CBRE(CBRE) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents CBRE Group, Inc.'s unaudited consolidated financial statements for Q2 2025, covering key financial statements and detailed explanatory notes Consolidated Balance Sheets Total assets increased to $27,693 million by June 30, 2025, while total liabilities rose to $18,700 million, driven by debt and warehouse lines | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $27,693 | $24,383 | | Total Liabilities | $18,700 | $15,191 | | Total Equity | $8,585 | $9,192 | | Cash and cash equivalents | $1,395 | $1,114 | | Receivables, net | $7,319 | $7,005 | | Warehouse receivables | $1,448 | $561 | | Goodwill | $6,410 | $5,621 | | Operating lease assets | $1,986 | $1,198 | | Long-term debt, net | $4,340 | $3,245 | | Warehouse lines of credit | $1,432 | $552 | | Commercial paper program | $1,356 | $175 | | Accumulated earnings | $9,393 | $9,567 | Consolidated Statements of Operations Q2 2025 revenue increased to $9,754 million, with net income attributable to CBRE Group, Inc. at $215 million, reflecting strong growth | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | $9,754 | $8,391 | $18,663 | $16,326 | | Total costs and expenses | $9,399 | $8,145 | $18,033 | $15,889 | | Operating income | $374 | $246 | $649 | $450 | | Net income | $239 | $142 | $431 | $290 | | Net income attributable to CBRE Group, Inc. | $215 | $130 | $378 | $256 | | Basic income per share | $0.72 | $0.42 | $1.26 | $0.84 | | Diluted income per share | $0.72 | $0.42 | $1.25 | $0.83 | Consolidated Statements of Comprehensive Income Comprehensive income attributable to CBRE Group, Inc. increased to $179 million for Q2 2025 and $359 million for H1 2025, due to higher net income and FX gains | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income | $239 | $142 | $431 | $290 | | Foreign currency translation gain (loss) | $2 | $(26) | $19 | $(115) | | Total other comprehensive (loss) income | $(24) | $(25) | $5 | $(113) | | Comprehensive income | $215 | $117 | $436 | $177 | | Comprehensive income attributable to CBRE Group, Inc. | $179 | $104 | $359 | $149 | Consolidated Statements of Cash Flows H1 2025 net cash used in operating activities increased to $489 million, while investing activities used $467 million, and financing provided $1,160 million | Metric | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(489) | $(205) | | Net cash used in investing activities | $(467) | $(1,307) | | Net cash provided by financing activities | $1,160 | $1,242 | | Effect of currency exchange rate changes on cash | $107 | $(68) | | NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $311 | $(338) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD | $1,532 | $1,033 | Consolidated Statements of Equity Total equity decreased to $8,585 million by June 30, 2025, primarily due to $669 million in common stock repurchases and decreased non-controlling interests | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total CBRE Group, Inc. Stockholders' Equity | $8,253 | $8,411 | | Non-controlling interests | $332 | $781 | | Total Equity | $8,585 | $9,192 | | Net income (six months) | $378 | $256 | | Repurchase of common stock (six months) | $(669) | $(48) | | Acquisition of non-controlling interests (six months) | $(362) | $22 | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's financial reporting, including significant accounting policies, recent acquisitions, debt structures, fair value measurements, and segment reporting, offering crucial context for the unaudited financial statements 1. Basis of Presentation Unaudited consolidated financial statements adhere to Form 10-Q rules and U.S. GAAP, based on management estimates, with prior year reclassifications - Financial statements are prepared in accordance with Form 10-Q rules and U.S. GAAP, requiring management estimates and assumptions[22] - Certain prior year amounts have been reclassified to conform to the fiscal 2025 presentation[23] 2. New Accounting Pronouncements CBRE adopted ASU 2023-09 in Q1 2025 and is evaluating ASU 2024-03 and ASU 2025-03 for future adoption, impacting disclosures and VIE accounting - Adopted ASU 2023-09, "Improvements to Income Tax Disclosures," prospectively in Q1 2025, requiring disaggregated income tax information[24] - Evaluating ASU 2024-03, "Expense Disaggregation Disclosures," effective for fiscal years beginning after December 15, 2026, requiring additional expense category disclosures[25] - Evaluating ASU 2025-03, "Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity," effective for fiscal years beginning after December 15, 2026, for business combinations involving VIEs[26] 3. Acquisitions CBRE acquired the