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 ended March 31, 2024 should be read in conjunction with our consolidated financial statements and related notes included in our 2023 Annual Report on Form 10-K (2023 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.”

Business Environment

The operating environment for commercial real estate remains challenging. Higher borrowing costs and uncertainty over the direction of interest rates continue to inhibit investment and financing activities as well as opportunities to harvest gains from our real estate development and investment management portfolios. Office leasing markets have improved this year reflecting a resilient economy and progress on occupiers’ return-to-office plans.

We invested approximately $820.2 million in M&A and other strategic investments in the quarter, while maintaining a leverage ratio substantially below the midpoint of our target range, giving us substantial liquidity to finance future growth.

Results of Operations

The following table sets forth items derived from our consolidated statements of operations for the three months ended March 31, 2024 and 2023 (dollars in millions):

			Three Months Ended March 31,
			2024												2023
Revenue:
Net revenue:
Facilities management			$	1,552					19.6		%				$	1,395					18.8		%
Property management			472						6.0		%				442						6.0		%
Project management			790						10.0		%				735						9.9		%
Valuation			167						2.1		%				166						2.2		%
Loan servicing			81						1.0		%				77						1.0		%
Advisory leasing			739						9.3		%				709						9.6		%
Capital markets:
Advisory sales			326						4.1		%				367						5.0		%
Commercial mortgage origination			95						1.2		%				71						1.0		%
Investment management			149						1.9		%				147						2.0		%
Development services			79						0.9		%				76						1.0		%
Corporate, other and eliminations			(6)						(0.1)		%				(4)						(0.1)		%
Total net revenue			4,444						56.0		%				4,181						56.4		%
Pass through costs also recognized as revenue			3,491						44.0		%				3,230						43.6		%
Total revenue			7,935						100.0		%				7,411						100.0		%
Costs and expenses:
Cost of revenue			6,475						81.6		%				6,006						81.0		%
Operating, administrative and other			1,111						14.0		%				1,209						16.3		%
Depreciation and amortization			158						2.0		%				162						2.2		%
Total costs and expenses			7,744						97.6		%				7,377						99.5		%
Gain on disposition of real estate			13						0.2		%				3						0.0		%
Operating income			204						2.6		%				37						0.5		%
Equity (loss) income from unconsolidated subsidiaries			(58)						(0.7)		%				142						1.9		%
Other income			9						0.1		%				2						0.0		%
Interest expense, net of interest income			36						0.5		%				28						0.3		%
Income before (benefit from) provision for income taxes			119						1.5		%				153						2.1		%
(Benefit from) provision for income taxes			(29)						(0.4)		%				28						0.4		%
Net income			148						1.9		%				125						1.7		%
Less: Net income attributable to non-controlling interests			22						0.3		%				8						0.1		%
Net income attributable to CBRE Group, Inc.			126						1.6		%				117						1.6		%
Core EBITDA			$	424					5.3		%				$	533					7.2		%

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

We reported consolidated net income of $126.2 million for the quarter, an increase of 8.0% from $116.9 million in the same period in 2023. Over the same time period, revenue rose 7.1% to $7.9 billion.

The revenue increase reflected increased leasing activity, particularly for office space, and continued strong growth in the Global Workplace Solutions (GWS) segment. High interest rates continued to weigh on property sales in the Advisory Services segment and investment activities in the Real Estate Investments segment, both of which are sensitive to market cycles. Overall, revenue from our resilient business (comprised of the entire GWS segment, property management, loan servicing, asset management fees in our investment management business and valuations), which generally grow across market cycles increased 8% in the quarter. Our transactional businesses (sales, leasing, mortgage origination, carried interest and incentive fees in our investment management business, and development fees), which are subject to market cycles, saw revenue edge up 1% in the quarter. We expect our transactional businesses to return to growth when the market cycle turns.

Foreign currency translation had a 0.2% positive impact on revenue, reflecting the strength in the British pound sterling and euro partially offset by weakness in the Argentina peso and Japanese yen.

Cost of revenue increased 7.8% during the quarter, due to higher pass through costs, higher compensation, and indirect reimbursed costs. Foreign currency translation had a 0.2% negative impact on total cost of revenue. Cost of revenue increased to 81.6% of total revenue from 81.0% in the first-quarter 2023, driven by higher cost to support growth in GWS revenues and a decline of higher-margin property sales in our Advisory Services segment.

