CBRE(CBRE) - 2024 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides a comprehensive overview of the company's unaudited financial performance, condition, and liquidity for the first quarter of 2024, including detailed financial statements and explanatory notes Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the three months ended March 31, 2024 and 2023, including statements of operations, balance sheets, cash flows, and equity, along with detailed notes covering accounting policies, acquisitions, debt, fair value measurements, and segment information Consolidated Statements of Operations This section presents the company's revenues, expenses, and net income for the three months ended March 31, 2024 and 2023, highlighting key profitability metrics Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :---------------------------------------- | :----------- | :----------- | | Revenue | 7,935 | 7,411 | | Operating income | 204 | 37 | | Net income | 148 | 125 | | Net income attributable to CBRE Group, Inc. | 126 | 117 | | Basic income per share | 0.41 | 0.38 | | Diluted income per share | 0.41 | 0.37 | - Net income attributable to CBRE Group, Inc. increased by 8.0% year-over-year, while total revenue rose by 7.1%[89] Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of March 31, 2024, and December 31, 2023 Consolidated Balance Sheet Highlights (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :-------------------------- | :---------------- | :---------------- | | Total Assets | 22,964 | 22,548 | | Total Liabilities | 13,865 | 13,481 | | Total Equity | 9,099 | 9,067 | | Goodwill | 5,554 | 5,129 | | Other intangible assets, net | 2,298 | 2,081 | Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2024 and 2023 Consolidated Statements of Cash Flows (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------------------------------ | :----------- | :----------- | | Net cash used in operating activities | (492) | (745) | | Net cash used in investing activities | (900) | (115) | | Net cash provided by financing activities | 1,192 | 761 | - Net cash used in operating activities decreased by $253 million, primarily due to net inflow from working capital and higher non-cash charges[147][148] - Net cash used in investing activities increased significantly by $784.7 million, mainly due to the J&J Worldwide Services acquisition[147][148] Consolidated Statements of Equity This section presents changes in the company's equity, including stockholders' equity and non-controlling interests, for the three months ended March 31, 2024 and 2023 Consolidated Statements of Equity Highlights (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :---------------------------------------- | :---------------- | :---------------- | | Total CBRE Group, Inc. Stockholders' Equity | 8,261 | 8,267 | | Non-controlling interests | 838 | 800 | | Accumulated earnings | 9,263 | 9,188 | | Accumulated other comprehensive loss | (1,005) | (924) | - Accumulated other comprehensive loss increased by $81 million due to foreign currency translation loss in Q1 2024[233] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, significant transactions, and financial instrument details Basis of Presentation The consolidated financial statements are prepared in accordance with GAAP for quarterly reports, relying on management's estimates and assumptions that are continuously evaluated - Financial statements are prepared in accordance with GAAP for Form 10-Q, requiring management estimates and assumptions[236] New Accounting Pronouncements The company adopted ASU 2023-01 (Leases) and ASU 2023-02 (Tax Credit Structures) in Q1 2024, neither of which had a material impact. It is currently evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for future impact - Adopted ASU 2023-01 (Leases) and ASU 2023-02 (Tax Credit Structures) in Q1 2024 with no material impact[213][16] - Evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for future impact[37][215] J&J Worldwide Services Acquisition CBRE acquired J&J Worldwide Services on February 27, 2024, for $820 million, enhancing its Global Workplace Solutions segment. The acquisition contributed $41.4 million in revenue and $0.5 million in net income for Q1 2024, with $17.5 million in transaction and integration costs - Acquired J&J Worldwide Services on February 27, 2024, for $820 million ($809 million cash, $11 million deferred/contingent consideration)[18][216] - J&J is a leading provider of engineering services, base support operations, and facilities maintenance for the U.S. federal government, reported as part of the Global Workplace Solutions (GWS) segment[18] J&J Acquisition Q1 2024 Financial Contribution | Metric | Amount ($M) | | :--------------- | :---------- | | Revenue | 41.4 | | Operating loss | 0.3 | | Net income | 0.5 | - Goodwill arising from the acquisition was $430 million, with approximately $115 million deductible for tax purposes[20] Warehouse Receivables & Warehouse Lines of Credit Warehouse receivables increased to $848 million as of March 31, 2024, primarily due to mortgage loan originations, funded by warehouse lines of credit. The company had a maximum of $1.2 billion in warehouse lines of credit principal outstanding during Q1 2024 Warehouse Receivables (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :------------------- | :---------------- | :---------------- | | Warehouse receivables | 848 | 675 | - Origination of mortgage loans totaled $2,216 million in Q1 2024[221] - Maximum warehouse lines of credit principal outstanding during Q1 2024 was $1.2 billion[43] Variable Interest Entities (VIEs) The company holds variable interests in certain unconsolidated VIEs, primarily in its Real Estate Investments segment, with a maximum exposure to loss of $238 million as of March 31, 2024 Maximum Exposure to Loss from Unconsolidated VIEs | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :--------------------- | :---------------- | :---------------- | | Maximum exposure to loss | 238 | 223 | Fair Value Measurements The company measures assets and liabilities at fair value using a three-level hierarchy. Total assets at fair value were $1,597 million as of March 31, 2024, with significant portions in warehouse receivables and investments in unconsolidated subsidiaries. No significant changes to valuation techniques were reported, except as described Total Assets and Liabilities at Fair Value (Mar 31, 2024) | Metric | Level 1 ($M) | Level 2 ($M) | Level 3 ($M) | Total ($M) | | :-------------------------- | :----------- | :----------- | :----------- | :--------- | | Total assets at fair value | 212 | 909 | 476 | 1,597 | | Total liabilities at fair value | — | 1 | 43 | 44 | - Warehouse receivables are classified as Level 2, with fair values primarily based on locked-in purchase prices[275] - Investments in unconsolidated subsidiaries include Level 1 (Altus Power, Inc. common stock) and Level 3 (Altus alignment shares, Industrious, other non-public entities) measurements[279] Investments in Unconsolidated Subsidiaries Total investments in unconsolidated subsidiaries decreased to $1,298 million as of March 31, 2024, primarily due to a decrease in the value of Altus Class A common stock and alignment shares Investment in Unconsolidated Subsidiaries (Mar 31, 2024 vs Dec 31, 2023) | Investment Type | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :---------------------------------- | :---------------- | :---------------- | | Real Estate Investments | 631 | 661 | | Investment in Altus: | | | | Class A common stock | 117 | 168 | | Alignment shares | 28 | 56 | | Other | 522 | 489 | | Total investment in unconsolidated subsidiaries | 1,298 | 1,374 | Long-Term Debt and Short-Term Borrowings Total long-term debt increased to $3,311 million as of March 31, 2024, primarily due to the issuance of $500 million in 5.500% senior notes in February 2024. The company was in compliance with all debt covenants Long-Term Debt (Mar 31, 2024 vs Dec 31, 2023) | Debt Instrument | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :-------------------------------------------- | :---------------- | :---------------- | | Senior term loans due in 2028 | 746 | 755 | | 5.950% senior notes due in 2034 | 976 | 976 | | 4.875% senior notes due in 2026 | 599 | 599 | | 5.500% senior notes due in 2029 | 496 | — | | 2.500% senior notes due in 2031 | 494 | 494 | | Total long-term debt | 3,311 | 2,824 | - Issued $500 million in 5.500% senior notes due April 1, 2029, in February 2024[290] - Outstanding under the Revolving Credit Agreement was $820 million as of March 31, 2024[294] - The company was in compliance with all covenants under its debt instruments as of March 31, 2024[292] Leases The company's lease liabilities and right-of-use assets primarily relate to office space, vehicles, and land for development. Total leased assets were $1,213 million and total lease liabilities were $1,413 million as of March 31, 2024 Lease Assets and Liabilities (Mar 31, 2024 vs Dec 31, 2023) | Category | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :------------------ | :---------------- | :---------------- | | Total leased assets | 1,213 | 1,240 | | Total lease liabilities | 1,413 | 1,439 | Commitments and Contingencies The company has various commitments and contingencies, including guarantees for Fannie Mae DUS Program loans ($38.7 billion subject to loss sharing), outstanding letters of credit ($253.7 million), performance and