remaining 60% of Industrious for $841 million in January 2025, resulting in $571 million in goodwill, and increased its Turner & Townsend stake to 70% - Acquired remaining 60% ownership of Industrious on January 16, 2025, for $841 million, increasing ownership to 100%[28][29] - The Industrious acquisition resulted in $571 million in goodwill, largely from synergies in flexible workplace solutions[29] - Combined project management business with Turner & Townsend in early January 2025, increasing CBRE's controlling interest to 70%[36] - A put option granted to Turner & Townsend partners, valued at $408 million as of June 30, 2025, has been classified as Mezzanine Equity[37] 4. Warehouse Receivables & Warehouse Lines of Credit Warehouse receivables significantly increased to $1,448 million by June 30, 2025, with total warehouse lines of credit reaching $3,625 million in maximum facility size | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Warehouse receivables | $1,448 | $561 | | Total Warehouse Lines of Credit (Maximum Facility Size) | $3,625 | $3,500 | | Total Warehouse Lines of Credit (Carrying Value) | $1,432 | $552 | | Origination of mortgage loans (six months) | $6,646 | $4,408 | | Sale of mortgage loans (six months) | $(5,764) | $(4,129) | - Warehouse receivables are carried at fair value and are under commitment to be purchased by Freddie Mac or Fannie Mae/Ginnie Mae MBS[40] 5. Variable Interest Entities (VIEs) Maximum exposure to loss from unconsolidated VIEs decreased to $216 million by June 30, 2025, from $242 million at December 31, 2024 | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Maximum exposure to loss | $216 | $242 | | Investments in unconsolidated subsidiaries | $182 | $192 | | Co-investment commitments | $34 | $37 | 6. Goodwill Goodwill increased to $6,410 million by June 30, 2025, primarily due to acquisitions like Industrious and foreign exchange movements, partially offset by reallocation | Metric | December 31, 2024 (Millions USD) | June 30, 2025 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Balance as of December 31, 2024 | $5,621 | - | | Reallocation | - | - | | Acquisitions | $569 | - | | Foreign exchange movement | $220 | - | | Balance as of June 30, 2025 | - | $6,410 | - Goodwill was reallocated due to the reorganization of business into four reportable segments (Advisory Services, Building Operations & Experience, Project Management, and Real Estate Investments) as of January 1, 2025[45] - An interim goodwill impairment test was performed as of January 1, 2025, with no impairment found[45] 7. Fair Value Measurements Total assets at fair value increased to $1,580 million by June 30, 2025, while total liabilities at fair value rose to $399 million, mainly due to derivative liabilities | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total assets at fair value | $1,580 | $1,223 | | Total liabilities at fair value | $399 | $36 | | Warehouse receivables (Level 2) | $1,448 | $561 | | Derivative assets (Level 2) | $46 | $43 | | Derivative liabilities (Level 2) | $372 | $0 | | Investments in unconsolidated subsidiaries (Level 3) | $24 | $412 | | Contingent consideration (Level 3) | $27 | $36 | - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[52] - The fair value of warehouse receivables is primarily based on locked-in purchase prices, classified as Level 2[56] - Investments in unconsolidated subsidiaries at fair value using NAV were $415 million at June 30, 2025, and $378 million at December 31, 2024, and are excluded from the fair value hierarchy tables[57] 8. Derivatives and Hedging Activities CBRE uses cross-currency swaps to hedge foreign exchange exposure, with derivative assets at $46 million and derivative liabilities significantly increasing to $372 million by June 30, 2025 | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Derivative Assets | $46 | $43 | | Total Derivative Liabilities | $372 | $0 | | Gross notional amount of fair value hedges | $485 | $346 | | Gross notional amount of net investment hedges | $3,600 | $1,000 | - Losses on fair value hedges for the three and six months ended June 30, 2025, were $40 million and $50 million, respectively, offset by foreign currency transaction gains on hedged loans[73] - During Q2 2025, a GBP-denominated subsidiary entered into £1.9 billion in cross-currency swap agreements, designated as net investment hedges, to manage EUR exposure[74] 9. Investments in Unconsolidated Subsidiaries Total investments in unconsolidated subsidiaries decreased to $858 million by June 30, 2025, primarily due to the acquisition of Altus and the remaining 60% of Industrious | Investment Type | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Real