10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2015

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

For the 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 incorporation or organization)		(I.R.S. Employer Identification Number)

400 South Hope Street, 25^th Floor Los Angeles, California		90071
(Address of principal executive offices)		(Zip Code)

(213) 613-3333		Not applicable
(Registrant’s telephone number, including area code)		(Former name, former address and former fiscal year if changed since last report)

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 x No ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨.

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


Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨

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

The number of shares of Class A common stock outstanding at July 31, 2015 was 333,179,917.

FORM 10-Q

June 30, 2015

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets at June 30, 2015 (Unaudited) and December 31, 2014		3
	Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014 (Unaudited)		4
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014 (Unaudited)		5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (Unaudited)		6
	Consolidated Statement of Equity for the six months ended June 30, 2015 (Unaudited)		7
	Notes to Consolidated Financial Statements (Unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		63
Item 4.	Controls and Procedures		64

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		65
Item 1A.	Risk Factors		65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65
Item 6.	Exhibits		66
Signatures			69

CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)


	June 30, 2015			December 31, 2014
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	336,422		$	740,884
Restricted cash		66,011			28,090
Receivables, less allowance for doubtful accounts of $44,060 and $41,831 at June 30, 2015 and December 31, 2014, respectively		1,604,620			1,736,229
Warehouse receivables		750,816			506,294
Trading securities		68,553			62,804
Income taxes receivable		49,995			12,709
Prepaid expenses		154,460			142,719
Deferred tax assets, net		204,858			205,866
Real estate and other assets held for sale		1,899			3,845
Available for sale securities		1,129			663
Other current assets		104,193			84,401

Total Current Assets		3,342,956			3,524,504
Property and equipment, net		484,032			497,926
Goodwill		2,313,819			2,333,821
Other intangible assets, net of accumulated amortization of $520,767 and $463,400 at June 30, 2015 and December 31, 2014, respectively		806,102			802,360
Investments in unconsolidated subsidiaries		222,539			218,280
Real estate under development		13,868			4,630
Real estate held for investment		21,217			37,129
Available for sale securities		58,123			59,512
Other assets, net		197,603			168,943

Total Assets	$	7,460,259		$	7,647,105

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	764,524		$	827,530
Compensation and employee benefits payable		577,967			623,814
Accrued bonus and profit sharing		421,108			788,858
Short-term borrowings:
Warehouse lines of credit		743,592			501,185
Revolving credit facility		—			4,840
Other		895			25

Total short-term borrowings		744,487			506,050
Current maturities of long-term debt		13,894			42,407
Notes payable on real estate		1,625			23,229
Other current liabilities		71,169			63,746

Total Current Liabilities		2,594,774			2,875,634
Long-Term Debt:
5.00% senior notes		800,000			800,000
Senior term loans		484,375			605,963
5.25% senior notes		426,774			426,813
Other long-term debt		7			26

Total Long-Term Debt		1,711,156			1,832,802
Notes payable on real estate		23,194			19,614
Deferred tax liabilities, net		167,294			149,233
Non-current tax liabilities		48,869			46,003
Pension liability		91,028			92,923
Other liabilities		320,416			329,498

Total Liabilities		4,956,731			5,345,707
Commitments and contingencies		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 333,100,934 and 332,991,031 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		3,331			3,330
Additional paid-in capital		1,067,934			1,039,425
Accumulated earnings		1,759,061			1,541,095
Accumulated other comprehensive loss		(370,734	)		(324,020	)

Total CBRE Group, Inc. Stockholders’ Equity		2,459,592			2,259,830
Non-controlling interests		43,936			41,568

Total Equity		2,503,528			2,301,398

Total Liabilities and Equity	$	7,460,259		$	7,647,105

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

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)


	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015		2014
Revenue	$	2,390,506		$	2,126,806	$	4,443,009	$	3,987,648

Costs and expenses:
Cost of services		1,487,974			1,314,473		2,778,751		2,475,933
Operating, administrative and other		610,158			566,202		1,141,933		1,094,597
Depreciation and amortization		70,605			63,295		140,451		128,498

Total costs and expenses		2,168,737			1,943,970		4,061,135		3,699,028
Gain on disposition of real estate		6,986			23,170		6,986		29,867


Operating income		228,755			206,006		388,860		318,487
Equity income from unconsolidated subsidiaries		6,693			9,264		22,144		24,264
Other (loss) income		(1,069	)		6,364		18		11,165
Interest income		1,402			1,146		3,699		2,723
Interest expense		26,154			28,470		52,368		56,485
Write-off of financing costs		—			—		2,685		—


Income before provision for income taxes		209,627			194,310		359,668		300,154
Provision for income taxes		76,474			64,111		133,377		102,013


Net income		133,153			130,199		226,291		198,141
Less: Net income attributable to non-controlling interests		8,124			24,735		8,325		25,014

Net income attributable to CBRE Group, Inc.	$	125,029		$	105,464	$	217,966	$	173,127


Basic income per share attributable to CBRE Group, Inc.	$	0.38		$	0.32	$	0.66	$	0.52


Weighted average shares outstanding for basic income per share		331,999,935			330,133,061		331,988,489		330,084,525


Diluted income per share attributable to CBRE Group, Inc.	$	0.37		$	0.32	$	0.65	$	0.52


Weighted average shares outstanding for diluted income per share		336,154,524			333,918,620		335,926,626		333,634,342

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

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)


	Three Months Ended June 30,					Six Months Ended June 30,
	2015		2014			2015			2014
Net income	$	133,153	$	130,199		$	226,291		$	198,141
Other comprehensive income (loss):
Foreign currency translation gain (loss)		57,508		24,873			(47,912	)		36,446
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		1,809		1,826			3,604			3,626
Unrealized gains (losses) on interest rate swaps and interest rate caps, net of tax		263		(2,810	)		(2,511	)		(4,314	)
Unrealized holding gains (losses) on available for sale securities, net of tax		237		(1,294	)		71			(856	)
Other, net		16		(140	)		18			135

Total other comprehensive income (loss)		59,833		22,455			(46,730	)		35,037

Comprehensive income		192,986		152,654			179,561			233,178
Less: Comprehensive income attributable to non-controlling interests		8,141		24,738			8,309			25,023

Comprehensive income attributable to CBRE Group, Inc.	$	184,845	$	127,916		$	171,252		$	208,155

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

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	226,291		$	198,141
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		140,451			128,498
Amortization and write-off of financing costs		7,264			3,645
Gain on sale of loans, servicing rights and other assets		(74,135	)		(33,277	)
Net realized and unrealized gains from investments		(18	)		(11,165	)
Gain on disposition of real estate held for investment		(6,488	)		(23,028	)
Equity income from unconsolidated subsidiaries		(22,144	)		(24,264	)
Provision for doubtful accounts		4,412			4,507
Deferred income taxes		(2,410	)		(7,884	)
Compensation expense related to equity awards		29,132			24,471
Incremental tax benefit from stock options exercised		(1,078	)		(2,158	)
Distribution of earnings from unconsolidated subsidiaries		13,174			9,297
Tenant concessions received		6,262			6,199
Purchase of trading securities		(42,653	)		(35,728	)
Proceeds from sale of trading securities		35,596			32,786
Decrease (increase) in receivables		113,769			(123,958	)
Increase in prepaid expenses and other assets		(43,118	)		(21,841	)
(Increase) decrease in real estate held for sale and under development		(3,417	)		4,438
Decrease in accounts payable and accrued expenses		(9,767	)		(62,939	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(390,333	)		(223,419	)
Increase in income taxes receivable/payable		(14,125	)		(72,131	)
(Decrease) increase in other liabilities		(4,971	)		10,820
Other operating activities, net		(3,885	)		(4,994	)

