cbg-10q_20170930.htm

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

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐.

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

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

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

The number of shares of Class A common stock outstanding at October 31, 2017 was 339,459,138.

	September 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	955,605		$	762,576
Restricted cash		84,794			68,836
Receivables, less allowance for doubtful accounts of $47,596 and $39,469 at September 30, 2017 and December 31, 2016, respectively		2,843,126			2,605,602
Warehouse receivables		1,434,910			1,276,047
Income taxes receivable		66,386			45,626
Prepaid expenses		218,049			184,107
Other current assets		201,864			179,656
Total Current Assets		5,804,734			5,122,450
Property and equipment, net		574,266			560,756
Goodwill		3,135,208			2,981,392
Other intangible assets, net of accumulated amortization of $943,587 and $771,673 at September 30, 2017 and December 31, 2016, respectively		1,400,699			1,411,039
Investments in unconsolidated subsidiaries		233,634			232,238
Deferred tax assets, net		94,250			105,324
Other assets, net		409,223			366,388
Total Assets	$	11,652,014		$	10,779,587
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,505,860		$	1,446,438
Compensation and employee benefits payable		763,554			772,922
Accrued bonus and profit sharing		727,066			890,321
Income taxes payable		82,106			58,351
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)		1,416,253			1,254,653
Other		16			16
Total short-term borrowings		1,416,269			1,254,669
Current maturities of long-term debt		10			11
Other current liabilities		56,512			102,717
Total Current Liabilities		4,551,377			4,525,429
Long-term debt, net of current maturities		2,551,568			2,548,126
Deferred tax liabilities, net		125,782			70,719
Non-current tax liabilities		17,851			54,042
Other liabilities		553,600			524,026
Total Liabilities		7,800,178			7,722,342
Commitments and contingencies		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 339,459,138 and 337,279,449 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		3,395			3,373
Additional paid-in capital		1,192,855			1,145,226
Accumulated earnings		3,179,985			2,656,906
Accumulated other comprehensive loss		(580,765	)		(791,018	)
Total CBRE Group, Inc. Stockholders’ Equity		3,795,470			3,014,487
Non-controlling interests		56,366			42,758
Total Equity		3,851,836			3,057,245
Total Liabilities and Equity	$	11,652,014		$	10,779,587

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Revenue	$	3,549,977	$	3,193,487	$	9,873,396	$	9,247,758
Costs and expenses:
Cost of services		2,513,377		2,252,783		6,919,018		6,520,629
Operating, administrative and other		704,898		686,530		2,023,503		2,010,338
Depreciation and amortization		102,591		92,725		297,014		269,987
Total costs and expenses		3,320,866		3,032,038		9,239,535		8,800,954
Gain on disposition of real estate		6,180		11,043		18,863		15,862
Operating income		235,291		172,492		652,724		462,666
Equity income from unconsolidated subsidiaries		67,834		24,672		158,236		116,902
Other income		1,768		1,356		9,069		8,453
Interest income		3,129		1,020		6,967		5,545
Interest expense		34,483		37,273		103,923		109,050
Income before provision for income taxes		273,539		162,267		723,073		484,516
Provision for income taxes		76,178		51,414		195,813		165,578
Net income		197,361		110,853		527,260		318,938
Less: Net income attributable to non- controlling interests		1,044		6,690		4,181		10,940
Net income attributable to CBRE Group, Inc.	$	196,317	$	104,163	$	523,079	$	307,998
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.58	$	0.31	$	1.55	$	0.92
Weighted average shares outstanding for basic income per share		337,948,324		335,770,122		337,280,914		334,949,606
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.58	$	0.31	$	1.54	$	0.91
Weighted average shares outstanding for diluted income per share		341,186,431		338,488,975		340,502,432		338,053,297

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net income	$	197,361		$	110,853		$	527,260		$	318,938
Other comprehensive income (loss):
Foreign currency translation gain (loss)		64,711			(15,940	)		204,147			(101,654	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		1,260			1,720			4,148			5,196
Unrealized gains (losses) on interest rate swaps, net of tax		25			788			102			(3,327	)
Unrealized holding gains on available for sale securities, net of tax		339			348			2,239			993
Other, net		(4	)		2			(20	)		(757	)
Total other comprehensive income (loss)		66,331			(13,082	)		210,616			(99,549	)
Comprehensive income		263,692			97,771			737,876			219,389
Less: Comprehensive income attributable to non-controlling interests		1,227			6,768			4,544			11,057
Comprehensive income attributable to CBRE Group, Inc.	$	262,465		$	91,003		$	733,332		$	208,332

