately after such transaction and in substantially the
same proportion as before the transaction and (B) in the case of a sale
of assets transaction, the transferee Person becomes the obligor in
respect of the Notes and a Subsidiary of the transferor of such assets.

Within 30 days following any Change of Control, unless we have exercised our
option to redeem all the Notes as described under "--Optional Redemption," we
will mail a notice to each noteholder with a copy to the Trustee (the "Change
of Control Offer") stating:

(1) that a Change of Control has occurred and that such noteholder has the
right to require us to purchase such noteholder's Notes at a purchase
price in cash equal to 101% of the principal amount thereof on the date
of purchase, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of noteholders of record on the relevant
record date to receive interest on the relevant interest payment date);

(2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income, cash
flow and capitalization, in each case after giving effect to such Change
of Control);

(3) the purchase date (which shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed); and

(4) the instructions, as determined by us, consistent with the covenant
described hereunder, that a noteholder must follow in order to have its
Notes purchased.

If the terms of the Credit Agreement prohibit the Company from making a
Change of Control Offer or from purchasing the Notes pursuant thereto, prior to
the mailing of the notice to noteholders described in the preceding paragraph,
but in any event within 30 days following any Change of Control, the Company
covenants to:

(1) repay in full all indebtedness outstanding under the Credit Agreement or
offer to repay in full all such indebtedness and repay the indebtedness
of each lender who has accepted such offer; or

(2) obtain the requisite consent under the Credit Agreement to permit the
purchase of the Notes as described above.

The Company must first comply with the covenant described above before it
will be required to purchase Notes in the event of a Change of Control;
provided, however, that the Company's failure to comply with the covenant
described in the preceding sentence or to make a Change of Control Offer
because of any such failure shall constitute a Default described in clause (4)
under "--Defaults" below (and not under clause (2) thereof). As a result of the
foregoing, a holder of the Notes may not be able to compel the Company to
purchase the Notes unless the Company is able at the time to refinance all
indebtedness outstanding under the Credit Agreement or obtain requisite
consents under the Credit Agreement.

We will not be required to make a Change of Control Offer following a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by us and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer or
if the Company has exercised its option to redeem all the Notes pursuant to the
provisions described under "--Optional Redemption."

We will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the purchase of Notes as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of the covenant described hereunder, we will comply with
the applicable securities laws and regulations and shall not be deemed to have
breached our obligations under the covenant described hereunder by virtue of
our compliance with such securities laws or regulations.

139

The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a sale or takeover of the
Company and, thus, the removal of incumbent management. The Change of Control
purchase feature is a result of negotiations between the Company and the
Initial Purchasers. We have no present intention to engage in a transaction
involving a Change of Control, although it is possible that we could decide to
do so in the future. Subject to the limitations discussed below, we could, in
the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control under the Indenture, but that could increase the amount of indebtedness
outstanding at such time or otherwise affect our capital structure or credit
ratings. Restrictions on our ability to Incur additional Indebtedness are
contained in the covenant described under "--Certain Covenants--Limitation on
Indebtedness," which limitations may terminate as described under the first
paragraph of "--Certain Covenants" below. Such restrictions can only be waived
with the consent of the holders of a majority in principal amount of the Notes
then outstanding. Except for the limitations contained in such covenant,
however, the Indenture will not contain any covenants or provisions that may
afford holders of the Notes protection in the event of a highly leveraged
transaction.

The Credit Agreement will prohibit us from purchasing any Notes, and will
also provide that the occurrence of certain change of control events with
respect to the Company would constitute a default thereunder. In the event a
Change of Control occurs at a time when we are prohibited from purchasing
Notes, we may seek the consent of our lenders to the purchase of Notes or may
attempt to refinance the borrowings that contain such prohibition. If we do not
obtain such a consent or repay such borrowings, we will remain prohibited from
purchasing Notes. In such case, our failure to offer to purchase Notes would
constitute a Default under the Indenture, which would, in turn, constitute a
default under the Credit Agreement. In such circumstances, the subordination
provisions in the Indenture would likely restrict payment to a holder of notes.

Future indebtedness that we may incur may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require the purchase of such indebtedness upon a Change of Control. Moreover,
the exercise by the holders of their right to require us to purchase the Notes
could cause a default under such indebtedness, even if the Change of Control
itself does not, due to the financial effect of such purchase on us. Finally,
our ability to pay cash to the holders of Notes following the occurrence of a
Change of Control may be limited by our then existing financial resources.
There can be no assurance that sufficient funds will be available when
necessary to make any required purchases.

The provisions under the Indenture relative to our obligation to make an
offer to purchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount of the Notes.

Certain Covenants

Set forth below are certain covenants contained in the Indenture. Following
the first day that (a) the ratings assigned to the Notes by both of the Rating
Agencies are Investment Grade Ratings and (b) no Default has occurred and is
continuing under the Indenture (and notwithstanding that the Company may later
cease to have an Investment Grade Rating from either or both Rating Agencies or
default under the Indenture), the Company and its Restricted Subsidiaries will
not be subject to the provisions of the Indenture described below under
"Limitation of Indebtedness," "Limitation on Restricted Payments," "Limitation
on Restrictions on Distributions from Restricted Subsidiaries," "Limitation on
Sales of Assets and Subsidiary Stock," "Limitation on Affiliate Transactions,"
"Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries," and clause (3) of the first paragraph under "Merger and
Consolidation."

Limitation on Indebtedness

(a) The Company will not, and will not permit any Restricted Subsidiary to,
Incur, directly or indirectly, any Indebtedness; provided, however, that the
Company and its Restricted Subsidiaries will be entitled to Incur

140

Indebtedness if, on the date of such Incurrence and after giving effect thereto
no Default has occurred and is continuing and the Consolidated Coverage Ratio
exceeds 2.25 to 1 if such Indebtedness is Incurred prior to June 1, 2003, or
2.5 to 1 if such Indebtedness is Incurred thereafter.

(b) Notwithstanding the foregoing paragraph (a), the Company and the
Restricted Subsidiaries will be entitled to Incur any or all of the following
Indebtedness:

(1) Indebtedness Incurred by the Company pursuant to any Revolving Credit
Facility; provided, however, that, immediately after giving effect to
any such Incurrence, the aggregate principal amount of all Indebtedness
Incurred under this clause (1) and then outstanding does not exceed the
greater of (A) $100.0 million less the sum of all principal payments
with respect to such Indebtedness pursuant to paragraph (a)(3)(A) of
the covenant described under "--Limitation on Sales of Assets and
Subsidiary Stock" and (B) 80% of the book value of the accounts
receivable of the Company and its Restricted Subsidiaries;

(2) Indebtedness Incurred by the Company pursuant to any Term Loan
Facility; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of all Indebtedness Incurred
under this clause (2) and then outstanding does not exceed $225.0
million less the aggregate sum of all principal payments actually made
from time to time after the Issue Date with respect to such
Indebtedness (other than principal payments made from any Refinancings
thereof);

(3) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or
transfer of any Capital Stock which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the obligor thereon and (B) if the
Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Notes;

(4) the Notes and the Exchange Notes (other than any Additional Notes);

(5) Indebtedness of CB Richard Ellis Services and its Subsidiaries
outstanding on both the Issue Date and the Merger Date (after giving
effect to the Transactions) (other than Indebtedness described in
clause (1), (2), (3) or (4) of this covenant);

(6) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or
prior to the date on which such Subsidiary was acquired by the Company
(other than Indebtedness Incurred in connection with, or to provide all
or any portion of the funds or credit support utilized to consummate,
the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company);
provided, however, at the time of such acquisition and after giving
effect thereto, the aggregate principal amount of all Indebtedness
Incurred pursuant to this clause (6) and then outstanding does not
exceed $10.0 million;

(7) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
to paragraph (a) or pursuant to clause (4), (5) or (6) or this clause
(7); provided, however, that to the extent such Refinancing
Indebtedness directly or indirectly Refinances Indebtedness of a
Subsidiary Incurred pursuant to clause (6), such Refinancing
Indebtedness shall be Incurred only by such Subsidiary;

(8) Hedging Obligations entered into in the ordinary course of business and
not for the purpose of speculation;

(9) obligations in respect of letters of credit, performance, bid and
surety bonds, completion guarantees, payment obligations in connection
with self-insurance or similar requirements provided by the Company or
any Restricted Subsidiary in the ordinary course of business;

(10) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within five Business
Days of its Incurrence;

141

(11) any Guarantee (including the Subsidiary Guaranties) by the Company or a
Restricted Subsidiary of Indebtedness or other obligations of the
Company or any of its Restricted Subsidiaries so long as the Incurrence
of such Indebtedness by the Company or such Restricted Subsidiary is
permitted under the terms of the Indenture (other than Indebtedness
Incurred pursuant to clause (6) above);

(12) Indebtedness arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
Incurred or assumed in connection with the acquisition or disposition
of any business, assets or a Subsidiary; provided that (A) such
Indebtedness is not reflected in the balance sheet of the Company or
any Restricted Subsidiary (contingent obligations referred to in a
footnote and footnotes to financial statements and not otherwise
reflected on the balance sheet will not be deemed to be reflected on
such balance sheet for purposes of this clause (A)) and (B) in the case
of a disposition, the maximum liability in respect of such Indebtedness
shall at no time exceed the gross proceeds including non-cash proceeds
(the fair market value of such non-cash proceeds being determined at
the time received and without giving effect to any subsequent changes
in value) actually received by the Company or such Restricted
Subsidiary in connection with such disposition;

(13) Melody Permitted Indebtedness;

(14) Purchase Money Indebtedness Incurred to finance the acquisition by the
Company or any Restricted Subsidiary of any fixed or capital assets in
the ordinary course of business in an aggregate principal amount which,
when taken together with all other Indebtedness Incurred pursuant to
this clause (14) and then outstanding, does not exceed $10.0 million;

(15) Indebtedness of Foreign Restricted Subsidiaries in an aggregate
principal amount which, when taken together with all other Indebtedness
of Foreign Restricted Subsidiaries Incurred pursuant to this clause
(15) and then outstanding, does not exceed $15.0 million; and

(16) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount which, when taken together with all other
Indebtedness of the Company and the Restricted Subsidiaries outstanding
on the date of such Incurrence (other than Indebtedness permitted by
clauses (1) through (15) above or paragraph (a)), does not exceed $30.0
million.

(c) Notwithstanding the foregoing, none of the Company or any Restricted
Subsidiary will Incur any Indebtedness pursuant to the foregoing paragraph (b)
if the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company or any Restricted Subsidiary unless
such Indebtedness shall be subordinated to the Notes or the applicable
Subsidiary Guaranty to at least the same extent as such Subordinated
Obligations.

(d) For purposes of determining compliance with this covenant, (1) in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described above, the Company, in its sole discretion,
will classify such item of Indebtedness at the time of Incurrence and only be
required to include the amount and type of such Indebtedness in one of the
above clauses (provided that any Indebtedness originally classified as Incurred
pursuant to clause (b)(16) above may later be reclassified as having been
Incurred pursuant to paragraph (a) above to the extent that such reclassified
Indebtedness could be Incurred pursuant to paragraph (a) above at the time of
such reclassification) and (2) the Company will be entitled to divide and
classify an item of Indebtedness in more than one of the types of Indebtedness
described above.

(e) Notwithstanding paragraphs (a) and (b) above, none of the Company,
Parent and any Restricted Subsidiary will incur (1) any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness of such Person, unless such Indebtedness is Senior Subordinated
Indebtedness or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Person or (2) any Secured Indebtedness that
is not Senior Indebtedness of such Person unless contemporaneously therewith
such Person makes effective provision to secure the Notes or applicable
Guaranty equally and ratably with such Secured Indebtedness for so long as such
Secured Indebtedness is secured by a Lien.

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(f) For purposes of determining compliance with any U.S. dollar restriction
on the Incurrence of Indebtedness where the Indebtedness Incurred is
denominated in a different currency, the amount of such Indebtedness will be
the U .S .Dollar Equivalent determined on the date of the Incurrence of such
Indebtedness, provided, however, that if any such Indebtedness denominated in a
different currency is subject to a Currency Agreement with respect to U.S.
dollars covering all principal, premium, if any, and interest payable on such
Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be
as provided in such Currency Agreement. The principal amount of any Refinancing
Indebtedness Incurred in the same currency as the Indebtedness being Refinanced
will be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to
the extent that (1) such U.S. Dollar Equivalent was determined based on a
Currency Agreement, in which case the Refinancing Indebtedness will be
determined in accordance with the preceding sentence, and (2) the principal
amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such
excess will be determined on the date such Refinancing Indebtedness is
Incurred.

Limitation on Restricted Payments

(a) The Company will not, and will not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment:

(1) a Default shall have occurred and be continuing (or would result
therefrom);

(2) the Company is not entitled to Incur an additional $1.00 of Indebtedness
pursuant to paragraph (a) of the covenant described under "--Limitation
on Indebtedness"; or

(3) the aggregate amount of such Restricted Payment and all other Restricted
Payments since the Issue Date would exceed the sum of (without
duplication):

(A) 50% of the Consolidated Net Income accrued during the period (treated
as one accounting period) from the Merger Date to the end of the most
recent fiscal quarter ended for which internal financial statements
are available prior to the date of such Restricted Payment (or, in
case such Consolidated Net Income shall be a deficit, minus 100% of
such deficit); plus

(B) 100% of the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale
to a Subsidiary of the Company and other than an issuance or sale to
an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their
employees) and 100% of any cash capital contribution received by the
Company from its shareholders subsequent to the Issue Date; plus

(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than
by a Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or the fair value of any other property, distributed by
the Company upon such conversion or exchange); plus

(D) an amount equal to the sum of (x) the net reduction in the
Investments (other than Permitted Investments) made by the Company or
any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person,
proceeds realized on the sale of such Investment and proceeds
representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any
Restricted Subsidiary, and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of such Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary;
provided, however, that the foregoing sum shall not exceed, in the
case of any such Person or Unrestricted Subsidiary, the amount of
Investments (excluding Permitted Investments) previously

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made (and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.

(b) The preceding provisions will not prohibit:

(1) any Restricted Payment made out of the Net Cash Proceeds of the
substantially concurrent sale of, or made by exchange for, Capital
Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company
or any of its Subsidiaries for the benefit of their employees) or a
substantially concurrent cash capital contribution received by the
Company from its shareholders; provided, however, that (A) such
Restricted Payment shall be excluded in the calculation of the amount
of Restricted Payments and (B) the Net Cash Proceeds from such sale or
such cash capital contribution (to the extent so used for such
Restricted Payment) shall be excluded from the calculation of amounts
under clause (3)(B) of paragraph (a) above;

(2) any purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Obligations of the Company or a
Restricted Subsidiary made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Indebtedness which is permitted
to be Incurred pursuant to the covenant described under "--Limitation
on Indebtedness;" provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted
Payments;

(3) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividend would have complied with this
covenant; provided, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments;

(4) repurchases of Capital Stock of Parent required under the Company's
401(k) plan as it existed as of the Merger Date; provided, however,
that such repurchases shall be excluded from the calculation of the
amount of Restricted Payments;

(5) so long as no Default has occurred and is continuing, the repurchase or
other acquisition of shares of Capital Stock of Parent or the Company
or any of the Company's Subsidiaries from employees (including
substantially full-time independent contractors), former employees,
directors, former directors or consultants of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, directors, former directors or consultants), pursuant to the
terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or
sell, shares of such Capital Stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed the sum of (A) $5.0 million, (B) the Net Cash Proceeds from the
sale of Capital Stock to members of management, consultants or
directors of the Company and its Subsidiaries that occurs after the
Merger Date (to the extent the Net Cash Proceeds from the sale of such
Capital Stock have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3)(B) of paragraph (a) above)
and (C) the cash proceeds of any "key man" life insurance policies that
are used to make such repurchases; provided further, however, that (x)
such repurchases and other acquisitions shall be excluded in the
calculation of the amount of Restricted Payments and (y) the Net Cash
Proceeds from such sale shall be excluded from the calculation of
amounts under clause (3)(B) of paragraph (a) above;

(6) Investments made by Melody in connection with the Melody Loan Arbitrage
Facility or the Melody Mortgage Warehousing Facility; provided,
however, that such Investments shall be excluded in the calculation of
the amount of Restricted Payments;

(7) payments required pursuant to the terms of the Merger Agreement to
consummate the Merger; provided, however, that such payments shall be
excluded in the calculation of the amount of Restricted Payments;

144

(8) dividends to Parent to be used by Parent solely to pay its franchise
taxes and other fees required to maintain its corporate existence and
to pay for general corporate and overhead expenses (including salaries
and other compensation of the employees) incurred by Parent in the
ordinary course of its business; provided, however, that such dividends
shall not exceed $1.0 million in any calendar year; provided further,
however, that such dividends shall be excluded in the calculation of
the amount of Restricted Payments;

(9) payments to Parent in respect of Federal, state and local taxes
directly attributable to (or arising as a result of) the operations of
the Company and its consolidated Subsidiaries; provided, however, that
the amount of such payments in any fiscal year do not exceed the amount
that the Company and its consolidated Subsidiaries would be required to
pay in respect of Federal, state and local taxes for such fiscal year
were the Company to pay such taxes as a stand-alone taxpayer (whether
or not all such amounts are actually used by Parent for such purposes);
provided further, however, that such payments shall be excluded in the
calculation of the amount of Restricted Payments; and

(10) Restricted Payments in an aggregate amount which, when taken together
with all Restricted Payments made pursuant to this clause (10) which
have not been repaid, does not exceed $20.0 million; provided, however,
that (A) at the time of such Restricted Payments, no Default shall have
occurred and be continuing (or result therefrom) and (B) such
Restricted Payments shall be excluded in the calculation of the amount
of Restricted Payments.

Limitation on Restrictions on Distributions from Restricted Subsidiaries

The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions on its Capital Stock to the
Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company,
(b) make any loans or advances to the Company or (c) transfer any of its
property or assets to the Company, except:

(1) with respect to clauses (a), (b) and (c),

(A) any encumbrance or restriction pursuant to an agreement of CB Richard
Ellis Services or any of its Subsidiaries in effect at or entered
into on the Issue Date or, in the case of the Credit Agreement, as in
effect on the Merger Date;

(B) any encumbrance or restriction contained in the terms of any
Indebtedness Incurred pursuant to clause (b)(15) of the covenant
described under "--Limitation on Indebtedness" or any agreement
pursuant to which such Indebtedness was issued if (x) either (i) the
encumbrance or restriction applies only in the event of and during
the continuance of a payment default or a default with respect to a
financial covenant contained in such Indebtedness or agreement or
(ii) the Company determines at the time any such Indebtedness is
Incurred (and at the time of any modification of the terms of any
such encumbrance or restriction) that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes and (y) the encumbrance
or restriction is not materially more disadvantageous to the holders
of the Notes than is customary in comparable financings or agreements
(as determined by the Board of Directors in good faith);

(C) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate,
the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company) and outstanding on such date;

145

(D) any encumbrance or restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (A), (B) or (C) of clause (1) of this covenant
or this clause (D) or contained in any amendment to an agreement
referred to in clause (A), (B) or (C) of clause (1) of this covenant
or this clause (D); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in
any such refinancing agreement or amendment are no less favorable to
the noteholders than encumbrances and restrictions with respect to
such Restricted Subsidiary contained in such predecessor agreements;
and

(E) any encumbrance or restriction pursuant to applicable law; and

(2) with respect to clause (c) only:

(A) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to
the extent such provisions restrict the transfer of the lease or the
property leased thereunder;

(B) restrictions contained in security agreements or mortgages securing
Indebtedness of a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such
security agreements or mortgages;

(C) restrictions on the transfer of assets subject to any Lien permitted
under the Indenture imposed by the holder of such Lien; and

(D) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or
disposition.

Limitation on Sales of Assets and Subsidiary Stock

(a) The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless:

(1) the Company or such Restricted Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value
(including as to the value of all non-cash consideration), as determined
in good faith by the Board of Directors, of the shares and assets
subject to such Asset Disposition;

(2) at least 80% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or cash equivalents;
and

(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as
the case may be):

(A) first, to the extent the Company elects (or is required by the terms
of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness
(other than any Disqualified Stock) of any other Wholly Owned
Subsidiary (in each case other than Indebtedness owed to the Company
or an Affiliate of the Company) within one year from the later of the
date of such Asset Disposition or the receipt of such Net Available
Cash;

(B) second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), to the extent the Company
elects, to acquire Additional Assets within one year from the later
of the date of such Asset Disposition or the receipt of such Net
Available Cash; and

(C) third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an offer
to the holders of the Notes (and to holders of other Senior
Subordinated Indebtedness of the Company designated by the Company)
to purchase Notes (and such other Senior Subordinated Indebtedness of
the Company) pursuant to and subject to the conditions contained in
the Indenture;

146

provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (C) above, the
Company or such Restricted Subsidiary shall permanently retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased.

Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries will not be required to apply any Net Available
Cash in accordance with this covenant except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which is not applied in
accordance with this covenant exceeds $10.0 million. Pending application of Net
Available Cash pursuant to this covenant, such Net Available Cash shall be
invested in Temporary Cash Investments or applied to temporarily reduce
revolving credit indebtedness.

For the purposes of this covenant, the following are deemed to be cash or
cash equivalents:

(1) the assumption of Indebtedness of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted Subsidiary
from all liability on such Indebtedness in connection with such Asset
Disposition; and

(2) securities received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.

(b) In the event of an Asset Disposition that requires the purchase of Notes
(and other Senior Subordinated Indebtedness of the Company) pursuant to clause
(a)(3)(C) above, the Company will purchase Notes tendered pursuant to an offer
by the Company for the Notes (and such other Senior Subordinated Indebtedness
of the Company) at a purchase price of 100% of their principal amount (or, in
the event such other Senior Subordinated Indebtedness of the Company was issued
with significant original issue discount, 100% of the accreted value thereof)
without premium, plus accrued but unpaid interest (or, in respect of such other
Senior Subordinated Indebtedness of the Company, such lesser price, if any, as
may be provided for by the terms of such Senior Subordinated Indebtedness of
the Company) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the Indenture. If the aggregate
purchase price of the securities tendered exceeds the Net Available Cash
allotted to their purchase, the Company will select the securities to be
purchased on a pro rata basis but in round denominations, which in the case of
the Notes will be denominations of $1,000 principal amount or multiples
thereof. The Company shall not be required to make such an offer to purchase
Notes (and other Senior Subordinated Indebtedness of the Company) pursuant to
this covenant if the Net Available Cash available therefor is less than $10.0
million (which lesser amount shall be carried forward for purposes of
determining whether such an offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).

(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the purchase of Notes pursuant to this covenant.
To the extent that the provisions of any securities laws or regulations
conflict with provisions of this covenant, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this clause by virtue of its compliance with
such securities laws or regulations.

Limitation on Affiliate Transactions

(a) The Company will not, and will not permit any Restricted Subsidiary to,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property, employee compensation arrangements or the
rendering of any service) with, or for the benefit of, any Affiliate of the
Company (an "Affiliate Transaction") unless:

(1) the terms of the Affiliate Transaction are no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained
at the time of the Affiliate Transaction in arm's-length dealings with a
Person who is not an Affiliate;

147

(2) if such Affiliate Transaction involves an amount in excess of $2.5
million, the terms of the Affiliate Transaction are set forth in writing
and a majority of the directors of the Company disinterested with
respect to such Affiliate Transaction have determined in good faith that
the criteria set forth in clause (1) are satisfied and have approved the
relevant Affiliate Transaction as evidenced by a resolution of the Board
of Directors; and

(3) if such Affiliate Transaction involves an amount in excess of $10.0
million, the Board of Directors shall also have received a written
opinion from an Independent Qualified Party to the effect that such
Affiliate Transaction is fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries or is not less favorable to the
Company and its Restricted Subsidiaries than could reasonably be
expected to be obtained at the time in an arm's-length transaction with
a Person who was not an Affiliate.

(b) The provisions of the preceding paragraph (a) will not prohibit:

(1) any Investment (other than a Permitted Investment) or other Restricted
Payment, in each case permitted to be made pursuant to the covenant
described under "--Limitation on Restricted Payments";

(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors;

(3) loans or advances to employees or consultants in the ordinary course of
business of the Company or its Restricted Subsidiaries, but in any
event not to exceed $3.0 million in the aggregate outstanding at any
one time;

(4) the payment of reasonable fees and compensation to, or the provision of
employee benefit arrangements and indemnity for the benefit of,
directors, officers, employees and consultants of the Company and its
Restricted Subsidiaries in the ordinary course of business;

(5) any transaction between or among the Company, any Restricted Subsidiary
or joint venture or similar entity which would constitute an Affiliate
Transaction solely because the Company or a Restricted Subsidiary owns
an equity interest in or otherwise controls such Restricted Subsidiary,
joint venture or similar entity;

(6) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company;

(7) the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of its obligations under the terms of any
stockholders agreement (including any registration rights agreement or
purchase agreement related thereto) or warrant agreement to which it is
a party as of the Merger Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of
obligations under any future amendment to any such existing agreement
or under any similar agreement entered into after the Merger Date shall
only be permitted by this clause (7) to the extent that the terms of
any such amendment or new agreement are not otherwise disadvantageous
to the noteholders in any material respect;

(8) the payment of fees and other expenses to be paid by Parent, the
Company or any of its Subsidiaries in connection with the Merger;

(9) any agreement as in effect on the Merger Date and described in this
offering circular or any renewals, extensions or amendments of any such
agreement (so long as such renewals, extensions or amendments are not
less favorable to the Company or the Restricted Subsidiaries) and the
transactions evidenced thereby; and

(10) transactions with customers, clients, suppliers or purchasers or
sellers of goods or services in each case in the ordinary course of
business and otherwise in compliance with the terms of the applicable

148

Indenture which are fair to the Company or its Restricted Subsidiaries,
in the reasonable determination of the Board of Directors of the
Company or the senior management thereof, or are on terms at least as
favorable as might reasonably have been obtained at such time from an
unaffiliated party.

Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries

The Company:

(1) will not, and will not permit any Restricted Subsidiary to, sell, lease,
transfer or otherwise dispose of any Capital Stock of any Restricted
Subsidiary to any Person (other than the Company or a Wholly Owned
Subsidiary); and

(2) will not permit any Restricted Subsidiary to issue any of its Capital
Stock (other than, if necessary, shares of its Capital Stock
constituting directors' or other legally required qualifying shares) to
any Person (other than to the Company or a Wholly Owned Subsidiary);

unless

(A) immediately after giving effect to such issuance, sale or other
disposition, neither the Company nor any of its Subsidiaries owns any
Capital Stock of such Restricted Subsidiary; or

(B) immediately after giving effect to such issuance, sale or other
disposition, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person (other than in
the case of an Exempt Subsidiary) remaining after giving effect thereto
is treated as a new Investment by the Company and such Investment would
be permitted to be made under the covenant described under "--Limitation
on Restricted Payments" if made on the date of such issuance, sale or
other disposition.

Merger and Consolidation

The Company will not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, directly or
indirectly, all or substantially all its assets to, any Person, unless:

(1) the resulting, surviving or transferee Person (the "Successor Company")
shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of
the Company under the Notes and the Indenture;

(2) immediately after giving pro forma effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having been
Incurred by such Successor Company or such Subsidiary at the time of
such transaction), no Default shall have occurred and be continuing;

(3) immediately after giving pro forma effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness;" and

(4) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger
or transfer and such supplemental indenture (if any) comply with the
Indenture;

provided, however, that clause (3) will not be applicable to (A) a Restricted
Subsidiary consolidating with, merging into or transferring all or part of its
properties and assets to the Company or (B) the Company merging with an
Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.

149

The Successor Company will be the successor to the Company and shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Indenture, and the predecessor Company, except in the case of
a lease, shall be released from the obligation to pay the principal of and
interest on the Notes.

The Company will not permit any Subsidiary Guarantor to consolidate with or
merge with or into, or convey, transfer or lease, in one transaction or a
series of transactions, all or substantially all of its assets to any Person
unless:

(1) except in the case of a Subsidiary Guarantor that has been disposed of
in its entirety to another Person (other than to the Company or an
Affiliate of the Company), whether through a merger, consolidation or
sale of Capital Stock or assets, if in connection therewith the Company
provides an Officers' Certificate to the Trustee to the effect that the
Company will comply with its obligations under the covenant described
under "--Limitation on Sales of Assets and Subsidiary Stock" in respect
of such disposition, the resulting, surviving or transferee Person (if
not such Subsidiary) shall be a Person organized and existing under the
laws of the jurisdiction under which such Subsidiary was organized or
under the laws of the United States of America, or any State thereof or
the District of Columbia, and such Person shall expressly assume, by a
Guaranty Agreement, all the obligations of such Subsidiary, if any,
under its Subsidiary Guaranty;

(2) immediately after giving effect to such transaction or transactions on a
pro forma basis (and treating any Indebtedness which becomes an
obligation of the resulting, surviving or transferee Person as a result
of such transaction as having been issued by such Person at the time of
such transaction), no Default shall have occurred and be continuing; and

(3) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with the
Indenture.

Parent will not consolidate with or merge with or into, or convey, transfer
or lease, in one transaction or a series of transactions, all or substantially
all of its assets to any Person unless:

(1) the resulting, surviving or transferee Person (if not Parent) shall be a
Person organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia, and such Person
shall expressly assume, by a Guaranty Agreement, all the obligations of
Parent, if any, under its Guaranty;

Future Guarantors

On the Merger Date, each of our Restricted Subsidiaries that is a guarantor
under the Credit Agreement executed and delivered to the Trustee a Guaranty
Agreement pursuant to which such Restricted Subsidiary fully and
unconditionally Guaranteed the Notes on a senior subordinated basis.

After the Merger Date, the Company will cause each Restricted Subsidiary
that Guarantees any Indebtedness of the Company to, at the same time, execute
and deliver to the Trustee a Guaranty Agreement pursuant to which such
Restricted Subsidiary will Guarantee payment of the Notes on the same terms and
conditions as those set forth in the Indenture.

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SEC Reports

Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC and provide the Trustee and noteholders within 15 days after it
files them with the SEC with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections,
such information, documents and other reports to be so filed with the SEC at
the times specified for the filings of such information, documents and reports
under such Sections; provided, however, that the Company shall not be so
obligated to file such reports with the SEC if the SEC does not permit such
filing, in which event the Company will make available such information to the
Trustee and noteholders within 15 days after the time the Company would be
required to file such information with the SEC if it were subject to Section 13
or 15(d) of the Exchange Act; provided further, however, that (a) so long as
Parent is the Guarantor of the Notes, the reports, information and other
documents required to be filed and provided as described hereunder may, at the
Company's option, be filed by and be those of Parent rather than the Company
and (b) in the event that Parent conducts any business or holds any significant
assets other than the capital stock of the Company at the time of filing and
providing any such report, information or other document containing financial
statements of Parent, Parent shall include in such report, information or other
document summarized financial information (as defined in Rule 1-02(bb) of
Regulation S-X promulgated by the SEC) with respect to the Company.

In addition, the Company will furnish to the holders of the Notes and to
prospective investors, upon the requests of such holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
so long as the Notes are not freely transferable under the Securities Act.

Defaults

Each of the following is an Event of Default:

(1) a default in the payment of interest on the Notes when due, continued
for 30 days;

(2) a default in the payment of principal of any Note when due at its Stated
Maturity, upon redemption, upon required purchase, upon declaration of
acceleration or otherwise;

(3) the failure by the Company, Parent or any Subsidiary Guarantor to comply
with its obligations under "--Certain Covenants--Merger and
Consolidation" above;

(4) the failure by the Company, Parent or any Subsidiary Guarantor, as the
case may be, to comply for 30 days after notice with any of its
obligations in the covenants described above under "Change of Control"
(other than a failure to purchase Notes) or under "--Certain Covenants"
under "--Limitation on Indebtedness," "--Limitation on Restricted
Payments," "--Limitation on Restrictions on Distributions from
Restricted Subsidiaries," "--Limitation on Sales of Assets and
Subsidiary Stock" (other than a failure to purchase Notes),
"--Limitation on Affiliate Transactions," "--Limitation on the Sale or
Issuance of Capital Stock of Restricted Subsidiaries," "--Future
Guarantors" or "--SEC Reports";

(5) the failure by the Company, Parent, or any Subsidiary Guarantor to
comply for 60 days after notice with its other agreements contained in
the Indenture;

(6) Indebtedness of the Company or any Significant Subsidiary is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10.0 million
(the "cross acceleration provision");

(7) certain events of bankruptcy, insolvency or reorganization of the
Company or any Significant Subsidiary (the "bankruptcy provisions");

(8) any judgment or decree for the payment of money (other than judgments
which are covered by enforceable insurance policies issued by solvent
carriers) in excess of $10.0 million is entered against

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the Company or any Significant Subsidiary, remains outstanding for a
period of 60 consecutive days following such judgment and is not
discharged, waived or stayed within 10 days after notice (the "judgment
default provision"); or

(9) the Parent Guaranty or a Subsidiary Guaranty ceases to be in full force
and effect (other than in accordance with the terms of such Guaranty) or
a Guarantor denies or disaffirms its obligations under its Guaranty.

However, a default under clauses (4), (5) and (8) will not constitute an Event
of Default until the Trustee or the holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified after receipt of such notice.

If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable; provided, however, that so long as any Bank Indebtedness remains
outstanding, no such acceleration shall be effective until the earlier of (1)
five Business Days after the giving of written notice to the Company and the
administrative agent (or similar agent if there is no administrative agent)
under the Credit Agreement and (2) the day on which any Bank Indebtedness is
accelerated. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holders of the Notes. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
Notes may rescind any such acceleration with respect to the Notes and its
consequences.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a
Note may pursue any remedy with respect to the Indenture or the Notes unless:

(1) such holder has previously given the Trustee notice that an Event of
Default is continuing;

(2) holders of at least 25% in principal amount of the outstanding Notes
have requested the Trustee to pursue the remedy;

(3) such holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the
receipt thereof and the offer of security or indemnity; and

(5) holders of a majority in principal amount of the outstanding Notes have
not given the Trustee a direction inconsistent with such request within
such 60-day period.

Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder of a Note or that would involve the Trustee in personal
liability.

If a Default occurs, is continuing and is known to the Trustee, the Trustee
must mail to each holder of the Notes notice of the Default within 90 days
after it occurs. Except in the case of a Default in the payment of principal of
or interest on any Note, the Trustee may withhold notice if and so long as a
committee of its trust

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officers determines that withholding notice is not opposed to the interest of
the holders of the Notes. In addition, we are required to deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default that occurred during
the previous year. We are required to deliver to the Trustee, within 30 days
after the occurrence thereof, written notice of any event which would
constitute certain Defaults, their status and what action we are taking or
propose to take in respect thereof.