payment bonds ($462.2 million), and deferred/contingent consideration for acquisitions ($536.1 million). Future co-investment commitments total $175.7 million - Fannie Mae DUS Program loans subject to loss sharing totaled $38.7 billion as of March 31, 2024[329] Commitments and Contingencies (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :------------------------------------ | :---------------- | :---------------- | | Outstanding letters of credit | 253.7 | N/A | | Outstanding performance and payment bonds | 462.2 | 241.8 | | Deferred and contingent consideration | 536.1 | 530.2 | - Aggregate future commitments for co-investment funds in the Real Estate Investments segment were $175.7 million as of March 31, 2024[73] Income Taxes The company reported a benefit from income taxes of $28.9 million in Q1 2024, a $56.9 million decrease from a provision in Q1 2023, primarily due to the reversal of unrecognized tax positions and lower pretax earnings. The effective tax rate fell to (24.3)% from 18.3% Income Tax Summary (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------------------------------ | :----------- | :----------- | | (Benefit from) provision for income taxes | (29) | 28 | | Effective tax rate | (24.3)% | 18.3% | - Gross unrecognized tax benefits decreased by $76.3 million to $337.2 million as of March 31, 2024, primarily due to an audit closure and expiration of statute of limitations[335] Income Per Share and Stockholders' Equity Basic income per share increased to $0.41 in Q1 2024 from $0.38 in Q1 2023, and diluted income per share increased to $0.41 from $0.37. The company did not repurchase any Class A common stock in Q1 2024, but repurchased $13.7 million in April 2024, with $1.5 billion capacity remaining under the 2021 program Income Per Share (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($) | Q1 2023 ($) | | :--------------- | :---------- | :---------- | | Basic income per share | 0.41 | 0.38 | | Diluted income per share | 0.41 | 0.37 | - No Class A common stock repurchases were made during Q1 2024. However, $13.7 million of Class A common stock was repurchased in April 2024[60][145] - Approximately $1.5 billion of capacity remained under the 2021 stock repurchase program as of March 31, 2024[60] Revenue from Contracts with Customers Total revenue from contracts with customers increased to $7,935 million in Q1 2024 from $7,411 million in Q1 2023. Global Workplace Solutions contributed the largest share of revenue. Contract assets increased to $549.8 million, while contract liabilities remained stable at $303.5 million Total Revenue from Contracts with Customers (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------ | :----------- | :----------- | | Total Revenue | 7,935 | 7,411 | Revenue by Segment (Q1 2024) | Segment | Revenue ($M) | | :------------------------- | :----------- | | Global Workplace Solutions | 5,809 | | Advisory Services | 1,904 | | Real Estate Investments | 228 | Contract Assets and Liabilities (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :------------------- | :---------------- | :---------------- | | Contract assets | 549.8 | 517.4 | | Contract liabilities | 303.5 | 304.3 | Segments Total reportable segment operating profit decreased to $528 million in Q1 2024 from $631 million in Q1 2023, primarily due to a significant decline in Real Estate Investments' operating profit. Global Workplace Solutions showed strong growth Total Reportable Segment Operating Profit (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------------------------------ | :----------- | :----------- | | Total reportable segment operating profit | 528 | 631 | Segment Operating Profit (Q1 2024) | Segment | Operating Profit ($M) | | :------------------------- | :-------------------- | | Advisory Services | 262 | | Global Workplace Solutions | 232 | | Real Estate Investments | 34 | Revenue by Geographic Region (Q1 2024 vs Q1 2023) | Region | Q1 2024 ($M) | Q1 2023 ($M) | | :---------------- | :----------- | :----------- | | United States | 4,422 | 4,145 | | United Kingdom | 1,085 | 995 | | All other countries | 2,428 | 2,271 | Telford Fire Safety Remediation The estimated liability for Telford Fire Safety Remediation efforts decreased slightly to $188.9 million as of March 31, 2024, primarily due to foreign exchange rate movements and minor costs incurred Telford Fire Safety Remediation Liability (Mar 31, 2024 vs Dec 31, 2023) | Metric | Mar 31, 2024 ($M) | Dec 31, 2023 ($M) | | :----------------- | :---------------- | :---------------- | | Estimated liability | 188.9 | 192.1 | Restructuring Activities The company continued restructuring activities in Q1 2024 to simplify management and improve efficiencies, incurring $31 