UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

orOR


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

For the ~~Transition Period~~transition period from _______________ to _______________

Commission File Number

001-32205

CBRE GROUP, INC.

(Exact name of registrant as specified in its charter)


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

2100 McKinney Avenue, Suite 1250,
Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)
	~~(214) 979-6100~~
	~~(Registrant’s telephone number, including area code)~~

~~_____________________________________________________________________________________~~

(214) 979-6100

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

The number of shares of Class A common stock outstanding at ~~October~~April 24, ~~2022~~2023 was ~~315,948,538.~~310,832,322.

Table of contents

FORM 10-Q

~~September 30, 2022~~March 31, 2023

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	1

	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	2

	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	3

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	4

	Consolidated Statements of Equity for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022	6

	Notes to Consolidated Financial Statements	87

Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations	3027

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5847

Item 4.	Controls and Procedures	5948

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	6049

Item 1A.	Risk Factors	6049

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6049

Item 6.	Exhibits	6150

Signatures		6251

Table of contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share data)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,125,011	$	2,430,951	Cash and cash equivalents	$	1,231,325	$	1,318,290
Restricted cash	Restricted cash	98,040		108,830		Restricted cash	88,464		86,559
Receivables, less allowance for doubtful accounts of $96,298 and $97,588 at September 30, 2022 and December 31, 2021, respectively		4,936,146		5,150,473
Receivables, less allowance for doubtful accounts of $92,086 and $92,354 at March 31, 2023 and December 31, 2022, respectively						Receivables, less allowance for doubtful accounts of $92,086 and $92,354 at March 31, 2023 and December 31, 2022, respectively	5,468,926		5,326,807
Warehouse receivables	Warehouse receivables	1,190,964		1,303,717		Warehouse receivables	792,294		455,354
Contract assets						Contract assets	384,010		391,626
Prepaid expenses	Prepaid expenses	312,374		333,885		Prepaid expenses	329,361		311,508
Contract assets		373,484		338,749
Income taxes receivable	Income taxes receivable	19,559		44,104		Income taxes receivable	140,922		81,528
Other current assets	Other current assets	534,379		371,656		Other current assets	611,098		557,009
Total Current Assets	Total Current Assets	8,589,957		10,082,365		Total Current Assets	9,046,400		8,528,681
Property and equipment, net of accumulated depreciation and amortization of $1,308,977 and $1,288,509 at September 30, 2022 and December 31, 2021, respectively		768,445		816,092
Property and equipment, net of accumulated depreciation and amortization of $1,458,857 and $1,386,261 at March 31, 2023 and December 31, 2022, respectively						Property and equipment, net of accumulated depreciation and amortization of $1,458,857 and $1,386,261 at March 31, 2023 and December 31, 2022, respectively	833,269		836,041
Goodwill	Goodwill	4,660,638		4,995,175		Goodwill	4,933,818		4,868,382
Other intangible assets, net of accumulated amortization of $1,819,575 and $1,725,280 at September 30, 2022 and December 31, 2021, respectively		2,146,468		2,409,427
Other intangible assets, net of accumulated amortization of $1,983,009 and $1,915,725 at March 31, 2023 and December 31, 2022, respectively						Other intangible assets, net of accumulated amortization of $1,983,009 and $1,915,725 at March 31, 2023 and December 31, 2022, respectively	2,152,939		2,192,706
Operating lease assets	Operating lease assets	992,831		1,046,377		Operating lease assets	980,741		1,033,011
Investments in unconsolidated subsidiaries (with $870,604 and $813,031 at fair value at September 30, 2022 and December 31, 2021, respectively)		1,461,287		1,196,088
Investments in unconsolidated subsidiaries (with $950,985 and $973,635 at fair value at March 31, 2023 and December 31, 2022, respectively)						Investments in unconsolidated subsidiaries (with $950,985 and $973,635 at fair value at March 31, 2023 and December 31, 2022, respectively)	1,295,088		1,317,705
Non-current contract assets	Non-current contract assets	131,341		135,626		Non-current contract assets	138,690		137,480
Real estate under development	Real estate under development	237,611		326,416		Real estate under development	180,290		172,253
Non-current income taxes receivable	Non-current income taxes receivable	46,001		33,150		Non-current income taxes receivable	59,471		51,910
Deferred tax assets, net	Deferred tax assets, net	155,945		157,032		Deferred tax assets, net	274,843		265,554
Other assets, net	Other assets, net	1,024,806		875,743		Other assets, net	1,134,548		1,109,666
Total Assets	Total Assets	$	20,215,330	$	22,073,491	Total Assets	$	21,030,097	$	20,513,389
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	2,720,466	$	2,916,331	Accounts payable and accrued expenses	$	3,008,485	$	3,078,781
Compensation and employee benefits payable	Compensation and employee benefits payable	1,403,934		1,539,291		Compensation and employee benefits payable	1,410,582		1,459,001
Accrued bonus and profit sharing	Accrued bonus and profit sharing	1,297,105		1,694,590		Accrued bonus and profit sharing	932,619		1,691,118
Operating lease liabilities						Operating lease liabilities	232,369		229,591
Contract liabilities	Contract liabilities	314,299		280,659		Contract liabilities	262,189		276,334
Operating lease liabilities		196,521		232,423
Income taxes payable	Income taxes payable	119,930		246,035		Income taxes payable	192,754		184,453
Short-term borrowings:	Short-term borrowings:					Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	1,176,514		1,277,451		Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	782,637		447,840
Revolving credit facility	Revolving credit facility	283,000		—		Revolving credit facility	1,209,000		178,000
Other short-term borrowings	Other short-term borrowings	38,411		32,668		Other short-term borrowings	17,153		42,914
Total short-term borrowings	Total short-term borrowings	1,497,925		1,310,119		Total short-term borrowings	2,008,790		668,754

Current maturities of long-term debt						Current maturities of long-term debt	433,433		427,792
Other current liabilities	Other current liabilities	205,473		199,421		Other current liabilities	236,241		226,170
Total Current Liabilities	Total Current Liabilities	7,755,653		8,418,869		Total Current Liabilities	8,717,462		8,241,994
Long-term debt, net of current maturities	Long-term debt, net of current maturities	1,476,929		1,538,123		Long-term debt, net of current maturities	1,086,268		1,085,712
Non-current operating lease liabilities	Non-current operating lease liabilities	1,065,815		1,116,562		Non-current operating lease liabilities	1,052,823		1,080,385
Non-current income taxes payable						Non-current income taxes payable	54,761		54,761
Non-current tax liabilities	Non-current tax liabilities	134,188		144,884		Non-current tax liabilities	154,943		148,806
Non-current income taxes payable		54,761		54,761
Deferred tax liabilities, net	Deferred tax liabilities, net	284,123		405,258		Deferred tax liabilities, net	276,681		282,073
Other liabilities	Other liabilities	804,217		1,035,917		Other liabilities	1,044,749		1,013,926
Total Liabilities	Total Liabilities	11,575,686		12,714,374		Total Liabilities	12,387,687		11,907,657
Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies	—		—
Equity:	Equity:					Equity:
CBRE Group, Inc. Stockholders’ Equity:	CBRE Group, Inc. Stockholders’ Equity:					CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 317,055,298 and 332,875,959 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		3,171		3,329
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 310,786,159 and 311,014,160 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Class A common stock; $0.01 par value; 525,000,000 shares authorized; 310,786,159 and 311,014,160 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	3,108		3,110
Additional paid-in capital	Additional paid-in capital	—		798,892		Additional paid-in capital	—		—
Accumulated earnings	Accumulated earnings	9,155,739		8,366,631		Accumulated earnings	8,809,824		8,832,943
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,223,083)		(640,659)		Accumulated other comprehensive loss	(953,098)		(982,780)
Total CBRE Group, Inc. Stockholders’ Equity	Total CBRE Group, Inc. Stockholders’ Equity	7,935,827		8,528,193		Total CBRE Group, Inc. Stockholders’ Equity	7,859,834		7,853,273
Non-controlling interests	Non-controlling interests	703,817		830,924		Non-controlling interests	782,576		752,459
Total Equity	Total Equity	8,639,644		9,359,117		Total Equity	8,642,410		8,605,732
Total Liabilities and Equity	Total Liabilities and Equity	$	20,215,330	$	22,073,491	Total Liabilities and Equity	$	21,030,097	$	20,513,389

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

Table of contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue	Revenue	$	7,529,546	$	6,798,327	$	22,633,757	$	19,195,819	Revenue	$	7,411,114	$	7,332,933
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenue	Cost of revenue	5,934,490		5,258,947		17,740,668		14,995,252		Cost of revenue	6,006,413		5,752,194
Operating, administrative and other	Operating, administrative and other	1,080,316		1,025,681		3,335,131		2,811,224		Operating, administrative and other	1,208,904		1,065,996
Depreciation and amortization	Depreciation and amortization	142,136		122,564		453,527		363,727		Depreciation and amortization	161,491		149,032
Asset impairments	Asset impairments	—		—		36,756		—		Asset impairments	—		10,351
Total costs and expenses	Total costs and expenses	7,156,942		6,407,192		21,566,082		18,170,203		Total costs and expenses	7,376,808		6,977,573
Gain on disposition of real estate	Gain on disposition of real estate	1,746		18,530		200,564		19,615		Gain on disposition of real estate	3,059		21,592
Operating income	Operating income	374,350		409,665		1,268,239		1,045,231		Operating income	37,365		376,952
Equity income from unconsolidated subsidiaries	Equity income from unconsolidated subsidiaries	233,972		163,809		396,011		459,535		Equity income from unconsolidated subsidiaries	141,682		42,871
Other income (loss)	Other income (loss)	7,844		7,693		(13,529)		22,470		Other income (loss)	2,475		(14,464)
Interest expense, net of interest income	Interest expense, net of interest income	19,957		11,038		51,301		34,916		Interest expense, net of interest income	28,414		12,826
Write-off of financing costs on extinguished debt		1,862		—		1,862		—
Income before provision for income taxes		594,347		570,129		1,597,558		1,492,320
Provision for income taxes		142,667		133,507		259,691		343,279

Income before provision for (benefit from) income taxes										Income before provision for (benefit from) income taxes	153,108		392,533
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	28,036		(3,738)
Net income	Net income	451,680		436,622		1,337,867		1,149,041		Net income	125,072		396,271
Less: Net income attributable to non-controlling interests	Less: Net income attributable to non-controlling interests	5,041		879		11,609		4,459		Less: Net income attributable to non-controlling interests	8,180		3,974
Net income attributable to CBRE Group, Inc.	Net income attributable to CBRE Group, Inc.	$	446,639	$	435,743	$	1,326,258	$	1,144,582	Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297
Basic income per share:	Basic income per share:									Basic income per share:
Net income per share attributable to CBRE Group, Inc.	Net income per share attributable to CBRE Group, Inc.	$	1.40	$	1.30	$	4.07	$	3.41	Net income per share attributable to CBRE Group, Inc.	$	0.38	$	1.18
Weighted average shares outstanding for basic income per share	Weighted average shares outstanding for basic income per share	319,827,769		335,364,942		325,705,500		335,621,337		Weighted average shares outstanding for basic income per share	310,464,609		331,925,104
Diluted income per share:	Diluted income per share:									Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	Net income per share attributable to CBRE Group, Inc.	$	1.38	$	1.28	$	4.01	$	3.37	Net income per share attributable to CBRE Group, Inc.	$	0.37	$	1.16
Weighted average shares outstanding for diluted income per share	Weighted average shares outstanding for diluted income per share	324,742,584		340,337,159		330,558,314		339,805,292		Weighted average shares outstanding for diluted income per share	315,358,147		337,140,325

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

Table of contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net income	Net income	$	451,680	$	436,622	$	1,337,867	$	1,149,041	Net income	$	125,072	$	396,271
Other comprehensive loss:
Foreign currency translation loss		(329,794)		(90,244)		(714,973)		(124,188)
Other comprehensive income (loss):										Other comprehensive income (loss):
Foreign currency translation gain (loss)										Foreign currency translation gain (loss)	37,734		(81,285)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	113		110		328		324		Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	110		108
Unrealized holding (losses) gains on available for sale debt securities, net of tax		(1,313)		215		(5,160)		(971)
Unrealized holding losses on available for sale debt securities, net of tax										Unrealized holding losses on available for sale debt securities, net of tax	(70)		(1,731)
Other, net of tax	Other, net of tax	127		105		127		105		Other, net of tax	5,558		100
Total other comprehensive loss		(330,867)		(89,814)		(719,678)		(124,730)
Total other comprehensive income (loss)										Total other comprehensive income (loss)	43,332		(82,808)
Comprehensive income	Comprehensive income	120,813		346,808		618,189		1,024,311		Comprehensive income	168,404		313,463
Less: Comprehensive (loss) income attributable to non-controlling interests		(54,312)		677		(125,645)		4,179
Less: Comprehensive income (loss) attributable to non-controlling interests										Less: Comprehensive income (loss) attributable to non-controlling interests	21,830		(18,053)
Comprehensive income attributable to CBRE Group, Inc.	Comprehensive income attributable to CBRE Group, Inc.	$	175,125	$	346,131	$	743,834	$	1,020,132	Comprehensive income attributable to CBRE Group, Inc.	$	146,574	$	331,516

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	1,337,867	$	1,149,041	Net income	$	125,072	$	396,271
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:						Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	453,527		363,727		Depreciation and amortization	161,491		149,032
Amortization of financing costs	Amortization of financing costs	6,537		5,080		Amortization of financing costs	1,161		1,663
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(132,938)		(198,131)		Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(23,481)		(28,422)
Asset impairments	Asset impairments	36,756		—		Asset impairments	—		10,351
Net realized and unrealized losses (gains), primarily from investments		29,046		(26,898)
Net realized and unrealized losses, primarily from investments						Net realized and unrealized losses, primarily from investments	319		16,690
Provision for doubtful accounts	Provision for doubtful accounts	11,501		24,489		Provision for doubtful accounts	3,969		3,303
Net compensation expense for equity awards	Net compensation expense for equity awards	123,812		133,308		Net compensation expense for equity awards	18,113		36,863
Equity income from unconsolidated subsidiaries	Equity income from unconsolidated subsidiaries	(396,011)		(459,535)		Equity income from unconsolidated subsidiaries	(141,682)		(42,871)
Distribution of earnings from unconsolidated subsidiaries	Distribution of earnings from unconsolidated subsidiaries	369,511		382,831		Distribution of earnings from unconsolidated subsidiaries	177,710		146,743
Proceeds from sale of mortgage loans	Proceeds from sale of mortgage loans	10,696,971		12,767,544		Proceeds from sale of mortgage loans	2,166,609		3,336,084
Origination of mortgage loans	Origination of mortgage loans	(10,559,591)		(12,712,118)		Origination of mortgage loans	(2,494,589)		(3,221,312)
Decrease in warehouse lines of credit		(100,937)		(192)
Increase (decrease) in warehouse lines of credit						Increase (decrease) in warehouse lines of credit	334,797		(105,326)
Tenant concessions received	Tenant concessions received	9,140		18,645		Tenant concessions received	528		2,114
Purchase of equity securities	Purchase of equity securities	(15,779)		(5,281)		Purchase of equity securities	(2,137)		(8,902)
Proceeds from sale of equity securities	Proceeds from sale of equity securities	27,387		6,856		Proceeds from sale of equity securities	2,120		20,750
Decrease (increase) in real estate under development		59,116		(123,580)
Increase in real estate under development						Increase in real estate under development	(5,943)		(41,358)
Increase in receivables, prepaid expenses and other assets (including contract and lease assets)	Increase in receivables, prepaid expenses and other assets (including contract and lease assets)	(375,359)		(255,161)		Increase in receivables, prepaid expenses and other assets (including contract and lease assets)	(73,437)		(156,061)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	(132,424)		(107,756)		Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	(73,960)		(108,355)
(Decrease) increase in compensation and employee benefits payable and accrued bonus and profit sharing		(375,180)		176,413
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing						Decrease in compensation and employee benefits payable and accrued bonus and profit sharing	(843,509)		(725,216)
(Increase) decrease in net income taxes receivable/payable	(Increase) decrease in net income taxes receivable/payable	(129,514)		42,100		(Increase) decrease in net income taxes receivable/payable	(56,713)		17,722
Other operating activities, net	Other operating activities, net	(128,629)		18,739		Other operating activities, net	(21,195)		(93,270)
Net cash provided by operating activities		814,809		1,200,121
Net cash used in operating activities						Net cash used in operating activities	(744,757)		(393,507)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(160,996)		(121,409)		Capital expenditures	(60,284)		(42,056)
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	(60,131)		(71,373)		Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	(44,653)		(16,792)
Contributions to unconsolidated subsidiaries	Contributions to unconsolidated subsidiaries	(322,127)		(400,967)		Contributions to unconsolidated subsidiaries	(28,998)		(44,387)
Distributions from unconsolidated subsidiaries	Distributions from unconsolidated subsidiaries	46,720		63,776		Distributions from unconsolidated subsidiaries	14,794		12,101
Investment in VTS		(100,432)		—

Other investing activities, net	Other investing activities, net	(6,783)		(25,433)		Other investing activities, net	4,074		(4,487)
Net cash used in investing activities	Net cash used in investing activities	(603,749)		(555,406)		Net cash used in investing activities	(115,067)		(95,621)

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving credit facility		283,000		—

Proceeds from revolving credit facility						Proceeds from revolving credit facility	1,660,000		210,000
Repayment of revolving credit facility						Repayment of revolving credit facility	(629,000)		—
Proceeds from notes payable on real estate	Proceeds from notes payable on real estate	25,904		71,157		Proceeds from notes payable on real estate	48		19,368
Repayment of notes payable on real estate	Repayment of notes payable on real estate	(22,514)		(13,944)		Repayment of notes payable on real estate	—		(13,954)
Proceeds from issuance of 2.500% senior notes		—		492,255

Repurchase of common stock	Repurchase of common stock	(1,404,394)		(188,285)		Repurchase of common stock	(129,808)		(367,863)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(31,525)		(3,421)		Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(60,034)		(13,556)
Units repurchased for payment of taxes on equity awards	Units repurchased for payment of taxes on equity awards	(35,162)		(36,747)		Units repurchased for payment of taxes on equity awards	(46,161)		(31,395)
Non-controlling interest contributions	Non-controlling interest contributions	1,293		652		Non-controlling interest contributions	567		210
Non-controlling interest distributions	Non-controlling interest distributions	(740)		(4,026)		Non-controlling interest distributions	(101)		(213)
Other financing activities, net	Other financing activities, net	(28,583)		(42,767)		Other financing activities, net	(34,474)		(11,606)
Net cash (used in) provided by financing activities		(1,212,721)		274,874
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	761,037		(209,009)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	(315,069)		(82,714)		Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	13,727		(49,015)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(1,316,730)		836,875
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH						NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(85,060)		(747,152)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	2,539,781		2,039,247		CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	1,404,849		2,539,781
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,223,051	$	2,876,122	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,319,789	$	1,792,629
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	68,878	$	29,131	Interest	$	39,379	$	12,826
Income tax payments, net	Income tax payments, net	$	507,557	$	220,955	Income tax payments, net	$	82,059	$	88,649

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

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CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in thousands)


		CBRE Group, Inc. Stockholders’													CBRE Group, Inc. Stockholders’
		Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total			Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at June 30, 2022		$	3,221	$	—	$	9,084,358	$	(951,569)	$	758,974	$	8,894,984
Balance at December 31, 2022														Balance at December 31, 2022	$	3,110	$	—	$	8,832,943	$	(982,780)	$	752,459	$	8,605,732
Net income	Net income	—		—		446,639		—		5,041		451,680		Net income	—		—		116,892		—		8,180		125,072
Net compensation expense for equity awards	Net compensation expense for equity awards	—		41,490		—		—		—		41,490		Net compensation expense for equity awards	—		18,113		—		—		—		18,113
Units repurchased for payment of taxes on equity awards	Units repurchased for payment of taxes on equity awards	—		(321)		—		—		—		(321)		Units repurchased for payment of taxes on equity awards	—		(12,566)		(33,595)		—		—		(46,161)
Repurchase of common stock	Repurchase of common stock	(51)		(32,829)		(375,431)		—		—		(408,311)		Repurchase of common stock	(14)		—		(114,235)		—		—		(114,249)
Foreign currency translation loss		—		—		—		(270,441)		(59,353)		(329,794)
Foreign currency translation gain														Foreign currency translation gain	—		—		—		24,084		13,650		37,734
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		113		—		113		Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		110		—		110
Unrealized holding losses on available for sale debt securities, net of tax	Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(1,313)		—		(1,313)		Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(70)		—		(70)
Contributions from non-controlling interests	Contributions from non-controlling interests	—		—		—		—		580		580		Contributions from non-controlling interests	—		—		—		—		567		567
Distributions to non-controlling interests	Distributions to non-controlling interests	—		—		—		—		(370)		(370)		Distributions to non-controlling interests	—		—		—		—		(101)		(101)
Other	Other	1		(8,340)		173		127		(1,055)		(9,094)		Other	12		(5,547)		7,819		5,558		7,821		15,663
Balance at September 30, 2022		$	3,171	$	—	$	9,155,739	$	(1,223,083)	$	703,817	$	8,639,644
Balance at March 31, 2023														Balance at March 31, 2023	$	3,108	$	—	$	8,809,824	$	(953,098)	$	782,576	$	8,642,410


		CBRE Group, Inc. Stockholders’													CBRE Group, Inc. Stockholders’
		Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total			Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at June 30, 2021		$	3,357	$	1,001,832	$	7,238,896	$	(564,564)	$	41,155	$	7,720,676
Balance at December 31, 2021														Balance at December 31, 2021	$	3,329	$	798,892	$	8,366,631	$	(640,659)	$	830,924	$	9,359,117
Net income	Net income	—		—		435,743		—		879		436,622		Net income	—		—		392,297		—		3,974		396,271
Net compensation expense for equity awards	Net compensation expense for equity awards	—		48,075		—		—		—		48,075		Net compensation expense for equity awards	—		36,863		—		—		—		36,863
Units repurchased for payment of taxes on equity awards	Units repurchased for payment of taxes on equity awards	—		(472)		—		—		—		(472)		Units repurchased for payment of taxes on equity awards	—		(31,395)		—		—		—		(31,395)
Repurchase of common stock	Repurchase of common stock	(11)		(99,999)		—		—		—		(100,010)		Repurchase of common stock	(42)		(390,821)		—		—		—		(390,863)
Foreign currency translation loss	Foreign currency translation loss	—		—		—		(90,042)		(202)		(90,244)		Foreign currency translation loss	—		—		—		(59,258)		(22,027)		(81,285)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		110		—		110		Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		108		—		108
Unrealized holding gains on available for sale debt securities, net of tax		—		—		—		215		—		215
Unrealized holding losses on available for sale debt securities, net of tax														Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(1,731)		—		(1,731)
Contributions from non-controlling interests	Contributions from non-controlling interests	—		—		—		—		125		125		Contributions from non-controlling interests	—		—		—		—		210		210
Distributions to non-controlling interests	Distributions to non-controlling interests	—		—		—		—		(649)		(649)		Distributions to non-controlling interests	—		—		—		—		(213)		(213)
Other	Other	—		(10,652)		—		105		(5,741)		(16,288)		Other	9		(4,352)		—		100		(14)		(4,257)
Balance at September 30, 2021		$	3,346	$	938,784	$	7,674,639	$	(654,176)	$	35,567	$	7,998,160
Balance at March 31, 2022														Balance at March 31, 2022	$	3,296	$	409,187	$	8,758,928	$	(701,440)	$	812,854	$	9,282,825

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

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~~CBRE GROUP, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY (Continued)~~

~~(Unaudited)~~

~~(Dollars in thousands)~~

CBRE Group, Inc. Stockholders’
Class A
common
stock Additional
paid-in
capital Accumulated
earnings Accumulated
other
comprehensive loss Non-
controlling
interests Total
Balance at December 31, 2021 $ 3,329 $ 798,892 $ 8,366,631 $ (640,659) $ 830,924 $ 9,359,117
Net income — — 1,326,258 — 11,609 1,337,867
Net compensation expense for equity awards — 123,812 — — — 123,812
Units repurchased for payment of taxes on equity awards — (35,162) — — — (35,162)
Repurchase of common stock (168) (872,992) (537,323) — — (1,410,483)
Foreign currency translation loss — — — (577,719) (137,254) (714,973)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax — — — 328 — 328
Unrealized holding losses on available for sale debt securities, net of tax — — — (5,160) — (5,160)
Contributions from non-controlling interests — — — — 1,293 1,293
Distributions to non-controlling interests — — — — (740) (740)
Other 10 (14,550) 173 127 (2,015) (16,255)
Balance at September 30, 2022 $ 3,171 $ — $ 9,155,739 $ (1,223,083) $ 703,817 $ 8,639,644

CBRE Group, Inc. Stockholders’
Class A
common
stock Additional
paid-in
capital Accumulated
earnings Accumulated
other
comprehensive loss Non-
controlling
interests Total
Balance at December 31, 2020 $ 3,356 $ 1,074,639 $ 6,530,057 $ (529,726) $ 41,761 $ 7,120,087
Net income — — 1,144,582 — 4,459 1,149,041
Net compensation expense for equity awards — 133,308 — — — 133,308
Units repurchased for payment of taxes on equity awards — (36,747) — — — (36,747)
Repurchase of common stock (22) (188,263) — — — (188,285)
Foreign currency translation loss — — — (123,908) (280) (124,188)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax — — — 324 — 324
Unrealized holding losses on available for sale debt securities, net of tax — — — (971) — (971)
Contributions from non-controlling interests — — — — 652 652
Distributions to non-controlling interests — — — — (4,026) (4,026)
Other 12 (44,153) — 105 (6,999) (51,035)
Balance at September 30, 2021 $ 3,346 $ 938,784 $ 7,674,639 $ (654,176) $ 35,567 $ 7,998,160

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

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Readers of this Quarterly Report on Form 10-Q (Quarterly Report) should refer to the audited financial statements and notes to consolidated financial statements of CBRE Group, Inc., a Delaware corporation (which may be referred to in these financial statements as “the company,” “we,” “us” and “our”), for the year ended December 31, ~~2021,~~2022, which are included in our ~~2021~~2022 Annual Report on Form 10-K ~~(2021~~(2022 Annual Report), filed with the United States Securities and Exchange Commission (SEC) and also available on our website (www.cbre.com), since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 2, Significant Accounting Policies, in the notes to consolidated financial statements in our ~~2021~~2022 Annual Report for further discussion of our significant accounting policies and estimates.

Considerations Related to ~~the Covid-19 Pandemic, the war in Ukraine and~~Tightening Monetary Policy

~~During~~The macroeconomic environment remains challenging as central banks continue to rapidly raise interest rates. The rising rate environment, coupled with certain bank failures in the first quarter of ~~2020, the emergence of the novel coronavirus (Covid-19) resulted in sharp contraction of economic and~~2023, has limited credit availability to all asset classes, including commercial real estate activity across much of the world. Commercial real estate markets recovered strongly beginning in 2021 and continuing into the second quarter of 2022. However, the pandemic has likely engendered structural changes to the utilization of many types of commercial real estate, which will have ongoing repercussions for our business. In addition, Russia’s invasion of Ukraine and the ongoing military conflict pose heightened risks for our operations in Europe, exacerbating supply chain disruptions, worsening inflation and raising the specter of energy shortages this winter. As a result of Russia’s invasion, we elected to exit most of our business in Russia, although we continue have a limited number of employees in the country, managing facilities for existing corporate clients under pre-existing global outsourcing contracts. In addition, the second half of 2022 has been marked by significant macroeconomic challenges as central banks around the world have sharply raised interest rates in efforts to rein in inflation, reducing credit availability.estate. Less available and more expensive debt capital has had pronounced effects on our capital markets (mortgage origination and property sales) businesses, making property acquisitions and dispositions harder to finance. Similar factors also impact the timing of and ~~ultimate~~ proceeds ~~realized for property~~generated from asset sales within our investment management and development ~~business.~~businesses and our ability to obtain debt capital to begin new development projects.