Amendments and Waivers

Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Notes) and any past default or compliance with any provisions may also be
waived with the consent of the holders of a majority in principal amount of the
Notes then outstanding. However, without the consent of each holder of an
outstanding Note affected thereby, an amendment or waiver may not, among other
things:

(1) reduce the amount of Notes whose holders must consent to an amendment;

(2) reduce the rate of or extend the time for payment of interest on any
Note;

(3) reduce the principal of or extend the Stated Maturity of any Note;

(4) reduce the amount payable upon the redemption of any Note or change the
time at which any Note may be redeemed as described under "--Optional
Redemption" above;

(5) make any Note payable in money other than that stated in the Note;

(6) impair the right of any holder of the Notes to receive payment of
principal of and interest on such holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such holder's Notes;

(7) make any change in the amendment provisions which require each holder's
consent or in the waiver provisions;

(8) make any change in the ranking or priority of any Note that would
adversely affect the noteholders; or

(9) make any change in any Guaranty that would adversely affect the
noteholders.

Notwithstanding the preceding, without the consent of any holder of the
Notes, the Company, Parent, the Subsidiary Guarantors and Trustee may amend the
Indenture:

(1) to cure any ambiguity, omission, defect or inconsistency;

(2) to provide for the assumption by a successor corporation of the
obligations of the Company, Parent or any Subsidiary Guarantor under the
Indenture;

(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code);

(4) to add guarantees with respect to the Notes, including any Subsidiary
Guaranties, or to secure the Notes;

(5) to add to the covenants of the Company, Parent or any Subsidiary
Guarantor for the benefit of the holders of the Notes or to surrender
any right or power conferred upon the Company, Parent or any Subsidiary
Guarantor;

(6) to make any change that does not adversely affect the rights of any
holder of the Notes; or

(7) to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the Trust Indenture Act.

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However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior
Indebtedness of the Company, Parent or a Subsidiary Guarantor then outstanding
unless the holders of such Senior Indebtedness (or their Representative)
consent to such change.

The consent of the holders of the Notes is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.

After an amendment under the Indenture becomes effective, we are required to
mail to holders of the Notes a notice briefly describing such amendment.
However, the failure to give such notice to all holders of the Notes, or any
defect therein, will not impair or affect the validity of the amendment.

Transfer

The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
We may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge payable in connection with certain transfers and
exchanges.

Defeasance

At any time, we may terminate all our and each Guarantor's obligations under
the Notes and the Indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the Notes, to replace mutilated,
destroyed, lost or stolen Notes and to maintain a registrar and paying agent in
respect of the Notes.

In addition, at any time we may terminate our obligations under "--Change of
Control" and under the covenants described under "--Certain Covenants" (other
than the covenant described under "--Merger and Consolidation"), the operation
of the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"--Defaults" above and the limitations contained in clause (3) of the first
paragraph under "--Certain Covenants--Merger and Consolidation" above
("covenant defeasance").

We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option. If we exercise our legal defeasance
option, payment of the Notes and the Guaranties may not be accelerated because
of an Event of Default with respect thereto. If we exercise our covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (4), (6), (7) (with respect only to
Significant Subsidiaries) or (8) under "--Defaults" above or because of the
failure of the Company to comply with clause (3) of the first paragraph under
"--Certain Covenants--Merger and Consolidation" above. If we exercise our legal
defeasance option or our covenant defeasance option, each Guarantor will be
released from all of its obligations with respect to its Guaranty.

In order to exercise either of our defeasance options, we must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes
to redemption or maturity, as the case may be, and must comply with certain
other conditions, including delivery to the Trustee of an Opinion of Counsel to
the effect that holders of the Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such deposit and defeasance and
will be subject to Federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred (and, in the case of legal defeasance only, such
Opinion of Counsel must be based on a ruling of the Internal Revenue Service or
other change in applicable Federal income tax law).

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Concerning the Trustee

State Street Bank and Trust Company of California, N.A. is to be the Trustee
under the Indenture. We have appointed State Street Bank and Trust Company of
California, N.A. as Registrar and Paying Agent with regard to the Notes.

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; provided, however, if it acquires any conflicting interest
it must either eliminate such conflict within 90 days, apply to the SEC for
permission to continue or resign.

The holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. If an Event of Default occurs (and is not cured), the
Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any holder of Notes,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor will have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Notes, any Subsidiary Guaranty or
the Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver and release may not be
effective to waive liabilities under the U.S. federal securities laws, and it
is the view of the SEC that such a waiver is against public policy.

Governing Law

The Indenture and the Notes are governed by, and construed in accordance
with, the laws of the State of New York.

Certain Definitions

"Additional Assets" means:

(1) any property or other assets (other than Indebtedness and Capital Stock)
used in a Related Business;

(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or

(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.

"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and

155

the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the covenants described under "--Certain
Covenants--Limitation on Restricted Payments," "--Certain Covenants--Limitation
on Affiliate Transactions" and "--Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial
owner of Capital Stock representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Capital Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.

"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:

(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary);

(2) all or substantially all the assets of any division or line of business
of the Company or any Restricted Subsidiary; or

(3) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted
Subsidiary;

(other than, in the case of clauses (1), (2) and (3) above,

(A) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary;

(B) for purposes of the covenant described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments" or a Permitted Investment;

(C) the sale by Melody of assets purchased and/or funded pursuant to the
Melody Mortgage Warehousing Facility or the Melody Loan Arbitrage
Facility;

(D) any sale of Capital Stock in, or Indebtedness or other securities of, an
Unrestricted Subsidiary;

(E) a disposition of Temporary Cash Investments in the ordinary course of
business;

(F) the disposition of property or assets that are obsolete, damaged or worn
out;

(G) the lease or sublease of office space in the ordinary course of
business;

(H) sales by Melody of debt servicing rights not in excess of $5.0 million
in the aggregate; and

(I) a disposition of assets with a fair market value of less than $750,000
(a "de minimis disposition"), so long as the sum of such de minimis
disposition plus all other de minimis dispositions previously made in
the same calendar year does not exceed $3.0 million in the aggregate);

provided, however, that a disposition of all or substantially all the assets of
the Company and its Restricted Subsidiaries taken as a whole will be governed
by the provisions of the Indenture described above under the caption "--Change
of Control" and/or the provisions described above under the caption "--Merger
and Consolidation" and not by the provisions described above under the caption
"--Limitation on Sales of Assets and Subsidiary Stock" covenant.

"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback

156

Transaction (including any period for which such lease has been extended);
provided, however, that if such Sale/Leaseback Transaction results in a Capital
Lease Obligation, the amount of Indebtedness represented thereby will be
determined in accordance with the definition of "Capital Lease Obligation."

"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing:

(1) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal
payment of or redemption or similar payment with respect to such
Indebtedness multiplied by the amount of such payment by

(2) the sum of all such payments.

"Bank Indebtedness" means all Obligations pursuant to the Credit Agreement.

"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.

"Business Day" means each day other than a Saturday, Sunday or a day on
which commercial banking institutions are authorized or required by law to
close in New York City.

"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined
in accordance with GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.

"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.

"Cash Equity Contributions" shall mean (a) the contribution to Parent of not
less than $98,800,000 in cash in the form of equity (it being understood that
(i) any contribution to Parent by RCBA of shares of common equity of CB Richard
Ellis Services in excess of 2,345,900 shares will be considered a cash
contribution by RCBA in an amount equal to $16.00 multiplied by the number of
shares constituting such excess and a contribution of such amount from Parent
to the Company and (ii) the transfer by designated managers of an aggregate of
up to $2.6 million of deferred compensation plan account balances (currently
reflected as cash surrender value of insurance policies, deferred compensation
plan in the financial statements of the Company) to stock fund units shall be
deemed to be a cash contribution to Parent of the amount of such transfer and a
contribution of such amount from Parent to the Company to the extent (x)
accounted for as equity of the Company and (y) such transfer of an account
balance results in a transfer to the Company of cash from the trust relating to
such deferred compensation plan) and (b) the contribution by Parent of the
amount so received, together with the net proceeds from its sale of the Parent
Senior Notes, to the Company as equity in exchange for Capital Stock (other
than Disqualified Stock) of the Company.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (x) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which internal financial statements are
available ending prior to the date of such determination to (y) Consolidated
Interest Expense for such four fiscal quarters; provided, however, that:

(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding
or if the transaction giving rise to the need to calculate the

157

Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness
as if such Indebtedness had been Incurred on the first day of such
period;

(2) if the Company or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning of
such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness
Incurred under any revolving credit facility unless such Indebtedness
has been permanently repaid and has not been replaced) on the date of
the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period
shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used
to repay, repurchase, defease or otherwise discharge such Indebtedness;

(3) if since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition, EBITDA for such period
shall be reduced by an amount equal to EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA
(if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for
such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such
sale);

(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any person which becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction requiring a
calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and

(5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or
any Restricted Subsidiary since the beginning of such period) shall have
made any Asset Disposition, any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if
made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.

For purposes of this definition, whenever pro forma effect is to be given to
an acquisition of assets, the amount of income or earnings relating thereto and
the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting officer of
the Company (and shall include any applicable Pro Forma Cost Savings). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).

158

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, without duplication:

(1) interest expense attributable to Capital Lease Obligations and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;

(2) amortization of debt discount and debt issuance cost;

(3) capitalized interest;

(4) non-cash interest expense;

(5) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;

(6) net payments pursuant to Hedging Obligations in respect of
Indebtedness;

(7) Preferred Stock dividends in respect of all Preferred Stock held by
Persons other than the Company or a Restricted Subsidiary (other than
dividends payable solely in Capital Stock (other than Disqualified
Stock) of the issuer of such Preferred Stock);

(8) interest incurred in connection with Investments in discontinued
operations;

(9) interest accruing on any Indebtedness of any other Person to the extent
such Indebtedness is Guaranteed by (or secured by the assets of) the
Company or any Restricted Subsidiary; and

(10) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust,

and less, to the extent included in such total interest expense, (A) the
amortization during such period of capitalized financing costs associated with
the Transactions and (B) the amortization during such period of other
capitalized financing costs; provided however, that the aggregate amount of
amortization relating to any such other capitalized financing costs deducted in
calculating Consolidated Interest Expense shall not exceed 3.5% of the
aggregate amount of the financing giving rise to such capitalized financing
costs.

"Consolidated Net Income" means, for any period, the sum of (1) the net
income of the Company and its consolidated Subsidiaries and (2) to the extent
deducted in calculating net income of the Company and its consolidated
Subsidiaries, (A) any non-recurring fees, expenses or charges related to the
Transactions and (B) any non-recurring charges related to one-time severance or
lease termination costs incurred in connection with the Transactions; provided,
however, that there shall not be included in such Consolidated Net Income:

(1) any net income of any Person (other than the Company) if such Person is
not a Restricted Subsidiary, except that:

(A) subject to the exclusion contained in clause (4) below, the Company's
equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount
of cash actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations
contained in clause (3) below); and

(B) the Company's equity in a net loss of any such Person to the extent
accounted for pursuant to the equity method of accounting for such
period shall be included in determining such Consolidated Net Income;

(2) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;

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(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that:

(A) subject to the exclusion contained in clause (4) below, the Company's
equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause); and

(B) the Company's equity in a net loss of any such Restricted Subsidiary
for such period shall be included in determining such Consolidated
Net Income;

(4) any gain (or loss) realized upon the sale or other disposition of any
assets of the Company, its consolidated Subsidiaries or any other Person
(including pursuant to any sale-and-leaseback arrangement) which is not
sold or otherwise disposed of in the ordinary course of business and any
gain (or loss) realized upon the sale or other disposition of any
Capital Stock of any Person;

(5) extraordinary gains or losses;

(6) the cumulative effect of a change in accounting principles;

(7) any income or losses attributable to discontinued operations (including
operations disposed of during such periods whether or not such
operations were classified as discontinued);

(8) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following the Issue Date; and

(9) if the Successor Company is not the Company, the aggregate net income
(or loss) of such Successor Company prior to the consolidation, merger
or transfer resulting in such Successor Company.

Notwithstanding the foregoing, for the purposes of the covenant described under
"--Certain Covenants--Limitation on Restricted Payments" only, there shall be
excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount
of Restricted Payments permitted under such covenant pursuant to clause
(a)(3)(D) thereof.

"Credit Agreement" means the Credit Agreement to be entered into among CB
Richard Ellis Services, Parent, as guarantor, the lenders referred to therein,
Credit Suisse First Boston, as Administrative Agent, Sole Lead Arranger and
Sole Book Manager, and the Syndication Agent and Documentation Agent named
therein, together with the related documents thereto (including the term loans
and revolving loans thereunder, any guarantees and security documents), as
amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to Refinance, in whole or in
part, the borrowings and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or a successor Credit Agreement,
whether by the same or any other lender or group of lenders.

"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement designed to
protect such Person against fluctuations in currency values.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

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"Designated Senior Indebtedness" with respect to a Person means:

(1) the Bank Indebtedness; and

(2) any other Senior Indebtedness of such Person which, at the date of
determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are
committed to lend up to, at least $25.0 million and is specifically
designated by such Person in the instrument evidencing or governing such
Senior Indebtedness as "Designated Senior Indebtedness" for purposes of
the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:

(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;

(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or

(3) is mandatorily redeemable or must be purchased upon the occurrence of
certain events or otherwise, in whole or in part;

in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that if such Capital Stock is issued to any employee
or to any plan for the benefit of employees of the Company or its Subsidiaries
or by any such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Company in order to satisfy obligations as a result of such employee's death or
disability; and provided further, however, that any Capital Stock that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to purchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the first anniversary of the Stated Maturity of the Notes shall not
constitute Disqualified Stock if:

(1) the "asset sale" or "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital
Stock than the terms applicable to the Notes and described under
"--Certain Covenants--Limitation on Sales of Assets and Subsidiary
Stock" and "--Change of Control"; and

(2) any such requirement only becomes operative after compliance with such
terms applicable to the Notes, including the purchase of any Notes
tendered pursuant thereto.

The amount of any Disqualified Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms
of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid
or repurchased on any date on which the amount of such Disqualified Stock is to
be determined pursuant to the Indenture; provided, however, that if such
Disqualified Stock could not be required to be redeemed, repaid or repurchased
at the time of such determination, the redemption, repayment or repurchase
price will be the book value of such Disqualified Stock as reflected in the
most recent financial statements of such Person.

"EBITDA" for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:

(1) all income tax expense of the Company and its consolidated Restricted
Subsidiaries;

(2) Consolidated Interest Expense;

(3) any non-recurring fees, expenses or charges related to any Equity
Offering, Permitted Investment, acquisition or Incurrence of
Indebtedness permitted to be Incurred by the Indenture (in each case,
whether or not successful), including any such fees, expenses or charges
related to the Transactions, in each case not exceeding $5.0 million in
the aggregate for all such non-recurring fees, expenses and charges
attributable to the same transaction or event (or group of related
transactions or events);

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(4) depreciation and amortization expense of the Company and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash
in a prior period);

(5) all other non-cash losses, expenses and charges of the Company and its
consolidated Restricted Subsidiaries (excluding any such non-cash loss,
expense or charge to the extent that it represents an accrual of or
reserve for cash expenditures in any future period); and

(6) any non-recurring charges that are incurred and associated with the
restructuring of the operations of the Company and its consolidated
Subsidiaries announced prior to the Issue Date and implemented within 90
days after the Merger Date;

in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted
at the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.

"Equity Offering" means any primary offering of Capital Stock of Parent or
the Company (other than Disqualified Stock) to Persons who are not Affiliates
of the Company other than (1) public offerings with respect to the Company's
Common Stock registered on Form S-8 and (2) issuances upon exercise of options
by employees of the Company or any of its Restricted Subsidiaries.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exchange Notes" means the debt securities of the Company issued pursuant to
the Indenture in exchange for, and in an aggregate principal amount at maturity
equal to, the Notes, in compliance with the terms of the Registration Rights
Agreement.

"Exempt Subsidiary" means any Restricted Subsidiary that shall have had
aggregate EBITDA of less than $250,000 for the period of the most recent four
consecutive fiscal quarters for which internal financial statements are
available ending prior to the date of the issuance or sale of its Capital Stock
giving rise to such determination; provided, however, that such sale or
issuance is pursuant to a plan or program for the sale or issuance of Capital
Stock a majority of which is sold to local management or to local strategic
investors.

"Facilities" means the Term Loan Facilities and the Revolving Credit
Facilities.

"Foreign Restricted Subsidiary" means any Restricted Subsidiary not
incorporated or organized under the laws of the United States of America, any
State thereof or the District of Columbia.

"Freeman Spogli" means collectively, (1) FS Equity Partners Ill, L.P., (2)
FS Equity Partners International L.P., (3) any investment fund that is
affiliated with Freeman Spogli & Co. Incorporated and (4) Freeman Spogli & Co.
Incorporated and any successor entity thereof controlled by the principals of
Freeman Spogli & Co. Incorporated or any entity controlled by, or under common
control with, Freeman Spogli & Co. Incorporated.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in:

(1) the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants;

162

(2) statements and pronouncements of the Financial Accounting Standards
Board;

(3) such other statements by such other entity as approved by a significant
segment of the accounting profession; and

(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of
the SEC.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise); or

(2) entered into for the purpose of assuring in any other manner the obligee
of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);

provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

"Guarantor" means Parent and/or a Subsidiary Guarantor.

"Guaranty" means the Parent Guaranty and/or a Subsidiary Guaranty.

"Guaranty Agreement" means a supplemental indenture, in a form satisfactory
to the Trustee, pursuant to which a Guarantor guarantees the Company's
obligations with respect to the Notes on the terms provided for in the
Indenture.

"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement or similar
agreement.

"Holder" or "noteholder" means the Person in whose name a Note is registered
on the Registrar's books.

"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Restricted Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. Solely for
purposes of determining compliance with "--Certain Covenants--Limitation on
Indebtedness," (1) amortization of debt discount or the accretion of principal
with respect to a noninterest bearing or other discount security and (2) the
payment of regularly scheduled interest in the form of additional Indebtedness
of the same instrument or the payment of regularly scheduled dividends on
Capital Stock in the form of additional Capital Stock of the same class and
with the same terms will not be deemed to be the Incurrence of Indebtedness.

"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):

(1) the principal in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;

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(2) all Capital Lease Obligations of such Person and all Attributable Debt
in respect of Sale/Leaseback Transactions entered into by such Person;

(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);

(4) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing
obligations (other than obligations described in clauses (1) through (3)
above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the
twentieth Business Day following payment on the letter of credit);

(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock of
such Person or, with respect to any Preferred Stock of any Subsidiary of
such Person, the principal amount of such Preferred Stock to be
determined in accordance with the Indenture (but excluding, in each
case, any accrued dividends);

(6) all obligations of the type referred to in clauses (1) through (5) of
other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of
any Guarantee;

(7) all obligations of the type referred to in clauses (1) through (6) of
other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets and the amount of the obligation so secured; and

(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.

Notwithstanding the foregoing, in connection with the purchase by the Company
or any Restricted Subsidiary of any business, the term "Indebtedness" will
exclude post-closing payment adjustments to which the seller may become
entitled to the extent such payment is determined by a final closing balance
sheet or such payment depends on the performance of such business after the
closing; provided, however, that, at the time of closing, the amount of any
such payment is not determinable and, to the extent such payment thereafter
becomes fixed and determined, the amount is paid within 30 days thereafter.
Indebtedness of any Person shall include all Indebtedness of any partnership or
other entity in which such Person is a general partner or other equity holder
with unlimited liability other than Indebtedness which by its terms is
non-recourse to such Person and its assets.

The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided,
however, that the principal amount of any noninterest bearing or other discount
security at any date will be the principal amount thereof that would be shown
on a balance sheet of such Person dated such date prepared in accordance with
GAAP.

"Independent Qualified Party" means an investment banking firm, accounting
firm or appraisal firm of national standing; provided, however, that such firm
is not an Affiliate of the Company.

"Interest Rate Agreement" means in respect of a Person any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.

"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of the lender) or other extensions
of credit (including by way of Guarantee or similar arrangement) or capital
contribution to (by

164

means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by such Person. Except as otherwise provided for herein, the amount of an
Investment shall be its fair market value at the time the Investment is made
and without giving effect to subsequent changes in value.

For purposes of the definition of "Unrestricted Subsidiary," the definition
of "Restricted Payment" and the covenant described under "--Certain
Covenants--Limitation on Restricted Payments":

(1) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (A)
the Company's "Investment" in such Subsidiary at the time of such
redesignation less (B) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net
assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors.

"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) and BBB- (or the equivalent) by Moody's Investors Service, Inc.
(or any successor to the rating agency business thereof) and Standard & Poor's
Ratings Group (or any successor to the rating agency business thereof),
respectively.

"Issue Date" means June 7, 2001.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

"Melody" means L.J. Melody & Company, a Texas corporation.

"Melody Loan Arbitrage Facility" means a credit facility provided to Melody
by any depository bank in which Melody deposits payments relating to mortgage
loans for which Melody is servicer prior to distribution of such payments to or
for the benefit of the holders of such loans, so long as (1) Melody applies all
proceeds of loans made under such credit facility to purchase Temporary Cash
Investments and (2) all such Temporary Cash Investments purchased by Melody
with the proceeds of loans thereunder (and proceeds thereof and distributions
thereon) are pledged to the depository bank providing such credit facility, and
such bank has a first priority perfected security interest therein, to secure
loans made under such credit facility.

"Melody Mortgage Warehousing Facility" means the credit facility provided by
Residential Funding Corporation ("RFC") or any substantially similar facility
extended to any Mortgage Banking Subsidiary in connection with any Mortgage
Banking Activities, pursuant to which RFC or another lender makes loans to
Melody, the proceeds of which loans are applied by Melody (or any Mortgage
Banking Subsidiary) to fund commercial mortgage loans originated and owned by
Melody (or any Mortgage Banking Subsidiary) subject to an unconditional,
irrevocable (subject to customary exceptions) commitment to purchase such
mortgage loans by the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association or any other quasi-federal governmental entity so
long as loans made by RFC or such other lender to Melody (or any Mortgage
Banking Subsidiary) thereunder are secured by a pledge of commercial mortgage
loans made by Melody (or any Mortgage Banking Subsidiary) with the proceeds of
such loans and RFC or such other lender has a perfected first priority security
interest therein, to secure loans made under such credit facility.

"Melody Permitted Indebtedness" means Indebtedness of Melody under the
Melody Loan Arbitrage Facility, the Melody Mortgage Warehousing Facility and
the Melody Working Capital Facility and Indebtedness

165

of any Mortgage Banking Subsidiary under the Melody Mortgage Warehousing
Facility that is, in all cases, non-recourse to the Company or any of its other
Subsidiaries.

"Melody Working Capital Facility" means a credit facility provided by a
financial institution to Melody, so long as (1) the proceeds of loans
thereunder are applied only to provide working capital to Melody, (2) loans
under such credit facility are unsecured, and (3) the aggregate principal
amount of loans outstanding under such credit facility at no time exceeds $1.0
million.

"Merger" means the merger of BLUM CB Corp. with and into CB Richard Ellis
Services pursuant to the Merger Agreement.

"Merger Agreement" means the second amended and restated agreement and plan
of merger dated as of May 31, 2001, among CB Richard Ellis Services, Parent and
Merger Sub, as such agreement may be further amended so long as such amendments
are not adverse to holders of the Notes, and all other documents entered into
or delivered in connection with the Merger Agreement.

"Merger Date" means the date the Merger is consummated.

"Mortgage Banking Activities" means the origination by a Mortgage Banking
Subsidiary of mortgage loans in respect of commercial and multi-family
residential real property, and the sale or assignment of such mortgage loans
and the related mortgages to another person (other than the Company or any of
its Subsidiaries) within sixty days after the origination thereof; provided,
however, that in each case prior to origination of any mortgage loan, the
Company or a Mortgage Banking Subsidiary, as the case may be, shall have
entered into a legally binding and enforceable purchase and sale agreement with
respect to such mortgage loan with a person that purchases such loans in the
ordinary course of business.

"Mortgage Banking Subsidiary" means Melody and its subsidiaries that are
engaged in Mortgage Banking Activities.

"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and
proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form), in each case net of:

(1) all legal, accounting, investment banking and brokerage fees, title and
recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes
required to be accrued as a liability under GAAP, as a consequence of
such Asset Disposition;

(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out
of the proceeds from such Asset Disposition;

(3) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries as a result of such Asset
Disposition; and

(4) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.

"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts

166

or commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.

"Obligations" means with respect to any Indebtedness all obligations for
principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.

"Parent" means CBRE Holding, Inc.

"Parent Senior Notes" means Parent's 16% Senior Notes Due 2011.

"Parent Guaranty" means the Guarantee by Parent of the Company's obligations
with respect to the Notes contained in the Indenture.

"Permitted Co-investment" means any Investment by any Restricted Subsidiary
which is formed solely to acquire up to 5% of the Capital Stock of any Person
(a "Co-investment Entity") managed by such Restricted Subsidiary whose
principal purpose is to invest, directly or indirectly, in commercial real
estate; provided, however, that such Restricted Subsidiary is acting in such
capacity pursuant to an arrangement substantially similar to arrangements
entered into by Restricted Subsidiaries involved in such activities prior to
the Issue Date.

"Permitted Holders" means (1) RCBA and Freeman Spogli, (2) any member of
senior management of the Company on the Merger Date and (3) DLJ Investment
Partners II, L.P. and its affiliates.

"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:

(1) the Company, a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary; provided,
however, that (A) the primary business of such Restricted Subsidiary is
a Related Business and (B) such Restricted Subsidiary is not restricted
from making dividends or similar distributions by contract, operation
of law or otherwise;

(2) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business is a
Related Business;

(3) cash and Temporary Cash Investments;

(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable
under the circumstances;

(5) payroll, travel, moving and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;

(6) loans or advances to employees or independent contractors made in the
ordinary course of business consistent with past practices of the
Company or such Restricted Subsidiary;

(7) loans or advances to clients and vendors made in the ordinary course of
business consistent with past practices of the Company or such
Restricted Subsidiary in an aggregate amount outstanding at any time
not exceeding $1.5 million;

(8) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments;

(9) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as
permitted pursuant to the covenant described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock;"

167

(10) any Person where such Investment was acquired by the Company or any of
its Restricted Subsidiaries (a) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (b) as a result of a foreclosure
by the Company or any of its Restricted Subsidiaries with respect to
any secured Investment or other transfer of title with respect to any
secured Investment in default;

(11) Hedging Obligations entered into in the ordinary course of the
Company's or any Restricted Subsidiary's business and not for the
purpose of speculation;

(12) any Person to the extent such Investment replaces or refinances an
Investment in such Person existing on the Issue Date or on the Merger
Date in an amount not exceeding the amount of the Investment being
replaced or refinanced; provided, however, the new Investment is on
terms and conditions no less favorable than the Investment being
renewed or replaced;

(13) Investments in insurance on the life of any participant in any deferred
compensation plan of the Company made in the ordinary course of
business consistent with past practices of the Company;

(14) Permitted Co-investments in an aggregate amount not exceeding (a) for
the period from the day after the Merger Date to December 31, 2001, the
excess of $20.0 million over the aggregate amount of all such
Investments made in the period from January 1, 2001 to the Merger Date,
and (b) $20.0 million in each calendar year thereafter; provided,
however, that such Investments made in Co-investment Entities investing
in countries that are not members of the Organization for Economic
Co-operation and Development shall not exceed $5.0 million in any
calendar year; provided further, however, that (x) at the time of such
Investment, no Default shall have occurred and be continuing (or result
therefrom) and (y) immediately after giving pro forma effect to such
Investment, the Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness;" and

(15) so long as no Default shall have occurred and be continuing (or result
therefrom), any Person in an aggregate amount which, when added
together with the amount of all the Investments made pursuant to this
clause (15) which at such time have not been repaid through repayments
of loans or advances or other transfers of assets, does not exceed
$15.0 million (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent
changes in value).

"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.

"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred
as to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.

"Principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.

"Pro Forma Cost Savings" means, with respect to any period, the reduction in
costs that were

(1) directly attributable to an asset acquisition and calculated on a basis
that is consistent with Regulation S-X under the Securities Act in
effect and applied as of the Issue Date, or

(2) implemented by the business that was the subject of any such asset
acquisition within six months of the date of the asset acquisition and
that are supportable and quantifiable by the underlying accounting
records of such business,

168

as if, in the case of each of clause (1) and (2), all such reductions in costs
had been effected as of the beginning of such period.

"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.

"Purchase Money Indebtedness" means Indebtedness (including Capital Lease
Obligations) (1) consisting of the deferred purchase price of property,
conditional sale obligations, obligations under any title retention agreement,
other purchase money obligations and obligations in respect of industrial
revenue bonds or similar Indebtedness, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the asset being
financed, and (2) Incurred to finance the acquisition by the Company or a
Restricted Subsidiary of such asset, including additions and improvements;
provided, however, that any Lien arising in connection with any such
Indebtedness shall be limited to the specified asset being financed or, in the
case of real property or fixtures, including additions and improvements, the
real property on which such asset is attached; provided further, however, that
such Indebtedness is Incurred within 180 days after such acquisition of such
assets by the Company or any Restricted Subsidiary.

"Rating Agencies" means Standard and Poor's Ratings Group and Moody's
Investors Service, Inc. or any successor to the respective rating agency
business thereof.

"RCBA" means (1) RCBA Strategic Partners, L.P., (2) BLUM Capital Partners,
L.P. and its successors and (3) any investment fund that is affiliated with
BLUM Capital Partners, L.P. or its successors.

"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced"
and "Refinancing" shall have correlative meanings.

"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Merger
Date or Incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:

(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced;

(2) such Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being Refinanced; and

(3) such Refinancing Indebtedness has an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) that is
equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium
and defeasance costs) under the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Restricted Subsidiary that Refinances Indebtedness of the
Company or (B) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.

"Registration Rights Agreement" means the Registration Rights Agreement
dated May 31, 2001, among the Company, Parent and Credit Suisse First Boston
Corporation.

"Related Business" means any business in which the Company was engaged on
the Merger Date and any business related, ancillary or complementary to any
business of the Company in which the Company was engaged on the Merger Date.

169

"Representative" means with respect to a Person any trustee, agent or
representative (if any) for an issue of Senior Indebtedness of such Person.

"Restricted Payment" with respect to any Person means:

(1) the declaration or payment of any dividends or any other distributions
of any sort in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving such Person) or
similar payment to the direct or indirect holders of its Capital Stock
(other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and dividends or distributions
payable solely to the Company or a Restricted Subsidiary, and other than
pro rata dividends or other distributions made by a Subsidiary that is
not a Wholly Owned Subsidiary to minority stockholders (or owners of an
equivalent interest in the case of a Subsidiary that is an entity other
than a corporation));

(2) the purchase, redemption or other acquisition or retirement for value of
any Capital Stock of the Company held by any Person or of any Capital
Stock of a Restricted Subsidiary held by any Affiliate of the Company
(other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of
the Company that is not Disqualified Stock);

(3) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment
or scheduled sinking fund payment of any Subordinated Obligations of
such Person (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in
each case due within one year of the date of such purchase, repurchase
or other acquisition); or

(4) the making of any Investment (other than a Permitted Investment) in any
Person.

"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.

"Revolving Credit Facility" means the revolving credit facility contained in
the Credit Agreement and any other facility or financing arrangement that
Refinances, in whole or in part, any such revolving credit facility.

"Sale/Leaseback Transaction" means an arrangement relating to property owned
by the Company or a Restricted Subsidiary on the Issue Date or thereafter
acquired by the Company or a Restricted Subsidiary whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended.

"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.

"Senior Indebtedness" means with respect to any Person:

(1) Indebtedness of such Person, whether outstanding on the Issue Date or
thereafter Incurred; and

(2) accrued and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to
such Person whether or not post-filing interest is allowed in such
proceeding) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is
responsible or liable

unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are subordinate or pari passu in right of
payment to

170

the Notes or the Guaranty of such Person, as the case may be; provided,
however, that Senior Indebtedness shall not include:

(1) any obligation of such Person to any Subsidiary;

(2) any liability for Federal, state, local or other taxes owed or owing by
such Person;

(3) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);

(4) any Indebtedness of such Person (and any accrued and unpaid interest in
respect thereof) which is subordinate or junior in any respect to any
other Indebtedness or other obligation of such Person; or

(5) that portion of any Indebtedness which at the time of Incurrence is
Incurred in violation of the Indenture; provided, however, that such
Indebtedness shall be deemed not to have been Incurred in violation of
the Indenture for purposes of this clause (5) if (x) the holders of such
Indebtedness or their representative or the Company shall have furnished
to the Trustee an opinion of recognized independent legal counsel,
unqualified in all material respects, addressed to the Trustee (which
legal counsel may, as to matters of fact, rely upon an Officers'
Certificate) to the effect that the Incurrence of such Indebtedness does
not violate the provisions of the Indenture or (y) such Indebtedness
consists of Bank Indebtedness, and the holders of such Indebtedness or
their agent or representative (1) had no actual knowledge at the time of
the Incurrence that the Incurrence of such Indebtedness violated the
Indenture and (2) shall have received an Officers' Certificate to the
effect that the Incurrence of such Indebtedness does not violate the
provisions of the Indenture.

"Senior Subordinated Indebtedness" means, with respect to a Person, the
Notes (in the case of the Company), the Parent Guaranty (in the case of
Parent), a Subsidiary Guaranty (in the case of a Subsidiary Guarantor) and any
other Indebtedness of such Person that specifically provides that such
Indebtedness is to rank pari passu with the Notes or such Guaranty, as the case
may be, in right of payment and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of such Person which is not
Senior Indebtedness of such Person.

"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

"Subordinated Obligation" means, with respect to a Person, any Indebtedness
of such Person (whether outstanding on the Issue Date or thereafter Incurred)
which is subordinate or junior in right of payment to the Notes or a Guaranty
of such Person, as the case may be, pursuant to a written agreement to that
effect.

"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or
controlled, directly or indirectly, by:

(1) such Person;

(2) such Person and one or more Subsidiaries of such Person; or

(3) one or more Subsidiaries of such Person.

"Subsidiary Guarantor" means each Subsidiary of the Company that executes
the Indenture as a guarantor on the Merger Date and each other Subsidiary of
the Company that thereafter guarantees the Notes pursuant to the terms of the
Indenture.

171

"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Notes.

"Temporary Cash Investments" means any of the following:

(1) any investment in direct obligations of the United States of America or
any agency thereof or obligations guaranteed by the United States of
America or any agency thereof;

(2) investments in time deposit accounts, bankers' acceptances, certificates
of deposit and money market deposits maturing within one year of the
date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any State
thereof or any foreign country recognized by the United States of
America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50.0 million (or the foreign
currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under
the Securities Act) or any money-market fund sponsored by a registered
broker-dealer or mutual fund distributor;

(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above and
clauses (4) and (5) below entered into with a bank meeting the
qualifications described in clause (2) above;

(4) investments in commercial paper, maturing not more than one year from
the date of creation thereof, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of
the United States of America or any foreign country recognized by the
United States of America with a rating at the time as of which any
investment therein is made of "P-l"(or higher) according to Moody's
Investors Service, Inc. or "A-l" (or higher) according to Standard and
Poor's Ratings Group;

(5) investments in securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least
"A" by Standard & Poor's Ratings Group or "A" by Moody's Investors
Service, Inc.; and

(6) other short-term investments utilized by Foreign Restricted Subsidiaries
in accordance with normal investment practices for cash management in
investments of a type analogous to the foregoing.