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

	Nine Months Ended
	September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	527,260		$	318,938
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		297,014			269,987
Amortization of financing costs		7,371			8,302
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(131,062	)		(134,775	)
Net realized and unrealized gains from investments		(9,069	)		(8,453	)
Gain on disposition of real estate held for investment	—				(9,901	)
Equity income from unconsolidated subsidiaries		(158,236	)		(116,902	)
Provision for doubtful accounts		7,442			6,805
Compensation expense for equity awards		68,975			43,346
Proceeds from sale of mortgage loans		11,316,041			10,075,850
Origination of mortgage loans		(11,441,884	)		(9,917,310	)
Increase (decrease) in warehouse lines of credit		161,600			(131,690	)
Distribution of earnings from unconsolidated subsidiaries		17,612			19,982
Tenant concessions received		14,739			7,667
Purchase of trading securities		(61,813	)		(76,136	)
Proceeds from sale of trading securities		53,251			84,234
(Increase) decrease in receivables		(90,526	)		46,289
Increase in prepaid expenses and other assets		(82,673	)		(101,916	)
Decrease in real estate held for sale and under development		10,784			2,870
Decrease in accounts payable and accrued expenses		(4,876	)		(125,471	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(224,798	)		(210,670	)
Increase in income taxes receivable/payable		(10,631	)		(66,589	)
Increase in other liabilities		1,162			8,807
Other operating activities, net		(20,415	)		(46,453	)
Net cash provided by (used in) operating activities		247,268			(53,189	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(101,606	)		(134,357	)
Acquisition of businesses (other than Global Workplace Solutions (GWS)), including net assets acquired, intangibles and goodwill, net of cash acquired		(59,394	)		(22,066	)
Acquisition of GWS, including net assets acquired, intangibles and goodwill	—				(10,477	)
Contributions to unconsolidated subsidiaries		(36,659	)		(57,295	)
Distributions from unconsolidated subsidiaries		177,506			119,539
Net proceeds from disposition of real estate held for investment	—				44,326
Increase in restricted cash		(11,020	)		(1,623	)
Purchase of available for sale securities		(29,408	)		(31,413	)
Proceeds from the sale of available for sale securities		25,618			29,560
Other investing activities, net		1,156			24,185
Net cash used in investing activities		(33,807	)		(39,621	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior term loans	—				(23,125	)
Proceeds from revolving credit facility		911,000			2,195,000
Repayment of revolving credit facility		(911,000	)		(2,112,000	)
Proceeds from notes payable on real estate held for investment		79			7,274
Repayment of notes payable on real estate held for investment		(1,324	)		(33,516	)
Proceeds from notes payable on real estate held for sale and under development		3,341			15,110
Repayment of notes payable on real estate held for sale and under development		(10,777	)		(4,102	)
Units repurchased for payment of taxes on equity awards		(29,549	)		(27,796	)
Non-controlling interest contributions		3,410			1,478
Non-controlling interest distributions		(6,643	)		(12,800	)
Payment of financing costs		(21	)		(5,601	)
Other financing activities, net		(2,673	)		(761	)
Net cash used in financing activities		(44,157	)		(839	)
Effect of currency exchange rate changes on cash and cash equivalents		23,725			(408	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		193,029			(94,057	)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD		762,576			540,403
CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	955,605		$	446,346
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	111,826		$	118,272
Income taxes, net	$	204,228		$	225,129

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

	CBRE Group, Inc. Shareholders
								Accumulated
	Class A		Additional					other			Non-
	common		paid-in			Accumulated		comprehensive			controlling
	stock		capital			earnings		loss			interests			Total
Balance at December 31, 2016	$	3,373	$	1,145,226		$	2,656,906	$	(791,018	)	$	42,758		$	3,057,245
Net income		—		—			523,079		—			4,181			527,260
Non-cash issuance of common stock related to acquisition		5		7,586			—		—			—			7,591
Compensation expense for equity awards		—		68,975			—		—			—			68,975
Units repurchased for payment of taxes on equity awards		—		(29,549	)		—		—			—			(29,549	)
Foreign currency translation gain		—		—			—		203,784			363			204,147
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—		—			—		4,148			—			4,148
Unrealized gains on interest rate swaps, net of tax		—		—			—		102			—			102
Unrealized holding gains on available for sale securities, net of tax		—		—			—		2,239			—			2,239
Contributions from non- controlling interests		—		—			—		—			3,410			3,410
Distributions to non- controlling interests		—		—			—		—			(6,643	)		(6,643	)
Acquisition of non- controlling interests		—		—			—		—			12,671			12,671
Other		17		617			—		(20	)		(374	)		240
Balance at September 30, 2017	$	3,395	$	1,192,855		$	3,179,985	$	(580,765	)	$	56,366		$	3,851,836