Financial Statement Preparation

The accompanying consolidated financial statements have been prepared in accordance with the rules applicable to quarterly reports on Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (U.S.), or General Accepted Accounting Principles (GAAP), for annual financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments, except as otherwise noted) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions about future events, ~~including the ongoing impacts of Covid-19, the war in Ukraine and~~such as weakening global macroeconomic conditions and stress in the banking system, including less available and more expensive debt capital. These estimates and the underlying assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Such estimates include the value of goodwill, intangibles and other long-lived assets, real estate assets, accounts receivable, contract assets, operating lease assets, investments in unconsolidated subsidiaries and assumptions used in the calculation of income taxes, retirement and other post-employment benefits, among others. These estimates and assumptions are based on our best judgment. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including consideration of the current economic environment, and adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In ~~March 2020 and January~~October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform: Scope,~~” respectively. Together, the ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective for a limited time for all entities through December 31, 2022. We have completed our evaluation of significant contracts and concluded these ASUs did not have a material impact on our consolidated financial statements and related disclosures.

~~Recent Accounting Pronouncements Pending Adoption~~

~~In October 2021, the FASB issued ASU~~ 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires that an acquirer entity in a business combination recognize and measure contract assets and liabilities acquired in a business combination at the acquisition date in accordance with Topic 606 as if the acquirer entity had originated the contracts. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those years. Early application of the amendments is permitted but should be applied to all acquisitions occurring in the annual period of adoption. The amendment should be applied prospectively to business combinations occurring on or after the effective date of the amendments. We ~~are evaluating the effect that~~adopted ASU 2021-08 ~~will~~in the first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related ~~disclosures, but do not expect it to have a material impact.~~disclosures.

In March 2022, the FASB issued ASU 2022-01,“Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method.” This ASU allows nonprepayable financial assets to be included in a closed portfolio hedged using the portfolio layer method. The expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. This guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We ~~are evaluating~~adopted ASU 2022-01 in the ~~effect that this guidance will~~first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related ~~disclosures, but do not expect it to have a material impact.~~disclosures.

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures.” This ASU eliminates the accounting guidance for Troubled Debt Restructuring by creditors in 310-40 and enhances disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, this ASU requires entities to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20. This guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We ~~are evaluating~~adopted ASU 2022-02 in the ~~effect that this guidance will~~first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related ~~disclosures, but do~~disclosures.

In September 2022, the FASB issued ASU 2022-04, “Supplier Finance Programs (Sub Topic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period including the key terms of the program and the following for obligations that the buyer has confirmed as valid to the provider: (1) the amount outstanding that remains unpaid by the buyer as of the end of the annual period, (2) a description of where those obligations are presented in the balance sheet, and (3) a rollforward of those obligations during the annual period, including the amount of obligations confirmed and the amount of obligations subsequently paid. Additionally, in each interim period, the buyer should disclose the amount of obligations outstanding that the buyer has confirmed as valid to the finance provider as of the end of the interim period. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We adopted ASU 2022-04 in the first quarter of 2023. The obligation outstanding under the applicable program was not ~~expect it to have a~~ material ~~impact.~~as of March 31, 2023.

Recent Accounting Pronouncements Pending Adoption

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” Topic 820, Fair Value Measurement, states that a reporting entity should consider the characteristics of the asset or liability when measuring the fair value, including restrictions on the sale of the asset or liability, if a market participant would take those characteristics into account and the key to that determination is the unit of account for the asset or liability being measured at fair value. Topic 820 contains conflicting guidance on what the unit of account is when measuring the fair value of an equity security and this has resulted in diversity in practice on whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the equity security’s fair value. To address this, the amendments in the ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU introduces new disclosure requirements to provide investors with information about the restriction including

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the nature and remaining duration of the restriction. This guidance is effective for fiscal years beginning after December 15, ~~2022,~~2023, and interim periods within those fiscal years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures, but do not expect it to have a material ~~impact~~.

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~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

impact.

In ~~September 2022,~~March 2023, the FASB issued ASU ~~2022-04, “~~2023-01, ~~Supplier Finance Programs (Sub Topic 405-50)~~“Leases (Topic 842): ~~Disclosure of Supplier Finance Program Obligations.~~Common Control Arrangements.”” This ~~ASU~~update requires ~~a buyer in a supplier finance program to disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period including~~that leasehold improvements associated with common control leases be amortized over the ~~key terms~~useful life of the ~~program~~leasehold improvements to the common control group (regardless of the lease term) and accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. This update also provides a practical expedient for private companies and not-for-profit entities to use written terms and conditions of a common control arrangement to determine if a lease exists and the ~~following~~classification and accounting for ~~obligations~~ that the buyer has confirmed as valid to the provider: (1) the amount outstanding that remains unpaid by the buyer as of the end of the annual period, (2) a description of where those obligations are presented in the balance sheet, and (3) a rollforward of those obligations during the annual period, including the amount of obligations confirmed and the amount of obligations subsequently paid. Additionally, in each interim period, the buyer should disclose the amount of obligations outstanding that the buyer has confirmed as valid to the finance provider as of the end of the interim period.lease. This guidance is effective for fiscal years beginning after December 15, ~~2022, including~~2023, and interim periods within those fiscal ~~years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted.~~years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related ~~disclosures.~~disclosures, but do not expect it to have a material impact.

3.In March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization method.”~~Turner & Townsend Acquisition~~

~~On November 1, 2021, we acquired a 60% ownership interest in,~~ This update permits an accounting election to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. This guidance is effective for fiscal years beginning after December 15, 2023, and entered into a strategic partnership with Turner & Townsend Holdings Limited (Turner & Townsend). Turner & Townsend is a leading professional services company specializing in program management, project management, cost and commercial management and advisory services acrossinterim periods within those fiscal years. We are evaluating the ~~real estate, infrastructure and natural resources sectors, and is reported in~~effect that this guidance will have on our ~~Global Workplace Solutions segment. The Turner & Townsend acquisition was funded with cash on hand. The preliminary purchase accounting has been recorded in the accompanying~~ consolidated financial statements ~~(with no changes made in 2022). The excess purchase price over the fair value of net assets acquired~~ and ~~non-controlling interest has been recorded~~related disclosures, but do not expect it to ~~goodwill. The goodwill arising from the Turner & Townsend acquisition consists largely of the synergies and opportunities to deliver~~have a premier project, program and cost management services. The goodwill recorded in connection with the Turner & Townsend acquisition was not deductible for tax purposes. The purchase price allocation for the business combination is preliminary, primarily for intangibles, and subject to change within the respective measurement period which will not extend beyond one year from the acquisition date.

material impact.

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~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

4.3. Warehouse Receivables & Warehouse Lines of Credit

Our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) is a Federal Home Loan Mortgage Corporation (Freddie Mac) approved Multifamily Program Plus Seller/Servicer and an approved Federal National Mortgage Association (Fannie Mae) Aggregation and Negotiated Transaction Seller/Servicer. In addition, CBRE Capital Markets’ wholly-owned subsidiary CBRE Multifamily Capital, Inc. (CBRE MCI) is an approved Fannie Mae Delegated Underwriting and Servicing (DUS) Seller/Servicer and CBRE Capital Markets’ wholly-owned subsidiary CBRE HMF, Inc. (CBRE HMF) is a U.S. Department of Housing and Urban Development (HUD) approved Non-Supervised Federal Housing Authority (FHA) Title II Mortgagee, an approved Multifamily Accelerated Processing (MAP) lender and an approved Government National Mortgage Association (Ginnie Mae) issuer of mortgage-backed securities (MBS). Under these arrangements, before loans are originated through proceeds from warehouse lines of credit, we obtain either a contractual loan purchase commitment from either Freddie Mac or Fannie Mae or a confirmed forward trade commitment for the issuance and purchase of a Fannie Mae or Ginnie Mae MBS that will be secured by the loans. The warehouse lines of credit are generally repaid within a one-month period when Freddie Mac or Fannie Mae buys the loans or upon settlement of the Fannie Mae or Ginnie Mae MBS, while we retain the servicing rights. Loans are funded at the prevailing market rates. We elect the fair value option for all warehouse receivables. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae mortgage-backed securities that will be secured by the underlying loans.

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


Beginning balance at December 31, ~~2021~~2022	$	~~1,303,717~~455,354
Origination of mortgage loans	~~10,559,591~~2,494,589
Gains (premiums on loan sales)	~~31,262~~6,807
Proceeds from sale of mortgage loans:
Sale of mortgage loans	~~(10,665,709)~~(2,159,802)
Cash collections of premiums on loan sales	~~(31,262)~~(6,807)
Proceeds from sale of mortgage loans	~~(10,696,971)~~(2,166,609)
Net ~~decrease~~increase in mortgage servicing rights included in warehouse receivables	~~(6,635)~~2,153
Ending balance at ~~September 30, 2022~~March 31, 2023	$	~~1,190,964~~792,294

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table is a summary of our warehouse lines of credit in place as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):


				September 30, 2022				December 31, 2021							March 31, 2023				December 31, 2022
Lender	Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value		Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	JP Morgan Chase Bank, N.A. (JP Morgan) (1)	12/16/2022	daily floating rate SOFR rate plus 1.60%, with a SOFR adjustment rate of 0.05%	$	1,335,000	$	922,817	$	1,335,000	$	742,124	JP Morgan Chase Bank, N.A. (JP Morgan) (1)	12/15/2023	daily floating rate SOFR rate plus 1.60%, with a SOFR adjustment rate of 0.05%	$	1,335,000	$	580,133	$	1,335,000	$	330,509
JP Morgan		12/16/2022	daily floating rate SOFR rate plus 2.75%, with a SOFR adjustment rate of 0.05%	15,000		729		15,000		4,326
JP Morgan (Business Lending Activity) (1)												JP Morgan (Business Lending Activity) (1)	12/15/2023	daily floating rate SOFR rate plus 2.75%, with a SOFR adjustment rate of 0.05%	15,000		—		15,000		—
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program ~~(2)~~	Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program ~~(2)~~	Cancelable anytime	daily one-month LIBOR plus 1.45%, with a LIBOR floor of 0.25%	650,000		62,715		650,000		133,084		Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program ~~(2)~~	Cancelable anytime	daily one-month LIBOR plus 1.45%, with a LIBOR floor of 0.25%	650,000		15,393		650,000		—
TD Bank, N.A. (TD Bank) ~~(3)~~(2)	TD Bank, N.A. (TD Bank) ~~(3)~~(2)	7/15/2023	daily floating rate SOFR rate 1.30%, with a SOFR adjustment rate of 0.10%	800,000		30,753		800,000		217,672		TD Bank, N.A. (TD Bank) ~~(3)~~(2)	7/15/2023	daily floating rate SOFR rate 1.30%, with a SOFR adjustment rate of 0.10%	800,000		22,701		800,000		—
Bank of America, N.A. (BofA) ~~(4)~~(3)	Bank of America, N.A. (BofA) ~~(4)~~(3)	5/24/2023	daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10%	350,000		152,280		350,000		178,600		Bank of America, N.A. (BofA) ~~(4)~~(3)	5/24/2023	daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10%	350,000		163,308		350,000		115,206
BofA ~~(5)~~(4)	BofA ~~(5)~~(4)	5/24/2023	daily floating rate SOFR rate 1.25%, with a SOFR adjustment rate of 0.10%	250,000		—		250,000		—		BofA ~~(5)~~(4)	5/24/2023	daily floating rate SOFR rate 1.25%, with a SOFR adjustment rate of 0.10%	250,000		—		250,000		—
MUFG Union Bank, N.A. (Union Bank) ~~(6)~~(5)	MUFG Union Bank, N.A. (Union Bank) ~~(6)~~(5)	6/27/2023	daily floating rate SOFR plus 1.30%	200,000		7,220		200,000		1,645		MUFG Union Bank, N.A. (Union Bank) ~~(6)~~(5)	6/27/2023	daily floating rate SOFR plus 1.30%	200,000		1,102		200,000		2,125
				$	3,600,000	$	1,176,514	$	3,600,000	$	1,277,451				$	3,600,000	$	782,637	$	3,600,000	$	447,840

(1)Effective October 18, 2021, this facility was renewed and amended and the maximum facility size was increased to ~~$1,335.0~~$1,350.0 million. This facility ~~has a~~was revised ~~maturity date of~~on October 17, 2022 ~~and~~with a revised interest rate to a Secured Overnight Finance Rate (SOFR) term plus 1.60%, with a SOFR adjustment rate of 0.05%, noting the Business Lending sublimit has a revised interest rate of daily adjusted term SOFR plus 2.75%, with a SOFR adjustment rate of 0.05%. Effective ~~October 17,~~December 16, 2022, ~~the~~this facility was renewed with a revised maturity date ~~was extended to~~of December ~~16, 2022.~~15, 2023.

(2)~~Effective January 15, 2021, the maximum facility was increased to $650.0 million.~~

~~(3)~~Effective July 1, 2020, this facility was amended and provides for a maximum aggregate principal amount of $400.0 million, in addition to an uncommitted $400.0 million temporary line of credit. Effective July 15, 2022, this facility was renewed with a revised interest rate of daily floating rate SOFR rate plus 1.30%, with a SOFR adjustment rate of 0.10% and a maturity date of July 15, 2023. As of ~~September 30, 2022,~~March 31, 2023, the uncommitted $400.0 million temporary line of credit was not utilized.

~~(4)~~(3)The total commitment amount of $350.0 million includes a separate sublimit borrowing in the amount of $100.0 million, which can be utilized for specific purposes as defined within the agreement. Effective May 25, 2022, this facility was renewed with a revised interest rate of daily floating rate SOFR ~~rate~~ plus 1.25%, with a SOFR adjustment rate of 0.10% and a maturity date of May 24, 2023. The sublimit is subject to an interest rate of daily floating rate SOFR plus 1.75%, with a SOFR adjustment rate of 0.10%. As of ~~September 30, 2022,~~March 31, 2023, the sublimit borrowing has not been utilized.

~~(5)~~(4)Effective May 25, 2022, the advised consent line was renewed for $250.0 million of capacity with a revised interest rate of daily floating rate SOFR ~~rate~~ plus 1.25%, with a SOFR adjustment rate of 0.10%, and a maturity date of May 24, 2023.

~~(6)~~(5)Effective June 27, 2022, this facility was renewed with a facility size of $200.0 million and a revised interest rate of daily floating rate SOFR ~~rate~~ plus 1.30% and a maturity date of June 27, 2023.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we had a maximum of ~~$1.6 billion~~$938.6 million of warehouse lines of credit principal outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5.4. Variable Interest Entities (VIEs)

We hold variable interests in certain VIEs primarily in our Real Estate Investments segment which are not consolidated as it was determined that we are not the primary beneficiary. Our involvement with these entities is in the form of equity co-investments and fee arrangements.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, our maximum exposure to loss related to VIEs which are not consolidated was as follows (dollars in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Investments in unconsolidated subsidiaries	Investments in unconsolidated subsidiaries	$	150,602	$	109,530	Investments in unconsolidated subsidiaries	$	165,015	$	152,762
Other current assets		—		4,219

Co-investment commitments	Co-investment commitments	82,008		90,328		Co-investment commitments	70,387		83,835
Maximum exposure to loss	Maximum exposure to loss	$	232,610	$	204,077	Maximum exposure to loss	$	235,402	$	236,597

6.5. Fair Value Measurements

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

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

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

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

There have been no significant changes to the valuation techniques and inputs used to develop the recurring fair value measurements from those disclosed in our ~~2021~~2022 Annual Report.

The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):

As of September 30, 2022
Fair Value Measured and Recorded Using
Level 1 Level 2 Level 3 Total
Assets
Available for sale debt securities:
U.S. treasury securities $ 6,262 $ — $ — $ 6,262
Debt securities issued by U.S. federal agencies — 8,824 — 8,824
Corporate debt securities — 45,542 — 45,542
Asset-backed securities — 3,360 — 3,360
Collateralized mortgage obligations — 28 — 28
Total available for sale debt securities 6,262 57,754 — 64,016
Equity securities 34,669 — — 34,669
Investments in unconsolidated subsidiaries 270,342 — 503,935 774,277
Warehouse receivables — 1,190,964 — 1,190,964
Other assets — — 1,867 1,867
Total assets at fair value $ 311,273 $ 1,248,718 $ 505,802 $ 2,065,793

~~There were no liabilities measured at fair value on a recurring basis as of September 30, 2022.~~


	As of March 31, 2023
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
Debt securities:
U.S. treasury securities	$	6,127	$	—	$	—	$	6,127
Debt securities issued by U.S. federal agencies	—		7,702		—		7,702
Corporate debt securities	—		41,704		—		41,704
Asset-backed securities	—		2,952		—		2,952

Total available for sale debt securities	6,127		52,358		—		58,485
Equity securities	33,512		—		—		33,512
Investments in unconsolidated subsidiaries	134,567		—		456,556		591,123
Warehouse receivables	—		792,294		—		792,294
Other assets	—		—		20,445		20,445
Total assets at fair value	$	174,206	$	844,652	$	477,001	$	1,495,859

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


		As of December 31, 2021									As of December 31, 2022
		Fair Value Measured and Recorded Using									Fair Value Measured and Recorded Using
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Available for sale debt securities:
Available for sale securities:										Available for sale securities:
Debt securities:										Debt securities:
U.S. treasury securities	U.S. treasury securities	$	7,002	$	—	$	—	$	7,002	U.S. treasury securities	$	6,164	$	—	$	—	$	6,164
Debt securities issued by U.S. federal agencies	Debt securities issued by U.S. federal agencies	—		9,276		—		9,276		Debt securities issued by U.S. federal agencies	—		8,249		—		8,249
Corporate debt securities	Corporate debt securities	—		50,897		—		50,897		Corporate debt securities	—		44,091		—		44,091
Asset-backed securities	Asset-backed securities	—		3,428		—		3,428		Asset-backed securities	—		3,201		—		3,201
Collateralized mortgage obligations		—		725		—		725

Total available for sale debt securities	Total available for sale debt securities	7,002		64,326		—		71,328		Total available for sale debt securities	6,164		55,541		—		61,705
Equity securities	Equity securities	69,880		—		—		69,880		Equity securities	33,724		—		—		33,724
Investments in unconsolidated subsidiaries	Investments in unconsolidated subsidiaries	229,900		23,741		406,690		660,331		Investments in unconsolidated subsidiaries	160,093		—		460,540		620,633
Warehouse receivables	Warehouse receivables	—		1,303,717		—		1,303,717		Warehouse receivables	—		455,354		—		455,354
Other assets										Other assets	—		—		14,452		14,452
Total assets at fair value	Total assets at fair value	$	306,782	$	1,391,784	$	406,690	$	2,105,256	Total assets at fair value	$	199,981	$	510,895	$	474,992	$	1,185,868

Liabilities
Other liabilities		—		—		$	10,700	$	10,700
Total liabilities at fair value		$	—	$	—	$	10,700	$	10,700

There were no liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

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

The equity securities are generally valued at the last reported sales price on the day of valuation or, if no sales occurred on the valuation date, at the mean of the bid and ask prices on such date. ~~During the third quarter, the company made a $100.4~~The above tables do not include our $100.7 million capital investment in VTS, a leading proptech company, ~~and~~made during the ~~balance~~third quarter of 2022 as it is ~~included in “other assets” in the accompanying consolidated balance sheets. The tables above do not include this~~a non-marketable equity investment accounted for under the measurement alternative, defined as cost minus ~~impairment, if any, and adjusted for subsequent observable transactions for the same or similar investments of the same issuer.~~impairment. No adjustments or impairments were recorded during the three months ended ~~September 30, 2022.~~March 31, 2023. It is included in “other assets, net” in the accompanying consolidated balance sheets.

The fair values of the warehouse receivables are primarily calculated based on already locked in purchase prices. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae mortgage backed securities that will be secured by the underlying loans (See Note 4)3). These assets are classified as Level 2 in the fair value hierarchy as a substantial majority of inputs are readily observable.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, investments in unconsolidated subsidiaries at fair value using NAV were ~~$96.3~~$359.9 million and ~~$152.7~~$353.0 million, respectively. These investments fall under practical expedient rules that do not require them to be included in the fair value hierarchy and as a result have been excluded from the tables above.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis ~~as of September 30, 2022~~ using significant unobservable inputs (Level 3) (dollars in thousands):

Investment in Unconsolidated Subsidiaries Other assets (liabilities)
Balance as of June 30, 2022 $ 441,626 $ 1,867
Transfer in — —
Net change in fair value 62,309 —
Purchases / Additions — —
Balance as of September 30, 2022 $ 503,935 $ 1,867
Balance as of December 31, 2021 $ 406,690 $ (10,700)
Transfer in — —
Net change in fair value (2,755) —
Purchases / Additions 100,000 12,567
Balance as of September 30, 2022 $ 503,935 $ 1,867


	Investment in Unconsolidated Subsidiaries		Other assets
Balance as of December 31, 2022	$	460,540	$	14,452
Transfer out	(230)		—
Net change in fair value	(3,753)		3,400
Purchases/ Additions	—		2,593
Balance as of March 31, 2023	$	456,556	$	20,445

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


Category of Assets/Liabilities using Unobservable Inputs						Consolidated Statements of Operations
Investments in unconsolidated subsidiaries						Equity income from unconsolidated subsidiaries
Other assets (liabilities)						Other income (loss)

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments as of ~~September 30, 2022~~March 31, 2023:

Valuation Technique

Unobservable Input

Range

Weighted Average

Investment in unconsolidated subsidiaries

Discounted cash flow

Discount rate

~~14.5% - 27.0%~~23.5

—

Monte Carlo

Volatility

45.0% - 70.0%

~~70.0~~47.6

Risk free interest rate

~~4.04~~4.5

Discount Yield

25.0

—

Other assets ~~(liabilities)~~

Discounted cash flow

Discount rate

~~27.0~~23.0

—

WeThere were no asset impairment charges recorded during the three months ended March 31, 2023. During the three months ended March 31, 2022, we recorded $10.4 million ~~during the first quarter of this year,~~ in non-cash asset impairment charges (primarily comprised of receivables), on a pretax basis, related to the exit of our Advisory Services business in Russia.

During the second quarter of this year, we recorded a non-cash goodwill impairment charge of $26.4 million in our Real Estate Investments segment for the Telford Homes business. The charge was attributable to the effects of elevated inflation on construction, materials and labor costs which increased Telford Homes’ risk as the contractor and reduced the profitability of current projects. The fair value measurements employed for our impairment evaluation was based on a discounted cash flow approach. Significant inputs used in the evaluation included a risk-free rate of return, estimated risk premium, terminal growth rates, working capital assumptions, income tax rates as well as other economic variables.

There were no ~~asset impairment charges or~~ other significant non-recurring fair value measurements recorded during the three months ended ~~September 30,~~March 31, 2023 and 2022. ~~There were no significant non-recurring fair value measurements recorded during the three and nine months ended September 30, 2021.~~

FASB ASC Topic 825, “Financial Instruments” requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets. Our financial instruments are as follows:

•Cash and Cash Equivalents and Restricted Cash – These balances include cash and cash equivalents as well as restricted cash with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

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~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

•Receivables, less Allowance for Doubtful Accounts – Due to their short-term nature, fair value approximates carrying value.

•Warehouse Receivables – These balances are carried at fair value. The primary source of value is either a contractual purchase commitment from Freddie Mac or a confirmed forward trade commitment for the issuance and purchase of a Fannie Mae or Ginnie Mae MBS (see Note 4)3).

•Investments in Unconsolidated Subsidiaries – A portion of these investments are carried at fair value as discussed above. It includes our equity investment and related interests in both public and non-public entities. Our ownership of common shares in Altus Power Inc. (Altus) is considered level 1 and is measured at fair value using a quoted price in an active market. ~~Private placement warrants related to Altus are considered level 2 and measured at fair value using observable inputs for similar assets in an active market.~~ Our ownership of alignment shares of Altus and our investment in Industrious and certain other non-controlling equity investments are considered level 3 which are measured at fair value using a Monte Carlo and a discounted cash ~~flow approach, respectively.~~flows. The valuation of Altus’ common shares ~~private placement warrants~~ and alignment shares are dependent on its stock price which could be volatile and subject to wide fluctuations in response to various market

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

conditions. Transfer out activities from level 3, as shown in the table above, represent annual conversion of a portion of our alignment shares in Altus to its common shares.

•Available for Sale Debt Securities – Primarily held by our wholly-owned captive insurance company, these investments are carried at their fair value.

•Equity Securities – Primarily held by our wholly-owned captive insurance company, these investments are carried at their fair value.

•Other assets / liabilities – Represents the ~~net~~ fair value of the unfunded commitment related to a revolving ~~facility in our Advisory Services segment.~~facility. Valuations are based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market comparables and recovery assumptions. It also includes approximately $10 million of investment in a non-public entity designated as trading debt security that the company purchased in the fourth quarter of 2022 for which cost approximated fair value at March 31, 2023.

•Short-Term Borrowings – The majority of this balance represents outstanding amounts under our warehouse lines of credit of our wholly-owned subsidiary, CBRE Capital Markets, and our revolving credit ~~facilities.~~facility. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value (see Notes 43 and 9)7).

•Senior Term Loans – Based upon information from third-party banks (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our senior term loans was approximately ~~$387.7~~$432.3 million and ~~$451.8~~$424.6 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Their actual carrying value, net of unamortized debt issuance costs, totaled ~~$391.7~~$433.4 million and ~~$454.5~~$427.8 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively (see Note 9)7).

•Senior Notes – Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our 4.875% senior notes was ~~$589.8~~$591.8 million and ~~$671.7~~$595.2 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The actual carrying value of our 4.875% senior notes, net of unamortized debt issuance costs and discount, totaled ~~$596.2~~$596.7 million and ~~$595.5~~$596.4 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The estimated fair value of our 2.500% senior notes was ~~$381.2~~$395.3 million and ~~$502.1~~$396.8 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. The actual carrying value of our 2.500% senior notes, net of unamortized debt issuance costs and discount, totaled ~~$489.0~~$489.6 million and ~~$488.1~~$489.3 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022 (See Note 7).

•Notes Payable on Real Estate - As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the carrying value of our notes payable on real estate, net of unamortized debt issuance costs, was ~~$50.8~~$55.9 million and ~~$48.2~~$52.7 million, respectively. These notes payable were not recourse to CBRE Group, Inc., except for being recourse to the single-purpose entities that held the real estate assets and were the primary obligors on the notes payable. These borrowings have either fixed interest rates or floating interest rates at spreads added to a market index. Although it is possible that certain portions of our notes payable on real estate may have fair values that differ from their carrying values, based on the terms of such loans as compared to current market conditions, or other factors specific to the borrower entity, we do not believe that the fair value of our notes payable is significantly different than their carrying value.