Operating, administrative and other expenses decreased by 8.1%, primarily because first-quarter 2023 included $139.0 million of restructuring charges (employee separation benefits, contract termination fees, consulting charges, etc.) versus just $29.3 million in the 2024 first-quarter. In addition, we recorded lower bonus expense during the 2024 quarter, which partially offset incremental staff compensation in the GWS segment as well as first-quarter 2023 credits for reduced incentive compensation in the Advisory segment and for insurance and benefits that did not recur in the current quarter. Foreign currency translation had a 0.2% negative impact on total operating, administrative and other expenses during the quarter. Operating expenses as a percentage of revenue decreased to 14.0% in the first-quarter 2024 from 16.3% in the 2023 quarter, reflecting lower incentive compensation expense in REI segment and higher operating expenses recorded last year under our cost management initiatives.

Depreciation and amortization expense decreased by 2.5% during the quarter, reflecting higher accelerated depreciation expense on certain assets as part of the cost savings initiatives.

We incurred an equity loss of $58.3 million versus equity income of $141.7 million in last year’s first-quarter. This was mainly due to an unusually large development asset disposition in first-quarter 2023 that did not recur this quarter. In addition, we recorded higher unrealized loss related to our non-core strategic equity investment in Altus Power, Inc. (Altus) this quarter.

Other income increased to $9.5 million from $2.5 million, reflecting increased values on the trading investment portfolio in our wholly owned captive insurance company.

Interest expense, net of interest income, increased by 28.3%, compared with the first-quarter 2023. This increase was primarily due to the impact of higher interest rates, increased borrowings on the revolving credit facilities, and the issuance of new debt during 2023 and the first quarter of 2024.

Our benefit from income taxes on a consolidated basis was $28.9 million for the three months ended March 31, 2024 as compared to a provision for income taxes of $28.0 million for the three months ended March 31, 2023. The decrease of $56.9 million is primarily related to the reversal of certain unrecognized tax positions in addition to a decrease in the company’s pretax earnings. Our effective tax rate fell to (24.3)% for the three months ended March 31, 2024 from 18.3% for the three months ended March 31, 2023. Our effective tax rate for the three months ended March 31, 2024 was different than the U.S. federal statutory tax rate of 21.0%, primarily due to the reversal of unrecognized tax positions, U.S. state taxes, and favorable permanent book tax differences.

The Organization for Economic Co-operation & Development (OECD) Pillar Two Model Rules established a minimum global effective tax rate of 15% on country-by-country profits for large multinational companies. European Union member states along with many other countries have adopted, or expect to adopt, the OECD Pillar Two Model effective January 1, 2024 or thereafter. The OECD and other countries continue to publish guidelines and legislation which include transition and safe harbor rules. The Pillar Two top-up taxes are not expected to have a material impact to our financial statements for 2024. However, we continue to monitor new legislative changes and assess the global impact of the Pillar Two Model Rules.

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, capital markets (property sales and mortgage 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 14 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Advisory Services

The following table summarizes our results of operations for our Advisory Services operating segment for the three months ended March 31, 2024 and 2023 (dollars in millions):

			Three Months Ended March 31,
			2024												2023
Revenue:
Net revenue:
Property management			$	472					24.8		%				$	442					23.8		%
Valuation			167						8.8		%				166						8.9		%
Loan servicing			81						4.3		%				77						4.2		%
Advisory leasing			739						38.8		%				709						38.2		%
Capital markets:
Advisory sales			326						17.1		%				367						19.8		%
Commercial mortgage origination			95						5.0		%				71						3.9		%
Total segment net revenue			1,880						98.8		%				1,832						98.8		%
Pass through costs also recognized as revenue			24						1.2		%				22						1.2		%
Total segment revenue			1,904						100.0		%				1,854						100.0		%
Costs and expenses:
Cost of revenue			1,148						60.3		%				1,127						60.8		%
Operating, administrative and other			497						26.1		%				523						28.2		%
Depreciation and amortization			69						3.6		%				78						4.2		%
Total costs and expenses			1,714						90.0		%				1,728						93.2		%
Operating income			190						10.0		%				126						6.8		%
Equity income from unconsolidated subsidiaries			1						0.0		%				1						0.1		%
Other income			2						0.1		%				2						0.1		%
Add-back: Depreciation and amortization			69						3.6		%				78						4.2		%
Adjustments:
Costs associated with efficiency and cost-reduction initiatives			—						0.0		%				63						3.3		%
Segment operating profit and segment operating profit on revenue margin			$	262					13.7		%				$	270					14.5		%
Segment operating profit on net revenue margin									13.9		%										14.7		%

