CBRE GROUP, INC. [CBRE] Filings

10-Q 1 cbre-20240630.htm 10-Q cbre-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 001-32205

CBRE GROUP, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________


Delaware						94-3391143
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2121 North Pearl Street, Suite 300, Dallas, Texas						75201
(Address of principal executive offices)						(Zip Code)

(214) 979-6100

(Registrant’s telephone number, including area code)

_____________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	“CBRE”	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Class A common stock outstanding at July 22, 2024 was 306,431,434.

Table of contents

FORM 10-Q

June 30, 2024

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	1

	Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023	2

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023	3

	Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	4

	Consolidated Statements of Equity for the three and six months ended June 30, 2024 and 2023	6

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	53

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Signatures		56

Table of contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions, except share data)


	June 30, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	928	$	1,265
Restricted cash	105		106
Receivables, less allowance for doubtful accounts of $103.7 and $102.0 at June 30, 2024 and December 31, 2023, respectively	6,304		6,370
Warehouse receivables	973		675
Contract assets	454		443
Prepaid expenses	342		333
Income taxes receivable	190		159
Other current assets	357		315
Total Current Assets	9,653		9,666
Property and equipment, net of accumulated depreciation and amortization of $1,703.4 and $1,576.1 at June 30, 2024 and December 31, 2023, respectively	895		907
Goodwill	5,667		5,129
Other intangible assets, net of accumulated amortization of $2,327.8 and $2,178.9 at June 30, 2024 and December 31, 2023, respectively	2,385		2,081
Operating lease assets	1,032		1,030
Investments in unconsolidated subsidiaries (with $904.6 and $997.3 at fair value at June 30, 2024 and December 31, 2023, respectively)	1,309		1,374
Non-current contract assets	92		75
Real estate under development	380		300
Non-current income taxes receivable	77		78
Deferred tax assets, net	338		361
Other assets, net	1,634		1,547
Total Assets	$	23,462	$	22,548
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,568	$	3,562
Compensation and employee benefits payable	1,230		1,459
Accrued bonus and profit sharing	974		1,556
Operating lease liabilities	244		242
Contract liabilities	311		298
Income taxes payable	128		217
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	961		666
Revolving credit facility	940		—
Other short-term borrowings	7		16
Current maturities of long-term debt	28		9
Other current liabilities	238		218
Total Current Liabilities	8,629		8,243
Long-term debt, net of current maturities	3,272		2,804
Non-current operating lease liabilities	1,091		1,089
Non-current income taxes payable	—		30
Non-current tax liabilities	148		157
Deferred tax liabilities, net	248		255
Other liabilities	885		903
Total Liabilities	14,273		13,481

Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 306,473,349 and 304,889,140 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	3		3
Additional paid-in capital	—		—
Accumulated earnings	9,384		9,188
Accumulated other comprehensive loss	(1,031)		(924)
Total CBRE Group, Inc. Stockholders’ Equity	8,356		8,267
Non-controlling interests	833		800
Total Equity	9,189		9,067
Total Liabilities and Equity	$	23,462	$	22,548

The accompanying notes are an integral part of these consolidated financial statements.

Table of contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	8,391	$	7,720	$	16,326	$	15,131
Costs and expenses:
Cost of revenue	6,793		6,179		13,268		12,186
Operating, administrative and other	1,191		1,089		2,302		2,297
Depreciation and amortization	161		155		319		316

Total costs and expenses	8,145		7,423		15,889		14,799
Gain on disposition of real estate	—		9		13		12
Operating income	246		306		450		344
Equity (loss) income from unconsolidated subsidiaries	(15)		(8)		(73)		134
Other income	6		6		15		8
Interest expense, net of interest income	63		43		99		71

Income before provision for income taxes	174		261		293		415
Provision for income taxes	32		55		3		84
Net income	142		206		290		331
Less: Net income attributable to non-controlling interests	12		5		34		13
Net income attributable to CBRE Group, Inc.	$	130	$	201	$	256	$	318
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.42	$	0.65	$	0.84	$	1.02
Weighted average shares outstanding for basic income per share	306,745,116		310,857,203		306,276,871		310,662,324
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.42	$	0.64	$	0.83	$	1.01
Weighted average shares outstanding for diluted income per share	308,035,211		314,282,247		308,269,040		314,821,615

The accompanying notes are an integral part of these consolidated financial statements.