"Term Loan Facility" means the term loan facilities contained in the Credit
Agreement and any other facilities or financing arrangements that Refinance in
whole or in part any such term loan facilities.

"Transactions" shall mean, collectively, the following transactions to occur
on or prior to the Merger Date: (a) the consummation of the Merger, (b) the
execution and delivery of the Credit Agreement and the initial borrowings
thereunder, (c) the execution and delivery of the Indenture relating to the
Parent Senior Notes and the issuance of the Parent Senior Notes, (d) the
closing of the tender offer for and the receipt of the requisite consents in
connection with the consent solicitation in respect of CB Richard Ellis
Services' existing 8 7/8% Senior Subordinated Notes Due 2006, (e) the Cash
Equity Contribution and (f) the payment of all fees and expenses then due and
owing that are required to be paid on or prior to the Merger Date in connection
with the offering of the Notes.

"Unrestricted Subsidiary" means:

(1) any Subsidiary of the Company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

172

The Board of Directors may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments."

The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (A) the Company could Incur $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Indebtedness" and (B) no Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.

"U.S. Dollar Equivalent" means with respect to any monetary amount in a
currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase of U.S.
dollars with the applicable foreign currency as published in The Wall Street
Journal in the "Exchange Rates" column under the heading "Currency Trading" on
the date two Business Days prior to such determination.

Except as described under "--Certain Covenants--Limitation on Indebtedness,"
whenever it is necessary to determine whether the Company has complied with any
covenant in the Indenture or a Default has occurred and an amount is expressed
in a currency other than u.s. dollars, such amount will be treated as the U.S.
Dollar Equivalent determined as of the date such amount is initially determined
in such currency.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.

"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Subsidiaries.

173

BOOK ENTRY; DELIVERY AND FORM

Book-Entry Procedures for the Global Notes

The exchange notes will initially be represented in the form of one or more
global notes in definitive, fully-registered book-entry form, without interest
coupons that will be deposited with or on behalf of The Depository Trust
Company, or DTC, and registered in the name of DTC or its participants.

Except as set forth below, the global notes may be transferred, in whole and
not in part, solely to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the global notes may not be exchanged for
notes in physical, certificated form except in the limited circumstances
described below.

The descriptions of the operations and procedures of DTC set forth below are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the settlement system of DTC and are subject to
change by DTC from time to time. We take no responsibility for these operations
or procedures, and investors are urged to contact DTC or its participants
directly to discuss these matters.

DTC has advised us that it is:

. a limited purpose trust company organized under the laws of the State of
New York;

. a "banking organization" within the meaning of the New York Banking Law;

. a member of the Federal Reserve System;

. a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and

. a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.

DTC was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants,
which eliminates the need for physical transfer and delivery of certificates.
DTC's participants include securities brokers and dealers; banks and trust
companies; clearing corporations and specified other organizations. Indirect
access to DTC's system is also available to other entities such as banks,
brokers, dealers, and trust companies; these indirect participants clear
through or maintain a custodial relationship with a participant, either
directly or indirectly. Investors who are not participants may beneficially own
securities held by or on behalf of DTC only through participants or indirect
participants.

So long as DTC or its nominee is the registered owner of a global note, DTC
or the nominee, as the case may be, will be considered the sole owner or holder
of the notes represented by the global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note:

. will not be entitled to have notes represented by the global notes
registered in their names;

. will not receive or be entitled to receive physical delivery of
certificated notes; and

. will not be considered the owners or holders of the notes under the
indenture for any purpose, including with respect to the giving of any
direction, instruction or approval to the trustee under the indenture.

Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedure of DTC and, if the holder is not a participant or an
indirect participant, on the procedures of the participant through which the
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or the global note. We understand that under existing industry
practice, if we request any action of holders of notes or a holder that is an
owner of a beneficial interest in a global note desires to take any action that
DTC, as the holder of the global note, is entitled to take, then DTC would
authorize the participants to take the action and the participants would
authorize holders owning through participants to take the action or would
otherwise act upon the instruction of

174

the holders. Neither we nor the trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of notes by DTC, or for maintaining, supervising or reviewing any records of
DTC relating to the notes.

Payment with respect to the principal of, any premium, any liquidated
damages, and interest on any notes represented by a global note registered in
the name of DTC or its nominee on the applicable record date will be payable by
the trustee to or at the direction of DTC or its nominee, in its capacity as
the registered holder of the global note representing the notes under the
indenture. Under the terms of the indenture, we and the trustee may treat the
persons in whose names the notes, including the global notes, are registered as
the owners of the notes for the purpose of receiving payment on the notes and
for any and all other purposes whatsoever. Accordingly, neither we nor the
trustee has or will have any responsibility or liability for the payment of
amounts to owners of beneficial interests in a global note, including
principal, any premium, any liquidated damages, and interest. Payments by the
participants and the indirect participants to the owners of beneficial
interests in a global note will be governed by standing instructions and
customary industry practice and will be the responsibility of the participants
or the indirect participants and DTC.

Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.

Although DTC has agreed to the above procedures to facilitate transfers of
interests in the global notes among its participants, it is under no obligation
to perform or to continue to perform the procedures, and the procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.

Certificated Notes

If:

. we notify the trustee in writing that DTC is no longer willing or able
to act as a depository or DTC ceases to be registered as a clearing
agency under the Securities Exchange Act of 1934 and a successor
depository is not appointed within 90 days of the notice or cessation;

. we, at our option, notify the trustee in writing that we elect to cause
the issuance of notes in definitive form under the indenture; or

. upon the occurrence of specified other events as provided in the
indenture;

then, certificated notes will be issued to each person that DTC identifies as
the beneficial owner of the notes represented by the global notes upon
surrender by DTC of the global notes. Upon the issuance of certificated notes,
the trustee is required to register certificated notes in the name of that
person or persons, or their nominee, and cause the certified notes to be
delivered to those persons.

Neither we nor the trustee will be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related notes and each of those persons may conclusively rely on, and will be
protected in relying on, instructions from DTC for all purposes, including with
respect to the registration and delivery, and the respective principal amounts,
of the notes to be issued.

175

DESCRIPTION OF OTHER INDEBTEDNESS

In connection with the merger, CBRE Holding issued 16% senior notes due on
July 20, 2011 described below and CB Richard Ellis Services entered into a new
senior secured credit agreement described below.

16% Senior Notes Due July 20, 2011

In connection with the merger, CBRE Holding issued to DLJ Investment
Funding, Inc. and other purchasers an aggregate of 65,000 units, which
consisted in the aggregate of $65.0 million in aggregate principal amount of
16% senior notes due July 20, 2011 and 339,820 shares of CBRE Holding Class A
common stock. The senior notes are unsecured obligations, senior to all of CBRE
Holding's current and future unsecured indebtedness, but are effectively
subordinated to all current and future indebtedness of CB Richard Ellis
Services. The net proceeds from the units were contributed to CB Richard Ellis
Services as equity. The senior notes are governed by an indenture between CBRE
Holding and State Street Bank and Trust Company of California, N.A., as
trustee, and will mature on July 20, 2011.

Interest accrues on the senior notes at a rate of 16% per year and is
payable quarterly in cash in arrears. However, until the fifth anniversary of
the issuance of the senior notes, interest in excess of 12% for the senior
notes may be paid in kind, and at any time, interest may be paid in kind to the
extent that CB Richard Ellis Services' ability to pay us cash dividends is
restricted by the terms of its senior secured credit facilities, which are
described below. There are no mandatory sinking fund payments for the senior
notes.

The senior notes are redeemable at the option of CBRE Holding, in whole at
any time or in part from time to time, upon not less than 30 nor more than 60
days' notice. The redemption price, expressed as a percentage of the principal
amount, will be as set forth in the table below, plus accrued and unpaid
interest, if redeemed during the twelve-month period commencing on the
anniversary of the issue date of these notes of the year below:

Year Percentage
---- ----------

2001................................... 116.0%
2002................................... 112.8
2003................................... 109.6
2004................................... 106.4
2005................................... 103.2
2006 and thereafter.................... 100.0

In the event of a change of control, which is defined in the indenture, CBRE
Holding is obligated to make an offer to purchase all outstanding senior notes
at a purchase price equal to 101% of the principal amount of the senior notes,
plus accrued and unpaid interest, subject to various conditions.

The indenture governing the senior notes contains customary restrictive
covenants for high yield securities, including, among others, limitations on
the following activities by CBRE Holding and its subsidiaries, including CB
Richard Ellis Services:

. payments of dividends or distributions to stockholders or the repurchase
of equity or debt that is junior to the senior notes;

. indebtedness and issuance of subsidiary equity;

. consolidation or merger;

. transactions with affiliates;

. liens; and

. disposition of assets.

176

The holders of the senior notes have registration rights with respect to the
senior notes. As a result, CBRE Holding has filed a registration statement with
respect to an offer to exchange the outstanding senior notes for senior notes
that have been registered under the Securities Act of 1933.

This summary of the material provisions of CBRE Holding's senior notes is
qualified in its entirety by reference to all of the provisions of the
indenture governing the senior notes, which has been filed as an exhibit to the
registration statement of which this prospectus forms a part. See "Where You
Can Find Additional Information About Us."

CB Richard Ellis Services' Senior Secured Credit Facilities

In connection with the merger and related transactions, CB Richard Ellis
Services entered into a credit agreement for which Credit Suisse First Boston,
or CSFB, serves as the administrative and collateral agent, the bookrunner and
the lead arranger. The senior secured credit facilities consist of the
following:

. Tranche A term facility of $50.0 million;

. Tranche B term facility of $185.0 million; and

. a revolving line of credit of $90.0 million, including revolving credit
loans, letters of credit and a swingline loan subfacility.

The senior secured credit facilities are jointly and severally guaranteed by
CBRE Holding and certain of CB Richard Ellis Services' subsidiaries, including
future domestic subsidiaries. The lenders also received a pledge of all of the
equity interests of CB Richard Ellis Services and its significant domestic
subsidiaries, including CB Richard Ellis, Inc., CBRE Investors, L.L.C. and L.J.
Melody & Company, and 65% of the voting stock of CB Richard Ellis Services'
foreign subsidiaries that are held directly by it or its domestic subsidiaries.
Additionally, these lenders generally have a lien on substantially all of CB
Richard Ellis Services' accounts receivables, cash, general intangibles,
investment property and future acquired material property.

The Tranche A term facility matures on July 20, 2007 and amortizes in equal
quarterly installments in the following annual amounts: $7.5 million in years
one and two and $8.75 million thereafter. The Tranche B term facility matures
on July 20, 2008 and amortizes in equal quarterly installments in an annual
amount equal to 1% of the outstanding principal amount of $185.0 million on the
closing date, with the balance payable on the maturity date. The revolving line
of credit terminates on July 20, 2007.

Borrowings under the senior secured credit facilities bear interest at
varying rates based, at CB Richard Ellis Services' option, on either LIBOR plus
3.25% or the alternate base rate plus 2.25%, in the case of Tranche A and the
revolving facility, and LIBOR plus 3.75% or the alternate base rate plus 2.75%,
in the case of Tranche B. The alternate base rate is the higher of (1) CSFB's
prime rate or (2) the effective rate for federal funds plus one-half of one
percent. After delivery of CB Richard Ellis Services' consolidated financial
statements for the year ended December 31, 2001, the amount added to the LIBOR
or the alternate base rate under the Tranche A and revolving facility will
vary, from 2.50% to 3.25% for the LIBOR and from 1.50% to 2.25% for the
alternate base rate, as determined by reference to our ratios of total debt
less available cash to EBITDA.

CB Richard Ellis Services is required to pay to the lenders under the senior
secured credit facilities a commitment fee on the average unused portion of the
revolving credit facility and a letter of credit fee on each letter of credit
outstanding. CB Richard Ellis Services also is required to apply proceeds of
sales of assets, issuances of equity, incurrences of debt and excess cash flow
to the prepayment of the term loans, subject to limited exceptions, as well as
excess cash flow to the lenders under the senior secured credit facilities.

177

The credit agreement for the senior secured credit facilities contains
customary restrictive covenants for a credit agreement, including, among
others, limitations on the following activities by CBRE Holding, CB Richard
Ellis Services and CB Richard Ellis Services' subsidiaries:

. dividends on, and redemptions and repurchases of, capital stock;

. prepayments, redemptions and repurchases of debt;

. liens and sale-leaseback transactions;

. loans and investments;

. indebtedness;

. mergers, acquisitions and asset sales;

. transactions with affiliates;

. changes in lines of business; and

. capital expenditures.

In addition, the credit agreement contains covenants that require CB Richard
Ellis Services to maintain specified financial ratios, including the following
ratios:

. total debt less available cash to EBITDA;

. total senior debt less the outstanding principal amount of the 11 1/4%
senior subordinated notes and less available cash to EBITDA;

. EBITDA to interest expense plus expense associated with dividends paid
to CBRE Holding to pay amounts due under the 16% senior notes due 2011;
and

. adjusted EBITDA to interest expense plus expense associated with
dividends paid to CBRE Holding to pay amounts due under the 16% senior
notes due 2011.

The credit agreement also includes events of default that are typical for
senior credit facilities and appropriate in the context of the merger and
related transactions, including nonpayment of principal, interest, fees or
reimbursement obligations with respect to letters of credit, violation of
covenants, inaccuracy of representations and warranties in any material
respect, cross default and cross-acceleration to certain other indebtedness and
agreements, bankruptcy and insolvency events, material judgments and
liabilities, defaults or judgments under ERISA and change of control. The
occurrence of any of the events of default could result in acceleration of our
obligations under the credit agreement and foreclosure on the collateral
securing the obligations, which could have material adverse results to holders
of the exchange and outstanding notes.

This summary of the material provisions of the new credit agreement is
qualified in its entirety by reference to all of the provisions of the credit
agreement, which has been filed as an exhibit to the registration statement of
which this prospectus forms a part. See "Where You Can Find Additional
Information About Us."

178

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain U.S. federal income tax consequences
of participation in the exchange offer and of the ownership and disposition of
exchange notes as of the date of this prospectus. Except where noted, this
summary deals only with exchange notes that are held as capital assets and does
not deal with taxpayers subject to special treatment under the U.S. federal
income tax laws, including if you are one of the following:

. a dealer in securities or currencies;

. a financial institution;

. an insurance company;

. a tax exempt organization;

. a person holding exchange notes as part of a hedging, integrated or
conversion transaction, constructive sale or straddle;

. a trader in securities that has elected the mark-to-market method of
accounting for your securities;

. a person liable for alternative minimum tax; or

. a United States person whose "functional currency" is not the U.S.
dollar.

If a partnership holds exchange notes, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding exchange notes, you
should consult your own tax advisors.

The discussion below is based upon the provisions of the Internal Revenue
Code of 1986 and regulations, rulings and judicial decisions as of the date of
this prospectus. Those authorities may be changed, perhaps retroactively, so as
to result in U.S. federal income tax consequences different from those
discussed below.

If you are considering the acquisition of exchange notes, you should consult
your own tax advisors concerning the federal income tax consequences to you and
any consequences arising under the laws of any other taxing jurisdiction.

Consequences of the Exchange

The exchange of the outstanding notes for the exchange notes in the exchange
offer will not constitute a taxable event to you. As a result:

. you will not realize any gain or loss upon receipt of an exchange note;

. the holding period of the exchange note will include the holding period
of the outstanding note exchanged for the exchange note; and

. the adjusted basis of the exchange note will be the same as the adjusted
tax basis of the outstanding note exchanged for the exchange note
immediately before the exchange.

Consequences to U.S. Holders

The following is a summary of certain U.S. federal tax consequences that
will apply to you if you are a U.S. holder of exchange notes.

"U.S. holder" means a beneficial owner of an exchange note that is:

. a citizen or resident of the United States;

179

. a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision of the United States;

. an estate the income of which is subject to U.S. federal income taxation
regardless of its source;

. a trust that (1) is subject to the primary supervision of a court within
the United States and the control of one or more United States persons
or (2) has a valid election in effect under applicable United States
Treasury regulations to be treated as a United States person.

A "non-U.S. holder" is a beneficial owner of an exchange note that is not a
U.S. holder. The material consequences to non-U.S. holders with respect to the
exchange notes are described under "Consequences to Non-U.S. Holders" below.

Payments of Interest

Except as set forth below, interest on an exchange note will generally be
taxable to you as ordinary income at the time it is paid or accrued in
accordance with your method of accounting for tax purposes.

Market Discount

If you purchased an outstanding note for an amount that is less than its
stated redemption price at maturity, the amount of the difference will be
treated as "market discount" for U.S. federal income tax purposes, unless that
difference is less than a specified de minimis amount. Under the market
discount rules, you will be required to treat any payment, other than qualified
stated interest, on, or any gain on the sale, exchange, retirement or other
disposition of, an exchange note as ordinary income to the extent of the market
discount that you have not previously included in income and are treated as
having accrued on the exchange note at the time of its payment or disposition.
In addition, you may be required to defer, until the maturity of the exchange
note or its earlier disposition in a taxable transaction, the deduction of all
or a portion of the interest expense on any indebtedness attributable to the
exchange note.

Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the exchange note, unless
you elect to accrue on a constant interest method. You may elect to include
market discount in income currently as it accrues, on either a ratable or
constant interest method, in which case the rule described above regarding
deferral of interest deductions will not apply. Your election to include market
discount in income currently, once made, applies to all market discount
obligations acquired by you on or after the first taxable year to which your
election applies and may not be revoked without the consent of the IRS. You
should consult your own tax advisor before making this election.

Amortizable Premium

If you purchased an outstanding note for an amount in excess of the sum of
all amounts payable on the note after the purchase date, other than qualified
stated interest, you will be considered to have purchased the outstanding note
at a "premium." You generally may elect to amortize the premium over the
remaining term of the exchange note on a constant yield method as an offset to
interest when includible in income under your regular accounting method.
Because the exchange notes are subject to redemption at the option of CB
Richard Ellis Services on or after June 15, 2006, premium on the exchange notes
will be calculated by assuming that CB Richard Ellis Services will exercise its
option in a manner that maximizes your yield. If you do not elect to amortize
premium, that premium will decrease the gain or increase the loss you would
otherwise recognize on disposition of the exchange note. Your election to
amortize premium on a constant yield method will also apply to all debt
obligations held or subsequently acquired by you on or after the first day of
the first taxable year to which the election applies. You may not revoke the
election without the consent of the IRS. You should consult your own tax
advisor before making this election.

180

Sale, Exchange and Retirement of Exchange Notes

When you sell, exchange, retire or otherwise dispose of an exchange note,
you will recognize gain or loss equal to the difference between the amount you
realize upon the sale, exchange, retirement or other disposition (less an
amount equal to any accrued qualified stated interest that you did not
previously include in income, which will be taxable as such) and the adjusted
tax basis of the exchange note. Except as described above with respect to
market discount, that gain or loss will be capital gain or loss. Capital gains
of individuals derived in respect of capital assets held for more than one year
are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.

Consequences to Non-U.S. Holders

The following is a summary of certain U.S. federal income tax consequences
that will apply to you if you are a non-U.S. holder of exchange notes. This
summary does not represent a detailed description of the federal tax
consequences to you in light of your particular circumstances. In addition, it
does not deal with non-U.S. holders that are subject to special treatment under
the U.S. federal income tax laws, including if you are a United States
expatriate, a controlled foreign corporation, a passive foreign investment
company, a foreign personal holding company or a corporation that accumulates
earnings to avoid federal income tax.

U.S. Federal Withholding Tax

The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest on the exchange notes provided that:

. you do not actually, or constructively, own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and applicable U.S. Treasury regulations;

. you are not a controlled foreign corporation that is related to us
through stock ownership;

. you are not a bank whose receipt of interest on the exchange notes is
described in section 881(c)(3)(A) of the Code; and

. (a) you provide your name and address on an Internal Revenue Service
Form W-8BEN or successor form, and certify, under penalty of perjury,
that you are not a United States person or (b) you hold the exchange
notes through certain foreign intermediaries or certain foreign
partnerships, and the certification requirements of applicable U.S.
Treasury regulations are satisfied; special certification rules apply to
certain non-U.S. holders that are entities rather than individuals.

If you cannot satisfy the requirements described above, payments of interest
made to you will be subject to U.S. federal withholding tax, unless you provide
us with a properly executed (1) Internal Revenue Service Form W-8BEN or
successor form claiming an exemption from, or reduction in, withholding under
the benefit of an applicable tax treaty or (2) Internal Revenue Service Form
W-8ECI or successor form stating that interest paid on an exchange note is not
subject to withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.

The 30% U.S. federal withholding tax generally will not apply to any gain
that you realize on the sale, exchange, retirement or other disposition of an
exchange note.

U.S. Federal Estate Tax

Your estate will not be subject to U.S. federal estate tax on exchange notes
beneficially owned by you at the time of your death, provided that you are not
a United States citizen or resident, as specially defined for U.S. federal
estate tax purposes, and (1) you do not own 10% or more of the total combined
voting power of all classes of our voting stock, within the meaning of the Code
and the U.S. Treasury regulations, and (2) interest on

181

the exchange notes would not have been, if received at the time of your death,
effectively connected with the conduct by you of a trade or business in the
United States.

U.S. Federal Income Tax

If you are engaged in a trade or business in the United States and interest
on the exchange notes is effectively connected with the conduct of that trade
or business, you will be subject to U.S. federal income tax on that interest on
a net income basis in the same manner as if you were a United States person as
defined under the Code. In addition, if you are a foreign corporation, you may
be subject to a branch profits tax equal to 30%, or lower applicable treaty
rate, of your earnings and profits for the taxable year, subject to certain
adjustments. For this purpose, interest on the exchange notes will be included
in earnings and profits.

Any gain realized on the disposition of an exchange note generally will not
be subject to U.S. federal income tax unless:

. the gain is effectively connected with the conduct by you of a trade or
business in the United States; or

. you are an individual who is present in the United states for 183 days
or more in the taxable year of that disposition, and other conditions
are met.

Information Reporting and Backup Withholding

In general, you will not be subject to backup withholding or information
reporting with respect to payments that we make to you provided that we do not
have actual knowledge or reason to know that you are a United States person and
we have received from you the statement described above under "Consequences to
Non-U.S. Holders--U.S. Federal Withholding Tax," or you otherwise qualify for
an exemption.

In addition, you will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale of an exchange note within
the United States or conducted through U.S.-related financial intermediaries,
if the payor receives the statement described above and does not have actual
knowledge or reason to know that you are a United States person, as defined
under the Code, or you otherwise qualify for an exemption.

Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the Internal Revenue Service.

182

PLAN OF DISTRIBUTION

Each broker-dealer that receives exchange notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of exchange notes received in exchange for outstanding
notes where the outstanding notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period of
180 days after the day the registered exchange offer expires, we will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any resale.

We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own
accounts pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of these
methods of resale, at market prices prevailing at the time of resale, at prices
related to the prevailing market prices or negotiated prices. Any resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer
or the purchasers of any exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
the exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any resale of exchange notes and any
commissions or concessions received by these persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

For a period of 180 days after the day the registered exchange offer
expires, we will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
the documents in the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer, including the expenses of one counsel for the
holders of the outstanding notes, other than commissions or concessions of any
brokers or dealers and will indemnify the holders of outstanding notes,
including any broker-dealers, against certain liabilities, including
liabilities under the Securities Act.

183

LEGAL MATTERS

The validity of the exchange notes and the guarantees will be passed upon
for us Simpson Thacher & Bartlett, Palo Alto, California.

EXPERTS

The consolidated financial statements and schedule of CB Richard Ellis
Services, Inc. as of December 31, 2000 and 1999 and for each of the three years
in the period ended December 31, 2000 and the consolidated financial statements
of CBRE Holding, Inc. as of June 30, 2001 and February 20, 2001 and for the
period from February 20, 2001 (Inception) to June 30, 2001 included in this
prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports appearing herein.

WHERE YOU CAN FIND MORE INFORMATION

We and the guarantors have filed with the Securities and Exchange Commission
a registration statement on Form S-4, which includes amendments, exhibits,
schedules and supplements, under the Securities Act of 1933 and the rules and
regulations under the Securities Act, for the registration of the exchange
notes and offered by this prospectus and the guarantees of the exchange notes.
Although this prospectus, which forms a part of the registration statement,
contains all material information included in the registration statement, parts
of the registration statement have been omitted from this prospectus as
permitted by the rules and regulations of the SEC. For further information with
respect to us and the guarantors and the exchange notes offered by this
prospectus, please refer to the registration statement.

Both CBRE Holding and CB Richard Ellis Services are currently subject to the
information requirements of the Securities Exchange Act of 1934. Accordingly,
each company files reports and other information with the SEC, unless and until
it obtains an exemption from the requirement to do so. The registration
statements and other reports or information can be inspected, and copies may be
obtained, at the Public Reference Room of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates, and at the regional public
reference facility maintained by the SEC located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Information on the
operation of the Public Reference Room of the SEC may be obtained by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a website at
http://www.sec.gov that contains reports, proxy and information statements and
other information that CBRE Holding and CB Richard Ellis Services have filed
electronically with the SEC.

Furthermore, we have agreed that, even if we are not required to file
periodic reports and other information with the SEC, for so long as any of the
notes remain outstanding we will furnish to you and the trustee for the
exchange notes the information that would be required to be furnished by us
under Sections 13 and 15(d) of the Exchange Act.

The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information by referring
to another document filed separately with the SEC. The information incorporated
by reference is considered to be part of this prospectus and later information
filed with the SEC will update and supersede the information in this
prospectus.

184

We incorporate by reference into this prospectus each document we file under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the expiration of the exchange offer. We also incorporate
by reference into this prospectus the following documents filed by us with the
SEC under the Exchange Act:

. our Annual Report on Form 10-K for the year ended December 31, 2000 filed
April 2, 2001;

. our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2001
filed May 15, 2001, as amended July 3, 2001, and June 30, 2001 filed
August 14, 2001; and

. our Current Reports on Form 8-K filed January 24, 2001, February 21, 2001,
February 27, 2001, March 21, 2001, May 3, 2001, May 23, 2001, June 7,
2001, July 5, 2001 and August 3, 2001.

We undertake to provide without charge to each person to whom a copy of this
prospectus has been delivered, upon request, a copy of any or all of the
documents incorporated by reference herein in this prospectus other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into the information that this prospectus incorporates. Requests
for copies should be directed to CB Richard Ellis Services, Inc., 505
Montgomery Street, Sixth Floor, San Francisco, California 94111, Attention:
Walter Stafford, Secretary.

If you would like to request documents from us, please make sure your
request is received before November 12, 2001 in order to receive the documents
before the expiration of the exchange offer.

185

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

Page
----

CB Richard Ellis Services, Inc.:

Consolidated Balance Sheets as of June 30, 2001 (Unaudited) and December 31, 2000................... F-2

Consolidated Statements of Operations for the three months and the six months ended June 30, 2001
and 2000 (Unaudited).............................................................................. F-3

Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2000
(Unaudited)....................................................................................... F-4

Notes to Consolidated Financial Statements (Unaudited).............................................. F-5

Report of Independent Public Accountants............................................................ F-19

Consolidated Balance Sheets as of December 31, 2000 and 1999........................................ F-20

Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998.......... F-21

Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.......... F-22

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and
1998.............................................................................................. F-23

Consolidated Statements of Comprehensive Income for the years ended December 31, 2000, 1999
and 1998.......................................................................................... F-24

Notes to Consolidated Financial Statements.......................................................... F-25

Quarterly Results of Operations and Other Financial Data (Unaudited)................................ F-57

CBRE Holding, Inc.:

Report of Independent Public Accountants............................................................ F-58

Consolidated Balance Sheets as of June 30, 2001 and February 20, 2001............................... F-59

Consolidated Statements of Operations for the three months ended June 30, 2001 (Unaudited) and for
the period from February 20, 2001 (inception) to June 30, 2001.................................... F-60

Consolidated Statement of Cash Flows for the period from February 20, 2001 (inception) to June 30,
2001.............................................................................................. F-61

Consolidated Statement of Stockholders' Equity for the period from February 20, 2001 (inception) to
June 30, 2001..................................................................................... F-62

Notes to Consolidated Financial Statements.......................................................... F-63

Report of Independent Public Accountants............................................................ F-68

Consolidated Balance Sheet as of February 20, 2001.................................................. F-69

Notes to Consolidated Balance Sheet................................................................. F-70

F-1

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share data)

June 30, December 31,
2001 2000
----------- ------------
(Unaudited)

ASSETS
------

Current Assets:
Cash and cash equivalents.......................................................................... $ 18,548 $ 20,854
Receivables, less allowance for doubtful accounts of $11,993 and $12,631 at June 30, 2001 and
December 31, 2000................................................................................. 149,811 176,908
Prepaid expenses................................................................................... 9,693 8,017
Deferred taxes, net................................................................................ 13,023 11,139
Other current assets............................................................................... 9,132 6,127
-------- --------
Total current assets............................................................................ 200,207 223,045
Property and equipment, net........................................................................... 77,590 75,992
Goodwill, net of accumulated amortization of $63,726 and $56,417 at June 30, 2001 and December 31,
2000................................................................................................. 412,379 423,975
Other intangible assets, net of accumulated amortization of $293,670 and $289,038 at June 30, 2001 and
December 31, 2000.................................................................................... 42,526 46,432
Cash surrender value of insurance policies, deferred compensation plan................................ 69,508 53,203
Investment in and advances to unconsolidated subsidiaries............................................. 43,064 41,325
Deferred taxes, net................................................................................... 35,305 32,327
Prepaid pension costs................................................................................. 24,089 25,235
Other assets.......................................................................................... 42,131 41,571
-------- --------
Total assets.................................................................................... $946,799 $963,105
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
Accounts payable and accrued expenses.............................................................. $ 68,929 $ 83,673
Compensation and employee benefits payable......................................................... 64,291 79,801
Accrued bonus and profit sharing................................................................... 31,049 107,878
Income taxes payable............................................................................... 6,377 28,260
Short-term borrowings.............................................................................. 12,017 9,215
Current maturities of long-term debt............................................................... 1,129 1,378
-------- --------
Total current liabilities....................................................................... 183,792 310,205
Long-term debt:
Senior subordinated notes, less unamortized discount of $1,542 and $1,664 at June 30, 2001 and
December 31, 2000................................................................................. 173,458 173,336
Revolving credit facility.......................................................................... 225,000 110,000
Other long-term debt............................................................................... 18,014 20,235
-------- --------
Total long-term debt............................................................................ 416,472 303,571
Deferred compensation liability....................................................................... 87,680 80,503
Other liabilities..................................................................................... 28,407 29,739
-------- --------
Total liabilities............................................................................... 716,351 724,018
Minority interest..................................................................................... 2,817 3,748

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $0.01 par value; 8,000,000 shares authorized; no shares issued or outstanding..... -- --
Common stock, $0.01 par value; 100,000,000 shares authorized; 20,732,049 and 20,605,023 shares
outstanding at June 30, 2001 and December 31, 2000................................................ 218 217
Additional paid-in capital......................................................................... 367,685 364,168
Notes receivable from sale of stock................................................................ (11,636) (11,847)
Accumulated deficit................................................................................ (93,464) (89,097)
Accumulated other comprehensive loss............................................................... (19,328) (12,258)
Treasury stock at cost, 1,072,155 shares at June 30, 2001 and December 31, 2000.................... (15,844) (15,844)
-------- --------
Total stockholders' equity...................................................................... 227,631 235,339
-------- --------
Total liabilities and stockholders' equity...................................................... $946,799 $963,105
======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-2

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except share and per share data)

Three Months Ended June
30 Six Months Ended June 30
------------------------ ------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------

Revenue:
Leases............................................. $ 112,980 $ 140,451 $ 216,146 $ 240,204
Sales.............................................. 72,693 85,673 146,536 159,954
Property and facilities management fees............ 28,501 25,640 56,373 50,925
Consulting and referral fees....................... 17,970 19,515 34,337 35,829
Appraisal fees..................................... 19,709 19,082 38,545 35,366
Loan origination and servicing fees................ 16,124 13,777 30,936 23,040
Investment management fees......................... 11,705 9,818 20,254 17,155
Other.............................................. 5,167 3,928 14,220 16,330
----------- ----------- ----------- -----------
Total revenue.................................. 284,849 317,884 557,347 578,803

Costs and Expenses:
Commissions, fees and other incentives............. 134,805 153,852 259,203 267,815
Operating, administrative and other................ 129,535 130,756 263,614 257,904
Depreciation and amortization...................... 11,446 10,731 23,142 21,300
Merger-related and other nonrecurring
charges.......................................... 5,608 -- 5,608 --
----------- ----------- ----------- -----------
Operating income...................................... 3,455 22,545 5,780 31,784
Interest income....................................... 692 92 1,492 581
Interest expense...................................... 9,358 10,985 18,413 20,670
----------- ----------- ----------- -----------
(Loss) income before (benefit) provision for
income tax.......................................... (5,211) 11,652 (11,141) 11,695
(Benefit) provision for income tax.................... (3,690) 6,175 (6,774) 6,198
----------- ----------- ----------- -----------
Net (loss) income..................................... $ (1,521) $ 5,477 $ (4,367) $ 5,497
=========== =========== =========== ===========
Basic (loss) earnings per share....................... $ (0.07) $ 0.26 $ (0.20) $ 0.26
=========== =========== =========== ===========
Weighted average shares outstanding for basic
(loss) earnings per share........................... 21,328,247 20,879,218 21,318,949 20,849,244
=========== =========== =========== ===========
Diluted (loss) earnings per share..................... $ (0.07) $ 0.26 $ (0.20) $ 0.26
=========== =========== =========== ===========
Weighted average shares outstanding for diluted (loss)
earnings per share.................................. 21,328,247 20,906,117 21,318,949 20,879,026
=========== =========== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-3

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

Six Months Ended
June 30
-------------------
2001 2000
--------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income.................................................................... $ (4,367) $ 5,497
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization excluding deferred financing costs................. 23,142 21,300
Gain on sale of properties, businesses and servicing rights...................... (9,728) (5,027)
Deferred compensation deferrals.................................................. 15,127 13,999
Decrease in receivables.............................................................. 20,254 20,661
Increase in cash surrender value of insurance policies, deferred compensation plan... (16,305) (17,240)
Decrease in compensation and employee benefits payable and accrued bonus and
profit sharing..................................................................... (89,893) (62,448)
Decrease in accounts payable and accrued expenses.................................... (13,393) (16,644)
Decrease in income taxes payable..................................................... (25,695) (10,245)
Decrease in other liabilities........................................................ (6,732) (1,005)
Other................................................................................ 336 135
--------- --------
Net cash used in operating activities............................................ (107,254) (51,017)
--------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................................................. (14,628) (11,451)
Proceeds from sale of properties, businesses and servicing rights.................... 9,191 11,601
Purchase of investments.............................................................. (5,484) (11,311)
Other investing activities, net...................................................... 353 (956)
--------- --------
Net cash used in investing activities............................................ (10,568) (12,117)
--------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility.............................................. 185,000 134,000
Repayment of revolving credit facility............................................... (70,000) (72,000)
Proceeds from (repayment of) senior notes and other loans, net....................... 1,315 (3,499)
Other financing activities, net...................................................... 602 (3,163)
--------- --------
Net cash provided by financing activities........................................ 116,917 55,338
--------- --------
Net decrease in cash and cash equivalents............................................... (905) (7,796)
Cash and cash equivalents, at beginning of period....................................... 20,854 27,844
Effect of exchange rate changes on cash................................................. (1,401) (853)
--------- --------
Cash and cash equivalents, at end of period............................................. $ 18,548 $ 19,195
========= ========

SUPPLEMENTAL DATA:
Cash paid during the period for:.....................................................
Interest (none capitalized)...................................................... $ 17,202 $ 21,501
Income taxes, net................................................................ $ 18,719 $ 15,441

The accompanying notes are an integral part of these consolidated financial
statements.

