cbre-10q_20190331.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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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 April 30, 2019 was 336,277,673.

	March 31,			December 31,
	2019			2018
ASSETS
Current Assets:
Cash and cash equivalents	$	604,952		$	777,219
Restricted cash		82,716			86,725
Receivables, less allowance for doubtful accounts of $60,115 and $60,348 at March 31, 2019 and December 31, 2018, respectively		3,801,474			3,668,591
Warehouse receivables		1,548,249			1,342,468
Contract assets		295,403			307,020
Prepaid expenses		248,359			254,892
Income taxes receivable		58,337			71,684
Other current assets		357,370			245,611
Total Current Assets		6,996,860			6,754,210
Property and equipment, net		730,450			721,692
Goodwill		3,663,882			3,652,309
Other intangible assets, net of accumulated amortization of $1,229,297 and $1,180,393 at March 31, 2019 and December 31, 2018, respectively		1,338,646			1,441,308
Operating lease assets		938,681			—
Investments in unconsolidated subsidiaries		228,406			216,174
Deferred tax assets, net		80,537			51,703
Other assets, net		715,546			619,397
Total Assets	$	14,693,008		$	13,456,793
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,833,841		$	1,919,827
Compensation and employee benefits payable		1,152,035			1,121,179
Accrued bonus and profit sharing		656,123			1,189,395
Operating lease liabilities		185,457			—
Contract liabilities		115,137			82,227
Income taxes payable		53,795			68,100
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)		1,561,207			1,328,761
Revolving credit facility		336,000			—
Total short-term borrowings		1,897,207			1,328,761
Current maturities of long-term debt		2,573			3,146
Other current liabilities		113,914			90,745
Total Current Liabilities		6,010,082			5,803,380
Long-term debt, net of current maturities		1,760,181			1,767,260
Non-current operating lease liabilities		969,216			—
Non-current tax liabilities		175,139			172,626
Deferred tax liabilities, net		126,384			107,425
Other liabilities		447,790			596,200
Total Liabilities		9,488,792			8,446,891
Commitments and contingencies		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 336,266,487 and 336,912,783 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		3,363			3,369
Additional paid-in capital		1,126,984			1,149,013
Accumulated earnings		4,675,201			4,504,684
Accumulated other comprehensive loss		(716,169	)		(718,269	)
Total CBRE Group, Inc. Stockholders’ Equity		5,089,379			4,938,797
Non-controlling interests		114,837			71,105
Total Equity		5,204,216			5,009,902
Total Liabilities and Equity	$	14,693,008		$	13,456,793

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

	Three Months Ended
	March 31,
	2019		2018
Revenue	$	5,135,510	$	4,673,952
Costs and expenses:
Cost of services		4,022,034		3,619,961
Operating, administrative and other		792,876		732,235
Depreciation and amortization		105,823		108,165
Intangible asset impairment		89,037		—
Total costs and expenses		5,009,770		4,460,361
Gain on disposition of real estate		19,247		18
Operating income		144,987		213,609
Equity income from unconsolidated subsidiaries		72,664		40,179
Other income (loss)		20,853		(4,280	)
Interest income		1,534		3,621
Interest expense		22,726		28,858
Write-off of financing costs on extinguished debt		2,608		27,982
Income before provision for income taxes		214,704		196,289
Provision for income taxes		43,878		46,164
Net income		170,826		150,125
Less: Net income (loss) attributable to non-controlling interests		6,417		(163	)
Net income attributable to CBRE Group, Inc.	$	164,409	$	150,288
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.49	$	0.44
Weighted average shares outstanding for basic income per share		336,020,431		338,890,098
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.48	$	0.44
Weighted average shares outstanding for diluted income per share		340,158,399		342,589,810

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

	Three Months Ended
	March 31,
	2019			2018
Net income	$	170,826		$	150,125
Other comprehensive income:
Foreign currency translation gain		937			66,032
Adoption of Accounting Standards Update 2016-01, net of tax		—			(3,964	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		410			755
Unrealized (losses) gains on interest rate swaps, net of tax		(59	)		603
Unrealized holding gains (losses) on available for sale debt securities, net of tax		755			(505	)
Other, net		1			5,528
Total other comprehensive income		2,044			68,449
Comprehensive income		172,870			218,574
Less: Comprehensive income (loss) attributable to non-controlling interests		6,361			(358	)
Comprehensive income attributable to CBRE Group, Inc.	$	166,509		$	218,932