Net cash used in operating activities		(42,191	)		(223,984	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(50,388	)		(53,605	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(94,975	)		(29,777	)
Contributions to unconsolidated subsidiaries		(27,571	)		(25,440	)
Distributions from unconsolidated subsidiaries		27,269			22,847
Net proceeds from disposition of real estate held for investment		—			68,183
Additions to real estate held for investment		(1,411	)		(5,144	)
Proceeds from the sale of servicing rights and other assets		12,615			12,820
(Increase) decrease in restricted cash		(38,678	)		14,201
Purchase of available for sale securities		(23,453	)		(41,466	)
Proceeds from the sale of available for sale securities		24,563			35,056
Other investing activities, net		1,192			327

Net cash used in investing activities		(170,837	)		(1,998	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior term loans		500,000			—
Repayment of senior term loans		(648,738	)		(19,825	)
Proceeds from revolving credit facility		831,000			1,154,568
Repayment of revolving credit facility		(835,512	)		(962,315	)
Proceeds from notes payable on real estate held for investment		—			3,575
Repayment of notes payable on real estate held for investment		(776	)		(22,990	)
Proceeds from notes payable on real estate held for sale and under development		4,404			4,885
Repayment of notes payable on real estate held for sale and under development		—			(32,984	)
Proceeds from short-term borrowings, net		569			6,538
Shares repurchased for payment of taxes on equity awards		(5,113	)		(15	)
Proceeds from exercise of stock options		3,214			2,209
Incremental tax benefit from stock options exercised		1,078			2,158
Non-controlling interests contributions		4,405			574
Non-controlling interests distributions		(10,637	)		(24,120	)
Payment of financing costs		(22,225	)		(104	)
Other financing activities, net		(2,138	)		(1,431	)

Net cash (used in) provided by financing activities		(180,469	)		110,723
Effect of currency exchange rate changes on cash and cash equivalents		(10,965	)		5,213

NET DECREASE IN CASH AND CASH EQUIVALENTS		(404,462	)		(110,046	)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD		740,884			491,912

CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	336,422		$	381,866

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	43,123		$	51,214

Income tax payments, net	$	148,011		$	182,315

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

CBRE GROUP, INC.

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

(Dollars in thousands)


	CBRE Group, Inc. Shareholders
	Class A common stock			Additional paid-in capital			Accumulated earnings		Accumulated other comprehensive loss			Non- controlling interests			Total
Balance at December 31, 2014	$	3,330		$	1,039,425		$	1,541,095	$	(324,020	)	$	41,568		$	2,301,398
Net income		—			—			217,966		—			8,325			226,291
Stock options exercised (including tax benefit)		2			4,290			—		—			—			4,292
Compensation expense for equity awards		—			29,132			—		—			—			29,132
Shares repurchased for payment of taxes on equity awards		(1	)		(5,112	)		—		—			—			(5,113	)
Foreign currency translation loss		—			—			—		(47,896	)		(16	)		(47,912	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—			—			—		3,604			—			3,604
Unrealized losses on interest rate swaps, net of tax		—			—			—		(2,511	)		—			(2,511	)
Unrealized holding gains on available for sale securities, net of tax		—			—			—		71			—			71
Contributions from non-controlling interests		—			—			—		—			4,405			4,405
Distributions to non-controlling interests		—			—			—		—			(10,637	)		(10,637	)
Other		—			199			—		18			291			508

Balance at June 30, 2015	$	3,331		$	1,067,934		$	1,759,061	$	(370,734	)	$	43,936		$	2,503,528

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

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying 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”), 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 (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. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, and reported amounts of revenue and expenses. Such estimates include the value of goodwill, intangibles and other long-lived assets, real estate assets, accounts receivable, 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. Certain reclassifications have been made to the 2014 financial statements to conform with the 2015 presentation.

The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2015. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014, which contains the latest available audited consolidated financial statements and notes thereto, which are as of and for the year ended December 31, 2014.

2. New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance under accounting principles generally accepted in the United States, or GAAP, when it becomes effective on January 1, 2018. This ASU permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of this ASU on our ongoing financial reporting.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” This ASU provides consolidation guidance for legal entities such as limited partnerships, limited liability corporations and securitization structures. ASU 2015-02 offers updated consolidation evaluation criteria and may require additional disclosures. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. We do not believe the adoption of ASU 2015-02 will have a material impact on our consolidated financial position, results of operations or disclosure requirements of our consolidated financial statements.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and requires the use of the retrospective method. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. We do not believe the adoption of this ASU will have a material impact on our consolidated financial position.

3. Acquisition of Global WorkPlace Solutions

On March 31, 2015, CBRE, Inc., our wholly-owned subsidiary, entered into a Stock and Asset Purchase Agreement with Johnson Controls, Inc. (JCI) to acquire JCI’s Global WorkPlace Solutions (GWS) business. GWS is a market-leading provider of Integrated Facilities Management solutions for major occupiers of commercial real estate and has significant operations around the world. The purchase price is $1.475 billion, payable in cash, with adjustments for working capital and other items. We expect to fund the acquisition through a combination of cash on hand and proceeds from the incurrence of debt. The closing of the transaction is subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to close in the late third quarter or early fourth quarter of 2015.

4. Variable Interest Entities (VIEs)

A consolidated subsidiary (the Venture) in our Global Investment Management segment sponsored investments by third-party investors in certain commercial properties through the formation of tenant-in-common limited liability companies and Delaware Statutory Trusts (collectively referred to as the Entities) that were owned by the third-party investors. The Venture also formed and was a member of a limited liability company for each property that served as master tenant (Master Tenant). Each Master Tenant leased the property from the Entities through a master lease agreement. Pursuant to the master lease agreements, the Master Tenant had the power to direct the day-to-day asset management activities that most significantly impacted the economic performance of the Entities. As a result, the Entities were deemed to be VIEs since the third-party investors holding the equity investment at risk in the Entities did not direct the day-to-day activities that most significantly impacted the economic performance of the properties held by the Entities. The Venture made voluntary contributions to each of these properties to support their operations beyond the cash flow generated by the properties themselves and such financial support was significant enough that the Venture was deemed to be the primary beneficiary of each Entity. During 2014, the remaining two commercial properties were sold.

The venture did not provide any financial support to the Entities during the six months ended June 30, 2014. The assets of the Entities were the sole collateral for the mortgage notes payable and other liabilities of the Entities and, as such, the creditors and equity investors of these Entities had no recourse to our assets held outside of these Entities.