Table of contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	142	$	206	$	290	$	331
Other comprehensive (loss) income:
Foreign currency translation (loss) gain	(26)		37		(115)		74

Unrealized holding gains on available for sale debt securities, net of tax	3		—		3		1
Other, net of tax	(2)		—		(1)		5
Total other comprehensive (loss) income	(25)		37		(113)		80
Comprehensive income	117		243		177		411
Less: Comprehensive income attributable to non-controlling interests	13		18		28		39
Comprehensive income attributable to CBRE Group, Inc.	$	104	$	225	$	149	$	372

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	290	$	331
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	319		316
Amortization of financing costs	3		2
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(60)		(45)
Gain on disposition of real estate assets	(13)		—

Net realized and unrealized gains, primarily from investments	(2)		(3)
Provision for doubtful accounts	9		6
Net compensation expense for equity awards	69		39
Equity loss (income) from unconsolidated subsidiaries	73		(134)
Distribution of earnings from unconsolidated subsidiaries	30		183
Proceeds from sale of mortgage loans	4,129		4,356
Origination of mortgage loans	(4,408)		(4,894)
Increase in warehouse lines of credit	295		549
Tenant concessions received	13		7
Purchase of equity securities	(28)		(8)
Proceeds from sale of equity securities	46		8
Increase in real estate under development	(6)		(37)
Decrease (increase) in receivables, prepaid expenses and other assets (including contract and lease assets)	110		(101)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	(77)		(313)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing	(788)		(811)
Increase in net income taxes receivable/payable	(153)		(157)
Other operating activities, net	(56)		(50)
Net cash used in operating activities	(205)		(756)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(135)		(135)
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	(1,051)		(166)
Contributions to unconsolidated subsidiaries	(73)		(60)
Distributions from unconsolidated subsidiaries	29		21
Acquisition and development of real estate assets	(136)		—
Proceeds from disposition of real estate assets	6		—
Other investing activities, net	53		(30)
Net cash used in investing activities	(1,307)		(370)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in millions)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility	2,505		3,206
Repayment of revolving credit facility	(1,565)		(2,801)


Proceeds from notes payable on real estate	12		—

Proceeds from issuance of 5.500% senior notes	495		—
Proceeds from issuance of 5.950% senior notes	—		975
Repurchase of common stock	(47)		(130)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(16)		(68)
Units repurchased for payment of taxes on equity awards	(97)		(50)
Non-controlling interest contributions	17		2
Non-controlling interest distributions	(30)		(1)
Other financing activities, net	(32)		(58)
Net cash provided by financing activities	1,242		1,075
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	(68)		3
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(338)		(48)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	1,371		1,405
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,033	$	1,357
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	170	$	91
Income tax payments, net	$	244	$	303
Non-cash investing and financing activities:
Deferred and/or contingent consideration	$	15	$	—

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in millions)


	CBRE Group, Inc. Stockholders’
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at March 31, 2024	$	3	$	—	$	9,263	$	(1,005)	$	838	$	9,099
Net income	—		—		130		—		12		142
Compensation expense for equity awards	—		39		—		—		—		39
Units repurchased for payment of taxes on equity awards	—		(1)		—		—		—		(1)
Repurchase of common stock	—		(39)		(9)		—		—		(48)
Foreign currency translation (loss) gain	—		—		—		(27)		1		(26)

Unrealized holding gains on available for sale debt securities, net of tax	—		—		—		3		—		3
Contributions from non-controlling interests	—		—		—		—		16		16
Distributions to non-controlling interests	—		—		—		—		(30)		(30)

Other	—		1		—		(2)		(4)		(5)
Balance at June 30, 2024	$	3	$	—	$	9,384	$	(1,031)	$	833	$	9,189