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Revenue increased 2.7% during the quarter. Global leasing revenue rose 4%, driven by Asia-Pacific (APAC) which grew 9%, led by Australia, India and South Korea as well as continued growth in Japan, despite an especially difficult first-quarter 2023 comparison for that country. Leasing revenue was up 5% in the U.S. Global office leasing growth improved compared with first-quarter 2023. Conversely, property sales revenue was down 11.2%, reflecting continued high interest rates and difficult credit conditions. The company’s loan origination business benefited from higher loan fees and a significant increase in interest earnings on escrow balances. Property management also grew solidly. Foreign currency translation had a 0.2% negative impact on total revenue during the quarter, primarily driven by weakness in the Japanese yen and Australian dollar partially offset by strength in the British pound sterling and euro.

Cost of revenue increased 1.9%, primarily reflecting business growth partially offset by lower commission expense. Foreign currency translation had a 0.1% positive impact on total cost of revenue. Cost of revenue dipped to 60.3% of total revenue from 60.8% in the 2023 first-quarter.

Operating, administrative and other expenses decreased by 5.0% due to significant restructuring charges in first-quarter 2023, which was partially offset by certain other one-time charges this quarter. Foreign currency translation had a 0.1% negative impact on total operating expenses.

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 March 31, 2024, MSRs contributed $12.6 million to operating income, offset by $34.5 million of amortization of related intangible assets. The MSR contribution to first-quarter 2023 operating income was $16.7 million and amortization totaled $36.5 million. The decline in MSRs reflected lower origination activity.

Depreciation and amortization expense decreased 12.6% due to accelerated depreciation recorded during first-quarter 2023 as part of cost savings initiatives.

Global Workplace Solutions

The following table summarizes our results of operations for our Global Workplace Solutions (GWS) operating segment for the three months ended March 31, 2024 and 2023 (dollars in millions):

			Three Months Ended March 31,
			2024												2023
Revenue:
Net revenue:
Facilities management			$	1,552					26.7		%				$	1,395					26.1		%
Project management			790						13.6		%				735						13.8		%
Total segment net revenue			2,342						40.3		%				2,130						39.9		%
Pass through costs also recognized as revenue			3,467						59.7		%				3,208						60.1		%
Total segment revenue			5,809						100.0		%				5,338						100.0		%
Costs and expenses:
Cost of revenue			5,279						90.8		%				4,842						90.7		%
Operating, administrative and other			297						5.1		%				323						6.1		%
Depreciation and amortization			71						1.2		%				64						1.2		%
Total costs and expenses			5,647						97.1		%				5,229						98.0		%
Operating income			162						2.9		%				109						2.0		%
Equity income from unconsolidated subsidiaries			1						0.0		%				—						0.0		%
Other income			2						0.0		%				—						0.0		%
Add-back: Depreciation and amortization			71						1.2		%				64						1.2		%
Adjustments:
Integration and other costs related to acquisitions (1)			(4)						(0.1)		%				7						0.1		%
Costs associated with efficiency and cost-reduction initiatives			—						0.0		%				50						1.0		%
Segment operating profit and segment operating profit on revenue margin			$	232					4.0		%				$	230					4.3		%
Segment operating profit on net revenue margin									9.9		%										10.8		%

---

(1)During the three months ended March 31, 2024, integration and other costs related to acquisitions include $17.5 million in deal and integration costs, offset by reversal of $21.7 million in previously recognized transaction-related bonus expense due to change in estimate.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Revenue increased 8.8%, reflecting a double-digit increase in facilities management, led by the Local business, but slower growth in project management, which had an especially difficult comparison with first-quarter 2023, when revenue growth was robust. Foreign currency translation had a 0.3% positive impact on total revenue during the quarter, primarily driven by strength in the British pound sterling partially offset by weakness in the Argentina peso.

Cost of revenue increased 9.0%, driven by higher pass-through costs and professional compensation. Foreign currency translation had a 0.3% negative impact on total cost of revenue. Cost of revenue was 90.8% of total revenue, only slightly changed from 90.7% in first-quarter 2023.

Operating, administrative and other expenses fell 8.1%, primarily because first-quarter 2023 restructuring charges were not repeated in the 2024 period. Foreign currency translation had a 0.1% positive impact on total operating expenses during the quarter.

