Investors may think that home prices are the only way to play the real estate sector, whether by investing in physical property or crowdfunding platforms that allow retail investors to tap into the income and appreciation potential from owning a share in a portfolio of properties. However, there are other lateral plays that offer a much better risk-to-reward ratio. As home prices now hit a new all-time high, with the average home price hovering at $501,700, investing in single-family homes has very little u ...

The U.S. is home to the majority of the world's data centers, with more than 2,800. The closest nation after that is the United Kingdom, with less than 400, according to the Data Center Map. Data centers are the physical vertebrae of internet infrastructure, supporting cloud computing capabilities and artificial intelligence. The value of the land where data centers are planned to be built is now soaring, 10 times the original price in one case from Vint Hill, Virginia. Pat Lynch, executive managing directo ...

The over 25K-square-foot space will provide room to accommodate the sustainability company's impressive growth DENVER, Aug. 21, 2024 /PRNewswire/ -- Redaptive, renowned for its data and sustainability solutions for industrial and commercial customers, is moving its headquarters from The Circa Building to a much larger, 25K-square-foot space on the eighth floor of McGregor Square in LoDo. The move comes on the heels of significant company growth. Redaptive's new headquarters is located in McGregor Square, wh ...

CBRE Group's (CBRE) wide array of real estate products and service offerings and healthy outsourcing business position it well for growth. Its solid balance sheet position also bodes well. Last month, this Dallas, TX-based real estate came up with better-than-expected second-quarter 2024 results. The company reported core earnings per share (EPS) of 81 cents, surpassing the Zacks Consensus Estimate of 69 cents. The results reflected growth in its resilient lines of business. Shares of this Zacks Rank #2 (Bu ...

CBRE Group, Inc. (NYSE:CBRE) Q2 2024 Results Conference Call July 25, 2024 8:30 AM ET Company Participants Chandni Luthra - Executive Vice President, Head of FP&A and Investor Relations Bob Sulentic - Chair & Chief Executive Officer Emma Giamartino - Chief Financial Officer Conference Call Participants Ronald Kamdem - Morgan Stanley Anthony Paolone - JPMorgan Jade Rahmani - KBW Michael Griffin - Citi Steve Sakwa - Evercore ISI Stephen Sheldon - William Blair Peter Abramowitz - Jefferies Operator Greetings, ...

Core Insights - CBRE Group Inc. reported second-quarter 2024 core earnings per share (EPS) of 81 cents, exceeding the Zacks Consensus Estimate of 69 cents, but reflecting a 1.2% decline year over year [1][2] - The company's shares rose over 9% following the earnings report, indicating positive market sentiment [2] - Quarterly revenues increased by 8.7% year over year to $8.39 billion, although this fell short of the Zacks Consensus Estimate of $8.52 billion [3] Revenue Performance - Global Workplace Solutions (GWS) segment saw a revenue increase of 9.5% (10.3% in local currency) to $5.94 billion, slightly below the estimate of $5.98 billion [15] - Advisory Services segment reported an 8.6% year-over-year revenue increase to $2.22 billion, aligning closely with estimates [7] - The leasing business performed well, particularly in the United States, driven by office leasing revenue growth in New York [2] Segment Analysis - Real Estate Investments segment experienced a revenue decline of 9.2% (same local currency) to $232 million [5] - Global sales revenues fell by 3% (2% in local currency), although property sales revenues began to stabilize [4] - Mortgage origination revenue rose by 38% (same local currency), attributed to a 20% increase in loan origination fees and higher interest earnings on escrow balances [4] Financial Position - At the end of Q2 2024, assets under management decreased by $1.5 billion to $142.5 billion due to lower asset values and adverse foreign currency movements [9] - Cash and cash equivalents stood at $928 million, down from $1.04 billion at the end of Q1 2024 [10] - Total liquidity was reported at $3.7 billion, including approximately $927.7 million in cash and the ability to borrow around $2.7 billion under revolving credit facilities [11] Shareholder Actions - During the quarter, CBRE repurchased approximately 0.6 million shares for $48.4 million, with $1.4 billion remaining under its authorized buyback program [12] Future Outlook - For 2024, CBRE projects core EPS in the range of $4.70-$4.90, an increase from the previous guidance of $4.25-$4.65, with expectations that over 45% of full-year core EPS will be achieved in Q4 2024 [13] - The Zacks Consensus Estimate for the same is currently at $4.48, which is below the guided range [13] Strategic Moves - CBRE acquired Direct Line Global for $290.9 million, enhancing its technical facilities management services for data center owners [16] - The company also plans to combine its project management business with its Turner & Townsend subsidiary [16]

Core Insights - CBRE Group reported revenue of $8.39 billion for the quarter ended June 2024, reflecting an 8.7% increase year-over-year, although it fell short of the Zacks Consensus Estimate of $8.52 billion by 1.52% [1] - The company's EPS was $0.81, slightly down from $0.82 in the same quarter last year, but it exceeded the consensus EPS estimate of $0.69 by 17.39% [1] Financial Performance Metrics - Investment Management AUM was $142.5 billion, slightly below the estimated $143.28 billion [3] - Total revenue from Real Estate Investments was $256 million, surpassing the average estimate of $242.32 million, marking a year-over-year increase of 0.1% [3] - Net revenue reached $4.97 billion, exceeding the average estimate of $4.82 billion, with a year-over-year growth of 11% [3] - Net revenue from Global Workplace Solutions was $2.55 billion, above the average estimate of $2.48 billion, reflecting a 15.5% year-over-year increase [3] - Net revenue from Advisory Services was $2.20 billion, exceeding the average estimate of $2.10 billion, with an 8.7% year-over-year increase [3] - Revenue from Property and advisory project management was $532 million, surpassing the estimated $505.06 million, representing a 15.9% year-over-year increase [3] - Revenue from Advisory Services recognized as pass-through costs was $23 million, slightly above the estimated $22.41 million, with a year-over-year increase of 7.5% [3] - Corporate, Other and Eliminations revenue was -$3 million, better than the estimated -$4.29 million, showing a 15% year-over-year decline [3] - Revenue from Global Workplace Solutions recognized as pass-through costs was $3.40 billion, below the estimated $3.60 billion, with a year-over-year increase of 5.5% [3] - Total revenue from Global Workplace Solutions was $5.43 billion, falling short of the estimated $6.03 billion, with no change year-over-year [3] - Total revenue from Advisory Services was $2.04 billion, below the estimated $2.14 billion, with no change year-over-year [3] - Revenue from pass-through costs recognized as revenue was $3.42 billion, below the estimated $3.74 billion, with a year-over-year increase of 5.5% [3] Stock Performance - CBRE shares have returned +11.5% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - CBRE Group reported quarterly earnings of $0.81 per share, exceeding the Zacks Consensus Estimate of $0.69 per share, but down from $0.82 per share a year ago [1] - The earnings surprise for the quarter was 17.39%, with a previous quarter surprise of 13.04% when actual earnings were $0.78 against an expectation of $0.69 [2] - Over the last four quarters, CBRE has surpassed consensus EPS estimates four times [3] Revenue Analysis - CBRE posted revenues of $8.39 billion for the quarter ended June 2024, missing the Zacks Consensus Estimate by 1.52%, compared to $7.72 billion in the same quarter last year [3] - The company has topped consensus revenue estimates two times over the last four quarters [3] Stock Performance - CBRE shares have increased approximately 5.6% since the beginning of the year, while the S&P 500 has gained 13.8% [5] - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $9.03 billion, and for the current fiscal year, it is $4.48 on revenues of $35.76 billion [7] Industry Context - The Real Estate - Operations industry, to which CBRE belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges ahead [12] - The performance of CBRE's stock may be influenced by the overall outlook for the industry [12]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section