Operating results relating to the Entities for the three and six months ended June 30, 2014 included the following (dollars in thousands):


	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Revenue	$	1,459	$	3,561
Operating, administrative and other expenses	$	1,355	$	2,588
Gain on disposition of real estate	$	23,028	$	23,028
Net income attributable to non-controlling interests	$	22,202	$	21,724

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

We also hold variable interests in certain VIEs in our Global Investment Management and Development Services segments 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 June 30, 2015 and December 31, 2014, our maximum exposure to loss related to the VIEs which are not consolidated was as follows (dollars in thousands):


	June 30, 2015		December 31, 2014
Investments in unconsolidated subsidiaries	$	22,263	$	26,353
Other assets, current		3,523		3,337
Co-investment commitments		200		200

Maximum exposure to loss	$	25,986	$	29,890

5. Fair Value Measurements

The “Fair Value Measurements and Disclosures” Topic of the FASB Accounting Standards Codification (ASC) (Topic 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or 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 were no significant transfers in or out of Level 1 and Level 2 during the three and six months ended June 30, 2015 and 2014.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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 Annual Report on Form 10-K for the year ended December 31, 2014. The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (dollars in thousands):


	As of June 30, 2015
	Fair Value Measured and Recorded Using						Total
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
U.S. treasury securities	$	4,553	$	—	$	—	$	4,553
Debt securities issued by U.S. federal agencies		—		6,469		—		6,469
Corporate debt securities		—		18,418		—		18,418
Asset-backed securities		—		3,023		—		3,023
Collateralized mortgage obligations		—		1,910		—		1,910

Total debt securities		4,553		29,820		—		34,373
Equity securities		24,879		—		—		24,879

Total available for sale securities		29,432		29,820		—		59,252
Trading securities		68,553		—		—		68,553
Warehouse receivables		—		750,816		—		750,816
Loan commitments		—		—		6,569		6,569
Foreign currency exchange forward contracts		—		7,127		—		7,127

Total assets at fair value	$	97,985	$	787,763	$	6,569	$	892,317

Liabilities
Interest rate swaps	$	—	$	25,106	$	—	$	25,106
Securities sold, not yet purchased		3,472		—		—		3,472
Foreign currency exchange forward contracts		—		5,061		—		5,061

Total liabilities at fair value	$	3,472	$	30,167	$	—	$	33,639

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)


	As of December 31, 2014
	Fair Value Measured and Recorded Using						Total
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
U.S. treasury securities	$	4,813	$	—	$	—	$	4,813
Debt securities issued by U.S. federal agencies		—		6,690		—		6,690
Corporate debt securities		—		16,664		—		16,664
Asset-backed securities		—		3,755		—		3,755
Collateralized mortgage obligations		—		1,959		—		1,959

Total debt securities		4,813		29,068		—		33,881
Equity securities		26,294		—		—		26,294

Total available for sale securities		31,107		29,068		—		60,175
Trading securities		62,804		—		—		62,804
Warehouse receivables		—		506,294		—		506,294
Loan commitments		—		—		2,372		2,372
Foreign currency exchange forward contracts		—		1,235		—		1,235

Total assets at fair value	$	93,911	$	536,597	$	2,372	$	632,880

Liabilities
Interest rate swaps	$	—	$	26,895	$	—	$	26,895
Securities sold, not yet purchased		1,830		—		—		1,830
Foreign currency exchange forward contracts		—		1,397		—		1,397

Total liabilities at fair value	$	1,830	$	28,292	$	—	$	30,122

There were no significant non-recurring fair value measurements recorded during the three and six months ended June 30, 2015 and 2014.

The following table provides additional information about fair value measurements for the Level 3 assets for the six months ended June 30, 2015 (dollars in thousands):


Balance at January 1, 2015	$	2,372
Net gains included in earnings		10,584
Settlements		(6,387	)
Transfers into (out of) Level 3		—

Ending balance at June 30, 2015	$	6,569

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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Warehouse Receivables: These balances are carried at fair value based on market prices at the balance sheet date.

Trading and Available for Sale Securities: These investments are carried at their fair value.

Foreign Currency Exchange Forward Contracts and Loan Commitments: These assets and liabilities are carried at their fair value as calculated by using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative (see Note 6).

Securities Sold, not yet Purchased: These liabilities are carried at their fair value.

Short-Term Borrowings: The majority of this balance represents outstanding amounts under our warehouse lines of credit for CBRE Capital Markets, Inc. (CBRE Capital Markets) and our revolving credit facility. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value.

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 $496.9 million and $645.1 million at June 30, 2015 and December 31, 2014, respectively. Their actual carrying value totaled $496.9 million and $645.6 million at June 30, 2015 and December 31, 2014, respectively (see Note 11).

Interest Rate Swaps: These liabilities are carried at their fair value as calculated by using widely-accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative (see Note 6).

5.00% Senior Notes: Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our 5.00% senior notes was $810.0 million and $818.0 million at June 30, 2015 and December 31, 2014, respectively. Their actual carrying value totaled $800.0 million at both June 30, 2015 and December 31, 2014.

5.25% Senior Notes: Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our 5.25% senior notes was $439.9 million and $439.7 million at June 30, 2015 and December 31, 2014, respectively. Their actual carrying value totaled $426.8 million at both June 30, 2015 and December 31, 2014.

Notes Payable on Real Estate: As of June 30, 2015 and December 31, 2014, the carrying value of our notes payable on real estate was $24.8 million and $42.8 million, respectively (see Note 10). These borrowings generally have floating interest rates at spreads added to a market rate index. It is likely that some portion of our notes payable on real estate have fair values lower than actual carrying values. Given the cost involved in estimating their fair value, we determined it was not practicable to do so. Additionally, these notes payable were not recourse to us as of June 30, 2015 or December 31, 2014.

6. Derivative Financial Instruments

We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of our debt funding and by using derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known but uncertain cash amounts, the value of which are determined by interest rates. Our

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings. We do not net derivatives on our balance sheet. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy.

In March 2011, we entered into five interest rate swap agreements, all with effective dates in October 2011, and immediately designated them as cash flow hedges in accordance with FASB ASC Topic 815, “Derivatives and Hedging.” The purpose of these interest rate swap agreements is to attempt to hedge potential changes to our cash flows due to the variable interest nature of our senior term loan facilities. The total notional amount of these interest rate swap agreements is $400.0 million, with $200.0 million expiring in October 2017 and $200.0 million expiring in September 2019. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. There was no significant hedge ineffectiveness for the three and six months ended June 30, 2015 and 2014. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive loss on the balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. We reclassified $3.0 million and $5.9 million for the three and six months ended June 30, 2015, respectively, and $3.0 million and $5.9 million for the three and six months ended June 30, 2014, respectively, from accumulated other comprehensive loss to interest expense. During the next twelve months, we estimate that $11.0 million will be reclassified from accumulated other comprehensive loss to interest expense. In addition, we recorded net gains of $0.4 million and net losses of $4.1 million for the three and six months ended June 30, 2015, respectively, and net losses of $4.6 million and $7.2 million for the three and six months ended June 30, 2014, respectively, to other comprehensive income/loss in relation to such interest rate swap agreements. As of June 30, 2015 and December 31, 2014, the fair values of such interest rate swap agreements were reflected as a $25.1 million liability and a $26.9 million liability, respectively, and were included in other long-term liabilities in the accompanying consolidated balance sheets.