Estate Investments (in projects and funds) | $760 | $702 | | Investment in Altus | $0 | $115 | | Other (including Industrious) | $98 | $478 | | Total investment in unconsolidated subsidiaries | $858 | $1,295 | - Altus was acquired by a third-party on April 16, 2025, eliminating CBRE's investment[78] - Non-cash asset impairment charges of $20 million related to equity method investments were recorded during the three and six months ended June 30, 2025[78] 10. Long-Term Debt and Short-Term Borrowings Long-term debt, net, increased to $4,340 million by June 30, 2025, and short-term borrowings rose to $2,794 million, driven by new senior notes and commercial paper | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total long-term debt, net of current maturities | $4,340 | $3,245 | | Total short-term borrowings | $2,794 | $906 | | Senior term loans due in 2028 | $1,363 | $720 | | 4.800% senior notes due in 2030 | $600 | $0 | | 5.500% senior notes due in 2035 | $500 | $0 | | Commercial paper program | $1,356 | $175 | | Revolving credit facilities | $0 | $132 | - Issued $600 million of 4.800% senior notes due 2030 and $500 million of 5.500% senior notes due 2035 on May 12, 2025[88][89] - Redeemed $600 million of 4.875% senior notes due 2026 in full on May 28, 2025, incurring $2 million in charges[94] - Entered into new 5-year ($3.5 billion) and 364-day ($1.0 billion) senior unsecured Revolving Credit Agreements on June 24, 2025, replacing prior facilities[96][101] - Outstanding borrowings under the commercial paper program increased to $1.4 billion at June 30, 2025, from $175 million at December 31, 2024[105] 11. Leases Operating lease assets significantly increased to $1,986 million by June 30, 2025, primarily due to the Industrious acquisition, with total lease liabilities rising to $2,524 million | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating lease assets | $1,986 | $1,198 | | Financing lease assets (Other assets) | $291 | $260 | | Total leased assets | $2,277 | $1,458 | | Operating lease liabilities (Current) | $282 | $200 | | Non-current operating lease liabilities | $2,053 | $1,307 | | Total lease liabilities | $2,524 | $1,672 | - Right-of-use assets obtained in exchange for new operating lease liabilities totaled $781 million for the six months ended June 30, 2025, primarily from the Industrious acquisition[109] 12. Commitments and Contingencies CBRE faces various commitments and contingencies, including $43.5 billion in DUS Program loss sharing, $292 million in letters of credit, and $331 million in deferred acquisition consideration - CBRE MCI's DUS Program has $43.5 billion in loans subject to loss sharing arrangements with Fannie Mae, with $165 million in letters of credit and a $64 million liability for loan loss guarantee[113] | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Outstanding letters of credit | $292 | - | | Guarantees | $180 | - | | Outstanding performance and payment bonds | $904 | $808 | | Deferred and contingent consideration | $331 | $292 | | Indirect tax liabilities | $96 | $91 | | Aggregate future commitments related to co-investment funds | $183 | - | | Unfunded capital commitments to consolidated projects | $328 | - | | Unfunded capital commitments to unconsolidated projects | $54 | - | 13. Income Taxes Provision for income taxes increased to $61 million for Q2 2025 and $113 million for H1 2025, with effective tax rates rising to 20.3% and 20.8% respectively | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Provision for income taxes | $61 | $32 | $113 | $3 | | Effective tax rate | 20.3% | 18.5% | 20.8% | 1.1% | - The effective tax rates differ from the U.S. federal statutory rate of 21.0% primarily due to U.S. state taxes and favorable permanent book tax differences[125] - Gross unrecognized tax benefits increased to $360 million at June 30, 2025, from $347 million at December 31, 2024[128] - The company is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBBA) on its financial statements[127] 14. Income Per Share and Stockholders' Equity Basic and diluted income per share increased for Q2 and H1 2025, with $663 million in common stock repurchases for H1 2025, leaving $5.2 billion remaining in the program | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic income per share | $0.72 | $0.42 | $1.26 | $0.84 | | Diluted income per share | $0.72 | $0.42 | $1.25 | $0.83 | | Weighted average shares outstanding for basic EPS | 297,950,927 | 306,745,116 | 299,113,472 | 306,276,871 | | Weighted average shares outstanding for diluted EPS | 300,008,422 | 308,035,211 | 301,455,253 | 308,269,040 | - Repurchased 2,123,191 shares for $256 million in Q2 2025 and 