	CBRE Group, Inc. Stockholders’
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at March 31, 2023	$	3	$	—	$	8,810	$	(953)	$	782	$	8,642
Net income	—		—		201		—		5		206
Compensation expense for equity awards	—		21		—		—		—		21
Units repurchased for payment of taxes on equity awards	—		(4)		—		—		—		(4)

Foreign currency translation gain	—		—		—		24		13		37


Contributions from non-controlling interests	—		—		—		—		1		1
Distributions to non-controlling interests	—		—		—		—		(1)		(1)
Other	—		(4)		—		—		(4)		(8)
Balance at June 30, 2023	$	3	$	13	$	9,011	$	(929)	$	796	$	8,894

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(Unaudited)

(Dollars in thousands)


	CBRE Group, Inc. Stockholders’
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at December 31, 2023	$	3	$	—	$	9,188	$	(924)	$	800	$	9,067
Net income	—		—		256		—		34		290
Compensation expense for equity awards	—		69		—		—		—		69
Units repurchased for payment of taxes on equity awards	—		(46)		(51)		—		—		(97)
Repurchase of common stock	—		(39)		(9)		—		—		(48)
Foreign currency translation loss	—		—		—		(109)		(6)		(115)

Unrealized holding gains on available for sale debt securities, net of tax	—		—		—		3		—		3
Contributions from non-controlling interests	—		—		—		—		17		17
Distributions to non-controlling interests	—		—		—		—		(30)		(30)
Acquisition of non-controlling interests	—		—		—		—		22		22
Other	—		16		—		(1)		(4)		11
Balance at June 30, 2024	$	3	$	—	$	9,384	$	(1,031)	$	833	$	9,189


	CBRE Group, Inc. Stockholders’
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at December 31, 2022	$	3	$	—	$	8,833	$	(983)	$	753	$	8,606
Net income	—		—		318		—		13		331
Compensation expense for equity awards	—		39		—		—		—		39
Units repurchased for payment of taxes on equity awards	—		(16)		(34)		—		—		(50)
Repurchase of common stock	—		—		(114)		—		—		(114)
Foreign currency translation gain	—		—		—		48		26		74

Unrealized holding gains on available for sale debt securities, net of tax	—		—		—		1		—		1
Contributions from non-controlling interests	—		—		—		—		2		2
Distributions to non-controlling interests	—		—		—		—		(1)		(1)
Other	—		(10)		8		5		3		6
Balance at June 30, 2023	$	3	$	13	$	9,011	$	(929)	$	796	$	8,894

The accompanying notes are an integral part of these consolidated financial statements.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Readers of this Quarterly Report on Form 10-Q (Quarterly Report) should refer to the audited financial statements and notes to consolidated financial statements of CBRE Group, Inc., a Delaware corporation (which may be referred to in these financial statements as “CBRE,” “the company,” “we,” “us” and “our”), for the year ended December 31, 2023, which are included in our 2023 Annual Report on Form 10-K (2023 Annual Report), filed with the United States Securities and Exchange Commission (SEC) and also available on our website (www.cbre.com), since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 2, Significant Accounting Policies, in the notes to consolidated financial statements in our 2023 Annual Report for further discussion of our significant accounting policies and estimates.

Financial Statement Preparation

The accompanying consolidated financial statements have been prepared in accordance with the rules applicable to quarterly reports on Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (U.S.), or General Accepted Accounting Principles (GAAP), for annual financial statements. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., which require management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts reported in our consolidated financial statements and accompanying notes and are based on our best judgment. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including consideration of the current economic environment, and adjust such estimates and assumptions when facts and circumstances dictate. Actual results may differ from these estimates and assumptions.