Additionally, 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 U.S. dollars. We enter into derivative financial instruments to attempt to protect the value or fix the amount of certain obligations in terms of our reporting currency, the U.S. dollar. In March 2014, we began a foreign currency exchange forward hedging program by entering into 38 foreign currency exchange forward contracts, including agreements to buy U.S. dollars and sell Australian dollars, British pound sterling, Canadian dollars, euros and Japanese yen, covering an initial notional amount of $209.7 million. The purpose of these forward contracts is to attempt to mitigate the risk of fluctuations in foreign currency exchange rates that would adversely impact some of our foreign currency denominated EBITDA. Hedge accounting was not elected for any of these contracts. As such, changes in the fair values of these contracts are recorded directly in earnings. Included in the consolidated statement of operations were net losses of $11.1 million and net gains of $7.3 million from foreign currency exchange forward contracts for the three and six months ended June 30, 2015, respectively, and net losses of $3.4 million from foreign currency exchange forward contracts for both the three and six months ended June 30, 2014. As of June 30, 2015, we had 83 foreign currency exchange forward contracts outstanding covering a notional amount of $367.7 million. As of June 30, 2015, the fair value of forward contracts with five counterparties aggregated to a $7.1 million asset position, which was included in other current assets in the accompanying consolidated balance sheets. As of June 30, 2015, the fair value of forward contracts with six counterparties aggregated to a $4.6 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of forward contracts with two counterparties aggregated to a $0.5 million asset position, which was included in other current assets in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of forward contracts with four counterparties aggregated to a $1.3 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

We also routinely monitor our exposure to currency exchange rate changes in connection with certain transactions and sometimes enter into foreign currency exchange option and forward contracts to limit our exposure to such transactions, as appropriate. In the ordinary course of business, we also sometimes utilize derivative financial instruments in the form of foreign currency exchange contracts to attempt to mitigate foreign currency exchange exposure resulting from intercompany loans. Included in the consolidated statements of operations were net losses of $0.6 million and $0.2 million for the three and six months ended June 30, 2015 resulting from net losses on these foreign currency exchange option and forward contracts. The net impact on earnings resulting from gains and/or losses associated with these contracts during the three and six months ended June 30, 2014 was not significant. As of June 30, 2015, we had four foreign currency exchange option and forward contracts outstanding covering a notional amount of $33.0 million. As of June 30, 2015, the fair value of forward contracts with two counterparties aggregated to a $0.5 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of forward contracts with one counterparty aggregated to a $0.8 million asset position, which was included in other current assets in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of forward contracts with one counterparty aggregated to a $0.1 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets.

We also enter into loan commitments that relate to the origination of commercial mortgage loans that will be held for resale. FASB ASC Topic 815 requires that these commitments be recorded at their fair values as derivatives. Included in the consolidated statements of operations were net gains of $6.6 million and $10.6 million for the three and six months ended June 30, 2015, respectively, resulting from these loan commitments. The net impact on earnings resulting from gains and/or losses associated with these loan commitments during the three and six months ended June 30, 2014 was not significant. As of June 30, 2015, the fair value of such contracts with three counterparties aggregated to a $6.6 million asset position, which was included in other current assets in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of such contracts with three counterparties aggregated to a $2.4 million asset position, which was included in other current assets in the accompanying consolidated balance sheets.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

7. Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries are accounted for under the equity method of accounting. Combined condensed financial information for these entities is as follows (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Global Investment Management:
Revenue	$	251,172		$	191,913		$	506,899		$	426,248
Operating loss	$	(109,353	)	$	(150,306	)	$	(80,726	)	$	(321,899	)
Net loss	$	(188,240	)	$	(93,821	)	$	(231,196	)	$	(253,972	)
Development Services:
Revenue	$	10,316		$	8,399		$	19,575		$	22,835
Operating income	$	2,301		$	1,945		$	41,348		$	18,407
Net (loss) income	$	(149	)	$	128		$	37,487		$	15,211
Other:
Revenue	$	45,979		$	46,377		$	73,566		$	71,582
Operating income	$	11,105		$	11,677		$	14,631		$	13,344
Net income	$	11,264		$	11,698		$	14,901		$	13,386
Total:
Revenue	$	307,467		$	246,689		$	600,040		$	520,665
Operating loss	$	(95,947	)	$	(136,684	)	$	(24,747	)	$	(290,148	)
Net loss	$	(177,125	)	$	(81,995	)	$	(178,808	)	$	(225,375	)

Our Global Investment Management segment invests our own capital in certain real estate investments with clients. We have provided investment management, property management, brokerage and other professional services in connection with these real estate investments on an arm’s length basis and earned revenues from these unconsolidated subsidiaries. We have also provided development, property management and brokerage services to certain of our unconsolidated subsidiaries in our Development Services segment on an arm’s length basis and earned revenues from these unconsolidated subsidiaries.

8. Real Estate and Other Assets Held for Sale and Related Liabilities

Real estate and other assets held for sale include completed real estate projects or land for sale in their present condition that have met all of the “held for sale” criteria of the “Property, Plant and Equipment” Topic of the FASB ASC (Topic 360) and other assets directly related to such projects. Liabilities related to real estate and other assets held for sale have been included within other current liabilities in the accompanying consolidated balance sheets.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Real estate and other assets held for sale and related liabilities were as follows (dollars in thousands):


	June 30, 2015		December 31, 2014
Assets:
Real estate held for sale (see Note 9)	$	1,899	$	3,840
Other current assets		—		5

Total real estate and other assets held for sale		1,899		3,845

Liabilities:
Accounts payable and accrued expenses		13		61

Total liabilities related to real estate and other assets held for sale		13		61

Net real estate and other assets held for sale	$	1,886	$	3,784

9. Real Estate

We provide build-to-suit services for our clients and also develop or purchase certain projects which we intend to sell to institutional investors upon project completion or redevelopment. Therefore, we have ownership of real estate until such projects are sold or otherwise disposed. Certain real estate assets secure the outstanding balances of underlying mortgage or construction loans. Our real estate is reported in our Development Services segment and consisted of the following (dollars in thousands):


	June 30, 2015		December 31, 2014
Real estate included in assets held for sale (see Note 8)	$	1,899	$	3,840
Real estate under development (non-current)		13,868		4,630
Real estate held for investment (1)		21,217		37,129

Total real estate (2)	$	36,984	$	45,599

(1)	Net of accumulated depreciation of $10.1 million and $12.3 million at June 30, 2015 and December 31, 2014, respectively.

(2)

Includes balances for lease intangibles of $0.1 million and $3.6 million at June 30, 2015 and December 31, 2014, respectively. We record lease intangibles upon acquiring real estate projects with in-place leases. The balances are shown net of amortization, which is recorded as an increase to, or a reduction of, rental income.

10. Notes Payable on Real Estate

We had loans secured by real estate, which consisted of the following (dollars in thousands):


	June 30, 2015		December 31, 2014
Current portion of notes payable on real estate	$	1,625	$	23,229
Notes payable on real estate, non-current portion		23,194		19,614

Total notes payable on real estate	$	24,819	$	42,843

At both June 30, 2015 and December 31, 2014, none of our notes payable on real estate was recourse to us, but was recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

11. Debt

We maintain credit facilities with third-party lenders, which we use for a variety of purposes. On March 28, 2013, we entered into a credit agreement (the 2013 Credit Agreement) with a syndicate of banks led by Credit Suisse AG (CS) as administrative and collateral agent, to completely refinance a previous credit agreement. On January 9, 2015, we entered into an amended and restated credit agreement (the 2015 Credit Agreement) with a syndicate of banks jointly led by Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and CS. In January 2015, we used the proceeds from the tranche A term loan facility under the 2015 Credit Agreement and from the December 2014 issuance of $125.0 million of 5.25% senior notes due 2025, along with cash on hand, to pay off the prior tranche A and tranche B term loans and the balance on our revolving credit facility under the 2013 Credit Agreement.