million in expenses, primarily for employee separation benefits and professional fees. These activities are expected to be substantially completed by the end of fiscal year 2024 Restructuring Expense Incurred (Q1 2024) | Category | Amount ($M) | | :--------------------------- | :---------- | | Employee separation benefits | 26 | | Professional fees and other | 5 | | Total expense incurred | 31 | - Restructuring activities are expected to be substantially completed by the end of fiscal year 2024[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the three months ended March 31, 2024. It highlights the challenging commercial real estate environment, consolidated and segment-specific performance, and the company's capital resources and critical accounting policies Business Environment The commercial real estate market remains challenging due to high borrowing costs and interest rate uncertainty, impacting investment and financing. However, office leasing markets have improved, reflecting a resilient economy and return-to-office trends. The company invested $820.2 million in M&A and strategic investments in Q1 - Commercial real estate operating environment remains challenging due to higher borrowing costs and interest rate uncertainty, inhibiting investment and financing activities[113] - Office leasing markets have improved, reflecting a resilient economy and progress on occupiers' return-to-office plans[113] - Invested approximately $820.2 million in M&A and other strategic investments during the quarter[87] Results of Operations This section analyzes the company's consolidated and segment-specific financial performance for Q1 2024 compared to Q1 2023, detailing revenue drivers, expense changes, and profitability Consolidated Results Consolidated net income increased 8.0% to $126.2 million on a 7.1% revenue increase to $7.9 billion in Q1 2024. Resilient businesses grew 8%, while transactional businesses saw a 1% increase. Cost of revenue increased due to higher pass-through costs and compensation, while operating, administrative, and other expenses decreased due to lower restructuring charges. Equity loss was recorded due to a non-recurring development asset disposition gain in Q1 2023 and unrealized losses on an equity investment Consolidated Financial Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | YoY Change (%) | | :---------------------------------------- | :----------- | :----------- | :------------- | | Revenue | 7,935 | 7,411 | 7.1 | | Net income attributable to CBRE Group, Inc. | 126.2 | 116.9 | 8.0 | | Cost of revenue | 6,475 | 6,006 | 7.8 | | Operating, administrative and other | 1,111 | 1,209 | (8.1) | | Equity (loss) income from unconsolidated subsidiaries | (58) | 142 | N/A | | Interest expense, net | 36 | 28 | 28.3 | - Revenue from resilient businesses increased 8%, while transactional businesses saw a 1% increase[89] - Operating, administrative and other expenses decreased primarily due to lower restructuring charges ($29.3 million in Q1 2024 vs $139.0 million in Q1 2023)[119] - Equity loss was mainly due to an unusually large development asset disposition in Q1 2023 that did not recur, and higher unrealized loss related to the non-core strategic equity investment in Altus Power, Inc[120] Segment Operations The company operates through three global business segments: Advisory Services, Global Workplace Solutions, and Real Estate Investments, along with a Corporate and Other segment. Each segment showed varied performance in Q1 2024 Advisory Services Advisory Services revenue increased 2.7% in Q1 2024, driven by a 4% rise in global leasing (especially APAC and U.S. office leasing) and strong property management growth. However, property sales revenue declined 11.2% due to high interest rates. Operating income increased significantly to $190 million from $126 million Advisory Services Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | YoY Change (%) | | :------------------------------------ | :----------- | :----------- | :------------- | | Total segment revenue | 1,904 | 1,854 | 2.7 | | Operating income | 190 | 126 | 50.8 | | Global leasing revenue growth | N/A | N/A | 4 | | Property sales revenue growth | N/A | N/A | (11.2) | | Cost of revenue (% of total revenue) | 60.3% | 60.8% | (0.5 pp) | - Global office leasing growth improved compared with Q1 2023, with APAC growing 9% and U.S. leasing up 5%[99] Global Workplace Solutions Global Workplace Solutions revenue increased 8.8% in Q1 2024, primarily from a double-digit increase in facilities management, despite slower growth in project management. Operating income rose to $162 million from $109 million Global Workplace Solutions Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | YoY