provides basic filing information for the Quarterly Report on Form 10-Q, confirming registrant status and SEC compliance - Filing is a Quarterly Report on Form 10-Q for the period ended June 30, 2024[23](index=23&type=chunk) - Registrant is a large accelerated filer and has filed all required reports and interactive data files[23](index=23&type=chunk) - Number of Class A common stock outstanding at July 22, 2024 was **306,431,434**[43](index=43&type=chunk) [PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents CBRE Group, Inc.'s unaudited consolidated financial statements and detailed notes on key financial aspects [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This chapter presents CBRE Group, Inc.'s unaudited consolidated financial statements for Q2 2024 and 2023, with detailed accompanying notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail the company's financial position, showing increases in total assets and liabilities, driven by goodwill, intangible assets, and debt Consolidated Balance Sheet Highlights (Dollars in millions) | Metric | June 30, 2024 | Dec 31, 2023 | Change | | :----- | :------------ | :----------- | :----- | | Total Assets | $23,462 | $22,548 | +$914 | | Total Liabilities | $14,273 | $13,481 | +$792 | | Total Equity | $9,189 | $9,067 | +$122 | | Goodwill | $5,667 | $5,129 | +$538 | | Other Intangible Assets, net | $2,385 | $2,081 | +$304 | | Long-term debt, net of current maturities | $3,272 | $2,804 | +$468 | | Revolving credit facility | $940 | $0 | +$940 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show decreased net income for Q2 2024 despite revenue growth, due to higher costs, interest expense, and equity losses Consolidated Statements of Operations Highlights (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Revenue | $8,391 | $7,720 | +8.7% | $16,326 | $15,131 | +7.9% | | Operating Income | $246 | $306 | -19.6% | $450 | $344 | +30.8% | | Equity (loss) income from unconsolidated subsidiaries | $(15) | $(8) | -87.5% | $(73) | $134 | -154.5% | | Interest expense, net | $63 | $43 | +46.5% | $99 | $71 | +39.4% | | Net income attributable to CBRE Group, Inc. | $130 | $201 | -35.3% | $256 | $318 | -19.5% | | Basic EPS | $0.42 | $0.65 | -35.4% | $0.84 | $1.02 | -17.6% | | Diluted EPS | $0.42 | $0.64 | -34.4% | $0.83 | $1.01 | -17.8% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated statements of comprehensive income show a decrease in comprehensive income for Q2 2024, primarily due to foreign currency translation losses Consolidated Statements of Comprehensive Income Highlights (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net income | $142 | $206 | -31.1% | $290 | $331 | -12.4% | | Foreign currency translation (loss) gain | $(26) | $37 | -170.3% | $(115) | $74 | -255.4% | | Total other comprehensive (loss) income | $(25) | $37 | -167.6% | $(113) | $80 | -241.3% | | Comprehensive income attributable to CBRE Group, Inc. | $104 | $225 | -53.8% | $149 | $372 | -60.0% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities decreased, while investing activities increased due to acquisitions, and financing activities rose from debt issuance Consolidated Statements of Cash Flows Highlights (Dollars in millions) | Metric | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | | Net cash used in operating activities | $(205) | $(756) | +$551 | | Net cash used in investing activities | $(1,307) | $(370) | -$937 | | Net cash provided by financing activities | $1,242 | $1,075 | +$167 | | Net decrease in cash and cash equivalents and restricted cash | $(338) | $(48) | -$290 | | Cash and cash equivalents and restricted cash, at end of period | $1,033 | $1,357 | -$324 | - Increase in net cash used in investing activities was primarily due to the acquisition of J&J Worldwide Services in February 2024 and Direct Line Global in June 2024[324](index=324&type=chunk) [Consolidated Statements of Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Equity) The consolidated statements of equity show an increase in total equity, driven by accumulated earnings, despite foreign currency losses and share repurchases Consolidated Statements of Equity Highlights (Dollars in millions) | Metric | Balance at Dec 31, 2023 | Balance at June 30, 2024 | Change | | :----- | :---------------------- | :----------------------- | :----- | | Accumulated earnings | $9,188 | $9,384 | +$196 | | Accumulated other comprehensive loss | $(924) | $(1,031) | -$107 | | Noncontrolling interests | $800 | $833 | +$33 | | Total Equity | $9,067 | $9,189 | +$122 | - Foreign currency translation loss of **$109 million** for the six months ended June 30, 2024[55](index=55&type=chunk) - Repurchase of common stock totaling **$48 million** for the six months ended June 30, 2024[55](index=55&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on financial statements, covering accounting policies, acquisitions, debt, fair value, segments, and specific provisions [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) This note outlines the basis of presentation for the consolidated financial statements, prepared in accordance with Form 10-Q rules and U.S. GAAP - Consolidated financial statements prepared in accordance with Form 10-Q rules and U.S. GAAP, requiring management estimates and assumptions[82](index=82&type=chunk) - Refer to the 2023 Annual Report on Form 10-K for full footnote disclosures and significant accounting policies[81](index=81&type=chunk) [2. New Accounting Pronouncements](index=11&type=section&id=2.%20New%20Accounting%20Pronouncements) This note details new FASB ASUs on segment reporting and income tax disclosures, with the company evaluating their potential impact - FASB issued ASU 2023-07 "Segment Reporting" (effective for fiscal years beginning after Dec 15, 2023, interim periods after Dec 15, 2024), requiring enhanced segment expense and other item disclosures, CODM information, and interim disclosures[59](index=59&type=chunk) - FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures" (effective for annual periods beginning after Dec 15, 2024), requiring disaggregated effective tax rate reconciliation and income taxes paid information[84](index=84&type=chunk) - The company is evaluating the impact of both ASUs on its consolidated financial statements[59](index=59&type=chunk)[84](index=84&type=chunk) [3. J&J Worldwide Services Acquisition](index=12&type=section&id=3.%20J%26J%20Worldwide%20Services%20Acquisition) This note details the acquisition of J&J Worldwide Services, including financing, consideration, and preliminary fair values of acquired assets and goodwill - Acquired **100% ownership** of J&J Worldwide Services on February 27, 2024, a provider of engineering services, base support operations, and facilities maintenance for the U.S. federal government, reported within the Global Workplace Solutions (GWS) segment[62](index=62&type=chunk) - Acquisition financed by **$500.0 million** senior notes, existing revolving credit facility, and cash on hand[85](index=85&type=chunk) J&J Acquisition Consideration and Preliminary Fair Values (Dollars in millions) | Metric | Amount | | :----- | :----- | | Cash consideration | $809 | | Deferred and contingent consideration | $11 | | Total consideration | $820 | | Estimated Fair Value of Net Assets Acquired | $357 | | Goodwill arising from acquisition | $463 | - Goodwill of approximately **$115.0 million** is deductible for tax purposes[64](index=64&type=chunk) J&J Acquisition Intangible Assets Acquired (Dollars in millions) | Asset Class | Amortization Period | Amount Assigned at Acquisition Date | Net Carrying Value (June 30, 2024) | | :---------- | :------------------ | :---------------------------------- | :--------------------------------- | | Customer relationships | 9-12 years | $174 | $169 | | Backlog | 4-6 years | $111 | $102 | | Trademark | 3 years | $10 | $9 | | Technology | 5 years | $2 | $2 | J&J Acquisition Pro Forma Financials (Dollars in millions, except per share) | Metric | 3 Months Ended June 30, 2024 (Pro Forma) | 3 Months Ended June 30, 2023 (Pro Forma) | 6 Months Ended June 30, 2024 (Pro Forma) | 6 Months Ended June 30, 2023 (Pro Forma) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | $8,391 | $7,830 | $16,398 | $15,355 | | Net income attributable to CBRE Group, Inc. | $131 | $187 | $262 | $279 | | Diluted EPS | $0.42 | $0.59 | $0.85 | $0.89 | [4. Warehouse Receivables & Warehouse Lines of Credit](index=14&type=section&id=4.