F-4

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Organization

CB Richard Ellis Services, Inc. (the Company) is a holding company that
conducts its worldwide operations through approximately 75 direct and indirect
subsidiaries. Approximately 76.8% of the Company's revenues are from the United
States (US) and 23.2% from the rest of the world. Effective July 20, 2001, the
Company was acquired by CBRE Holding, Inc. (CB Holding) pursuant to an Amended
and Restated Agreement and Plan of Merger with CB Holding and Blum CB
Corporation, a wholly owned subsidiary of CB Holding. CB Holding is controlled
by an affiliate of the Company's director Richard Blum. Additionally, other
directors of the Company and certain of the Company's senior officers
collectively have a significant interest in CB Holding. The merger was approved
by the Company's stockholders on July 18, 2001.

2. Basis of Preparation

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and include all
information and footnotes required for interim financial statement
presentation. In the Company's opinion, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. The preparation of financial statements in conformity with accounting
principles generally accepted in the US requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting periods. Actual results could differ materially from those estimates.
All significant intercompany transactions and balances have been eliminated and
certain reclassifications have been made to prior periods' consolidated
financial statements to conform to current period presentation. The results of
operations for the six months ended June 30, 2001 are not necessarily
indicative of the results of operations to be expected for the year ending
December 31, 2001.

The consolidated financial statements and notes to the consolidated
financial statements, along with management's discussion and analysis of
financial condition, results of operations, liquidity and capital resources
should be read in conjunction with the Company's recent filing on Form 10-K,
which contains the latest available audited consolidated financial statements
and notes thereto, as of and for the period ended December 31, 2000.

3. Investments in and Advances to Unconsolidated Subsidiaries

Condensed Statement of Operations (unaudited) for the unconsolidated
subsidiaries accounted for using the equity method is as follows (in
thousands):

Three Months Ended Six Months Ended
June 30 June 30
----------------- -----------------
2001 2000 2001 2000
------- ------- -------- --------

Revenues.............. $66,380 $60,800 $136,029 $109,295
Income from operations 10,187 5,584 22,876 18,803
Net (loss) income..... (15) (599) 7,831 8,358

4. Debt

At June 30, 2001, the Company had a revolving credit facility of $270.0
million and outstanding Senior Subordinated Notes (Subordinated Notes) due on
June 1, 2006. Effective July 20, 2001, the revolving credit facility and
Subordinated Notes were paid off in their entirety.

The Company has short-term borrowings of $12.0 million and $9.2 million with
related weighted average interest rates of 6.4% and 7.3% as of June 30, 2001
and December 31, 2000, respectively.

F-5

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

A subsidiary of the Company has a credit agreement with Residential Funding
Corporation (RFC). The credit agreement provides for a revolving line of credit
of up to $175.0 million, and bears interest at 1.00% per annum over LIBOR. The
agreement expires on August 31, 2001. During the quarter, the Company had a
maximum of $160.1 million revolving line of credit principal outstanding. At
June 30, 2001, the Company had $1.4 million revolving line of credit principal
outstanding, which is included in short-term borrowings in the accompanying
Consolidated Balance Sheets.

5. Commitments and Contingencies

Between November 12 and December 6, 2000, five putative class actions were
filed in the Court of Chancery of the State of Delaware in and for New Castle
County by various of the Company's stockholders against the Company, its
directors and the buying group which has proposed to take the Company private.
A similar action was also filed on November 17, 2000 in the Superior Court of
the State of California in and for the County of Los Angeles. These actions all
alleged that the offering price for the going private transaction was unfair
and inadequate and sought injunctive relief or rescission of the transaction
and, in the alternative, money damages.

The five Delaware actions have been consolidated. As of February 23, 2001,
the parties to the Delaware litigation entered into a memorandum of
understanding in which they agreed in principle to a settlement. The memorandum
provides, among other things:

. that the defendants admit no liability or wrongdoing whatsoever;

. that the members of the buying group acknowledge that the pendency and
prosecution of the Delaware litigation were positive contributing factors
to its decision to increase the merger consideration;

. for the certification of a settlement class and the entry of a final
judgment granting a full release of the defendants; and

. for attorneys' fees in an amount not to exceed $380,000.

There are numerous conditions to the settlement proposed by the memorandum
including the closing of the merger.

The merger closed on July 20, 2001 and the memorandum became final, subject
to the approval of the Court.

In December 1996, GMH Associates, Inc. (GMH) filed a lawsuit against
Prudential Realty Group (Prudential) and the Company in the Superior Court of
Pennsylvania, Franklin County, alleging various contractual and tort claims
against Prudential, the seller of a large office complex, and the Company, its
agent in the sale, contending that Prudential breached its agreement to sell
the property to GMH, breached its duty to negotiate in good faith, conspired
with the Company to conceal from GMH that Prudential was negotiating to sell
the property to another purchaser and that Prudential and the Company
misrepresented that there were no other negotiations for the sale of the
property. Following a non-jury trial, the court rendered a decision in favor of
GMH and against Prudential and the Company, awarding GMH $20.3 million in
compensatory damages, against Prudential and the Company jointly and severally,
and $10.0 million in punitive damages, allocating the punitive damage award
$7.0 million as against Prudential and $3.0 million as against the Company.
Following the denial of motions by Prudential and the Company for a new trial,
a judgment was entered on December 3, 1998. Prudential and the Company filed an
appeal of the judgment. On March 3, 2000, the appellate court in Pennsylvania
reversed all of the trial courts' decisions finding that liability was not
supported on any theory claimed by GMH and directed that a judgment be entered
in favor of the defendants including the Company. The

F-6

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

plaintiff filed an appeal with the Pennsylvania Supreme Court, which was
denied. The plaintiff has exhausted all appeal possibilities and judgment has
been entered in favor of all defendants.

In August 1993, a former commissioned sales person of the Company filed a
lawsuit against the Company in the Superior Court of New Jersey, Bergen County,
alleging gender discrimination and wrongful termination by the Company. On
November 20, 1996, a jury returned a verdict against the Company, awarding $1.5
million in general damages and $5.0 million in punitive damages to the
plaintiff. Subsequently, the trial court awarded the plaintiff $0.6 million in
attorneys' fees and costs. Following denial by the trial court of the Company's
motions for new trial, reversal of the verdict and reduction of damages, the
Company filed an appeal of the verdict and requested a reduction of damages. On
March 9, 1999 the appellate court ruled in the Company's favor, reversed the
trial court's decision and ordered a new trial. On February 16, 2000, the
Supreme Court of New Jersey reversed the decision of the appellate court,
concluded that the general damage award in the trial court should be sustained
and returned the case to the appellate court for a determination as to whether
a new trial should be ordered on the issue of punitive damages. In April 2000,
the Company settled the compensatory damages claim, including interest, and all
claims to date with respect to attorneys fees by paying to the plaintiff the
sum of $2.75 million leaving only the punitive damage claim for resolution. The
plaintiff also agreed with very limited exceptions, that no matter what the
outcome of the punitive damage claim, the Company would not be responsible for
more than 50% of the plaintiff's future attorney fees. In February 2001, the
Company settled all remaining claims for the sum of $2.0 million and received a
comprehensive release.

The Company is a party to a number of pending or threatened lawsuits arising
out of, or incident to, its ordinary course of business. Based on available
cash and anticipated cash flows, the Company believes that the ultimate outcome
will not have an impact on the Company's ability to carry on its operations.
Management believes that any liability that may result from disposition of
these lawsuits will not have a material effect on the Company's consolidated
financial position or results of operations.

An important part of the strategy for the Company's investment management
business involves investing its own capital in certain real estate investments
with its clients. As of June 30, 2001, the Company had committed $37.6 million
to fund future co-investments.

6. Comprehensive Loss

Comprehensive loss consists of net (loss) income and other comprehensive
loss. Accumulated other comprehensive loss consists of foreign currency
translation adjustments. For the six months ended June 30, 2001, total
comprehensive loss was $11.4 million, which consists of foreign currency
translation loss of $7.0 million and a net loss of $4.4 million. For the six
months ended June 30, 2000, total comprehensive loss was $2.4 million, which
consists of foreign currency translation loss of $7.9 million and net income of
$5.5 million.

7. Per Share Information

Basic (loss) earnings per share was computed by dividing net (loss) income
by the weighted average number of common shares outstanding of 21,328,247 and
20,879,218 for the three months ended June 30, 2001 and 2000, respectively, and
21,318,949 and 20,849,244 for the six months ended June 30, 2001 and 2000,
respectively. As a result of operating losses incurred for the three and six
months ended June 30, 2001, diluted weighted average shares outstanding do not
give effect to common stock equivalents, as to do so would be anti-dilutive.
For the three and six months ended June 30, 2000, the computation of diluted
earnings per share further assumes the dilutive effect of 26,899 and 29,782
common stock equivalents, respectively, which consisted principally of stock
options.

F-7

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

8. Industry Segments

The Company reports its operations through three business segments:
Transaction Management, Financial Services and Management Services. The Company
has a number of lines of business which are aggregated, reported and managed
through these three segments. The Transaction Management segment is the
Company's largest generator of revenue and includes Brokerage Services,
Corporate Services and Investment Property activities. Brokerage Services
includes activities that provide sales, leasing and consulting services in
connection with commercial real estate and is the Company's primary revenue
source. Corporate Services focuses on building relationships with large
corporate clients which generate recurring revenue. Investment Property
activities provide brokerage services for commercial real property marketed for
sale to institutional and private investors. The current year results of the
Transaction Management segment include merger-related and other nonrecurring
charges of $1.8 million. The Financial Services segment provides commercial
mortgage, valuation, investment management and consulting and research
services. The current year results of Financial Services include a nonrecurring
pre-tax gain of $5.6 million from the sale of mortgage fund management
contracts and the current quarter includes a $3.3 million pre-tax gain on the
sale of loan servicing rights. Also included in the current year results are
merger-related and other nonrecurring charges of $3.3 million. The Management
Services segment provides facility management services to corporate real estate
users and property management and related services to owners. Current year
results include merger-related and other nonrecurring charges of $0.5 million.
Prior year results include a $4.7 million nonrecurring pre-tax gain on the sale
of certain non-strategic assets. The following unaudited table summarizes the
revenue, cost and expenses, and operating income (loss) by operating segment
for the periods ended June 30, 2001 and 2000:

Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
(Dollars in thousands)

Revenue
Transaction Management................. $190,338 $232,094 $370,319 $410,553
Financial Services..................... 57,111 49,503 113,030 90,900
Management Services.................... 37,400 36,287 73,998 77,350
-------- -------- -------- --------
$284,849 $317,884 $557,347 $578,803
======== ======== ======== ========
Operating income (loss)
Transaction Management................. $ 1,519 $ 18,344 $ (2,611) $ 22,975
Financial Services..................... 1,087 4,578 7,936 5,383
Management Services.................... 849 (377) 455 3,426
-------- -------- -------- --------
3,455 22,545 5,780 31,784
-------- -------- -------- --------
Interest income........................... 692 92 1,492 581
Interest expense.......................... 9,358 10,985 18,413 20,670
-------- -------- -------- --------
(Loss) income before (benefit) provision
for income tax.......................... $ (5,211) $ 11,652 $(11,141) $ 11,695
======== ======== ======== ========

F-8

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
2001 2000 2001 2000
-------- -------- -------- --------
(Dollars in thousands)

Geographic Information

Revenue
Americas
United States......................... $216,877 $245,700 $427,886 $444,200
Canada, South and Central America..... 9,037 11,061 20,541 20,260
-------- -------- -------- --------
225,914 256,761 448,427 464,460
Pacific................................... 11,279 11,678 18,969 19,692
Asia...................................... 10,128 10,141 19,143 19,874
Europe, Middle East and Africa............ 37,528 39,304 70,808 74,777
-------- -------- -------- --------
$284,849 $317,884 $557,347 $578,803
======== ======== ======== ========

9. Nonrecurring Charges

During the second quarter of 2001, the Company recorded merger-related and
other nonrecurring pre-tax charges totaling $5.6 million. This included
merger-related costs of $1.3 million, the write-off of an e-business investment
of $2.9 million, as well as severance costs of $1.4 million related to the
Company's cost reduction program instituted in May 2001.

10. Guarantor and Nonguarantor Financial Statements

In connection with the planned acquisition by BLUM CB Corp., and as part of
the related proposed financing, the Company plans to issue an aggregate of
$229.0 million in senior subordinated notes due 2011 (the Notes). These Notes
will be unsecured and will rank equally in right of payment with any of the
Company's future senior subordinated unsecured indebtedness. The Notes will be
effectively subordinated to indebtedness and other liabilities of the Company's
subsidiaries that are not guarantors of the Notes. The Notes are guaranteed on
a full, unconditional, joint and several basis by the Company's wholly-owned
domestic subsidiaries.

The following condensed consolidating financial information includes:

(1) Condensed consolidating balance sheets as of June 30, 2001 and December
31, 2000; condensed consolidating statements of income for the three
months and six months ended June 30, 2001 and June 30, 2000; and
condensed consolidating statements of cash flows for the six months
ended June 30, 2001 and June 30, 2000 of (a) CB Richard Ellis Services,
Inc., the parent; (b) the guarantor subsidiaries; (c) the nonguarantor
subsidiaries; and (d) the Company on a consolidated basis; and

(2) Elimination entries necessary to consolidate CB Richard Ellis Services,
Inc., the parent, with guarantor and nonguarantor subsidiaries.

F-9

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED BALANCE SHEETS
As of June 30, 2001
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
-------- ------------ ------------ ----------- ------------

Current Assets:
Cash and cash equivalents............................ $ 228 $ 9,800 $ 8,520 $ -- $ 18,548
Receivables, less allowance for doubtful accounts.... 595 74,830 74,386 -- 149,811
Prepaid and other current assets..................... 10,973 7,882 12,993 -- 31,848
-------- -------- -------- --------- --------
Total current assets............................... 11,796 92,512 95,899 -- 200,207
Property and equipment, net........................... -- 57,912 19,678 -- 77,590
Goodwill, net......................................... -- 208,864 203,515 -- 412,379
Intangible assets, net................................ 4,933 34,473 3,120 -- 42,526
Cash surrender value of insurance policies, deferred
compensation......................................... 69,508 -- -- -- 69,508
Investments in and advances to unconsolidated
subsidiaries......................................... 3,970 33,857 5,237 -- 43,064
Investment in consolidated subsidiaries............... 189,296 175,124 -- (364,420) --
Inter-company loan receivable......................... 396,899 -- -- (396,899) --
Deferred taxes, net................................... 40,639 -- -- (5,334) 35,305
Prepaid pension costs................................. -- -- 24,089 -- 24,089
Other assets.......................................... 4,102 31,702 6,327 -- 42,131
-------- -------- -------- --------- --------
Total assets....................................... $721,143 $634,444 $357,865 $(766,653) $946,799
======== ======== ======== ========= ========
Current Liabilities:
Accounts payable and accrued expenses................ $ 1,926 $ 31,319 $ 35,684 $ -- $ 68,929
Compensation and employee benefits................... -- 44,431 19,860 -- 64,291
Reserve for bonus and profit sharing................. -- 23,868 7,181 -- 31,049
Income taxes payable................................. 3,948 -- 2,429 -- 6,377
Short-term borrowings............................... -- 2,187 9,830 -- 12,017
Current maturities of long-term debt................. -- 505 624 -- 1,129
-------- -------- -------- --------- --------
Total current liabilities.......................... 5,874 102,310 75,608 -- 183,792
Long-term debt:
Senior subordinated notes, less unamortized discount. 173,458 -- -- -- 173,458
Revolving credit facilities.......................... 225,000 -- -- -- 225,000
Other long-term debt................................. 1,500 15,399 1,115 -- 18,014
Inter-company loan payable........................... -- 312,453 84,446 (396,899) --
-------- -------- -------- --------- --------
Total long-term debt............................... 399,958 327,852 85,561 (396,899) 416,472
Deferred compensation liability....................... 87,680 -- -- -- 87,680
Other liabilities..................................... -- 14,986 18,755 (5,334) 28,407
-------- -------- -------- --------- --------
Total liabilities.................................. 493,512 445,148 179,924 (402,233) 716,351

Minority interest..................................... -- -- 2,817 -- 2,817
-------- -------- -------- --------- --------
Commitments and contingencies

Stockholders' Equity.................................. 227,631 189,296 175,124 (364,420) 227,631
-------- -------- -------- --------- --------
Total liabilities and stockholders' equity......... $721,143 $634,444 $357,865 $(766,653) $946,799
======== ======== ======== ========= ========

F-10

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED BALANCE SHEETS
As of December 31, 2000
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
-------- ------------ ------------ ----------- ------------

Current Assets:
Cash and cash equivalents................................ $ 62 $ 7,558 $ 13,234 $ -- $ 20,854
Receivables, less allowance for doubtful accounts........ 637 85,173 91,098 -- 176,908
Inter-company receivables................................ -- 8,448 -- (8,448) --
Prepaid and other current assets......................... 9,269 7,138 8,876 -- 25,283

-------- -------- -------- --------- --------
Total current assets................................... 9,968 108,317 113,208 (8,448) 223,045
Property and equipment, net............................... -- 55,100 20,892 -- 75,992
Goodwill, net............................................. -- 213,131 210,844 -- 423,975
Intangible assets, net.................................... 5,964 36,267 4,201 -- 46,432
Cash surrender value of insurance policies, deferred
compensation............................................. 53,203 -- -- -- 53,203
Investments in and advances to unconsolidated
subsidiaries.............................................. 3,695 32,511 5,119 -- 41,325
Investment in consolidated subsidiaries................... 222,590 192,544 -- (415,134) --
Inter-company loan receivable............................. 293,111 -- -- (293,111) --
Deferred taxes, net....................................... 38,047 -- -- (5,720) 32,327
Prepaid pension costs..................................... -- -- 25,235 -- 25,235
Other assets.............................................. 4,741 30,752 6,078 -- 41,571
-------- -------- -------- --------- --------
Total assets........................................... $631,319 $668,622 $385,577 $(722,413) $963,105
======== ======== ======== ========= ========
Current Liabilities:
Accounts payable and accrued expenses.................... $ 2,720 $ 33,730 $ 47,223 $ -- $ 83,673
Inter-company payable.................................... -- -- 8,448 (8,448) --
Compensation and employee benefits....................... -- 94,916 33,233 -- 128,149
Reserve for bonus and profit sharing..................... -- 38,360 21,170 -- 59,530
Income taxes payable..................................... 26,679 -- 1,581 -- 28,260
Short-term borrowings.................................... -- 2,269 6,946 -- 9,215
Current maturities of long-term debt.................... -- 473 905 -- 1,378
-------- -------- -------- --------- --------
Total current liabilities.............................. 29,399 169,748 119,506 (8,448) 310,205
Long-term debt:
Senior subordinated notes, less unamortized discount..... 173,336 -- -- -- 173,336
Revolving credit facilities.............................. 110,000 -- -- -- 110,000
Other long-term debt..................................... 2,742 16,111 1,382 -- 20,235
Inter-company loan payable............................... -- 234,923 58,188 (293,111) --
-------- -------- -------- --------- --------
Total long-term debt................................... 286,078 251,034 59,570 (293,111) 303,571
Deferred compensation liability........................... 80,503 -- -- -- 80,503
Other liabilities......................................... -- 15,162 20,297 (5,720) 29,739
-------- -------- -------- --------- --------
Total liabilities...................................... 395,980 435,944 199,373 (307,279) 724,018

Minority interest......................................... -- -- 3,748 -- 3,748
-------- -------- -------- --------- --------
Commitments and contingencies

Stockholders' Equity...................................... 235,339 232,678 182,456 (415,134) 235,339
-------- -------- -------- --------- --------
Total liabilities and stockholders' equity (deficit)... $631,319 $668,622 $385,577 $(722,413) $963,105
======== ======== ======== ========= ========

F-11

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED STATEMENT OF INCOME
For the Quarter Ended June 30, 2001
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue..................................... $ -- $216,878 $67,971 $ -- $284,849
Costs and expenses:
Commissions, fees and other incentives... -- 107,707 27,098 -- 134,805
Operating, administrative and other...... 558 91,643 37,334 -- 129,535
Depreciation and amortization............ -- 7,518 3,928 -- 11,446
Merger-related and other nonrecurring
charges................................ -- 5,608 -- -- 5,608
------- -------- ------- ------- --------
Operating income (loss)..................... (558) 4,402 (389) -- 3,455
Interest income............................. 7,803 493 199 (7,803) 692
Interest expense............................ 8,500 6,820 1,841 (7,803) 9,358
Equity earnings (losses) of consolidated
subsidiaries.............................. (3,063) (1,138) -- 4,201 --
------- -------- ------- ------- --------
Loss before provision for income tax........ (4,318) (3,063) (2,031) 4,201 (5,211)
Benefit for income tax...................... (2,797) -- (893) -- (3,690)
------- -------- ------- ------- --------
Net loss.................................... $(1,521) $ (3,063) $(1,138) $ 4,201 $ (1,521)
======= ======== ======= ======= ========
------- -------- ------- ------- --------
EBITDA...................................... $ (558) $ 17,528 $ 3,539 $ -- $ 20,509
======= ======== ======= ======= ========

F-12

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended June 30, 2001
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue....................................... $ -- $427,887 $129,460 $ -- $557,347
Costs and expenses:
Commissions, fees and other incentives..... -- 203,990 55,213 -- 259,203
Operating, administrative and other........ 137 189,567 73,910 -- 263,614
Depreciation and amortization.............. -- 15,370 7,772 -- 23,142
Merger-related and other nonrecurring
charges.................................. -- 5,608 -- -- 5,608
------- -------- -------- -------- --------
Operating (loss) income....................... (137) 13,352 (7,435) -- 5,780
Interest income............................... 14,896 931 561 (14,896) 1,492
Interest expense.............................. 16,352 13,287 3,670 (14,896) 18,413
Equity losses of consolidated subsidiaries.... (3,947) (4,943) -- 8,890 --
------- -------- -------- -------- --------
Loss income before (benefit) provision for
income tax.................................. (5,540) (3,947) (10,544) 8,890 (11,141)
(Benefit) provision for income tax............ (1,173) -- (5,601) -- (6,774)
------- -------- -------- -------- --------
Net loss...................................... $(4,367) $ (3,947) $ (4,943) $ 8,890 $ (4,367)
======= ======== ======== ======== ========
------- -------- -------- -------- --------
EBITDA........................................ $ (137) $ 34,330 $ 337 $ -- $ 34,530
======= ======== ======== ======== ========

F-13

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED STATEMENT OF INCOME
For the Quarter Ended June 30, 2000
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue..................................... $ -- $245,702 $72,182 $ -- $317,884
Costs and expenses:
Commissions, fees and other incentives... -- 124,955 28,897 -- 153,852
Operating, administrative and other...... 39 92,010 38,707 -- 130,756
Depreciation and amortization............ -- 6,642 4,089 -- 10,731
Merger-related and other nonrecurring
charges................................ -- -- -- -- --
------- -------- ------- -------- --------
Operating income (loss)..................... (39) 22,095 489 -- 22,545
Interest income............................. 8,979 17 2 (8,906) 92
Interest expense............................ 10,153 7,981 1,757 (8,906) 10,985
Equity earnings (losses) of consolidated
subsidiaries.............................. 14,091 (40) -- (14,051) --
------- -------- ------- -------- --------
Income (loss) before provision (benefit) for
income tax................................ 12,878 14,091 (1,266) (14,051) 11,652
Provision (benefit) for income tax.......... 7,401 -- (1,226) -- 6,175
------- -------- ------- -------- --------
Net income (loss)........................... $ 5,477 $ 14,091 $ (40) $(14,051) $ 5,477
======= ======== ======= ======== ========
------- -------- ------- -------- --------
EBITDA...................................... $ (39) $ 28,737 $ 4,578 $ -- $ 33,276
======= ======== ======= ======== ========

F-14

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended June 30, 2000
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue..................................... $ -- $444,199 $134,604 $ -- $578,803
Costs and expenses:
Commissions, fees and other incentives... -- 213,032 54,783 -- 267,815
Operating, administrative and other...... 590 182,072 75,242 -- 257,904
Depreciation and amortization............ -- 12,979 8,321 -- 21,300
Merger-related and other nonrecurring
charges................................ -- -- -- -- --
------- -------- -------- -------- --------
Operating (loss) income..................... (590) 36,116 (3,742) -- 31,784
Interest income............................. 17,563 356 79 (17,417) 581
Interest expense............................ 19,110 15,779 3,198 (17,417) 20,670
Equity earnings (losses) of consolidated
subsidiaries.............................. 17,207 (3,486) -- (13,721) --
------- -------- -------- -------- --------
Income (loss) before provision (benefit) for
income tax................................ 15,070 17,207 (6,861) (13,721) 11,695
Provision (benefit) for income tax.......... 9,573 -- (3,375) -- 6,198
------- -------- -------- -------- --------
Net income (loss)........................... $ 5,497 $ 17,207 $ (3,486) $(13,721) $ 5,497
======= ======== ======== ======== ========
------- -------- -------- -------- --------
EBITDA...................................... $ (590) $ 49,095 $ 4,579 $ -- $ 53,084
======= ======== ======== ======== ========

F-15

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONDENSED STATEMENT OF CASH FLOWS
For the Six Months ended June 30, 2001
(in thousands)

Guarantor Non-Guarantor
Parent Subsidiary Subsidiaries Consolidated
-------- ---------- ------------- ------------

CASH FLOWS (USED IN) PROVIDED BY
OPERATING ACTIVITIES..................................... $(33,725) $(49,756) $(23,773) $(107,254)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........................ -- (11,441) (3,187) (14,628)
Proceeds from sale of properties, businesses and servicing
rights................................................... -- 8,763 428 9,191
Purchase of investments.................................... -- (2,500) (2,984) (5,484)
Other investing activities, net............................ 209 195 (51) 353
-------- -------- -------- ---------
Net cash provided by (used in) investing activities... 209 (4,983) (5,794) (10,568)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility.................... 185,000 -- -- 185,000
Repayment of revolving credit facility..................... (70,000) -- -- (70,000)
Decrease (increase) in intercompany receivables, net....... (81,454) 58,702 22,752 --
Other financing activities, net............................ 136 (1,721) 3,502 1,917
-------- -------- -------- ---------
Net cash provided by (used in) financing activities... 33,682 56,981 26,254 116,917
-------- -------- -------- ---------
Net (decrease) increase in cash and cash equivalents....... 166 2,242 (3,313) (905)
Cash and cash equivalents, at beginning of period.......... 62 7,558 13,234 20,854
Effect of exchange rates changes on cash................... -- -- (1,401) (1,401)
-------- -------- -------- ---------
CASH AND CASH EQUIVALENTS, AT END OF
PERIOD................................................... $ 228 $ 9,800 $ 8,520 $ 18,548
======== ======== ======== =========

SUPPLEMENTAL DATA:
Cash paid during the period for:
Interest (none capitalized)............................. $ 16,131 $ 997 $ 74 $ 17,202
Federal and local income taxes.......................... $ 14,678 $ -- $ 4,041 $ 18,719

F-16

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

CONDENSED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2000
(in thousands)

Non-
Guarantor Guarantor
Parent Subsidiaries Subsidiaries Consolidated
-------- ------------ ------------ ------------

CASH FLOWS (USED IN) PROVIDED BY
OPERATING ACTIVITIES..................................... $(29,257) $(10,024) $(11,736) $(51,017)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........................ -- (9,275) (2,176) (11,451)
Proceeds from sale of properties, businesses and servicing
rights................................................... -- 11,501 100 11,601
Purchase of investments.................................... -- (9,000) (2,311) (11,311)
Other investing activities, net............................ (114) 207 (1,049) (956)
-------- -------- -------- --------
Net cash used in investing activities................. (114) (6,567) (5,436) (12,117)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility.................... 134,000 -- -- 134,000
Repayment of revolving credit facility..................... (72,000) -- -- (72,000)
Decrease (increase) in intercompany receivables, net....... (31,575) 21,114 10,461 --
Other financing activities, net............................ (1,786) (2,516) (2,360) (6,662)
-------- -------- -------- --------
Net cash provided by (used in) financing activities... 28,639 18,598 8,101 55,338
-------- -------- -------- --------
Net increase in cash and cash equivalents.................. (732) 2,007 (9,071) (7,796)
Cash and cash equivalents, at beginning of period.......... 864 6,287 20,693 27,844
Effect of exchange rates changes on cash................... -- -- (853) (853)
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS, AT END OF
PERIOD................................................... $ 132 $ 8,294 $ 10,769 $ 19,195
======== ======== ======== ========

SUPPLEMENTAL DATA:
Cash paid during the period for:...........................
Interest (none capitalized)............................. $ 17,662 $ 1,337 $ 2,502 $ 21,501
Federal and local income taxes.......................... $ 11,051 $ -- $ 4,390 $ 15,441

F-17

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

11. Subsequent Events

Effective July 20, 2001, the Company was acquired by CB Holding which is
controlled by an affiliate of the Company's director Richard Blum.
Additionally, other directors of the Company and certain of the Company's
senior officers collectively have a significant interest in CB Holding. The
merger was approved by the Company's stockholders on July 18, 2001. Pursuant to
the merger, each share of the Company's common stock, other than those held by
members of the buying group, has been converted into the right to receive
$16.00. As a result of the merger, the Company's shares are no longer listed on
the New York Stock Exchange.

The Company has also successfully completed a tender offer and consent
solicitation for all of the outstanding principal amount of its 8 7/8% Senior
Subordinated Notes due 2006 (the Notes). The Notes were purchased at $1,079.14
for each $1,000 principal amount of Notes, which includes the consent payment
of $30.00 per $1,000 principal amount of Notes. The Company also repaid the
outstanding balance of its revolving credit facility.

As part of the merger transaction, the Company assumed $229.0 million in
aggregate principal amount of 11 1/4% Senior Subordinated Notes due 2011 for
$225.6 million. The Company also entered into a senior credit facility with
Credit Suisse First Boston (CSFB) and other lenders. This includes the Tranche
A term facility of up to $50.0 million, maturing in 2007; the Tranche B term
facility of up to $185.0 million, maturing in 2008; and the revolving line of
credit of up to $90.0 million, including revolving credit loans, letters of
credit and a swingline loan subsidiary, maturing in 2007. The Company had an
outstanding balance on the revolving line of credit of $40.0 million at the
close of the merger.

Borrowings under the senior secured credit facilities will bear interest at
varying rates based on the Company's option, on either LIBOR plus 3.25% or the
alternate base rate plus 2.25%, in the case of Tranche A and the revolving
facility, and LIBOR plus 3.75% or the alternate base rate plus 2.75%, in the
case of Tranche B. The alternate base rate is the higher of (1) CSFB's prime
rate or (2) the Federal Funds Effective Rate plus one-half of one percent.
After delivery of the Company's consolidated financial statements for the year
ending December 31, 2001, the amount added to the LIBOR rate or the alternate
base rate under the Tranche A and revolving facility will vary, from 2.50% to
3.25% for LIBOR and from 1.50% to 2.25% for the alternate base rate, as
determined by reference to the Company's ratios of total debt less available
cash to EBITDA. EBITDA represents earnings before net interest expense, income
taxes, depreciation and amortization and merger-related and other nonrecurring
charges.

In addition, on September 11, 2001, a terrorist attack resulted in the
destruction of the World Trade Center Towers in New York City and significant
damage to surrounding buildings and property in lower Manhattan. Due to this
attack and a separate attack on the Pentagon in northern Virginia, as well as
the possibility of related acts of terror and/or an outbreak of hostilities,
there could be a further deterioration of the U.S. economy and commercial real
estate market conditions, which could further adversely affect our transaction
management segment and our other business segments.

F-18

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of CB Richard Ellis Services, Inc.:

We have audited the accompanying consolidated balance sheets of CB Richard
Ellis Services, Inc. (a Delaware corporation) as of December 31, 2000, and
1999, and the related consolidated statements of operations, stockholders'
equity, comprehensive income and cash flows for each of the three years in the
period ended December 31, 2000. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CB Richard Ellis Services,
Inc. as of December 31, 2000, and 1999, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of
the basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Los Angeles, California
February 24, 2001

(Except with respect to the information included in Notes 12 and 13, as to
which the date is October 19, 2001.)

F-19

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share data)

December 31
-------------------
2000 1999
-------- ---------

ASSETS
------
Current Assets:
Cash and cash equivalents......................................................................... $ 20,854 $ 27,844
Receivables, less allowance for doubtful accounts of $12,631 and $15,560 at December 31, 2000
and 1999......................................................................................... 176,908 168,276
Prepaid expenses.................................................................................. 8,017 8,370
Deferred taxes, net............................................................................... 11,139 11,758
Other current assets.............................................................................. 6,127 10,596
-------- ---------
Total current assets........................................................................... 223,045 226,844
Property and equipment, net........................................................................... 75,992 70,149
Goodwill, net of accumulated amortization of $56,417 and $41,008 at December 31, 2000 and 1999........ 423,975 445,010
Other intangible assets, net of accumulated amortization of $289,038 and $279,156 at December 31, 2000
and 1999............................................................................................. 46,432 57,524
Cash surrender value of insurance policies, deferred compensation plan................................ 53,203 20,442
Investment in and advances to unconsolidated subsidiaries............................................. 41,325 38,514
Deferred taxes, net................................................................................... 32,327 28,190
Prepaid pension costs................................................................................. 25,235 26,323
Other assets.......................................................................................... 41,571 16,487
-------- ---------
Total assets................................................................................... $963,105 $ 929,483
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable and accrued expenses............................................................. $ 83,673 $ 81,068
Compensation and employee benefits................................................................ 79,801 84,357
Accrued bonus and profit sharing.................................................................. 107,878 81,394
Income taxes payable.............................................................................. 28,260 18,429
Current maturities of long-term debt.............................................................. 10,593 6,765
-------- ---------
Total current liabilities...................................................................... 310,205 272,013
Long-term debt:
Senior subordinated notes, less unamortized discount of $1,664 and $1,892 at December 31, 2000
and 1999......................................................................................... 173,336 173,108
Revolving credit facility......................................................................... 110,000 160,000
Other long-term debt.............................................................................. 20,235 24,764
-------- ---------
Total long-term debt........................................................................... 303,571 357,872
Deferred compensation liability....................................................................... 80,503 47,202
Other liabilities..................................................................................... 29,739 38,787
-------- ---------
Total liabilities............................................................................... 724,018 715,874
Minority interest..................................................................................... 3,748 3,872

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $0.01 par value; 8,000,000 shares authorized; no shares issued or outstanding.... -- --
Common stock, $0.01 par value; 100,000,000 shares authorized; 20,605,023 and 20,435,692 shares
issued and outstanding at December 31, 2000 and 1999............................................. 217 213
Additional paid-in capital........................................................................ 364,168 355,893
Notes receivable from sale of stock............................................................... (11,847) (8,087)
Accumulated deficit............................................................................... (89,097) (122,485)
Accumulated other comprehensive loss.............................................................. (12,258) (1,928)
Treasury stock at cost, 1,072,155 and 885,100 shares at December 31, 2000 and 1999................ (15,844) (13,869)
-------- ---------
Total stockholders' equity..................................................................... 235,339 209,737
-------- ---------
Total liabilities and stockholders' equity..................................................... $963,105 $ 929,483
======== =========

The accompanying notes are an integral part of these consolidated financial
statements.