Change (%) | | :------------------------------------ | :----------- | :----------- | :------------- | | Total segment revenue | 5,809 | 5,338 | 8.8 | | Operating income | 162 | 109 | 48.6 | | Cost of revenue (% of total revenue) | 90.8% | 90.7% | 0.1 pp | - Revenue increase reflected a double-digit increase in facilities management, led by the Local business[102] Real Estate Investments Real Estate Investments revenue increased 1.9% in Q1 2024, driven by slightly higher development and construction fees and incentive fees. However, the segment recorded an equity loss of $10.6 million, a significant decline from Q1 2023's equity income of $166.7 million, which included a large development asset sale gain. Operating income improved to $6 million from a loss of $71 million Real Estate Investments Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | YoY Change (%) | | :------------------------------------ | :----------- | :----------- | :------------- | | Total segment revenue | 228 | 223 | 1.9 | | Operating income (loss) | 6 | (71) | N/A | | Equity (loss) income from unconsolidated subsidiaries | (10.6) | 166.7 | N/A | | Cost of revenue (% of total revenue) | 18.8% | 17.2% | 1.6 pp | - The equity loss from unconsolidated subsidiaries in Q1 2024 contrasts with a large gain on a development portfolio asset sale in Q1 2023[135] Corporate and Other The Corporate and Other segment reported an increased operating loss of $175 million in Q1 2024, up from $124 million in Q1 2023. This was primarily due to a higher equity loss of $70.7 million (reflecting lower value of Altus Power, Inc. investment) and increased operating, administrative, and other expenses related to employee separation and strategic projects Corporate and Other Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------------------------------ | :----------- | :----------- | | Segment operating loss | (175) | (124) | | Equity loss from unconsolidated subsidiaries | (70.7) | (26.3) | | Operating, administrative and other expenses | 128.4 | 111 | - The increased equity loss reflects the lower value of the investment in publicly traded Altus Power, Inc[166] Liquidity and Capital Resources The company maintains strong liquidity with $2.8 billion available under revolving credit facilities and $1.0 billion in cash as of March 31, 2024. It relies on internally generated cash flow and credit facilities for working capital and investments. Long-term liquidity needs include debt repayment and acquisition obligations. The company issued $500 million in senior notes in Q1 2024 and repurchased $13.7 million of stock in April 2024 - As of March 31, 2024, the company had $2.8 billion of borrowings available under its revolving credit facilities and $1.0 billion of cash and cash equivalents[142] - Expected capital expenditures for 2024 are up to $331.4 million[142] - Issued $500 million in 5.500% senior notes in February 2024, generating net proceeds of $494.9 million[143] - Repurchased $13.7 million of Class A common stock in April 2024, with $1.5 billion capacity remaining under the 2021 program[145] Historical Cash Flows Net cash used in operating activities decreased to $491.9 million in Q1 2024 from $744.8 million in Q1 2023, driven by improved working capital and higher non-cash charges. Net cash used in investing activities increased significantly to $899.7 million due to the J&J acquisition. Net cash provided by financing activities increased to $1.2 billion due to new debt issuance and no share repurchases in Q1 Historical Cash Flows (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :------------------------------------ | :----------- | :----------- | | Net cash used in operating activities | (491.9) | (744.8) | | Net cash used in investing activities | (899.7) | (115) | | Net cash provided by financing activities | 1,192 | 761 | Indebtedness The company's long-term debt includes senior term loans and various senior notes (5.950%, 5.500%, 4.875%, 2.500%). In Q1 2024, $500 million in 5.500% senior notes were issued. The company also utilizes a $3.5 billion revolving credit facility and a £120 million Turner & Townsend facility, with $820 million and no amount outstanding respectively as of March 31, 2024 - Issued $500 million in 5.500% senior notes due April 1, 2029, on February 23, 2024[185] - As of March 31, 2024, $820 million was outstanding under the $3.5 billion Revolving Credit Agreement[181][189] - The Turner & Townsend £120 million revolving credit facility had no amount outstanding as of March 31, 2024[190] Off-Balance Sheet Arrangements The company does not have off-balance sheet arrangements that are expected to have a material current or future impact on its financial condition, liquidity, or