%20Warehouse%20Receivables%20%26%20Warehouse%20Lines%20of%20Credit) This note describes warehouse receivables and lines of credit for mortgage loan originations, carried at fair value and generally repaid quickly - CBRE Capital Markets originates mortgage loans through warehouse lines of credit, which are generally repaid within one month upon purchase by Freddie Mac or Fannie Mae, or settlement of MBS[114](index=114&type=chunk) - All warehouse receivables are carried at fair value and are under commitment to be purchased or have confirmed forward trade commitments[114](index=114&type=chunk) Warehouse Receivables Rollforward (Dollars in millions) | Metric | Amount | | :----- | :----- | | Beginning balance at Dec 31, 2023 | $675 | | Origination of mortgage loans | $4,408 | | Proceeds from sale of mortgage loans | $(4,129) | | Ending balance at June 30, 2024 | $973 | Warehouse Lines of Credit Summary (Dollars in millions) | Lender | Current Maturity | Maximum Facility Size | Carrying Value (June 30, 2024) | Carrying Value (Dec 31, 2023) | | :----- | :--------------- | :-------------------- | :----------------------------- | :---------------------------- | | JP Morgan Chase Bank, N.A. | 12/13/2024 | $1,335 | $675 | $613 | | Fannie Mae Multifamily ASAP Program | Cancelable anytime | $650 | $66 | $7 | | TD Bank, N.A. | 7/31/2024 | $600 | $16 | $28 | | Bank of America, N.A. | 5/21/2025 | $350 | $204 | $18 | | Total | | $3,200 | $961 | $666 | [5. Variable Interest Entities (VIEs)](index=16&type=section&id=5.%20Variable%20Interest%20Entities%20(VIEs)) This note explains the company's variable interests in certain unconsolidated VIEs, primarily in the Real Estate Investments segment - The company holds variable interests in certain VIEs, primarily in the Real Estate Investments (REI) segment, which are not consolidated as the company is not the primary beneficiary[98](index=98&type=chunk) Maximum Exposure to Loss from Unconsolidated VIEs (Dollars in millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :----- | :------------ | :----------- | | Investments in unconsolidated subsidiaries | $181 | $165 | | Co-investment commitments | $50 | $58 | | Maximum exposure to loss | $231 | $223 | [6. Fair Value Measurements](index=16&type=section&id=6.%20Fair%20Value%20Measurements) This note defines fair value and presents the three-level hierarchy for assets and liabilities, detailing unobservable inputs for Level 3 instruments - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction, using a three-level hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than Level 1; Level 3: unobservable inputs)[98](index=98&type=chunk) Fair Value of Assets and Liabilities (June 30, 2024, Dollars in millions) | Asset/Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------- | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Available for sale debt securities | $10 | $16 | $0 | $26 | | Equity securities | $65 | $0 | $0 | $65 | | Investments in unconsolidated subsidiaries | $96 | $0 | $457 | $553 | | Warehouse receivables | $0 | $973 | $0 | $973 | | Other assets | $0 | $12 | $31 | $43 | | **Total Assets at Fair Value** | **$171** | **$1,001** | **$488** | **$1,660** | | **Liabilities:** | | | | | | Contingent consideration | $0 | $0 | $40 | $40 | | **Total Liabilities at Fair Value** | **$0** | **$0** | **$40** | **$40** | Fair Value of Assets and Liabilities (Dec 31, 2023, Dollars in millions) | Asset/Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------- | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Available for sale debt securities | $12 | $56 | $0 | $68 | | Equity securities | $41 | $0 | $0 | $41 | | Investments in unconsolidated subsidiaries | $168 | $0 | $477 | $645 | | Warehouse receivables | $0 | $675 | $0 | $675 | | Other assets | $0 | $0 | $16 | $16 | | **Total Assets at Fair Value** | **$221** | **$731** | **$493** | **$1,445** | | **Liabilities:** | | | | | | Contingent consideration | $0 | $0 | $36 | $36 | | Other liabilities | $0 | $5 | $0 | $5 | | **Total Liabilities at Fair Value** | **$0** | **$5** | **$36** | **$41** | - Investments in unconsolidated subsidiaries at fair value using NAV were **$351.8 million** (June 30, 2024) and **$352.3 million** (Dec 31, 2023), excluded from hierarchy tables due to practical expedient rules[101](index=101&type=chunk) Level 3 Reconciliation (Dollars in millions) | Metric | Investment in Unconsolidated Subsidiaries | Other Assets | Contingent Consideration | | :----- | :---------------------------------------- | :----------- | :----------------------- | | Balance as of Dec 31, 2023 | $477 | $16 | $36 | | Net change in fair value | $(20) | $9 | $(3) | | Purchases / Additions | $0 | $6 | $9 | | Sales / Payments | $0 | $0 | $(2) | | Balance as of June 30, 2024 | $457 | $31 | $40 | Significant Unobservable Inputs for Level 3 Instruments (June 30, 2024) | Category | Valuation Technique | Unobservable Input | Range | Weighted Average | | :------- | :------------------ | :----------------- | :---- | :--------------- | | Investment in unconsolidated subsidiaries | Discounted cash flow | Discount rate | 18% | — | | | Monte Carlo | Volatility | 35%-61% | 36% | | | | Discount rate | 25% | — | | Other assets | Discounted cash flow | Discount rate | 18% | — | | Contingent consideration | Monte Carlo | Volatility | 21% | — | | | | Discount rate | 5% | — | | | Discounted estimated payments | Discount rate | 5%-6% | 6% | Estimated Fair Value vs. Carrying Value of Long-Term Debt (Dollars in millions) | Financial Instrument | Estimated Fair Value (June 30, 2024) | Carrying Value (June 30, 2024) | Estimated Fair Value (Dec 31, 2023) | Carrying Value (Dec 31, 2023) | | :------------------- | :----------------------------------- | :----------------------------- | :---------------------------------- | :---------------------------- | | Senior term loans | $736 | $741 | $746 | $752 | | 5.950% senior notes | $1,012 | $975 | $1,049 | $974 | | 4.875% senior notes | $593 | $598 | $600 | $597 | | 5.500% senior notes | $502 | $495 | $0 | $0 | | 2.500% senior notes | $415 | $491 | $424 | $490 | [7. Investments in Unconsolidated Subsidiaries](index=20&type=section&id=7.%20Investments%20in%20Unconsolidated%20Subsidiaries) This note details investments in unconsolidated subsidiaries, including Altus holdings, and combined financial information for equity method entities Composition of Investments in Unconsolidated Subsidiaries (Dollars in millions) | Investment Type | June 30, 2024 | Dec 31, 2023 | | :-------------- | :------------ | :----------- | | Real Estate Investments (in projects and funds) | $662 | $661 | | Investment in Altus (Class A common stock) | $96 | $168 | | Investment in Altus (Alignment shares) | $16 | $56 | | Other | $535 | $489 | | Total investment in unconsolidated subsidiaries | $1,309 | $1,374 | - CBRE held **24,557,823 shares** of Altus Class A common stock as of June 30, 2024, representing approximately **15.35% ownership**[110](index=110&type=chunk) - Alignment shares (Class B common shares) automatically convert into Altus Class A common stock based on total return thresholds. At March 31, 2024, **201,250 alignment shares** converted into **2,011 Class A common shares**[110](index=110&type=chunk) Combined Condensed Financial Information for Equity Method Entities (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $950 | $559 | $1,963 | $4,658 | | Operating income (loss) | $340 | $(59) | $655 | $3,569 | | Net (loss) income | $(198) | $(1,114) | $(1,235) | $572 | [8. Long-Term Debt and Short-Term Borrowings](index=21&type=section&id=8.%20Long-Term%20Debt%20and%20Short-Term%20Borrowings) This note details the company's long-term debt and short-term borrowings, including recent senior note issuance, credit agreements, and covenant compliance Long-Term Debt (Dollars in millions) | Debt Instrument | June 30, 2024 | Dec 31, 2023 | | :-------------- | :------------ | :----------- | | Senior term loans due in 2028 | $743 | $755 | | 5.950% senior notes due in 2034 | $977 | $976 | | 4.875% senior notes due in 2026 | $599 | $599 | | 5.500% senior notes due in 2029 | $496 | $0 | | 2.500% senior notes due in 2031 | $495 | $494 | | Total long-term debt, net of current maturities | $3,272 | $2,804 | - On February 23, 2024, CBRE Services issued **$500.0 million** of **5.500% senior notes** due April 1, 2029, at **99.837%** of face value, with interest payable semi-annually[3](index=3&type=chunk) - The 2023 Credit Agreement (maturing July 10, 2028) includes **€366.5 million** Euro-denominated and **$350.0 million** U.S. Dollar-denominated term loans, with interest rates tied to EURIBOR or Adjusted Term SOFR plus an applicable percentage[159](index=159&type=chunk)[13](index=13&type=chunk) - Revolving Credit Agreement provides a **$3.5 billion** senior unsecured revolving credit facility maturing August 5, 2027, with **$940.0 million** outstanding and **$10.0 million** in letters of credit as of June 30, 2024[361](index=361&type=chunk)[141](index=141&type=chunk) - All debt instruments contain restrictive covenants and require compliance with financial ratios (e.g., minimum EBITDA to interest expense, maximum leverage ratio), with the company in compliance as of June 30, 2024[160](index=160&type=chunk)[165](index=165&type=chunk)[14](index=14&type=chunk) [9. Leases](index=24&type=section&id=9.