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

	Three Months Ended
	March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	170,826		$	150,125
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		105,823			108,165
Amortization and write-off of financing costs on extinguished debt		4,175			29,733
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(53,517	)		(45,078	)
Intangible asset impairment		89,037			—
Net realized and unrealized (gains) losses from investments		(20,853	)		4,280
Provision for doubtful accounts		1,867			5,601
Compensation expense for equity awards		29,271			29,570
Equity income from unconsolidated subsidiaries		(72,664	)		(40,179	)
Distribution of earnings from unconsolidated subsidiaries		77,158			45,182
Proceeds from sale of mortgage loans		4,453,797			2,910,181
Origination of mortgage loans		(4,646,348	)		(3,132,008	)
Increase in warehouse lines of credit		232,446			237,239
Tenant concessions received		3,464			12,634
Purchase of equity securities		(62,117	)		(23,569	)
Proceeds from sale of equity securities		25,730			20,001
(Increase) decrease in receivables, prepaid expenses and other assets (including contract and lease assets)		(172,218	)		69,971
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)		(33,982	)		(146,221	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(519,719	)		(483,031	)
(Increase) decrease in income taxes receivable/payable		(11,344	)		4,668
Other operating activities, net		(2,721	)		(7,222	)
Net cash used in operating activities		(401,889	)		(249,958	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(47,665	)		(46,724	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(2,142	)		—
Contributions to unconsolidated subsidiaries		(23,562	)		(10,611	)
Distributions from unconsolidated subsidiaries		5,974			15,216
Purchase of equity securities		(2,867	)		(10,219	)
Proceeds from sale of equity securities		4,356			4,367
Purchase of available for sale debt securities		—			(12,066	)
Proceeds from the sale of available for sale debt securities		603			2,264
Other investing activities, net		679			(6,439	)
Net cash used in investing activities		(64,624	)		(64,212	)

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

	Three Months Ended
	March 31,
	2019			2018
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior term loans		300,000			550,000
Repayment of senior term loans		(300,000	)		—
Proceeds from revolving credit facility		507,000			898,000
Repayment of revolving credit facility		(171,000	)		(435,000	)
Repayment of 5.00% senior notes (including premium)		—			(820,000	)
Repurchase of common stock		(45,088	)		—
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)		(17,185	)		(8,049	)
Units repurchased for payment of taxes on equity awards		(9,186	)		(4,550	)
Non-controlling interest contributions		40,774			1,595
Non-controlling interest distributions		(1,347	)		(1,025	)
Payment of financing costs		(3,374	)		(39	)
Other financing activities, net		(566	)		413
Net cash provided by financing activities		300,028			181,345
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash		(9,791	)		29,819
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(176,276	)		(103,006	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD		863,944			824,819
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	687,668		$	721,813
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	33,606		$	48,994
Income taxes, net	$	54,241		$	37,219

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

	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, 2018	$	3,369		$	1,149,013		$	4,504,684	$	(718,269	)	$	71,105		$	5,009,902
Net income		—			—			164,409		—			6,417			170,826
Compensation expense for equity awards		—			29,271			—		—			—			29,271
Units repurchased for payment of taxes on equity awards		—			(9,186	)		—		—			—			(9,186	)
Repurchase of common stock		(11	)		(45,077	)		—		—			—			(45,088	)
Foreign currency translation gain (loss)		—			—			—		993			(56	)		937
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—			—			—		410			—			410
Unrealized losses on interest rate swaps, net of tax		—			—			—		(59	)		—			(59	)
Unrealized holding gains on available for sale debt securities, net of tax		—			—			—		755			—			755
Contributions from non-controlling interests		—			—			—		—			40,774			40,774
Distributions to non-controlling interests		—			—			—		—			(1,347	)		(1,347	)
Other		5			2,963			6,108		1			(2,056	)		7,021
Balance at March 31, 2019	$	3,363		$	1,126,984		$	4,675,201	$	(716,169	)	$	114,837		$	5,204,216