The 2015 Credit Agreement is now an unsecured credit facility that is jointly and severally guaranteed by us and substantially all of our material domestic subsidiaries. As of June 30, 2015, the 2015 Credit Agreement provides for the following: (1) a $2.6 billion revolving credit facility, which includes the capacity to obtain letters of credit and swingline loans and matures on January 9, 2020; and (2) a $500.0 million tranche A term loan facility requiring quarterly principal payments, which began on June 30, 2015 and continue through maturity on January 9, 2020.

The revolving credit facility under the 2015 Credit Agreement allows for borrowings outside of the United States (U.S.), with a $75.0 million sub-facility available to one of our Canadian subsidiaries, a $100.0 million sub-facility available to one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $300.0 million sub-facility available to one of our U.K. subsidiaries. Additionally, outstanding borrowings under these sub-facilities may be up to 5.0% higher as allowed under the currency fluctuation provision in the 2015 Credit Agreement. Borrowings under the revolving credit facility bear interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.85% to 1.00% or (2) the daily rate, in each case as determined by reference to our Credit Rating (as defined in the 2015 Credit Agreement). The 2015 Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused) and as of June 30, 2015, no amounts were outstanding under our revolving credit facility other than letters of credit totaling $2.0 million. These letters of credit, which reduce the amount we may borrow under the revolving credit facility, were primarily issued in the ordinary course of business. As of December 31, 2014, we had $4.8 million of revolving credit facility principal outstanding under the 2013 Credit Agreement with a related weighted average annual interest rate of 1.4%, which was included in short-term borrowings in the accompanying consolidated balance sheets.

Borrowings under the tranche A term loan facility under the 2015 Credit Agreement as of June 30, 2015 bear interest, based on our option, on either (1) the applicable fixed rate plus 0.95% to 1.25% or (2) the daily rate plus 0.0% to 0.25%, in each case as determined by reference to our Credit Rating (as defined in the 2015 Credit Agreement). As of June 30, 2015, we had $496.9 million of term loan facility principal outstanding under the 2015 Credit Agreement, which was included in the accompanying consolidated balance sheets. As of December 31, 2014, we had $645.6 million of term loan facilities principal outstanding (including $434.4 million of tranche A term loan facility and $211.2 million of tranche B term loan facility) under the 2013 Credit Agreement, which are also included in the accompanying consolidated balance sheets.

Our 2015 Credit Agreement and the indentures governing our 5.00% senior notes and 5.25% senior notes contain restrictive covenants that, among other things, limit our ability to incur additional indebtedness, pay dividends or make distributions to stockholders, repurchase capital stock or debt, make investments, sell assets or subsidiary stock, create or permit liens on assets, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers. Our 2015

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Credit Agreement also requires us to maintain a minimum coverage ratio of EBITDA (as defined in the 2015 Credit Agreement) to total interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to EBITDA (as defined in the 2015 Credit Agreement) of 4.25x as of the end of each fiscal quarter. Our coverage ratio of EBITDA to total interest expense was 13.74x for the trailing twelve months ended June 30, 2015 and our leverage ratio of total debt less available cash to EBITDA was 1.15x as of June 30, 2015.

12. 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 therefor as liabilities on our financial statements are unlikely to be significant, but litigation is inherently uncertain and there is the potential for a material adverse effect on our 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 Multifamily Capital, Inc. (CBRE MCI), a wholly-owned subsidiary of CBRE Capital Markets, entered into an agreement with Federal National Mortgage Association (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 in select cases, is subject to sharing up to one-third of any losses on loans originated under the DUS Program. CBRE MCI has funded loans subject to such loss sharing arrangements with unpaid principal balances of $11.3 billion at June 30, 2015. Additionally, CBRE MCI has funded loans under the DUS Program that are not subject to loss sharing arrangements with unpaid principal balances of approximately $51.6 million at June 30, 2015. 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 June 30, 2015 and December 31, 2014, CBRE MCI had a $32.0 million and a $29.0 million, respectively, letter of credit under this reserve arrangement, and had provided approximately $19.9 million and $16.8 million, respectively, of loan loss accruals. Fannie Mae’s recourse under the DUS Program is limited to the assets of CBRE MCI, which totaled approximately $267.0 million (including $112.7 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 June 30, 2015.

We had outstanding letters of credit totaling $41.4 million as of June 30, 2015, 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. CBRE MCI’s letter of credit totaling $32.0 million referred to in the preceding paragraph represented the majority of the $41.4 million outstanding letters of credit. The remaining letters of credit are primarily executed by us in the ordinary course of business and expire at varying dates through June 2016.

We had guarantees totaling $19.9 million as of June 30, 2015, 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 $19.9 million primarily represents guarantees of obligations of unconsolidated subsidiaries, which expire at varying dates through December 2018, as well as various guarantees of management contracts in our operations overseas, which expire at the end of each of the respective agreements.

In addition, as of June 30, 2015, we had numerous non-recourse carveout, completion and budget guarantees relating to development projects. These guarantees are commonplace in our industry and are made by us in the ordinary course of our Development Services business. Non-recourse carveout guarantees generally require that

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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. However, we generally use “guaranteed maximum price” contracts with reputable, bondable general contractors with respect to projects for which we provide these guarantees. These contracts are intended to pass the risk to such contractors. While there can be no assurance, we do not expect to incur any material losses under these guarantees.

An important part of the strategy for our Global Investment Management business involves investing our capital in certain real estate investments with our clients. These co-investments typically range from 2.0% to 5.0% of the equity in a particular fund. As of June 30, 2015, we had aggregate commitments of $20.7 million to fund future co-investments.

Additionally, an important part of our Development Services business strategy is to invest in unconsolidated real estate subsidiaries as a principal (in most cases co-investing with our clients). As of June 30, 2015, we had committed to fund $20.6 million of additional capital to these unconsolidated subsidiaries.

13. Income Per Share Information

The following is a calculation of income per share (dollars in thousands, except share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Computation of basic income per share attributable to CBRE Group, Inc. shareholders:
Net income attributable to CBRE Group, Inc. shareholders	$	125,029	$	105,464	$	217,966	$	173,127
Weighted average shares outstanding for basic income per share		331,999,935		330,133,061		331,988,489		330,084,525

Basic income per share attributable to CBRE Group, Inc. shareholders	$	0.38	$	0.32	$	0.66	$	0.52


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Computation of diluted income per share attributable to CBRE Group, Inc. shareholders:
Net income attributable to CBRE Group, Inc. shareholders	$	125,029	$	105,464	$	217,966	$	173,127
Weighted average shares outstanding for basic income per share		331,999,935		330,133,061		331,988,489		330,084,525
Dilutive effect of contingently issuable shares		3,913,275		3,360,227		3,678,940		3,120,170
Dilutive effect of stock options		241,314		425,332		259,197		429,647

Weighted average shares outstanding for diluted income per share		336,154,524		333,918,620		335,926,626		333,634,342

Diluted income per share attributable to CBRE Group, Inc. shareholders	$	0.37	$	0.32	$	0.65	$	0.52

For both the three and six months ended June 30, 2015, 47,082 of contingently issuable shares were excluded from the computation of diluted earnings per share because their inclusion would have had an anti-

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

dilutive effect. For both the three and six months ended June 30, 2014, 10,503 of contingently issuable shares were excluded from the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.