F-20

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)

Year Ended December 31
-----------------------------------
2000 1999 1998
----------- ----------- -----------

Revenue:
Leases.............................................................. $ 539,419 $ 448,091 $ 371,300
Sales............................................................... 389,745 394,718 357,718
Property and facilities management fees............................. 110,654 110,111 86,379
Consulting and referral fees........................................ 78,714 73,569 72,586
Appraisal fees...................................................... 75,055 71,050 48,082
Loan origination and servicing fees................................. 58,190 45,940 39,402
Investment management fees.......................................... 42,475 28,929 33,145
Other............................................................... 29,352 40,631 25,891
----------- ----------- -----------
Total revenue................................................... 1,323,604 1,213,039 1,034,503
Costs and Expenses:
Commissions, fees and other incentives.............................. 634,639 559,289 458,463
Operating, administrative and other................................. 538,481 536,381 448,794
Merger-related and other nonrecurring charges....................... -- -- 16,585
Depreciation and amortization....................................... 43,199 40,470 32,185
----------- ----------- -----------
Operating income....................................................... 107,285 76,899 78,476
Interest income........................................................ 2,554 1,930 3,054
Interest expense....................................................... 41,700 39,368 31,047
----------- ----------- -----------
Income before provision for income tax................................. 68,139 39,461 50,483
Provision for income tax............................................... 34,751 16,179 25,926
----------- ----------- -----------
Net income............................................................. $ 33,388 $ 23,282 $ 24,557
=========== =========== ===========
Deemed dividend on preferred stock..................................... $ -- $ -- $ 32,273
=========== =========== ===========
Net income (loss) applicable to common stockholders.................... $ 33,388 $ 23,282 $ (7,716)
=========== =========== ===========
Basic earnings (loss) per share........................................ $ 1.60 $ 1.11 $ (0.38)
=========== =========== ===========
Weighted average shares outstanding for basic earnings (loss) per share 20,931,111 20,998,097 20,136,117
=========== =========== ===========
Diluted earnings (loss) per share...................................... $ 1.58 $ 1.10 $ (0.38)
=========== =========== ===========
Weighted average shares outstanding for diluted earnings (loss) per
share................................................................ 21,097,240 21,072,436 20,136,117
=========== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-21

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31
-------------------------------
2000 1999 1998
--------- --------- ---------

Cash flows from operating activities:
Net income............................................................................... $ 33,388 $ 23,282 $ 24,557
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization excluding deferred financing costs...................... 43,199 40,470 32,185
Amortization of deferred financing costs.............................................. 2,069 1,696 1,184
Deferred compensation deferrals....................................................... 43,557 25,932 14,738
(Gain) loss on sale of properties, businesses and servicing rights.................... (10,184) (9,865) 2,058
Equity interest in earnings of unconsolidated subsidiaries............................ (7,112) (7,528) (3,443)
Minority interest..................................................................... 607 2,016 730
Provision for litigation, doubtful accounts and other................................. 5,125 4,724 5,185
Deferred income tax (benefit) provision............................................... (4,083) (12,688) 14,394
Increase in receivables.................................................................. (12,545) (37,640) (24,846)
Increase in cash surrender value of insurance policies, deferred compensation plan....... (32,761) (20,442) --
Increase in compensation and employee benefits payable and accrued bonus and profit share 24,418 37,339 7,782
(Decrease) increase in accounts payable and accrued expenses............................. (3,201) 1,346 2,615
Increase in income taxes payable......................................................... 11,074 16,696 8,913
(Decrease) increase in other liabilities................................................. (9,553) 7,583 (9,536)
Net change in other operating assets and liabilities................................. 114 1,090 98
--------- --------- ---------
Net cash provided by operating activities............................................ 84,112 74,011 76,614
--------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment...................................................... (26,921) (35,130) (29,715)
Proceeds from sale of inventoried property............................................... -- 7,355 --
Proceeds from sale of properties, businesses and servicing rights........................ 17,495 12,072 --
Purchase of investments.................................................................. (23,413) (1,019) --
Increase in intangible assets and goodwill............................................... (3,119) (5,331) (14,595)
Acquisition of businesses including net assets acquire intangibles and goodwill.......... (3,442) (8,931) (189,895)
Other investing activities, net.......................................................... 3,678 4,217 10,685
--------- --------- ---------
Net cash used in investing activities................................................ (35,722) (26,767) (223,520)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from revolving credit facility.................................................. 179,000 165,000 315,000
Repayment of revolving credit facility................................................... (229,000) (172,000) (268,000)
Proceeds from senior subordinated term loan.............................................. -- -- 172,788
Repayment of inventoried property loan................................................... -- (7,093) (377)
Proceeds from (repayment of) senior notes and other loans, net........................... 588 (12,402) (14,324)
Payment of dividends payable............................................................. -- -- (5,000)
Repurchase of preferred stock............................................................ -- -- (72,331)
Repurchase of common stock............................................................... (2,018) (4,986) (8,883)
Repayment of capital leases.............................................................. (1,373) (1,340) (1,655)
Minority interest payments............................................................... (2,180) (3,801) (2,902)
Other financing activities, net.......................................................... 1,460 (1,099) 5,122
--------- --------- ---------
Net cash (used in) provided by financing activities.................................. (53,523) (37,721) 119,438
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents..................................... (5,133) 9,523 (27,468)
Cash and cash equivalents, at beginning of period........................................ 27,844 19,551 47,181
Effect of exchange rate changes on cash.................................................. (1,857) (1,230) (162)
--------- --------- ---------
Cash and cash equivalents, at end of period.............................................. $ 20,854 $ 27,844 $ 19,551
========= ========= =========
Supplemental data:
Cash paid during the period for:
Interest (none capitalized)........................................................... $ 38,352 $ 36,997 $ 27,528
Income taxes, net..................................................................... $ 27,607 $ 12,689 $ 3,395

The accompanying notes are an integral part of these consolidated financial
statements.

F-22

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)

Notes Accumulated
Additional receivable other
Preferred Common Paid-in from sale Accumulated comprehensive Treasury
Stock Stock capital of stock deficit income (loss) stock Total
--------- ------ ---------- ---------- ----------- ------------- -------- --------

Balance, December 31, 1997............ $ 40 $188 $333,981 $ (5,956) $(170,324) $ (158) $ -- $157,771
Net income............................ -- -- -- -- 24,557 -- -- 24,557
Common stock issued for incentive
plans................................ -- 1 962 (962) -- -- -- 1
Contributions, deferred compensation
plan................................. -- -- 5,361 -- -- -- -- 5,361
Collection on, net of cancellation of
notes receivable from employee
stock incentive plan................. -- -- (646) 1,264 -- -- -- 618
Common stock issued for REI and HP
acquisitions......................... -- 15 58,486 -- -- -- -- 58,501
Shares issued for Capital Accumulation
Plan................................. -- -- 2,889 -- -- -- -- 2,889
Common stock options exercised........ -- 7 8,835 -- -- -- -- 8,842
Amortization of cheap stock........... -- -- 312 -- -- -- -- 312
Tax deduction from issuance of
stock................................ -- -- 11,907 -- -- -- -- 11,907
Foreign currency translation gain..... -- -- -- -- -- 1,297 -- 1,297
Purchase of preferred stock........... (40) -- (72,291) -- -- -- -- (72,331)
Purchase of common stock.............. -- -- -- -- -- -- (8,883) (8,883)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 1998............ -- 211 349,796 (5,654) (145,767) 1,139 (8,883) 190,842
Net income............................ -- -- -- -- 23,282 -- -- 23,282
Common stock issued for incentive
plans................................ -- 2 2,534 (2,534) -- -- -- 2
Contributions, deferred compensation
plan................................. -- -- 2,094 -- -- -- -- 2,094
Collection on, net of cancellation of
notes receivable from employee
stock incentive plan................. -- -- -- 101 -- -- -- 101
Common stock options exercised........ -- -- 449 -- -- -- -- 449
Amortization of cheap stock........... -- -- 312 -- -- -- -- 312
Tax deduction from issuance of
stock................................ -- -- 708 -- -- -- -- 708
Foreign currency translation loss..... -- -- -- -- -- (3,067) -- (3,067)
Purchase of common stock.............. -- -- -- -- -- -- (4,986) (4,986)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 1999............ -- 213 355,893 (8,087) (122,485) (1,928) (13,869) 209,737
Net income............................ -- -- -- -- 33,388 -- -- 33,388
Common stock issued for incentive
plans................................ -- 4 4,310 (4,310) -- -- -- 4
Contributions, deferred compensation
plan................................. -- -- 2,729 -- -- -- -- 2,729
Deferred compensation plan
co-match............................. -- -- 907 -- -- -- -- 907
Collection on, net of cancellation of
notes receivable from employee
stock incentive plan................. -- -- (550) 550 -- -- -- --
Amortization of cheap and restricted
stock................................ -- -- 342 -- -- -- -- 342
Tax deduction from issuance of
stock................................ -- -- 580 -- -- -- -- 580
Foreign currency translation loss..... -- -- -- -- -- (10,330) -- (10,330)
Purchase of common stock.............. -- -- (43) -- -- -- (1,975) (2,018)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 2000............ $ -- $217 $364,168 $(11,847) $ (89,097) $(12,258) $(15,844) $235,339
==== ==== ======== ======== ========= ======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-23

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Year Ended December 31
--------------------------
2000 1999 1998
-------- ------- -------

Net income........................ $ 33,388 $23,282 $24,557
Other comprehensive (loss) income
net of tax...................... (10,330) (3,067) 1,297
-------- ------- -------
Comprehensive income.............. $ 23,058 $20,215 $25,854
======== ======= =======

The accompanying notes are an integral part of these consolidated financial
statements.

F-24

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
CB Richard Ellis Services, Inc. (the Company) and majority owned and controlled
subsidiaries. The equity attributable to minority shareholders' interests in
subsidiaries is shown separately in the balance sheets. All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company's investments in unconsolidated subsidiaries in which it has the
ability to exercise significant influence over operating and financial
policies, but does not control, are accounted for by using the equity method.
Accordingly, the Company's share of the earnings of these equity basis
companies is included in consolidated net income. All other investments held on
a long-term basis are valued at cost less any permanent impairment in value.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with
an original maturity of less than three months. The Company controls certain
cash and cash equivalents as agent for its investment and property management
clients. These amounts are not included in the consolidated balance sheets.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price of an acquisition over
the Company's interest in the fair value of the net identifiable assets
acquired. Goodwill is carried at cost less accumulated amortization and
amortized on a straight-line basis. Net goodwill at December 31, 2000 consisted
of $405.7 million related to the 1995 through 2000 acquisitions which is being
amortized over an estimated useful life of 30 years and $18.3 million related
to the Company's original acquisition in 1989 which is being amortized over an
estimated useful life of 40 years.

Net other intangible assets at December 31, 2000 included $6.0 million of
deferred financing costs and $40.4 million of intangibles stemming from the
1995 through 2000 acquisitions. These are amortized on a straight-line basis
over the estimated useful lives of the assets up to 12 years.

The Company periodically evaluates the recoverability of the carrying amount
of goodwill and other intangible assets. In this assessment, the Company
considers macro market conditions and trends in the Company's relative market
position, its capital structure, lender relationships and the estimated
undiscounted future cash flows associated with these assets. If any of the
significant assumptions inherent in this assessment materially change due to
market, economic and/or other factors, the recoverability is assessed based on
the revised assumptions and resultant undiscounted cash flows. If the analysis
indicates impairment, it would be recorded in the period the changes occur
based on the fair value of the goodwill and other intangible assets.

Property, Plant and Equipment

The Company capitalizes expenditures that materially increase the life of
the related assets and charges the cost of maintenance and repairs to expense.
Upon sale or retirement, the capitalized costs and related accumulated
depreciation or amortization are eliminated from the respective accounts, and
the resulting gain or loss is included in operating income.

Depreciation is computed primarily using the straight line method over
estimated useful lives ranging from 3 to 10 years. Leasehold improvements are
amortized over the term of the respective leases, excluding options to

F-25

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

renew. Equipment under capital leases is depreciated over the related term of
the leases. The Company periodically reviews property, plant and equipment for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If any of the significant
assumptions inherent in this assessment materially change due to market,
economics, and/or other factors, the recoverability is assessed based on the
revised assumptions. If this analysis indicates that such assets are considered
to be impaired, the impairment is recognized in the period the changes occur
and is measured by the amount in which the carrying value exceeds the fair
value of the asset.

Income Recognition

Real estate commissions on sales are recorded as income upon close of escrow
or upon transfer of title. Real estate commissions on leases are generally
recorded as income once the Company satisfies all obligations under the
commission agreement, which generally occurs upon the earlier of the date of
occupancy or cash receipt, if cash is received prior to occupancy. The
existence of any significant future contingencies will result in the delay of
recognition of income until such contingency is satisfied. If, for example, the
tenant has a free rent period, lease revenue is not recorded until the first
month's rent is paid. Investment management fees and management fees are
recognized when earned under the provisions of the related agreements.
Appraisal fees are recorded after services have been rendered. Loan origination
fees are recognized at the time the loan closes and the Company has no
significant remaining obligations for performance in connection with the loan
transaction, while loan servicing fees are recorded as principal and interest
payments are collected from mortgagors. Other commissions and fees are recorded
as income at the time the related services have been performed unless
significant future contingencies exist. The adoption of Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements," did not have a
material effect on our operations or financial position.

Foreign Currencies

The financial statements of subsidiaries located outside the United States
(U.S.) are generally measured using the local currency as the functional
currency. The assets and liabilities of these subsidiaries are translated at
the rates of exchange at the balance sheet date and income and expenses are
translated at the average monthly rate. The currency effects of translating the
financial statements of these non-U.S. operations of the Company are included
in the "Accumulated other comprehensive income (loss)" component of
stockholders' equity. Gains and losses resulting from foreign currency
transactions are included in the results of operations. The aggregate
transaction gains and losses included in the consolidated statements of
operations are a $3.1 million loss, $1.1 million gain and $0.2 million loss for
2000, 1999 and 1998, respectively.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income
(loss). Accumulated other comprehensive income (loss) consists of foreign
currency translation adjustments.

Accounting for Transfers and Servicing

The Company follows Statement of Financial Accounting Standards (SFAS) No.
125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments in accounting for loan sales and acquisition of servicing
rights. Under SFAS No. 125, the Company is required to recognize, at fair
value, financial and servicing assets it has acquired control over and related
liabilities it has incurred and amortize them over the period of estimated net
servicing income or loss. Write-off of the asset is required when control is
surrendered. The fair value of these servicing rights resulted in a gain, which
is reflected in the Consolidated Statements of Operations, with a corresponding
servicing asset of approximately $0.7 million and $0.8 million, at December 31,
2000 and 1999, respectively, which is reflected in the Consolidated Balance
Sheets.

F-26

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles in the U.S. requires management to make
estimates and assumptions that affect the reported amounts of certain assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of certain revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. Management believes that these estimates provide a reasonable basis
for the fair presentation of its financial condition and results of operations.

Stock Based Compensation

The Company has elected to apply the provisions of Accounting Principles
Board (APB) Opinion No. 25 and provide the pro forma disclosure requirements of
SFAS No. 123, Accounting for Stock Based Compensation in the footnotes to its
consolidated financial statements. SFAS No. 123 requires pro forma disclosure
of net income and, if presented, earnings per share, as if the fair-value based
method of accounting defined in this statement had been applied. APB Opinion
No. 25 and related interpretations require accounting for stock compensation
awards based on their intrinsic value as of the grant date.

Income Taxes

Income taxes are accounted for under the asset and liability method in
accordance with SFAS 109, Accounting for Income Taxes. Deferred tax assets and
liabilities are determined based on temporary differences between financial
reporting and tax basis of assets and liabilities and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured by
applying enacted tax rates and laws to taxable income in the years in which the
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

New Accounting Pronouncements

In September 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
SFAS 140 revises the standards for accounting for securitizations and other
transfers of financial assets and collateral established by SFAS 125. In
addition, this statement is effective for recognition and reclassification of
collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. The Company does
not perform these types of transactions. This statement is effective for all
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. The Company is evaluating the impact of SFAS
140 on its results of operation and financial position for these types of
transactions.

In June 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities--an Amendment of
FASB Statement No. 133. SFAS No. 138 amends the accounting and reporting for
certain derivative instruments and hedging activities and is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS 138 is
not expected to have a material impact on earnings or other components of
comprehensive income of the Company.

In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133, which deferred the effective date of SFAS No. 133 for one
year. SFAS No. 137 is effective for all fiscal quarters of all fiscal years
beginning after June 15,

F-27

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2000. SFAS No. 137 is not anticipated to have a material impact on earnings or
other components of comprehensive income as the Company had no derivatives
outstanding at December 31, 2000.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
not expected to have a material impact on earnings or other components of
comprehensive income as the Company had no derivatives outstanding at December
31, 2000.

Reclassifications

Some reclassifications, which do not have an effect on net income, have been
made to the 1999 and 1998 financial statements to conform to the 2000
presentation.

2. Acquisitions and Dispositions

During 2000, the Company acquired five companies with an aggregate purchase
price of approximately $3.4 million in cash, $0.7 million in notes, plus
additional payments over the next five years based on acquisition earnout
agreements. These payments will supplement the purchase price and be recorded
as additional goodwill. The most significant acquisition in 2000 was the
purchase of Boston Mortgage Capital Corporation (Boston Mortgage), through L.J.
Melody, for approximately $2.1 million, plus supplemental payments based on an
acquisition earnout agreement. Boston Mortgage provides further mortgage
banking penetration into the northeast. It services approximately $1.8 billion
in loans covering roughly 175 commercial properties throughout New England, New
York and New Jersey.

In February 2000, the Company sold certain non-strategic assets for cash
proceeds of $8.4 million, resulting in a pre-tax gain of $4.7 million.

During 1999, the Company acquired four companies with an aggregate purchase
price of approximately $13.8 million. The two significant acquisitions were
Eberhardt Company which was acquired in September 1999 through L.J. Melody for
approximately $7.0 million and Profi Nordic which was acquired in February 1999
through CBRE Profi Acquisition Corp. (formerly Koll Tender III) for
approximately $5.5 million.

During 1999, the Company sold five of its smaller non-strategic offices
(Bakersfield and Fresno, California; Albuquerque, New Mexico; Reno, Nevada; and
Salt Lake City, Utah) for a total of approximately $7.0 million received in
cash and notes. It also sold an insurance operation which was used to help
property management and other clients with complex insurance problems for $3.0
million in receivables. These sales resulted in a pre-tax gain of $8.7 million.

On October 20, 1998 the Company, through L.J. Melody, purchased Carey,
Brumbaugh, Starman, Phillips, and Associates, Inc., a regional mortgage banking
firm for approximately $5.6 million in cash and approximately $2.4 million in
notes bearing interest at 9.0% with three annual payments which began in
October 1999. Approximately $0.2 million of the $2.4 million notes was
accounted for as deferred cash compensation to select key executives. The
acquisition was accounted for as a purchase. The purchase price has largely
been allocated to

F-28

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

intangibles and goodwill which are amortized on a straight line basis over
their estimated useful lives of 7 and 30 years, respectively.

On October 1, 1998 the Company purchased the remaining ownership interests
that it did not already own in the Richard Ellis Australia and New Zealand
businesses. The costs for the remaining interest was $20.0 million in cash.
Virtually all of the revenue of these locations is derived from brokerage and
appraisal services. The acquisition was accounted for as a purchase. The
purchase price has largely been allocated to intangibles and goodwill which are
amortized on a straight line basis over their estimated useful lives ranging up
to 30 years.

On September 22, 1998 the Company purchased the approximately 73.0% interest
that it did not already own in CB Commercial Real Estate Group of Canada, Inc.
The Company acquired the remaining interest for approximately $14.3 million in
cash. The acquisition was accounted for as a purchase. The purchase price has
been largely allocated to intangibles and goodwill which are amortized on a
straight line basis over their estimated useful lives ranging up to 30 years.

On July 7, 1998 the Company acquired the business of Hillier Parker May and
Rowden, now known as CB Hillier Parker Limited (HP), a commercial property
services partnership operating in the United Kingdom (UK). The acquisition was
accounted for as a purchase. The purchase price for HP included approximately
$63.6 million in cash and $7.1 million in shares of the Company's common stock.
In addition, the Company assumed a contingent payout plan for key HP employees
with a potential payout over three years of approximately $13.9 million and
assumed various annuity obligations of approximately $15.0 million. The
purchase price has largely been allocated to goodwill which is amortized on a
straight line basis over its estimated useful life of 30 years.

On July 1, 1998 the Company increased its ownership percentage in CB
Commercial/Arnheim & Neely, an existing partnership formed in September 1996,
which then combined with the Galbreath Company Mid-Atlantic to form CB Richard
Ellis/Pittsburgh, LP. The total purchase price of the Company's 50% interest in
the combined enterprise is $5.7 million.

On May 31, 1998 the Company acquired Mathews Click and Associates, a
property sales, leasing, and management firm, for approximately $10.0 million
in cash and potential supplemental payments of $1.9 million which were
contingent upon operating results, payable to the sellers over a period of two
years. The acquisition was accounted for as a purchase. The total purchase
price including potential supplemental payments was allocated to intangibles
and goodwill which are amortized on a straight line basis over their estimated
useful lives of 7 and 30 years, respectively.

Effective May 1, 1998 the Company, through L.J. Melody, acquired
Shoptaw-James, Inc. (Shoptaw-James), a regional mortgage banking firm, for
approximately $6.3 million in cash and approximately $2.7 million in notes
bearing interest at 9.0% with three annual payments which began in May 1999.
The acquisition was accounted for as a purchase. Approximately $0.3 million of
the $2.7 million notes are being accounted for as compensation over the term of
the notes as the payment of these notes are contingent upon select key
executives' and producers' continued employment with the Company. Approximately
$2.4 million of the $2.7 million is being accounted for as supplemental
payments to the sellers over a period of three years. The purchase price and
supplemental payments have largely been allocated to intangibles and goodwill
which are amortized on a straight line basis over their estimated useful lives
of 7 and 30 years, respectively.

On April 17, 1998 the Company purchased all of the outstanding shares of CB
Commercial Limited, formerly known as REI Limited (REI), an international
commercial real estate services firm operating under the name Richard Ellis in
major commercial real estate markets worldwide (excluding the UK). The
acquisition was accounted for as a purchase. The purchase price has largely
been allocated to goodwill, which is amortized on a

F-29

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

straight line basis over an estimated useful life of 30 years. The purchase
price for REI was approximately $104.8 million of which approximately $53.3
million was paid in cash and notes and approximately $51.5 million was paid in
shares of the Company's common stock. In addition, the Company assumed
approximately $14.4 million of long-term debt and minority interest. The
Company incurred a one-time charge of $3.8 million associated with the
integration of REI's operations and systems into the Company's.

On February 1, 1998 the Company, through L.J. Melody, acquired all of the
issued and outstanding stock of Cauble and Company of Carolina, a regional
mortgage banking firm for approximately $2.2 million, including cash payments
of approximately $1.8 million and a note payable of approximately $0.4 million
bearing interest at 9.0% with principal payments starting in April 1998. The
acquisition was accounted for as a purchase. The purchase price has been
largely allocated to intangibles and goodwill, which are amortized on a
straight line basis over their estimated useful lives of 7 and 30 years,
respectively.

On January 31, 1998 the Company, through L.J. Melody, acquired certain
assets of North Coast Mortgage Company, a regional mortgage banking firm for
cash payments of approximately $3.0 million and approximately $0.9 million in
notes. Approximately $0.3 million of the $0.9 million notes have been accounted
for as supplemental payments to the sellers and approximately $0.6 million as
deferred compensation to certain key executives and producers payable in three
annual installments which began in February 1999. The acquisition was accounted
for as a purchase. The purchase price and supplemental payments have largely
been allocated to intangibles and goodwill, which are amortized on a straight
line basis over their estimated useful lives of 7 and 30 years, respectively.
The $0.6 million of deferred cash compensation is being accounted for as
compensation over the term of the agreements as the payment of the compensation
is contingent upon select key executives' and producers' continued employment
with the Company.

The assets and liabilities of certain acquired companies, along with the
related goodwill, intangibles and indebtedness, are reflected in the
accompanying consolidated financial statements at December 31, 2000. The
results of operations of the acquired companies are included in the
consolidated results from the dates they were acquired. The unaudited pro forma
results of operations of the Company for the year ended December 31, 1998,
assuming the REI acquisition had occurred on January 1, 1998, would have been
as follows (amounts in thousands, except per share data):

Year Ended
December 31,
1998
------------

Revenue..................................... $1,051,114
Net income.................................. 15,586
Net loss applicable to common stockholders.. (16,687)
Loss per share
Basic.................................... (0.81)
Diluted.................................. (0.81)

For the year ended December 31, 1998, net loss applicable to common
stockholders includes a deemed dividend of $32.3 million on the repurchase of
the Company's preferred stock. The pro forma results do not necessarily
represent results which would have occurred if the acquisitions had taken place
on the date assumed above, nor are they indicative of the results of future
combined operations. The amounts are based upon certain assumptions and
estimates, and do not reflect any benefit from economies which might be
achieved from combined operations. Further, REI historical results for the
first three months of 1998 include certain nonrecurring adjustments.

F-30

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. Property and Equipment

Property and equipment is stated at cost and consists of the following (in
thousands):

December 31
------------------
2000 1999
-------- --------

Buildings and improvements.................. $ 17,354 $ 19,273
Furniture and equipment..................... 128,678 111,840
Equipment under capital leases.............. 28,765 29,800
-------- --------
174,797 160,913
Accumulated depreciation and amortization... (98,805) (90,764)
-------- --------
Property and equipment, net................. $ 75,992 $ 70,149
======== ========

The Company sold its headquarters building in downtown Los Angeles,
California, in September 1999 and a small office building in Phoenix, Arizona
in October 1999, both at a minimal loss. Depreciation expense was $19.2
million, $17.1 million and $14.8 million during 2000, 1999 and 1998,
respectively.

4. Investments in and Advances to Unconsolidated Subsidiaries

Investments in and advances to unconsolidated subsidiaries as of December
31, 2000 and 1999 are as follows (in thousands):

December 31
---------------
Interest 2000 1999
-------- ------- -------

CB Commercial/Whittier Partners, LP......... 50.0% $10,173 $ 9,646
CBRE Pittsburgh............................. 50.0% 6,261 5,853
Ikoma CB Richard Ellis K.K.................. 20.0% 3,695 2,523
Strategic Partners (CBRE Investors)......... 3.4% 3,659 --
Building Technology Engineers............... 49.9% 2,595 --
CBRE Corp Partners, LLC..................... 9.1% 2,510 1,453
Other....................................... * 12,432 19,039
------- -------
$41,325 $38,514
======= =======

--------
* Various interests with varying ownership rates.

Unaudited combined condensed financial information for the entities
accounted for using the equity method is as follows (in thousands):

Consolidated Statement of Operations Information

Year Ended December 31
-------------------------
2000 1999 1998
-------- -------- -------
(Unaudited)

Net revenue................................. $241,902 $172,365 $72,911
Income from operations...................... 59,936 43,088 27,921
Net income.................................. 50,183 32,795 23,678

F-31

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Condensed Balance Sheet Information:

December 31
-----------------
2000 1999
-------- --------
(Unaudited)

Current assets.............................. $153,942 $ 62,579
Noncurrent assets........................... 777,718 689,286
Current liabilities......................... 94,507 34,076
Noncurrent liabilities...................... 302,530 249,546
Minority interest........................... 519 1,115

5. Employee Benefit Plans

Option Plans. In conjunction with the North Coast Mortgage Company
acquisition, options for 25,000 shares were granted with an exercise price
representing the fair market value at date of grant of $32.50 per share. On
December 15, 1998, the option holders elected to change the exercise price to
$20.00 per share, which was above market value on the date of election, and
simultaneously reduce the number of shares by 20%. The options vest over five
years at a rate of 20% per year, expiring in February 2008. Options for 20,000
shares under the North Coast Mortgage Company acquisition were outstanding at
December 31, 2000.

In conjunction with the Shoptaw-James acquisition, options for 25,000 shares
were granted with an exercise price representing a fair market value of $37.32
per share on the date of grant. On December 15, 1998 the option holders elected
to change the exercise price to $20.00 per share, which was above market value
on the date of election, and simultaneously reduce the number of shares by 20%.
The options vest over five years at a rate of 20% per year, expiring in May
2008. Options for 20,000 shares under the Shoptaw-James acquisition were
outstanding at December 31, 2000.

In October 1998, in conjunction with the Carey, Brumbaugh acquisition,
options for 25,000 shares were granted with an exercise price representing a
fair market of $19.44 per share on the grant date. The options vest over five
years at a rate of 20% per year, expiring in September 2008. Options for 25,000
shares under the Carey, Brumbaugh acquisition were outstanding at December 31,
2000.

In April 1998, in conjunction with the REI acquisition, the Company approved
the assumption of the options outstanding under the REI Limited Stock Option
Plan. These options for 46,115 shares of common stock were issued and exercised
immediately at $14.95 per share in exchange for existing REI options. Also in
conjunction with the REI acquisition, the Company granted options for 475,677
shares at an exercise price equal to fair market value at date of grant of
$33.76 per share. On December 15, 1998 select holders of stock options elected
to change the exercise price of their options to $20.00 per share, which was
above market value on the date of election, and simultaneously reduce the
number of shares by 20%. During 2000, the Company granted options for 58,000
shares of common stock at an exercise price of $12.88 per share. All options
were granted at an exercise price equal to fair market value at date of grant.
The vesting periods of these options range from three to five years and they
expire at various dates through August 2010. Options for 492,984 shares were
outstanding under the REI Limited Stock Option Plan at December 31, 2000.

A total of 700,000 shares of common stock have been reserved for issuance
under the Company's 1997 Employee Stock Option Plan. On December 15, 1998,
select holders of stock options with an exercise price in excess of $20.00 per
share elected to change the exercise price of their options to $20.00 per
share, which was above market value on the date of election and simultaneously
reduce the number of shares by 20%. During 2000, the Company granted options
for 105,000 shares of common stock at exercise prices ranging from $10.38

F-32

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

to $12.85 per share. All options were granted at an exercise price equal to
fair market value at date of grant. The vesting periods for these options range
from approximately four to five years and they expire at various dates through
August 2010. Options for 692,060 shares were outstanding under the 1997
Employee Stock Option Plan at December 31, 2000.

In August 1997, in conjunction with the Koll acquisition, the Company
approved the assumption of the options outstanding under the KMS Holding
Company Amended 1994 Stock Option Plan (now known as the CBC Substitute Option
Plan (CBCSP)) and the Koll Acquisition Stock Option Plan (KASOP). Under the
CBCSP, 407,087 stock options were issued with exercise prices ranging from
$12.89 to $18.04 per share in exchange for existing Koll options. These options
were immediately exercisable and expire at various dates through April 2006.
All options were granted at an exercise price equal to fair market value at
date of grant. At December 31, 2000, 231,941 options were outstanding. Under
the KASOP, options for 550,000 shares were approved for issuance to former
senior executives of Koll who became employees or directors of the Company.
These options have exercise prices ranging from $14.25 to $36.75 per share and
vesting periods ranging from immediate to three years. During 2000, the Company
granted options for 20,000 shares of common stock under the KASOP at an
exercise price of $12.88 per share. These options expire at various dates
through August 2010. Options for 550,000 shares were outstanding for the KASOP
at December 31, 2000.

In August 1997, in conjunction with the Koll acquisition, the Company
approved the issuance of warrants to purchase 599,967 shares. Of the
outstanding warrants, 42,646 are attached to common stock obtainable under the
CBC Substitute Option Plan and 555,741 are attached to shares of outstanding
common stock. Each warrant is exercisable into one share of common stock at an
exercise price of $30.00 commencing in August 2000 and expiring in August 2004.
At December 31, 2000, 598,387 warrants issued were outstanding.

A total of 90,750 shares of common stock have been reserved for issuance
under the L.J. Melody Acquisition Stock Option Plan, which was adopted by the
Board of Directors in September 1996 as part of the July 1996 acquisition of
L.J. Melody. Options for all these shares have been issued at an exercise price
of $10.00 per share and vest over a period of five years at the rate of 5% per
quarter and these options expire in June 2006. Options for 90,750 shares of
common stock under the L.J. Melody Acquisition Stock Option Plan were
outstanding at December 31, 2000.

A total of 600,000 shares of common stock have been reserved for issuance
under the Company's 1991 Service Providers Stock Option Plan. In various years,
options were granted below market price to select directors as partial payment
for director fees. On December 15, 1998 select holders of stock options with an
exercise price in excess of $20.00 per share elected to change the exercise
price of their options to $20.00 per share, which was above market value on the
date of election and simultaneously reduce the number of shares by 20%. During
2000, options for 39,000 shares were granted to select directors and executive
officers at an exercise price equal to fair market value at date of grant
ranging from $11.81 to $12.88 per share. These options vest from a zero to a
five year period and expire at various dates through August 2010. Options for
583,888 shares were outstanding under the 1991 Service Providers Stock Option
Plan at December 31, 2000.

A total of 1,000,000 shares of common stock have been reserved for issuance
under the Company's 1990 Stock Option Plan. All options vest over a four year
period, expiring at various dates through November 2006. Options for 35,000
shares under the 1990 Stock Option Plan were outstanding at December 31, 2000.

The Company completed the 1999 stock repurchase program on January 5, 2000.
A total of 397,450 shares of common stock were purchased for a total of $5.0
million. In 1998, a total of 488,900 shares of common stock were purchased for
$8.8 million. The shares purchased in 1999 and 1998 will be used to minimize
the dilution caused by the exercise of stock options and the grant of stock
purchase rights.