5,185,163 shares for $663 million in H1 2025[132] - The share repurchase program was authorized for an additional $5.0 billion in November 2024, bringing the total to $9.0 billion, with $5.2 billion remaining capacity as of June 30, 2025[131][132] 15. Revenue from Contracts with Customers Total revenue for Q2 2025 was $9,754 million and for H1 2025 was $18,663 million, showing consistent growth across key service lines like Facilities and Project Management | Service Type | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Facilities management | $5,119 | $4,360 | $9,887 | $8,626 | | Project management | $1,786 | $1,563 | $3,417 | $3,082 | | Advisory leasing | $995 | $875 | $1,857 | $1,607 | | Advisory sales | $460 | $384 | $819 | $709 | | Property management | $638 | $492 | $1,221 | $920 | | Total Revenue | $9,754 | $8,391 | $18,663 | $16,326 | - Contract assets totaled $485 million ($382 million current) at June 30, 2025, slightly down from $489 million ($400 million current) at December 31, 2024[139] - Contract liabilities increased to $420 million at June 30, 2025, from $375 million at December 31, 2024. Revenue of $148 million for the six months ended June 30, 2025, was recognized from the December 31, 2024, contract liability balance[140] 16. Segments CBRE reorganized into four segments: Advisory Services, BOE, Project Management, and REI, with SOP as the key performance measure, excluding certain non-recurring costs - Reorganized into four reportable segments: Advisory Services, Building Operations & Experience (BOE), Project Management, and Real Estate Investments (REI)[141][142] - BOE segment now includes enterprise and local facilities management, property management, and flexible workplace solutions (following Industrious acquisition)[141] - Project Management segment formed by combining CBRE's project management business with Turner & Townsend[141] | Segment | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Advisory Services SOP | $380 | $287 | $681 | $520 | | Building Operations & Experience SOP | $261 | $213 | $477 | $373 | | Project Management SOP | $121 | $102 | $234 | $203 | | Real Estate Investments SOP | $25 | $10 | $50 | $44 | | Total segment operating profit | $660 | $492 | $1,220 | $846 | 17. Telford Fire Safety Remediation Estimated liability for Telford Fire Safety Remediation increased to $212 million by June 30, 2025, primarily due to exchange rate changes, with costs highly subjective | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Estimated liability | $212 | $204 | | Current portion of liability | $116 | $102 | - The increase in liability is due to changes in exchange rates less actual remediation costs incurred[152] - Remediation costs are subjective and depend on factors like individual building requirements, completion time, material costs, and regulatory changes[153] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on CBRE's financial condition, operational results, and liquidity for the three and six months ended June 30, 2025, highlighting market recovery and strategic capital allocation Business Environment The commercial real estate market continued its recovery in H1 2025, marked by strong occupier demand, a rebound in sales and financing, and robust demand for services - Commercial real estate market continued to recover in H1 2025[158] - Strong occupier demand for office space globally, particularly in the U.S[158] - Real estate sales and financing activity rebounded strongly[158] - Demand for facilities and project management services remained strong due to outsourcing trends[158] Capital Allocation CBRE repurchased $256 million in shares during Q2 2025 and $663 million through June 30, 2025, while maintaining substantial liquidity for future growth - Repurchased $256 million in shares during Q2 2025[159] - Repurchased $663 million in shares through June 30, 2025[159] - Maintained substantial liquidity to finance future growth[159] Results of Operations CBRE reported strong revenue growth for Q2 and H1 2025, driven by increased leasing, mortgage origination, and property sales, with net income significantly increasing | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total Revenue | $9,754 | $8,391 | $18,663 | $16,326 | | Total adjusted net revenue | $5,668 | $4,971 | $10,780 | $9,415 | | Operating income | $374 | $246 | $649 | $450 | | Net income attributable to CBRE Group, Inc. | $215 | $130 | $378 | $256 | | Core EBITDA | $658 | $505 | $1,198 | $930 | - Revenue increased by 16.2% for Q2 2025 and 14.3% for H1 2025, driven by growth in Advisory, BOE, and Project Management segments[162][172] - Foreign currency translation had a 1.1% positive impact on Q2 revenue