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(Unaudited)

~~7. Goodwill~~

We test each of our reporting units for goodwill impairment annually at October 1st, or upon a triggering event, in accordance with ASC Topic 350, “Intangibles – Goodwill and Other.” During the three months ended June 30, 2022, we recorded a non-cash goodwill impairment charge of $26.4 million in our Real Estate Investments segment for the Telford Homes business. The charge is attributable to the effects of elevated inflation on construction, materials and labor costs. This increased Telford Homes’ risk as the contractor and reduced the profitability of current projects. The requirement to test certain assets for impairment was triggered as a result of changing market conditions as of June 30, 2022, which resulted in the impairment to the goodwill balance associated with the Telford Homes reporting unit.

There were no other triggering events requiring an impairment assessment be conducted in the nine months ended September 30, 2022. However, it is possible that future changes in circumstances would require the company to record additional non-cash impairment charges.

8.6. Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries are accounted for under the equity method of accounting. Our investment ownership percentages in equity method investments vary, generally ranging upfrom 1.0% to 50.0%. The following table represents the composition of investment in unconsolidated subsidiaries under equity method of accounting and fair value option (dollars in thousands):


Investment type	Investment type	September 30, 2022		December 31, 2021		Investment type	March 31, 2023		December 31, 2022
Real estate investments		$	617,099	$	453,813
Investment in Altus Power, Inc.:
Class A common stock (22 million shares)		270,342		229,900
Real estate investments (in projects and funds)						Real estate investments (in projects and funds)	$	632,050	$	622,826
Investment in Altus:						Investment in Altus:
Class A common stock (1)						Class A common stock (1)	134,567		160,093
Alignment shares ~~(1)~~(2)	Alignment shares ~~(1)~~(2)	121,549		114,727		Alignment shares ~~(1)~~(2)	44,809		59,530
Private placement warrants (2)		—		23,741

Subtotal	Subtotal	391,890		368,368		Subtotal	179,376		219,624
Other (3)	Other (3)	452,298		373,907		Other (3)	483,662		475,256
Total investment in unconsolidated subsidiaries	Total investment in unconsolidated subsidiaries	$	1,461,287	$	1,196,088	Total investment in unconsolidated subsidiaries	$	1,295,088	$	1,317,705

_______________

(1)CBRE held 24,556,012 and 24,554,201 shares of Altus Class A common stock as of March 31, 2023, and December 31 2022, respectively.

(2)The alignment shares, also known as Class B common shares, will automatically convert into Altus Class A common shares based on the achievement of certain total return thresholds on Altus Class A common shares as of the relevant measurement date over the seven fiscal years following the merger. As of March 31, ~~2022~~2023 (the ~~first~~second measurement date), 201,250 of alignment shares automatically converted into 2,011 shares of Class A common stock, of which ~~were issued on April 11, 2022.~~

~~(2)On September 21, 2022, we exercised all of the private placement warrants on a~~ “~~cashless basis~~” ~~and receive 2,552,390 shares of Class A common stock based on a 0.2763 conversion rate.~~CBRE was entitled to 1,811 shares.

(3)Consists of our investments in Industrious and other non-public entities.

Combined condensed financial information for the entities accounted for using the equity method is as follows (dollars in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue	Revenue	$	688,584	$	636,229	$	1,916,277	$	2,098,850	Revenue	$	4,098,173	$	581,115
Operating income	Operating income	280,290		375,655		745,676		1,082,656		Operating income	3,627,503		273,693
Net income (1)	Net income (1)	937,221		909,341		3,889,302		2,386,276		Net income (1)	1,686,306		1,452,847

_______________

(1)Included in net income are realized and unrealized earnings and losses in investments in unconsolidated investment funds and realized earnings and losses from sales of real estate projects in investments in unconsolidated subsidiaries. These realized and unrealized earnings and losses are not included in revenue and operating income.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

9.7. Long-Term Debt and Short-Term Borrowings

Long-Term Debt

Long-term debt consists of the following (dollars in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Senior term loan, with interest of 0.75% plus EURIBOR adj, due in full at maturity on December 20, 2023		$	392,080	$	455,166
Senior Euro term loan, with interest of 0.75% plus EURIBOR adj						Senior Euro term loan, with interest of 0.75% plus EURIBOR adj	$	433,433	$	427,792
4.875% senior notes due in 2026, net of unamortized discount	4.875% senior notes due in 2026, net of unamortized discount	598,257		597,911		4.875% senior notes due in 2026, net of unamortized discount	598,493		598,374
2.500% senior notes due in 2031, net of unamortized discount	2.500% senior notes due in 2031, net of unamortized discount	493,307		492,782		2.500% senior notes due in 2031, net of unamortized discount	493,659		493,476

Total long-term debt	Total long-term debt	1,483,644		1,545,859		Total long-term debt	1,525,585		1,519,642

Less: current maturities of long-term debt						Less: current maturities of long-term debt	433,433		427,792
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	6,715		7,736		Less: unamortized debt issuance costs	5,884		6,138
Total long-term debt, net of current maturities	Total long-term debt, net of current maturities	$	1,476,929	$	1,538,123	Total long-term debt, net of current maturities	$	1,086,268	$	1,085,712

We maintain credit facilities with third-party lenders, which we use for a variety of purposes. On ~~March 4, 2019,~~July 9, 2021, CBRE Services, Inc. (CBRE Services) entered into an incremental assumption agreement with respect to its credit agreement, dated October 31, 2017 (such agreement, as amended by a December 20, 2018 incremental term loan assumption agreement, and such, a March 4, 2019 incremental assumption agreement ~~collectively, the 2019 Credit Agreement), which (i) extended the maturity of the U.S. dollar tranche A term loans under~~and such, credit agreement, (ii) extended the termination date of the revolving credit commitments available under such credit agreement and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit commitments under such credit agreement. The proceeds from the new tranche A term loan facility under the 2019 Credit Agreement were used to repay the $300.0 million of tranche A term loans outstanding under the credit agreement in effect prior to the entry into the 2019 incremental assumption agreement. Ona July 9, 2021 ~~CBRE Services entered into an additional~~ incremental assumption agreement, ~~with respect to~~collectively, the ~~2019~~2021 Credit ~~Agreement~~Agreement) for purposes of increasing the revolving credit commitments previously available under the ~~2019~~2021 Credit Agreement by an aggregate principal amount of $350.0 ~~million (the 2019 Credit Agreement,~~million.

On May 21, 2021, we entered into a definitive agreement whereby our subsidiary guarantors were released as ~~amended by the July 9, 2021 incremental assumption agreement is collectively referred to in this Quarterly Report as~~guarantors from the 2021 Credit ~~Agreement).~~ Agreement.

On December 10, 2021, CBRE Services and certain of the other borrowers entered into ana first amendment of the 2021 Credit Agreement which (i) changed the interest rate applicable to revolving borrowings denominated in Sterling from a LIBOR-based rate to a rate based on the Sterling Overnight Index Average (SONIA) and (ii) changed the interest rate applicable to revolving borrowings denominated in Euros from a LIBOR-based rate to a rate based on EURIBOR. The revised interest rates described above went into effect on January 1, 2022. ~~On May 21, 2021, we entered into a definitive agreement whereby our subsidiary guarantors were released as guarantors from the 2021 Credit Agreement.~~

On August 5, 2022, CBRE Group, Inc., as Holdings, and CBRE Global Acquisition Company, as the Luxembourg Borrower, ~~Services~~ entered into a second amendment to the 2021 Credit Agreement which, among other things (i) amended certain of the representations and warranties, affirmative covenants, negative covenants and events of default in the 2021 Credit Agreement in a manner consistent with the new 5-year senior unsecured Revolving Credit Agreement (as described below), (ii) terminated all revolving commitments previously available to the subsidiaries of the company thereunder and (iii) reflected the resignation of the previous administrative agent and the appointment of Wells Fargo Bank, National Association as the new administrative agent (the 2021 Credit Agreement, as amended by the first amendment and second amendment is referred to in this Quarterly Report as the 2022 Credit Agreement).

The 2022 Credit Agreement is a senior unsecured credit facility that is guaranteed by CBRE Group, Inc. As of ~~September 30, 2022,~~March 31, 2023, the 2022 Credit Agreement provided for a €400.0 million term loan facility due and payable in full at maturity on December 20, 2023. ~~The $300.0 million tranche~~ A ~~term loan facility that was also covered under this agreement was repaid on November 23, 2021. In addition, a~~ $3.15 billion revolving credit facility, which included the capacity to obtain letters of credit and swingline loans and would have terminated on March 4, 2024, was ~~also~~ previously provided under this agreement and was replaced with a new $3.5 billion 5-year senior unsecured Revolving Credit Agreement entered into on August 5, 2022 (as described below).

Borrowings under the euro term loan facility under the 2022 Credit Agreement bear interest at a minimum rate of 0.75% plus EURIBOR and revolving borrowings bear interest, based at our option, on either (1) the applicable fixed rate plus 0.68% to 1.075% or (2) the daily rate plus 0.0% to 0.075% in each case as determined by reference to our Credit Rating (as defined in the 2022 Credit Agreement). As of March 31, 2023, we had $433.4 million of euro term loan borrowings outstanding under the 2022 Credit Agreement (at an interest rate of 0.75% plus EURIBOR), net of unamortized debt issuance costs, included as current maturities of long-term debt in the accompanying consolidated balance sheets.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

On March 18, 2021, CBRE Services issued $500.0 million in aggregate principal amount of 2.500% senior notes due April 1, 2031 (the 2.500% senior notes) at a price equal to 98.451% of their face value. The 2.500% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness. The 2.500% senior notes are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year.

On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 (the 4.875% senior notes) at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness. The 4.875% senior notes are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1 of each year.

The indentures governing our 4.875% senior notes and 2.500% senior notes (1) contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers, and (2) require that the notes be jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and any domestic subsidiary that guarantees the 2022 Credit Agreement. Our 2022 Credit Agreement also requires us to maintain a minimum coverage ratio of consolidated EBITDA (as defined in the 2022 Credit Agreement) to consolidated interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to consolidated EBITDA (as defined in the 2022 Credit Agreement) of 4.25x (and in the case of the first four full fiscal quarters following consummation of a qualified acquisition (as defined in the 2022 Credit Agreement), 4.75x) as of the end of each fiscal quarter. Our coverage ratio of consolidated EBITDA to consolidated interest expense was 45.56x for the trailing twelve months ended September 30, 2022, and our leverage ratio of total debt less available cash to consolidated EBITDA was 0.33x as of September 30, 2022. In addition, the 2022 Credit AgreementThe indentures also ~~contains~~contain other customary affirmative and negative covenants and events of default.

On We were in compliance with the covenants under our debt instruments as of March 18, 2021, CBRE Services issued $500.0 million in aggregate principal amount of 2.500% senior notes due April 1, 2031 (the 2.500% senior notes) at a price equal to 98.451% of their face value. The 2.500% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 2.500% senior notes are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1.

On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 (the 4.875% senior notes) at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 4.875% senior notes are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1.

The indentures governing our 4.875% senior notes and 2.500% senior notes contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. In addition, these indentures require that the 4.875% senior notes and 2.500% senior notes be jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and any domestic subsidiary that guarantees the 2022 Credit Agreement.31, 2023.

Short-Term Borrowings

Revolving Credit Agreement

On August 5, 2022, we entered into a new 5-year senior unsecured Revolving Credit Agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a senior unsecured revolving credit facility available to CBRE Services with a capacity of $3.5 billion and a maturity date of August 5, 2027. ~~The commitments replaced in full and increased the revolving credit facility previously available under the 2021 Credit Agreement by $350.0 million.~~ Borrowings bear interest at (i) CBRE Services’ option, either (a) a Term SOFR rate published by CME Group Benchmark Administration Limited for the applicable interest period or (b) a base rate determined by reference to the greatest of (1) the prime rate determined by Wells Fargo, (2) the federal funds rate plus 1/2 of 1% and (3) the sum of (x) a Term SOFR rate published by CME Group Benchmark Administration Limited for an interest period of one month and (y) 1.00% plus (ii) 10 basis points, plus (iii) a rate equal to an applicable rate (in the case of borrowings based on the Term SOFR rate, 0.630% to 1.100% and in the case of borrowings based on the base rate, 0.0% to 0.100%, in each case, as determined by reference to our Debt Rating (as defined in the Revolving Credit Agreement). The applicable rate is also subject to certain increases and/or decreases specified in the Revolving Credit Agreement linked to achieving certain sustainability goals.

The Revolving Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). In addition, the Revolving Credit Agreement also includes capacity for letters of credit ~~of an outstanding aggregate amount of~~not to exceed $300.0 ~~million.~~million in the aggregate.

The Revolving Credit Agreement also requires us to maintain a minimum coverage ratio of consolidated EBITDA (as defined in the Revolving Credit Agreement) to consolidated interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to consolidated EBITDA (as defined in the Revolving Credit Agreement) of 4.25x (and in the case of the first four full fiscal quarters following consummation of a qualified acquisition (as defined in the Revolving Credit Agreement), 4.75x) as of the end of each fiscal quarter. In addition, the Revolving Credit Agreement also contains other customary affirmative and negative covenants and events of default. We were in compliance with the covenants under this agreement as of March 31, 2023.

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~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

On August 5, 2022, CBRE Services made an initial borrowing of $220.0 million under the Revolving Credit Agreement. These proceeds, in addition to cash on hand, were used to repay in full all revolving credit borrowings outstanding under the 2021 Credit Agreement and terminate the revolving commitments thereunder. As of ~~September 30, 2022, $283.0 million~~March 31, 2023, $1.2 billion was outstanding under the Revolving Credit Agreement. No letters of credit were outstanding as of ~~September 30, 2022.~~March 31, 2023. Letters of credit are issued in the ordinary course of business and would reduce the amount we may borrow under the Revolving Credit Agreement.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Revolving Credit Facilities under the 2021 Credit Agreement

The revolving credit facility under the 2021 Credit Agreement allowed for borrowings outside of the U.S., with a $200.0 million sub-facility available to CBRE Services, one of our Canadian subsidiaries, one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $320.0 million sub-facility available to CBRE Services and one of our U.K. subsidiaries. Borrowings under the revolving credit facility bore interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.68% to 1.075% or (2) the daily rate plus 0.0% to 0.075%, in each case as determined by reference to our Credit Rating (as defined in the 2021 Credit Agreement). The 2021 Credit Agreement required us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused).

As of January 1, 2022, pursuant to ana first amendment to the 2021 Credit Agreement entered into on December 10, 2021, the applicable fixed rate for revolving borrowings denominated in Euros was changed to EURIBOR and the applicable fixed rate for revolving borrowings denominated in Sterling was changed to SONIA (with SONIA-based borrowings subject to a “credit spread adjustment” of an additional 0.0326% in addition to the interest rate spreads described above).

On August 5, 2022, pursuant to a second amendment to the 2021 Credit Agreement, among other things, all revolving commitments previously available to the subsidiaries of the company under the 2021 Credit Agreement were terminated and replaced with a new $3.5 billion 5-year senior unsecured Revolving Credit Agreement (as described above).

Turner & Townsend Revolving Credit Facilities

Turner & Townsend has a revolving credit facility with a capacity of £120.0 million and an additional accordion option of £20.0 million that matures on March 31, 2027. As of ~~September 30, 2022, $29.4~~March 31, 2023, $8.6 million (£~~26.3~~7.0 million) was outstanding under this revolving credit facility bearing interest at SONIA plus 0.75%, all of which ~~$22.3 million (£20.0 million) matures on November 11, 2022 and $7.1 million (£6.3 million) matures on February 21,~~was repaid in April 2023.

Warehouse Lines of Credit

CBRE Capital Markets has warehouse lines of credit with third-party lenders for the purpose of funding mortgage loans that will be resold, and a funding arrangement with Fannie Mae for the purpose of selling a percentage of certain closed multifamily loans to Fannie Mae. These warehouse lines are recourse only to CBRE Capital Markets and are secured by our related warehouse receivables. See Note 43 for additional information.

2018

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~10.~~8. Leases

We are the lessee in contracts for our office space tenancies and for leased ~~vehicles and for our wholly-owned subsidiary Hana.~~vehicles. These arrangements account for the significant portion of our lease liabilities and right-of-use assets. We monitor our service arrangements to evaluate whether they meet the definition of a lease.

Supplemental balance sheet information related to our leases is as follows (dollars in thousands):


Category	Category	Classification	September 30, 2022		December 31, 2021		Category	Classification	March 31, 2023		December 31, 2022
Assets	Assets						Assets
Operating	Operating	Operating lease assets	$	992,831	$	1,046,377	Operating	Operating lease assets	$	980,741	$	1,033,011
Financing	Financing	Other assets, net	86,233		110,809		Financing	Other assets, net	90,509		91,028
Total leased assets	Total leased assets		$	1,079,064	$	1,157,186	Total leased assets		$	1,071,250	$	1,124,039
Liabilities	Liabilities						Liabilities
Current:	Current:						Current:
Operating	Operating	Operating lease liabilities	$	196,521	$	232,423	Operating	Operating lease liabilities	$	232,369	$	229,591
Financing	Financing	Other current liabilities	29,825		38,103		Financing	Other current liabilities	33,984		33,039
Non-current:	Non-current:						Non-current:
Operating	Operating	Non-current operating lease liabilities	1,065,815		1,116,562		Operating	Non-current operating lease liabilities	1,052,823		1,080,385
Financing	Financing	Other liabilities	56,023		73,257		Financing	Other liabilities	57,124		58,094
Total lease liabilities	Total lease liabilities		$	1,348,184	$	1,460,345	Total lease liabilities		$	1,376,300	$	1,401,109

Supplemental cash flow information and non-cash activity related to our operating and ~~finance~~financing leases are as follows (dollars in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	108,649	$	83,214	Right-of-use assets obtained in exchange for new operating lease liabilities	$	39,998	$	14,784
Right-of-use assets obtained in exchange for new financing lease liabilities	Right-of-use assets obtained in exchange for new financing lease liabilities	21,331		31,693		Right-of-use assets obtained in exchange for new financing lease liabilities	8,004		9,415
Other non-cash increases in operating lease right-of-use assets (1)		37,741		11,431
Other non-cash (decreases) increases in operating lease right-of-use assets (1)						Other non-cash (decreases) increases in operating lease right-of-use assets (1)	(52,701)		25,346
Other non-cash increases (decreases) in financing lease right-of-use assets (1)	Other non-cash increases (decreases) in financing lease right-of-use assets (1)	5,444		(2,919)		Other non-cash increases (decreases) in financing lease right-of-use assets (1)	151		(989)

(1)The non-cash activity in the right-of-use assets resulted from lease ~~modifications~~modifications/remeasurements and ~~remeasurements.~~terminations.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~11.~~9. Commitments and Contingencies

We are a party to a number of pending or threatened lawsuits arising out of, or incident to, our ordinary course of business. We believe that any losses in excess of the amounts accrued therefore as liabilities on our consolidated financial statements are unlikely to be significant, but litigation is inherently uncertain and there is the potential for a material adverse effect on our consolidated financial statements if one or more matters are resolved in a particular period in an amount materially in excess of what we anticipated.

In January 2008, CBRE MCI, a wholly-owned subsidiary of CBRE Capital Markets, entered into an agreement with Fannie Mae under Fannie Mae’s Delegated Underwriting and Servicing Lender Program (DUS Program), to provide financing for multifamily housing with five or more units. Under the DUS Program, CBRE MCI originates, underwrites, closes and services loans without prior approval by Fannie Mae, and typically, is subject to sharing up to one-third of any losses on loans originated under the DUS Program. CBRE MCI has funded loans with unpaid principal balances of ~~$37.4~~$39.5 billion at ~~September 30, 2022,~~March 31, 2023, of which ~~$33.5~~$35.8 billion is subject to such loss sharing arrangements. CBRE MCI, under its agreement with Fannie Mae, must post cash reserves or other acceptable collateral under formulas established by Fannie Mae to provide for sufficient capital in the event losses occur. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, CBRE MCI had ~~$108.0~~$125.0 million and ~~$100.0~~$113.0 million, respectively, of letters of credit under this reserve arrangement and had recorded a liability of approximately ~~$62.4~~$66.2 million and ~~$64.0~~$65.1 million, respectively, for its loan loss guarantee obligation under such arrangement. Fannie Mae’s recourse under the DUS Program is limited to the assets of CBRE MCI, which assets totaled approximately ~~$881.3~~$894.6 million (including ~~$424.1~~$452.5 million of warehouse receivables, a substantial majority of which are pledged against warehouse lines of credit and are therefore not available to Fannie Mae) at ~~September 30, 2022.~~March 31, 2023.

CBRE Capital Markets participates in Freddie Mac’s Multifamily Small Balance Loan (SBL) Program. Under the SBL program, CBRE Capital Markets has certain repurchase and loss reimbursement obligations. We could potentially be obligated to repurchase any SBL loan originated by CBRE Capital Markets that remains in default for 120 days following the forbearance period, if the default occurred during the first 12 months after origination and such loan had not been earlier securitized. In addition, CBRE Capital Markets may be responsible for a loss not to exceed 10% of the original principal amount of any SBL loan that is not securitized and goes into default after the 12-month repurchase period. CBRE Capital Markets must post a cash reserve or other acceptable collateral to provide for sufficient capital in the event the obligations are triggered. As of both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, CBRE Capital Markets had posted a $5.0 million letter of credit under this reserve arrangement.

We had outstanding letters of credit totaling ~~$177.3~~$215.2 million as of ~~September 30, 2022,~~March 31, 2023, excluding letters of credit for which we have outstanding liabilities already accrued on our consolidated balance sheet related to our subsidiaries’ outstanding reserves for claims under certain insurance programs as well as letters of credit related to operating leases. The CBRE Capital Markets letters of credit totaling ~~$113.0~~$130.0 million as of ~~September 30, 2022~~March 31, 2023 referred to in the preceding paragraphs represented the majority of the ~~$177.3~~$215.2 million outstanding letters of credit as of such date. The remaining letters of credit are primarily executed by us in the ordinary course of business and expire at the end of each of the respective agreements.

We had guarantees totaling ~~$60.4~~$388.9 million as of ~~September 30, 2022,~~March 31, 2023, excluding guarantees related to pension liabilities, consolidated indebtedness and other obligations for which we have outstanding liabilities already accrued on our consolidated balance sheet, and excluding guarantees related to operating leases. The ~~$60.4~~$388.9 million primarily represents guarantees executed by us in the ordinary course of business, including various guarantees of management and vendor contracts in our operations overseas, which expire at the end of each of the respective agreements.

In addition, as of ~~September 30, 2022,~~March 31, 2023, we had issued numerous non-recourse carveout, completion and budget guarantees relating to development projects for the benefit of third parties. These guarantees are commonplace in our industry and are made by us in the ordinary course of our Real Estate Investments business. Non-recourse carveout guarantees generally require that our project-entity borrower not commit specified improper acts, with us potentially liable for all or a portion of such entity’s indebtedness or other damages suffered by the lender if those acts occur. Completion and budget guarantees generally require us to complete construction of the relevant project within a specified timeframe and/or within a specified budget, with us potentially being liable for costs to complete in excess of such timeframe or budget. While there can be no assurance, we do not expect to incur any material losses under these guarantees.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

An important part of the strategy for our Real Estate Investments ~~business~~segment involves investing our capital in certain real estate investments with our clients. ~~These co-investments~~For our investment funds, we generally ~~total~~co-invest up to 2.0% of the equity in a particular fund. As of ~~September 30, 2022,~~March 31, 2023, we had aggregate future commitments of ~~$110.5~~$93.1 million related to ~~fund these future co-investments.~~co-investment funds. Additionally, ~~an important part of our Real Estate Investments business strategy is~~we make selective ~~investment~~investments in real estate ~~projects. We invest~~development projects on our own account or co-invest with our clients with up to 50% of the project's equity as a principal in unconsolidated real estate ~~subsidiaries. As of September 30, 2022, we~~projects. We had committed ~~to fund $82.7~~capital of $135.3 million ~~of additional capital to unconsolidated subsidiaries~~ and ~~$138.3~~$96.7 million to ~~real estate~~consolidated and unconsolidated projects, ~~that were consolidated in our financial statements.~~respectively, as of March 31, 2023.

~~On April 28, 2022,~~Also refer to Note 15 for the Telford ~~Homes signed the UK government’s non-binding~~ Fire Safety Pledge (the Pledge), which states that subject to entering into mutually acceptable definitive agreements with the UK government, Telford Homes will (1) take responsibility for performing or funding self-remediation works relating to certain life-critical fire-safety issues on all Telford Homes-constructed buildings of 11 meters in height or greater in England and (2) withdraw Telford Homes-constructed buildings from, or reimburse the government for, Telford Homes-constructed buildings covered in the government-sponsored Building Safety Fund (BSF) and Aluminum Composite Material Funds. CBRE believes there is a potential risk of loss attributable to past events, including retroactive changes in building fire-safety regulations, under the Pledge, and also under existing contracts and / or the new Building Safety Act. The estimated potential costs for buildings within the required scope of the remediation are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control. These include, but are not limited to, the time required for the remediation to be completed, the size and number of buildings that may require remediation, cost of construction or remediation materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, potential business disruption costs, potential changes to or new regulations and regulatory approval. As a result of signing the Pledge and the potential for CBRE to pay for remediation under any definitive agreements that may negotiated by the parties under the Pledge, CBRE recorded non-cash charges of $9.5 million and $47.0 million during the three months and nine months ended September 30, 2022, respectively. This potential liability primarily represents adjusted amounts the UK government has already paid or quantified through the BSF for remediation of Telford-constructed buildings. Given the significant unknowns and multiple variables described above, CBRE is not able to estimate a reasonable range of costs in excess of the amount recorded as of September 30, 2022. CBRE continues to assess its potential liability, including likelihood of payment, and believes it could be material to the company.Remediation provision.

~~12.~~10. Income Taxes

~~Our provision for income taxes on~~ a consolidated basis was $259.7 million for the nine months ended September 30, 2022 as compared to a provision for income taxes of $343.3 million for the nine months ended September 30, 2021. The decrease of $83.6 million is primarily related to the recognition of a net discreteone-time tax benefit ~~attributable to an outside basis difference recognized~~in 2022 as a result of legal entity ~~restructuring. The recognition of the outside tax basis difference generated tax attribute carry forwards that will~~restructuring, offset income generated during the current year and be carried forward. Based on our strong history of earnings and the nature of our business we expect to generate sufficient taxable income within the carry forward period and therefore conclude it is more likely than not that we will realize the full tax benefit of the tax attributes. Accordingly, we have not provided any valuation allowance against the deferred tax assets.by a decrease from corresponding change in earnings.

Our effective tax rate increased to ~~24.0%~~18.3% for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~23.4%~~(1.0)% for the three months ended ~~September 30, 2021.~~March 31, 2022. Our effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 was different than the U.S. federal statutory tax rate of 21.0% primarily due to U.S. state taxes and ~~local taxes.~~favorable permanent book tax differences.

Our effective tax rate decreased to 16.3% for the nine months ended September 30, 2022 from 23.0% for the nine months ended September 30, 2021. Our effective tax rate for the nine months ended September 30, 2022 was different than the U.S. federal statutory tax rate of 21.0% primarily due to the recognition of a net discrete tax benefit attributable to an outside basis difference recognized as a result of legal entity restructuring, partially offset by state and local taxes.

~~Table of contents~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the company had gross unrecognized tax benefits of ~~$347.5~~$399.7 million and ~~$191.9~~$391.4 million, respectively. The increase of ~~$155.6~~$8.3 million resulted from the accrual of gross unrecognized tax benefits of $157.4 million primarily related to certain legal entity reorganizations and a release of $1.8 million of gross unrecognized tax benefits primarily related to the expiration of statute of limitations in various tax jurisdictions.benefits.