F-33

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of the status of the Company's option plans at December 31, 2000,
1999 and 1998 and changes during the years then ended is presented in the table
and narrative below:

2000 1999 1998
------------------- ------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Stock Options and Warrants Shares Price Shares Price Shares Price
-------------------------- --------- -------- --------- -------- ---------- --------

Outstanding beginning of the year..... 3,075,356 $20.71 2,937,085 $23.18 3,284,381 $22.43
Granted............................... 487,710 24.81 628,611 15.17 1,885,944 25.94
Exercised............................. -- -- (58,000) 10.00 (824,385) 10.73
Forfeited/Expired..................... (223,056) 19.84 (432,340) 31.64 (1,408,855) 32.42
--------- ------ --------- ------ ---------- ------
Outstanding end of year............... 3,340,010 $21.25 3,075,356 20.71 2,937,085 $23.18
--------- ------ --------- ------ ---------- ------
Exercisable at end of year............ 1,824,665 $23.90 770,756 $21.86 830,289 $21.94
Weighted average fair value of options
granted during the year............. $ 6.72 $ 8.84 $12.27

Significant option and warrant groups outstanding at December 31, 2000 and
related weighted average price and life information is presented below:

Exercisable Options
Outstanding Options and Warrants and Warrants
------------------------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Number Remaining Exercise Number Exercise
Range of Exercise Prices Outstanding Contractual Life Price Exercisable Price
------------------------ ----------- ---------------- -------- ----------- --------

$00.38-$10.38...... 167,594 5.32 yrs. $ 7.44 143,519 $ 6.97
$11.81-$19.44...... 985,941 7.69 yrs. 14.48 327,141 14.48
$20.00-$23.75...... 1,273,754 6.84 yrs. 20.52 488,218 20.79
$30.00-$36.75...... 912,721 4.64 yrs. 32.11 865,787 32.02
--------- ------ --------- ------
3,340,010 $21.25 1,824,665 $23.90
========= ====== ========= ======

Deferred Compensation Plan (the DCP). In 1994, the Company implemented the
DCP. Under the DCP, a select group of management and highly compensated
employees can defer the payment of all or a portion of their compensation
(including any bonus). The DCP permits participating employees to make an
irrevocable election at the beginning of each year to receive amounts deferred
at a future date either in cash, which is an unsecured long-term liability of
the Company, or in shares of common stock of the Company which elections are
recorded as additions to stockholders' equity. In May 2000, the Company began
repurchasing stock from the open market in order to minimize the dilutive
effect of issuing stock pursuant to the DCP. As of December 31, 2000, the
Company has repurchased 185,800 shares of common stock for $2.0 million, which
is reported as an increase in treasury stock. In 1999, the Company revised the
DCP to add insurance products which function like mutual funds as an investment
alternative and to fund the Company's obligation for deferrals invested in
these insurance products. Prior to July 1, 2000, cash payments to purchase
additional insurance products were made on the third business day of the month
following the related DCP participant deferral. Currently, payments are made
twice a month. For the year ended December 31, 2000, $43.6 million was deferred
and mainly allocated to the other investment products. The accumulated
non-stock liability at December 31, 2000 was $80.5 million and the assets (in
the form of insurance proceeds) set aside to cover the liability was $53.2
million. The total liability of $92.0 million, including $11.5 million deferred
in stock, was charged to expense in the period of deferral and classified as
deferred compensation plan liability, except for stock which is included in
stockholders' equity. On July 17, 2000, the Company announced a match of the
stock portion of the DCP for the Plan Year 1999 in the

F-34

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

amount of $4.5 million, equivalent to 437,880 shares of common stock at a
market price of $10.38 per share. The vesting period is over five years with
20% vesting each year at December 31, 2000 through 2004. The related
compensation expense will be amortized over the vesting period. The Company
charged to compensation expense a total of $0.9 million for the year ended
December 31, 2000. The weighted average fair value of the shares granted during
the year is $5.90. In October 2000, the Company added the "Retention Program"
and the "Recruitment Program" to the DCP, with the awards being effective
January 2001. Under the Retention Program, the 125 best sales professionals
were credited with 5,700, 4,500 or 3,000 stock units under the DCP (each unit
is the equivalent of one share of stock). The stock units do not vest for four
years and in the case of those sales professionals who were credited with 5,700
or 4,500 stock units, there was a requirement to execute a long-term covenant
not to compete. Under the Recruitment Program, the Company credited either
stock units or cash to experienced new hires for sales professional jobs. The
share awards ranged from 750 to 4,500 and the cash awards ranged from $30
thousand to $100 thousand.

As allowed under the provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, the Company has elected to follow Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations in accounting for its employee stock based compensation plans.
Under this method the Company does not recognize compensation expense for
options that were granted at or above the market price of the underlying stock
on the date of grant. Had compensation expense been determined consistent with
SFAS No. 123, the Company's net income and per share information would have
been reduced to the following pro forma amounts (in thousands except per share
data):

2000 1999 1998
------- ------- -------

Net Income:
As Reported.............................. $33,388 $23,282 $24,557
Pro Forma................................ 30,393 19,039 20,396
Basic EPS:
As Reported.............................. 1.60 1.11 (0.38)
Pro Forma................................ 1.45 0.91 (0.59)
Diluted EPS:
As Reported.............................. 1.58 1.10 (0.38)
Pro Forma................................ 1.44 0.91 (0.59)

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.

The fair value of each option grant and DCP company match is estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for grants:

2000 1999 1998
---------- ---------- ----------

Risk free interest rate..................... 6.52% 5.55% 4.95%
Expected volatility......................... 58.06% 61.83% 48.16%
Expected life............................... 5.00 years 5.00 years 5.00 years

Dividend yield is excluded from the calculation since it is the present
intention of the Company to retain all earnings.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because

F-35

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

changes in the subjective input assumptions can materially affect the fair
value estimate, the Company believes the Black-Scholes model does not
necessarily provide a reliable single measure of the fair value of its employee
stock options.

Stock Purchase Plans. The Company has restricted stock purchase plans
covering select key executives including senior management. A total of 500,000
and 550,000 shares of common stock have been reserved for issuance under the
Company's 1999 and 1996 Equity Incentive Plans, respectively. The shares may be
issued to senior executives for a purchase price equal to the greater of $18.00
and $10.00 per share or fair market value, respectively. Under the 1999 and
1996 Equity Incentive Plans, the Company issued 285,000 and 50,000 shares in
2000, and 415,833 and 441,937 shares were outstanding at December 31, 2000,
respectively. The purchase price for these shares must be paid either in cash
or by delivery of a full recourse promissory note. The related promissory notes
are also included in the Consolidated Statements of Stockholders' Equity.

In October 1998, the Company offered all employees under the 1990 Stock
Option Plan who held options that expired in April 1999 a loan equal to 100% of
the total exercise price plus 40% of the difference between the current market
value of the shares and the exercise price. Loan proceeds were applied towards
the total exercise price and payroll withholding taxes. The loans are evidenced
by full recourse promissory notes having a maturity of five years at an
interest rate of 6.0%. Interest is due annually, while the principal is due the
earlier of five years or upon sale of the shares. The shares issued under this
offering may not be sold until after 18 months from the date of issuance. A
total of 415,000 shares were issued under this offering. The related promissory
notes of $4.7 million and $4.9 million are included in other assets in the
Consolidated Balance Sheets at December 31, 2000 and 1999, respectively.

Bonuses. The Company has bonus programs covering select key employees,
including senior management. Awards are based on the position and performance
of the employee and the achievement of pre-established financial, operating and
strategic objectives. The amounts charged to expense for bonuses were $49.8
million, $44.3 million and $33.7 million for the years ended December 31, 2000,
1999, and 1998, respectively.

Capital Accumulation Plan (the Cap Plan). The Cap Plan is a defined
contribution profit sharing plan under Section 401(k) of the Internal Revenue
Code and is the Company's only such plan. Under the Cap Plan, each
participating employee may elect to defer a portion of his or her earnings and
the Company may make additional contributions from the Company's current or
accumulated net profits to the Cap Plan in these amounts as determined by the
Board of Directors. The Company expensed, in connection with the Cap Plan, $2.2
million and $1.6 million for the years ended December 31, 2000 and 1999. No
expense, in connection with the Cap Plan, was incurred for the year ended
December 31, 1998.

Employee Stock Purchase Plan. In May 2000, the Company amended and restated,
effective July 1, 2000, its 1998 employee stock purchase plan designed
exclusively for employees who earn less than $100,000 in total annual
compensation. Under the plan, the eligible employees may purchase common stock
by means of contributions to the Company at a price equal to 90% of the fair
market value of the share on the last trading day of the purchase period. The
plan provides for purchases by employees up to an aggregate of 150,000 shares
each year for 2000, 2001 and 2002. This program was discontinued effective
October 2000.

Pension Plan. The Company, through the acquisition of Hillier Parker,
maintains a contributory defined benefit pension plan to provide retirement
benefits to existing and former Hillier Parker employees participating in the
plan. It is the Company's policy to fund the minimum annual contributions
required by applicable regulations. Pension expense totaled $0.9 million, $1.9
million and $0.9 million in 2000, 1999 and 1998, respectively.

F-36

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following sets forth a reconciliation of benefit obligation, plan
assets, plan's funded status and amounts recognized in the accompanying
Consolidated Balance Sheets:

Year Ended
December 31
------------------
2000 1999
-------- --------
(in thousands)

Change in benefit obligation
Benefit obligation at beginning of year..... $ 72,146 $ 73,190
Service cost................................ 5,728 5,350
Interest cost............................... 4,026 4,175
Plan participants' contributions............ 671 804
Actuarial gain.............................. (4,680) (7,495)
Benefits paid............................... (1,343) (1,760)
Currency gain............................... (5,472) (2,118)
-------- --------
Benefit obligation at end of year........... $ 71,076 $ 72,146
======== ========

Change in plan assets
Fair value of plan assets at beginning of
year...................................... $115,039 $ 95,731
Actual return on plan assets................ (3,340) 22,666
Company contributions....................... 1,257 786
Plan participants' contributions............ 671 419
Benefits paid............................... (1,343) (1,760)
Currency loss............................... (8,596) (2,803)
-------- --------
Fair value of plan assets at end of year.... $103,688 $115,039
======== ========

Funded status............................... $ 32,612 $ 42,893
Unrecognized net actuarial gain............. (7,941) (16,570)
Company contributions in the
post-measurement period................... 564 --
-------- --------
Prepaid benefit cost........................ $ 25,235 $ 26,323
======== ========

Weighted-average assumptions used in developing the projected benefit
obligation were as follows:

December 31
----------------
2000 1999
------- -------

Discount rate............................... 6.00% 5.75%
Expected return on plan assets.............. 7.75% 7.75%
Rate of compensation increase............... 5.00% 5.00%

Net periodic pension cost consisted of the following:

Year Ended
December 31
----------------
2000 1999
------- -------
(in thousands)

Employer service cost....................... $ 5,728 $ 5,350
Interest cost on projected benefit
obligation................................ 4,026 4,175
Expected return on plan assets.............. (8,395) (7,636)
Unrecognized net gain....................... (425) --
------- -------
Net periodic benefit cost................... $ 934 $ 1,889
======= =======

F-37

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. Long-term Debt

Long-term debt consists of the following (in thousands):

December 31
-----------------
2000 1999
-------- --------

Senior Subordinated Notes, less unamortized discount of $1.7 million and
$1.9 million at December 31, 2000 and 1999, respectively, with fixed interest
at 8.9% due in 2006.......................................................... $173,336 $173,108
Revolving Credit Facility, with interest ranging from 8.5% to 9.0%, due in
2003......................................................................... 110,000 160,000
Westmark Senior Notes, with interest ranging from 9.0% to 10.0% through
December 31, 2004 and at variable rates depending on the Company's credit
facility rate thereafter, due from 2001 through 2010......................... 15,502 16,502
Euro cash pool loan, with interest at 6.91% and no stated maturity date........ 6,946 --
REI Senior Notes, with variable interest rates based on Sterling LIBOR minus
1.5%, due in 2002............................................................ 2,742 2,965
Shoptaw-James Senior Notes, with fixed interest at 9.0%, due in 2001........... 810 1,620
Carey, Brumbaugh Senior Notes, with fixed interest at 9.0%, due in 2001........ 720 1,440
Eberhardt Acquisition Obligations, with fixed interest at 8.0%, due from 2001
through 2002................................................................. 600 900
Capital lease obligations, mainly for autos and telephone equipment, with
interest ranging from 6.8% to 8.9%, due through 2004......................... 2,302 3,554
Other.......................................................................... 1,206 4,548
-------- --------
Total.......................................................................... 314,164 364,637
Less current maturities........................................................ 10,593 6,765
-------- --------
Total long-term debt........................................................ $303,571 $357,872
======== ========

Annual aggregate maturities of long-term debt at December 31, 2000 are as
follows (in thousands): 2001--$10,593; 2002--$4,536; 2003--$110,512;
2004--$128; 2005--$20; and $188,375 thereafter.

In October 1999, the Company executed an amendment to the revolving credit
facility, eliminating the mandatory reduction on December 31, 1999, and
revising some of the restrictive covenants. The new amendment is also subject
to mandatory reductions of the facility by $80.0 million and $70.0 million on
December 31, 2000 and 2001, respectively. This reduced the facility from $350.0
million to $270.0 million at December 31, 2000. The amount outstanding under
this facility was $110.0 million at December 31, 2000. Interest rate
alternatives include Bank of America's reference rate plus 1.00% and LIBOR plus
2.00%. The weighted average rate on amounts outstanding at December 31, 2000
was 8.79%.

The revolving credit facility contains numerous restrictive covenants that,
among other things, limit the Company's ability to incur or repay other
indebtedness, make advances or loans to subsidiaries and other entities, make
capital expenditures, incur liens, enter into mergers or effect other
fundamental corporate transactions, sell its assets, or declare dividends. In
addition, the Company is required to meet certain ratios relating to its
adjusted net worth, level of indebtedness, fixed charges and interest coverage.

The Company has outstanding Senior Subordinated Notes (Subordinated Notes)
due on June 1, 2006. The Subordinated Notes are redeemable in whole or in part
after June 1, 2002 at 104.438% of par on that date and at declining prices
thereafter. On or before June 1, 2001, up to 35.0% of the issued amount may be
redeemed at 108.875% of par plus accrued interest solely with the proceeds from
an equity offering.

F-38

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company has a credit agreement with Residential Funding Corporation
(RFC). The credit agreement provides for a revolving line of credit, which
bears interest at 1.25% per annum over LIBOR. On July 19, 2000, the Company
executed an amendment to the revolving line of credit, increasing the line of
credit from $50.0 million to $100.0 million, decreasing the interest rate from
1.25% to 1.00% per annum over LIBOR and extending the expiration date from
August 31, 2000 to August 31, 2001. In addition, on November 8, 2000, the
Company obtained a temporary line of credit increase of $52.0 million,
resulting in a total line of credit equaling $152.0 million. This temporary
line of credit increase expired on November 30, 2000. During the year, the
Company had a maximum of $151.3 million revolving line of credit principal
outstanding. At December 31, 2000, the Company had $0.4 million revolving line
of credit principal outstanding.

7. Commitments and Contingencies

In August 1993, a former commissioned sales person of the Company filed a
lawsuit against the Company in the Superior Court of New Jersey, Bergen County,
alleging gender discrimination and wrongful termination by the Company. On
November 20, 1996, a jury returned a verdict against the Company, awarding $1.5
million in general damages and $5.0 million in punitive damages to the
plaintiff. Subsequently, the trial court awarded the plaintiff $0.6 million in
attorneys' fees and costs. Following denial by the trial court of the Company's
motions for new trial, reversal of the verdict and reduction of damages, the
Company filed an appeal of the verdict and requested a reduction of damages. On
March 9, 1999, the appellate court ruled in the Company's favor, reversed the
trial court decision and ordered a new trial. On February 16, 2000, the Supreme
Court of New Jersey reversed the decision of the appellate court, concluded
that the general damage award in the trial court should be sustained and
returned the case to the appellate court for a determination as to whether a
new trial should be ordered on the issue of punitive damages. In April 2000,
the Company settled the compensatory damages claim (including interest) and all
claims to date with respect to attorneys fees by paying to the plaintiff the
sum of $2.75 million leaving only the punitive damage claim for resolution (the
plaintiff also agreed, with very limited exceptions, that no matter what the
outcome of the punitive damage claim the Company would not be responsible for
more than 50% of the plaintiff's future attorney fees). In February 2001, the
Company settled all remaining claims for the sum of $2.0 million and received a
comprehensive release.

F-39

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

believes that any liability to the Company that may result from disposition of
these lawsuits will not have a material effect on the consolidated financial
position or results of operations of the Company.

The following is a schedule by years of future minimum lease payments for
noncancelable leases as of December 31, 2000 (in thousands):

Capital Operating
Leases Leases
------- ---------

2001................................... $1,167 $ 48,299
2002................................... 895 40,686
2003................................... 518 33,316
2004................................... 10 25,967
2005................................... -- 22,195
Thereafter............................. -- 97,674
------ --------
Total minimum payments required..... $2,590 $268,137
====== ========

The interest portion of capital lease payments represents the amount
necessary to reduce net minimum lease payments to present value calculated at
the Company's incremental borrowing rate at the inception of the leases. This
totaled $0.3 million at December 31, 2000, resulting in a present value of net
minimum lease payments of $2.3 million. At December 31, 2000, $0.9 million and
$1.4 million are included in the current portion of long-term debt and
long-term debt, respectively. In addition, the total minimum payments for
noncancelable operating leases have not been reduced by the minimum sublease
rental income of $42.9 million due in the future under noncancelable subleases.

Substantially all leases require the Company to pay maintenance costs,
insurance and property taxes, and generally may be renewed for five year
periods. The composition of total rental expense under noncancelable operating
leases consisted of the following (in thousands):

December 31,
-------------------------
2000 1999 1998
------- ------- -------

Minimum rentals........................ $56,243 $51,467 $33,126
Less sublease rentals.................. (1,387) (928) (706)
------- ------- -------
$54,856 $50,539 $32,420
======= ======= =======

In 1999, the Company entered into an agreement with Fannie Mae in which the
Company agreed to fund the purchase of a $103.6 million loan portfolio from
proceeds from its RFC line of credit, which was temporarily increased to $140.0
million in 2000. In December 2000, the Company entered into an agreement with
Fannie Mae in which the Company agreed to fund the purchase of an additional
$7.5 million loan from proceeds from its RFC line of credit. A 100%
participation in both the original and additional loan portfolio was
subsequently sold to Fannie Mae with the Company retaining the credit risk on
the first 2% of loss incurred on the underlying commercial mortgage loans. The
Company has collateralized a portion of its obligation to cover the first 2% of
losses for both the $103.6 million loan portfolio and the additional $7.5
million loan portfolio by increasing a letter of credit in favor of Fannie Mae
to total $1.1 million.

The Company has a participation agreement with RFC whereby RFC agrees to
purchase a 99% participation interest in any eligible multifamily mortgage
loans owned by the Company and outstanding at quarter-end. This participation
agreement, which originally expired on August 31, 2000, has been extended to
August 31, 2001.

F-40

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

An important part of the strategy for the Company's investment management
business involves investing the Company's own capital in certain real estate
investments with its clients. As of December 31, 2000, the Company had
committed an additional $37.7 million to fund future co-investments.

8. Income Taxes

The tax provision (benefit) for the years ended December 31, 2000, 1999 and
1998 consisted of the following (in thousands):

Year Ended December 31
-------------------------
2000 1999 1998
------- ------- -------

Federal:
Current............................. $24,924 $14,403 $ 4,265
Deferred tax........................ 921 (1,417) 14,469
Reduction of valuation allowances... (3,000) (6,347) --
------- ------- -------
22,845 6,639 18,734
State:
Current............................. 6,895 5,627 3,470
Deferred tax........................ (1,243) (1,411) (75)

------- ------- -------
5,652 4,216 3,395
Foreign:
Current............................. 7,015 8,837 3,797
Deferred tax........................ (761) (3,513) --
------- ------- -------
6,254 5,324 3,797
------- ------- -------
$34,751 $16,179 $25,926
======= ======= =======

The following is a reconciliation, stated as a percentage of pre-tax income,
of the US statutory federal income tax rate to the Company's effective tax rate
on income from operations:

Year Ended December 31
---------------------
2000 1999 1998
---- ---- ----

Federal statutory tax rate.................................................. 35% 35% 35%
Permanent differences, including goodwill, meals, entertainment and other... 11 15 8
State taxes, net of federal benefit......................................... 6 9 4
Foreign income taxes........................................................ 4 4 4
Reduction of valuation allowances........................................... (5) (22) --
-- --- --
Effective tax rate.......................................................... 51% 41% 51%
== === ==

The domestic component of income before provision for income tax included in
the consolidated statement of operations was $63.2 million, $32.0 million and
$45.6 million, for 2000, 1999 and 1998, respectively. The international
component of income before provision for income tax was $4.9 million, $7.4
million and $4.9 million, for 2000, 1999 and 1998, respectively.

F-41

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Cumulative tax effects of temporary differences are shown below at December
31, 2000 and 1999 (in thousands):

December 31
------------------
2000 1999
-------- --------

Asset (Liability)
Property and equipment...................................................... $ 11,910 $ 5,820
Bad debts and other reserves................................................ 12,832 15,940
Intangible amortization..................................................... (15,736) (16,533)
Bonus, unexercised restricted stock, deferred compensation.................. 35,343 23,990
Partnership income.......................................................... 6,950 7,092
Net operating loss (NOL) and alternative minimum tax credit carryforwards... 6,134 23,086
Unconsolidated affiliates................................................... 1,010 (1,167)
All other, net.............................................................. 1,853 2,040
-------- --------
Net deferred tax asset before valuation allowances.......................... 60,296 60,268
Valuation allowances........................................................ (16,830) (20,320)
-------- --------
Net deferred tax asset................................................... $ 43,466 $ 39,948
======== ========

The Company had federal income tax NOLs of approximately $16.3 million at
December 31, 2000, corresponding to $5.7 million of the Company's $60.3 million
in net deferred tax assets before valuation allowances.

The ability of the Company to utilize NOLs was limited in 1998 and will be
in subsequent years as a result of the Company's 1996 public offering, the 1997
Koll acquisition and the 1998 repurchase of preferred stock which cumulatively
caused a more than 50.0% change of ownership within a three year period. As a
result of the limitation, the Company's ability to utilize its existing NOLs is
limited to $26.0 million on an annual basis. It is anticipated that the Company
will utilize the remaining NOLs in 2001.

A deferred US tax liability has not been provided on the unremitted earnings
of foreign subsidiaries because it is the intent of the Company to permanently
reinvest these earnings. Undistributed earnings of foreign subsidiaries, which
have been or are intended to be permanently invested in accordance with APB No.
23, Accounting for Income Taxes--Special Areas, aggregated $27.7 million at
December 31, 2000.

9. Earnings Per Share Information

Basic earnings (loss) per share was computed by dividing net income (loss),
less preferred dividend requirements as applicable, by the weighted average
number of common shares outstanding during each period. The computation of
diluted earnings (loss) per share further assumes the dilutive effect of stock
options, stock warrants and other stock-based compensation programs, as well as
the conversion of the preferred stock during periods when preferred stock was
outstanding and was dilutive.

In January 1998, the Company repurchased all 4.0 million shares of its
outstanding convertible preferred stock. The portion of the purchase price in
excess of the carrying value represents the deemed dividend charge to net
income applicable to common shareholders when computing basic and diluted
earnings (loss) per share for the year ended December 31, 1998.

F-42

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following is a calculation of earnings (loss) per share for the years
ended December 31 (in thousands, except share and per share data):

2000 1999 1998
------------------------- ------------------------- ---------------------------
Per- Per- Per-
Share Share Share
Income Shares Amount Income Shares Amount Income Shares Amount
------- ---------- ------ ------- ---------- ------ -------- ---------- ------

Basic earnings (loss) per share:
Net income...................... $33,388 $23,282 $ 24,557
Deemed dividend on preferred
stock repurchase............... -- -- (32,273)
------- ---------- ----- ------- ---------- ----- -------- ---------- ------
Net income (loss) applicable
to common stockholders........ $33,388 20,931,111 $1.60 $23,282 20,998,097 $1.11 $ (7,716) 20,136,117 $(0.38)
======= ========== ===== ======= ========== ===== ======== ========== ======
Diluted earnings (loss) per share:
Net income (loss) applicable to
common stockholders............ $33,388 20,931,111 $23,282 20,998,097 $ (7,716) 20,136,117
Diluted effect of exercise of
options outstanding............ 35,594 74,339 --
Diluted effect of stock-based
compensation programs.......... 130,535 -- --
------- ---------- ------- ---------- -------- ----------
Net income (loss) applicable
to common stockholders........ $33,388 21,097,240 $1.58 $23,282 21,072,436 $1.10 $ (7,716) 20,136,117 $(0.38)
======= ========== ===== ======= ========== ===== ======== ========== ======

The following items were not included in the computation of diluted earnings
per share because their effect in the aggregate was anti-dilutive for the years
ended December 31,

2000 1999 1998
-------------- -------------- ---------------

Stock options
Outstanding....... 2,574,029 2,008,659 2,337,118
Price ranges...... $11.81-$36.75 $16.38-$36.75 $0.30-$37.31
Expiration ranges. 6/8/04-8/31/10 6/8/04-5/31/09 4/18/99-7/22/08
Stock warrants
Outstanding....... 598,387 599,967 599,967
Price............. $30.00 $30.00 $30.00
Expiration date... 8/28/04 8/28/04 8/28/04

10. Disclosures About Fair Value of Financial Instruments

Long-term Debt. Based on dealer's quote, the estimated fair value of the
Company's $173.3 million Senior Subordinated Note, discussed in Note 6, is
$155.8 million.

Estimated fair values for the Revolving Credit Facilities and the remaining
long-term debts are not presented because the Company believes that it is not
materially different from book value, primarily because the majority of the
Company's debt is based on variable rates.

F-43

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11. Industry Segments

In July 1999, the Company undertook a reorganization to streamline its US
operations which resulted in a change in its segment reporting from four to
three segments. The Company has a number of lines of business which are
aggregated, reported and managed through these three segments: Transaction
Management, Financial Services and Management Services. The Transaction
Management segment is our largest generator of revenue and operating income and
includes Brokerage Services, Corporate Services and Investment Property
activities. Brokerage Services includes activities that provide sales, leasing
and consulting services in connection with commercial real estate and is the
Company's primary revenue source. Corporate Services focuses on building
relationships with large corporate clients which generate recurring revenue.
Investment Property activities provide brokerage services for commercial real
property marketed for sale to institutional and private investors. The
Financial Services segment provides commercial mortgage, valuation, investment
management and consulting and research services. The Management Services
segment provides facility management services to corporate real estate users
and property management and related services to owners. The following table
summarizes the revenue, cost and expenses, and operating income (loss) by
operating segment for the year ended December 31, 2000, 1999 and 1998 (in
thousands):

Year Ended December 31
--------------------------------
2000 1999 1998
---------- ---------- ----------

Revenue:
Transaction Management
Leases........................................ $ 510,287 $ 426,108 $ 352,811
Sales......................................... 378,486 383,726 330,206
Other consulting and referral fees(1)......... 61,479 71,095 79,934
---------- ---------- ----------
Total revenue............................. 950,252 880,929 762,951
Financial Services
Appraisal fees................................ 72,861 69,007 48,090
Loan origination and servicing fees........... 58,188 45,938 39,402
Investment management fees.................... 40,433 27,323 32,591
Other(1)...................................... 42,622 35,059 25,167
---------- ---------- ----------
Total revenue............................. 214,104 177,327 145,250
Management Services
Property management fees...................... 83,251 79,994 67,300
Facilities management fees.................... 23,069 25,597 17,219
Other(1)...................................... 52,928 49,192 41,783
---------- ---------- ----------
Total revenue............................. 159,248 154,783 126,302
---------- ---------- ----------
Consolidated revenues............................ $1,323,604 $1,213,039 $1,034,503
========== ========== ==========
Operating income (loss)
Transaction Management........................... $ 83,305 $ 68,382 $ 81,232
Financial Services............................... 17,712 7,113 6,849
Management Services.............................. 6,268 1,404 6,980
Merger-related and other nonrecurring charges.... -- -- (16,585)
---------- ---------- ----------
107,285 76,899 78,476
Interest income.................................. 2,554 1,930 3,054
Interest expense................................. 41,700 39,368 31,047
---------- ---------- ----------
Income before provision for income taxes......... $ 68,139 $ 39,461 $ 50,483
========== ========== ==========

F-44

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Year Ended December 31
-----------------------
2000 1999 1998
------- ------- -------

Depreciation and amortization
Transaction Management..................................... $21,342 $20,676 $13,722
Financial Services......................................... 12,001 10,719 11,025
Management Services........................................ 9,856 9,075 7,438
------- ------- -------
$43,199 $40,470 $32,185
======= ======= =======

Year Ended December 31
-----------------------
2000 1999 1998
------- ------- -------

Capital expenditures
Transaction Management..................................... $15,435 $15,830 $12,669
Financial Services......................................... 6,674 11,030 10,179
Management Services........................................ 4,812 8,270 6,867
------- ------- -------
$26,921 $35,130 $29,715
======= ======= =======
Equity interest in earnings of unconsolidated subsidiaries
Transaction Management..................................... $ 3,930 $ 2,542 $ 315
Financial Services......................................... 1,162 4,030 706
Management Services........................................ 2,020 956 2,422
------- ------- -------
$ 7,112 $ 7,528 $ 3,443
======= ======= =======

December 31
-----------------
2000 1999
-------- --------

Identifiable assets
Transaction Management.................................. $477,268 $444,422
Financial Services...................................... 261,682 246,151
Management Services..................................... 159,835 171,118
Corporate............................................... 64,320 67,792
-------- --------
$963,105 $929,483
======== ========

Identifiable assets by industry segment are those assets used in the Company
operations in each segment. Corporate identified assets are principally made up
of cash and cash equivalents and deferred taxes.

December 31
---------------
2000 1999
------- -------

Investment in and advances to unconsolidated subsidiaries
Transaction Management.................................. $14,208 $11,352
Financial Services...................................... 15,199 18,587
Management Services..................................... 11,918 8,575
------- -------
$41,325 $38,514
======= =======

F-45

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Geographic Information:

Year Ended December 31
--------------------------------
2000 1999 1998
---------- ---------- ----------

Revenue
Americas
United States......................... $1,027,359 $ 940,341 $ 884,304
Canada, South and Central America..... 46,721 42,112 16,473
---------- ---------- ----------
1,074,080 982,453 900,777

Asia Pacific.............................. 84,985 79,420 46,528
Europe, Middle East and Africa............ 164,539 151,166 87,198
---------- ---------- ----------
$1,323,604 $1,213,039 $1,034,503
========== ========== ==========

December 31
---------------
2000 1999
------- -------

Long-Lived assets
United States.............................................. $55,100 $51,064
All other countries........................................ 20,892 19,085
------- -------
$75,992 $70,149
======= =======

Long lived assets include property, plant and equipment.

12. Guarantor and Nonguarantor Financial Statements

The following condensed consolidating financial information, which is
subject to change based on the issuance of the Notes, includes:

(1) Condensed consolidating balance sheets as of December 31, 2000 and 1999
and the related statements of income and cash flows for each of the
three years in the period ended December 31, 2000 of (a) CB Richard
Ellis Services, Inc., the parent; (b) the guarantor subsidiaries; (c)
the nonguarantor subsidiaries; and (d) the Company on a consolidated
basis; and

(2) Elimination entries necessary to consolidate CB Richard Ellis Services,
Inc., the parent, with guarantor and nonguarantor subsidiaries.

Investments in consolidated subsidiaries are presented using the equity
method of accounting. The principal elimination entries eliminate investments
in consolidated subsidiaries and intercompany balances and transactions.
Merger-related and other nonrecurring charges reported in 1998 were not pushed
down to the various subsidiaries.