results of operations - No off-balance sheet arrangements are expected to have a material current or future impact on financial condition, liquidity, or results of operations[192] Critical Accounting Policies and Estimates The company's critical accounting policies and estimates, including revenue recognition, business combinations, goodwill, income taxes, contingencies, and investments in unconsolidated subsidiaries, remain unchanged from the 2023 Annual Report - There have been no material changes to critical accounting policies and estimates as of March 31, 2024[193] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk primarily stems from foreign currency exchange rate fluctuations and changes in interest rates on debt obligations. These risks are managed through debt funding strategies and derivative financial instruments International Operations The company is exposed to foreign currency exchange rate fluctuations due to significant international operations, with 44.3% of Q1 2024 revenue transacted in foreign currencies. A hypothetical 10% adverse change in the U.S. dollar against the British pound sterling or euro would impact pre-tax income by $2.0 million and $1.7 million, respectively - Approximately 44.3% of Q1 2024 revenue was transacted in foreign currencies[382] Hypothetical Impact of 10% Adverse USD Change on Pre-Tax Income (Q1 2024) | Currency | Impact on Pre-Tax Income ($M) | | :------------------- | :---------------------------- | | British pound sterling | 2.0 | | Euro | 1.7 | Interest Rates The company manages interest rate risk using a combination of fixed and variable rate debt. A hypothetical 100 basis point increase in interest rates on variable rate debt would decrease pre-tax income by $3.9 million and increase cash used in operating activities by $3.9 million for Q1 2024 - A hypothetical 100 basis point increase in interest rates on outstanding variable rate debt would decrease pre-tax income by $3.9 million and increase cash used in operating activities by $3.9 million for Q1 2024[366] PART II – OTHER INFORMATION This section provides additional non-financial disclosures, including legal proceedings, risk factors, equity sales, and executive trading plans, supplementing the financial information Item 1. Legal Proceedings There have been no material changes to the company's legal proceedings as previously disclosed in its 2023 Annual Report - No material changes to legal proceedings since the 2023 Annual Report[372] Item 1A. Risk Factors There have been no material changes to the company's risk factors as previously disclosed in its 2023 Annual Report. The business remains susceptible to macroeconomic conditions, interest rate volatility, and geopolitical events - No material changes to risk factors since the 2023 Annual Report[380] - The business could suffer from rapid changes in interest rates, reduced access to debt capital, macroeconomic downturns, regulatory uncertainty, or unanticipated disruptions like public health crises and geopolitical events[381] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 287 shares of Class A common stock to a non-employee director in lieu of cash payments in Q1 2024, under an exemption from registration - Issued 287 shares of Class A common stock to a non-employee director on February 26, 2024, in lieu of $25,847 of prorated director fees[373] Item 5. Other Information The Chief Operating Officer and CEO of Real Estate Investments entered into Rule 10b5-1 Trading Plans in February 2024 to sell Class A common stock - Chief Operating Officer, Vikram Kohli, and CEO, Real Estate Investments, Daniel Queenan, entered into Rule 10b5-1 Trading Plans in February 2024[374] Rule 10b5-1 Trading Plans Details | Name | Plan Adoption Date | Trading Commencement Date | Maximum Shares | Plan Expiration Date | | :----------------- | :----------------- | :------------------------ | :------------- | :------------------- | | Vikramaditya Kohli | Feb 26, 2024 | Aug 12, 2024 | Up to 2,123 | Nov 29, 2024 | | Daniel Queenan | Feb 27, 2024 | Jun 3, 2024 | Up to 50,000 | Jun 13, 2025 | Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents, indentures for senior notes, equity incentive plan agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, By-Laws, Ninth Supplemental Indenture for 5.500% Senior Notes due 2029, and various equity incentive plan agreements[388] - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. §1350 are also filed[388] Signatures The report is signed by the Chief Financial Officer and Chief Accounting Officer on May 3, 2024, certifying its accuracy - The report was signed by Emma E. Giamartino (Chief Financial Officer) and Lindsey S. Caplan (Chief Accounting Officer) on May 3, 2024[391][392]