2. New Accounting Pronouncements

Recent Accounting Pronouncements Pending Adoption

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This update enhances reportable segment disclosures by requiring a public entity to: 1) disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, 2) disclose, on an annual and interim basis, an amount of other segment items by reportable segment and a description of its composition, 3) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, 4) disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and 5) provide all the disclosures required by this update and all existing segment disclosures in Topic 280 if the entity has a single reportable segment. This ASU also clarifies that, in addition to the measure that is most consistent with the measurement principles under GAAP, a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are evaluating the impact this guidance will have on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid and will be effective for annual periods beginning after December 15, 2024. The new requirements should be applied on a prospective basis with an option to apply them retrospectively. Early adoption is permitted. We are evaluating the impact that ASU 2023-09 will have on our consolidated financial statements and related disclosures.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3. J&J Worldwide Services Acquisition

On February 27, 2024, we acquired a 100% ownership interest in J&J Worldwide Services (J&J), a leading provider of engineering services, base support operations and facilities maintenance for the U.S. federal government. J&J primarily serves the U.S. Department of Defense through long-term, fixed-price contracts and is reported as part of our Global Workplace Solutions (GWS) segment. The acquisition is consistent with key elements of our M&A strategy that focus on enhancing our technical services capabilities, increasing revenue resilience and secular growth, and expanding our government client base within our GWS segment.

The J&J acquisition was treated as a business combination under FASB Accounting Standards Codification (ASC) Topic 805 and was accounted for using the acquisition method of accounting. We financed the acquisition with a new issuance in February 2024 of $500.0 million in aggregate principal amount of 5.500% senior notes due April 1, 2029; (ii) borrowings under our existing revolving credit facility under our 2023 Credit Agreement; and (iii) cash on hand. See Note 8 for more information on the above mentioned debt instruments.

The following summarizes the consideration transferred at closing for the J&J acquisition (dollars in millions):


Cash consideration	$	809
Deferred and contingent consideration	11
Total consideration	$	820

The purchase price included $7.4 million of contingent consideration, representing the acquisition date fair value recognized for up to $250.0 million gross of potential future earnout payments based on the achievement of certain performance thresholds during calendar years 2025 and 2026.

The following represents the summary of the excess purchase price over the fair value of net assets acquired (dollars in millions):


Purchase price	$	820
Less: Estimated fair value of net assets acquired (see table below)	357
Excess purchase price over estimated fair value of net assets acquired	$	463

The preliminary purchase accounting adjustments related to the J&J acquisition have been recorded in the accompanying consolidated financial statements. The excess purchase price over the fair value of net assets acquired and non-controlling interest has been recorded to goodwill. The goodwill arising from the J&J acquisition consists largely of the synergies and opportunities to deliver premier engineering services, base support operations and facilities maintenance services. Of the goodwill generated, approximately $115.0 million is deductible for tax purposes.

The acquired assets and assumed liabilities of J&J were recorded at their estimated fair values. The purchase price allocation for the business combination is preliminary, primarily for intangibles, and subject to change within the respective measurement period which will not extend beyond one year from the acquisition date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined. Any such adjustments may be material.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table summarizes the preliminary fair values assigned to the identified assets acquired and liabilities assumed at the acquisition date on February 27, 2024 (dollars in millions):


Assets Acquired:
Cash and cash equivalents	$	26

Receivables, net	91
Contract assets	22
Prepaid expenses	2
Other current assets	2
Property and equipment, net	11
Other intangible assets, net	297
Operating lease assets	2
Investments in unconsolidated subsidiaries	24
Other assets, net	15
Total assets acquired	492
Liabilities Assumed:
Accounts payable and accrued expenses	54
Compensation and employee benefits payable	8
Contract liabilities	1
Income taxes payable	1
Other current liabilities	2
Non-current operating lease liabilities	3
Deferred tax liabilities, net	57
Other liabilities	3
Total liabilities assumed	129
Non-controlling Interest Acquired	6
Estimated Fair Value of Net Assets Acquired	$	357

In connection with the J&J acquisition, below is a summary of the preliminary value allocated to the intangible assets acquired (dollars in millions):


				As of June 30, 2024
Asset Class	Amortization Period	Amount Assigned at Acquisition Date		Accumulated Amortization		Net Carrying Value
Customer relationships	9-12 years	$	174	$	5	$	169
Backlog	4-6 years	111		9		102
Trademark	3 years	10		1		9
Technology	5 years	2		—		2

The accompanying consolidated statements of operations for the three months ended June 30, 2024 includes revenue, operating loss and net loss of $105.7 million, $4.8 million and $4.4 million, respectively, and for the six months ended June 30, 2024 includes revenue, operating loss and net loss of $147.1 million, $5.1 million and $3.9 million, respectively, attributable to the J&J acquisition. This does not include the total direct transaction and integration costs of $17.5 million and $1.0 million incurred during the first and second quarter of 2024, respectively, in connection with the J&J acquisition, which are included in the unaudited pro forma results.