%20Leases) This note provides supplemental balance sheet and cash flow information related to the company's operating and financing leases - The company is a lessee for office space, leased vehicles, and land leases in its global development business, which account for a significant portion of lease liabilities and right-of-use assets[143](index=143&type=chunk) Supplemental Balance Sheet Information Related to Leases (Dollars in millions) | Category | June 30, 2024 | Dec 31, 2023 | | :------- | :------------ | :----------- | | Operating lease assets | $1,032 | $1,030 | | Financing lease assets (Other assets, net) | $210 | $210 | | Total leased assets | $1,242 | $1,240 | | Current operating lease liabilities | $244 | $242 | | Non-current operating lease liabilities | $1,091 | $1,089 | | Total lease liabilities | $1,446 | $1,439 | Supplemental Cash Flow and Non-Cash Activity for Leases (Dollars in millions) | Activity | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------- | :--------------------------- | :--------------------------- | | Right-of-use assets obtained for new operating lease liabilities | $66 | $71 | | Right-of-use assets obtained for new financing lease liabilities | $30 | $25 | | Other non-cash increases (decreases) in operating lease ROU assets | $45 | $(38) | | Other non-cash decrease in financing lease ROU assets | $(5) | $0 | [10. Commitments and Contingencies](index=24&type=section&id=10.%20Commitments%20and%20Contingencies) This note outlines the company's commitments and contingencies, including lawsuits, letters of credit, performance bonds, guarantees, and capital commitments - The company is involved in pending or threatened lawsuits arising from ordinary business, believing losses in excess of accrued liabilities are unlikely to be significant[5](index=5&type=chunk) - Outstanding letters of credit totaled **$254.7 million** as of June 30, 2024, primarily for CBRE Capital Markets (**$155.0 million**)[16](index=16&type=chunk) - Outstanding performance and payment bonds approximated **$988.5 million** as of June 30, 2024, significantly up from **$241.8 million** at December 31, 2023[148](index=148&type=chunk) - Guarantees totaled **$196.5 million** as of June 30, 2024, primarily for management and vendor contracts in overseas operations[200](index=200&type=chunk) - Deferred and contingent consideration for business acquisitions totaled **$538.9 million** as of June 30, 2024 (**$267.6 million** current, **$271.3 million** long-term)[174](index=174&type=chunk)[321](index=321&type=chunk) - Unfunded capital commitments for co-investment funds were **$157.9 million**, and for consolidated and unconsolidated real estate projects were **$168.0 million** and **$68.7 million**, respectively, as of June 30, 2024[203](index=203&type=chunk)[293](index=293&type=chunk) [11. Income Taxes](index=26&type=section&id=11.%20Income%20Taxes) This note details the provision for income taxes and effective tax rate, explaining changes due to earnings, unrecognized tax positions, and state audit closures Provision for Income Taxes (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Provision for income taxes | $32.2 | $55.4 | -41.9% | $3.4 | $84.0 | -95.9% | | Effective tax rate | 18.5% | 21.2% | -2.7 pp | 1.1% | 20.1% | -19.0 pp | - Decrease in provision for income taxes primarily due to a decrease in earnings and the reversal of unrecognized tax positions[204](index=204&type=chunk)[177](index=177&type=chunk) - Gross unrecognized tax benefits decreased by **$70.4 million** to **$343.1 million** as of June 30, 2024, primarily due to an audit closure and expiration of statute of limitations[152](index=152&type=chunk) - Reserves for U.S. sales and use taxes increased to **$24.2 million** as of June 30, 2024, from **$3.2 million** at December 31, 2023, due to closure of certain ongoing state audits[437](index=437&type=chunk) [12. Income Per Share and Stockholders' Equity](index=27&type=section&id=12.%20Income%20Per%20Share%20and%20Stockholders'%20Equity) This note presents basic and diluted income per share, weighted average shares, and details on common stock repurchases and remaining program capacity Basic and Diluted Income Per Share (Dollars in millions, except per share data) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to CBRE Group, Inc. stockholders | $130 | $201 | $256 | $318 | | Basic income per share | $0.42 | $0.65 | $0.84 | $1.02 | | Diluted income per share | $0.42 | $0.64 | $0.83 | $1.01 | | Weighted average shares outstanding for basic EPS | 306,745,116 | 310,857,203 | 306,276,871 | 310,662,324 | | Weighted average shares outstanding for diluted EPS | 308,035,211 | 314,282,247 | 308,269,040 | 314,821,615 | - Repurchased **554,741 shares** of common stock for **$48.4 million** during the three months ended June 30, 2024, under the **$4.0 billion** 2021 program[154](index=154&type=chunk) - Approximately **$1.4 billion** of capacity remained under the 2021 share repurchase program as of June 30, 2024[154](index=154&type=chunk) [13. Revenue from Contracts with Customers](index=28&type=section&id=13.%20Revenue%20from%20Contracts%20with%20Customers) This note explains revenue recognition policies and provides disaggregated revenue by service type and segment, along with contract assets and liabilities - Revenue is recognized when control of promised services is transferred to customers, reflecting expected consideration[182](index=182&type=chunk) Disaggregated Revenue by Service Type and Segment (3 Months Ended June 30, 2024, Dollars in millions) | Service Type | Advisory Services | Global Workplace Solutions | Real Estate Investments | Corporate, other and eliminations | Consolidated | | :----------- | :---------------- | :------------------------- | :---------------------- | :-------------------------------- | :----------- | | Facilities management | $0 | $4,127 | $0 | $0 | $4,127 | | Project management | $0 | $1,817 | $0 | $0 | $1,817 | | Advisory leasing | $884 | $0 | $0 | $0 | $884 | | Advisory sales | $386 | $0 | $0 | $0 | $386 | | Property management | $555 | $0 | $0 | $(3) | $552 | | Valuation | $184 | $0 | $0 | $0 | $184 | | Commercial mortgage origination | $44 | $0 | $0 | $0 | $44 | | Loan servicing | $22 | $0 | $0 | $0 | $22 | | Investment management | $0 | $0 | $149 | $0 | $149 | | Development services | $0 | $0 | $80 | $0 | $80 | | **Total Revenue** | **$2,218** | **$5,944** | **$232** | **$(3)** | **$8,391** | Disaggregated Revenue by Service Type and Segment (6 Months Ended June 30, 2024, Dollars in millions) | Service Type | Advisory Services | Global Workplace Solutions | Real Estate Investments | Corporate, and other eliminations | Consolidated | | :----------- | :---------------- | :------------------------- | :---------------------- | :-------------------------------- | :----------- | | Facilities management | $0 | $8,193 | $0 | $0 | $8,193 | | Project management | $0 | $3,560 | $0 | $0 | $3,560 | | Advisory leasing | $1,624 | $0 | $0 | $0 | $1,624 | | Advisory sales | $712 | $0 | $0 | $0 | $712 | | Property management | $1,051 | $0 | $0 | $(9) | $1,042 | | Valuation | $351 | $0 | $0 | $0 | $351 | | Commercial mortgage origination | $73 | $0 | $0 | $0 | $73 | | Loan servicing | $42 | $0 | $0 | $0 | $42 | | Investment management | $0 | $0 | $298 | $0 | $298 | | Development services | $0 | $0 | $158 | $0 | $158 | | **Total Revenue** | **$4,122** | **$11,753** | **$460** | **$(9)** | **$16,326** | - Contract assets totaled **$545.2 million** (**$453.6 million** current) as of June 30, 2024, up from **$517.4 million** (**$442.9 million** current) at December 31, 2023[209](index=209&type=chunk) - Contract liabilities totaled **$311.0 million** (all current) as of June 30, 2024, up from **$304.3 million** (**$297.6 million** current) at December 31, 2023[425](index=425&type=chunk) - Recognized **$57.8 million** and **$189.7 million** in revenue from contract liabilities for the three and six months ended June 30, 2024, respectively[425](index=425&type=chunk) [14. Segments](index=30&type=section&id=14.