	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, 2017	$	3,395	$	1,220,508		$	3,443,007		$	(552,414	)	$	60,118		$	4,174,614
Net income (loss)		—		—			150,288			—			(163	)		150,125
Adoption of Accounting Standards Update 2016-01, net of tax		—		—			3,964			(3,964	)		—			—
Compensation expense for equity awards		—		29,570			—			—			—			29,570
Units repurchased for payment of taxes on equity awards		—		(4,550	)		—			—			—			(4,550	)
Foreign currency translation gain (loss)		—		—			—			66,227			(195	)		66,032
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—		—			—			755			—			755
Unrealized gains on interest rate swaps, net of tax		—		—			—			603			—			603
Unrealized holding losses on available for sale debt securities, net of tax		—		—			—			(505	)		—			(505	)
Contributions from non-controlling interests		—		—			—			—			1,595			1,595
Distributions to non-controlling interests		—		—			—			—			(1,025	)		(1,025	)
Other		2		723			(5,506	)		5,528			713			1,460
Balance at March 31, 2018	$	3,397	$	1,246,251		$	3,591,753		$	(483,770	)	$	61,043		$	4,418,674

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, 2018, which are included in our 2018 Annual Report on Form 10-K (2018 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 2018 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, contract assets, operating lease assets, investments in unconsolidated subsidiaries and assumptions used in the calculation of income taxes, retirement and other post-employment benefits, among others. These estimates and assumptions are based on our best judgment. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including consideration of the current economic environment, and adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Certain reclassifications have been made to the 2018 financial statements to conform with the 2019 presentation.

The Financial Accounting Standards Board (FASB) previously issued six Accounting Standards Updates (ASUs) related to leases. The ASUs issued were: (1) in February 2016, ASU 2016-02, “Leases (Topic 842)”, (2) in January 2018, ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”, (3) in July 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases”, (4) in July 2018, ASU 2018-11, “Targeted Improvements”, (5) in December 2018, ASU 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors” and (6) in March 2019, ASU 2019-01, “Leases (Topic 842): Codification Improvements.” ASU 2016-02 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 previous lease accounting literature, but without relying upon the bright-line tests. The amendments in ASU 2018-01 specify how land easements are within the scope of ASC 842 and permit a practical expedient to not assess whether expired or existing land easements that were not previously accounted for as leases are leases under ASC 842. The amendments in ASU 2018-10 affect narrow aspects of the guidance issued in the amendments in ASU 2016-02. The amendments in ASU 2018-11 provide an optional method for adopting the new leasing guidance and provide lessors with a practical expedient to combine lease and associated non-lease components by class of underlying asset in contracts that meet certain criteria. The amendments in ASU 2018-20 provide an accounting policy election permitting lessors to treat certain

sales and other similar taxes incurred as lessee costs, guidance on the treatment of certain lessor costs and guidance on recognizing variable payments for contracts with a lease and non-lease component. The amendments in ASU 2019-01 affect narrow aspects of the guidance issued in the amendments in ASU 2016-02. These ASUs are effective for annual periods in fiscal years beginning after December 15, 2018.

We adopted these ASUs in the first quarter of 2019 by using the optional transitional method associated with no adjustment to comparative period financial statements presented for prior periods. We elected certain practical expedients, including the package of transition practical expedients and the practical expedient to forego separating lease and non-lease components in our lessee contracts. We also made an accounting policy election to exempt short-term leases of 12 months or less from balance sheet recognition requirements associated with the new standard; fixed rental payments for short-term leases will be recognized as a straight-line expense over the lease term.

As a result of the adoption of the leasing guidance, the consolidated balance sheet as of January 1, 2019 reflected $1.2 billion of additional lease liabilities, along with corresponding right-of-use assets of $1.0 billion, reflecting adjustments for items such as prepaid and deferred rent, unamortized initial direct costs, and unamortized lease incentive balances. The adoption of the leasing guidance did not have a material impact on our consolidated statements of operations.