F-46

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONSOLIDATED BALANCE SHEETS
FOR THE YEAR ENDED DECEMBER 31, 2000
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
-------- ------------ ------------ ----------- ------------

Current Assets:
Cash and cash equivalents............... $ 62 $ 7,558 $ 13,234 $ -- $ 20,854
Receivables, less allowance for
doubtful accounts....................... 637 85,173 91,098 -- 176,908
Inter-company receivables............... -- 8,448 -- (8,448) --
Prepaid and other current assets........ 9,269 7,138 8,876 -- 25,283
-------- -------- -------- --------- --------
Total current assets.................. 9,968 108,317 113,208 (8,448) 223,045
Property and equipment, net.............. -- 55,100 20,892 -- 75,992
Goodwill, net............................ -- 213,131 210,844 -- 423,975
Intangible assets, net................... 5,964 36,267 4,201 -- 46,432
Cash surrender value of insurance
policies, deferred compensation......... 53,203 -- -- -- 53,203
Investments in and advances to
unconsolidated subsidiaries............. 3,695 32,511 5,119 -- 41,325
Investment in consolidated subsidiaries.. 222,590 192,544 -- (415,134) --
Inter-company loan receivable............ 293,111 -- -- (293,111) --
Deferred taxes, net...................... 38,047 -- -- (5,720) 32,327
Prepaid pension costs.................... -- -- 25,235 -- 25,235
Other assets............................. 4,741 30,752 6,078 -- 41,571
-------- -------- -------- --------- --------
Total assets.......................... $631,319 $668,622 $385,577 $(722,413) $963,105
======== ======== ======== ========= ========
Current Liabilities:
Accounts payable and accrued expenses... $ 2,720 $ 33,730 $ 47,223 $ -- $ 83,673
Inter-company payable................... -- -- 8,448 (8,448) --
Compensation and employee benefits...... -- 94,916 33,233 -- 128,149
Reserve for bonus and profit sharing.... -- 38,360 21,170 -- 59,530
Income taxes payable.................... 26,679 -- 1,581 -- 28,260
Current maturities of long-term debt.... -- 2,742 7,851 -- 10,593
-------- -------- -------- --------- --------
Total current liabilities............. 29,399 169,748 119,506 (8,448) 310,205
Long-term debt:
Senior subordinated notes, less
unamortized discount.................... 173,336 -- -- -- 173,336
Revolving credit facilities............. 110,000 -- -- -- 110,000
Other long-term debt.................... 2,742 16,111 1,382 -- 20,235
Inter-company loan payable.............. -- 234,923 58,188 (293,111) --
-------- -------- -------- --------- --------
Total long-term debt.................. 286,078 251,034 59,570 (293,111) 303,571
Deferred compensation liability.......... 80,503 -- -- -- 80,503
Other liabilities........................ -- 15,162 20,297 (5,720) 29,739
-------- -------- -------- --------- --------
Total liabilities..................... 395,980 435,944 199,373 (307,279) 724,018

Minority interest........................ -- -- 3,748 -- 3,748

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $.01 par value......... -- -- -- -- --
Common stock, $.01 par value............ 217 -- -- -- 217
Additional paid-in capital.............. 364,168 233,218 183,875 (417,093) 364,168
Notes receivable from sale of stock..... (11,847) -- -- -- (11,847)
Accumulated earnings (deficit).......... (89,097) 256 6,567 (6,823) (89,097)
Accumulated other comprehensive loss.... (12,258) (796) (7,986) 8,782 (12,258)
Treasury stock at cost.................. (15,844) -- -- -- (15,844)
-------- -------- -------- --------- --------
Total stockholders' equity............ 235,339 232,678 182,456 (415,134) 235,339
-------- -------- -------- --------- --------
Total liabilities and stockholders'
equity................................ $631,319 $668,622 $385,577 $(722,413) $963,105
======== ======== ======== ========= ========

F-47

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONSOLIDATED BALANCE SHEETS
FOR THE YEAR ENDED DECEMBER 31, 1999
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
--------- ------------ ------------ ----------- ------------

Current Assets:
Cash and cash equivalents................................ $ 864 $ 6,287 $ 20,693 $ -- $ 27,844
Receivables, less allowance for doubtful accounts........ 348 89,742 78,186 -- 168,276
Inter-company receivables................................ -- 40,442 -- (40,442) --
Prepaid and other current assets......................... 11,758 11,377 7,589 -- 30,724
--------- -------- -------- --------- ---------
Total current assets................................... 12,970 147,848 106,468 (40,442) 226,844
Property and equipment, net............................... -- 51,064 19,085 -- 70,149
Goodwill, net............................................. -- 218,783 226,227 -- 445,010
Intangible assets, net.................................... 7,913 41,995 7,616 -- 57,524
Cash surrender value of insurance policies, deferred
compensation............................................. 20,442 -- -- -- 20,442
Investments in and advances to unconsolidated
subsidiaries............................................. 2,523 32,036 3,955 -- 38,514
Investment in consolidated subsidiaries................... 145,999 179,141 -- (325,140) --
Inter-company loan receivable............................. 392,597 -- -- (392,597) --
Deferred taxes, net....................................... 28,190 -- -- -- 28,190
Prepaid pension costs..................................... -- -- 26,323 -- 26,323
Other assets.............................................. 4,883 9,693 1,911 -- 16,487
--------- -------- -------- --------- ---------
Total assets........................................... $ 615,517 $680,560 $391,585 $(758,179) $ 929,483
========= ======== ======== ========= =========
Current Liabilities:
Accounts payable and accrued expenses.................... $ 4,076 $ 34,728 $ 42,264 $ -- $ 81,068
Inter-company payable.................................... -- -- 40,442 (40,442) --
Compensation and employee benefits....................... -- 84,676 34,450 -- 119,126
Reserve for bonus and profit sharing..................... -- 28,932 17,693 -- 46,625
Income taxes payable..................................... 18,429 -- -- -- 18,429
Current maturities of long-term debt..................... -- 3,833 2,932 -- 6,765
--------- -------- -------- --------- ---------
Total current liabilities.............................. 22,505 152,169 137,781 (40,442) 272,013
Long-term debt:
Senior subordinated notes, less unamortized discount..... 173,108 -- -- -- 173,108
Revolving credit facilities.............................. 160,000 -- -- -- 160,000
Other long-term debt..................................... 2,965 19,674 2,125 -- 24,764
Inter-company loan payable............................... -- 342,501 50,096 (392,597) --
--------- -------- -------- --------- ---------
Total long-term debt................................... 336,073 362,175 52,221 (392,597) 357,872
Deferred compensation liability........................... 47,202 -- -- -- 47,202
Other liabilities......................................... -- 15,622 23,165 -- 38,787
--------- -------- -------- --------- ---------
Total liabilities...................................... 405,780 529,966 213,167 (433,039) 715,874

Minority interest......................................... -- -- 3,872 -- 3,872

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $.01 par value.......................... -- -- -- -- --
Common stock, $.01 par value............................. 213 -- -- -- 213
Additional paid-in capital............................... 355,893 220,779 165,770 (386,549) 355,893
Notes receivable from sale of stock...................... (8,087) -- -- -- (8,087)
Accumulated earnings (deficit)........................... (122,485) (69,964) 11,867 58,097 (122,485)
Accumulated other comprehensive income loss.............. (1,928) (221) (3,091) 3,312 (1,928)
Treasury stock at cost................................... (13,869) -- -- -- (13,869)
--------- -------- -------- --------- ---------
Total stockholders' equity (deficit)................... 209,737 150,594 174,546 (325,140) 209,737
--------- -------- -------- --------- ---------
Total liabilities and stockholders' equity (deficit)... $ 615,517 $680,560 $391,585 $(758,179) $ 929,483
========= ======== ======== ========= =========

F-48

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue..................................... $ -- $1,027,359 $296,245 $ -- $1,323,604
Costs and expenses:
Commissions, fees and other incentives... -- 517,878 116,761 -- 634,639
Operating, administrative and other...... 2,380 379,595 156,506 -- 538,481
Depreciation and amortization............ -- 26,604 16,595 -- 43,199
------- ---------- -------- -------- ----------
Operating income (loss)..................... (2,380) 103,282 6,383 -- 107,285
Interest income............................. 32,969 1,389 876 (32,680) 2,554
Interest expense............................ 37,980 29,151 7,249 (32,680) 41,700
Equity earnings (losses) of consolidated
subsidiaries.............................. 70,220 (5,300) -- (64,920) --
------- ---------- -------- -------- ----------
Income before provision for income tax...... 62,829 70,220 10 (64,920) 68,139
Provision for income tax.................... 29,441 -- 5,310 -- 34,751
------- ---------- -------- -------- ----------
Net income (loss)........................... $33,388 $ 70,220 $ (5,300) $(64,920) $ 33,388
======= ========== ======== ======== ==========

F-49

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
------- ------------ ------------ ----------- ------------

Revenue..................................... $ -- $940,342 $272,697 $ -- $1,213,039
Costs and expenses:
Commissions, fees and other incentives... -- 455,661 103,628 -- 559,289
Operating, administrative and other...... 2,247 394,437 139,697 -- 536,381
Depreciation and amortization............ -- 23,839 16,631 -- 40,470
------- -------- -------- -------- ----------
Operating income (loss)..................... (2,247) 66,405 12,741 -- 76,899
Interest income............................. 30,721 924 724 (30,439) 1,930
Interest expense............................ 35,351 27,852 6,604 (30,439) 39,368
Equity in earnings of consolidated
subsidiaries.............................. 46,338 8,054 -- (54,392) --
------- -------- -------- -------- ----------
Income before provision for income tax...... 39,461 47,531 6,861 (54,392) 39,461
Provision for income tax.................... 16,179 -- -- -- 16,179
------- -------- -------- -------- ----------
Net income.................................. $23,282 $ 47,531 $ 6,861 $(54,392) $ 23,282
======= ======== ======== ======== ==========

F-50

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(in thousands)

Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Elimination Total
-------- ------------ ------------ ----------- ------------

Revenue................................... $ -- $884,636 $149,867 $ -- $1,034,503
Costs and expenses:
Commissions, fees and other incentives. -- 427,846 30,617 -- 458,463
Operating, administrative and other.... 330 345,522 102,942 -- 448,794
Depreciation and amortization.......... -- 24,278 7,907 -- 32,185
Merger-related and other nonrecurring
charges.............................. 16,585 -- -- -- 16,585
-------- -------- -------- -------- ----------
Operating income (loss)................... (16,915) 86,990 8,401 -- 78,476
Interest income........................... 24,483 2,192 796 (24,417) 3,054
Interest expense.......................... 26,256 25,017 4,191 (24,417) 31,047
Earnings of consolidated subsidiaries..... 69,171 -- -- (69,171) --
-------- -------- -------- -------- ----------
Income before provision for income tax.... 50,483 64,165 5,006 (69,171) 50,483
Provision for income tax.................. 25,926 -- -- -- 25,926
-------- -------- -------- -------- ----------
Net income................................ $ 24,557 $ 64,165 $ 5,006 $(69,171) $ 24,557
======== ======== ======== ======== ==========

F-51

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
(in thousands)

Non-
Guarantor Guarantor
Parent Subsidiary Subsidiaries Elimination Consolidated
--------- ---------- ------------ ----------- ------------

CASH FLOWS (USED IN) PROVIDED BY
OPERATING ACTIVITIES........................... $ (30,270) $109,487 $ 4,895 $ -- $ 84,112

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment.............. -- (17,828) (9,093) -- (26,921)
Proceeds from sale of properties, businesses and
servicing rights............................... -- 16,926 569 -- 17,495
Purchase of investments.......................... -- (20,316) (3,097) -- (23,413)
Other investing activities, net.................. (177) 1,377 (4,083) -- (2,883)
--------- -------- -------- ----- ---------
Net cash used in investing activities....... (177) (19,841) (15,704) -- (35,722)

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit facility.......... 179,000 -- -- -- 179,000
Repayment of revolving credit facility........... (229,000) -- -- -- (229,000)
Decrease (increase) in inter-company receivables,
payables and loans, net........................ 81,779 (82,424) 645 -- --
Other financing activities, net.................. (2,134) (5,951) 4,562 -- (3,523)
--------- -------- -------- ----- ---------
Net cash provided by (used in) financing
activities................................ 29,645 (88,375) 5,207 -- (53,523)
--------- -------- -------- ----- ---------
Net (decrease) increase in cash and cash
equivalents.................................... (802) 1,271 (5,602) -- (5,133)
Cash and cash equivalents, at beginning of period 864 6,287 20,693 -- 27,844
Effect of exchange rates changes on cash......... -- -- (1,857) -- (1,857)
--------- -------- -------- ----- ---------
CASH AND CASH EQUIVALENTS, AT END
OF PERIOD...................................... $ 62 $ 7,558 $ 13,234 $ -- $ 20,854
========= ======== ======== ===== =========

SUPPLEMENTAL DATA:
Cash paid during the period for:.................
Interest (none capitalized)................... $ 35,464 $ 2,606 $ 282 $ -- $ 38,352
Income taxes, net............................. $ 19,450 $ -- $ 8,157 -- $ 27,607

F-52

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(in thousands)

Non-
Guarantor Guarantor
Parent Subsidiaries Subsidiaries Elimination Consolidated
--------- ------------ ------------ ----------- ------------

CASH FLOWS (USED IN) PROVIDED BY
OPERATING ACTIVITIES.......................... $ (4,399) $ 56,398 $ 22,012 $ -- $ 74,011

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment............. -- (25,050) (10,080) -- (35,130)
Proceeds from sale of properties, businesses and
servicing rights.............................. -- 12,072 -- -- 12,072
Acquisition of businesses including net assets
acquired, intangibles and goodwill............ (550) (8,381) -- -- (8,931)
Other investing activities, net................. (1,855) 8,892 (1,815) -- 5,222
--------- -------- -------- ---- ---------
Net cash used in investing activities...... (2,405) (12,467) (11,895) -- (26,767)

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit facility......... 165,000 -- -- -- 165,000
Repayment of revolving credit facility.......... (172,000) -- -- -- (172,000)
Repayment of senior notes and other loans, net.. (2,403) (3,498) (6,501) -- (12,402)
Decrease (increase) in intercompany
receivables, net.............................. 23,606 (23,269) (337) -- --
Other financing activities, net................. (6,734) (11,157) (428) -- (18,319)
--------- -------- -------- ---- ---------
Net cash provided by (used in) financing
activities............................... 7,469 (37,924) (7,266) -- (37,721)
--------- -------- -------- ---- ---------
Net increase in cash and cash equivalents....... 665 6,007 2,851 -- 9,523
Cash and cash equivalents, at beginning of
period........................................ 199 280 19,072 -- 19,551
Effect of exchange rates changes on cash........ -- -- (1,230) -- (1,230)
--------- -------- -------- ---- ---------
CASH AND CASH EQUIVALENTS, AT
END OF PERIOD................................. $ 864 $ 6,287 $ 20,693 $ -- $ 27,844
========= ======== ======== ==== =========
SUPPLEMENTAL DATA:
Cash paid during the period for:................
Interest (none capitalized).................. $ 34,780 $ 1,874 $ 343 $ -- $ 36,997
Income taxes, net............................ $ 12,689 $ -- $ -- $ -- $ 12,689

F-53

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(in thousands)

Non-
Guarantor Guarantor
Parent Subsidiaries Subsidiaries Elimination Consolidated
--------- ------------ ------------ ----------- ------------

CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES.......................... $ 13,915 $ 59,508 $ 3,191 $ -- $ 76,614

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment............. -- (22,617) (7,098) -- (29,715)
(Increase) decrease in intangible assets and
goodwill...................................... -- (15,762) 1,167 -- (14,595)
Acquisition of businesses including net assets
acquired, intangibles and goodwill............ (154,470) (35,425) -- -- (189,895)
Other investing activities, net................. -- 8,839 1,846 -- 10,685
--------- -------- ------- ----- ---------
Net cash used in investing activities...... (154,470) (64,965) (4,085) -- (223,520)

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit facility......... 315,000 -- -- -- 315,000
Repayment of revolving credit facility.......... (268,000) -- -- -- (268,000)
Proceeds from senior subordinated term loan..... 172,788 -- -- -- 172,788
(Repayment of) senior notes and other loans,
net........................................... -- (5,601) (8,723) -- (14,324)
Decrease (increase) in intercompany
receivables, net.............................. 1,967 (30,252) 28,285 -- --
Repurchase of preferred stock................... (72,331) -- -- -- (72,331)
Repurchase of common stock...................... (8,883) -- -- -- (8,883)
Other financing activities, net................. 207 (5,019) -- -- (4,812)
--------- -------- ------- ----- ---------
Net cash provided by (used in) financing
activities............................... 140,748 (40,872) 19,562 -- 119,438
--------- -------- ------- ----- ---------
Net increase (decrease) in cash and cash
equivalents................................... 193 (46,329) 18,668 -- (27,468)
Cash and cash equivalents, at beginning of
period........................................ 6 46,609 566 -- 47,181
Effect of exchange rates changes on cash........ -- -- (162) -- (162)
--------- -------- ------- ----- ---------
CASH AND CASH EQUIVALENTS, AT
END OF PERIOD................................. $ 199 $ 280 $19,072 $ -- $ 19,551
========= ======== ======= ===== =========
SUPPLEMENTAL DATA:
Cash paid during the period for:
Interest (none capitalized).................. $ 22,633 $ 2,581 $ 2,314 $ -- $ 27,528
Income taxes, net............................ $ 3,395 $ -- $ -- $ -- $ 3,395

F-54

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. Subsequent Event

Effective July 20, 2001, the Company was acquired by CBRE Holding, Inc. (CB
Holding), which is controlled by an affiliate of the Company's director Richard
Blum. Additionally, other directors of the Company and certain of the Company's
senior officers collectively have a significant interest in CB Holding. The
merger was approved by the Company's stockholders on July 18, 2001. Pursuant to
the merger, each share of the Company's common stock, other than those held by
members of the buying group, has been converted into the right to receive
$16.00. As a result of the merger, the Company's shares are no longer listed on
the New York Stock Exchange.

In addition, on September 11, 2001, a terrorist attack resulted in the
destruction of the World Trade Center Towers in New York City and significant
damage to surrounding buildings and property in lower Manhattan. Due to this
attack and a separate attack on the Pentagon in northern Virginia, as well as
the possibility of related acts of terror and/or an outbreak of hostilities,
there could be a further deterioration of the U.S. economy and commercial real
estate market conditions, which could further adversely affect our transaction
management segment and our other business segments.

F-55

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CB RICHARD ELLIS SERVICES, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Above Market Allowance for Legal Other
Lease Reserve Bad Debts Reserve Reserves
------------- ------------- ------- --------

Balance, December 31, 1997.............................. $ -- $ 8,980 $ 9,807 $ 9,108
CB Canada balances at the date of acquisition........ -- 606 -- --
REI balances at the date of acquisition.............. -- 2,211 -- 256
Hillier Parker balances at the date of acquisition... 13,360 895 72 421
Charges to expense................................... -- 2,978 1,843 364
Write-offs, payments and other....................... (54) (2,322) (1,623) (6,004)
------- ------- ------- -------
Balance, December 31, 1998.............................. 13,306 13,348 10,099 4,145
Charges to expense................................... -- 2,560 2,164 26
Write-offs, payments and other....................... (384) (348) (4,000) (2,526)
------- ------- ------- -------
Balance, December 31, 1999.............................. 12,922 15,560 8,263 1,645
Charges to expense................................... -- 3,061 2,015 49
Write-offs, payments and other....................... (1,568) (5,990) (5,139) (291)
------- ------- ------- -------
Balance, December 31, 2000.............................. $11,354 $12,631 $ 5,139 $ 1,403
======= ======= ======= =======

F-56

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CB RICHARD ELLIS SERVICES, INC.

QUARTERLY RESULTS OF OPERATIONS AND OTHER FINANCIAL DATA
(Unaudited)

The following table sets forth the Company's unaudited quarterly results of
operations. The unaudited quarterly information should be read in conjunction
with the audited consolidated financial statements of the Company and the notes
thereto. The operating results for any quarter are not necessarily indicative
of the results for any future period.

1999
---------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
----------- ----------- ----------- -----------

Results of Operation:
Revenue................................ $ 233,201 $ 277,167 $ 307,018 $ 395,653
Operating income....................... $ 5,076 $ 16,580 $ 20,046 $ 35,197
Interest expense, net.................. $ 8,639 $ 9,667 $ 9,503 $ 9,629
Net income (loss)...................... $ (1,753) $ 3,356 $ 4,648 $ 17,031
Basic EPS(1)........................... $ (0.08) $ 0.16 $ 0.22 $ 0.81
Weighted average shares outstanding for
basic EPS(1).......................... 20,640,438 21,032,324 21,098,757 20,928,615
Diluted EPS(1)......................... $ (0.08) $ 0.16 $ 0.22 $ 0.81
Weighted average shares outstanding for
diluted EPS(1)........................ 20,640,438 21,125,074 21,162,334 20,964,066
Other Financial Data:
EBITDA................................. $ 15,070 $ 26,548 $ 30,047 $ 45,704
Net cash provided by (used in)
operating activities.................. $ (54,347) $ 10,122 $ 47,062 $ 71,174
Net cash (used in) provided by
investing activities.................. $ 1,840 $ (16,327) $ (6,863) $ (5,417)
Net cash (used in) provided by
financing activities.................. $ 50,040 $ 2,389 $ (27,820) $ (62,330)
Balance Sheet Data:
Cash and cash equivalents.............. $ 17,425 $ 12,553 $ 25,122 $ 27,844
Total assets........................... $ 824,757 $ 841,311 $ 871,159 $ 929,483
Total long-term debt................... $ 431,135 $ 435,419 $ 413,227 $ 357,872
Total liabilities...................... $ 634,707 $ 648,801 $ 670,685 $ 715,874
Total stockholders equity.............. $ 185,259 $ 187,819 $ 196,324 $ 209,737
Number of shares outstanding........... 20,640,865 20,794,165 20,686,995 20,435,692
Ratios:
Debt/equity............................ 2.37 2.35 2.13 1.74
EBITDA/net interest expense............ 1.74 2.75 3.16 4.75
EBITDA as a percentage of revenue...... 6.5% 9.6% 9.8% 11.6%
Net income as a percentage of revenue.. (0.8)% 1.2% 1.5% 4.3%
International revenue as a percentage
of consolidated revenue............... 22.6% 22.3% 22.5% 22.5%

2000 2001
-------------------------------------------------- -------------------------
March 31 June 30 Sept. 30 Dec. 31 March 31 June 30
----------- ----------- ----------- ----------- ----------- -----------

Results of Operation:
Revenue................................ $ 260,919 $ 317,884 $ 326,521 $ 418,280 $ 272,498 $ 284,849
Operating income....................... $ 9,239 $ 22,545 $ 24,884 $ 50,617 $ 2,325 $ 3,455
Interest expense, net.................. $ 9,196 $ 10,893 $ 10,039 $ 9,018 $ 8,255 $ 8,666
Net income (loss)...................... $ 20 $ 5,477 $ 6,977 $ 20,914 $ (2,846) $ (1,521)
Basic EPS(1)........................... $ -- $ 0.26 $ 0.34 $ 0.99 $ (0.13) $ (0.07)
Weighted average shares outstanding for
basic EPS(1).......................... 20,819,268 20,879,218 20,086,651 21,217,685 21,309,550 21,328,247
Diluted EPS(1)......................... $ -- $ 0.26 $ 0.33 $ 0.97 $ (0.13) $ (0.07)
Weighted average shares outstanding for
diluted EPS(1)........................ 20,851,184 20,906,117 20,881,092 21,554,942 21,309,550 21,328,247
Other Financial Data:
EBITDA................................. $ 19,808 $ 33,276 $ 35,718 $ 61,682 $ 14,021 $ 20,509
Net cash provided by (used in)
operating activities.................. $ (67,522) $ 16,505 $ 48,528 $ 86,601 $ (104,263) $ (2,991)
Net cash (used in) provided by
investing activities.................. $ 6,314 $ (18,431) $ (16,255) $ (7,350) $ (536) $ (10,032)
Net cash (used in) provided by
financing activities.................. $ 58,794 $ (3,456) $ (28,824) $ (80,037) $ 104,940 $ 11,977
Balance Sheet Data:
Cash and cash equivalents.............. $ 24,791 $ 19,195 $ 20,724 $ 20,854 $ 20,339 $ 18,548
Total assets........................... $ 897,756 $ 904,925 $ 930,029 $ 963,105 $ 931,296 $ 946,799
Total long-term debt................... $ 416,531 $ 418,231 $ 390,624 $ 303,571 $ 409,653 $ 416,472
Total liabilities...................... $ 687,765 $ 693,416 $ 717,618 $ 724,018 $ 704,037 $ 716,351
Total stockholders equity.............. $ 206,711 $ 208,276 $ 209,569 $ 235,339 $ 224,292 $ 227,631
Number of shares outstanding........... 20,408,692 20,270,560 20,246,122 20,605,023 20,636,051 20,732,049
Ratios:
Debt/equity............................ 2.04 2.03 1.88 1.33 1.83 1.83
EBITDA/net interest expense............ 2.15 3.05 3.56 6.84 1.70 2.37
EBITDA as a percentage of revenue...... 7.6% 10.5% 10.9% 14.7% 5.1 % 7.2 %
Net income as a percentage of revenue.. -- 1.7% 2.1% 5.0% (1.0)% (0.5)%
International revenue as a percentage
of consolidated revenue............... 23.9% 22.7% 21.8% 21.6% 22.6% 23.9%

--------
(1) EPS is defined as earnings (loss) per share

F-57

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholder and Board of Directors of CBRE Holding, Inc.:

We have audited the accompanying consolidated balance sheets of CBRE
Holding, Inc. (a Delaware corporation) as of June 30, 2001 and February 20,
2001 and the related consolidated statements of operations, stockholders'
equity and cash flows for the period from February 20, 2001 (Inception) to June
30, 2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CBRE Holding, Inc. as of
June 30, 2001 and February 20, 2001 and the results of their operations and
their cash flows for the period from February 20, 2001 (Inception) to June 30,
2001, in conformity with accounting principles generally accepted in the United
States.

ARTHUR ANDERSEN LLP

Los Angeles, California

October 19, 2001

F-58

CBRE HOLDING, INC.

CONSOLIDATED BALANCE SHEETS

June 30, February 20,
2001 2001
------------ ------------

ASSETS
------

Current Assets:
Restricted cash and cash equivalents....................................... $229,449,280 $160
Other current assets....................................................... 1,044,828
------------ ----
Total current assets................................................... 230,544,108 160
Other assets............................................................... 7,723,748 --
------------ ----
Total assets........................................................... $238,267,856 $160
============ ====

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
Accounts payable........................................................... $ 7,768,874 $ --
Accrued interest........................................................... 1,717,500 --
------------ ----
Total current liabilities.............................................. 9,486,374 --
Long-term debt:
Senior subordinated notes, less unamortized discount of $3,358,331 at
June 30, 2001............................................................ 225,641,669 --
------------ ----
Total long-term debt................................................... 225,641,669 --
------------ ----
Total liabilities................................................... 235,128,043 --
------------ ----

Commitments and contingencies

Stockholders' Equity:
Class A common stock; $0.01 par value; 75,000,000 shares authorized; no
shares issued and outstanding at June 30, 2001 and February 20, 2001..... -- --
Class B common stock; $0.01 par value; 25,000,000 shares authorized;
241,885 shares and 10 shares issued and outstanding at June 30, 2001 and
February 20, 2001........................................................ 2,419 --
Additional paid-in capital................................................. 3,867,741 160
Accumulated deficit........................................................ (730,347) --
Total stockholders' equity............................................. 3,139,813 160
------------ ----
Total liabilities and stockholders' equity.......................... $238,267,856 $160
============ ====

The accompanying notes are an integral part of these consolidated financial
statements.

F-59

CBRE HOLDING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Period from
February 20, 2001
Three Months Ended (inception)
June 30, 2001 to June 30, 2001
------------------ -----------------
(unaudited)

Interest Income............................................... $ 579,845 $ 579,845
Interest Expense.............................................. 1,775,175 1,775,175
----------- -----------
Loss before benefit for income tax............................ (1,195,330) (1,195,330)
Benefit for income tax........................................ (464,983) (464,983)
----------- -----------
Net loss...................................................... $ (730,347) $ (730,347)
=========== ===========
Basic loss per share.......................................... $ (11.45) $ (16.48)
=========== ===========
Weighted average shares outstanding for basic loss per share.. 63,801 44,323
=========== ===========
Diluted loss per share........................................ $ (11.45) $ (16.48)
=========== ===========
Weighted average shares outstanding for diluted loss per share 63,801 44,323
=========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-60

CBRE HOLDING, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Period from
February 20, 2001
(inception)
to June 30, 2001
-----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................... $ (730,347)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred debt costs..................................... 57,675
Increase in other current assets............................................ (1,044,828)
Increase in other assets.................................................... (7,768,874)
Increase in accounts payable................................................ 7,768,874
Increase in accrued interest................................................ 1,717,500
------------
Net cash used in operating activities................................... --
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior subordinated notes......................... 225,629,120
Proceeds from issuance of common stock...................................... 3,870,160
------------
Net cash provided by financing activities............................... 229,499,280
------------
Net increase in cash and cash equivalents...................................... 229,499,280
Cash and cash equivalents, at beginning of period.............................. --
------------
Cash and cash equivalents, at end of period.................................... $229,499,280
============
SUPPLEMENTAL DATA:
Cash paid during the period for:
Interest (none capitalized)................................................. $ --
Income taxes, net........................................................... $ --

The accompanying notes are an integral part of this consolidated financial
statements.

F-61

CBRE HOLDING, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(in thousands)

Class A Class B Additional
Common Common Paid-in Accumulated
Stock Stock Capital Deficit Total
------- ------- ---------- ----------- ------

Balance, February 20, 2001 $ -- $ -- $ -- $ -- $ --
Net loss.................. -- -- -- (730) (730)
Issuance of common stock.. -- 2 3,868 -- 3,870
---- ---- ------ ----- ------
Balance, June 30, 2001.... $ -- $ 2 $3,868 $(730) $3,140
==== ==== ====== ===== ======

The accompanying notes are an integral part of these consolidated financial
statements.

F-62

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

CBRE Holding, Inc., a Delaware Corporation, was incorporated on February 20,
2001 as BLUM CB Holding Corp. On March 26, 2001, BLUM CB Holding Corp. changed
its name to CBRE Holding, Inc (the Company). The Company and its former wholly
owned subsidiary, BLUM CB Corp., a Delaware corporation, were created to
acquire all of the outstanding shares, other than those held by the buying
group identified below, of CB Richard Ellis Services, Inc. (CBRE), an
international real estate services firm, in a merger accounted for as a
purchase transaction (the Merger) for $16.00 per share in cash. Prior to the
Merger, the Company was a wholly owned subsidiary of RCBA Strategic Partners,
L.P. (RCBA Strategic). RCBA Strategic, continued to control the Company upon
completion of the Merger. RCBA Strategic is an affiliate of Richard C. Blum,
who is a director of the Company and CBRE.

On February 23, 2001, a contribution and voting agreement (the Contribution
Agreement) was signed by the following persons and entities, who are referred
to together as the "buying group": RCBA Strategic; FS Equity Partners III,
L.P.; FS Equity Partners International, L.P.; Raymond Wirta; Brett White; The
Koll Holding Company and Frederic Malek. The Contribution Agreement was amended
on April 24, 2001 and further amended on May 31, 2001 and July 19, 2001.

On February 24, 2001, the Company entered into a merger agreement (the
Merger Agreement) providing for the acquisition of CBRE through the merger of
BLUM CB Corp. with and into CBRE in exchange for $16.00 in cash for each
outstanding share, other than those held by the buying group identified below.
The Merger Agreement was amended on April 24, 2001 and further amended on May
31, 2001.

CBRE's stockholders approved the Merger on July 18, 2001. On July 20, 2001,
the Company acquired CBRE pursuant to the merger of BLUM CB Corp. with and into
CBRE with CBRE surviving the merger. Upon completion of the Merger, CBRE became
a wholly owned subsidiary of the Company.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and include all
information and footnotes required for interim financial statement
presentation, and include the results of BLUM CB Corp. and the Company. All
intercompany transactions and balances have been eliminated. The results of
operations for the period from February 20, 2001 (Inception) to June 30, 2001
are not necessarily indicative of the results of operations to be expected for
the period from February 20, 2001 (Inception) to December 31, 2001.

The consolidated financial statements and notes to the consolidated
financial statements, along with management's discussion and analysis of
financial condition, results of operations, liquidity and capital resources
should be read in conjunction with the Company's Form S-1 Registration
Statement dated July 13, 2001, which contains the latest available audited
consolidated balance sheet and notes thereto, as of February 20, 2001.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents consist of cash and highly liquid
investments with an original maturity of less than three months, and primarily
represents the net proceeds from the issuance of the Senior Subordinated Notes
and the issuance of 241,875 shares of common stock to RCBA Strategic on June 7,
2001. In accordance

F-63

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

with the terms of the Senior Subordinated Notes, these funds were deposited in
escrow pending completion of the Merger as a condition for the release of the
funds to the Company.

Other Assets

Other assets at June 30, 2001 included $7.7 million of deferred financing
costs related to the Senior Subordinated Notes, which are being amortized over
10 years.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of certain assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of certain revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. Management believes that these estimates provide a reasonable basis
for the fair presentation of its financial condition and results of operations.

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are determined based on temporary
differences between financial reporting and tax basis of assets and liabilities
and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured by applying enacted tax rates and laws to taxable
income in the years in which the temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

3. Debt

The Company has $229.0 million in aggregate principal amount of 11 1/4%
Senior Subordinated Notes due June 15, 2011 (the Notes), which were issued and
sold by BLUM CB Corp. for approximately $225.6 million on June 7, 2001. The net
proceeds from the sale of the Notes were deposited in an escrow account and
were released to the Company upon completion of the merger on July 20, 2001. In
connection with the merger, CBRE assumed the Notes and the Company and many of
its subsidiaries guaranteed the Notes.

The notes require semi-annual payments of interest in arrears on June 15 and
December 15. The Notes contain numerous restrictive covenants that, among other
things, limit the Company's ability to incur additional indebtedness, pay
dividends or distributions to stockholders or repurchase equity or debt that is
junior to the Notes, sell assets or subsidiary stock, enter into transactions
with affiliates, issue subsidiary equity and enter into consolidations or
mergers.

The Notes are redeemable in whole or in part after June 15, 2006 at 105.625%
of par on that date and at declining prices thereafter. On or before June 15,
2004, up to 35.0% of the issued amount of the Notes may be redeemed at 11 1/4%
of par plus accrued and unpaid interest solely with the proceeds from an equity
offering. In the event of a change of control, as defined in the Indenture
Agreement, the Company is obligated to make an offer to purchase the Notes at a
redemption price of 101.0% of the principal amount, plus accrued interest.

F-64

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. Commitments and Contingencies

On June 29, 2001, the Company entered into a purchase agreement with DLJ
Investment Funding, Inc. (DLJ) to issue and sell to DLJ 65,000 units for an
aggregate purchase price of $65.0 million, which units consist in the aggregate
of $65.0 million in aggregate principal amount of the Company's 16% Senior
Notes due 2011 (Senior Notes) and 521,847 shares of its Class A common stock.
The issuance of the Senior Notes pursuant to the purchase agreement was
contingent on the closing of the Merger, among other things.

Between November 12 and December 6, 2000, five putative class actions were
filed in the Court of Chancery of the State of Delaware in and for New Castle
County by various of CBRE's stockholders against BLUM CB Corp., CBRE, its
directors and the buying group. A similar action was also filed on November 17,
2000 in the Superior Court of the State of California in and for the County of
Los Angeles. These actions all alleged that BLUM CB Corp.'s offering price for
shares of CBRE's common stock was unfair and inadequate and sought injunctive
relief or rescission of the transaction and, in the alternative, money damages.

. that the defendants admit no liability or wrongdoing whatsoever;

. for the lead counsel for the plaintiff to have an opportunity to review
the proxy statement before mailing;

. for the certification of a settlement class and the entry of a final
judgment granting a full release of the defendants; and

. for the payment of attorneys' fees in an amount not to exceed $380,000.

Conditions to the settlement proposed by the memorandum include:

. negotiation and execution of a mutually acceptable stipulation of
settlement;

. closing of the merger;

. dismissal of the Delaware and California litigation with prejudice; and

. completion by the plaintiffs of reasonable additional discovery as lead
counsel reasonably believes is appropriate.

The parties may not be able to complete a mutually acceptable stipulation of
settlement, and, if so, the litigation will continue. However, the Company
believes that the ultimate outcome will not have an impact on the Company's
ability to carry on its operations. Management believes that any liability that
may result from disposition of these lawsuits will not have a material effect
on the Company's consolidated financial position or results of operations.

5. Per Share Information

Basic loss per share and diluted loss per share were computed by dividing
net loss by the weighted average number of common shares outstanding of 63,801
for the three months ended June 30, 2001 and 44,323 for the

F-65

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

period from February 20, 2001 (Inception) to June 30, 2001. As of June 30,
2001, the Company had no other common stock equivalents outstanding.

6. Subsequent Events

CBRE's stockholders approved the Merger on July 18, 2001, and the Merger was
completed on July 20, 2001. Pursuant to the Merger, each share of CBRE's common
stock, other than those held by members of the buying group, was converted into
the right to receive $16.00 in cash. As a result of the Merger, CBRE became a
wholly owned subsidiary of the Company and CBRE's shares are no longer listed
on the New York Stock Exchange.

On July 20, 2001, CBRE successfully completed a tender offer and consent
solicitation for all of the outstanding principal amount of its 8 7/8% Senior
Subordinated Notes due 2006 (the Subordinated Notes). The Subordinated Notes
were purchased by CBRE at $1,079.14 for each $1,000 principal amount, which
included a consent payment of $30.00 per $1,000 principal amount. On such date,
CBRE also repaid the outstanding balance of its former revolving credit
facility.

As part of the Merger, on July 20, 2001, CBRE assumed BLUM CB Corp.'s $229.0
million in Notes and the Company and many of CBRE's subsidiaries guaranteed the
Notes. The proceeds from the Notes were utilized to fund a portion of the
Merger, the refinancing of CBRE's pre-existing debt and the payment of related
fees and expenses.