%20Segments) This note describes the company's three global business segments and plans for a new fourth segment, presenting segment revenue, operating profit, and geographic revenue - The company operates through three global business segments: Advisory Services, Global Workplace Solutions (GWS), and Real Estate Investments (REI)[231](index=231&type=chunk) - Plans to combine project management business with Turner & Townsend subsidiary, forming a new fourth reportable segment in 2025[264](index=264&type=chunk)[426](index=426&type=chunk) Segment Revenue and Operating Profit (Dollars in millions) | Segment | 3 Months Ended June 30, 2024 Revenue | 3 Months Ended June 30, 2023 Revenue | 6 Months Ended June 30, 2024 Revenue | 6 Months Ended June 30, 2023 Revenue | 3 Months Ended June 30, 2024 Operating Profit | 3 Months Ended June 30, 2023 Operating Profit | 6 Months Ended June 30, 2024 Operating Profit | 6 Months Ended June 30, 2023 Operating Profit | | :------ | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Advisory Services | $2,218 | $2,042 | $4,122 | $3,895 | $344 | $315 | $606 | $585 | | Global Workplace Solutions | $5,944 | $5,426 | $11,753 | $10,764 | $258 | $233 | $490 | $462 | | Real Estate Investments | $232 | $256 | $460 | $480 | $10 | $33 | $44 | $165 | | Corporate, other and eliminations | $(3) | $(4) | $(9) | $(8) | $(120) | $(84) | $(294) | $(209) | | **Total** | **$8,391** | **$7,720** | **$16,326** | **$15,131** | **$612** | **$581** | **$1,140** | **$1,212** | Geographic Revenue (Dollars in millions) | Region | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $4,670 | $4,211 | $9,092 | $8,356 | | United Kingdom | $1,195 | $1,056 | $2,280 | $2,051 | | All other countries | $2,526 | $2,453 | $4,954 | $4,724 | | **Total Revenue** | **$8,391** | **$7,720** | **$16,326** | **$15,131** | [15. Telford Fire Safety Remediation](index=31&type=section&id=15.%20Telford%20Fire%20Safety%20Remediation) This note details the estimated liability for Telford Fire Safety Remediation, explaining the decrease due to foreign exchange and costs incurred, and highlighting cost subjectivity - Estimated liability for Telford Fire Safety Remediation was **$185.2 million** (**$92.7 million** current) as of June 30, 2024, a decrease from **$192.1 million** (**$82.2 million** current) at December 31, 2023[214](index=214&type=chunk) - Decrease in liability primarily due to foreign exchange rate movements and costs incurred for work performed[214](index=214&type=chunk) - Remediation costs are subjective and dependent on variables like individual building requirements, completion time, material costs, and regulatory changes[215](index=215&type=chunk) [16. Restructuring Activities](index=32&type=section&id=16.%20Restructuring%20Activities) This note details Q2 2024 restructuring activities to improve efficiencies, including expenses by segment and the rollforward of cash-based restructuring charges - The company continued restructuring activities in Q2 2024 to simplify management, workforce structure, and improve efficiencies[191](index=191&type=chunk) Restructuring Expenses by Segment (3 Months Ended June 30, 2024, Dollars in millions) | Expense Type | Advisory Services | Global Workplace Solutions | Real Estate Investments | Corporate | Consolidated | | :----------- | :---------------- | :------------------------- | :---------------------- | :-------- | :----------- | | Employee separation benefits | $0 | $30 | $0 | $21 | $51 | | Professional fees and other | $0 | $0 | $0 | $37 | $37 | | **Total** | **$0** | **$30** | **$0** | **$58** | **$88** | Restructuring Expenses by Segment (6 Months Ended June 30, 2024, Dollars in millions) | Expense Type | Advisory Services | Global Workplace Solutions | Real Estate Investments | Corporate | Consolidated | | :----------- | :---------------- | :------------------------- | :---------------------- | :-------- | :----------- | | Employee separation benefits | $0 | $30 | $0 | $50 | $80 | | Professional fees and other | $0 | $0 | $0 | $39 | $39 | | **Total** | **$0** | **$30** | **$0** | **$89** | **$119** | Ending Liability Balances for Cash-Based Restructuring Charges (Dollars in millions) | Category | Employee separation benefits | Professional fees and other | | :------- | :--------------------------- | :-------------------------- | | Balance at Dec 31, 2023 | $13 | $0 | | Expense incurred | $80 | $26 | | Payments made | $(59) | $(5) | | Balance at June 30, 2024 | $34 | $21 | - Restructuring activities are expected to be substantially completed by the end of fiscal year 2024[192](index=192&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity for Q2 2024, highlighting revenue growth and net income decline [Business Environment](index=33&type=section&id=Business%20Environment) This section discusses the improving commercial real estate operating environment, with increased liquidity and office leasing activity, despite high borrowing costs - Overall operating environment for commercial real estate is improving, with liquidity improving across funding sources despite high borrowing costs[442](index=442&type=chunk) - Decline in investment sales slowed in Q2, with capital returning to real estate and increased opportunities to harvest gains from development and investment management portfolios[442](index=442&type=chunk) - Office leasing markets continue to improve, reflecting a resilient economy and occupiers' expansion plans[442](index=442&type=chunk) [Capital Allocation](index=33&type=section&id=Capital%20Allocation) This section details capital allocation strategies, including M&A investments and share repurchases, and plans to form a new project management segment - Invested approximately **$339.3 million** in M&A and share repurchases during the quarter, including the acquisition of a firm specializing in data center facilities management[195](index=195&type=chunk) - Announced plans to combine project management business with Turner & Townsend subsidiary, forming a new segment in 2025, creating a premier provider of project, program, and cost management services[195](index=195&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section analyzes consolidated financial performance, highlighting revenue growth, net income decline, and impacts from costs, interest, and foreign currency translation Consolidated Financial Performance (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total Revenue | $8,391 | $7,720 | +8.7% | $16,326 | $15,131 | +7.9% | | Net income attributable to CBRE Group, Inc. | $130 | $201 | -35.3% | $256 | $318 | -19.5% | | Operating income | $246 | $306 | -19.6% | $450 | $344 | +30.8% | | Equity (loss) income from unconsolidated subsidiaries | $(15) | $(8) | -87.5% | $(73) | $134 | -154.5% | | Interest expense, net | $63 | $43 | +46.5% | $99 | $71 | +39.4% | | Provision for income taxes | $32 | $55 | -41.9% | $3 | $84 | -96.4% | | Core EBITDA | $505 | $504 | +0.2% | $930 | $1,036 | -10.3% | - Revenue growth driven by resilient businesses (facilities management, project management, property management, loan servicing, asset management fees, valuations) which increased approximately **9.5%** in Q2 2024[428](index=428&type=chunk) - Transactional Businesses (sales, leasing, mortgage origination, carried interest, development fees) revenue edged up **5.2%** in Q2 2024[198](index=198&type=chunk) - Cost of revenue increased **9.9%** in Q2 2024 (**8.9%** for six months) due to higher pass-through costs, compensation, and indirect reimbursed costs, increasing to **81.0%** of total revenue (**81.2%** for six months)[222](index=222&type=chunk)[227](index=227&type=chunk) - Operating, administrative and other expenses increased **9.3%** in Q2 2024, primarily due to **$80.3 million** in restructuring charges and indirect tax settlement accrual. For the six months, these expenses were relatively flat, with **$109.6 million** in restructuring and indirect tax settlement charges offset by bonus expense reversals[255](index=255&type=chunk)[260](index=260&type=chunk) - Foreign currency translation had a negative impact on revenue (**0.7%** in Q2, **0.3%** for six months) due to weakness in Argentina peso and Japanese yen, partially offset by British pound sterling strength[254](index=254&type=chunk)[259](index=259&type=chunk) - OECD Pillar Two Model Rules for a minimum global effective tax rate of **15%** are not expected to have a material impact on 2024 financial statements[224](index=224&type=chunk)[430](index=430&type=chunk) [Segment Operations](index=38&type=section&id=Segment%20Operations) This section provides an overview of the company's three global business segments and the planned introduction of a fourth reportable segment in 2025 - The company currently reports financial results across three global business segments: Advisory Services, Global Workplace Solutions (GWS), and Real Estate Investments (REI)[231](index=231&type=chunk) - A fourth reportable segment will be introduced in 2025, combining the project management business with Turner & Townsend[264](index=264&type=chunk) [Advisory Services](index=39&type=section&id=Advisory%20Services) This section details the Advisory Services segment's performance, including revenue growth in leasing, decline in property sales, and impacts from MSRs and compensation Advisory Services Segment Performance (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total segment revenue | $2,218 | $2,042 | +8.6% | $4,122 | $3,895 | +5.8% | | Operating income | $281 | $238 | +18.1% | $471 | $364 | +29.4% | | Segment operating profit | $344 | $315 | +9.2% | $606 | $585 | +3.6% | | Segment operating profit on revenue margin | 15.5% | 15.4% | +0.1 pp | 14.7% | 15.0% | -0.3 pp | - Global leasing revenue rose **8.7%** in Q2 2024 (**6.6%** for six months), driven by Americas (**12.4%** in Q2, **8.3%** for six months) and APAC (**2.8%** in Q2, **5.3%** for six months)[267](index=267&type=chunk)[271](index=271&type=chunk) - Property sales revenue was down **3.1%** in Q2 2024 (**7.0%** for six months) due to high interest rates and difficult credit conditions[267](index=267&type=chunk)[271](index=271&type=chunk) - Loan origination business benefited from **20% higher** loan origination fees and increased interest earnings on escrow balances[267](index=267&type=chunk) - Property management grew solidly, fueled by onboarding of Brookfield's **65 million sq. ft.** U.S. office portfolio[267](index=267&type=chunk) - Cost of revenue increased **10.1%** in Q2 2024 (**6.2%** for six months) due to business growth, higher pass-through costs, professional compensation, and commission expense[235](index=235&type=chunk)[239](index=239&type=chunk) - Operating, administrative and other expenses increased **3.4%** in Q2 2024, primarily due to incentive compensation reset. For the six months, these expenses slightly decreased by **0.9%** due to significant restructuring expenses in the prior year not recurring at the same rate[269](index=269&type=chunk)[272](index=272&type=chunk) - Mortgage Servicing Rights (MSRs) contributed **$23.3 million** to operating income in Q2 2024 (**$35.9 million** for six months), offset by **$33.5 million** in amortization (**$68.0 million** for six months)[237](index=237&type=chunk)[240](index=240&type=chunk) [Global Workplace Solutions (GWS)](index=41&type=section&id=Global%20Workplace%20Solutions) This section details the GWS segment's performance, highlighting revenue growth in facilities and project management, and increased costs and amortization from acquisitions GWS Segment Performance (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total segment revenue | $5,944 | $5,426 | +9.5% | $11,753 | $10,764 | +9.2% | | Operating income | $132 | $157 | -15.9% | $294 | $266 | +10.5% | | Segment operating profit | $258 | $233 | +10.7% | $490 | $462 | +6.1% | | Segment operating profit on revenue margin | 4.3% | 4.3% | 0.0 pp | 4.2% | 4.3% | -0.1 pp | | Segment operating profit on net revenue margin | 10.1% | 10.6% | -0.5 pp | 10.0% | 10.7% | -0.7 pp | - Revenue increased **9.5%** in Q2 2024 (**9.2%** for six months), reflecting double-digit growth in facilities management (led by Local business) and project management (due to Turner & Townsend)[302](index=302&type=chunk)[277](index=277&type=chunk) - Cost of revenue increased **9.8%** in Q2 2024 (**9.4%** for six months) due to higher pass-through costs, indirect reimbursed costs, and professional compensation, slightly increasing as a percentage of revenue due to a shift towards lower-margin facilities management[275](index=275&type=chunk)[245](index=245&type=chunk) - Operating, administrative and other expenses increased **15.6%** in Q2 2024 due to restructuring and severance charges. For the six months, these expenses increased **3.5%** due to restructuring charges and the inclusion of J&J's operating results[243](index=243&type=chunk)[305](index=305&type=chunk) - Depreciation and amortization expense increased **23.2%** in Q2 2024 (**17.6%** for six months) due to higher amortization from recent acquisitions like J&J Worldwide Services[303](index=303&type=chunk)[278](index=278&type=chunk) [Real Estate Investments (REI)](index=43&type=section&id=Real%20Estate%20Investments) This section details the REI segment's performance, noting revenue decrease due to lower development fees, increased costs, and changes in equity income from unconsolidated subsidiaries REI Segment Performance (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (YoY) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total segment revenue | $232 | $256 | -9.2% | $460 | $480 | -4.1% | | Operating income (loss) | $3 | $34 | -91.2% | $9 | $(36) | +125.0% | | Segment operating profit | $10 | $33 | -69.7% | $44 | $165 | -73.3% | | Segment operating profit on revenue margin | 4.3% | 13.0% | -8.7 pp | 9.7% | 34.3% | -24.6 pp | - Revenue decreased **9.2%** in Q2 2024 (**4.1%** for six months) due to lower development and construction fees and asset management revenue, partially offset by higher carried interest[280](index=280&type=chunk)[312](index=312&type=chunk) - Cost of revenue increased **11.5%** in Q2 2024 (**11.5%** for six months) due to higher costs on real estate development and construction projects despite revenue decline[307](index=307&type=chunk)[284](index=284&type=chunk) - Operating, administrative and other expenses decreased **4.5%** in Q2 2024 due to lower profit share expense. For the six months, these expenses decreased **16.6%** due to lower bonus expense and prior year's efficiency initiatives not recurring[281](index=281&type=chunk)[313](index=313&type=chunk) - Equity income from unconsolidated subsidiaries was **$4.3 million** in Q2 2024 (vs. loss of **$3.4 million** in Q2 2023) due to higher co-investment returns. For the six months, equity income was **$14.9 million** (vs. **$163.2 million** in 2023) due to a large development asset sale in Q1 2023 not recurring[308](index=308&type=chunk)[285](index=285&type=chunk) Assets Under Management (AUM) Rollforward (Dollars in billions) | Metric | Funds | Separate Accounts | Securities | Total | | :----- | :---- | :---------------- | :--------- | :---- | | Balance at Dec 31, 2023 | $65.3 | $72.8 | $9.4 | $147.5 | | Inflows | $2.0 | $3.1 | $0.5 | $5.6 | | Outflows | $(1.4) | $(4.7) | $(0.8) | $(6.9) | | Market depreciation | $(1.4) | $(2.1) | $(0.2) | $(3.7) | | Balance at June 30, 2024 | $64.5 | $69.1 | $8.9 | $142.5 | [Corporate and Other](index=45&type=section&id=Corporate%20and%20Other) This section details the Corporate and Other segment's operating loss, driven by increased overhead costs, employee separation charges, and lower investment values - Corporate segment consists of overhead costs; "Other" includes strategic non-core non-controlling equity investments and inter-segment eliminations[316](index=316&type=chunk)[445](index=445&type=chunk) Corporate and Other Segment Operating Loss (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating loss | $(170) | $(123) | $(324) | $(250) | | Equity loss from unconsolidated subsidiaries | $(22) | $(6) | $(93) | $(32) | | Segment operating loss | $(120) | $(84) | $(294) | $(209) | - Operating, administrative and other expenses for core corporate functions rose **41.7%** in Q2 2024 (**28.5%** for six months) due to increased employee separation charges, one-time strategic project charges, and higher incentive compensation[289](index=289&type=chunk)[317](index=317&type=chunk) - Equity loss of **$22.0 million** in Q2 2024 (**$92.7 million** for six months) reflects lower value of investment in Altus Power, Inc., partially offset by positive fair value adjustment on Industrious investment[290](index=290&type=chunk)[319](index=319&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity and capital resources, including cash flow trends, debt management, and future capital requirements and commitments - Expects to satisfy working capital and funding requirements with internally generated cash flow and revolving credit facilities, anticipating sufficiency for the foreseeable future (at least 12 months)[293](index=293&type=chunk)[349](index=349&type=chunk) - Capital requirements for 2024 include up to **$329.1 million** in anticipated capital expenditures, net of tenant concessions[293](index=293&type=chunk) - As of June 30, 2024, had **$2.7 billion** of borrowings available under revolving credit facilities and **$927.7 million** of cash and cash equivalents[293](index=293&type=chunk) - Long-term liquidity needs include repayment of outstanding debt and obligations related to acquisitions (deferred/contingent consideration totaling **$538.9 million** as of June 30, 2024)[350](index=350&type=chunk)[321](index=321&type=chunk) - Repurchased **554,741 shares** of Class A common stock for **$48.4 million** in Q2 2024, with **$1.4 billion** remaining capacity under the **$4.0 billion** 2021 program[322](index=322&type=chunk) [Historical Cash Flows](index=47&type=section&id=Historical%20Cash%20Flows) This section analyzes historical cash flow trends, noting decreased cash used in operating activities, increased investing activities due to acquisitions, and higher financing activities - Net cash used in operating activities decreased to **$204.8 million** for the six months ended June 30, 2024, from **$755.6 million** in the prior year, driven by net inflow from working capital (better accounts receivable collection) and lower outflows from real estate development[297](index=297&type=chunk) - Net cash used in investing activities increased by **$937.8 million** to **$1.3 billion** for the six months ended June 30, 2024, primarily due to the acquisitions of J&J Worldwide Services and Direct Line Global[324](index=324&type=chunk) - Net cash provided by financing activities increased to **$1.2 billion** for the six months ended June 30, 2024, from **$1.1 billion** in the prior year, driven by net proceeds from the revolver and lower share repurchases[298](index=298&type=chunk) [Indebtedness](index=48&type=section&id=Indebtedness) This section details the company's indebtedness, including recent senior note issuance, credit agreements, and compliance with restrictive covenants - Issued **$500.0 million** of **5.500% senior notes** due April 1, 2029, on February 23, 2024[300](index=300&type=chunk) - The 2023 Credit Agreement (July 10, 2023) refinanced previous debt, providing Euro-denominated (**€366.5 million**) and U.S. Dollar-denominated (**$350.0 million**) term loans[356](index=356&type=chunk) - Revolving Credit Agreement (August 5, 2022) provides a **$3.5 billion** facility, with **$940.0 million** outstanding and **$10.0 million** in letters of credit as of June 30, 2024[361](index=361&type=chunk)[362](index=362&type=chunk) - All senior notes (**5.950%**, **5.500%**, **4.875%**, **2.500%**) and term loans are guaranteed by CBRE Group, Inc. and/or CBRE Services[329](index=329&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that would significantly impact the company's financial condition or liquidity - The company does not have off-balance sheet arrangements that are believed to have a material current or future impact on financial condition, liquidity, or results of operations[364](index=364&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the company's critical accounting policies and estimates, including revenue recognition, business combinations, goodwill, income taxes, and contingencies - Consolidated financial statements are prepared using GAAP, requiring estimates and assumptions based on historical experience and other reasonable factors[366](index=366&type=chunk) - Critical accounting policies include revenue recognition, business combinations, goodwill and other intangible assets, income taxes, contingencies, and investments in unconsolidated subsidiaries – fair value option[366](index=366&type=chunk) - No material changes to these policies and estimates as of June 30, 2024[366](index=366&type=chunk) [New Accounting Pronouncements](index=50&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 2 for details on new accounting pronouncements and their potential impact on the company's financial statements - Refer to Note 2 of the Notes to Consolidated Financial Statements for details on new accounting pronouncements[367](index=367&type=chunk) [Non-GAAP Financial Measures](index=51&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like net revenue, segment operating profit margins, and core EBITDA, used for performance evaluation - Net revenue, segment operating profit on revenue margin, segment operating profit on net revenue margin, and core EBITDA are non-GAAP measures used to evaluate operating performance and enhance comparability[337](index=337&type=chunk)[369](index=369&type=chunk) - Core EBITDA represents earnings before non-controlling interests, net interest expense, taxes, depreciation, amortization, asset impairments, and various other adjustments, providing insight into underlying business performance[338](index=338&type=chunk) Core EBITDA Reconciliation (Dollars in millions) | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to CBRE Group, Inc. | $130 | $201 | $256 | $318 | | Net income attributable to non-controlling interests | $12 | $5 | $34 | $13 | | Net income | $142 | $206 | $290 | $331 | | Adjustments (Depreciation, Interest, Taxes, Restructuring, etc.) | $363 | $298 | $640 | $705 | | **Core EBITDA** | **$505** | **$504** | **$930** | **$1,036** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily foreign currency exchange rate fluctuations and interest rate changes on debt obligations [International Operations](index=55&type=section&id=International%20Operations) This section details the company's exposure to foreign currency exchange rate fluctuations due to significant international operations and revenue transacted in foreign currencies - Significant portion of business and employees are outside the U.S., exposing the company to foreign exchange rate fluctuations[379](index=379&type=chunk)[399](index=399&type=chunk) - REI segment has significant Euro and British pound denominated AUM, revenue, and earnings in Europe; GWS segment also derives significant revenue and earnings in foreign currencies[399](index=399&type=chunk) - Approximately **44.3%** of revenue was transacted in foreign currencies during the three and six months ended June 30, 2024[400](index=400&type=chunk) Revenue by Significant Currency (Dollars in millions) | Currency | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States dollar | $4,671 | $4,220 | $9,094 | $8,365 | | British pound sterling | $1,195 | $1,056 | $2,280 | $2,051 | | Euro | $779 | $722 | $1,496 | $1,380 | | Canadian dollar | $251 | $286 | $539 | $580 | | Australian dollar | $236 | $220 | $428 | $411 | | Indian rupee | $176 | $159 | $355 | $313 | | Chinese yuan | $124 | $136 | $231 | $246 | | Japanese yen | $104 | $113 | $230 | $229 | | Swiss franc | $116 | $100 | $227 | $197 | | Singapore dollar | $100 | $101 | $201 | $196 | | Other currencies | $639 | $607 | $1,245 | $1,163 | | **Total Revenue** | **$8,391** | **$7,720** | **$16,326** | **$15,131** | - A hypothetical **10%** adverse change in the U.S. dollar value relative to the British pound sterling would increase pre-tax income by **$2.2 million** for the six months ended June 30, 2024; relative to the Euro, it would increase pre-tax income by **$6.0 million**[401](index=401&type=chunk) [Interest Rates](index=56&type=section&id=Interest%20Rates) This section discusses the company's management of interest rate risk through fixed and variable rate debt, and the hypothetical impact of interest rate changes - Manages interest expense using a combination of fixed and variable rate debt and historically used interest rate swap agreements, though none were outstanding as of June 30, 2024[383](index=383&type=chunk) - A hypothetical **100 basis point** increase in interest rates on outstanding variable rate debt at June 30, 2024, would decrease pre-tax income by **$8.4 million** and increase cash used in operating activities by **$8.4 million** for the six months ended June 30, 2024[384](index=384&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=57&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures as of June 30, 2024, ensuring complete and accurate corporate disclosure - Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2024, at the reasonable assurance level[386](index=386&type=chunk) - Disclosure controls and procedures are designed to ensure complete and accurate corporate disclosure and timely communication of information to management[404](index=404&type=chunk) [Changes in Internal Control Over Financial Reporting](index=57&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2024 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2024[387](index=387&type=chunk) [PART II – OTHER INFORMATION](index=58&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides updates on legal proceedings, risk factors, equity security sales, and other information, including share repurchase program details and exhibits [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms no material changes to legal proceedings as previously disclosed in the 2023 Annual Report - No material changes to legal proceedings as