For the three and six months ended June 30, 2014, options to purchase 7,314 shares of common stock were excluded from the computation of diluted earnings per share. These options were excluded because their inclusion would have had an anti-dilutive effect given that the options’ exercise prices were greater than the average market price of our common stock for such period.

14. Pensions

We have two contributory defined benefit pension plans in the United Kingdom (U.K.), which we acquired in connection with previous acquisitions. Our subsidiaries based in the U.K. maintain the plans to provide retirement benefits to existing and former employees participating in these plans. During 2007, we reached agreements with the active members of these plans to freeze future pension plan benefits. In return, the active members became eligible to enroll in the CBRE Group Personal Pension Plan, a defined contribution plan in the U.K.

Net periodic pension cost (benefit) consisted of the following (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Interest cost	$	3,686		$	4,477		$	7,427		$	8,908
Expected return on plan assets		(4,547	)		(5,857	)		(9,159	)		(11,653	)
Amortization of unrecognized net loss		1,016			668			2,047			1,330

Net periodic pension cost (benefit)	$	155		$	(712	)	$	315		$	(1,415	)

With respect to these pension plans, our historical policy has been to contribute annually to the plans, an amount to fund pension liabilities as actuarially determined and as required by applicable laws and regulations. Our contributions to these plans are invested by the plan trustee and, if these investments do not perform well in the future, we may be required to provide additional contributions to cover any pension underfunding. We contributed $1.5 million and $3.4 million to fund our pension plans during the three and six months ended June 30, 2015, respectively. We expect to contribute a total of $6.3 million to fund our pension plans for the year ending December 31, 2015.

15. Segments

We report our operations through the following segments: (1) Americas, (2) EMEA, (3) Asia Pacific, (4) Global Investment Management and (5) Development Services.

The Americas segment is our largest segment of operations and provides a comprehensive range of services throughout the U.S. and in the largest regions of Canada and key markets in Latin America. The primary services offered consist of the following: real estate services, mortgage loan origination and servicing, valuation services, asset services and corporate services.

Our EMEA and Asia Pacific segments provide services similar to the Americas business segment. The EMEA segment has operations primarily in Europe, while the Asia Pacific segment has operations in Asia, Australia and New Zealand.

Our Global Investment Management business provides investment management services to clients seeking to generate returns and diversification through direct and indirect investments in real estate in North America, Europe and Asia Pacific.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Our Development Services business consists of real estate development and investment activities primarily in the U.S.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue
Americas	$	1,434,489	$	1,235,720	$	2,662,105	$	2,257,401
EMEA		585,714		510,987		1,079,738		1,029,666
Asia Pacific		261,828		241,214		470,194		436,857
Global Investment Management		94,053		126,314		204,277		238,777
Development Services		14,422		12,571		26,695		24,947

	$	2,390,506	$	2,126,806	$	4,443,009	$	3,987,648


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
EBITDA
Americas	$	203,411	$	169,404	$	390,732	$	295,166
EMEA		47,810		27,369		55,388		50,734
Asia Pacific		28,154		23,765		38,704		32,006
Global Investment Management		16,304		38,129		51,184		66,392
Development Services		1,181		1,527		7,140		13,102

	$	296,860	$	260,194	$	543,148	$	457,400

EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization. EBITDA is not a recognized measurement under U.S. generally accepted accounting principles (GAAP) and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

We generally use EBITDA to evaluate operating performance and for other discretionary purposes, and we believe that this measure provides a more complete understanding of ongoing operations, enhances comparability of current results to prior periods and may be useful for investors to analyze our financial performance because EBITDA eliminates the impact of selected charges that may obscure trends in the underlying performance of our business. We further believe that investors may find EBITDA useful in evaluating our operating performance compared to that of other companies in our industry because EBITDA 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. EBITDA may vary for different companies for reasons unrelated to overall operating performance.

EBITDA is not intended to be 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. EBITDA may also differ from the amount calculated under similarly titled definitions in our debt agreements, which amounts 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 and making certain restricted payments.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Net interest expense and write-off of financing costs have been expensed in the segment incurred. Provision for income taxes has been allocated among our segments by using applicable U.S. and foreign effective tax rates. EBITDA for our segments is calculated as follows (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Americas
Net income attributable to CBRE Group, Inc.	$	96,857		$	92,304		$	192,059		$	162,770
Add:
Depreciation and amortization		44,591			35,187			87,541			69,345
Interest expense (income), net		4,247			(226	)		7,793			8,960
Write-off of financing costs		—			—			2,685			—
Royalty and management service expense (income)		2,370			(2,843	)		2,478			(3,707	)
Provision for income taxes		55,346			44,982			98,176			57,798

EBITDA	$	203,411		$	169,404		$	390,732		$	295,166

EMEA
Net income (loss) attributable to CBRE Group, Inc.	$	19,929		$	(6,967	)	$	1,443		$	(13,957	)
Add:
Depreciation and amortization		14,607			15,319			29,399			32,782
Interest expense, net		11,375			17,184			22,822			24,343
Royalty and management service income		(4,975	)		(3,070	)		(6,192	)		(6,955	)
Provision for income taxes		6,874			4,903			7,916			14,521

EBITDA	$	47,810		$	27,369		$	55,388		$	50,734

Asia Pacific
Net income attributable to CBRE Group, Inc.	$	10,949		$	8,246		$	13,608		$	4,002
Add:
Depreciation and amortization		3,783			3,371			7,629			6,439
Interest expense, net		991			768			1,889			1,103
Royalty and management service expense		1,586			4,623			1,649			8,262
Provision for income taxes		10,845			6,757			13,929			12,200

EBITDA	$	28,154		$	23,765		$	38,704		$	32,006

Global Investment Management
Net (loss) income attributable to CBRE Group, Inc.	$	(2,688	)	$	12,234		$	8,020		$	15,062
Add:
Depreciation and amortization		7,061			8,452			14,672			17,818
Interest expense, net		7,818			8,745			15,502			17,586
Royalty and management service expense		1,019			1,290			2,065			2,400
Provision for income taxes		3,094			7,408			10,925			13,526

EBITDA	$	16,304		$	38,129		$	51,184		$	66,392

Development Services
Net (loss) income attributable to CBRE Group, Inc.	$	(18	)	$	(353	)	$	2,836		$	5,250
Add:
Depreciation and amortization		563			966			1,210			2,114
Interest expense, net		321			853			663			1,770
Provision for income taxes		315			61			2,431			3,968

EBITDA	$	1,181		$	1,527		$	7,140		$	13,102

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

16. Guarantor and Nonguarantor Financial Statements

The following condensed consolidating financial information includes:

(1) Condensed consolidating balance sheets as of June 30, 2015 and December 31, 2014; condensed consolidating statements of operations for the three and six months ended June 30, 2015 and 2014; condensed consolidating statements of comprehensive income (loss) for the three and six months ended June 30, 2015 and 2014; and condensed consolidating statements of cash flows for the six months ended June 30, 2015 and 2014 of (a) CBRE Group, Inc., as the parent, (b) CBRE Services, Inc. (CBRE), as the subsidiary issuer, (c) the guarantor subsidiaries, (d) the nonguarantor subsidiaries and (e) CBRE Group, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate CBRE Group, Inc. as the parent with CBRE and its guarantor and nonguarantor subsidiaries.