The fair value of customer relationships and backlog was determined using the Multi-Period Excess Earnings Method (MPEEM), a form of the Income Approach. The MPEEM is a specific application of the Discounted Cash Flow Method. The principle behind the MPEEM is that the value of an intangible asset is equal to the present value of the incremental cash flows attributable only to the subject intangible asset. This estimation used certain unobservable key inputs such as timing of projected cash flows, growth rates, expected contract renewal probabilities, discount rates, and the assessment of useful life.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The fair value of the trademark and the existing technology was determined by using the Relief-from-Royalty Method, a form of the Income Approach, and relied on key unobservable inputs such as timing of the projected cash flows, growth rates, and royalty rates. The basic tenet of the Relief-from-Royalty Method is that without ownership of the subject intangible asset, the user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the rights to use that asset. By acquiring the intangible asset, the user avoids these payments.

Unaudited pro forma results, assuming the J&J acquisition had occurred as of January 1, 2023 for purposes of the pro forma disclosures for the three and six months ended June 30, 2024 and 2023 are presented below. They include certain adjustments for increased amortization expense related to the intangible assets acquired (approximately $4.7 million for the three months ended June 30, 2023, and approximately $3.2 million and $9.4 million for the six months ended June 30, 2024 and 2023, respectively) as well as increased interest expense related to the long-term financing ($7.0 million for the three months ended June 30, 2023, and approximately $4.2 million and $14.1 million for the six months ended June 30, 2024 and 2023, respectively). Direct transaction and integration costs of $1.0 million incurred during the second quarter of 2024, $17.5 million, incurred during the the first quarter of 2024, and $2.1 million incurred during the fourth quarter of 2023 as well as the tax impact of all pro forma adjustments are also included in the unaudited pro forma results.

These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the J&J acquisition occurred on January 1, 2023 and may not be indicative of future operating results (dollars in millions, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	8,391	$	7,830	$	16,398	$	15,355
Operating income	247		295		461		308
Net income attributable to CBRE Group, Inc.	131		187		262		279
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.43	$	0.60	$	0.85	$	0.90
Weighted average shares outstanding for basic income per share	306,745,116		310,857,203		306,276,871		310,662,324
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.42	$	0.59	$	0.85	$	0.89
Weighted average shares outstanding for diluted income per share	308,035,211		314,282,247		308,269,040		314,821,615

Other acquisitions

During the three months ended June 30, 2024, the company completed five in-fill business acquisitions, including one in the Advisory Services segment and four in the GWS segment, with an aggregate purchase price of approximately $290.9 million in cash and non-cash consideration. Assets acquired and liabilities assumed are primarily working capital in nature. The results of operations of all acquisitions completed during the six months ended June 30, 2024 have been included in the company’s consolidated financial results since their respective acquisition dates. These acquisitions were not significant in relation to the company’s consolidated financial results and, therefore, pro-forma financial information has not been presented.

The following table identifies the company’s allocation of purchase price to goodwill and other intangible assets by category (dollars in millions):


	Amount Assigned at Acquisition Date		Weighted-Average Life (in years)
Goodwill	$	118	N/A
Customer relationships	141		12 years
Other intangible assets	3		2 years
Total	$	262

4. Warehouse Receivables & Warehouse Lines of Credit

Our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) is a Federal Home Loan Mortgage Corporation (Freddie Mac) approved Multifamily Program Plus Seller/Servicer and an approved Federal National Mortgage Association (Fannie Mae) Aggregation and Negotiated Transaction Seller/Servicer. In addition, CBRE Capital Markets’