and a 0.4% negative impact on H1 revenue[163][173] - Equity loss from unconsolidated subsidiaries decreased significantly to $2 million for H1 2025 from $73 million in H1 2024, primarily due to lower unrealized equity losses in the prior period[177] Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 Consolidated net income for Q2 2025 increased to $215 million on $9.8 billion revenue, up from $130 million on $8.4 billion, fueled by strong segment performance - Consolidated net income increased by 65.4% to $215 million[161] - Revenue growth of 16.2% driven by leasing, commercial mortgage origination, property sales, and BOE segment expansion[162] - Cost of revenue increased 16.9% to 81.4% of total revenue[164] - Operating, administrative and other expenses increased 7.1%, but decreased as a percentage of revenue to 13.1% from 14.2%[165] - Provision for income taxes increased to $61 million from $32 million, with the effective tax rate rising to 20.3% from 18.5%[168] Legislative Developments OECD Pillar Two Model Rules for a 15% minimum global effective tax rate are being adopted, and CBRE is evaluating the impact of the U.S. One Big Beautiful Bill Act (OBBBA) - OECD Pillar Two Model Rules for a 15% minimum global effective tax rate are being adopted by EU member states and other countries[169] - The U.S. One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, changing federal income tax laws[170] - CBRE is evaluating the impact of OBBBA on its financial statements and operations[170] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 Consolidated net income for H1 2025 increased to $378 million on $18.7 billion revenue, up from $256 million on $16.3 billion, with broad-based revenue growth and improved profitability - Consolidated net income increased by 47.7% to $378 million[171] - Revenue growth of 14.3% driven by leasing, commercial mortgage origination, property sales, and BOE and Project Management segments[172] - Cost of revenue increased 14.6% to 81.5% of total revenue[174] - Operating, administrative and other expenses increased 7.2%, but decreased as a percentage of revenue to 13.2% from 14.1%[175] - Equity loss decreased to $2 million from $73 million, primarily due to lower unrealized equity losses in the prior period[177] - Provision for income taxes increased to $113 million from $3 million, with the effective tax rate rising to 20.8% from 1.1%[179] Segment Operations CBRE's segment operations reflect a reorganization into Advisory Services, BOE, Project Management, and REI, with most segments showing strong growth, except REI due to lower fees - Reorganized into four reportable segments: Advisory Services, Building Operations & Experience (BOE), Project Management, and Real Estate Investments (REI)[181] - Advisory Services provides property leasing, capital markets, loan servicing, and valuation[182] - BOE offers integrated outsourcing services including facilities and property management[182] - Project Management delivers program, project, and cost consultancy services[182] - REI is a real assets developer, investor, and operator, comprising investment management and development services[182] Advisory Services Advisory Services revenue increased by 14.4% in Q2 2025 and 14.0% in H1 2025, driven by strong global leasing and property sales, with improved segment operating profit margins | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total segment revenue | $1,996 | $1,744 | $3,690 | $3,238 | | Advisory leasing revenue | $995 | $875 | $1,857 | $1,607 | | Advisory sales revenue | $460 | $384 | $819 | $709 | | Commercial mortgage origination | $127 | $88 | $215 | $147 | | Segment operating profit | $380 | $287 | $681 | $520 | | Segment operating profit on revenue margin | 19.0% | 16.5% | 18.5% | 16.1% | - Global leasing revenue rose 13.7% in Q2 2025 and 15.5% in H1 2025, led by office and industrial sectors[186][193] - Property sales revenue grew 19.8% in Q2 2025 and 15.5% in H1 2025[186][193] - MSRs contributed $32 million to operating income in Q2 2025 (vs. $23 million in Q2 2024) and $55 million in H1 2025 (vs. $36 million in H1 2024)[191][196] Building Operations & Experience Building Operations & Experience (BOE) revenue increased by 18.7% in Q2 2025 and 16.4% in H1 2025, driven by management fees, new clients, and acquisitions | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total segment revenue | $5,764 | $4,855 | $11,119 | $9,555 | | Facilities management revenue | $2,010 | $1,752 | $3,876 | $3,354 | | Property management revenue | $620 | $476 | $1,181 | $890 | | Segment operating profit | $261 | $213 | $477 | $373 | | Segment operating profit on revenue margin | 4.5% | 4.4% | 4.3% | 