Investments in consolidated subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in consolidated subsidiaries and intercompany balances and transactions.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2015

(Dollars in thousands)


	Parent		CBRE		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Elimination			Consolidated Total
Current Assets:
Cash and cash equivalents	$	5	$	15,041	$	56,547	$	264,829	$	—		$	336,422
Restricted cash		—		—		1,150		64,861		—			66,011
Receivables, net		—		—		593,479		1,011,141		—			1,604,620
Warehouse receivables (a)		—		—		628,013		122,803		—			750,816
Trading securities		—		—		101		68,452		—			68,553
Income taxes receivable		9,625		—		27,942		12,428		—			49,995
Prepaid expenses		—		—		59,910		94,550		—			154,460
Deferred tax assets, net		—		—		140,746		64,112		—			204,858
Real estate and other assets held for sale		—		—		1,058		841		—			1,899
Available for sale securities		—		—		1,129		—		—			1,129
Other current assets		—		7,077		59,473		37,643		—			104,193

Total Current Assets		9,630		22,118		1,569,548		1,741,660		—			3,342,956
Property and equipment, net		—		—		345,569		138,463		—			484,032
Goodwill		—		—		1,205,056		1,108,763		—			2,313,819
Other intangible assets, net		—		—		512,318		293,784		—			806,102
Investments in unconsolidated subsidiaries		—		—		185,767		36,772		—			222,539
Investments in consolidated subsidiaries		3,343,116		2,493,405		930,412		—		(6,766,933	)		—
Intercompany loan receivable		—		2,552,719		700,000		—		(3,252,719	)		—
Real estate under development		—		—		842		13,026		—			13,868
Real estate held for investment		—		—		5,675		15,542		—			21,217
Available for sale securities		—		—		56,304		1,819		—			58,123
Other assets, net		—		48,726		113,133		35,744		—			197,603

Total Assets	$	3,352,746	$	5,116,968	$	5,624,624	$	3,385,573	$	(10,019,652	)	$	7,460,259

Current Liabilities:
Accounts payable and accrued expenses	$	—	$	19,664	$	209,244	$	535,616	$	—		$	764,524
Compensation and employee benefits payable		—		626		346,696		230,645		—			577,967
Accrued bonus and profit sharing		—		—		207,347		213,761		—			421,108
Short-term borrowings:
Warehouse lines of credit (a)		—		—		624,360		119,232		—			743,592
Other		—		—		16		879		—			895

Total short-term borrowings		—		—		624,376		120,111		—			744,487
Current maturities of long-term debt		—		12,500		1,380		14		—			13,894
Notes payable on real estate		—		—		—		1,625		—			1,625
Other current liabilities		—		4,807		60,873		5,489		—			71,169

Total Current Liabilities		—		37,597		1,449,916		1,107,261		—			2,594,774
Long-Term Debt:
5.00% senior notes		—		800,000		—		—		—			800,000
Senior term loans		—		484,375		—		—		—			484,375
5.25% senior notes		—		426,774		—		—		—			426,774
Other long-term debt		—		—		—		7		—			7
Intercompany loan payable		893,154		—		1,306,364		1,053,201		(3,252,719	)		—

Total Long-Term Debt		893,154		1,711,149		1,306,364		1,053,208		(3,252,719	)		1,711,156
Notes payable on real estate		—		—		—		23,194		—			23,194
Deferred tax liabilities, net		—		—		106,438		60,856		—			167,294
Non-current tax liabilities		—		—		48,869		—		—			48,869
Pension liability		—		—		—		91,028		—			91,028
Other liabilities		—		25,106		219,632		75,678		—			320,416

Total Liabilities		893,154		1,773,852		3,131,219		2,411,225		(3,252,719	)		4,956,731
Commitments and contingencies		—		—		—		—		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity		2,459,592		3,343,116		2,493,405		930,412		(6,766,933	)		2,459,592
Non-controlling interests		—		—		—		43,936		—			43,936

Total Equity		2,459,592		3,343,116		2,493,405		974,348		(6,766,933	)		2,503,528

Total Liabilities and Equity	$	3,352,746	$	5,116,968	$	5,624,624	$	3,385,573	$	(10,019,652	)	$	7,460,259

(a)

Although CBRE Capital Markets is included among our domestic subsidiaries that jointly and severally guarantee our 5.00% senior notes, 5.25% senior notes and our 2015 Credit Agreement, a substantial majority of warehouse receivables funded under TD Bank, N.A. (TD Bank), JP Morgan Chase Bank, N.A. (JP Morgan), Bank of America (BofA), Capital One, N.A. (Capital One) and Fannie Mae ASAP lines of credit are pledged to TD Bank, JP Morgan, BofA, Capital One and Fannie Mae, and accordingly, are not included as collateral for these notes or our other outstanding debt.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2014

(Dollars in thousands)


	Parent		CBRE		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Elimination			Consolidated Total
Current Assets:
Cash and cash equivalents	$	5	$	18,262	$	374,103	$	348,514	$	—		$	740,884
Restricted cash		—		—		630		27,460		—			28,090
Receivables, net		—		—		605,044		1,131,185		—			1,736,229
Warehouse receivables (a)		—		—		339,921		166,373		—			506,294
Trading securities		—		—		115		62,689		—			62,804
Income taxes receivable		19,443		—		—		10,603		(17,337	)		12,709
Prepaid expenses		—		—		62,902		79,817		—			142,719
Deferred tax assets, net		—		—		140,761		65,105		—			205,866
Real estate and other assets held for sale		—		—		—		3,845		—			3,845
Available for sale securities		—		—		663		—		—			663
Other current assets		—		1,185		50,429		32,787		—			84,401

Total Current Assets		19,448		19,447		1,574,568		1,928,378		(17,337	)		3,524,504
Property and equipment, net		—		—		361,899		136,027		—			497,926
Goodwill		—		—		1,196,418		1,137,403		—			2,333,821
Other intangible assets, net		—		—		493,058		309,302		—			802,360
Investments in unconsolidated subsidiaries		—		—		173,738		44,542		—			218,280
Investments in consolidated subsidiaries		3,019,410		2,433,913		914,895		—		(6,368,218	)		—
Intercompany loan receivable		—		2,453,215		700,000		—		(3,153,215	)		—
Real estate under development		—		—		828		3,802		—			4,630
Real estate held for investment		—		—		6,814		30,315		—			37,129
Available for sale securities		—		—		57,714		1,798		—			59,512
Other assets, net		—		33,581		98,139		37,223		—			168,943

Total Assets	$	3,038,858	$	4,940,156	$	5,578,071	$	3,628,790	$	(9,538,770	)	$	7,647,105

Current Liabilities:
Accounts payable and accrued expenses	$	—	$	19,541	$	257,591	$	550,398	$	—		$	827,530
Compensation and employee benefits payable		—		626		346,663		276,525		—			623,814
Accrued bonus and profit sharing		—		—		425,329		363,529		—			788,858
Income taxes payable		—		—		17,337		—		(17,337	)		—
Short-term borrowings:
Warehouse lines of credit (a)		—		—		337,184		164,001		—			501,185
Revolving credit facility		—		—		—		4,840		—			4,840
Other		—		—		16		9		—			25