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

wholly-owned subsidiary CBRE Multifamily Capital, Inc. (CBRE MCI) is an approved Fannie Mae Delegated Underwriting and Servicing (DUS) Seller/Servicer and CBRE Capital Markets’ wholly-owned subsidiary CBRE HMF, Inc. (CBRE HMF) is a U.S. Department of Housing and Urban Development (HUD) approved Non-Supervised Federal Housing Authority (FHA) Title II Mortgagee, an approved Multifamily Accelerated Processing (MAP) lender and an approved Government National Mortgage Association (Ginnie Mae) issuer of mortgage-backed securities (MBS). Under these arrangements, before loans are originated through proceeds from warehouse lines of credit, we obtain either a contractual loan purchase commitment from either Freddie Mac or Fannie Mae or a confirmed forward trade commitment for the issuance and purchase of a Fannie Mae or Ginnie Mae MBS that will be secured by the loans. The warehouse lines of credit are generally repaid within a one-month period when Freddie Mac or Fannie Mae buys the loans or upon settlement of the Fannie Mae or Ginnie Mae MBS, while we retain the servicing rights. Loans are funded at the prevailing market rates. We elect the fair value option for all warehouse receivables. At June 30, 2024 and December 31, 2023, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae MBS that will be secured by the underlying loans.

A rollforward of our warehouse receivables is as follows (dollars in millions):


Beginning balance at December 31, 2023	$	675
Origination of mortgage loans	4,408
Gains (premiums on loan sales)	14
Proceeds from sale of mortgage loans:
Sale of mortgage loans	(4,115)
Cash collections of premiums on loan sales	(14)
Proceeds from sale of mortgage loans	(4,129)
Net increase in mortgage servicing rights included in warehouse receivables	5
Ending balance at June 30, 2024	$	973

The following table is a summary of our warehouse lines of credit in place as of June 30, 2024 and December 31, 2023 (dollars in millions):


			June 30, 2024				December 31, 2023
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan)	12/13/2024	daily floating Secured Overnight Financing Rate (SOFR) plus 1.50%, with a SOFR adjustment of 0.05%	$	1,335	$	675	$	1,335	$	613
JP Morgan (Business Lending Activity)	12/13/2024	daily floating SOFR plus 2.75%, with a SOFR adjustment of 0.05%	15		—		15		—
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program	Cancelable anytime	daily floating SOFR plus 1.45%, with a SOFR floor of 0.25%	650		66		650		7
TD Bank, N.A. (TD Bank) (1)	7/31/2024	daily floating SOFR plus 1.30%, with a SOFR adjustment of 0.10%	600		16		600		28
Bank of America, N.A. (BofA) (2)	5/21/2025	daily floating SOFR plus 1.25%, with a SOFR adjustment of 0.10%	350		204		350		18
BofA (2)	5/21/2025	daily floating SOFR plus 1.25%, with a SOFR adjustment of 0.10%	250		—		250		—

			$	3,200	$	961	$	3,200	$	666

________________________________________________________________________________________________________________________________________

(1)Effective July 15, 2023, this facility was renewed and amended to a maximum aggregate principal amount of $300.0 million, with an uncommitted $300.0 million temporary line of credit and a maturity date of July 15, 2024. Effective July 15, 2024, the maturity date was extended until July 31, 2024 and there were no changes to the SOFR rate or the SOFR adjustment rate with the extension. As of June 30, 2024, the uncommitted $300.0 million temporary line of credit was not utilized.

(2)Effective May 22, 2024, this facility was renewed and there were no changes to the SOFR rate or the SOFR adjustment rate at renewal.

During the six months ended June 30, 2024, we had a maximum of $1.2 billion of warehouse lines of credit principal outstanding.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. Variable Interest Entities (VIEs)

We hold variable interests in certain VIEs primarily in our Real Estate Investments (REI) segment which are not consolidated as it was determined that we are not the primary beneficiary. Our involvement with these entities is in the form of equity co-investments and fee arrangements. As of June 30, 2024 and December 31, 2023, our maximum exposure to loss related to the VIEs that are not consolidated was as follows (dollars in millions):


	June 30, 2024		December 31, 2023
Investments in unconsolidated subsidiaries	$	181	$	165

Co-investment commitments	50		58
Maximum exposure to loss	$	231	$	223

6. Fair Value Measurements

Topic 820 of the FASB ASC defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1 – Quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

There have been no significant changes to the valuation techniques and inputs used to develop the recurring fair value measurements from those disclosed in our 2023 Annual Report, except as described below.