On August 16, 2022, the Inflation Reduction Act (IRA), a budget reconciliation package that contained legislation targeting energy security and climate change, healthcare and taxes, was signed into law. With respect to corporate-level taxes, the IRA included a 1% excise tax on stock buybacks and a 15% ~~minimum~~ corporate alternative minimum tax (CAMT) based on financial statement income of certain U.S. companies that meet the $1 billion profitability threshold criteria, effective after December 31, 2022. ~~We continue to evaluate the~~The legislation did not have a material impact ~~of the legislation and forthcoming administrative guidance and regulations~~ to our financial ~~statements and results of operations.~~results.

~~13.~~11. Income Per Share and Stockholders’ Equity

The calculations of basic and diluted income per share attributable to CBRE Group, Inc. stockholders are as follows (dollars in thousands, except share and per share data):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Basic Income Per Share	Basic Income Per Share									Basic Income Per Share
Net income attributable to CBRE Group, Inc. stockholders	Net income attributable to CBRE Group, Inc. stockholders	$	446,639	$	435,743	$	1,326,258	$	1,144,582	Net income attributable to CBRE Group, Inc. stockholders	$	116,892	$	392,297
Weighted average shares outstanding for basic income per share	Weighted average shares outstanding for basic income per share	319,827,769		335,364,942		325,705,500		335,621,337		Weighted average shares outstanding for basic income per share	310,464,609		331,925,104
Basic income per share attributable to CBRE Group, Inc. stockholders	Basic income per share attributable to CBRE Group, Inc. stockholders	$	1.40	$	1.30	$	4.07	$	3.41	Basic income per share attributable to CBRE Group, Inc. stockholders	$	0.38	$	1.18

Diluted Income Per Share	Diluted Income Per Share									Diluted Income Per Share
Net income attributable to CBRE Group, Inc. stockholders	Net income attributable to CBRE Group, Inc. stockholders	$	446,639	$	435,743	$	1,326,258	$	1,144,582	Net income attributable to CBRE Group, Inc. stockholders	$	116,892	$	392,297
Weighted average shares outstanding for basic income per share	Weighted average shares outstanding for basic income per share	319,827,769		335,364,942		325,705,500		335,621,337		Weighted average shares outstanding for basic income per share	310,464,609		331,925,104
Dilutive effect of contingently issuable shares	Dilutive effect of contingently issuable shares	4,914,815		4,972,217		4,852,814		4,183,955		Dilutive effect of contingently issuable shares	4,893,538		5,215,221
Weighted average shares outstanding for diluted income per share	Weighted average shares outstanding for diluted income per share	324,742,584		340,337,159		330,558,314		339,805,292		Weighted average shares outstanding for diluted income per share	315,358,147		337,140,325
Diluted income per share attributable to CBRE Group, Inc. stockholders	Diluted income per share attributable to CBRE Group, Inc. stockholders	$	1.38	$	1.28	$	4.01	$	3.37	Diluted income per share attributable to CBRE Group, Inc. stockholders	$	0.37	$	1.16

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~1,506,140~~511,419 and ~~1,369,162,~~1,349,842, respectively, of contingently issuable shares were excluded from the computation of diluted income per share because their inclusion would have had an anti-dilutive effect.

~~For the three and nine months ended September 30,~~

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

On November 19, 2021, ~~30,903 and 31,666, respectively, of contingently issuable shares were excluded from the computation of diluted income per share because their inclusion would have had an anti-dilutive effect.~~

~~In February 2019,~~ our board of directors authorized a program for the repurchase of up to ~~$500.0 million~~$2.0 billion of our Class A common stock over three years (the 2019 program). During the first quarter of 2022, we repurchased 615,108 shares of our common stock under the 2019 program at an average price of $101.88 per share using cash on hand for $62.7 million, fully utilizing the remaining capacity under this program.

~~On November 19, 2021, our board of directors authorized a new program for the repurchase of up to $2.0 billion of our~~ common stock over five years (the 2021 program). On August 18, 2022, our board of directors authorized an additional $2.0 billion, bringing the total authorized repurchase amount under this program to a total of $4.0 billion. During the three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased ~~5,094,577~~1,368,173 shares of our common stock with an average price of ~~$80.14~~$83.48 per share using cash on hand for ~~$408.3 million. During~~$114.2 million under the ~~nine months ended September 30, 2022, we repurchased 16,167,978 shares of our common stock with an average price of $83.35 per share using cash on hand for $1.3 billion.~~2021 program. As of ~~September 30, 2022,~~March 31, 2023, we had approximately ~~$2.6~~$2.0 billion of capacity remaining under the 2021 program. During the three months ended March 31, 2022, we repurchased 4,178,386 shares of our common stock using cash on hand for $390.8 million.

~~Table of contents~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~14.~~12. Revenue from Contracts with Customers

We account for revenue with customers in accordance with FASB ASC Topic, “Revenue from Contracts with Customers” (Topic 606). Revenue is recognized when or as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those services.

Disaggregated Revenue

The following tables represent a disaggregation of revenue from contracts with customers by type of service and/or segment (dollars in thousands):


		Three Months Ended September 30, 2022											Three Months Ended March 31, 2023
		Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated			Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated
Topic 606 Revenue:	Topic 606 Revenue:											Topic 606 Revenue:
Facilities management	Facilities management	$	—	$	3,671,930	$	—	$	—	$	3,671,930	Facilities management	$	—	$	3,680,162	$	—	$	—	$	3,680,162
Project management												Project management	—		1,657,560		—		—		1,657,560
Advisory leasing	Advisory leasing	989,615		—		—		—		989,615		Advisory leasing	708,654		—		—		—		708,654
Advisory sales	Advisory sales	600,527		—		—		—		600,527		Advisory sales	367,404		—		—		—		367,404
Property management	Property management	458,292		—		—		(5,732)		452,560		Property management	463,774		—		—		(4,322)		459,452
Project management		—		1,171,809		—		—		1,171,809
Valuation	Valuation	177,198		—		—		—		177,198		Valuation	165,612		—		—		—		165,612
Commercial mortgage origination (1)	Commercial mortgage origination (1)	59,149		—		—		—		59,149		Commercial mortgage origination (1)	24,363		—		—		—		24,363
Loan servicing (2)	Loan servicing (2)	13,869		—		—		—		13,869		Loan servicing (2)	17,525		—		—		—		17,525
Investment management	Investment management	—		—		146,695		—		146,695		Investment management	—		—		147,490		—		147,490
Development services	Development services	—		—		95,142		—		95,142		Development services	—		—		74,257		—		74,257
Topic 606 Revenue	Topic 606 Revenue	2,298,650		4,843,739		241,837		(5,732)		7,378,494		Topic 606 Revenue	1,747,332		5,337,722		221,747		(4,322)		7,302,479
Out of Scope of Topic 606 Revenue:	Out of Scope of Topic 606 Revenue:											Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	Commercial mortgage origination	71,276		—		—		—		71,276		Commercial mortgage origination	46,577		—		—		—		46,577
Loan servicing	Loan servicing	63,875		—		—		—		63,875		Loan servicing	59,959		—		—		—		59,959
Development services (3)	Development services (3)	—		—		15,901		—		15,901		Development services (3)	—		—		2,099		—		2,099
Total Out of Scope of Topic 606 Revenue	Total Out of Scope of Topic 606 Revenue	135,151		—		15,901		—		151,052		Total Out of Scope of Topic 606 Revenue	106,536		—		2,099		—		108,635
Total Revenue	Total Revenue	$	2,433,801	$	4,843,739	$	257,738	$	(5,732)	$	7,529,546	Total Revenue	$	1,853,868	$	5,337,722	$	223,846	$	(4,322)	$	7,411,114

2522

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Three Months Ended September 30, 2021
Advisory
Services Global
Workplace
Solutions Real Estate
Investments Corporate, other and eliminations Consolidated
Topic 606 Revenue:
Facilities management $ — $ 3,480,090 $ — $ — $ 3,480,090
Advisory leasing 869,124 — — — 869,124
Advisory sales 673,411 — — — 673,411
Property management 432,658 — — (4,795) 427,863
Project management — 687,053 — — 687,053
Valuation 176,644 — — — 176,644
Commercial mortgage origination (1)
82,033 — — — 82,033
Loan servicing (2)
11,594 — — — 11,594
Investment management — — 135,175 — 135,175
Development services — — 87,588 — 87,588
Topic 606 Revenue 2,245,464 4,167,143 222,763 (4,795) 6,630,575
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination 99,780 — — — 99,780
Loan servicing 66,903 — — — 66,903
Development services (3)
— — 1,069 — 1,069
Total Out of Scope of Topic 606 Revenue 166,683 — 1,069 — 167,752
Total Revenue $ 2,412,147 $ 4,167,143 $ 223,832 $ (4,795) $ 6,798,327

~~(1)We earn fees for arranging financing for borrowers with third-party lender contacts. Such fees are in scope of Topic 606.~~

~~(2)Loan servicing fees earned from servicing contracts for which we do not hold mortgage servicing rights are in scope of Topic 606.~~

~~(3)Out of scope revenue for development services represents selling profit from transfers of sales-type leases in the scope of Topic 842.~~

~~Table of contents~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2022
Advisory
Services Global
Workplace
Solutions Real Estate
Investments Corporate, other and eliminations Consolidated
Topic 606 Revenue:
Facilities management $ — $ 11,292,738 $ — $ — $ 11,292,738
Advisory leasing 2,732,045 — — — 2,732,045
Advisory sales 1,936,073 — — — 1,936,073
Property management 1,375,156 — — (12,751) 1,362,405
Project management — 3,264,762 — — 3,264,762
Valuation 554,879 — — — 554,879
Commercial mortgage origination (1)
214,333 — — — 214,333
Loan servicing (2)
41,710 — — — 41,710
Investment management — — 454,816 — 454,816
Development services — — 297,635 — 297,635
Topic 606 Revenue 6,854,196 14,557,500 752,451 (12,751) 22,151,396
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination 221,345 — — — 221,345
Loan servicing 194,691 — — — 194,691
Development services (3)
— — 66,325 — 66,325
Total Out of Scope of Topic 606 Revenue 416,036 — 66,325 — 482,361
Total Revenue $ 7,270,232 $ 14,557,500 $ 818,776 $ (12,751) $ 22,633,757


		Nine Months Ended September 30, 2021											Three Months Ended March 31, 2022
		Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated			Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated
Topic 606 Revenue:	Topic 606 Revenue:											Topic 606 Revenue:
Facilities management	Facilities management	$	—	$	10,395,345	$	—	$	—	$	10,395,345	Facilities management	$	—	$	3,800,688	$	—	$	—	$	3,800,688
Project management												Project management	—		1,004,928		—		—		1,004,928
Advisory leasing	Advisory leasing	2,082,248		—		—		—		2,082,248		Advisory leasing	772,722		—		—		—		772,722
Advisory sales	Advisory sales	1,677,557		—		—		—		1,677,557		Advisory sales	619,827		—		—		—		619,827
Property management	Property management	1,283,090		—		—		(15,397)		1,267,693		Property management	455,872		—		—		(4,888)		450,984
Project management		—		1,880,403		—		—		1,880,403
Valuation	Valuation	517,460		—		—		—		517,460		Valuation	181,142		—		—		—		181,142
Commercial mortgage origination (1)	Commercial mortgage origination (1)	187,995		—		—		—		187,995		Commercial mortgage origination (1)	73,890		—		—		—		73,890
Loan servicing (2)	Loan servicing (2)	32,100		—		—		—		32,100		Loan servicing (2)	14,008		—		—		—		14,008
Investment management	Investment management	—		—		406,516		—		406,516		Investment management	—		—		150,567		—		150,567
Development services	Development services	—		—		258,281		—		258,281		Development services	—		—		99,655		—		99,655
Topic 606 Revenue	Topic 606 Revenue	5,780,450		12,275,748		664,797		(15,397)		18,705,598		Topic 606 Revenue	2,117,461		4,805,616		250,222		(4,888)		7,168,411
Out of Scope of Topic 606 Revenue:	Out of Scope of Topic 606 Revenue:											Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	Commercial mortgage origination	295,561		—		—		—		295,561		Commercial mortgage origination	70,980		—		—		—		70,980
Loan servicing	Loan servicing	181,133		—		—		—		181,133		Loan servicing	60,007		—		—		—		60,007
Development services (3)	Development services (3)	—		—		13,527		—		13,527		Development services (3)	—		—		33,535		—		33,535
Total Out of Scope of Topic 606 Revenue	Total Out of Scope of Topic 606 Revenue	476,694		—		13,527		—		490,221		Total Out of Scope of Topic 606 Revenue	130,987		—		33,535		—		164,522
Total Revenue	Total Revenue	$	6,257,144	$	12,275,748	$	678,324	$	(15,397)	$	19,195,819	Total Revenue	$	2,248,448	$	4,805,616	$	283,757	$	(4,888)	$	7,332,933

(1)We earn fees for arranging financing for borrowers with third-party lender contacts. Such fees are in scope of Topic 606.

(2)Loan servicing fees earned from servicing contracts for which we do not hold mortgage servicing rights are in scope of Topic 606.

(3)Out of scope revenue for development services represents selling profit from transfers of sales-type leases in the scope of Topic 842.

~~Table of contents~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Contract Assets and Liabilities

We had contract assets totaling ~~$504.8~~$522.7 million ($~~373.5~~384.0 million of which was current) and ~~$474.4~~$529.1 million ($~~338.7~~391.6 million of which was current) as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

We had contract liabilities totaling ~~$321.8~~$268.8 million ($~~314.3~~262.2 million of which was current) and ~~$288.9~~$284.3 million ($~~280.7~~276.3 million of which was current) as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we recognized revenue of ~~$244.7~~$183.2 million that was included in the contract liability balance at December 31, ~~2021.~~2022.

~~15.~~13. Segments

We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions and (3) Real Estate Investments. ~~As part of the realignment of our organizational structure and performance measure to how our chief operating decision maker (CODM) views the company,~~In addition, we ~~created~~also have a “Corporate, other and elimination” segment.

Our Corporate segment primarily consists of corporate headquarters costs for executive officers and certain other central functions. We track our strategic non-core non-controlling equity investments in “other” which is considered an operating segment and reported together with Corporate ~~as it~~but does not meet the aggregation criteria for presentation as a separate reportable segment. These activities are not allocated to the other business segments. Corporate and other also includes eliminations related to inter-segment revenue.

Segment operating profit (SOP) is the measure reported to the ~~CODM~~chief operating decision marker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. Segment operating profit represents earnings, inclusive of amounts attributable to non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments, as well as adjustments related to the following: certain carried interest incentive compensation expense ~~(reversal)~~ to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, efficiency and cost-reduction initiatives, integration and other costs related to ~~acquisitions, costs associated with efficiency and cost-reduction initiatives, and a provision associated with Telford’s fire safety remediation efforts.~~acquisitions. This metric excludes the impact of corporate overhead as these costs are ~~now~~ reported under Corporate and other. During fourth quarter of 2021, we changed the definition of SOP to include net income (loss) attributable to non-controlling interest to provide a more meaningful view of the segment’s performance and related margins and to conform to the CODM’s view of the business segments. Prior period segment operating profit for our reportable segments have been recast to conform to this change.

~~Summarized financial information by segment is as follows (dollars in thousands):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Revenue
Advisory Services $ 2,433,801 $ 2,412,147 $ 7,270,232 $ 6,257,144
Global Workplace Solutions 4,843,739 4,167,143 14,557,500 12,275,748
Real Estate Investments 257,738 223,832 818,776 678,324
Corporate, other and eliminations (5,732) (4,795) (12,751) (15,397)
Total revenue $ 7,529,546 $ 6,798,327 $ 22,633,757 $ 19,195,819
Segment operating profit
Advisory Services $ 423,802 $ 521,678 $ 1,410,113 $ 1,318,762
Global Workplace Solutions 219,406 187,332 640,438 509,684
Real Estate Investments 59,458 146,768 501,028 363,878
Total reportable segment operating profit $ 702,666 $ 855,778 $ 2,551,579 $ 2,192,324

2823

Table of contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Summarized financial information by segment is as follows (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Revenue
Advisory Services	$	1,853,868	$	2,248,448
Global Workplace Solutions	5,337,722		4,805,616
Real Estate Investments	223,846		283,757
Corporate, other and eliminations (1)	(4,322)		(4,888)
Total revenue	$	7,411,114	$	7,332,933

Segment Operating Profit
Advisory Services	$	269,722	$	465,654
Global Workplace Solutions	229,666		202,736
Real Estate Investments	131,498		167,052
Total reportable segment operating profit	$	630,886	$	835,442

(1)Eliminations represent revenue from transactions with other operating segments. See Note 12.

Reconciliation of total reportable segment operating profit to net income is as follows (dollars in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Net income attributable to CBRE Group, Inc. $ 446,639 $ 435,743 $ 1,326,258 $ 1,144,582
Net income attributable to non-controlling interests 5,041 879 11,609 $ 4,459
Net income 451,680 436,622 1,337,867 $ 1,149,041
Adjustments to increase (decrease) net income:
Depreciation and amortization 142,136 122,564 453,527 363,727
Asset impairments — — 36,756 —
Interest expense, net of interest income 19,957 11,038 51,301 34,916
Write-off of financing costs on extinguished debt 1,862 — 1,862 —
Provision for income taxes 142,667 133,507 259,691 343,279
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue (6,161) 16,959 9,200 33,963
Impact of fair value adjustments to real estate assets acquired in the
Telford acquisition (purchase accounting) that were sold in period (1,300) 47 (4,447) 772
Costs incurred related to legal entity restructuring 893 — 12,814 —
Integration and other costs related to acquisitions 7,716 16,211 24,046 24,345
Costs associated with efficiency and cost-reduction initiatives 18,929 — 18,929 —
Provision associated with Telford’s fire safety remediation efforts 9,479 — 46,984 —
Corporate and other (income) loss, including eliminations (85,192) 118,830 303,049 242,281
Total reportable segment operating profit $ 702,666 $ 855,778 $ 2,551,579 $ 2,192,324


	Three Months Ended March 31,
	2023		2022
Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297
Net income attributable to non-controlling interests	8,180		3,974
Net income	125,072		396,271
Adjustments to increase (decrease) net income:
Depreciation and amortization	161,491		149,032
Asset impairments	—		10,351
Interest expense, net of interest income	28,414		12,826

Provision for (benefit from) income taxes	28,036		(3,738)

Carried interest incentive compensation expense to align with the timing of associated revenue	6,978		22,856
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period	—		(1,696)
Costs incurred related to legal entity restructuring	—		1,676
Integration and other costs related to acquisitions	18,134		8,121


Costs associated with efficiency and cost-reduction initiatives	138,247		—

Corporate and other loss, including eliminations	124,514		239,743
Total reportable segment operating profit	$	630,886	$	835,442

Our CODM is not provided with total asset information by segment and accordingly, does not measure or allocate total assets on a segment basis. As a result, we have not disclosed any asset information by segment.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Geographic Information

Revenue in the table below is allocated based upon the country in which services are performed (dollars in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue	Revenue									Revenue
United States	United States	$	4,320,235	$	3,943,714	$	12,887,747	$	10,856,277	United States	$	4,144,596	$	4,131,397
United Kingdom	United Kingdom	970,307		841,241		3,002,798		2,451,222		United Kingdom	995,428		985,999
All other countries	All other countries	2,239,004		2,013,372		6,743,212		5,888,320		All other countries	2,271,090		2,215,537
Total revenue	Total revenue	$	7,529,546	$	6,798,327	$	22,633,757	$	19,195,819	Total revenue	$	7,411,114	$	7,332,933

~~16.~~14. Efficiency and ~~Cost Reduction~~Cost-Reduction Initiatives

During the third quarter of 2022, we launched certain cost and operational efficiency initiatives that will further improve the company’s resiliency in an economic downturn while enabling continued operating platform investments that support future growth. The efficiency initiatives include management and workforce structure simplification, occupancy footprint rationalization and certain third-party spending reductions. ~~For~~As part of this, we incurred certain cash and non-cash charges. Non-cash charges are primarily associated with acceleration of depreciation and write-down of lease and related assets, partially offset by release of lease liability, as part of our lease termination activities. Cash-based charges are primarily related to employee separation, lease and certain contract exit costs, and professional fees. During the three months ended ~~September 30, 2022, the company~~March 31, 2023, total charges (excluding depreciation) incurred ~~$19.3~~were $138.2 million, ~~of costs (primarily to be settled in the fourth quarter of 2022)~~ related to employee separation, lease termination, and ~~consulting fees.~~professional fees and other contract exit costs. Management continues to evaluate and modify these initiatives, which are likely to continue over the next ~~several~~few months.

The following table presents the detail of expense incurred by segment (dollars in thousands):


	Three Months Ended March 31, 2023
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate		Consolidated
Employee separation benefits	$	17,175	$	28,894	$	13,158	$	2,538	$	61,765
Lease exit costs	39,273		731		4,204		1,143		45,351
Professional fees and other	6,090		19,763		4,093		1,185		31,131
Subtotal	62,538		49,388		21,455		4,866		138,247
Depreciation expense	5,440		79		3,482		—		9,001
Total	$	67,978	$	49,467	$	24,937	$	4,866	$	147,248

The following table shows ending liability balance associated with major cash-based charges (dollars in thousands):


	Employee separation benefits		Professional fees and other
Balance at December 31, 2022	$	37,014	$	10,600
Expense incurred	61,765		31,131
Payments made	(44,672)		(37,392)

Balance at March 31, 2023	$	54,107	$	4,339

Ending balance related to employee separation was included in “compensation and employee benefits payable” and the balance related to professional fees and other was included in “accounts payable and accrued expenses” in the accompanying consolidated balance sheets. Of the total charges incurred, net of depreciation expense, $17.9 million was included within the “Cost of revenue” line item and $120.3 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statement of operations for the three months ended March 31, 2023.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

15. Telford Fire Safety Remediation

On March 16, 2023, Telford Homes entered into a legally binding agreement with the U.K. government, under which Telford Homes will (1) take responsibility for performing or funding self-remediation works relating to certain life-critical fire-safety issues on all Telford Homes-constructed buildings of 11 meters in height or greater in England constructed in the last 30 years (in-scope buildings) and (2) withdraw Telford Homes-developed buildings from the government-sponsored Building Safety Fund (BSF) and Aluminum Composite Material (ACM) Funds or reimburse the government funds for the cost of remediation of in-scope buildings.

The accompanying consolidated balance sheets include an estimated liability of approximately $188.1 million and $185.9 million as of March 31, 2023 and December 31, 2022, respectively, related to remediation efforts. The balance increased as of March 31, 2023 primarily due to the movement of foreign exchange rates, partially offset by $0.5 million of costs incurred for work performed during the quarter. We did not record any additional provision this quarter as the March 31, 2023 balance remains our best estimate of potential losses associated with overall remediation efforts. The potential liability and number of buildings affected may change as in-scope buildings are assessed, scopes of remediation are agreed with interested parties (freeholders and leaseholders) and the required remediation work is tendered for each building, all of which is anticipated to result in a lengthy process. We will continue to assess new information as it becomes available and adjust our estimated liability accordingly.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide the reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect future results. The MD&A in this Quarterly Report on Form 10-Q (Quarterly Report) for CBRE Group, Inc. for the three months ~~and nine months~~ ended ~~September 30, 2022~~March 31, 2023 should be read in conjunction with our consolidated financial statements and related notes included in our 2022 Annual Report on Form 10-K ~~for the fiscal year ended December 31, 2021 (2021~~(2022 Annual Report) as well as the unaudited financial statements included elsewhere in this Quarterly Report.

In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the next quarter and beyond. For important information regarding these forward-looking statements, please see the discussion below under the caption “Cautionary Note on Forward-Looking Statements.”

Overview

CBRE Group, Inc. is a Delaware corporation. References to “CBRE,” “the company,” “we,” “us” and “our” refer to CBRE Group, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.

We are the world’s largest commercial real estate services and investment firm, based on ~~2021~~2022 revenue, with leading global market positions in our leasing, property sales, occupier outsourcing and valuation businesses. As of December 31, ~~2021,~~2022, the company had ~~more than 105,000~~approximately 115,000 employees (excluding Turner & Townsend Holdings Limited employees) serving clients in more than 100 countries.

We provide services to real estate investors and occupiers. For investors, our services include capital markets (property sales and mortgage ~~origination,~~origination), mortgage sales and ~~servicing),~~servicing, property leasing, investment management, property management, valuation and development services, among others. For occupiers, our services include facilities management, project management, transaction ~~(both property~~(property sales and leasing), and consulting services, among others. We provide services under the following brand names: “CBRE” (real estate advisory and outsourcing services); “CBRE Investment Management” (investment management); “Trammell Crow Company” ~~(U.S.~~(primarily U.S. development); “Telford Homes” (U.K. development); and “Turner & Townsend Holdings Limited” ~~(global project, program and cost management)~~(Turner & Townsend).

We generate revenue from ~~both~~ stable, recurring sources (large multi-year portfolio and ~~per-project~~per project contracts) and ~~more~~from cyclical, non-recurring ~~(commissions and fees~~sources, including commissions on ~~transactions) sources.~~transactions. Our revenue mix has become ~~heavily~~more weighted towards stable revenue sources, particularly occupier outsourcing, and ~~markedly less dependent~~our dependence on ~~highly~~ cyclical property sales and lease transaction ~~revenue. As a result of our four-dimension diversification strategy (asset types, lines of business, clients and geographies) and strong balance sheet, we~~revenue has declined. We believe we are ~~well -positioned~~well-positioned to capture a substantial and growing share of market opportunities at a time when investors and occupiers increasingly prefer to purchase integrated, account-based services on a national and global basis. ~~We also believe we are increasingly well situated to weather challenging macroeconomic environments due to our increased diversification and resiliency.~~

In ~~2021,~~2022, we generated revenue from a highly diversified base of clients, including 93more than 95 of the Fortune 100 companies. We have been an S&P 500 company since 2006 and in 2022 we were ranked #126 on the Fortune 500. We have been voted the most recognized commercial real estate brand in the Lipsey Company survey for 2122 years in a row (including ~~2022)~~2023). We have also been rated a World’s Most Ethical Company by the Ethisphere Institute for ~~nine~~ten consecutive years (including ~~2022)~~2023), and ~~have been~~ included in ~~both~~ the Dow Jones World Sustainability Index for ~~three~~four years in a row and the Bloomberg Gender-Equality Index for ~~three~~four years in a ~~row.~~row (including 2023).