On July 20, 2001, CBRE entered into a $325.0 million senior credit facility
(the Credit Facility) with Credit Suisse First Boston (CSFB) and other lenders
to fund a portion of the Merger, the refinancing of CBRE's pre-existing debt
and the payment of related fees and expenses. The Credit Facility was jointly
and severally guaranteed by the Company and certain of CBRE's subsidiaries and
is secured by substantially all the assets of the Company, CBRE and CBRE's
domestic subsidiaries, provided that neither CBRE nor any of its domestic
subsidiaries pledged more than 65% of the voting stock of any foreign
subsidiary. The Credit Facility includes a Tranche A term facility of $50.0
million, a Tranche B term facility of $185.0 million, and a revolving line of
credit of up to $90.0 million, including revolving credit loans, letters of
credit and a swingline loan. CBRE had an outstanding balance on the revolving
line of credit of $40.0 million at the close of the merger on July 20, 2001.

The Tranche A facility will fully amortize by June 20, 2007 through
quarterly principal payments totaling $7.5 million during the first two years
and $8.75 million during years three through six. The Tranche B facility
requires quarterly principal payments of $462,500, with the remaining
outstanding principal due on July 20, 2008. The revolving line of credit
requires the repayment of any outstanding balance for a period of 45
consecutive days commencing on any day in the month of December of each year,
with any remaining outstanding principal due on July 20, 2007.

Borrowings under the Credit Facility will bear interest at varying rates
based on the Company's option, at either LIBOR plus 3.25% or the alternate base
rate plus 2.25%, in the case of the Tranche A facility and the revolving line
of credit, and LIBOR plus 3.75% or the alternate base rate plus 2.75%, in the
case of the Tranche B facility. The alternate base rate is the higher of (1)
CSFB's prime rate or (2) the Federal Funds Effective Rate plus one-half of one
percent. After delivery of CBRE's consolidated financial statements for the
year ending December 31, 2001, the amount added to the LIBOR or the alternate
base rate under the Tranche A facility and revolving line of credit will vary,
from 2.50% to 3.25% for the LIBOR and from 1.50% to 2.25% for

F-66

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the alternate base rate, as determined by reference to the Company's ratio of
total debt less available cash to EBITDA.

EBITDA represents earnings before net interest expense, income taxes,
depreciation and amortization and merger-related and other nonrecurring
charges.

The Credit Facility contains numerous restrictive covenants that, among
other things, limit the Company's and CBRE's ability to: incur additional
indebtedness, pay dividends, redeem or repurchase capital stock; prepay, redeem
or repurchase debt; enter into liens and sale-leaseback transactions; extend
loans and make investments; incur additional indebtedness; transact mergers,
acquisitions and asset sales; enter into transactions with affiliates; incur
changes in lines of business; and incur capital expenditures. In addition, the
Credit Facility contains covenants that require CBRE to maintain CBRE financial
ratios relating to its level of indebtedness, fixed charges and interest
coverage.

On July 20, 2001, the Company issued and sold to DLJ and other lenders the
Senior Notes, together with 521,847 shares of the Company's Class A common
stock. The Senior Notes are effectively subordinated to all current and future
indebtedness of CBRE and its subsidiaries.

Interest on the Senior Notes will accrue at a rate of 16% per year and be
payable quarterly in cash in arrears. Until June 29, 2006, interest in excess
of 12% may be paid in kind, and at any time, interest may be paid in kind to
the extent that CBRE's ability to pay cash dividends to the Company is
restricted by the terms of the Credit Facility. The Senior Notes are redeemable
in whole or in part at 116.0% percent of the principal amount, plus accrued and
unpaid interest during 2001 and at declining prices thereafter. In the event of
a change of control, as defined in the Indenture Agreement, the Company is
obligated to make an offer to purchase all outstanding Senior Notes.

The Indenture for the Senior Notes contains numerous restrictive covenants
that, among other things, limit the Company's ability to: pay dividends or
distributions to stockholders or to repurchase equity or debt that is junior to
the Senior Notes; issue debt or equity of subsidiaries; enter into liens;
dispose of assets; transact consolidations or mergers; and enter into
transactions with affiliates.

In addition, on September 11, 2001, a terrorist attack resulted in the
destruction of the World Trade Center Towers in New York City and significant
damage to surrounding buildings and property in lower Manhattan. Due to this
attack and a separate attack on the Pentagon in northern Virginia, as well as
the possibility of related acts of terror and/or an outbreak of hostilities,
there could be a further deterioration of the U.S. economy and commercial real
estate market conditions, which could further adversely affect our transaction
management segment and our other business segments.

F-67

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholder and Board of Directors of CBRE Holding, Inc.:

We have audited the accompanying consolidated balance sheet of CBRE Holding,
Inc. (a Delaware corporation) as of February 20, 2001. This financial statement
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the balance sheet is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of CBRE Holding, Inc.
as of February 20, 2001, in conformity with accounting principles generally
accepted in the United States.

ARTHUR ANDERSEN LLP

Los Angeles, California
April 23, 2001

(Except with respect to the information included in Note 2, as to which the
date is October 19, 2001)

F-68

CBRE HOLDING, INC.

CONSOLIDATED BALANCE SHEET

February 20,
2001
------------

ASSETS
------
Cash............................................................................ $160.00
-------
Total assets............................................................. $160.00
=======

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Total liabilities............................................................... $ --
Stockholders' equity
Common stock, $0.01 par value; 2,000 shares authorized, 10 shares issued and
outstanding................................................................ 0.10
Additional paid-in capital................................................... 159.90
-------
Total stockholders' equity............................................... 160.00
-------
Total liabilities and stockholders' equity............................... $160.00
=======

The accompanying notes are an integral part of this consolidated balance sheet.

F-69

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED BALANCE SHEET

1. Summary of Significant Accounting Policies

a. Organization and Description of Partnership

CBRE Holding, Inc., a Delaware corporation, was established on February 20,
2001, as BLUM CB Holding Corp. On March 26, 2001, BLUM CB Holding Corp. changed
its name to CBRE Holding, Inc. (the Company). The purpose of the Company is to
act as the acquiror in a transaction (the Merger) to acquire all of the
outstanding shares of CB Richard Ellis Services, Inc. (CBRE), an international
real estate services firm, for $16.00 per share in cash. The Company intends to
offer shares in the Company to certain managers and employees of CBRE. The
Company is a wholly-owned subsidiary of RCBA Strategic Partners, L.P. (RCBA
Strategic). RCBA Strategic, is expected to control the Company after the
Merger.

The accompanying consolidated balance sheet includes the accounts of the
Company and its wholly-owned subsidiary, BLUM CB Corporation (BLUM CB),
established October 27, 2000, formerly known as CB Radio Corp. All significant
intercompany accounts and transactions have been eliminated in consolidation.

b. Commitments & Contingencies

In connection with the announcement of the Merger, BLUM CB and CBRE have
been subject to putative class action lawsuits. Between November 12 and
December 6, 2000, five putative class actions were filed in the Court of
Chancery of the State of Delaware in and for New Castle County by various
stockholders against CBRE, its directors and the buying group and their
affiliates. A similar action was also filed on November 17, 2000, in the
Superior Court of the State of California in and for the County of Los Angeles.
These actions all alleged that The Company's offering price was unfair and
inadequate and sought injunctive relief or rescission of the merger
transactions and, in the alternative, money damages.

The five Delaware actions were subsequently consolidated and a lead counsel
appointed. As of February 23, 2001, the parties to the Delaware litigation
entered into a memorandum of understanding in which they agreed in principle to
a settlement. The memorandum provides, among other things that:

1. The defendants admit no liability or wrongdoing whatsoever;

2. The buying group acknowledges that the pendency and prosecution of the
Delaware litigation were positive contributing factors to its decision
to increase the merger consideration;

3. For the lead counsel for the plaintiff to have an opportunity to review
the CBRE proxy statement before mailing;

4. For the certification of a settlement class and the entry of a final
judgment granting a full release of the defendants; and

5. For attorneys' fees in an amount not to exceed $380,000.

Conditions to the settlement proposed by the memorandum include:

1. Negotiation and execution of a mutually acceptable stipulation of
settlement;

2. Closing of the merger;

3. Dismissal of the Delaware and California litigation with prejudice; and

4. Completion by the plaintiffs of such reasonable additional discovery as
lead counsel reasonably believes is appropriate.

F-70

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED BALANCE SHEET--(Continued)

The parties may not be able to complete a mutually acceptable stipulation of
settlement, and, if so, the litigation will continue, which could have a
material adverse impact on the Company's ability to complete the Merger.

2. Subsequent Events

On February 23, 2001, a contribution and voting agreement was signed by the
following persons and entities, who are referred to together as the "buying
group": RCBA Strategic Partners, L.P., FS Equity Partners III, L.P. and FS
Equity Partners International, L.P., Raymond Wirta, Brett White, The Koll
Holding Company and Frederic Malek.

Each member of the buying group was either a shareholder, senior executive
or director of CB Richard Ellis Services, Inc. or an affiliate of one of the
same prior to the Merger. Pursuant to the contribution and voting agreement,
immediately prior to the Merger, each of the members of the buying group
contributed all of the shares of CBRE common stock that it holds directly to
the Company. Each of these shares contributed to the Company were cancelled, as
a result of the merger, and the Company did not receive any consideration for
those shares of CBRE common stock. The Company issued one share of Class B
common stock in exchange for each share of CBRE common stock contributed by the
buying group.

On February 24, 2001, the Company announced that it had entered into a
merger agreement providing for the acquisition of CBRE by its wholly-owned
subsidiary, Blum CB for $16.00 per share in cash.

The agreement provided that CBRE employees had the option to roll over their
existing shares in CBRE's deferred compensation plan and a portion of CBRE
shares held in their 401(k) accounts. Employees were also provided the
opportunity to make a direct equity investment in the Company.

F-71

CBRE HOLDING, INC.

NOTES TO CONSOLIDATED BALANCE SHEET--(Continued)

EBITDA represents earnings before net interest expense, income taxes,
depreciation and amortization and merger-related and other nonrecurring
charges.

In addition, on September 11, 2001, a terrorist attack resulted in the
destruction of the World Trade Center Towers in New York City and significant
damage to surrounding buildings and property in lower Manhattan. Due to this
attack and a separate attack on the Pentagon in northern Virginia, as well as
the possibility of related acts of terror and/or an outbreak of hostilities,
there could be a further deterioration of the U.S. economy and commercial real
estate market conditions, which could further adversely affect our transaction
management segment and our other business segments.

F-72

[LOGO] CB RICHARD ELLIS

CB Richard Ellis Services, Inc.

OFFER TO EXCHANGE ALL OUTSTANDING 11 1/4% SENIOR SUBORDINATED NOTES DUE JUNE
15, 2011 FOR 11 1/4% SENIOR SUBORDINATED NOTES DUE JUNE 15, 2011, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

UNCONDITIONALLY GUARANTEED ON A SENIOR SUBORDINATED BASIS BY CBRE HOLDING, INC.
AND SOME OF OUR SUBSIDIARIES

-----------------

PROSPECTUS

-----------------

October , 2001

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

(a) CB Richard Ellis Services, Inc.; CBRE Holding, Inc.; CB Richard Ellis,
Inc.; CB Richard Ellis Corporate Facilities, Inc.; KEA/1, Inc.; KEA/II, Inc.;
Koll Partnerships I, Inc.; Koll Partnerships II, Inc.; Koll Capital Markets
Group, Inc. and Koll Investment Management, Inc. (each a Delaware corporation
and collectively the "Delaware Corporations").

Section 145 of the Delaware General Corporation Law (the "DGCL") permits the
Delaware Corporations' board of directors to indemnify any person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
any threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or
agent of the Delaware Corporations, in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). The statute provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.

As permitted by sections 102 and 145 of the DGCL the Delaware Corporations'
certificates of incorporation eliminate a director's personal liability for
monetary damages to the company and its stockholders arising from a breach of a
director's fiduciary duty, except as otherwise provided under the DGCL.

The Delaware Corporations' bylaws provide for the mandatory indemnification
of its directors, officers, employees and other agents to the fullest extent
permitted by the DGCL.

CBRE Holding, Inc. may purchase and maintain insurance on behalf of any
director, officer, agent or employee of CBRE Holding, Inc. against liability
asserted against such person; whether or not CBRE Holding, Inc. would have the
power to indemnify such person against such liability under the provisions of
the certificate of incorporation or otherwise.

(b) CBRE/LJM-Nevada, Inc.

The Nevada Revised Statutes provide that a corporation's articles of
incorporation may include a provision eliminating or limiting the personal
liability of a director or officer to the corporation or its stockholders for
damages for breach of fiduciary duty as a director or officer. However, such a
provision may not eliminate or limit the liability of a director or officer for
(1) acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law or (2) the payment of certain distributions in violation of
Chapter 78 of the Nevada Revised Statutes.

The articles of incorporation of CBRE/LJM-Nevada, Inc. provide that the
personal liability of any director of the Corporation to the Corporation or its
stockholders for damages or breach of fiduciary as a director is eliminated to
the fullest extent permitted by the Nevada Revised Statutes.

(c) Bonutto-Hoffer Investments; D.A. Management, Inc.; Koll Investment
Management, Inc.; Sol L. Rabin, Inc. and Vincent F. Martin, Jr., Inc. (each a
California corporation and collectively the "California Corporations").

The California Corporations' articles of incorporation and bylaws limit the
personal liability of their directors for monetary damages to the fullest
extent permitted by the California General Corporation Law (the "California
Law"). Under the California Law, a director's liability to a company or its
shareholders may not be

II-1

limited with respect to the following items: (i) acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law, (ii) acts or
omissions that a director believes to be contrary to the best interests of the
company or its shareholders or that involve the absence of good faith on the
part of the director, (iii) any transaction from which a director derived an
improper personal benefit, (iv) acts or omissions that show a reckless
disregard for the director's duty to the company or its shareholders in
circumstances in which the director was aware, or should have been aware, in
the ordinary course of performing a director's duties, of a risk of a serious
injury to the company or its shareholders, (v) acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the company or its shareholders, (vi) contracts or
transactions between the company and a director within the scope of Section 310
of the California Law or (vii) improper dividends, loans and guarantees under
Section 316 of the California Law. The limitation of liability does not affect
the availability of injunctions and other equitable remedies available to the
California Corporations' shareholders for any violation by a director of the
director's fiduciary duty to the California Corporations or their shareholders.

The California Corporations' articles of incorporation and bylaws also
include an authorization for the California Corporations to indemnify their
"agents" (as defined in Section 317 of the California Law) through bylaw
provisions, by agreement or otherwise, to the fullest extent permitted by law.
Pursuant to this provision, the California Corporations' bylaws provide for
indemnification of the California Corporations' directors. In addition, the
California Corporations may, at their discretion, provide indemnification to
persons whom the California Corporations are not obligated to indemnify,
including their officers, employees and other agents. The bylaws also allow the
California Corporations to enter into indemnity agreements with individual
directors, officers, employees and other agents. These indemnity agreements
have been entered into with all directors and executive officers and provide
the maximum indemnification permitted by law. These agreements, together with
the California Corporations' bylaws and articles of incorporation, may require
the California Corporations, among other things, to indemnify these directors
or executive officers (other than for liability resulting from willful
misconduct of a culpable nature), to advance expenses to them as they are
incurred, provided that they undertake to repay the amount advanced if it is
ultimately determined by a court that they are not entitled to indemnification,
and to obtain directors' and officers' insurance if available on reasonable
terms. Section 317 of the California Law and the California Corporations'
bylaws make provision for the indemnification of officers, directors and other
corporation agents in terms sufficiently broad to indemnify such persons, under
certain circumstances, for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act.

Bonutto-Hoffer Investments, D.A. Management, Inc., Sol L. Rabin, Inc. and
Vincent F. Martin, Jr., Inc. may purchase and maintain insurance on behalf of
any of their agents against liability asserted against or incurred by the agent
in such capacity or arising out of the agent's status as such whether or not it
would have the power to indemnify against such liability.

(d) CB Richard Ellis Investors, L.L.C.; CBRE/LJM Mortgage Company, L.L.C.
and Global Innovation Advisor, LLC (each a Delaware limited liability company
and collectively, the "LLCs").

The LLCs are each empowered by Section 18-108 of the Delaware Limited
Liability Company Act, subject to the procedures and limitation stated therein,
to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or completed action,
suit or proceeding in which such person is made a party by reason of his being
or having been a director, officer, employee or agent of such LLC. The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
agreement, vote of members or disinterested directors or otherwise.

The Limited Liability Company agreements of CBRE/LJM Mortgage Company,
L.L.C. and Global Innovation Advisor, LLC permit indemnification by the company
for any loss, damage, cost or expense by reason of any act or omission
performed or omitted by a manager on behalf of the company and in a manner
believed to be within the scope of his or her authority, subject to certain
exceptions.

II-2

(e) L.J. Melody & Company ("L.J. Melody").

Article 2.02A(16) and Article 2.01-1 of the Texas Business Corporation Act
(the "TCBA") and Article 5 of L.J. Melody's bylaws provide it with broad powers
and authority to indemnify its directors and officers and to purchase and
maintain insurance for such purposes. Article 2.02A(16) of the TCBA empowers a
corporation to indemnify directors, officers, employees and agents of the
corporation and to purchase and maintain liability insurance for those persons.
Article 2.20-1 of the TCBA permits a corporation to indemnify a person who was,
is or is threatened to be made a named defendant or respondent in a proceeding
because the person is or was a director only if it is determined that the
person conducted himself in good faith.

Under Article 2.02-1 of the TCBA, a corporation shall indemnify a director
or officer against reasonable expense incurred by such director in connection
with a proceeding in which such director is a named defendant or respondent
because they are or were a director or officer if they have been wholly
successful, on the merits or otherwise, in the defense of the proceeding, and,
in addition, such indemnification may be ordered in a proper case by a court of
law. In addition, a corporation may indemnify and advance expenses to persons
who are not or were not officers, employees or agents of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise to the same extent that it may indemnify and advance expenses to
directors under this article. The statute provides that a corporation may
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation or a person who is or was serving at the request of
the corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another enterprise, against any
liability asserted against him in such capacity or arising out of such status,
whether or not the corporation would have the power to indemnify him against
the liability under this article.

(f) Westmark Real Estate Acquisition Partnership, L.P. ("Westmark").

Westmark is empowered by Section 17-108 of the Delaware Revised Uniform
Limited Partnership Act, subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or completed action,
suit or proceeding in which such person is made a party by reason of his being
or having been a director, officer, employee or agent of Westmark. The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
agreement, vote of members of disinterested directors or otherwise.

(g) L J Melody & Company of Texas, LP.

L J Melody & Company of Texas, LP's partnership agreement provides that, to
the fullest extent permitted by law, the general partner shall be indemnified
and held harmless by the partnership from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, legal fees and expenses), judgments, fines, penalties, interest and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
the general partner may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as a general partner of the
partnership, provided, that in each case the general partner acted in good
faith and in a manner which the general partner reasonably believed to be in
the best interests of the partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful. To the
fullest extent permitted by law, expenses (including, without limitation, legal
fees) incurred by the general partner in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the partnership
prior to the final disposition thereof upon receipt by the partnership of an
undertaking by or on behalf of the general partner to repay such amount if it
shall be determined that the general partner is not entitled to be indemnified
as authorized.

(h) Holdpar A and Holdpar B (each a Delaware General Partnership and
collectively the "Partnerships").

The Partnerships' partnership agreements provide that, to the extent
permitted by law, the partners shall each be indemnified and held harmless by
the Partnerships from and against any and all losses, claims, damages,

II-3

liability, expenses, judgments, fines, settlements and other amounts arising
from any and all claims, costs, demands, actions, suits or proceedings, in
which the partner may be involved, or threatened to be involved as a party or
otherwise by reason of their status as a partner, whether or not such party
continues to be a partner at the time such liability or expense is paid or
incurred, if the party acted in good faith and in a manner it reasonably
believed to be in the best interests of the Partnerships.

The Partnerships may purchase and maintain insurance on behalf of the
partners and against any liability which may be asserted against or expense
which may be incurred by such party in connection with the Partnerships'
activities, whether or not the Partnerships would have the power to indemnify
such party against such liability under the provisions of the partnership
agreements.

Item 21. Exhibits and Financial Statement Schedules.

Exhibit Description
------- -----------

2.1 Amended and Restated Agreement and Plan of Merger dated as of May 31, 2001 by and among
CB Richard Ellis Services, Inc. ("Services"), CBRE Holding, Inc. ("Holding") and BLUM CB
Corp.(1)

3.1(a) Restated Certificate of Incorporation of Services(6)

3.1(b) Fifth Amended and Restated Bylaws of Services(6)

3.2(a) Restated Certificate of Incorporation of Holding(4)

3.2(b) Restated Bylaws of Holding(4)

3.3(a) Articles of Incorporation of Bonutto-Hofer Investments(6)

3.3(b) Amended and Restated Bylaws of Bonutto-Hofer Investments(6)

3.4(a) Certificate of Formation of CBRE/LJM Mortgage Company, L.L.C.(6)

3.4(b) Operating Agreement of CBRE/LJM Mortgage Company, L.L.C.(6)

3.5(a) Articles of Incorporation of CBRE/LJM-Nevada, Inc.(6)

3.5(b) Bylaws of CBRE/LJM-Nevada, Inc.(6)

3.6(a) Certificate of Incorporation of CB Richard Ellis Corporate Facilities Management, Inc.(6)

3.6(b) Bylaws of CB Richard Ellis Corporate Facilities Management, Inc.(6)

3.7(a) Second Restated Certificate of Incorporation of CB Richard Ellis, Inc.(6)

3.7(b) Fourth Amended and Restated Bylaws of CB Richard Ellis, Inc.(6)

3.8(a) Certificate of Formation of CB Richard Ellis Investors, L.L.C.(6)

3.8(b) Amended and Restated Limited Liability Company Agreement of CB Richard Ellis Investors, L.L.C.
(formerly known as Westmark Realty Advisors L.L.C.).(6)

3.9(a) Amended and Restated Articles of Incorporation of D.A. Management, Inc.(6)

3.9(b) Amended and Restated Bylaws of D.A. Management, Inc.(6)

3.10(a) Certificate of Formation of Global Innovation Advisor, LLC(6)

3.10(b) Limited Liability Company Agreement of Global Innovation Advisor, LLC(6)

3.11 Amended and Restated Partnership Agreement of Holdpar A(6)

3.12 Amended and Restated Partnership Agreement of Holdpar B(6)

3.13(a) Certificate of Incorporation of KEA/1, Inc.(6)

3.13(b) Bylaws of KEA/1, Inc.(6)

3.14(a) Certificate of Incorporation of KEA/II, Inc.(6)

II-4

Exhibit Description
------- -----------

3.14(b) Bylaws of KEA/II, Inc.(6)

3.15(a) Certificate of Incorporation of Koll Capital Markets Group, Inc.(6)

3.15(b) Bylaws of Koll Capital Markets Group, Inc.(6)

3.16(a) Articles of Incorporation of Koll Investment Management, Inc.(6)

3.16(b) Bylaws of Koll Investment Management, Inc.(6)

3.17(a) Certificate of Incorporation of Koll Partnerships I, Inc.(6)

3.17(b) Bylaws of Koll Partnerships I, Inc.(6)

3.18(a) Certificate of Incorporation of Koll Partnerships II, Inc.(6)

3.18(b) Bylaws of Koll Partnerships II, Inc.(6)

3.19(a) Articles of Incorporation of L.J. Melody & Company(6)

3.19(b) Bylaws of L.J. Melody & Company(6)

3.20(a) Certificate of Limited Partnership of L J Melody & Company of Texas, LP(6)

3.20(b) Limited Partnership Agreement of L J Melody & Company of Texas, LP (formerly known as
L.J. Melody Mortgage Company, LP)(6)

3.21(a) Articles of Incorporation of Sol L. Rabin, Inc.(6)

3.21(b) Bylaws of Sol L. Rabin, Inc.(6)

3.22(a) Articles of Incorporation of Vincent F. Martin, Jr., Inc.(6)

3.22(b) Bylaws of Vincent F. Martin, Jr., Inc.(6)

3.23(a) Certificate of Limited Partnership of Westmark Real Estate Acquisition Partnership, L.P.(6)

3.23(b) Amended and Restated Agreement of Limited Partnership of Westmark Real Estate Acquisition
Partnership, L.P.(6)

4.1(a) Amended and Restated Contribution and Voting Agreement, dated as of May 31, 2001 (the
"Contribution and Voting Agreement"), by and among Holding, BLUM CB Corp., RCBA Strategic
Partners, L.P., FS Equity Partners III, L.P., FS Equity Partners International, L.P., The Koll Holding
Company, Donald Koll, Frederic V. Malek, Raymond E. Wirta and Brett White(1)

4.1(b) Amendment to the Contribution and Voting Agreement, dated as of July 19, 2001, by and among
Holding, BLUM CB Corp., RCBA Strategic Partners, L.P., FS Equity Partners III, L.P., FS Equity
Partners International, L.P., The Koll Holding Company, Donald Koll, Frederic V. Malek,
Raymond E. Wirta and Brett White(2)

4.2 Securityholders' Agreement, dated as of July 20, 2001, by and among Holding, Services, RCBA
Strategic Partners, L.P., Blum Strategic Partners II, L.P., FS Equity Partners III, L.P., FS Equity
Partners International, L.P., The Koll Holding Company, Donald Koll, Frederic V. Malek,
Raymond E. Wirta, Brett White, California Public Education Retirement System, DLJ Investment
Funding, Inc. and Credit Suisse First Boston Corporation(2)

4.3 Warrant Agreement, dated as of July 20, 2001, by and among Holding, FS Equity Partners III, L.P. and
FS Equity Partners International, L.P.(2)

4.4 Form of Designated Manager Subscription Agreement(4)

4.5 Form of Employee Subscription Agreement(4)

4.6 Indenture, dated as of June 7, 2001, among Services, BLUM CB Corp., Holding, the Subsidiary
Guarantors named therein and State Street Bank and Trust Company of California, N.A., as Trustee,
for 11 1/4% Senior Subordinated Notes due 2011(2)

II-5

Exhibit Description
----- -----------

4.7 Registration Rights Agreement, dated as of May 31, 2001, among Services, BLUM CB Corp. and Credit
Suisse First Boston Corporation(2)

4.8 Indenture, dated as of July 20, 2001, among Holding and State Street Bank and Trust Company, N.A., as
Trustee, for 16% Senior Notes due 2011(2)

4.9 Registration Rights Agreement, dated as of May 31, 2001, between Holding and Credit Suisse First
Boston Corporation(2)

4.10 Anti-Dilution Agreement, dated as of July 20, 2001, between Credit Suisse First Boston Corporation and
Holding(2)

5.1 Opinion of Simpson Thacher & Bartlett(6)

10.1 CBRE Holding, Inc. 2001 Stock Incentive Plan(4)

10.2 Full-Recourse Note of Raymond Wirta dated July 20, 2001(6)

10.3 Full-Recourse Note of Brett White dated July 20, 2001(6)

10.4 Full-Recourse Note of James Leonetti dated July 20, 2001(6)

10.5 Pledge Agreement, dated as of July 20, 2001, between Holding and Raymond Wirta(6)

10.6 Pledge Agreement, dated as of July 20, 2001, between Holding and Brett White(6)

10.7 Pledge Agreement, dated as of July 20, 2001, between Holding and James Leonetti(6)

10.8 Option Agreement, dated as of July 20, 2001, between Holding and Raymond Wirta(6)

10.9 Option Agreement, dated as of July 20, 2001, between Holding and Brett White(6)

10.10 Option Agreement, dated as of July 20, 2001, between Holding and James Leonetti(6)

10.11 CB Richard Ellis Amended and Restated Deferred Compensation Plan(5)

10.12 CB Richard Ellis Amended and Restated 401(k) Plan(5)

10.13 Employment Agreement, dated as of July 20, 2001, between Services and Raymond E. Wirta(6)

10.14 Employment Agreement, dated as of July 20, 2001, between Services and W. Brett White(6)

10.15 Employment Agreement, dated May 23, 1997 ("Didion Employment Agreement") between Services and
James J. Didion(3)

10.16 Amendment No. 1 to Didion Employment Agreement, dated as of May 18, 1999, between Services and
James J. Didion*

10.17 Amendment No. 2 to Didion Employment Agreement, dated as of September 1, 1999, between Services
and James J. Didion*

10.18 Assumption Agreement, dated as of July 19, 2001, between BLUM CB Corp. and James J. Didion*

10.19 Credit Agreement, dated as of July 20, 2001, among Services, Holding, the Subsidiary Guarantors
named therein, Credit Suisse First Boston and the other lenders named therein(2)

12.1 Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends of Services(6)

12.2 Computation of Ratio of Earnings to Fixed Charges of Holding(6)

21.1 Subsidiaries of the Company(6)

23.1 Consent of Arthur Andersen LLP*

23.2 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1)

24 Powers of Attorney(6)

25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of State Street Bank and Trust
Company of California, N.A., as Trustee(6)

99.1 Form of Letter of Transmittal(6)

99.2 Form of Notice of Guaranteed Delivery(6)

II-6

--------
* Filed herewith.
(1) Incorporated by reference to an exhibit filed in the Amendment to the CB
Richard Ellis Services, Inc. Amended General Statement of Beneficial
Ownership, filed June 7, 2001.
(2) Incorporated by reference to an exhibit filed in the Amendment to the CB
Richard Ellis Services, Inc. Amended General Statement of Beneficial
Ownership, filed July 30, 2001.
(3) Incorporated by reference to an exhibit filed in the CB Richard Ellis
Services, Inc. Annual Report on Form 10-K405, filed March 31, 1999.

(4) Incorporated by reference to an exhibit filed in Amendment No. 2 to the
CBRE Holding, Inc. Registration Statement on Form S-1, Registration No.
333-59440, filed on July 5, 2001.

(5) Incorporated by reference to an exhibit filed in Amendment No. 3 to the
CBRE Holding, Inc. Registration Statement on Form S-1, Registration No.
333-59440, filed on July 9, 2001.

(6) Incorporated by reference to an exhibit filed in the Registration Statement
on Form S-4, Registration No. 333-70980, filed on October 4, 2001.

Item 22. Undertakings

The undersigned registrants hereby undertake:

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by the director, officer or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on October 22, 2001.

CB RICHARD ELLIS SERVICES, INC.

By: /S/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Senior Executive Vice
President and General Counsel

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on October 22, 2001 by or behalf of the
following persons in the capacities indicated with the registrant.

Signature Title
--------- -----

* Chief Executive Officer and Director (Principal
--------------------------------------- Executive Officer)
RAYMOND E. WIRTA

* Chief Financial Officer (Principal Financial and
--------------------------------------- Accounting Officer)
JAMES H. LEONETTI

* Director and President
---------------------------------------
W. BRETT WHITE

* Chairman of the Board of Directors
---------------------------------------
RICHARD C. BLUM

* Director
---------------------------------------
JEFFREY A. COZAD

--------------------------------------- Director
CATHY A. DELCOCO

* Director
---------------------------------------
FREDERIC V. MALEK

* Director
---------------------------------------
BRADFORD M. FREEMAN

* Director
---------------------------------------
CLAUS J. MOLLER

* Director
---------------------------------------
GARY L. WILSON

*By: /S/ WALTER V. STAFFORD
---------------------------------------
WALTER V. STAFFORD
ATTORNEY-IN-FACT

II-8

SIGNATURES

CBRE HOLDING, INC.

By: /s/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Senior Executive Vice
President and General Counsel

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on October 22, 2001 by or on behalf of
the following persons in the capacities indicated with the registrant.

Signature Title
--------- -----

* Chief Executive Officer and Director (Principal
---------------------------------------- Executive Officer)
RAYMOND E. WIRTA

* Chief Financial Officer (Principal Financial and
---------------------------------------- Accounting Officer)
JAMES H. LEONETTI

* Director and President
----------------------------------------
W. BRETT WHITE

* Chairman of the Board of Directors
----------------------------------------
RICHARD C. BLUM

* Director
----------------------------------------
JEFFREY A. COZAD

---------------------------------------- Director
CATHY A. DELCOCO

* Director
----------------------------------------
FREDERIC V. MALEK

* Director
----------------------------------------
BRADFORD M. FREEMAN

* Director
----------------------------------------
CLAUS J. MOLLER

* Director
----------------------------------------
GARY L. WILSON

*By: /S/ WALTER V. STAFFORD
----------------------------------------
WALTER V. STAFFORD
ATTORNEY-IN-FACT

II-9

SIGNATURES

BONUTTO-HOFER INVESTMENTS

By: /S/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Senior Executive Vice
President and General Counsel

Signature Title
--------- -----

--------------------------------------- President and Chief Executive Officer
JOHN A. BONUTTO (Principal Executive Officer)

* Chief Financial Officer and Director
--------------------------------------- (Principal Financial and Accounting
JAMES H. LEONETTI Officer)

* Chairman of the Board of Directors
---------------------------------------
RAYMOND E. WIRTA

/S/ WALTER V. STAFFORD Director
---------------------------------------
WALTER V. STAFFORD

*By: /S/ WALTER V. STAFFORD
---------------------------------------
WALTER V. STAFFORD
ATTORNEY-IN-FACT

II-10

SIGNATURES

CB RICHARD ELLIS CORPORATE FACILITIES
MANAGEMENT, INC.

By: /S/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Senior Executive Vice
President and General Counsel

Signature Title
--------- -----

--------------------------------------- President (Principal Executive Officer)
JOHN W. DAVIS

* Chief Financial Officer and Director
--------------------------------------- (Principal Financial and Accounting
JAMES H. LEONETTI Officer)

* Chairman of the Board of Directors
---------------------------------------
RAYMOND E. WIRTA

/S/ WALTER V. STAFFORD Director
---------------------------------------
WALTER V. STAFFORD

*By: /S/ WALTER V. STAFFORD
---------------------------------------
WALTER V. STAFFORD
Attorney-in-Fact

II-11

SIGNATURES

CB RICHARD ELLIS INVESTORS, L.L.C.

By: /S/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Vice President

Signature Title
--------- -----

* President, Chief Executive Officer and
--------------------------------------- Director (Principal Executive Officer)
ROBERT H. ZERBST

* Chief Financial Officer (Principal
--------------------------------------- Financial and Accounting Officer)
LAURIE E. ROMANAK

* Chairman of the Board of Directors
---------------------------------------
RAYMOND E. WIRTA

* Director
---------------------------------------
JAMES H. LEONETTI

/S/ WALTER V. STAFFORD Director
---------------------------------------
WALTER V. STAFFORD

*By: /S/ WALTER V. STAFFORD
---------------------------------------
WALTER V. STAFFORD
Attorney-in-Fact

II-12

SIGNATURES

CB RICHARD ELLIS, INC.

By: /S/ WALTER V. STAFFORD
__________________________________
NAME: WALTER V. STAFFORD
Title: Vice President

Signature Title
--------- -----

* Chief Executive Officer and Director
---------------------------------------- (Principal Executive Officer)
RAYMOND E. WIRTA

* Chief Financial Officer (Principal
---------------------------------------- Financial and Accounting Officer)
JAMES H. LEONETTI