The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (dollars in millions):


	As of June 30, 2024
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. treasury securities	$	10	$	—	$	—	$	10

Corporate debt securities	—		16		—		16


Total available for sale debt securities	10		16		—		26
Equity securities	65		—		—		65
Investments in unconsolidated subsidiaries	96		—		457		553
Warehouse receivables	—		973		—		973
Other assets	—		12		31		43
Total assets at fair value	$	171	$	1,001	$	488	$	1,660

Liabilities
Contingent consideration	—		—		40		40

Total liabilities at fair value	$	—	$	—	$	40	$	40

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	As of December 31, 2023
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. treasury securities	$	12	$	—	$	—	$	12
Debt securities issued by U.S. federal agencies	—		11		—		11
Corporate debt securities	—		44		—		44
Asset-backed securities	—		1		—		1

Total available for sale debt securities	12		56		—		68
Equity securities	41		—		—		41
Investments in unconsolidated subsidiaries	168		—		477		645
Warehouse receivables	—		675		—		675
Other assets	—		—		16		16
Total assets at fair value	$	221	$	731	$	493	$	1,445

Liabilities
Contingent consideration	—		—		36		36
Other liabilities	—		5		—		5
Total liabilities at fair value	$	—	$	5	$	36	$	41

Fair value measurements for our available for sale debt securities are obtained from independent pricing services which utilize observable market data that may include quoted market prices, dealer quotes, market spreads, cash flows, the U.S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

The equity securities are generally valued at the last reported sales price on the day of valuation or, if no sales occurred on the valuation date, at the mean of the bid and ask prices on such date. The above tables do not include our $142.8 million as of both June 30, 2024 and December 31, 2023, for capital investments in certain non-public entities as they are non-marketable equity investments accounted for under the measurement alternative, defined as cost minus impairment. These investments are included in “Other assets, net” in the accompanying consolidated balance sheets.

The fair values of the warehouse receivables are primarily calculated based on already locked in purchase prices. At June 30, 2024 and December 31, 2023, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae mortgage backed securities that will be secured by the underlying loans (see Note 4). These assets are classified as Level 2 in the fair value hierarchy as a substantial majority of inputs are readily observable.

As of June 30, 2024 and December 31, 2023, investments in unconsolidated subsidiaries at fair value using NAV were $351.8 million and $352.3 million, respectively, and investments at fair value using NAV which are not accounted for under the equity method were $19.6 million and $19.2 million, respectively. These investments fall under practical expedient rules that do not require them to be included in the fair value hierarchy and as a result have been excluded from the tables above.

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions):


	Investment in Unconsolidated Subsidiaries		Other Assets		Contingent Consideration
Balance as of March 31, 2024	$	458	$	18	$	43
Transfer in (out)	—		—		—
Net change in fair value	(1)		10		(3)
Purchases / Additions	—		3		2
Sales / Payments	—		—		(2)
Balance as of June 30, 2024	$	457	$	31	$	40

Balance as of December 31, 2023	$	477	$	16	$	36
Transfer in (out)	—		—		—
Net change in fair value	(20)		9		(3)
Purchases / Additions	—		6		9
Sales / Payments	$	—	$	—	$	(2)
Balance as of June 30, 2024	$	457	$	31	$	40

Net change in fair value, included in the table above, is reported in Net income as follows:


Category of Assets/Liabilities using Unobservable Inputs						Consolidated Financial Statements
Investments in unconsolidated subsidiaries						Equity (loss) income from unconsolidated subsidiaries
Other assets (liabilities)						Other income
Contingent consideration (short term)						Accounts payable and accrued expenses
Contingent consideration (long term)