~~In 2020, the Covid-19 pandemic primarily impacted the property sales and leasing lines of business in the Advisory Services segment.~~ The adverse effects eased significantly in 2021 and early 2022 as global economic conditions improved and sales and leasing volumes rose markedly. Further, the pandemic catalyzed strong industrial and multifamily transaction volumes, which offset subdued office activity. Nevertheless, Covid-19 continues to impact our operations, and company return-to-office strategies have been slow to gain momentum. As a result, occupier confidence in making long-term office leasing decisions has not returned to pre-pandemic levels. In addition, Russia’s invasion of Ukraine and the ongoing military conflict pose heightened risks for our operations in Europe, exacerbating supply chain disruptions, worsening inflation and raising the specter of energy shortages this winter, among other macroeconomic challenges. As a result of Russia’s invasion, we elected to exit most of our business in Russia, although we continue to have a limited number of employees in the country, managing facilities for corporate clients under pre-existing global outsourcing contracts. While the economies most directly impacted by the invasion, Russia and Ukraine, are not material to our business, the future direct and indirect impacts on regional and global economies are difficult to predict. In addition, the second half of 2022 has been marked by significant macroeconomic challengesenvironment remains challenging as central banks ~~around~~continue to rapidly raise interest rates. The rising rate environment, coupled with certain bank failures in the ~~world have sharply raised interest rates in efforts~~first quarter of 2023, has limited credit availability to ~~rein in inflation, reducing credit availability.~~all asset classes, including commercial real estate. Less available and more expensive debt capital has had pronounced effects on our capital markets (mortgage

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origination and property sales) businesses, making property acquisitions and dispositions harder to finance. Similar factors also impact the timing of and ~~ultimate~~ proceeds ~~realized for property~~generated from asset sales within our investment management and development ~~business.~~

businesses and our ability to obtain debt capital to begin new development projects.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, which require us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We believe that the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, business combinations, goodwill and other intangible assets, income

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taxes, contingencies, and ~~income taxes~~investments in unconsolidated subsidiaries – fair value option can be found in our ~~2021~~2022 Annual Report. There have been no material changes to these policies and estimates as of ~~September 30, 2022.~~March 31, 2023.

New Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Seasonality

In a typical year, a significant portion of our revenue ~~and earnings generation follow~~is seasonal, ~~patterns,~~ which an investor should keep in mind when comparing our financial condition and results of operations on a quarter-by-quarter basis. Historically, our revenue, operating income, net income and cash flow from operating activities have tended to be lowest in the first quarter and highest in the fourth quarter ~~when investors~~of each year. Revenue, earnings and ~~occupiers intensely~~cash flow have generally been concentrated in the fourth calendar quarter due to the focus on completing sales, financing and leasing transactions prior to year-end. The ~~ongoing impact of the Covid-19 pandemic~~sharp rise in interest rates to combat inflation and ~~intensifying current macroeconomic challenges~~resultant banking sector stress and economic uncertainty may cause seasonality to deviate from historical patterns.

Inflation

Our ~~commissions and variable costs related~~business continues to ~~revenue are primarily~~be affected by ~~commercial real estate transactions as well as market supply and demand, which may be impacted~~high inflation in 2023. Most notably, moves by ~~inflation. For example,~~a number of countries’ central banks to tame high inflation ~~has~~by rapidly raising interest rates sharply increased ~~construction materials~~the cost of debt and ~~labor costs~~dramatically constrained its availability, resulting in a significant decline in sales and financing transaction activity. In addition, rising price levels across the economy have required us to increase compensation expense to retain top talent and our development ~~business. Nonetheless,~~businesses has incurred higher input costs for construction materials. On the other hand, we believe that parts of our business ~~has significant inherent~~have protections against ~~inflation, and to date, general inflation has not had a material impact upon most of our operations.~~inflation. The company continues to monitor inflation, ~~central bank~~ monetary policy changes in response to inflation and potentially adverse effects toon our ~~business from elevated inflation, higher interest rates or both.~~business.

Items Affecting Comparability

When you read our financial statements and the information included in this Quarterly Report, you should consider that we have experienced, and continue to experience, several material trends and uncertainties ~~(particularly those caused or exacerbated by Covid-19)~~ that have affected our financial condition and results of operations that make it challenging to predict our future performance based on our historical results. We believe that the following material trends and uncertainties are crucial to an understanding of the variability in our historical earnings and cash ~~flow~~flows and the potential for continued variability in the future.

Macroeconomic Conditions

Economic trends and government policies affect global and regional commercial real estate markets as well as our operations directly. These include overall economic activity and employment growth, with specific sensitivity to growth in office-based employment; interest rate levels of and changes in interest rates; the cost and availability of credit; and the impact of tax and regulatory ~~policies, and geopolitical events, such as the ongoing war in Ukraine.~~policies. Periods of economic weakness or recession, significantly rising interest rates, fiscal uncertainty, declining employment levels, decreasing demand for commercial real estate, falling real estate values, ~~disruptions~~disruption to the global capital or credit markets, ~~or general economic activity,~~ or the public perception that any of these events may occur, will negatively affect the performance of our business.

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Compensation is our largest expense and our sales and leasing professionals generally are paid on a commission and/or bonus basis that correlates with their revenue production. As a result, the negative effects on our operating margins ofduring difficult market conditions, such as the environment that prevailed in the early months of the Covid-19 pandemic ~~were~~or the current stressed capital markets environment, are partially mitigated by the inherent variability of our compensation cost structure. In addition, when negative economic conditions have been particularly severe, ~~like during the depth of the Covid-19 pandemic,~~ we have moved decisively to lower operating expenses to improve financial performance. We ~~are taking such steps~~began efforts in 2022 and have continued in 2023 to reduce expenses in light of macroeconomic challenges stemming from rapidly rising interest rates and the ~~intensifying macroeconomic challenges.~~stressed banking sector. Additionally, our contractual ~~and other more stable~~ revenue ~~sources have~~has increased ~~over many years~~ primarily as a result ~~the~~of growth ofin our ~~occupier~~ outsourcing business, and we believe this contractual revenue should ~~help~~partially offset the negative impacts that macroeconomic deterioration could have on other parts of our business. We also believe that we have significantly improved the resiliency of our business ~~through a four-dimension diversification strategy that has expanded~~by expanding the business strategically across asset types, clients, geographies and lines of business. Nevertheless, adverse global and regional economic trends ~~could~~will pose significant risks to the performance of our consolidated ~~operating results~~operations and financial condition.

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Effects of Acquisitions and Investments

We have historically made significant use of strategic acquisitions to add and enhance service capabilities around the world. On November 1, 2021, we acquired a 60% controlling ownership interest in Turner & Townsend Holdings Limited (Turner & Townsend) for £960.0 million, or $1.3 billion along with the acquisition of $44.0 million (£32.2 million) in cash. The Turner & Townsend acquisition was funded with cash on hand and gross deferred purchase consideration of $591.2 million (£432.0 million). We believe Turner & Townsend helps us advance our diversification strategy across asset types, lines of business, clients, and geographies. Turner & Townsend is a leading professional services company specializing in program management, project management, cost and commercial management and advisory services across the real estate, infrastructure and natural resources sectors, and is consolidated and reported in our Global Workplace Solutions segment.

~~Strategic in-fill~~In-fill acquisitions have also played a key role in strengthening our service offerings. The companies we acquired have generally been regional or specialty firms that complement our existing platform, or independent affiliates, which, in some cases, we held a small equity interest.

During ~~2021,~~2022, we completed ~~eight~~seven in-fill ~~acquisitions: a U.S. firm that provides construction and project management services, a professional service advisory firm in Australia, a U.S. firm focused on investment banking and investment sales~~acquisitions in the ~~global gaming real estate market, a leading facilities management firm~~Advisory Services segment and four in the ~~Netherlands, a workplace interior design~~Global Workplace Solutions segment totaling $205.8 million in cash and ~~project management company in Singapore, a property management firm in France, a residential brokerage in the Netherlands, and an occupancy management company based in the U.S.~~deferred consideration. During the first ~~nine months~~quarter of ~~2022,~~2023, we completed ~~nine~~one in-fill ~~acquisitions: a leading project management firm in Spain and Portugal, a retail~~ acquisition ~~and a property agency~~ in the ~~United Kingdom, an advisory firm in Scotland, a consulting firm focused on real-estate related sustainability issues in France~~Advisory Services segment and ~~a valuation firm in New Zealand, a property tax consultancy~~four in the ~~United States, a technology company serving clients~~Global Workplace Solutions segment totaling $65.1 million in ~~our occupier outsourcing business,~~cash and a professional services company in Australia focused on project development, execution and operation services. In addition, during the third quarter of 2022, we made a $100.4 million investment in VTS, a technology company that helps leasing agents better serve property owners and enables property managers to create more engaging experiences for building tenants, thus improving occupancy rates.deferred consideration.

We believe strategic acquisitions can significantly decrease the cost, time and resources necessary to attain a meaningful competitive position – or expand our capabilities – within targeted markets or business lines. In general, however, most acquisitions will initially have an adverse impact on our operating income and net income as a result of transaction-related expenditures, including severance, lease termination, transaction and deferred financing costs, as well as costs and charges associated with integrating the acquired business and integrating its financial and accounting systems into our own.

Our acquisition structures often include deferred and/or contingent purchase consideration in future periods that are subject to the passage of time or achievement of certain performance metrics and other conditions. As of ~~September 30, 2022,~~March 31, 2023, we have accrued deferred purchase and contingent considerations totaling ~~$532.1~~$542.4 million, which is included in “Accounts payable and accrued expenses” and in “Other long-term liabilities” in the accompanying consolidated balance sheets set forth in Item 1 of this Quarterly Report.

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International Operations

We conduct a significant portion of our business and employ a substantial number of people outside the U.S. As a result, we are subject to risks associated with doing business globally. Our Real Estate Investments business has significant euro and British pound denominated assets under management, as well as associated revenue and earnings in Europe. In addition, our Global Workplace Solutions business also derives significant revenue and earnings in foreign currencies, such as the euro and British pound sterling. Our business has been ~~materially~~significantly impacted this year by the sharp appreciation of the U.S. dollar against these and other foreign currencies. Further fluctuations in foreign currency exchange rates may continue to produce corresponding changes in our AUM, revenue and earnings.

Our businesses could suffer from the effects of public health crises, ~~(such as the ongoing Covid-19 pandemic),~~ geopolitical events (such as the war in Ukraine) or, economic disruptions (or the perception that such disruptions may occur) ~~that affect~~, high interest rate levels, rapid changes in interest rates, decreased access to debt capital or liquidity constraints, downturns in the general macroeconomic backdrop, or ~~create~~regulatory or financial market ~~or regulatory~~ uncertainty.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, approximately ~~43.1%~~44.1% of our revenue was transacted in foreign currencies. The following table sets forth our revenue derived from our most significant currencies (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022				2021				2022				2021					2023				2022
United States dollar	United States dollar	$	4,320,235	57.4	%	$	3,943,714	58.0	%	$	12,887,747	56.9	%	$	10,856,277	56.6	%	United States dollar	$	4,144,810	55.9	%	$	4,131,397	56.3	%
British pound sterling	British pound sterling	970,307		12.9	%	841,241		12.4	%	3,002,798		13.3	%	2,451,222		12.8	%	British pound sterling	995,428		13.4	%	985,999		13.4	%
Euro	Euro	690,675		9.2	%	668,061		9.8	%	2,085,971		9.2	%	2,016,846		10.5	%	Euro	657,481		8.9	%	681,912		9.3	%
Canadian dollar	Canadian dollar	297,266		3.9	%	252,553		3.7	%	940,042		4.2	%	751,275		3.9	%	Canadian dollar	294,251		4.0	%	318,560		4.3	%
Australian dollar	Australian dollar	196,313		2.6	%	152,027		2.2	%	558,456		2.5	%	423,320		2.2	%	Australian dollar	190,818		2.6	%	165,939		2.3	%
Indian rupee	Indian rupee	129,506		1.7	%	113,142		1.7	%	376,992		1.7	%	322,662		1.7	%	Indian rupee	154,250		2.1	%	119,866		1.6	%
Japanese yen																		Japanese yen	115,785		1.6	%	117,471		1.6	%
Chinese yuan	Chinese yuan	127,952		1.7	%	109,768		1.6	%	367,875		1.6	%	320,354		1.7	%	Chinese yuan	110,753		1.5	%	118,343		1.6	%
Swiss franc	Swiss franc	96,821		1.3	%	89,696		1.3	%	289,394		1.3	%	279,683		1.5	%	Swiss franc	96,528		1.3	%	95,558		1.3	%
Singapore dollar	Singapore dollar	90,069		1.2	%	68,481		1.0	%	258,129		1.1	%	210,129		1.1	%	Singapore dollar	94,365		1.3	%	83,125		1.1	%
Japanese yen		84,702		1.1	%	75,178		1.1	%	297,604		1.3	%	243,287		1.3	%
Other currencies (1)	Other currencies (1)	525,700		7.0	%	484,466		7.2	%	1,568,749		6.9	%	1,320,764		6.7	%	Other currencies (1)	556,645		7.4	%	514,763		7.2	%
Total revenue	Total revenue	$	7,529,546	100.0	%	$	6,798,327	100.0	%	$	22,633,757	100.0	%	$	19,195,819	100.0	%	Total revenue	$	7,411,114	100.0	%	$	7,332,933	100.0	%

(1)Approximately 4746 currencies comprise ~~7.0%~~7.4% of our revenue for the three months ended ~~September 30, 2022~~March 31, 2023, and approximately 48 currencies comprise ~~6.9%~~7.2% of our revenue for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. ~~Approximately 37 currencies comprise 7.2% and 6.7%~~

Table of ~~our revenues for the three and nine months ended September 30, 2021, respectively.~~contents

Although we operate globally, we report our results in U.S. dollars. As a result, the strengthening or weakening of the U.S. dollar may positively or negatively impact our reported results. For example, we estimate that had the British pound sterling-to-U.S. dollar exchange rates been 10% higher during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the net impact would have been a decrease in pre-tax income of ~~$1.0~~$3.7 million. Had the euro-to-U.S. dollar exchange rates been 10% higher during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the net impact would have been an increase in pre-tax income of ~~$21.6~~$1.5 million. These hypothetical calculations estimate the impact of translating results into U.S. dollars and do not include an estimate of the impact that a 10% change in the U.S. dollar against other currencies would have had on our foreign operations.

Fluctuations in foreign currency exchange rates may result in corresponding fluctuations in revenue and earnings as well as the AUM for our investment management business, which could have a material adverse effect on our business, financial condition and operating results. Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. Our international operations also are subject to, among other things, political instability and changing regulatory environments, which affect the currency markets and which as a result may adversely affect our future financial condition and results of operations. We routinely monitor these risks and related costs and evaluate the appropriate amount of oversight to allocate towards business activities in foreign countries where such risks and costs are particularly significant.

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Results of Operations

The following table sets forth items derived from our consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue:
Net revenue:
Facilities management $ 1,281,525 17.0 % $ 1,231,101 18.1 % $ 3,807,804 16.8 % $ 3,587,247 18.7 %
Property management 439,125 5.8 % 422,652 6.2 % 1,321,669 5.8 % 1,252,599 6.5 %
Project management 674,671 9.0 % 320,694 4.7 % 1,970,850 8.7 % 966,821 5.0 %
Valuation 177,198 2.4 % 176,644 2.6 % 554,879 2.5 % 517,460 2.7 %
Loan servicing 77,744 1.0 % 78,497 1.2 % 236,401 1.0 % 213,233 1.1 %
Advisory leasing 989,615 13.1 % 869,124 12.8 % 2,732,045 12.1 % 2,082,248 10.9 %
Capital markets:
Advisory sales 600,527 8.0 % 673,411 9.9 % 1,936,073 8.6 % 1,677,557 8.7 %
Commercial mortgage origination 130,425 1.7 % 181,813 2.7 % 435,678 1.9 % 483,556 2.5 %
Investment management 146,695 1.9 % 135,175 2.0 % 454,816 2.0 % 406,516 2.1 %
Development services 111,043 1.5 % 88,657 1.3 % 363,960 1.6 % 271,808 1.4 %
Corporate, other and eliminations (5,732) (0.1) % (4,795) (0.1) % (12,751) (0.1) % (15,397) 0.0 %
Total net revenue 4,622,836 61.3 % 4,172,973 61.4 % 13,801,424 60.9 % 11,443,648 59.6 %
Pass through costs also recognized as revenue 2,906,710 38.7 % 2,625,354 38.6 % 8,832,333 39.1 % 7,752,171 40.4 %
Total revenue 7,529,546 100.0 % 6,798,327 100.0 % 22,633,757 100.0 % 19,195,819 100.0 %
Costs and expenses:
Cost of revenue 5,934,490 78.8 % 5,258,947 77.3 % 17,740,668 78.4 % 14,995,252 78.1 %
Operating, administrative and other 1,080,316 14.3 % 1,025,681 15.1 % 3,335,131 14.7 % 2,811,224 14.6 %
Depreciation and amortization 142,136 1.9 % 122,564 1.8 % 453,527 2.0 % 363,727 2.0 %
Asset impairments — 0.0 % — 0.0 % 36,756 0.2 % — 0.0 %
Total costs and expenses 7,156,942 95.0 % 6,407,192 94.2 % 21,566,082 95.3 % 18,170,203 94.7 %
Gain on disposition of real estate 1,746 0.0 % 18,530 0.3 % 200,564 0.9 % 19,615 0.1 %
Operating income 374,350 5.0 % 409,665 6.0 % 1,268,239 5.6 % 1,045,231 5.4 %
Equity income from unconsolidated subsidiaries 233,972 3.1 % 163,809 2.4 % 396,011 1.7 % 459,535 2.4 %
Other income (loss) 7,844 0.1 % 7,693 0.1 % (13,529) (0.1) % 22,470 0.1 %
Interest expense, net of interest income 19,957 0.3 % 11,038 0.1 % 51,301 0.1 % 34,916 0.1 %
Write-off of financing costs on extinguished debt 1,862 0.0 % — 0.0 % 1,862 0.0 % — 0.0 %
Income before provision for income taxes 594,347 7.9 % 570,129 8.4 % 1,597,558 7.1 % 1,492,320 7.8 %
Provision for income taxes 142,667 1.9 % 133,507 2.0 % 259,691 1.1 % 343,279 1.8 %
Net income 451,680 6.0 % 436,622 6.4 % 1,337,867 6.0 % 1,149,041 6.0 %
Less: Net income attributable to non-controlling interests 5,041 0.1 % 879 0.0 % 11,609 0.1 % 4,459 0.0 %
Net income attributable to CBRE Group, Inc. $ 446,639 5.9 % $ 435,743 6.4 % $ 1,326,258 5.9 % $ 1,144,582 6.0 %
Core EBITDA $ 605,839 8.0 % $ 732,437 10.8 % $ 2,256,494 10.0 % $ 1,908,006 9.9 %
Consolidated Adjusted EBITDA (1)
$ 787,858 10.5 % $ 736,948 10.8 % $ 2,248,530 9.9 % $ 1,950,043 10.2 %
Adjusted EBITDA attributable to non-controlling interests (1)
$ 17,477 $ 879 $ 55,602 $ 4,459
Adjusted EBITDA attributable to CBRE Group, Inc. (1)
$ 770,381 $ 736,069 $ 2,192,928 $ 1,945,584
~~_______________________________~~

~~(1)~~In conjunction with the acquisition of a 60% interest in Turner & Townsend in the fourth quarter of 2021, we modified our definition of Consolidated Adjusted EBITDA and Segment Operating Profit (SOP) to be inclusive of net income attributable to non-controlling interests and have recast prior periods to conform to this definition.

~~Table of contents~~


	Three Months Ended March 31,
	2023				2022
Revenue:
Net revenue:
Facilities management	$	1,395,203	18.8	%	$	1,242,529	16.9	%
Property management	441,195		6.0	%	438,094		6.0	%
Project management	734,774		9.9	%	623,961		8.5	%
Valuation	165,612		2.2	%	181,142		2.5	%
Loan servicing	77,484		1.0	%	74,015		1.0	%
Advisory leasing	708,654		9.6	%	772,722		10.5	%
Capital markets:
Advisory sales	367,404		5.0	%	619,827		8.5	%
Commercial mortgage origination	70,940		1.0	%	144,870		2.0	%
Investment management	147,490		2.0	%	150,567		2.1	%
Development services	76,356		1.0	%	133,190		1.8	%
Corporate, other and eliminations	(4,322)		(0.1)	%	(4,888)		(0.1)	%
Total net revenue	4,180,790		56.4	%	4,376,029		59.7	%
Pass through costs also recognized as revenue	3,230,324		43.6	%	2,956,904		40.3	%
Total revenue	7,411,114		100.0	%	7,332,933		100.0	%
Costs and expenses:
Cost of revenue	6,006,413		81.0	%	5,752,194		78.5	%
Operating, administrative and other	1,208,904		16.3	%	1,065,996		14.6	%
Depreciation and amortization	161,491		2.2	%	149,032		2.0	%
Asset impairments	—		0.0	%	10,351		0.1	%
Total costs and expenses	7,376,808		99.5	%	6,977,573		95.2	%
Gain on disposition of real estate	3,059		0.0	%	21,592		0.3	%
Operating income	37,365		0.5	%	376,952		5.1	%
Equity income from unconsolidated subsidiaries	141,682		1.9	%	42,871		0.5	%
Other income (loss)	2,475		0.0	%	(14,464)		(0.2)	%
Interest expense, net of interest income	28,414		0.3	%	12,826		0.1	%

Income before provision for (benefit from) income taxes	153,108		2.1	%	392,533		5.3	%
Provision for (benefit from) income taxes	28,036		0.4	%	(3,738)		(0.1)	%
Net income	125,072		1.7	%	396,271		5.4	%
Less: Net income attributable to non-controlling interests	8,180		0.1	%	3,974		0.1	%
Net income attributable to CBRE Group, Inc.	$	116,892	1.6	%	$	392,297	5.3	%

Core EBITDA	$	532,589	7.2	%	$	732,063	10.0	%

Net revenue, segment operating profit on revenue margin, segment operating profit on net revenue margin, ~~core EBITDA~~ and ~~consolidated adjusted~~core EBITDA are not recognized measurements under accounting principles generally accepted in the United States, or GAAP. When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP. We generally use these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. We believe these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected costs and charges that may obscure the underlying performance of our business and related trends. Because not all companies use identical calculations, our presentation of net revenue ~~core EBITDA~~ and ~~consolidated adjusted~~core EBITDA may not be comparable to similarly titled measures of other companies.

Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients and generally has no margin. Segment operating profit on revenue margin is computed by dividing segment operating profit by revenue and provides a comparable profitability measure against our peers. Segment operating profit on net revenue margin is computed by dividing segment operating profit by net revenue and is a better indicator of the segment’s margin since it does not include the diluting effect of pass through revenue which generally has no margin.

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We use ~~consolidated adjusted~~core EBITDA as an indicator of ~~consolidated~~the company’s operating financial performance. ItCore EBITDA represents earnings before the portion attributable to non-controlling interests, net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to certain carried interest incentive compensation expense ~~(reversal)~~ to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, and costs associated with efficiency and cost-reduction ~~initiatives, and a provision associated with Telford’s fire safety remediation efforts.~~initiatives. Core EBITDA ~~removes from adjusted EBITDA~~excludes the impact of fair value changes on certain non-core non-controlling equity investments that are not directly related to our business segments as these could fluctuate significantly period over period. We believe that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income taxes and the accounting effects of capital spending.

~~Consolidated adjusted EBITDA and~~ Core EBITDA ~~are~~is not intended to be ~~measures~~a measure of free cash flow for our discretionary use because it does not consider certain cash requirements such as tax and debt service payments. ~~These measures~~This measure may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt. We also use ~~consolidated adjusted~~core EBITDA as a significant component when measuring our operating performance under our employee incentive compensation programs.

~~Table of contents~~

~~Consolidated adjusted EBITDA and~~ Core EBITDA ~~are~~is calculated as follows (dollars in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net income attributable to CBRE Group, Inc.	Net income attributable to CBRE Group, Inc.	$	446,639	$	435,743	$	1,326,258	$	1,144,582	Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	5,041		879		11,609		4,459		Net income attributable to non-controlling interests	8,180		3,974
Net income	Net income	451,680		436,622		1,337,867		1,149,041		Net income	125,072		396,271
Add:
Adjustments:										Adjustments:
Depreciation and amortization	Depreciation and amortization	142,136		122,564		453,527		363,727		Depreciation and amortization	161,491		149,032
Asset impairments	Asset impairments	—		—		36,756		—		Asset impairments	—		10,351
Interest expense, net of interest income	Interest expense, net of interest income	19,957		11,038		51,301		34,916		Interest expense, net of interest income	28,414		12,826
Write-off of financing costs on extinguished debt		1,862		—		1,862		—
Provision for income taxes		142,667		133,507		259,691		343,279

Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue		(6,161)		16,959		9,200		33,963
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	28,036		(3,738)

Carried interest incentive compensation expense to align with the timing of associated revenue										Carried interest incentive compensation expense to align with the timing of associated revenue	6,978		22,856
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period	Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period	(1,300)		47		(4,447)		772		Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period	—		(1,696)
Costs incurred related to legal entity restructuring	Costs incurred related to legal entity restructuring	893		—		12,814		—		Costs incurred related to legal entity restructuring	—		1,676
Integration and other costs related to acquisitions	Integration and other costs related to acquisitions	7,716		16,211		24,046		24,345		Integration and other costs related to acquisitions	18,134		8,121

Costs associated with efficiency and cost-reduction initiatives	Costs associated with efficiency and cost-reduction initiatives	18,929		—		18,929		—		Costs associated with efficiency and cost-reduction initiatives	138,247		—
Provision associated with Telford’s fire safety remediation efforts		9,479		—		46,984		—
Consolidated Adjusted EBITDA		$	787,858	$	736,948	$	2,248,530	$	1,950,043

Less: Net fair value adjustments on strategic non-core investments		182,019		4,511		(7,964)		42,037
Net fair value adjustments on strategic non-core investments										Net fair value adjustments on strategic non-core investments	26,217		136,364
Core EBITDA	Core EBITDA	$	605,839	$	732,437	$	2,256,494	$	1,908,006	Core EBITDA	$	532,589	$	732,063

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022

We reported consolidated net income of ~~$446.6~~$116.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 on revenue of ~~$7.5~~$7.4 billion as compared to consolidated net income of ~~$435.7~~$392.3 million on revenue of ~~$6.8~~$7.3 billion for the three months ended ~~September 30, 2021.~~March 31, 2022.

Our revenue on a consolidated basis for the three months ended ~~September 30, 2022~~March 31, 2023 increased by ~~$0.7 billion,~~$78.2 million, or ~~10.8%~~1.1%, as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The revenue increase reflects growth in the Global Workplace Solutions (GWS) segment partially offset by a decline in revenue in the Advisory Services and in the Real Estate Investments (REI) ~~segments while Advisory Services revenue remained relatively flat.~~segments. Revenue in our Global Workplace Solutions segment increased by ~~$676.6~~$532.1 million or ~~16.2%~~11.1% due to ~~an increase in the project management revenue stream which now also reflects a full quarter contribution~~new client wins, expansion of services to existing clients, and contributions from ~~our acquisition of Turner & Townsend that closed in November 2021, and growth~~strategic in-fill acquisitions. Revenue in our ~~facilities management line of business.~~Advisory Services segment decreased 17.5% and was significantly impacted by the current macroeconomic and fiscal environment driving down sale and lease revenue during the quarter. Revenue in the Real Estate ~~Investment~~Investments segment ~~was up 15.1% as we continue~~decreased 21.1% primarily due to ~~realize elevated asset management fees driven by asset appreciation and increased~~decreased development and construction revenue ~~due to completion of certain key projects~~and lower real estate sales activities in our Telford line of business. Advisory Services gross revenue remained relatively flat primarily due to a decline in our capital markets line of business (which includes sales and commercial mortgage origination) which offset the ~~revenue growth in leasing and property management.~~international development markets. Foreign currency translation had a ~~5.1%~~3.3% negative impact on total revenue during the three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by weakness in the British pound sterling, euro and ~~Japanese yen.~~Canadian dollar.