Real Estate Investments

The following table summarizes our results of operations for our Real Estate Investments (REI) operating segment for the three months ended March 31, 2024 and 2023 (dollars in millions):

			Three Months Ended March 31,
			2024												2023
Revenue:
Investment management			$	149					65.1		%				$	147					65.9		%
Development services			79						34.9		%				76						34.1		%
Total segment revenue			228						100.0		%				223						100.0		%
Costs and expenses:
Cost of revenue			43						18.8		%				38						17.2		%
Operating, administrative and other			189						82.9		%				252						112.6		%
Depreciation and amortization			3						1.4		%				7						2.9		%
Total costs and expenses			235						103.1		%				297						132.7		%
Gain on disposition of real estate			13						5.9		%				3						1.4		%
Operating income (loss)			6						2.8		%				(71)						(31.3)		%
Equity income from unconsolidated subsidiaries			11						4.7		%				167						74.6		%
Add-back: Depreciation and amortization			3						1.4		%				7						2.9		%
Adjustments:
Carried interest incentive compensation expense to align with the timing of associated revenue			14						6.2		%				7						3.0		%
Costs associated with efficiency and cost-reduction initiatives			—						0.0		%				21						9.5		%
Segment operating profit and segment operating profit on revenue margin			$	34					15.1		%				$	131					58.7		%

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Revenue increased 1.9% for the current quarter. This reflected slightly higher development and construction fees and incentive fees in investment management, and flat asset management revenue. Foreign currency translation had a 1.4% positive impact on total revenue, primarily driven by strength in the British pound sterling.

Cost of revenue increased 11.4%, and was 18.8% of total revenue – up from 17.2% in the same period in 2023. We generated more revenue from the global development business which has higher cost of revenue associated with it. Foreign currency translation had a 4.2% negative impact on total cost of revenue during the quarter.

Operating, administrative and other expenses decreased 25.1%, primarily because of restructuring charges incurred in first-quarter 2023 and lower incentive compensation expense in the current quarter. Foreign currency translation had a 0.7% negative impact on total operating expenses.

We recorded an equity loss from unconsolidated subsidiaries of approximately $10.6 million versus equity income of $166.7 million in the 2023 first-quarter, which included an unusually large gain on a development portfolio asset sale. Gain on disposition of real estate increased by $10.4 million compared with first-quarter 2023.

A roll forward of our AUM by product type for the three months ended March 31, 2024 is as follows (dollars in billions):

			Funds						Separate Accounts						Securities						Total
Balance at December 31, 2023			$	65.3					$	72.8					$	9.4					$	147.5
Inflows			0.4						1.5						0.1						2.0
Outflows			(0.7)						(1.4)						(0.5)						(2.6)
Market depreciation			(0.8)						(2.1)						—						(2.9)
Balance at March 31, 2024			$	64.2					$	70.8					$	9.0					$	144.0

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.

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 months ended March 31, 2024 and 2023 (dollars in millions):

			Three Months Ended March 31, (1)
			2024						2023
Elimination of inter-segment revenue			$	(6)					$	(4)
Costs and expenses:
Cost of revenue (2)			5						(1)
Operating, administrative and other			128						111
Depreciation and amortization			15						13
Total costs and expenses			148						123
Operating loss			(154)						(127)
Equity loss from unconsolidated subsidiaries			(71)						(26)
Other income (loss)			5						—
Add-back: Depreciation and amortization			15						13
Adjustments:
Costs associated with efficiency and cost-reduction initiatives			29						5
Costs incurred related to legal entity restructuring			1						—
Integration and other costs related to acquisitions			—						11
Segment operating loss			$	(175)					$	(124)

---

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

(2)Primarily relates to inter-segment eliminations.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Core corporate

Operating, administrative and other expenses for our core corporate functions rose 15.7% to $128.4 million for the first quarter of 2024, due to increased charges associated with employee separation and certain one-time charges related to strategic projects.

Other (non-core)

We recorded an equity loss of $70.7 million, reflecting the lower value of our investment in publicly traded Altus Power, Inc. (NYSE:AMPS). This compares with a $26.3 million loss in first-quarter 2023, reflecting the market value of our Altus ownership interest.

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 facilities. Our expected capital requirements for 2024 include up to $331.4 million of anticipated capital expenditures, net of tenant concessions. During the three months ended March 31, 2024, we incurred $60.5 million of capital expenditures, net of tenant concessions received. As of March 31, 2024, we had aggregate future commitments of $175.7 million related to co-investments funds in our Real Estate Investments segment, $79.8 million of which is expected to be funded in 2024. Additionally, as of March 31, 2024, we are committed to fund additional capital of $190.3 million and $54.3 million to consolidated and unconsolidated projects, respectively, within our Real Estate Investments segment. As of March 31, 2024, we had $2.8 billion of borrowings available under our revolving credit facilities (under both the Revolving Credit Agreement, as described below, and the Turner & Townsend revolving credit facility) and $1.0 billion of cash and cash equivalents.