previously disclosed in the 2023 Annual Report[406](index=406&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to risk factors, noting forward-looking statements are subject to various uncertainties - No material changes to risk factors as previously disclosed in the 2023 Annual Report[407](index=407&type=chunk) - Forward-looking statements are subject to uncertainties and factors that could cause actual results to differ materially, including economic conditions, market volatility, interest rate changes, and geopolitical events[341](index=341&type=chunk)[394](index=394&type=chunk)[374](index=374&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details open market share repurchase activity during Q2 2024, including shares purchased, average price, and remaining program capacity Open Market Share Repurchase Activity (3 Months Ended June 30, 2024, Dollars in millions, except per share amounts) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | April 1, 2024 - April 30, 2024 | 158,380 | $86.63 | 158,380 | | | May 1, 2024 - May 31, 2024 | 198,043 | $87.48 | 198,043 | | | June 1, 2024 - June 30, 2024 | 198,318 | $87.54 | 198,318 | | | **Total** | **554,741** | **$87.25** | **554,741** | **$1,418** | - Repurchased **$48.4 million** of common stock under the 2021 program during Q2 2024, with **$1.4 billion** remaining capacity as of June 30, 2024[388](index=388&type=chunk) - No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during Q2 2024[409](index=409&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This section outlines how the company routinely announces financial and other material information via its Investor Relations website and SEC filings - Routinely announces financial and other material information via Investor Relations website, SEC filings, press releases, public conference calls, and webcasts[344](index=344&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists various exhibits incorporated by reference or filed with the report, including corporate documents and certifications - Lists various exhibits incorporated by reference or filed herewith, including Amended and Restated Certificate of Incorporation, Separation Agreement, Certifications of CEO and CFO, and Inline XBRL Taxonomy documents[390](index=390&type=chunk)[411](index=411&type=chunk)[414](index=414&type=chunk) [Signatures](index=60&type=section&id=Signatures) This section contains the signatures of the authorized representatives of CBRE Group, Inc., confirming the due filing of the report - Report signed by Emma E. Giamartino (Chief Financial Officer) and Lindsey S. Caplan (Chief Accounting Officer) on July 25, 2024[393](index=393&type=chunk)[412](index=412&type=chunk)[417](index=417&type=chunk)

Revenue Growth - Revenue increased by 9% and net revenue increased by 11% compared to the previous year[23] - Net revenue for Q2 2024 was $4.971 billion, up from $4.478 billion in Q2 2023[52] - Total revenue for Q2 2024 reached $8.391 billion, compared to $7.720 billion in Q2 2023[52] - Global leasing revenue rose 9%, driven by a 12% increase in the Americas[26] - Mortgage origination revenue jumped 38%, led by a 20% increase in loan origination fees[27] - Property Management Revenue increased to $555 million in Q2 2024, up 15.4% from $481 million in Q2 2023, with net revenue rising to $532 million from $460 million[86] - Facilities Management Revenue grew to $4.127 billion in Q2 2024, a 12% increase from $3.686 billion in Q2 2023, with net revenue up 18% to $1.697 billion[89] - Project Management Revenue reached $1.817 billion in Q2 2024, up 4.4% from $1.740 billion in Q2 2023, with net revenue increasing 11% to $850 million[90] - Total Revenue for Q2 2024 was $8.391 billion, an 8.7% increase from $7.720 billion in Q2 2023, with net revenue up 11% to $4.971 billion[96] - Global Workplace Solutions (GWS) Revenue rose 9.5% to $5.944 billion in Q2 2024, with net revenue increasing 15.5% to $2.547 billion[99] - Advisory transaction revenue increased 5%, driven by a 13% rise in U.S. leasing revenue and a 20% increase in mortgage origination fees[94] Core EBITDA and Profitability - Core EBITDA for the quarter was $504 million[4] - Core EBITDA for Q2 2024 was $505 million[56] - Core EBITDA for the trailing twelve months ended June 30, 2024, was $2,103 million[82] - Core EBITDA for the six months ended June 30, 2024, was $930 million, compared to $1,036 million in the same period in 2023[78] - Operating income for Q2 2024 was $246 million, compared to $306 million in Q2 2023[45] - Total segment operating profit was $497 million, with Advisory contributing $315 million and Global Workplace Solutions contributing $233 million[58] - Net income attributable to CBRE Group, Inc. for Q2 2024 was $130 million, down from $201 million in Q2 2023[45] - Net income attributable to CBRE Group, Inc. for the six months ended June 30, 2024, was $256 million, compared to $318 million in the same period in 2023[78] - Core net income attributable to CBRE Group, Inc. stockholders, as adjusted, for the six months ended June 30, 2024, was $489 million, compared to $548 million in the same period in 2023[78] - Core diluted income per share attributable to CBRE Group, Inc., as adjusted, for the six months ended June 30, 2024, was $1.59, compared to $1.74 in the same period in 2023[78] - GAAP EPS decreased 34.2% to $0.42 in Q2 2024, while Core EPS declined 1.9% to $0.81[96][102] Cash Flow and Liquidity - Free cash flow for the second quarter was $220 million, with cash flow conversion improving to 64% on a trailing 12-month basis[34] - The company had approximately $3.7 billion of total liquidity as of June 30, 2024[13] - Cash and cash equivalents decreased to $928 million as of June 30, 2024, compared to $1,265 million at the end of 2023[67] - Net cash used in operating activities was $205 million for the six months ended June 30, 2024, compared to $756 million in the same period in 2023[68] - Net cash provided by financing activities for the six months ended June 30, 2024, was $1,242 million, compared to $1,075 million in the same period in 2023[69] - Free Cash Flow improved significantly to $220 million in Q2 2024, compared to a negative $86 million in Q2 2023[96] Assets and Liabilities - Assets Under Management (AUM) totaled $142.5 billion, a decrease of $1.5 billion from the previous quarter[6] - The servicing portfolio increased to more than $425 billion, up 3% for the quarter and 7% from a year ago[28] - Total assets increased to $23,462 million as of June 30, 2024, up from $22,548 million at the end of 2023[67] - Total liabilities increased to $14,273 million as of June 30, 2024, compared to $13,481 million at the end of 2023[67] - Goodwill increased to $5,667 million as of June 30, 2024, up from $5,129 million at the end of 2023[67] - CBRE's net leverage ratio was 1.58x as of June 30, 2024, well below the primary debt covenant of 4.25x[105] Capital Deployment and Acquisitions - The company deployed $1.3 billion of capital year-to-date across M&A and REI co-investments[24] - Acquisitions during the quarter totaled approximately $290.9 million, primarily for Direct Line Global[22] - Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired, amounted to $1,051 million for the six months ended June 30, 2024[68] - The company repurchased 0.6 million shares for $48.4 million in Q2 2024, with $1.4 billion remaining under the stock repurchase program[93] Costs and Expenses - Cost of revenue for Q2 2024 was $6.793 billion, up from $6.179 billion in Q2 2023[45] - Total costs and expenses for Q2 2024 were $8.145 billion, up from $7.423 billion in Q2 2023[45] - Integration and other costs related to acquisitions for the first quarter of 2024 were $17.5 million, offset by a reversal of $21.7 million in previously recognized transaction-related bonus expense[85] Portfolio and Development - The in-process portfolio ended Q2 2024 at $18.8 billion, unchanged from Q1 2024[54] - Global development operating loss totaled approximately $26 million in Q2 2024[54] - Capital expenditures for Q2 2024 were $66.8 million[42] Segment Performance - Total Core revenue for the period was $4,478 million, with Advisory contributing $2,021 million and Global Workplace Solutions contributing $2,205 million[58] - Total Consolidated revenue reached $7,720 million, driven by Services ($3,242 million) and Real Estate Investments ($256 million)[58] - Operating income for the period was $306 million, with Advisory contributing $238 million and Global Workplace Solutions contributing $157 million[58] - Turner & Townsend net revenue for the three months ended June 30, 2024, was $444 million, compared to $377 million in the same period in 2023[84]