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

Readers of this Quarterly Report on Form 10-Q (Quarterly Report) should refer to the audited financial statements and notes to consolidated financial statements of CBRE Group, Inc., a Delaware corporation (which may be referred to in these financial statements as the “company,” “we,” “us” and “our”), for the year ended December 31, 2016, which are included in our 2016 Annual Report on Form 10-K (2016 Annual Report), filed with the United States Securities and Exchange Commission (SEC) and also available on our website (www.cbre.com), since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 2, Significant Accounting Policies, in the notes to consolidated financial statements in our 2016 Annual Report for further discussion of our significant accounting policies and estimates.

The accompanying consolidated financial statements have been prepared in accordance with the rules applicable to quarterly reports on Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (U.S.), or 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 2016 financial statements to conform with the 2017 presentation.

The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2017.

The Financial Accounting Standards Board (FASB) has recently issued five Accounting Standards Updates (ASUs) related to revenue recognition (“new revenue recognition guidance”), all of which will become effective for the company on January 1, 2018. The ASUs issued are: (1) in May 2014, ASU 2014-09, “Revenue from Contracts with Customers (Topic 606);” (2) in March 2016, ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net);” (3) in April 2016, ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing;” (4) in May 2016, ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-scope Improvements and Practical Expedients;” and (5) in December 2016, ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers.” ASU 2014-09 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 and will replace most existing revenue recognition guidance under GAAP. This ASU permits the use of either the retrospective or cumulative effect transition method. ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. ASU 2016-10 clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09. ASU 2016-12 clarifies guidance in

certain narrow areas and adds some practical expedients. ASU 2016-20 also clarifies guidance in certain narrow areas and adds optional exemptions to certain disclosure requirements.

We plan to adopt the new revenue recognition guidance in the first quarter of 2018 using the retrospective transition method. We continue to evaluate the impact that adoption of these updates will have on our consolidated financial statements and related disclosures. Based on our assessment, the impact of the application of the new revenue recognition guidance will result in an acceleration of some revenues that are based, in part, on future contingent events. For example, some brokerage revenues from leasing commissions in various countries where we operate will get recognized earlier. Under current GAAP, a portion of these commissions are deferred until a future contingency is resolved (e.g., tenant move-in or payment of first month’s rent). Under the new revenue guidance, the company’s performance obligation will be typically satisfied at lease signing and therefore the portion of the commission that is contingent on a future event will likely be recognized earlier if deemed not subject to significant reversal. We have evaluated the impact of the updated principal versus agent guidance on our consolidated financial statements in relation to third-party costs which are billed to clients in association with facilities management and project management services. We determined a significant amount of additional contracts will be accounted for on a gross basis, resulting in a significant gross up of third-party costs as compared to our current presentation, with no impact on profitability. This is driven by a change in the indicators used to assess if we control these third-party service providers.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU will significantly change the income statement impact of equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is not permitted, except for the provisions related to the recognition of changes in fair value of financial liabilities when the fair value option is elected. We do not believe the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize most leases on the balance sheet as liabilities, with corresponding right-of-use assets. For income statement recognition purposes, leases will be classified as either a finance or operating lease in a manner similar to the requirements under the current lease accounting literature, but without relying upon the bright-line tests. This ASU is effective for annual periods in fiscal years beginning after December 15, 2018 and mandates a modified retrospective transition method for all entities. We plan to adopt ASU 2016-02 in the first quarter of 2019 and are currently evaluating the magnitude of its impact on our consolidated financial statements by reviewing our existing lease contracts and service contracts that may include embedded leases.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2016-13 will have on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. At this point in time, we do not believe the adoption of ASU 2016-15 will have a material impact on our consolidated financial statements and related disclosures.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This ASU requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. At this point in

time, we do not believe the adoption of ASU 2016-16 will have a material impact on our consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. At this point in time, we do not believe the adoption of ASU 2016-18 will have a material impact on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU eliminates Step 2 from the goodwill impairment test. This ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2017-04 will have on our goodwill assessment process, but do not believe the adoption of ASU 2017-04 will have a material impact on our consolidated financial statements and related disclosures.

In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” This ASU clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset and also defines the term in substance nonfinancial asset. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. At this point in time, we do not believe the adoption of ASU 2017-05 will have a material impact on our consolidated financial statements and related disclosures.