3.9% | - Revenue growth driven by increased management fees and reimbursements, and impact from acquisitions[199][202] - Cost of revenue increased 18.7% in Q2 2025 and 16.1% in H1 2025, primarily due to higher pass-through costs[200][204] - Depreciation and amortization expense increased 8.9% in Q2 2025 and 28.4% in H1 2025, reflecting intangibles from recent acquisitions like Industrious[201][206] Project Management Project Management revenue increased by 14.3% in Q2 2025 and 10.9% in H1 2025, driven by strong performance from the legacy Turner & Townsend business | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total segment revenue | $1,786 | $1,563 | $3,417 | $3,082 | | Segment operating profit | $121 | $102 | $234 | $203 | | Segment operating profit on revenue margin | 6.8% | 6.5% | 6.8% | 6.6% | - Revenue growth attributed to continued strong performance from the legacy Turner & Townsend business[209][212] - Cost of revenue increased 14.9% in Q2 2025 and 11.2% in H1 2025, driven by higher pass-through costs and professional compensation[210][213] - Depreciation and amortization expense decreased 7.1% in Q2 2025 and 8.9% in H1 2025, due to intangible assets being fully amortized in 2024[211][215] Real Estate Investments Real Estate Investments (REI) revenue decreased by 7.3% in Q2 2025 and 2.6% in H1 2025 due to lower development fees and carried interest, though operating profit increased | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total segment revenue | $215 | $232 | $448 | $460 | | Investment management revenue | $144 | $149 | $299 | $298 | | Development services revenue | $71 | $83 | $149 | $162 | | Segment operating profit | $25 | $10 | $50 | $44 | | Segment operating profit on revenue margin | 11.6% | 4.3% | 11.2% | 9.6% | - Revenue decrease primarily due to lower development fees from Telford and lower carried interest[217][223] - Gain on disposition of real estate increased by $19 million in Q2 2025 and $6 million in H1 2025, driven by monetization of real estate development assets[219][226] - Assets Under Management (AUM) increased to $155.3 billion at June 30, 2025, from $146.2 billion at December 31, 2024, driven by market appreciation and inflows[221][228] Corporate and Other The Corporate and Other segment reported an increased operating loss for Q2 and H1 2025 due to higher corporate overhead from acquisitions, though equity income improved significantly | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Operating loss | $(214) | $(170) | $(409) | $(324) | | Equity income (loss) from unconsolidated subsidiaries | $2 | $(22) | $23 | $(93) | | Segment operating loss | $(127) | $(120) | $(222) | $(294) | - Operating, administrative and other expenses for core corporate functions rose 15.7% in Q2 2025 and 27.7% in H1 2025, mainly due to acquisition and integration costs[231][233] - Equity income of $2 million in Q2 2025 (vs. $22 million loss in Q2 2024) and $23 million in H1 2025 (vs. $93 million loss in H1 2024) reflects the higher value of the Altus investment, which was acquired on April 16, 2025[232][234] Liquidity and Capital Resources CBRE maintains strong liquidity with $1.4 billion in cash and $3.3 billion available under revolving credit facilities, expecting to meet funding needs - As of June 30, 2025, CBRE had $1.4 billion in cash and cash equivalents and $3.3 billion available under revolving credit facilities[236] - Anticipated capital expenditures for 2025 are up to $363 million[236] - Aggregate future commitments include $183 million for co-investment funds and $382 million for consolidated and unconsolidated development projects[236] - Issued $1.1 billion in new senior notes in May 2025, partially used to redeem $600 million of existing notes[238] - Accrued deferred purchase consideration for acquisitions totaled $331 million at June 30, 2025[241] Historical Cash Flows Net cash used in operating activities increased to $489 million for H1 2025, while investing activities used $467 million, and financing activities provided $1,160 million - Net cash used in operating activities increased to $489 million for H1 2025, from $205 million in H1 2024, driven by working capital movements[245] - Net cash used in investing activities decreased by $840 million to $467 million for H1 2025, primarily due to lower cash outflows from acquisitions (e.g., Industrious vs. J&J Worldwide Services)[246] - Net cash provided by financing activities decreased to $1,160 million for H1 2025, from $1,242 million in H1 2024, due to increased common stock repurchases offset by net proceeds from commercial paper and new debt[247] Indebtedness CBRE manages indebtedness through fixed and variable rate