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Our cost of revenue on a consolidated basis increased by ~~$0.7 billion,~~$254.2 million, or ~~12.8%~~4.4%, during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021.~~2022. This increase was primarily due to higher costs associated with our Global Workplace Solutions segment due to growth in our facilities and project management businesses, ~~full quarter of Turner & Townsend operations,~~ and ~~increased development and construction costs to generate higher development and construction revenue. Our Advisory Services segment also experienced an increase~~approximately $18 million in charges associated with cost savings initiatives. This was partially offset by a decline in cost of revenue ~~mainly~~in our Advisory Services segment due to ~~higher~~lower commission expense ~~due to growth~~and by a decline in cost of revenue in our ~~sales and leasing~~global development business ~~earlier this year,~~ in ~~addition to higher support costs.~~our Real Estate Investments segment. Foreign currency translation had a ~~5.1%~~3.4% positive impact on total cost of revenue during the three months ended ~~September 30, 2022.~~March 31, 2023. Cost of revenue as a percentage of revenue increased to ~~78.8%~~81.0% for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~77.3%~~78.5% for the three months ended ~~September 30, 2021.~~March 31, 2022. This was mainly due to ~~a shift~~growth in ~~the composition~~facilities management and project management services in our Global Workplace Solutions segment, in addition, to certain fixed cost of revenue ~~mix for Advisory which saw a decline in its high margin debt origination line of business. In addition, inflationary market conditions drove up the cost of construction and development~~ in our ~~Telford line of business.~~

~~Table of contents~~

Advisory Services segment.

Our operating, administrative and other expenses on a consolidated basis increased by ~~$54.6~~$142.9 million, or ~~5.3%~~13.4%, during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021.~~2022. The increase was primarily due to anour efficiency and cost-reduction initiatives that started during the third quarter of 2022. As part of these initiatives, we incurred approximately $120.3 million in additional operating expenses, primarily in the form of employee separation benefits, contract termination fees and consulting costs, that did not occur during three months ended March 31, 2022. In addition, we also incurred higher professional fees to support us as we continue to explore various capital allocation opportunities. This increase was partially offset by lower overall stock compensation expense in ~~compensation and benefits for support staff given~~ the ~~expansion of the overall business, foreign currency transaction losses, increased discretionary expenses, and acquisition and integration related costs~~current period as compared to the three months ended September 30, 2021. In addition, the current quarter also includes operating expenses from our Turner & Townsend business. We also recorded an incremental $9.5 million of estimated provision related to fire and building safety remediation work that our Telford businesssame period in the Real Estate Investment segment expects to undertake based on the local government mandate. The company also initiated certain efficiency and cost reduction initiatives in the third quarter which resulted in approximately $18.9 million of charges that did not occur lastprior year. ~~These increased expenses were partially offset by downward revisions to certain incentive compensation expenses as we align with expected company performance.~~ Foreign currency translation had a ~~5.1%~~3.6% positive impact on total operating, administrative and other expenses during the three months ended ~~September 30, 2022.~~March 31, 2023. Operating expenses as a percentage of revenue ~~decreased~~increased to ~~14.3%~~16.3% for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~15.1%~~14.6% for the three months ended ~~September 30, 2021,~~March 31, 2022, primarily due to ~~downward revisions to incentive compensation in both investment management and development lines of businesses.~~significant costs incurred under our efficiency initiatives against a modest revenue increase.

Our depreciation and amortization expense on a consolidated basis increased by ~~$19.6~~$12.5 million, or ~~16.0%~~8.4%, during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021.~~2022. This increase was primarily attributable to ~~amortization~~accelerated depreciation expense recognition due to downward revision to the remaining useful lives of ~~backlog~~certain property, plant and ~~customer relationship intangibles from~~equipment.

We recorded$10.4 million in asset impairments on a consolidated basis for the ~~acquisition~~three months ended March 31, 2022 related to our exit of ~~Turner & Townsend, with no comparable activity~~the Advisory Services business in Russia. We did not record any asset impairments for the ~~prior period.~~three months ended March 31, 2023.

Our gain on disposition of real estate on a consolidated basis was ~~$1.7~~$3.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, which was a decrease of ~~$16.8~~$18.5 million over the prior year period, due to fewer property sales onof certain consolidated ~~deals~~projects within our Real Estate Investments segment.

Our equity income from unconsolidated subsidiaries ~~increased by $70.2 million, or 42.8%, during the three months ended September 30, 2022~~more than tripled this quarter as compared to the same period in ~~2021,~~2022, an increase of $98.8 million. This was primarily driven by ~~an increase~~higher equity earnings associated with property sales reported in ~~the~~our Real Estate Investments segment and lower negative fair value adjustment of our non-core strategic equity investment in Altus Power, Inc. (Altus) ~~partially offset by lower~~as compared to first quarter 2022.

Our other income on a consolidated basis was $2.5 million for the three months ended March 31, 2023 versus a loss of $14.5 million for the same period in the prior year. Losses incurred last year were primarily due to sales of certain marketable equity ~~earnings associated with property sales reported in our Real Estate Investments segment.~~securities.

Our consolidated interest expense, net of interest income, increased by ~~$8.9~~$15.6 million, or ~~80.8%~~121.5%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021.~~2022. This increase was primarily due to the impact of higher interest ~~expense associated with deferred purchase consideration related to the Turner & Townsend transaction~~rates and increased borrowings on the revolving credit ~~facility this quarter as compared to the same period last year.~~facilities.

Our provision for income taxes on a consolidated basis was ~~$142.7~~$28.0 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to a ~~provision for~~benefit from income taxes of ~~$133.5~~$3.7 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase of ~~$9.2~~$31.8 million is primarily related to ~~increase~~a one-time tax benefit in 2022 as a result of legal entity restructuring, offset by a decrease from corresponding change in earnings. Our effective tax rate increased to ~~24.0%~~18.3% for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~23.4%~~(1.0)% for the three months ended ~~September 30, 2021.~~March 31, 2022. Our effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 was different than the U.S. federal statutory tax rate of 21.0%, primarily due to U.S. state taxes and ~~local taxes.~~favorable permanent book tax differences.

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~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

We reported consolidated net income of $1.3 billion for the nine months ended September 30, 2022 on revenue of $22.6 billion as compared to consolidated net income of $1.1 billion on revenue of $19.2 billion for the nine months ended September 30, 2021.

Our revenue on a consolidated basis for the nine months ended September 30, 2022 increased by $3.4 billion, or 17.9%, as compared to the nine months ended September 30, 2021. The revenue increase reflects growth across the three business segments. Revenue in our Global Workplace Solutions segment increased by more than 18.6% primarily due to an increase in the project management revenue stream which now also reflects a full period contribution from our Turner & Townsend partnership supplemented by a modest growth in our facilities management business. Advisory Services revenue increased by $1.0 billion or 16.2% as all lines of business, except commercial mortgage origination, experienced growth this period as compared to the same period in the prior year. Significant growth occurred in our transaction business with sales and lease revenue up over 15.4% and 31.2%, respectively, as we continue to recover from the impacts of the Covid-19 pandemic across our major markets. Revenue in the Real Estate Investment services segment was up 20.7% as we continue to realize higher asset management fees driven by asset appreciation and increased development and construction revenue, partially offset by lower co-investment returns. Foreign currency translation had a 3.7% negative impact on total revenue during the nine months ended September 30, 2022, primarily driven by weakness in the euro, British pound sterling and Japanese yen.

Our cost of revenue on a consolidated basis increased by $2.7 billion, or 18.3%, during the nine months ended September 30, 2022 as compared to the same period in 2021. This increase was primarily due to higher costs associated with our Global Workplace Solutions segment given the growth in our facilities management and project management businesses, including Turner & Townsend, and higher commission expense associated with our Advisory Services segment due to growth in our sales and leasing business earlier in the year. Foreign currency translation had a 3.5% positive impact on total cost of revenue during the nine months ended September 30, 2022. Cost of revenue as a percentage of revenue increased slightly to 78.4% for the nine months ended September 30, 2022 as compared to 78.1% for the nine months ended September 30, 2021.

Our operating, administrative and other expenses on a consolidated basis increased by $523.9 million, or 18.6%, for the nine months ended September 30, 2022 as compared to the same period in 2021. The increase was primarily due to an increase in compensation and benefits for support staff given the expansion of the overall business, discretionary expenses, incentive compensation expense, acquisition and integration related costs, provision related to Telford Home’s building and fire safety remediation work, and charges associated with efficiency and cost reduction initiatives as compared to the nine months ended September 30, 2021. In addition, the current period also included operating expenses from our Turner & Townsend business. Foreign currency translation also had a 3.9% positive impact on total operating expenses during the nine months ended September 30, 2022. Operating expenses as a percentage of revenue increased slightly to 14.7% for the nine months ended September 30, 2022 from 14.6% for the nine months ended September 30, 2021, primarily due to investments made by GWS in new roles to drive future business growth.

Our depreciation and amortization expense on a consolidated basis increased by $89.8 million, or 24.7%, during the nine months ended September 30, 2022 as compared to the same period in 2021. This increase was primarily attributable to amortization of backlog and customer relationship intangibles from the acquisition of Turner & Townsend, with no comparable activity in the prior period.

Our asset impairments on a consolidated basis totaled $36.8 million for the nine months ended September 30, 2022. We recorded $10.4 million in asset impairment during the first quarter of 2022 related to our exit of the Advisory Services business in Russia. We recorded $26.4 million of non-cash asset impairment charges in our Real Estate Investment segment during the second quarter related to Telford Homes. The charge is attributable to the effect of elevated inflation on construction, materials and labor costs, which will reduce Telford Homes’ profitability because the sales prices for the build-to-rent developments are fixed at the time the developments are sold to a long-term investor. This resulted in a need to impair the goodwill balance associated with the Telford Homes reporting unit, primarily due to an expected reduction in cash flows and profitability. There were no asset impairments recorded in the comparative prior period.

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Our gain on disposition of real estate on a consolidated basis increased by $180.9 million, during the nine months ended September 30, 2022 as compared to the same period in 2021 due to significant gains associated with certain property sales on consolidated deals within our Real Estate Investments segment.

Our equity income from unconsolidated subsidiaries on a consolidated basis decreased by $63.5 million, or 13.8%, during the nine months ended September 30, 2022 as compared to the same period in 2021, primarily driven by a lower equity pickup and fair value adjustment in our non-core investment portfolio this year. In addition, we recorded higher equity earnings associated with property sales reported in our Real Estate Investments segment last year as compared to this year.

Our consolidated interest expense, net of interest income, increased by $16.4 million, or 46.9%, for the nine months ended September 30, 2022 as compared to the same period in 2021. This increase was primarily due to interest expense related to deferred purchase consideration associated with the Turner & Townsend acquisition and interest expense associated with net borrowings on the revolving credit facilities. In addition, we recorded nine months’ interest expense this period on the 2.500% senior note issued in late March 2021.

Our provision for income taxes on a consolidated basis was $259.7 million for the nine months ended September 30, 2022 as compared to a provision for income taxes of $343.3 million for the nine months ended September 30, 2021. The decrease of $83.6 million is primarily related to the recognition of a net discrete tax benefit attributable to an outside basis difference recognized as a result of legal entity restructuring. Our effective tax rate decreased to 16.3% for the nine months ended September 30, 2022 from 23.0% for the nine months ended September 30, 2021. Our effective tax rate for the nine months ended September 30, 2022 was different than the U.S. federal statutory tax rate of 21.0% primarily due to the recognition of a net discrete tax benefit attributable to an outside basis difference recognized as a result of legal entity restructuring, partially offset by state and local taxes.

On August 16, 2022, the Inflation Reduction Act (IRA), a budget reconciliation package that contained legislation targeting energy security and climate change, healthcare and taxes, was signed into law. With respect to corporate-level taxes, the IRA included a 1% excise tax on stock buybacks and a 15% minimum corporate minimum tax (CAMT) based on financial statement income of certain U.S. companies that meet the $1 billion profitability threshold criteria, effective after December 31, 2022. We continue to evaluate the impact of the legislation and forthcoming administrative guidance and regulations to our financial statements and results of operations.

Segment Operations

We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions; and (3) Real Estate Investments.

Advisory Services provides a comprehensive range of services globally, including property leasing, ~~property~~capital markets (property sales and mortgage ~~services,~~origination), mortgage sales and servicing, property management, and valuation. Global Workplace Solutions provides a broad suite of integrated, contractually-based outsourcing services to occupiers of real estate, including facilities management and project management. Real Estate Investments includes investment management services provided globally and development services in the U.S., U.K. and Continental Europe.

We also have a Corporate and Other segment. Corporate primarily consists of corporate overhead costs. Other consists of activities from strategic non-core, non-controlling equity investments and is considered an operating segment but does not meet the aggregation criteria for presentation as a separate reportable segment and is, therefore, combined with Corporate and reported as Corporate and other. It also includes eliminations related to inter-segment revenue. For additional information on our segments, see Note 1513 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

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Advisory Services

The following table summarizes our results of operations for our Advisory Services operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue:
Net revenue:
Property management $ 439,125 18.0 % $ 422,652 17.5 % $ 1,321,669 18.2 % $ 1,252,599 20.0 %
Valuation 177,198 7.3 % 176,644 7.3 % 554,879 7.6 % 517,460 8.3 %
Loan servicing 77,744 3.2 % 78,497 3.3 % 236,401 3.3 % 213,233 3.4 %
Advisory leasing 989,615 40.7 % 869,124 36.0 % 2,732,045 37.6 % 2,082,248 33.3 %
Capital markets:
Advisory sales 600,527 24.7 % 673,411 27.9 % 1,936,073 26.6 % 1,677,557 26.8 %
Commercial mortgage origination 130,425 5.4 % 181,813 7.6 % 435,678 6.0 % 483,556 7.7 %
Total segment net revenue 2,414,634 99.3 % 2,402,141 99.6 % 7,216,745 99.3 % 6,226,653 99.5 %
Pass through costs also recognized as revenue 19,167 0.7 % 10,006 0.4 % 53,487 0.7 % 30,491 0.5 %
Total segment revenue 2,433,801 100.0 % 2,412,147 100.0 % 7,270,232 100.0 % 6,257,144 100.0 %
Costs and expenses:
Cost of revenue 1,501,276 61.7 % 1,433,315 59.4 % 4,368,039 60.1 % 3,652,711 58.4 %
Operating, administrative and other 516,270 21.2 % 466,189 19.3 % 1,510,937 20.8 % 1,298,407 20.7 %
Depreciation and amortization 72,867 3.0 % 76,249 3.2 % 227,170 3.1 % 220,172 3.5 %
Asset impairments — 0.0 % — 0.0 % 10,351 0.1 % — 0.0 %
Total costs and expenses 2,090,413 85.9 % 1,975,753 81.9 % 6,116,497 84.1 % 5,171,290 82.6 %
Gain on disposition of real estate 21 0.0 % — 0.0 % 21 0.0 % — 0.0 %
Operating income 343,409 14.1 % 436,394 18.1 % 1,153,756 15.9 % 1,085,854 17.4 %
Equity income from unconsolidated subsidiaries 3,514 0.1 % 19,567 0.8 % 14,775 0.2 % 22,466 0.4 %
Other income (loss) 511 0.1 % (10,531) (0.5) % 560 0.0 % (9,729) (0.2) %
Add-back: Depreciation and amortization 72,867 3.0 % 76,249 3.2 % 227,170 3.1 % 220,172 3.5 %
Add-back: Asset impairments — 0.0 % — 0.0 % 10,351 0.1 % — 0.0 %
Adjustments:
Costs associated with efficiency and cost-reduction initiatives 3,501 0.1 % — 0.0 % 3,501 0.1 % — 0.0 %
Segment operating profit and segment operating profit on revenue margin (1)
$ 423,802 17.4 % $ 521,679 21.6 % $ 1,410,113 19.4 % $ 1,318,763 21.1 %
Segment operating profit on net revenue margin 17.6 % 21.7 % 19.5 % 21.2 %
Segment operating profit attributable to non-controlling interests (1)
$ 728 $ 140 $ 2,648 $ 627
Segment operating profit attributable to CBRE Group, Inc. (1)
$ 423,074 $ 521,539 $ 1,407,465 $ 1,318,136
~~_______________________________~~

~~(1)~~During the fourth quarter of 2021, we changed the definition of SOP to include net income (loss) attributable to non-controlling interest, as discussed further in Note 15 (Segments). Prior period segment operating profit for our reportable segments have been recast to conform to this change.


	Three Months Ended March 31,
	2023				2022
Revenue:
Net revenue:
Property management	$	441,195	23.8	%	$	438,094	19.5	%
Valuation	165,612		8.9	%	181,142		8.1	%
Loan servicing	77,484		4.2	%	74,015		3.3	%
Advisory leasing	708,654		38.2	%	772,722		34.4	%
Capital markets:
Advisory sales	367,404		19.8	%	619,827		27.6	%
Commercial mortgage origination	70,940		3.9	%	144,870		6.3	%
Total segment net revenue	1,831,289		98.8	%	2,230,670		99.2	%
Pass through costs also recognized as revenue	22,579		1.2	%	17,778		0.8	%
Total segment revenue	1,853,868		100.0	%	2,248,448		100.0	%
Costs and expenses:
Cost of revenue	1,126,761		60.8	%	1,312,291		58.4	%
Operating, administrative and other	522,866		28.2	%	480,255		21.4	%
Depreciation and amortization	78,443		4.2	%	74,887		3.3	%
Asset impairments	—		0.0	%	10,351		0.4	%
Total costs and expenses	1,728,070		93.2	%	1,877,784		83.5	%

Operating income	125,798		6.8	%	370,664		16.5	%
Equity income from unconsolidated subsidiaries	1,002		0.1	%	9,756		0.5	%
Other income (loss)	1,938		0.1	%	(4)		0.0	%
Add-back: Depreciation and amortization	78,443		4.2	%	74,887		3.3	%
Add-back: Asset impairments	—		0.0	%	10,351		0.4	%
Adjustments:





Costs associated with efficiency and cost-reduction initiatives	62,541		3.3	%	—		0.0	%
Segment operating profit and segment operating profit on revenue margin	$	269,722	14.5	%	$	465,654	20.7	%
Segment operating profit on net revenue margin			14.7	%			20.9	%

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Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022

Revenue ~~increased~~decreased by ~~$21.7~~$394.6 million, or ~~0.9%~~17.5%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended September 30, 2021. Lease revenue increased 13.9% with strengths across most global markets. Growth in leasing revenue was supported by the continued recovery in industrial and office sectors, mainly in the Americas, which saw an increase of over 18.6% this quarter as compared to the prior period. This was partially offset by a drop in sales revenue, mainly in the Americas region, and commercial mortgage origination revenue.March 31, 2022. The current macroeconomic and fiscal environment has put a significant stress on the lending environment making it difficult to access capital at a reasonable cost. ~~Sales activity remained strong~~Leasing revenue declined 8.3%, sales revenue was down 40.7% and mortgage origination revenue was down 51.0%. The slowdown in the ~~Continental Europe and~~lending environment also affected appraisal revenue which was down 8.6%. This was partially offset by a modest growth in the ~~United Kingdom which experienced growth~~property management line of ~~15.6% and 5.7%, respectively.~~business, mainly in the U.S. Foreign currency translation had a ~~4.1%~~2.4% negative impact on total revenue during the three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by weakness in the ~~euro,~~ British pound sterling, Japanese yen and ~~Japanese yen.~~euro.

Cost of revenue ~~increased~~decreased by ~~$68.0~~$185.5 million, or ~~4.7%~~14.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021,~~2022, primarily due to ~~increased~~lower commission expense related to ~~growth~~a decline in ~~the sales~~our leasing and ~~leasing business earlier in the year along with higher support costs.~~capital markets business. Foreign currency translation had a ~~3.8%~~2.5% positive impact on total cost of revenue during the three months ended ~~September 30, 2022.~~March 31, 2023. Cost of revenue as a percentage of revenue increased to ~~61.7%~~60.8% for the three months ended ~~September 30, 2022~~March 31, 2023 versus ~~59.4%~~58.4% for the same period in ~~2021.~~2022. This was mainly due to ~~increased commissions. In addition, there was~~ a shift in the composition of total revenue as higher margin capital markets revenue decreased as a percentage of total revenue this quarter versus the same period last ~~year.~~year and growth in property management.

Operating, administrative and other expenses increased by ~~$50.1~~$42.6 million, or ~~10.7%~~8.9%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. This increase was primarily due to ~~an increase in discretionary expenses, support staff compensation~~elevated employee separation benefit and lease exit related ~~benefits,~~charges incurred under our efficiency and ~~technology enablement charges,~~cost-reduction initiatives, partially offset by lower incentive compensation expense to align with expected segment and company performance as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. Foreign currency translation had a ~~5.8%~~3.2% positive impact on total operating expenses during the three months ended ~~September 30, 2022.~~March 31, 2023.

In connection with the origination and sale of mortgage loans for which the company retains servicing rights, we record servicing assets or liabilities based on the fair value of the retained mortgage servicing rights (MSRs) on the date the loans are sold. Upon origination of a mortgage loan held for sale, the fair value of the mortgage servicing rights to be retained is included in the forecasted proceeds from the anticipated loan sale and results in a net gain (which is reflected in revenue). Subsequent to the initial recording, MSRs are amortized (within amortization expense) and carried at the lower of amortized cost or fair value in other intangible assets in the accompanying consolidated balance sheets. They are amortized in proportion to and over the estimated period that the servicing income is expected to be received. For the three months ended ~~September 30, 2022,~~March 31, 2023, MSRs contributed to operating income ~~$34.7~~$16.7 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by ~~$39.4~~$36.5 million of amortization of related intangible assets. For the three months ended ~~September 30, 2021,~~March 31, 2022, MSRs contributed to operating income ~~$48.6~~$35.2 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by ~~$42.3~~$41.0 million of amortization of related intangible assets. The decline in MSRs was associated with lower origination activity given the higher cost of debt.

Equity income from unconsolidated subsidiaries decreased by ~~$16.1~~$8.8 million, or ~~82.0%~~89.7%, during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021,~~2022, due to ~~a positive~~lower net fair value adjustments on our strategic non-controlling equity investment ~~in Industrious last year as compared to a relatively neutral adjustment this quarter.~~

~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

Revenue increased by $1.0 billion, or 16.2%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, driven by growth in all lines of business except commercial mortgage origination. The revenue increase primarily reflects higher sales, up 15.4%, and leasing revenue, up 31.2%, as well as ~~higher~~ valuation revenue driven by increased revenue per assignment and higher demand given the market conditions. Commercial mortgage origination experienced a large increase in revenue last year due to a resurgence of activity following the pandemic in 2020. Foreign currency translation had a 3.4% negative impact on total revenue during the nine months ended September 30, 2022, primarily driven by weakness in euro, British pound sterling and Japanese yen.portfolio.

~~Table of contents~~

Cost of revenue increased by $715.3 million, or 19.6%, for the nine months ended September 30, 2022 as compared to the same period in 2021, primarily due to increased commission expense resulting from higher sales and leasing revenue and increased professional compensation to support the growth in the business. Foreign currency translation also had a 3.1% positive impact on total cost of revenue during the nine months ended September 30, 2022. Cost of revenue as a percentage of revenue increased to 60.1% for the nine months ended September 30, 2022 from 58.4% for the nine months ended September 30, 2021. This was due to a shift in the composition of total revenue where high margin debt origination revenue decreased as a percentage of total revenue this quarter versus the same period last year.

Operating, administrative and other expenses increased by $212.5 million, or 16.4%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. This increase was primarily due to an increase in discretionary spend, support staff compensation and related benefits, technology enablement charges, employee recruitment and temporary help related charges as compared to the nine months ended September 30, 2021. Foreign currency translation also had a 4.3% positive impact on total operating expenses during the nine months ended September 30, 2022.

For the nine months ended September 30, 2022, MSRs contributed to operating income $105.4 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $125.1 million of amortization of related intangible assets. For the nine months ended September 30, 2021, MSRs contributed to operating income $140.6 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $117.8 million of amortization of related intangible assets. The decline was associated with lower origination activity given the higher cost of debt.

Amortization expense during the nine months ended September 30, 2022 increased by $7.8 million, as compared to the same period in 2021, primarily due to accelerated amortization related to loan payoffs in the Capital Markets business.

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Global Workplace Solutions

The following table summarizes our results of operations for our Global Workplace Solutions operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue:
Net revenue:
Facilities management $ 1,281,525 26.5 % $ 1,231,101 29.5 % $ 3,807,804 26.2 % $ 3,587,247 29.2 %
Project management 674,671 13.9 % 320,694 7.7 % 1,970,850 13.5 % 966,821 7.9 %
Total segment net revenue 1,956,196 40.4 % 1,551,795 37.2 % 5,778,654 39.7 % 4,554,068 37.1 %
Pass through costs also recognized as revenue 2,887,543 59.6 % 2,615,348 62.8 % 8,778,846 60.3 % 7,721,680 62.9 %
Total segment revenue 4,843,739 100.0 % 4,167,143 100.0 % 14,557,500 100.0 % 12,275,748 100.0 %
Costs and expenses:
Cost of revenue 4,360,311 90.0 % 3,788,156 90.9 % 13,177,844 90.5 % 11,215,553 91.4 %
Operating, administrative and other 281,783 5.8 % 209,232 5.0 % 776,131 5.3 % 578,527 4.7 %
Depreciation and amortization 57,105 1.2 % 34,580 0.9 % 189,933 1.3 % 101,586 0.8 %
Operating income 144,540 3.0 % 135,175 3.2 % 413,592 2.9 % 380,082 3.1 %
Equity income from unconsolidated subsidiaries 645 0.0 % 749 0.0 % 1,108 0.0 % 983 0.0 %
Other income 2,690 0.1 % 617 0.0 % 5,049 0.0 % 2,688 0.1 %
Add-back: Depreciation and amortization 57,105 1.2 % 34,580 0.9 % 189,933 1.3 % 101,586 0.8 %
Adjustments:
Integration and other costs related to acquisitions 7,716 0.1 % 16,211 0.4 % 24,046 0.2 % 24,345 0.2 %
Costs associated with efficiency and cost-reduction initiatives 6,710 0.1 % — 0.0 % 6,710 0.0 % — 0.0 %
Segment operating profit and segment operating profit on revenue margin (1)
$ 219,406 4.5 % $ 187,332 4.5 % $ 640,438 4.4 % $ 509,684 4.2 %
Segment operating profit on net revenue margin 11.2 % 12.1 % 11.1 % 11.2 %
Segment operating profit attributable to non-controlling interests (1)
$ 16,225 $ 17 $ 51,060 $ 40
Segment operating profit attributable to CBRE Group, Inc. (1)
$ 203,181 $ 187,315 $ 589,378 $ 509,644


	Three Months Ended March 31,
	2023				2022
Revenue:
Net revenue:
Facilities management	$	1,395,203	26.1	%	$	1,242,529	25.9	%
Project management	734,774		13.8	%	623,961		12.9	%
Total segment net revenue	2,129,977		39.9	%	1,866,490		38.8	%
Pass through costs also recognized as revenue	3,207,745		60.1	%	2,939,126		61.2	%
Total segment revenue	5,337,722		100.0	%	4,805,616		100.0	%
Costs and expenses:
Cost of revenue	4,842,639		90.7	%	4,373,967		91.0	%
Operating, administrative and other	323,060		6.1	%	239,386		5.0	%
Depreciation and amortization	63,556		1.2	%	61,969		1.3	%

Total costs and expenses	5,229,255		98.0	%	4,675,322		97.3	%
Operating income	108,467		2.0	%	130,294		2.7	%
Equity income from unconsolidated subsidiaries	341		0.0	%	863		0.0	%
Other income	490		0.0	%	1,489		0.0	%
Add-back: Depreciation and amortization	63,556		1.2	%	61,969		1.3	%

Adjustments:

Integration and other costs related to acquisitions	7,424		0.1	%	8,121		0.2	%
Costs associated with efficiency and cost-reduction initiatives	49,388		1.0	%	—		0.0	%
Segment operating profit and segment operating profit on revenue margin	$	229,666	4.3	%	$	202,736	4.2	%
Segment operating profit on net revenue margin			10.8	%			10.9	%

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Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022

Revenue increased by ~~$676.6~~$532.1 million, or ~~16.2%~~11.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily attributable to growth in the facilities management and project management line of businesses as both experienced growth from new and existing ~~clients. We recorded approximately $325.2 million in revenue~~clients and contributions from ~~Turner & Townsend during the quarter with no such activity in the comparable period. Excluding Turner & Townsend, revenue rose 8.4% with project management up 23.2% due to~~ certain ~~large projects~~strategic and ~~focused growth initiatives.~~in-fill acquisitions. Foreign currency translation had a ~~5.5%~~3.7% negative impact on total revenue during the three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by weakness in the British pound sterling and euro.