In March 2017, the FASB issued ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” This ASU requires the premium to be amortized to the earliest call date. This ASU does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2017-08 will have on our consolidated financial statements and related disclosures.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This ASU refines and expands hedge accounting for both financial and commodity risks. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2017-12 will have on our consolidated financial statements and related disclosures.

Our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) is a Federal Home Loan Mortgage Corporation (Freddie Mac) approved Multifamily Program Plus Seller/Servicer and an approved Federal National Mortgage Association (Fannie Mae) Aggregation and Negotiated Transaction Seller/Servicer. In addition, CBRE Capital Markets’ wholly-owned subsidiary CBRE Multifamily Capital, Inc. (CBRE MCI) is an approved Fannie Mae Delegated Underwriting and Servicing (DUS) Seller/Servicer and CBRE Capital Markets’ wholly-owned subsidiary CBRE HMF, Inc. (CBRE HMF) is a U.S. Department of Housing and Urban Development (HUD) approved Non-Supervised Federal Housing Authority (FHA) Title II Mortgagee, an approved Multifamily Accelerated Processing (MAP) lender and an approved Government National Mortgage Association (Ginnie Mae) issuer of mortgage-backed securities (MBS). Under these arrangements, before loans are originated through proceeds from warehouse lines of credit, we obtain either a contractual loan purchase commitment from either Freddie Mac or Fannie Mae or a confirmed forward trade commitment for the issuance and purchase of a Fannie

Mae or Ginnie Mae MBS that will be secured by the loans. Loans funded from the warehouse lines of credit are generally repaid within a one-month period, on average, when Freddie Mac or Fannie Mae buys the loans or upon settlement of the Fannie Mae or Ginnie Mae MBS, while we retain the servicing rights. Such loans are funded at the prevailing market rates. The warehouse lines of credit are recourse only to CBRE Capital Markets and are secured by our related warehouse receivables. We elect the fair value option for all warehouse receivables. At September 30, 2017 and December 31, 2016, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae mortgage-backed securities that will be secured by the underlying loans.

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

The following table is a summary of our warehouse lines of credit in place as of September 30, 2017 and December 31, 2016 (dollars in thousands):

			September 30, 2017				December 31, 2016
			Maximum				Maximum
Lender	Current Maturity	Pricing	Facility Size		Carrying Value		Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	2/28/2017	daily one-month LIBOR plus 1.45%	$	—	$	—	$	300,000	$	275,945
JP Morgan (2)	10/23/2017	daily one-month LIBOR plus 1.45%		800,000		704,908		700,000		—
JP Morgan (2)	10/23/2017	daily one-month LIBOR plus 2.75%		25,000		1,487		25,000		3,768
Bank of America (BofA) (1)	1/30/2017	daily one-month LIBOR plus 1.60%		—		—		300,000		300,000
BofA	6/5/2018	daily one-month LIBOR plus 1.40%		225,000		155,744		200,000		18,555
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program (1)	1/17/2017	daily one-month LIBOR plus 1.35%, with a LIBOR floor of 0.35%		—		—		200,000		200,000
Fannie Mae ASAP Program	Cancelable anytime	daily one-month LIBOR plus 1.35%, with a LIBOR floor of 0.35%		450,000		94,250		450,000		111,160
TD Bank, N.A. (TD Bank) (1)	2/28/2017	daily one-month LIBOR plus 1.35%		—		—		375,000		154,032
TD Bank	6/30/2018	daily one-month LIBOR plus 1.25%		400,000		366,600		400,000		—
Capital One, N.A. (Capital One) (1)	1/23/2017	daily one-month LIBOR plus 1.45%

Delaware		94-3391143
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

400 South Hope Street, 25th 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)

		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets at September 30, 2017 (Unaudited) and December 31, 2016	1

	Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (Unaudited)	2

	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 (Unaudited)	3

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (Unaudited)	4

	Consolidated Statement of Equity for the nine months ended September 30, 2017 (Unaudited)	5

	Notes to Consolidated Financial Statements (Unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	58

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	59

Item 1A.	Risk Factors	59

Item 6.	Exhibits	59

Signatures		62

Beginning balance at January 1, 2017	$	1,276,047
Origination of mortgage loans		11,441,884
Gains (premiums on loan sales)		32,711

Sale of mortgage loans		(11,283,330	)
Cash collections of premiums on loan sales		(32,711	)
Proceeds from sale of mortgage loans		(11,316,041	)

Net increase in mortgage servicing rights included in warehouse receivables		309
Ending balance at September 30, 2017	$	1,434,910

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