We have historically relied on our internally generated cash flow and our revolving credit facilities to fund our working capital, capital expenditure and general investment requirements (including in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements. In the absence of extraordinary events, large strategic acquisitions or large returns of capital to shareholders, we anticipate that our cash flow from operations and our revolving credit facilities 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. 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.

In February 2024, we conducted a new issuance for $500.0 million in aggregate principal amount of 5.500% senior notes due in 2029 (the 5.500% senior notes) generating net proceeds of $494.9 million which included debt issuance cost of $1.3 million related to this issuance.

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.

Our long-term liquidity needs, other than those related to ordinary course obligations and commitments such as operating leases, are generally comprised of the following 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 March 31, 2024 and December 31, 2023, we had accrued deferred purchase and contingent consideration totaling $536.1 million ($265.0 million of which was a current liability) and $530.2 million ($264.1 million of which was a current liability), respectively, which was 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.

The third, as described in Note 12 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report, 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). 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 March 31, 2024, we did not repurchase any shares of our Class A common stock. During the period April 1, 2024 thru April 30, 2024, we repurchased 158,380 shares of our Class A common stock with an average price of $86.63 per share using cash on hand for an aggregate of $13.7 million. As of both March 31, 2024 and April 30, 2024, we had $1.5 billion of capacity remaining under the 2021 program.

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.

Historical Cash Flows

Operating Activities

Net cash used in operating activities totaled $491.9 million for the three months ended March 31, 2024 as compared to $744.8 million during the three months ended March 31, 2023. The primary drivers that contributed to the lower usage were as follows: (1) net inflow from working capital; the net working capital change was mainly due to higher collection of receivables, which lagged in the prior year, partially offset by higher outflows related to accounts payable and accrued expenses, (2) higher non-cash charges for share-based compensation expense, (3) higher net distribution of equity income from unconsolidated subsidiaries, and (4) elevated operating performance.

Investing Activities

Net cash used in investing activities totaled $899.7 million for the three months ended March 31, 2024, an increase of $784.7 million as compared to the three months ended March 31, 2023. The increase was primarily due to the acquisition of J&J Worldwide Services in February 2024 and outflows associated with our real estate projects compared to 2023.

Financing Activities

Net cash provided by financing activities totaled $1.2 billion for the three months ended March 31, 2024 as compared to $761.0 million for the three months ended March 31, 2023. The increased inflow was primarily driven by net proceeds of $494.9 million from the issuance of our 5.500% senior notes in first-quarter 2024 and no share repurchase activity as compared to first-quarter 2023. This was partially offset by higher net outflow on the revolver.

Indebtedness

We use a variety of financing arrangements, both long-term and short-term, to fund our 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 to lower funding costs.

Long-Term Debt

On July 10, 2023, CBRE Group, Inc., CBRE Services, Inc. (CBRE Services) and Relam Amsterdam Holdings B.V., a wholly-owned subsidiary of CBRE Services, entered into a new 5-year senior unsecured Credit Agreement (2023 Credit Agreement) maturing on July 10, 2028, which refinanced and replaced the previous credit agreement. The 2023 Credit Agreement provides for a senior unsecured term loan credit facility comprised of (i) tranche A Euro-denominated term loans in an aggregate principal amount of €366.5 million and (ii) tranche A U.S. Dollar-denominated term loans in an aggregate principal amount of $350.0 million with weighted average interest rate of 5.8% as of March 31, 2024, both requiring quarterly principal payments beginning on December 31, 2024 and continuing through maturity on July 10, 2028. The proceeds of the term loans under the 2023 Credit Agreement were applied to the repayment of all remaining outstanding senior term loans, approximately $437.5 million, under the previous credit agreement, the payment of related fees and expenses and other general corporate purposes.

On February 23, 2024, CBRE Services issued $500.0 million in aggregate principal amount of 5.500% senior notes due April 1, 2029 (the 5.500% senior notes) at a price equal to 99.837% of their face value. The 5.500% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 5.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024.

On June 23, 2023, CBRE Services issued $1.0 billion in aggregate principal amount of 5.950% senior notes due August 15, 2034 (the 5.950% senior notes) at a price equal to 98.174% of their face value. The 5.950% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 5.950% per year and is payable semi-annually in arrears on February 15 and August 15 of each year.