Cost of revenue increased by ~~$572.2~~$468.7 million, or ~~15.1%~~10.7%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021,~~2022, driven by the higher revenue leading to higher pass through costs and higher professional compensation. Foreign currency translation had a 5.4% positive impact on total cost of revenue during the three months ended September 30, 2022. Cost of revenue as a percentage of revenue declined modestly at 90.0% for the three months ended September 30, 2022 as comparedcompensation to ~~90.9% for the same period in 2021, primarily due to increase in project management revenue which generally has higher margins.~~

Operating, administrative and other expenses increased by $72.6 million, or 34.7%, for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021. This increase was attributable to higher support staff compensation and related benefits, expenses related to efficiency and cost reduction initiatives and integration costs associated with the Turner & Townsend transaction. In addition, we recorded operating expenses incurred by Turner & Townsend this quarter with no such activity in the comparable period. Foreign currency translation had a 6.0% positive impact on total operating expenses during the three months ended September 30, 2022.

~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

Revenue increased by $2.3 billion, or 18.6%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The increase was primarily attributable to growth in our project management line of business, supplemented by moderate growth in facilities management revenue. We recorded approximately $975.5 million in revenue from Turner & Townsend during the quarter with no such activity in the comparable period. Excluding Turner & Townsend, revenue rose nearly 10.6% with project management up 21.7%. Foreign currency translation had a 3.7% negative impact on total revenue during the nine months ended September 30, 2022, primarily driven by weakness in the British pound sterling and euro.

Cost of revenue increased by $2.0 billion, or 17.5%, for the nine months ended September 30, 2022 as compared to the same period in 2021, driven by the higher revenue leading to higher pass through costs and increased professional compensation.growth. Foreign currency translation had a 3.6% positive impact on total cost of revenue during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Cost of revenue as a percentage of revenue ~~decreased slightly to 90.5%~~remained relatively flat at 90.7% for the ~~nine~~three months ended ~~September 30, 2022 from 91.4%~~March 31, 2023 as compared to 91.0% for the ~~nine months ended September 30, 2021, primarily due to increase~~same period in ~~project management revenue which generally has higher margins.~~2022.

Operating, administrative and other expenses increased by ~~$197.6~~$83.7 million, or ~~34.2%~~35.0%, for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the ~~nine~~three months ended ~~September 30, 2021. The~~March 31, 2022. This increase ~~in compensation expense~~ was attributable to ~~investment in new roles~~higher support staff compensation and related benefits from in-fill acquisitions, expenses related to ~~drive business growth. We also recorded higher stock compensation expenses, employee recruitment costs,~~efficiency and cost-reduction initiatives, contract termination fees, and diligence and integration ~~related~~ costs ~~for Turner & Townsend. In addition, we recorded operating expenses incurred by Turner & Townsend for the nine months ended September 30, 2022~~associated with ~~no such activity in the comparable period.~~recent acquisitions. Foreign currency translation ~~also~~ had a ~~4.0%~~5.6% positive impact on total operating expenses during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

~~Table of contents~~

Real Estate Investments

The following table summarizes our results of operations for our Real Estate Investments (REI) operating segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022				2021				2022				2021					2023				2022
Revenue:	Revenue:																	Revenue:
Investment management	Investment management	$	146,695	56.9	%	$	135,175	60.4	%	$	454,816	55.5	%	$	406,516	59.9	%	Investment management	$	147,490	65.9	%	$	150,567	53.1	%
Development services	Development services	111,043		43.1	%	88,657		39.6	%	363,960		44.5	%	271,808		40.1	%	Development services	76,356		34.1	%	133,190		46.9	%
Total segment revenue	Total segment revenue	257,738		100.0	%	223,832		100.0	%	818,776		100.0	%	678,324		100.0	%	Total segment revenue	223,846		100.0	%	283,757		100.0	%
Costs and expenses:	Costs and expenses:																	Costs and expenses:
Cost of revenue	Cost of revenue	57,967		22.5	%	40,224		18.0	%	202,296		24.7	%	138,184		20.4	%	Cost of revenue	38,538		17.2	%	70,053		24.7	%
Operating, administrative and other	Operating, administrative and other	194,480		75.5	%	229,303		102.4	%	747,687		91.3	%	645,558		95.2	%	Operating, administrative and other	252,095		112.6	%	246,752		87.0	%
Depreciation and amortization	Depreciation and amortization	3,911		1.5	%	4,617		2.1	%	11,385		1.4	%	20,570		3.0	%	Depreciation and amortization	6,460		2.9	%	3,856		1.3	%
Asset impairments		—		0.0	%	—		0.0	%	26,405		3.2	%	—		0.0	%

Total costs and expenses																		Total costs and expenses	297,093		132.7	%	320,661		113.0	%
Gain on disposition of real estate	Gain on disposition of real estate	1,725		0.7	%	18,530		8.3	%	200,543		24.5	%	19,615		2.9	%	Gain on disposition of real estate	3,059		1.4	%	21,592		7.6	%
Operating income (loss)		3,105		1.2	%	(31,782)		(14.2	%)	31,546		3.9	%	(106,373)		(15.7	%)
Operating loss																		Operating loss	(70,188)		(31.3)	%	(15,312)		(5.4)	%
Equity income from unconsolidated subsidiaries	Equity income from unconsolidated subsidiaries	50,300		19.5	%	156,479		69.9	%	380,726		46.5	%	411,546		60.7	%	Equity income from unconsolidated subsidiaries	166,674		74.5	%	157,440		55.5	%
Other (loss) income		(493)		(0.2)	%	447		0.2	%	(1,388)		(0.2)	%	3,399		0.5	%
Other income (loss)																		Other income (loss)	115		0.1	%	(92)		0.0	%
Add-back: Depreciation and amortization	Add-back: Depreciation and amortization	3,911		1.5	%	4,617		2.1	%	11,385		1.4	%	20,570		3.0	%	Add-back: Depreciation and amortization	6,460		2.9	%	3,856		1.3	%
Add-back: Asset impairments		—		0.0	%	—		0.0	%	26,405		3.2	%	—		0.0	%

Adjustments:	Adjustments:																	Adjustments:
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue		(6,161)		(2.4	%)	16,959		7.6	%	9,200		1.1	%	33,963		5.0	%
Carried interest incentive compensation expense to align with the timing of associated revenue																		Carried interest incentive compensation expense to align with the timing of associated revenue	6,978		3.0	%	22,856		8.1	%
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period	Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period	(1,300)		(0.5)	%	47		0.0	%	(4,447)		(0.5)	%	772		0.1	%	Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period	—		0.0	%	(1,696)		(0.6)	%

Costs associated with efficiency and cost-reduction initiatives	Costs associated with efficiency and cost-reduction initiatives	617		0.2	%	—		0.0	%	617		0.1	%	—		0.0	%	Costs associated with efficiency and cost-reduction initiatives	21,459		9.5	%	—		0.0	%
Provision associated with Telford’s fire safety remediation efforts		9,479		3.7	%	—		0.0	%	46,984		5.7	%	—		0.0	%
Segment operating profit (1)		$	59,458	23.0	%	$	146,767	65.6	%	$	501,028	61.2	%	$	363,877	53.6	%

Segment operating profit attributable to non-controlling interests (1)		$	523			$	722			1,894				3,792
Segment operating profit attributable to CBRE Group, Inc. (1)		$	58,935			$	146,045			$	499,134			$	360,085
Segment operating profit and segment operating profit on revenue margin																		Segment operating profit and segment operating profit on revenue margin	$	131,498	58.7	%	$	167,052	58.9	%

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022

Revenue ~~increased~~decreased by ~~$33.9~~$59.9 million, or ~~15.1%~~21.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by ~~an increase~~a decrease in real estate sales ~~primarily~~ in the United Kingdom, and ~~increased~~decreased development and construction fees. Investment management ~~fees increased as a result of appreciating asset values.~~revenue remained relatively flat. Foreign currency translation had a ~~10.6%~~4.1% negative impact on total revenue during the three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by weakness in the British pound sterling and euro.

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Cost of revenue ~~increased~~decreased by ~~$17.7~~$31.5 million, or ~~44.1%~~45.0%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. Cost of revenue as a percentage of revenue was ~~22.5%~~17.2% as compared to ~~18.0%~~24.7% during the same period in ~~2021.~~2022. This was primarily due to ~~increased construction costs as~~ a ~~result of inflation~~shift in the ~~Telford Homes business. The gross increase in cost~~composition of overall revenue ~~from Telford Homes was offset by increased~~with higher revenue coming from the investment management line of business which has no associated cost of revenue. Foreign currency translation had a ~~22.6%~~6.1% positive impact on total cost of revenue during the three months ended ~~September 30, 2022.~~

~~Table of contents~~

March 31, 2023.

Operating, administrative and other expenses ~~decreased~~increased by ~~$34.8~~$5.3 million, or ~~15.2%~~2.2%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021,~~2022, primarily due to ~~lower carried interest compensation expense this quarter~~increase in employee separation benefits and consulting charges incurred as ~~compared to~~part of the ~~same period last year,~~company's efficiency and cost-reduction initiatives, partially offset by lower incentive compensation expense to align with business ~~performance, partially offset by an increase in compensation expense consistent with higher revenue growth as well as an increase to Telford Homes’ building and fire safety remediation provision.~~performance. Foreign currency translation had a ~~6.1%~~3.4% positive impact on total operating expenses during the three months ended ~~September 30, 2022.~~March 31, 2023.

Equity income from unconsolidated subsidiaries ~~declined~~increased by ~~$106.2~~$9.2 million, or ~~67.9%~~5.9%, ~~and gain~~during the three months ended March 31, 2023 as compared to the same period in 2022. Gain on disposition of real estate decreased by ~~$16.8~~$18.5 million during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the same period in ~~2021. These declines are~~2022. This was primarily due to ~~lower global~~fewer development ~~sale activity than third quarter last year.~~sales of consolidated projects.

A roll forward of our AUM by product type for the three months ended ~~September 30, 2022~~March 31, 2023 is as follows (dollars in billions):

Funds Separate Accounts Securities Total
Balance at June 30, 2022 $ 64.7 $ 71.4 $ 10.8 $ 146.9
Inflows 4.2 2.2 0.5 6.9
Outflows (0.7) (1.3) (0.8) (2.8)
Market depreciation (2.2) (3.6) (1.3) (7.1)
Balance at September 30, 2022 $ 66.0 $ 68.7 $ 9.2 $ 143.9


	Funds		Separate Accounts		Securities		Total
Balance at December 31, 2022	$	66.2	$	73.2	$	9.9	$	149.3
Inflows	1.4		2.4		0.3		4.1
Outflows	(0.6)		(1.2)		(0.3)		(2.1)
Market (depreciation) appreciation	(1.0)		(1.6)		0.2		(2.4)
Balance at March 31, 2023	$	66.0	$	72.8	$	10.1	$	148.9

AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, securities portfolios and investments in operating companies and joint ventures. Our AUM is intended principally to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our assets under management consist of:

•the total fair market value of the real estate properties and other assets either wholly-owned or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested or to which they have provided financing. Committed (but unfunded) capital from investors in our sponsored funds is not included in this component of our AUM. The value of development properties is included at estimated completion cost. In the case of real estate operating companies, the total value of real properties controlled by the companies, generally through joint ventures, is included in AUM; and

•the net asset value of our managed securities portfolios, including investments (which may be comprised of committed but uncalled capital) in private real estate funds under our fund of funds investments.

Our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.

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~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

Revenue increased by $140.5 million, or 20.7%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily driven by an increase in real estate sales, primarily in the U.K. and an increase in our development and construction management fees in our development services line of business globally. Investment management fees increased, supported by market appreciation driving up asset fees, partially offset by lower co-investment returns. Foreign currency translation had a 7.0% negative impact on total revenue during the nine months ended September 30, 2022, primarily driven by weakness in the British pound sterling and euro.

Cost of revenue increased by $64.1 million, or 46.4%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. Cost of revenue as a percentage of revenue was 24.7% for the nine months ended September 30, 2022 as compared to 20.4% for the nine months ended September 30, 2021. This was primarily driven by the increased construction costs due to inflation in our Telford Homes business. We also experienced a change in composition of revenue for this period. Revenue from global development services, which has an associated cost of revenue in the Telford Homes business increased to 44.5% of total segment revenue as compared to 40.1% last year. Revenue from investment management, which have no associated cost of revenue, contributed 55.5% to total segment revenue as compared to 59.9% last year. Foreign currency translation had a 12.0% positive impact on total cost of revenue during the nine months ended September 30, 2022.

Operating, administrative and other expenses increased by $102.1 million, or 15.8%, for the nine months ended September 30, 2022 as compared to the same period in 2021, primarily due to an increase in overall compensation, bonuses and profit share in our development services and investment management line of business consistent with higher revenue growth. We also recorded approximately $47.0 million of estimated provision related to fire and building safety remediation work that our Telford Homes business expects to undertake based on the pledge signed in the second quarter. These increases are partially offset by lower carried interest compensation expense, and decreases in certain operating expenses, such as legal fees and technology related expenses. Foreign currency translation had a 4.5% positive impact on total operating expenses during the nine months ended September 30, 2022.

Our equity income from unconsolidated subsidiaries decreased by $30.8 million, or 7.5%, during the nine months ended September 30, 2022 as compared to the same period in 2021. Gain on disposition of real estate increased by $180.9 million during the nine months ended September 30, 2022 as compared to the same period in 2021. This was primarily due to the composition of the portfolio, deal structures, and timing. During the nine months ended September 30, 2021 our sales activity was almost entirely sales of our equity interests to our JV partners whereas in the current year we had sales of equity interests as well as significant assets sales, primarily land sales.

~~A roll forward of our AUM by product type for the nine months ended September 30, 2022 is as follows (dollars in billions):~~

Funds Separate Accounts Securities Total
Balance at December 31, 2021 $ 56.6 $ 73.6 $ 11.7 $ 141.9
Inflows 14.1 6.2 2.3 22.6
Outflows (3.8) (6.9) (1.5) (12.2)
Market depreciation (0.9) (4.2) (3.3) (8.4)
Balance at September 30, 2022 $ 66.0 $ 68.7 $ 9.2 $ 143.9

We describe above how we calculate AUM. Also, as noted above, our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.

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Corporate and Other

Our Corporate segment primarily consists of corporate overhead costs. Other consists of activities from strategic non-core non-controlling equity investments and is considered an operating segment but does not meet the aggregation criteria for presentation as a separate reportable segment and is, therefore, combined with our core Corporate function and reported as Corporate and other. The following table summarizes our results of operations for our core Corporate and other segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars in thousands):


		Three Months Ended September 30, (1)				Nine Months Ended September 30, (1)					Three Months Ended March 31, (1)
		2022		2021		2022		2021			2023		2022
Elimination of inter-segment revenue	Elimination of inter-segment revenue	$	(5,732)	$	(4,795)	$	(12,751)	$	(15,397)	Elimination of inter-segment revenue	$	(4,322)	$	(4,888)
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenue (2)	Cost of revenue (2)	14,936		(2,748)		(7,511)		(11,196)		Cost of revenue (2)	(1,525)		(4,117)
Operating, administrative and other	Operating, administrative and other	87,783		120,957		300,376		288,732		Operating, administrative and other	110,883		99,603
Depreciation and amortization	Depreciation and amortization	8,253		7,118		25,039		21,399		Depreciation and amortization	13,032		8,320

Operating loss	Operating loss	(116,704)		(130,122)		(330,655)		(314,332)		Operating loss	(126,712)		(108,694)
Equity income (loss) from unconsolidated subsidiaries		179,513		(12,986)		(598)		24,540
Other income (loss)		5,136		17,160		(17,750)		26,112
Equity loss from unconsolidated subsidiaries										Equity loss from unconsolidated subsidiaries	(26,335)		(125,188)
Other loss										Other loss	(68)		(15,857)
Add-back: Depreciation and amortization	Add-back: Depreciation and amortization	8,253		7,118		25,039		21,399		Add-back: Depreciation and amortization	13,032		8,320

Adjustments:	Adjustments:									Adjustments:

Integration and other costs related to acquisitions										Integration and other costs related to acquisitions	10,710		—
Costs incurred related to legal entity restructuring	Costs incurred related to legal entity restructuring	893		—		12,814		—		Costs incurred related to legal entity restructuring	—		1,676
Costs associated with efficiency and cost-reduction initiatives	Costs associated with efficiency and cost-reduction initiatives	8,101		—		8,101		—		Costs associated with efficiency and cost-reduction initiatives	4,859		—
Segment operating profit (loss)		$	85,192	$	(118,830)	$	(303,049)	$	(242,281)
Segment operating loss										Segment operating loss	$	(124,514)	$	(239,743)

_______________

(1)Percentage of revenue calculations are not meaningful and therefore not included.

(2)Primarily relates to inter-segment eliminations.

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022

Core corporate

Operating, administrative and other expenses for our core corporate function were approximately ~~$87.8~~$111.0 million for the three months ended ~~September 30, 2022, a decrease of $33.2 million or 27.4%~~March 31, 2023, as compared to the three months ended September 30, 2021. This was primarily due to a decrease in incentive compensation (equity and bonuses) to align with expected company performance, change in recharge approach of shared service expenses to the segments, partially offset by increased general compensation and benefits and charges associated with efficiency and cost reduction initiatives.

~~Other (non-core)~~

~~Equity income from non-core non-controlling equity investments (unconsolidated subsidiaries) was approximately $179.5~~$97 million for the three months ended ~~September 30,~~March 31, 2022, an increase of ~~$192.5~~$13.7 million ~~as compared to equity loss in the three months ended September 30, 2021.~~or 14.0%. This was primarily due to ~~significant positive fair value adjustments on Altus~~professional fees incurred to support us as ~~compared to unfavorable fair value adjustments that were recorded in same period last year on certain other non-core investments.~~

~~Other income was approximately $2.5 million for the three months ended September 30, 2022 versus $17.5 million same period last year. We held certain marketable equity securities in~~we explore various capital allocation opportunities, employee separation benefits and consulting charges under our ~~non-core portfolio last year that experienced an increase in market value during the nine months ended September 30, 2021. These securities were disposed of during the first quarter of 2022.~~

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~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

~~Core corporate~~

Operating, administrative and other expenses for our core corporate function were approximately $299.4 million for the nine months ended September 30, 2022, an increase of $10.7 million or 3.7% as compared to the nine months ended September 30, 2021. This was primarily due to an increase in compensation and related benefits, a provision associated with transfer taxes and costs related to previous legal entity restructures, and charges associated with efficiency and ~~cost reduction~~cost-reduction initiatives, partially offset by ~~lower stock~~a decrease in incentive compensation ~~and bonus expense as compared~~ to ~~prior period and a change in recharge approach of shared service expenses to the segments.~~align with expected company performance.

Other loss was approximately ~~$11.3~~$0.1 million for ~~the nine~~three months ended ~~September 30, 2022 versus income of $8.6~~March 31, 2023 compared to $6.9 million in the same period last year. This is primarily comprised of net ~~unfavorable~~ activity related to unrealized and realized gain/loss on equity and available for sale debt securities owned by our wholly-owned captive insurance company. These mark to market adjustments were in a net unfavorable position in the first quarter of last year as compared to ~~the~~ same period ~~of the prior~~this year.

Other (non-core)

We recorded equity ~~income~~loss from unconsolidated subsidiaries of approximately ~~$24.5~~$26.3 million ~~during~~for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2023 from ~~favorable~~unfavorable fair value adjustments related to certain non-core ~~investments. During~~investments as compared to a $125.2 million net unfavorable adjustment recorded during the ~~nine~~three months ended September 30, 2022, we are in a net neutral position because of a significant recovery in our holdings of Altus equity in the third quarter which has essentially offset the losses recorded earlier in the year on Altus and certain other non-core investments.March 31, 2022.

We recorded ~~other loss~~losses of ~~$6.4~~approximately $8.9 million ~~which is mainly~~during three months ended March 31, 2022 due to ~~realized losses on~~the sale of certain marketable equity securities with no similar activity in ~~early part~~first quarter of ~~this year as compared to positive unrealized mark to market adjustments recorded in the same period last year.~~2023.

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Liquidity and Capital Resources

We believe that we can satisfy our working capital and funding requirements with internally generated cash flow and, as necessary, borrowings under our revolving credit facility. Our expected capital requirements for ~~2022~~2023 include up to approximately ~~$257.3~~$334.5 million of anticipated capital expenditures, net of tenant concessions. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we incurred ~~$151.9~~$59.8 million of capital expenditures, net of tenant concessions ~~received, which includes approximately $18.7~~received. As of March 31, 2023, we had aggregate future commitments of $93.1 million related to ~~technology enablement. As of September 30, 2022, we had aggregate commitments of $110.5 million to fund future~~ co-investments funds in our Real Estate Investments ~~business, $20.4~~segment, $30.4 million of which is expected to be funded in ~~2022.~~2023. Additionally, as of ~~September 30, 2022,~~March 31, 2023, we are committed to fund additional capital of ~~$82.7~~$135.3 million and ~~$138.3~~$96.7 million ~~respectively, to unconsolidated subsidiaries and~~ to consolidated and unconsolidated projects, respectively, within our Real Estate Investments ~~business.~~segment. As of ~~September 30, 2022,~~March 31, 2023, we had ~~$3.3~~$2.5 billion of borrowings available under our revolving credit facilities (under both the Revolving Credit Agreement, as described below, and ~~$1.1~~the Turner & Townsend revolving credit facility) and $1.2 billion of cash and cash ~~equivalents available for general corporate use.~~equivalents.

We have historically relied on our internally generated cash flow and our revolving credit ~~facility~~facilities to fund our working capital, capital expenditure and general investment requirements (including strategic in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements. In the absence of extraordinary events or a large strategic acquisition, we anticipate that our cash flow from operations and our revolving credit facility would be sufficient to meet our anticipated cash requirements for the foreseeable future, and at a minimum for the next 12 months. Given compensation is our largest expense and our sales and leasing professionals are generally paid on a commission and/or bonus basis that correlates with their revenue production, the negative effect of difficult market conditions is partially mitigated by the inherent variability of our compensation cost structure. In addition, when negative economic conditions have been particularly severe, we have moved decisively to lower operating expenses to improve financial performance, and then have restored certain expenses as economic conditions improved. We may seek to take advantage of market opportunities to refinance existing debt instruments, as we have done in the past, with new debt instruments at interest rates, maturities and terms we deem attractive. We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

As noted above, we believe that any future significant acquisitions we may make could require us to obtain additional debt or equity financing. In the past, we have been able to obtain such financing for material transactions on terms that we believed to be reasonable. However, it is possible that we may not be able to obtain acquisition financing on favorable terms, or at all, in the ~~future if we decide to make any further significant acquisitions.~~future.

Our long-term liquidity needs, other than those related to ordinary course obligations and commitments such as operating leases, are generally comprised of three elements. The first is the repayment of the outstanding and anticipated principal amounts of our long-term indebtedness. If our cash flow is insufficient to repay our long-term debt when it comes due, then we expect that we would need to refinance such indebtedness or otherwise amend its terms to extend the maturity dates. We cannot make any assurances that such refinancing or amendments would be available on attractive terms, if at all.

The second long-term liquidity need is the payment of obligations related to acquisitions. Our acquisition structures often include deferred and/or contingent purchase consideration in future periods that are subject to the passage of time or achievement of certain performance metrics and other conditions. As of ~~September 30,~~March 31, 2023 and December 31, 2022, we had accrued deferred purchase consideration totaling ~~$532.1~~$542.4 million ($~~111.2~~62.7 million of which was a current liability), and $574.3 million ($117.3 million of which was a current liability), respectively, which was included in “Accounts payable and accrued expenses” and in “Other liabilities” in the accompanying consolidated balance sheets set forth in Item 1 of this Quarterly Report.

~~Lastly, as described in our~~ ~~2021 Annual Report~~, in February 2019, our board of directors authorized a program for the repurchase of up to $500.0 million of our Class A common stock over three years (the 2019 program). During the first quarter of 2022, we fully utilized the remaining capacity and repurchased 615,108 shares of our Class A common stock with an average price of $101.88 per share using cash on hand for $62.7 million.

In November 2021, our board of directors authorized a ~~new~~ program for the company to repurchase up to $2.0 billion of our Class A common stock over five years, effective November 19, 2021 (the 2021 program). In August 2022, our board of directors authorized an additional $2.0 billion, bringing the total authorized repurchase amount under the 2021 program to a total of $4.0 billion. During the three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased ~~5,094,577~~1,368,173 shares of our Class A common stock with an average price of ~~$80.14~~$83.48 per share using cash on hand for ~~$408.3~~$114.2 million. ~~During the nine months ended September 30, 2022, we repurchased 16,167,978 shares of our common stock with an average price of $83.35 per share using cash on hand for $1.3 billion.~~ As of ~~September 30, 2022~~both March 31, 2023 and ~~October~~April 24, ~~2022, respectively,~~2023, we had ~~$2.6 billion and $2.5~~$2.0 billion of capacity remaining under the 2021 program.

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Our stock repurchases have been funded with cash on hand and we intend to continue funding future repurchases with existing cash. We may utilize our stock repurchase programs to continue offsetting the impact of our stock-based compensation program and on a more opportunistic basis if we believe our stock presents a compelling investment compared to other discretionary uses. The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors.