As of January 1, 2019, we account for leases in accordance with ASC Topic 842, “Leases.” The present value of lease payments, which are either fixed payments, in-substance fixed payments, or variable payments tied to an index or rate are recognized on the balance sheet with corresponding lease liabilities and right-of-use assets upon the commencement of the lease. These lease costs are expensed over the respective lease term in accordance with the classification of the lease (i.e. operating versus finance classification). Variable lease payments not tied to an index or rate are expensed as incurred and not subject to capitalization.

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 elected to early adopt ASU 2017‑04 in the first quarter of 2019. The adoption of ASU 2017‑04 did not have any 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 adopted ASU 2017-08 in the first quarter of 2019 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

The FASB previously issued two ASUs related to derivatives and hedging. The ASUs issued were: (1) in August 2017, ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” and (2) in October 2018, ASU 2018-16 “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting.” ASU 2017-12 refines and expands hedge accounting for both financial and commodity risks. ASU 2018-16 adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes. These ASUs are effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We adopted these ASUs in the first quarter of 2019 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018‑02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This ASU provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax

Cuts and Jobs Act (or portion thereof) is recorded. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2018-02 in the first quarter of 2019 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018‑09, “Codification Improvements.” The amendments in ASU 2018‑09 represent changes to clarify, correct errors in, or make minor improvements to the Codification, eliminating inconsistencies and providing clarifications in current guidance. This ASU is effective for fiscal years beginning after December 15, 2018. We adopted ASU 2018-09 in the first quarter of 2019 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

The FASB previously issued two ASUs related to financial instruments – credit losses. The ASUs issued were: (1) in June 2016, ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and (2) in November 2018, ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments—Credit Losses.” ASU 2016-13 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. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leasing standard. These ASUs are 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 and ASU 2018-19 will have on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. As ASU 2018-13 only revises disclosure requirements, it will not have any impact on our consolidated financial statements. We are evaluating the effect, if any, that ASU 2018‑13 will have on our disclosures.

In August 2018, the FASB issued ASU 2018‑14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted. As ASU 2018-14 only revises disclosure requirements, it will not have any impact on our consolidated financial statements. We are evaluating the effect, if any, that ASU 2018‑14 will have on our disclosures.

In October 2018, the FASB issued ASU 2018‑17, “Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities.” This ASU amends the guidance for determining whether a decision-making fee is a variable interest and requires organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in GAAP). 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 2018‑17 will have on our consolidated financial statements and related disclosures.

In November 2018, the FASB issued ASU 2018‑18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.” This ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard and provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. 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 2018‑18 will have on our consolidated financial statements and related disclosures.

On June 12, 2018, CBRE Jason Acquisition LLC (Merger Sub), our wholly-owned subsidiary, and FacilitySource Holdings, LLC (FacilitySource), WP X Finance, LP and Warburg Pincus X Partners, LP (collectively, the Stockholders) entered into a stock purchase agreement and plan of merger (the Merger Agreement). As part of the Merger Agreement, (i) we purchased from the Stockholders all the outstanding shares of capital stock of FS WP Holdco, Inc (Blocker Corp), which owned 1,686,013 Class A units (the Blocker Units) and (ii) immediately following the acquisition of Blocker Corp, Merger Sub merged with FacilitySource, with FacilitySource continuing as the surviving company and our wholly-owned subsidiary within our Global Workplace Solutions segment (the FacilitySource Acquisition), with the remaining Blocker Units not held by Blocker Corp. canceled and converted into the right to receive cash consideration as set forth in the Merger Agreement. The estimated net initial purchase price was approximately $266.5 million, with $263.0 million paid in cash. We financed the transaction with cash on hand and borrowings under our revolving credit facility. We completed the FacilitySource Acquisition to help us (i) build a tech-enabled supply chain capability for the occupier outsourcing industry and (ii) drive meaningfully differentiated outcomes for leading occupiers of real estate.