debt, with long-term debt increasing due to new senior notes and incremental term loans, and short-term borrowings rising - Entered into a new 5-year senior unsecured Credit Agreement on July 10, 2023, refinancing previous debt[249] - Incurred incremental term loans of €425 million and $125 million in March 2025, used for working capital and general corporate purposes[250] - Issued $600 million of 4.800% senior notes due 2030 and $500 million of 5.500% senior notes due 2035 on May 12, 2025[252][253] - Redeemed $600 million of 4.875% senior notes due 2026 on May 28, 2025, using proceeds from new note offerings[257] - Established a commercial paper program in December 2024, with $1.4 billion outstanding at June 30, 2025[266] - Entered new 5-year ($3.5 billion) and 364-day ($1.0 billion) revolving credit agreements on June 24, 2025, with no amounts outstanding as of June 30, 2025[261][264] Of –Balance Sheet Arrangements CBRE has no material off-balance sheet arrangements expected to impact its financial condition, liquidity, or results of operations, with details referenced in Note 12 - No material off-balance sheet arrangements are expected to impact financial condition, liquidity, or results of operations[270] - Off-balance sheet arrangements are described in Note 12 – Commitments and Contingencies[270] Critical Accounting Policies and Estimates CBRE's critical accounting policies and estimates remain consistent with the 2024 Annual Report, with no material changes as of June 30, 2025 - No material changes to critical accounting policies and estimates as of June 30, 2025[271] - Critical accounting policies include revenue recognition, business combinations, goodwill and other intangible assets, income taxes, contingencies, and investments in unconsolidated subsidiaries – fair value option[271] New Accounting Pronouncements Information regarding new accounting pronouncements is detailed in Note 2 of the Notes to Consolidated Financial Statements - Refer to Note 2 – New Accounting Pronouncements for details on recently adopted and pending accounting pronouncements[272] Non-GAAP Financial Measures CBRE uses non-GAAP measures like adjusted net revenue and Core EBITDA to evaluate operating performance and enhance comparability, excluding certain costs - Non-GAAP measures include adjusted net revenue, segment operating profit on revenue margin, segment operating profit on adjusted net revenue margin, and Core EBITDA[273] - These measures are used to evaluate operating performance, enhance comparability, and eliminate the impact of selected costs and charges[273] - Core EBITDA is adjusted for items like depreciation, amortization, interest, taxes, acquisition costs, carried interest, tax audit charges, business wind-down results, fair value adjustments, and transformation costs[275][277] | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income attributable to CBRE Group, Inc. | $215 | $130 | $378 | $256 | | Net income | $239 | $142 | $431 | $290 | | Core EBITDA | $658 | $505 | $1,198 | $930 | Cautionary Note on Forward-Looking Statements This section warns that the report contains forward-looking statements subject to uncertainties and factors that could cause actual results to differ materially - Report contains forward-looking statements based on management's expectations and beliefs, subject to uncertainties[280][281] - Factors that may cause actual results to differ include economic, political, and regulatory conditions, market volatility, competition, and acquisition integration challenges[282] - CBRE assumes no obligation to update forward-looking statements, except as required by law[283] - Investors should not place undue reliance on forward-looking statements[283] Item 3. Quantitative and Qualitative Disclosures About Market Risk CBRE's primary market risks are foreign currency exchange rate fluctuations and changes in interest rates on debt, managed through funding strategies and derivatives - Primary market risks are foreign currency exchange rate fluctuations and changes in interest rates on debt obligations[287] - Risk management involves managing debt funding and using derivative financial instruments, not for trading or speculative purposes[287] International Operations Approximately 43.3% of Q2 2025 revenue was in foreign currencies, exposing CBRE to exchange rate fluctuations, with a hypothetical 10% USD increase impacting pre-tax income - Approximately 43.3% of Q2 2025 revenue and 42.7% of H1 2025 revenue was transacted in foreign currencies[291] | Currency | Three Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | | :---------------- | :---------------------------------------------- | :--------------------------------------------- | | United