On April 28, 2022, Telford Homes signed the UK government’s non-binding Fire Safety Pledge (the Pledge), which states that subject to entering into mutually acceptable definitive agreements with the UK government, Telford Homes will (1) take responsibility for performing or funding self-remediation works relating to certain life-critical fire-safety issues on all Telford Homes-constructed buildings

Table of 11 meters in height or greater in England and (2) withdraw Telford Homes-constructed buildings from, or reimburse the government for, Telford Homes-constructed buildings covered in the government-sponsored Building Safety Fund (BSF) and Aluminum Composite Material Funds. CBRE believes there is a potential risk of loss attributable to past events, including retroactive changes in building fire-safety regulations, under the Pledge, and also under existing contracts and / or the new Building Safety Act. The estimated potential costs for buildings within the required scope of the remediation are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control. These include, but are not limited to, the time required for the remediation to be completed, the size and number of buildings that may require remediation, cost of construction or remediation materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, potential business disruption costs, potential changes to or new regulations and regulatory approval. As a result of signing the Pledge and the potential for CBRE to pay for remediation under any definitive agreements that may negotiated by the parties under the Pledge, CBRE recorded non-cash charges of $9.5 million and $47.0 million during the three months and nine months ended September 30, 2022, respectively. This potential liability primarily represents adjusted amounts the UK government has already paid or quantified through the BSF for remediation of Telford-constructed buildings. Given the significant unknowns and multiple variables described above, CBRE is not able to estimate a reasonable range of costs in excess of the amount recorded as of September 30, 2022. CBRE continues to assess its potential liability, including likelihood of payment, and believes it could be material to the company.contents

Historical Cash Flows

Operating Activities

Net cash ~~provided by~~used in operating activities totaled ~~$814.8~~$744.8 million for the ~~nine~~three months ended ~~September 30, 2022, a decrease~~March 31, 2023, an increase of ~~$385.3~~$351.3 million as compared to the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The primary driver was lower earnings this quarter as compared to a strong first quarter in 2022. The other key drivers that contributed to the ~~decline~~higher usage were as follows: (1) ~~the~~lower net equity distribution from unconsolidated subsidiaries this quarter as compared to first quarter 2022, and (2) lower net proceeds from sale of equity securities this quarter as compared to first quarter 2022. These were partially offset by a positive net cash ~~outflow~~inflow associated with net working capital ~~increased in the current period as compared~~and real estate under development activities. This was mainly due to ~~same period~~timing of certain cash tax payments and refunds that led to higher outflow last year, ~~by approximately $832.7 million. This was primarily due~~lower outflow related to ~~increased issuance of incentive compensation in the form of producer based loans, higher increase in~~ accounts ~~receivable~~payable and ~~contract assets,~~accrued this year, partially offset by higher outflow related to net bonus payments, compensation and other employee benefits, increase in accounts receivable and changes in net outflow related to real estate held for sale and under development. This change in working capital was partially offset by (1) timing of certain cash tax payments and refunds, (2) increased cash collection of equity income ~~from unconsolidated subsidiaries, (3) higher net proceeds from equity securities, and (4) stronger operating performance, supplemented by add backs of higher net non-cash charges, such as impairments.~~taxes receivable accounts.

Investing Activities

Net cash used in investing activities totaled ~~$603.7~~$115.1 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, an increase of ~~$48.3~~$19.4 million as compared to the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This increase was primarily driven by ~~our $100.4 million investment in VTS during the third quarter 2022. In addition, we received lower distributions from unconsolidated subsidiaries. This was partially offset by lower contributions~~higher capital expenditures compared to ~~unconsolidated subsidiaries~~2022 to support various growth initiatives, and ~~less~~higher spend on strategic in-fill acquisitions during this period as compared to the ~~nine~~three months ended ~~September 30, 2021. We also had an increase of capital expenditures~~March 31, 2022. This was partially offset by lower net contributions to unconsolidated subsidiaries as compared to ~~2021 to support various growth initiatives.~~the three months ended March 31, 2022.

Financing Activities

Net cash ~~used in~~provided by financing activities totaled ~~$1.2 billion~~$761.0 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to net cash ~~provided by~~used in financing activities of ~~$274.9~~$209.0 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The increased ~~usage during the period~~inflow was primarily due to ~~$1.4~~(1) $1.0 billion ~~used to repurchase shares~~in net proceeds from our revolving credit facility received this period as compared to ~~$188.3~~net proceeds of $210.0 million ~~in the prior period;~~last year, and (2) lower share repurchase activity this quarter as ~~well as $28.1~~compared to first quarter last year. This was partially offset by $46.5 million in increased outflow related to acquisitions where cash was paid after 90 days of the acquisition date. In addition, the cash flow benefited from the issuance of the 2.500% senior notes in the prior period. This was partially offset by $283.0 million in net proceeds from our revolving credit facility received this period whereas no such proceeds were received in the prior period.

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Indebtedness

~~Our level~~We use a variety of ~~indebtedness increases the possibility that we may be unable~~financing arrangements, both long-term and short-term, to ~~pay the principal amount of~~fund our ~~indebtedness~~operations in addition to cash generated from operating activities. We also use several funding sources to avoid becoming overly dependent on one financing source, and ~~other obligations when due. In addition, we may incur additional debt from time~~ to time to finance strategic acquisitions, investments, joint ventures or for other purposes, subject to the restrictions contained in the documents governing our indebtedness. If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase.lower funding costs.

Long-Term Debt

~~We maintain credit facilities with third-party lenders, which we use for a variety of purposes.~~ On ~~March 4, 2019,~~July 9, 2021, CBRE Services, Inc. (CBRE Services) entered into an additional incremental assumption agreement with respect to its credit agreement, dated October 31, 2017 (such agreement, as amended by a December 20, 2018 incremental term loan assumption agreement, ~~and such~~a March 4, 2019 incremental assumption agreement ~~is collectively referred to in this Quarterly Report as the 2019 Credit Agreement), which (i) extended the maturity of the U.S. dollar tranche A term loans under~~and such credit agreement, (ii) extended the termination date of the revolving credit commitments available under such credit agreement and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit commitments under such credit agreement. The proceeds from a new tranche A term loan facility under the 2019 Credit Agreement were used to repay the $300.0 million of tranche A term loans outstanding under the credit agreement in effect prior to the entry into the 2019 incremental assumption agreement. On July 9, 2021 ~~CBRE Services entered into an additional~~ incremental assumption agreement, ~~with respect to~~collectively, the ~~2019~~2021 Credit ~~Agreement~~Agreement) for purposes of increasing the revolving credit commitments previously available under the ~~2019~~2021 Credit Agreement by an aggregate principal amount of $350.0 ~~million (the 2019 Credit Agreement,~~million.

On December 10, 2021, CBRE Services and certain of the other borrowers entered into ana first amendment ofto the 2021 Credit Agreement which (i) changed the interest rate applicable to revolving borrowings denominated in Sterling from a LIBOR-based rate to a rate based on the Sterling Overnight Index Average (SONIA) and (ii) changed the interest rate applicable to revolving borrowings denominated in Euros from a LIBOR-based rate to a rate based on EURIBOR. The revised interest rates described above went into effect on January 1, 2022.

On August 5, 2022, CBRE Group, Inc., as Holdings, and CBRE Global Acquisition Company, as the Luxembourg Borrower, entered into a second amendment to the 2021 Credit Agreement which, among other things (i) amended certain of the representations and warranties, affirmative covenants, negative covenants and events of default in the 2021 Credit Agreement in a manner consistent with the new 5-year senior unsecured Revolving Credit Agreement (as described below), (ii) terminated all revolving commitments previously available to the subsidiaries of the company thereunder and (iii) reflected the resignation of the previous administrative agent and the appointment of Wells Fargo Bank, National Association as the ~~successor~~new administrative agent (the 2021 Credit Agreement, as amended by the first amendment and second amendment is referred to in this Quarterly Report as the 2022 Credit Agreement).

The 2022 Credit Agreement is a senior unsecured credit facility that is guaranteed by CBRE Group, Inc. As of ~~September 30, 2022,~~March 31, 2023, the 2022 Credit Agreement provided for a €400.0 million term loan facility due and payable in full at maturity on December 20, 2023. In addition, a $3.15 billion revolving credit facility, which included the capacity to obtain letters of credit and swingline loans and would have terminated on March 4, 2024, was ~~also~~ previously provided under this agreement and was replaced with a new $3.5 billion 5-year senior unsecured Revolving Credit Agreement entered into on August 5, 2022 (as described below).

On March 18, 2021, CBRE Services issued $500.0 million in aggregate principal amount of 2.500% senior notes due April 1, 2031 (the 2.500% senior notes) at a price equal to 98.451% of their face value. The 2.500% senior notes are unsecured obligations of CBRE Services ~~senior to all of its current~~ and ~~future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 2.500% senior notes~~ are ~~jointly and severally~~ guaranteed on a senior basis by CBRE Group, Inc. ~~and any domestic subsidiary of CBRE Services that guarantees our 2022 Credit Agreement.~~ Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1.

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each year, beginning on October 1, 2021.

On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 (the 4.875% senior notes) at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services ~~senior to all of its current~~ and ~~future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 4.875% senior notes~~ are ~~jointly and severally~~ guaranteed on a senior basis by CBRE Group, Inc. ~~and any domestic subsidiary of CBRE Services that guarantees our 2022 Credit Agreement.~~ Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1.

On May 21, 2021, all existing subsidiary guarantors were released from their guarantees of our 2022 Credit Agreement, 4.875% senior notes and 2.500% senior notes. Our 2022 Credit Agreement, Revolving Credit Agreement, 4.875% senior notes and 2.500% senior notes remain fully and unconditionally guaranteed by CBRE Group, Inc.

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Combined summarized financial information for CBRE Group, Inc. (parent) and CBRE Services (subsidiary issuer) is as follows (dollars in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Balance Sheet Data:	Balance Sheet Data:					Balance Sheet Data:
Current assets	Current assets	$	6,508	$	8,604	Current assets	$	276	$	8,628
Non-current assets ~~(1)~~	Non-current assets ~~(1)~~	11,719		34,711		Non-current assets ~~(1)~~	12,344		13,002
Total assets ~~(1)~~	Total assets ~~(1)~~	$	18,227	$	43,315	Total assets ~~(1)~~	$	12,620	$	21,630

Current liabilities	Current liabilities	$	302,654	$	17,610	Current liabilities	$	1,221,582	$	206,026
Non-current liabilities (1)	Non-current liabilities (1)	1,517,763		1,083,584		Non-current liabilities (1)	1,543,360		1,804,975
Total liabilities (1)	Total liabilities (1)	$	1,820,417	$	1,101,194	Total liabilities (1)	$	2,764,942	$	2,011,001


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021 (2)			2023		2022
Statement of Operations Data:	Statement of Operations Data:					Statement of Operations Data:
Revenue	Revenue	$	—	$	—	Revenue	$	—	$	—
Operating loss	Operating loss	(1,787)		(1,725)		Operating loss	(441)		(540)
Net income		8,116		22,142
Net (loss) income						Net (loss) income	(8,613)		5,682

(1)Includes ~~$432.6~~$457.1 million and $719.3 million of intercompany loan payables ~~and $25.3 million of intercompany loan receivables from~~to non-guarantor subsidiaries as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. All intercompany balances and transactions between CBRE Group, Inc. and CBRE Services have been eliminated.

~~(2)Amounts include activity related to our subsidiaries that were still listed as guarantors for the period presented.~~

For additional information on all of our long-term debt, see Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8 included in our ~~2021~~2022 Annual Report and Note 97 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Short-Term Borrowings

On August 5, 2022, we entered into a new 5-year senior unsecured Revolving Credit Agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a senior unsecured revolving credit facility available to CBRE Services with a capacity of $3.5 billion and a maturity date of August 5, 2027. The commitments replaced in full and increased the revolving credit facility previously available under the 2021 Credit Agreement by $350.0 million. Borrowings bear interest at (i) at CBRE Services’ option, either (a) a Term SOFR rate published by CME Group Benchmark Administration Limited for the applicable interest period or (b) a base rate determined by reference to the greatest of (1) the prime rate determined by Wells Fargo, (2) the federal funds rate plus 1/2 of 1% and (3) the sum of (x) a Term SOFR rate published by CME Group Benchmark Administration Limited for an interest period of one month and (y) 1.00% ~~plus~~ ~~(ii) 10 basis points,~~ ~~plus~~ (iii) a rate equal to an applicable rate (in the case of borrowings based on the Term SOFR rate, 0.630% to 1.100% and in the case of borrowings based on the base rate, 0.0% to 0.100%, in each case, as determined by reference to our Debt Rating (as defined in the Revolving Credit Agreement)). The applicable rate is also subject to certain increases and/or decreases specified in the Revolving Credit Agreement linked to achieving certain sustainability goals.

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As of ~~September 30, 2022, $283.0 million~~March 31, 2023, $1.2 billion was outstanding under the Revolving Credit Agreement. No letters of credit were outstanding as of ~~September 30, 2022.~~March 31, 2023. As of ~~October~~April 24, ~~2022, $283.0 million~~2023, $1.4 billion was outstanding under the Revolving Credit Agreement. Letters of credit are issued in the ordinary course of business and would reduce the amount we may borrow under the Revolving Credit Agreement.

In addition, Turner & Townsend maintains a £120.0 million revolving credit facility ~~under the~~pursuant to a credit agreement dated March 31, 2022, ~~credit agreement,~~ with an additional accordion option of £20.0 million. As of March 31, 2023, $8.6 million (£7.0 million) was outstanding under this revolving credit facility and bears interest at SONIA plus 0.75%. No balance was outstanding as of April 24, 2023.

For additional information on all of our short-term borrowings, see Notes 5 and 11 of the Notes to Consolidated Financial Statements set forth in Item 8 included in our ~~2021~~2022 Annual Report and Notes 43 and 97 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

We also maintain warehouse lines of credit with certain third-party lenders. See Note 43 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Off –Balance Sheet Arrangements

We do not have off-balance sheet arrangements that we believe could have a material current or future impact on our financial condition, liquidity or results of operations. Our off-balance sheet arrangements are described in Note 119 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report and are incorporated by reference herein.

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Cautionary Note on Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words “anticipate,” “believe,” “could,” “should,” “propose,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases are used in this Quarterly Report to identify forward-looking statements. Except for historical information contained herein, the matters addressed in this Quarterly Report are forward-looking statements. These statements relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies.

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

The following factors are among those, but are not only those, that may cause actual results to differ materially from the forward-looking statements:

•disruptions in general economic, political and regulatory conditions and significant public health events, ~~or the outbreak of war,~~ particularly in geographies or industry sectors where our business may be concentrated;

•volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the U.S.;

•poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate;

•foreign currency fluctuations and changes in currency restrictions, trade sanctions and import/export and transfer pricing rules;

•disruptions to business, market and operational conditions related to the Covid-19 pandemic and the impact of government rules and regulations intended to mitigate the effects of this pandemic, including, without limitation, rules and regulations that impact us as a loan originator and servicer for U.S. GSEs;

•our ability to compete globally, or in specific geographic markets or business segments that are material to us;

•our ability to identify, acquire and integrate accretive businesses;

•costs and potential future capital requirements relating to businesses we may acquire;

•integration challenges arising out of companies we may acquire;

•increases in unemployment and general slowdowns in commercial activity;

•trends in pricing and risk assumption for commercial real estate services;

•the effect of significant changes in capitalization rates across different property types;

•a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance;

•client actions to restrain project spending and reduce outsourced staffing levels;

•our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry;

•our ability to attract new user and investor clients;

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•our ability to retain major clients and renew related contracts;

•our ability to leverage our global services platform to maximize and sustain long-term cash flow;

•our ability to continue investing in our platform and client service offerings;

•our ability to maintain expense discipline;

•the emergence of disruptive business models and technologies;

•negative publicity or harm to our brand and reputation;

•the failure by third parties to comply with service level agreements or regulatory or legal requirements;

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•the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so;

•our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments;

•the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit;

•declines in lending activity of U.S. GSEs, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market;

•changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to ~~certain conflicts and~~ the level of political instability in those regions;

•litigation and its financial and reputational risks to us;

•our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms;

•our ability to retain, attract and incentivize key personnel;

•our ability to manage organizational challenges associated with our size;

•liabilities under guarantees, or for construction defects, that we incur in our development services business;

•variations in historically customary seasonal patterns that cause our business not to perform as expected;

•our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade;

•our and our employees’ ability to execute on, and adapt to, information technology strategies and trends;

•cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

•our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, fire and safety building requirements and regulations, as well as data privacy and protection regulations, ESG matters, and the anti-corruption laws and trade sanctions of the U.S. and other countries;

•changes in applicable tax or accounting requirements;

•any inability for us to implement and maintain effective internal controls over financial reporting;

•the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets;

•the performance of our equity investments in companies we do not control; and

•the other factors described elsewhere in this Quarterly Report on Form 10-Q, included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies,” “Quantitative and Qualitative Disclosures About Market Risk” and Part II, Item 1A, “Risk Factors” or as described in our ~~2021~~2022 Annual Report, in particular in Part II, Item 1A “Risk Factors”, or as described in the other documents and reports we file with the Securities and Exchange Commission (SEC).

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Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC.

Investors and others should note that we routinely announce financial and other material information using our Investor Relations website (https://ir.cbre.com), SEC filings, press releases, public conference calls and webcasts. We use these channels of distribution to communicate with our investors and members of the public about our company, our services and other items of interest. Information contained on our website is not part of this Quarterly Report or our other filings with the SEC.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information in this section should be read in connection with the information on market risk related to changes in interest rates and non-U.S. currency exchange rates in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our ~~2021~~2022 Annual Report.

Our exposure to market risk primarily consists of foreign currency exchange rate fluctuations related to our international operations and changes in interest rates on debt obligations. We manage such risk primarily by managing the amount, sources, and duration of our debt funding and by using derivative financial instruments. We apply Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 815, “Derivatives and Hedging,” when accounting for derivative financial instruments. In all cases, we view derivative financial instruments as a risk management tool and, accordingly, do not use derivatives for trading or speculative purposes.

Exchange Rates

Our foreign operations expose us to fluctuations in foreign exchange rates. These fluctuations may impact the value of our cash receipts and payments in terms of our functional (reporting) currency, which is the U.S. dollar. See the discussion of international operations, which is included in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Items Affecting Comparability—International Operations” and is incorporated by reference herein.

Interest Rates

We manage our interest expense by using a combination of fixed and variable rate debt. Historically, we have entered into interest rate swap agreements to attempt to hedge the variability of future interest payments due to changes in interest rates. As of ~~September 30, 2022,~~March 31, 2023, we did not have any outstanding interest rate swap agreements.

The estimated fair value of our senior term loans was approximately ~~$387.7~~$432.3 million at ~~September 30, 2022.~~March 31, 2023. Based on dealers’ quotes, the estimated fair value of our 4.875% ~~senior notes~~ and 2.500% senior notes was ~~$589.8~~$591.8 million and ~~$381.2~~$395.3 million, respectively, at ~~September 30, 2022.~~March 31, 2023.

We utilize sensitivity analyses to assess the potential effect on our variable rate debt. If interest rates were to increase 100 basis points on our outstanding variable rate debt at ~~September 30, 2022,~~March 31, 2023, the net impact of the additional interest cost would be a decrease of ~~$5.3~~$4.1 million on pre-tax income and a decrease of ~~$5.3~~$4.1 million in cash ~~provided by~~used in operating activities for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended, requires that we conduct an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report, and we have a disclosure policy in furtherance of the same. This evaluation is designed to ensure that all corporate disclosure is complete and accurate in all material respects. The evaluation is further designed to ensure that all information required to be disclosed in our SEC reports is accumulated and communicated to management to allow timely decisions regarding required disclosures and recorded, processed, summarized and reported within the time periods and in the manner specified in the SEC’s rules and forms. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our Chief Executive Officer and Chief Financial Officer supervise and participate in this evaluation, and they are assisted by members of our Disclosure Committee. Our Disclosure Committee consists of our General Counsel, our Chief Accounting Officer, ~~our Chief Communication Officer,~~ Senior Officers of significant business lines and other select employees.

We conducted the required evaluation, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined by Securities Exchange Act Rule 13a-15(e)) were ~~not~~ effective as of ~~September 30, 2022 due~~March 31, 2023 to accomplish their objectives at the ~~material weaknesses in internal control over financial reporting that were disclosed in our 2021 Annual Report.~~

Notwithstanding such material weaknesses in internal control over financial reporting, our management concluded that our consolidated financial statements in this Quarterly Report on Form 10-Q present fairly, in all material respects, the company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.

~~Remediation~~

As previously described in Part II, Item 9A of our 2021 Annual Report, we continue to implement our remediation plans to address the material weaknesses in our internal controls over financial reporting related to the GWS EMEA business. During the three months ended September 30, 2022, we furthered our remediation efforts through the following activities:

•~~Implementation of focused training, including mandatory On-the-Job-Training (OJT) for revenue and receivables and journal entries; and~~

•~~Redesign and refinement of the processes and controls related to journal entries.~~

Though further remediation efforts were made this quarter, such weaknesses will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively.reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes to our legal proceedings as previously disclosed in our ~~2021~~2022 Annual Report.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in our ~~2021~~2022 Annual Report.

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

Open market share repurchase activity during the three months ended ~~September 30, 2022~~March 31, 2023 was as follows (dollars in thousands, 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 (1)
July 1, 2022 - July 31, 2022 976,604 $ 78.46 976,604
August 1, 2022 - August 31, 2022 2,858,626 83.26 2,858,626
September 1, 2022 - September 30, 2022 1,259,347 74.33 1,259,347
5,094,577 $ 80.14 5,094,577 $ 2,566,756


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 (1)
January 1, 2023 - January 31, 2023	881,751	$	81.84	881,751
February 1, 2023 - February 28, 2023	486,422	86.47		486,422
March 1, 2023 - March 31, 2023	—	—		—
	1,368,173	$	83.48	1,368,173	$	2,001,574

(1)In November 2021, our board of directors authorized a program for the company to repurchase up to $2.0 billion of our Class A common stock over five years, effective November 19, 2021 (the ~~"2021 program"~~“2021 program”). In August 2022, our board of directors authorized an additional $2.0 billion under this program, bringing the total authorized amount under the 2021 program to a total of ~~$4.5~~$4.0 billion. During the ~~third~~first quarter of ~~2022,~~2023, we repurchased ~~$408.3~~$114.2 million of our common stock under the 2021 program. The remaining ~~$2.6~~$2.0 billion in the table represents the amount available to repurchase shares under the 2021 program as of ~~September 30, 2022.~~March 31, 2023.

Our stock repurchase ~~programs do~~program does not obligate us to acquire any specific number of shares. Under ~~these programs,~~this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Our stock repurchases have been funded with cash on hand and we intend to continue funding future repurchases with existing cash. We may utilize our stock repurchase programs to continue offsetting the impact of our stock-based compensation program and on a more opportunistic basis if we believe our stock presents a compelling investment compared to other discretionary uses. The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors.

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Item 6. Exhibits

Incorporated by Reference
Exhibit No. Exhibit Description Form SEC File No. Exhibit Filing Date Filed Herewith
3.1
Amended and Restated Certificate of Incorporation of CBRE Group, Inc.
8-K 001-32205 3.1 05/23/2018
3.2
Amended and Restated By-Laws of CBRE Group, Inc.
8-K 001-32205 3.1 03/27/2020
10.1
Amendment No. 2, dated as of August 5, 2022, among CBRE Group, Inc., CBRE Global Acquisition Company, the lenders party thereto, Credit Suisse AG, Cayman Islands Branch and Wells Fargo Bank, National Association.
8-K 001-32205 10.1 08/08/2022
10.2
Revolving Credit Agreement, dated as of August 5, 2022, among CBRE Group, Inc., CBRE Services, Inc., the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, National Association, as administrative agent.
8-K 001-32205 10.2 08/08/2022
10.3
Holdings Guaranty Agreement, dated as of August 5, 2022, among CBRE Group, Inc., CBRE Services, Inc. and Wells Fargo Bank, National Association, as administrative agent.
8-K 001-32205 10.3 08/08/2022
22.1
Subsidiary Issuers and Guarantors of CBRE Group, Inc.’s Registered Debt
X
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
X
32
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002
X
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

SEC File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of CBRE Group, Inc.

8-K

001-32205

3.1

05/23/2018

3.2

Amended and Restated By-Laws of CBRE Group, Inc.

8-K

001-32205

3.1

02/17/2023

10.1

Separation Agreement, dated as of January 20, 2023, by and between CBRE Group, Inc. and Michael J. Lafitte.

10-K

001-32205

10.33

02/27/2023

22.1

Subsidiary Issuers and Guarantors of CBRE Group, Inc.’s Registered Debt

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			CBRE GROUP, INC.

Date: ~~October~~April 27, ~~2022~~2023			/s/ EMMA E. GIAMARTINO
			Emma E. Giamartino ~~Global Group President,~~ Chief Financial ~~Officer and Chief Investment~~ Officer (Principal Financial Officer)

Date: ~~October~~April 27, ~~2022~~2023			/s/ LINDSEYS. CAPLAN
			Lindsey S. Caplan Chief Accounting Officer (Principal Accounting Officer)

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	As of September 30, 2022
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. treasury securities	$	6,262	$	—	$	—	$	6,262
Debt securities issued by U.S. federal agencies	—		8,824		—		8,824
Corporate debt securities	—		45,542		—		45,542
Asset-backed securities	—		3,360		—		3,360
Collateralized mortgage obligations	—		28		—		28
Total available for sale debt securities	6,262		57,754		—		64,016
Equity securities	34,669		—		—		34,669
Investments in unconsolidated subsidiaries	270,342		—		503,935		774,277
Warehouse receivables	—		1,190,964		—		1,190,964
Other assets	—		—		1,867		1,867
Total assets at fair value	$	311,273	$	1,248,718	$	505,802	$	2,065,793


	Investment in Unconsolidated Subsidiaries		Other assets (liabilities)
Balance as of June 30, 2022	$	441,626	$	1,867
Transfer in	—		—
Net change in fair value	62,309		—
Purchases / Additions	—		—
Balance as of September 30, 2022	$	503,935	$	1,867

Balance as of December 31, 2021	$	406,690	$	(10,700)
Transfer in	—		—
Net change in fair value	(2,755)		—
Purchases / Additions	100,000		12,567
Balance as of September 30, 2022	$	503,935	$	1,867


	Three Months Ended September 30, 2021
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated
Topic 606 Revenue:
Facilities management	$	—	$	3,480,090	$	—	$	—	$	3,480,090
Advisory leasing	869,124		—		—		—		869,124
Advisory sales	673,411		—		—		—		673,411
Property management	432,658		—		—		(4,795)		427,863
Project management	—		687,053		—		—		687,053
Valuation	176,644		—		—		—		176,644
Commercial mortgage origination (1)	82,033		—		—		—		82,033
Loan servicing (2)	11,594		—		—		—		11,594
Investment management	—		—		135,175		—		135,175
Development services	—		—		87,588		—		87,588
Topic 606 Revenue	2,245,464		4,167,143		222,763		(4,795)		6,630,575
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	99,780		—		—		—		99,780
Loan servicing	66,903		—		—		—		66,903
Development services (3)	—		—		1,069		—		1,069
Total Out of Scope of Topic 606 Revenue	166,683		—		1,069		—		167,752
Total Revenue	$	2,412,147	$	4,167,143	$	223,832	$	(4,795)	$	6,798,327


	Nine Months Ended September 30, 2022
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate, other and eliminations		Consolidated
Topic 606 Revenue:
Facilities management	$	—	$	11,292,738	$	—	$	—	$	11,292,738
Advisory leasing	2,732,045		—		—		—		2,732,045
Advisory sales	1,936,073		—		—		—		1,936,073
Property management	1,375,156		—		—		(12,751)		1,362,405
Project management	—		3,264,762		—		—		3,264,762
Valuation	554,879		—		—		—		554,879
Commercial mortgage origination (1)	214,333		—		—		—		214,333
Loan servicing (2)	41,710		—		—		—		41,710
Investment management	—		—		454,816		—		454,816
Development services	—		—		297,635		—		297,635
Topic 606 Revenue	6,854,196		14,557,500		752,451		(12,751)		22,151,396
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	221,345		—		—		—		221,345
Loan servicing	194,691		—		—		—		194,691
Development services (3)	—		—		66,325		—		66,325
Total Out of Scope of Topic 606 Revenue	416,036		—		66,325		—		482,361
Total Revenue	$	7,270,232	$	14,557,500	$	818,776	$	(12,751)	$	22,633,757