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 and 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 and 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 5.950% senior notes, 5.500% senior notes, 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.

The term loan borrowings under the 2023 Credit Agreement is fully and unconditionally guaranteed by CBRE Group, Inc. and CBRE Services. Our Revolving Credit Agreement, 5.950% senior notes, 5.500% senior notes, 4.875% senior notes and 2.500% senior notes are fully and unconditionally guaranteed by CBRE Group, Inc.

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

			March 31, 2024						December 31, 2023
Balance Sheet Data:
Current assets			$	11					$	7
Non-current assets			1,732						1,733
Total assets			$	1,743					$	1,740
Current liabilities			$	845					$	48
Non-current liabilities (1)			3,785						2,994
Total liabilities (1)			$	4,630					$	3,042

			Three Months Ended March 31,
			2024						2023
Statement of Operations Data:
Revenue			$	—					$	—
Operating loss			—						—
Net loss			(23)						(9)

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(1)Includes $1.2 billion and $932.5 million of intercompany loan payables to non-guarantor subsidiaries as of March 31, 2024 and December 31, 2023, respectively. All intercompany balances and transactions between CBRE Group, Inc. and CBRE Services have been eliminated.

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 2023 Annual Report and Note 8 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 commitments in an aggregate principal amount of up to $3.5 billion and a maturity date of August 5, 2027.

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 not to exceed $300.0 million in the aggregate.

As of March 31, 2024, $820.0 million was outstanding under the Revolving Credit Agreement. $10.0 million of letters of credit were outstanding as of March 31, 2024. As of April 30, 2024, $895.0 million 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 pursuant to a credit agreement dated March 31, 2022, with an additional accordion option of £20.0 million, that matures on March 31, 2027. As of March 31, 2024, no amount was outstanding under this revolving credit facility. As of April 30, 2024, $25.0 million (£20.0 million) was outstanding under this revolving credit facility bearing interest at SONIA plus 0.73%.

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 2023 Annual Report and Notes 4 and 8 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 4 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 10 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report and are incorporated by reference herein.

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 taxes, contingencies, and investments in unconsolidated subsidiaries – fair value option can be found in our 2023 Annual Report. There have been no material changes to these policies and estimates as of March 31, 2024.

New Accounting Pronouncements

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

Non-GAAP Financial Measures

Net revenue, segment operating profit on revenue margin, segment operating profit on net revenue margin, and 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 and 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.

We use core EBITDA as an indicator of the company’s operating financial performance. Core 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 carried interest incentive compensation expense to align with the timing of associated revenue, costs incurred related to legal entity restructuring, efficiency and cost-reduction initiatives, integration and other costs related to acquisitions, and provision associated with Telford’s fire safety remediation efforts. We believe that investors may find this measure 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.

Core EBITDA is not intended to be measures of free cash flow for our discretionary use because it does not consider certain cash requirements such as tax and debt service payments. 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 core EBITDA as a significant components when measuring our operating performance under our employee incentive compensation programs.

Core EBITDA is calculated as follows (dollars in millions):

			Three Months Ended March 31,
			2024						2023
Net income attributable to CBRE Group, Inc.			$	126					$	117
Net income attributable to non-controlling interests			22						8
Net income			148						125
Adjustments:
Depreciation and amortization			158						162
Interest expense, net of interest income			36						28
(Benefit from) provision for income taxes			(29)						28
Carried interest incentive compensation expense to align with the timing of associated revenue			14						7
Net fair value adjustments on strategic non-core investments			71						26
Costs associated with efficiency and cost-reduction initiatives			29						139
Costs incurred related to legal entity restructuring			1						—
Integration and other costs related to acquisitions (1)			(4)						18
Core EBITDA			$	424					$	533

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(1)During the three months ended March 31, 2024, integration and other costs related to acquisitions include $17.5 million in deal and integration costs, offset by reversal of $21.7 million in previously recognized transaction-related bonus expense due to change in estimate.

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,” “forecast,” “target,” 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, 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;

• 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 companies 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;

• 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;

• 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 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;

• 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 and Estimates,” “Quantitative and Qualitative Disclosures About Market Risk” and Part II, Item 1A, “Risk Factors” or as described in our 2023 Annual Report, in particular in Part I, Item 1A “Risk Factors”, or as described in the other documents and reports we file with the Securities and Exchange Commission (SEC).

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.