States dollar | $5,529 | $10,699 | | British pound sterling | $1,386 | $2,620 | | Euro | $908 | $1,674 | | Canadian dollar | $278 | $529 | | Indian rupee | $222 | $436 | | Australian dollar | $228 | $410 | | Japanese yen | $136 | $261 | | Swiss franc | $111 | $223 | | Chinese yuan | $113 | $219 | | Singapore dollar | $104 | $205 | | Other currencies | $739 | $1,387 | | Total revenue | $9,754 | $18,663 | - A hypothetical 10% increase in USD value relative to GBP would decrease pre-tax income by $1 million for H1 2025[292] - A hypothetical 10% increase in USD value relative to EUR would increase pre-tax income by $10 million for H1 2025[292] Interest Rates CBRE manages interest rate risk using fixed and variable rate debt and interest rate swaps, with a hypothetical 100 basis point increase in rates decreasing pre-tax income by $14 million - Manages interest expense using fixed and variable rate debt and interest rate swap agreements[294] | Financial instrument | Estimated Fair Value (June 30, 2025, Millions USD) | | :-------------------------------- | :----------------------------------------------- | | Senior term loans due in 2028 | $1,255 | | 5.950% senior notes due in 2034 | $1,053 | | 4.800% senior notes due in 2030 | $603 | | 5.500% senior notes due in 2035 | $503 | | 5.500% senior notes due in 2029 | $517 | | 2.500% senior notes due in 2031 | $443 | - A hypothetical 100 basis point increase in interest rates on variable rate debt would decrease pre-tax income by $14 million for H1 2025[295] Item 4. Controls and Procedures CBRE's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring complete and accurate financial reporting Disclosure Controls and Procedures CBRE's disclosure controls and procedures were effective as of June 30, 2025, ensuring complete and accurate financial reporting with reasonable assurance - Disclosure controls and procedures were effective as of June 30, 2025[297] - Evaluation ensures complete and accurate corporate disclosure and timely reporting of information[296] Changes in Internal Control Over Financial Reporting There were no material changes in CBRE's internal control over financial reporting during the fiscal quarter ended June 30, 2025 - No material changes in internal control over financial reporting during Q2 2025[298] PART II – OTHER INFORMATION Item 1. Legal Proceedings There have been no material changes to CBRE's legal proceedings since the disclosures in its 2024 Annual Report - No material changes to legal proceedings as previously disclosed in the 2024 Annual Report[300] Item 1A. Risk Factors There have been no material changes to CBRE's risk factors as previously disclosed in its 2024 Annual Report - No material changes to risk factors as previously disclosed in the 2024 Annual Report[301] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds CBRE repurchased 2,123,191 shares for $256 million in Q2 2025 under its share repurchase program, with approximately $5.2 billion remaining available | 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 (Millions USD) | | :----------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 1,510,751 | $117.93 | 1,510,751 | - | | May 1, 2025 - May 31, 2025 | 458,749 | $125.47 | 458,749 | - | | June 1, 2025 - June 30, 2025 | 153,691 | $129.89 | 153,691 | - | | Total (Q2 2025) | 2,123,191 | $120.43 | 2,123,191 | $5,159 | - The share repurchase program does not obligate CBRE to acquire any specific number of shares and is funded with cash on hand[302] - The program is used to offset stock-based compensation impact and for opportunistic investments[302] Item 5. Other Information No officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025[303] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, indentures, equity agreements, credit agreements, and certifications - Includes Amended and Restated Certificate of Incorporation and By-Laws[304] - Lists Tenth and Eleventh Supplemental Indentures for 4.800% Senior Notes due 2030 and 5.500% Senior Notes due 2035[304] - Contains various Grant Notice and Restricted Stock Unit Agreements for the 2019 Equity Incentive Plan[304] - Includes 5-Year and 364-Day Revolving Credit Agreements and related Guaranty Agreements[304] - Certifications by CEO and CFO (Rule 13a-14(a) and 18 U.S.C. §1350) and Inline XBRL documents are also filed[305] Signatures The report is signed by Emma E. Giamartino, Chief Financial Officer, and Lindsey S. Caplan, Chief Accounting Officer, on behalf of CBRE Group, Inc. on July 29, 2025 - Signed by Emma E. Giamartino, Chief Financial Officer, and Lindsey S. Caplan, Chief Accounting Officer[309] - Date of signing: July 29, 2025[309]