The preliminary purchase accounting related to the FacilitySource Acquisition has been recorded in the accompanying consolidated financial statements (with no change in the first quarter of 2019). The excess purchase price over the estimated fair value of net assets acquired has been recorded to goodwill. The goodwill arising from the FacilitySource Acquisition consists largely of the synergies and economies of scale expected from combining the operations acquired from FacilitySource with ours. We are currently assessing if any portion of the goodwill recorded in connection with the FacilitySource Acquisition will be deductible for tax purposes, but do not expect any tax deductible goodwill to be significant. Given the complexity of the transaction, the calculation of the fair value of certain assets and liabilities acquired, primarily income tax items, is still preliminary. The purchase price allocation is expected to be completed as soon as practicable, but no later than one year from the acquisition date.

Our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) is a Federal Home Loan Mortgage Corporation (Freddie Mac) approved Multifamily Program Plus Seller/Servicer and an approved Federal National Mortgage Association (Fannie Mae) Aggregation and Negotiated Transaction Seller/Servicer. In addition, CBRE Capital Markets’ wholly-owned subsidiary CBRE Multifamily Capital, Inc. (CBRE MCI) is an approved Fannie Mae Delegated Underwriting and Servicing (DUS) Seller/Servicer and CBRE Capital Markets’ wholly-owned subsidiary CBRE HMF, Inc. (CBRE HMF) is a U.S. Department of Housing and Urban Development (HUD) approved Non-Supervised Federal Housing Authority (FHA) Title II Mortgagee, an approved Multifamily Accelerated Processing (MAP) lender and an approved Government National Mortgage Association (Ginnie Mae) issuer of mortgage-backed securities (MBS). Under these arrangements, before loans are originated through proceeds from warehouse lines of credit, we obtain either a contractual loan purchase commitment from either Freddie Mac or Fannie Mae or a confirmed forward trade commitment for the issuance and purchase of a Fannie Mae or Ginnie Mae MBS that will be secured by the loans. The warehouse lines of credit are generally repaid within a one-month period when Freddie Mac or Fannie Mae buys the loans or upon settlement of the Fannie Mae or Ginnie Mae MBS, while we retain the servicing rights. Loans are funded at the prevailing market rates. We elect the fair value option for all warehouse receivables. At March 31, 2019 and December 31, 2018, 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 March 31, 2019 and December 31, 2018 (dollars in thousands):

			March 31, 2019				December 31, 2018
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan)	10/21/2019	daily one-month LIBOR plus 1.30%	$	985,000	$	959,921	$	985,000	$	871,680
JP Morgan	10/21/2019	daily one-month LIBOR plus 2.75%		15,000		—		15,000		—
Capital One, N.A. (Capital One) (1)	7/27/2019	daily one-month LIBOR plus 1.35%		700,000		33,230		325,000		120,195
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program (2)	Cancelable anytime	daily one-month LIBOR plus 1.35%, with a LIBOR floor of 0.35%		450,000		123,237		450,000		149,089
TD Bank, N.A. (TD Bank)	6/30/2019	daily one-month LIBOR plus 1.20%		400,000		260,740		400,000		165,945
Bank of America, N.A. (BofA)	6/4/2019	daily one-month LIBOR plus 1.30%		225,000		184,079		225,000		21,852
BofA	6/4/2019	daily one-month LIBOR plus 1.15%		200,000		—		200,000		—
			$	2,975,000	$	1,561,207

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)


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

		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets at March 31, 2019 and December 31, 2018	1

	Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018	2

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018	3

	Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	4

	Consolidated Statements of Equity for the three months ended March 31, 2019 and 2018	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	48

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 6.	Exhibits	50

Signatures		52

Beginning balance at December 31, 2018	$	1,342,468
Origination of mortgage loans		4,646,348
Gains (premiums on loan sales)		8,515
Proceeds from sale of mortgage loans:
Sale of mortgage loans		(4,445,282	)
Cash collections of premiums on loan sales		(8,515	)
Proceeds from sale of mortgage loans		(4,453,797	)
Net increase in mortgage servicing rights included in warehouse receivables		4,715
Ending balance at March 31, 2019	$	1,548,249

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