Total short-term borrowings		—		—		337,200		168,850		—			506,050
Current maturities of long-term debt		—		39,650		2,734		23		—			42,407
Notes payable on real estate		—		—		—		23,229		—			23,229
Other current liabilities		—		1,258		58,357		4,131		—			63,746

Total Current Liabilities		—		61,075		1,445,211		1,386,685		(17,337	)		2,875,634
Long-Term Debt:
5.00% senior notes		—		800,000		—		—		—			800,000
Senior term loans		—		605,963		—		—		—			605,963
5.25% senior notes		—		426,813		—		—		—			426,813
Other long-term debt		—		—		—		26		—			26
Intercompany loan payable		779,028		—		1,350,424		1,023,763		(3,153,215	)		—

Total Long-Term Debt		779,028		1,832,776		1,350,424		1,023,789		(3,153,215	)		1,832,802
Notes payable on real estate		—		—		—		19,614		—			19,614
Deferred tax liabilities, net		—		—		87,486		61,747		—			149,233
Non-current tax liabilities		—		—		45,936		67		—			46,003
Pension liability		—		—		—		92,923		—			92,923
Other liabilities		—		26,895		215,101		87,502		—			329,498

Total Liabilities		779,028		1,920,746		3,144,158		2,672,327		(3,170,552	)		5,345,707
Commitments and contingencies		—		—		—		—		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity		2,259,830		3,019,410		2,433,913		914,895		(6,368,218	)		2,259,830
Non-controlling interests		—		—		—		41,568		—			41,568

Total Equity		2,259,830		3,019,410		2,433,913		956,463		(6,368,218	)		2,301,398

Total Liabilities and Equity	$	3,038,858	$	4,940,156	$	5,578,071	$	3,628,790	$	(9,538,770	)	$	7,647,105

(a)

Although CBRE Capital Markets is included among our domestic subsidiaries that jointly and severally guarantee our 5.00% senior notes, 5.25% senior notes and our 2013 Credit Agreement, a substantial majority of warehouse receivables funded under BofA, JP Morgan, Capital One and Fannie Mae ASAP lines of credit are pledged to BofA, JP Morgan, Capital One and Fannie Mae, and accordingly, are not included as collateral for these notes or our other outstanding debt.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2015

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries		Nonguarantor Subsidiaries			Elimination			Consolidated Total
Revenue	$	—		$	—		$	1,341,591	$	1,048,915		$	—		$	2,390,506
Costs and expenses:
Cost of services		—			—			849,131		638,843			—			1,487,974
Operating, administrative and other		12,362			11,698			301,412		284,686			—			610,158
Depreciation and amortization		—			—			39,282		31,323			—			70,605

Total costs and expenses		12,362			11,698			1,189,825		954,852			—			2,168,737
Gain on disposition of real estate		—			—			141		6,845			—			6,986

Operating (loss) income		(12,362	)		(11,698	)		151,907		100,908			—			228,755
Equity income (loss) from unconsolidated subsidiaries		—			—			8,591		(1,898	)		—			6,693
Other income (loss)		—			1			335		(1,405	)		—			(1,069	)
Interest income		—			52,361			78,199		990			(130,148	)		1,402
Interest expense		—			102,816			36,373		17,113			(130,148	)		26,154
Royalty and management service expense (income)		—			—			236		(236	)		—			—
Income from consolidated subsidiaries		132,726			171,425			43,680		—			(347,831	)		—

Income before (benefit of) provision for income taxes		120,364			109,273			246,103		81,718			(347,831	)		209,627
(Benefit of) provision for income taxes		(4,665	)		(23,453	)		74,678		29,914			—			76,474

Net income		125,029			132,726			171,425		51,804			(347,831	)		133,153
Less: Net income attributable to non-controlling interests		—			—			—		8,124			—			8,124

Net income attributable to CBRE Group, Inc.	$	125,029		$	132,726		$	171,425	$	43,680		$	(347,831	)	$	125,029

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2014

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Elimination			Consolidated Total
Revenue	$	—		$	—		$	1,168,544		$	958,262	$	—		$	2,126,806
Costs and expenses:
Cost of services		—			—			728,165			586,308		—			1,314,473
Operating, administrative and other		10,684			4,253			270,637			280,628		—			566,202
Depreciation and amortization		—			—			31,991			31,304		—			63,295

Total costs and expenses		10,684			4,253			1,030,793			898,240		—			1,943,970
Gain on disposition of real estate		—			—			—			23,170		—			23,170

Operating (loss) income		(10,684	)		(4,253	)		137,751			83,192		—			206,006
Equity income from unconsolidated subsidiaries		—			—			8,802			462		—			9,264
Other income		—			1			757			5,606		—			6,364
Interest income		—			44,115			531			615		(44,115	)		1,146
Interest expense		—			26,168			22,688			23,729		(44,115	)		28,470
Royalty and management service (income) expense		—			—			(4,779	)		4,779		—			—
Income from consolidated subsidiaries		112,163			103,575			16,540			—		(232,278	)		—

Income before (benefit of) provision for income taxes		101,479			117,270			146,472			61,367		(232,278	)		194,310
(Benefit of) provision for income taxes		(3,985	)		5,107			42,897			20,092		—			64,111

Net income		105,464			112,163			103,575			41,275		(232,278	)		130,199
Less: Net income attributable to non-controlling interests		—			—			—			24,735		—			24,735

Net income attributable to CBRE Group, Inc.	$	105,464		$	112,163		$	103,575		$	16,540	$	(232,278	)	$	105,464

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Elimination			Consolidated Total
Revenue	$	—		$	—		$	2,499,462		$	1,943,547		$	—		$	4,443,009
Costs and expenses:
Cost of services		—			—			1,566,774			1,211,977			—			2,778,751
Operating, administrative and other		25,506			(6,922	)		585,999			537,350			—			1,141,933
Depreciation and amortization		—			—			75,809			64,642			—			140,451

Total costs and expenses		25,506			(6,922	)		2,228,582			1,813,969			—			4,061,135
Gain on disposition of real estate		—			—			141			6,845			—			6,986

Operating (loss) income		(25,506	)		6,922			271,021			136,423			—			388,860
Equity income (loss) from unconsolidated subsidiaries		—			—			23,912			(1,768	)		—			22,144
Other income (loss)		—			1			1,259			(1,242	)		—			18
Interest income		—			107,728			78,873			2,613			(185,515	)		3,699
Interest expense		—			127,702			75,775			34,406			(185,515	)		52,368
Write-off of financing costs		—			2,685			—			—			—			2,685
Royalty and management service (income) expense		—			—			(3,866	)		3,866			—			—
Income from consolidated subsidiaries		233,847			243,645			43,905			—			(521,397	)		—

Income before (benefit of) provision for income taxes		208,341			227,909			347,061			97,754			(521,397	)		359,668
(Benefit of) provision for income taxes		(9,625	)		(5,938	)		103,416			45,524			—			133,377

Net income		217,966			233,847			243,645			52,230			(521,397	)		226,291
Less: Net income attributable to non-controlling interests		—			—			—			8,325			—			8,325

Net income attributable to CBRE Group, Inc.	$	217,966		$	233,847		$	243,645		$	43,905		$	(521,397	)	$	217,966

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2014

(Dollars in thousands)

Parent

CBRE

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Elimination

Consolidated
Total

Revenue

—

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