cbre-10q_20200331.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 27, 2020 was 335,166,810.

	March 31,			December 31,
	2020			2019
ASSETS
Current Assets:
Cash and cash equivalents	$	628,451		$	971,781
Restricted cash		104,244			121,964
Receivables, less allowance for doubtful accounts of $80,543 and $72,725 at March 31, 2020 and December 31, 2019, respectively		4,262,264			4,466,674
Warehouse receivables		1,273,259			993,058
Contract assets		329,988			328,012
Prepaid expenses		287,556			282,741
Income taxes receivable		88,153			93,915
Other current assets		289,672			276,319
Total Current Assets		7,263,587			7,534,464
Property and equipment, net		800,869			836,206
Goodwill		3,673,758			3,753,493
Other intangible assets, net of accumulated amortization of $1,390,807 and $1,358,528 at March 31, 2020 and December 31, 2019, respectively		1,339,786			1,379,546
Operating lease assets		997,793			997,966
Investments in unconsolidated subsidiaries		422,910			426,711
Non-current contract assets		200,673			201,760
Real estate under development		170,932			185,508
Deferred tax assets, net		89,046			73,864
Non-current income taxes receivable		29,510			139,136
Other assets, net		691,400			668,542
Total Assets	$	15,680,264		$	16,197,196
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,365,003		$	2,436,084
Compensation and employee benefits payable		1,237,963			1,324,990
Accrued bonus and profit sharing		693,806			1,261,974
Operating lease liabilities		183,159			168,663
Contract liabilities		106,995			108,671
Income taxes payable		81,758			30,207
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)		1,258,832			977,175
Other		5,208			4,534
Total short-term borrowings		1,264,040			981,709
Current maturities of long-term debt		1,718			1,814
Other current liabilities		130,984			122,339
Total Current Liabilities		6,065,426			6,436,451
Long-term debt, net of current maturities		1,754,518			1,761,245
Non-current operating lease liabilities		1,045,708			1,057,758
Non-current tax liabilities		92,119			85,966
Deferred tax liabilities, net		50,686			34,593
Non-current income taxes payable		40,562			93,647
Other liabilities		461,698			454,424
Total Liabilities		9,510,717			9,924,084
Commitments and contingencies		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 335,145,077 and 334,752,283 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		3,351			3,348
Additional paid-in capital		1,026,768			1,115,944
Accumulated earnings		5,950,263			5,793,149
Accumulated other comprehensive loss		(851,039	)		(679,748	)
Total CBRE Group, Inc. Stockholders’ Equity		6,129,343			6,232,693
Non-controlling interests		40,204			40,419
Total Equity		6,169,547			6,273,112
Total Liabilities and Equity	$	15,680,264		$	16,197,196

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

	Three Months Ended
	March 31,
	2020			2019
Revenue	$	5,889,168		$	5,135,510
Costs and expenses:
Cost of revenue		4,712,674			4,022,034
Operating, administrative and other		790,066			792,876
Depreciation and amortization		113,794			105,823
Asset impairments		75,171			89,037
Total costs and expenses		5,691,705			5,009,770
Gain on disposition of real estate		22,827			19,247
Operating income		220,290			144,987
Equity income from unconsolidated subsidiaries		20,631			72,664
Other (loss) income		(193	)		20,853
Interest expense, net of interest income		16,016			21,192
Write-off of financing costs on extinguished debt		—			2,608
Income before provision for income taxes		224,712			214,704
Provision for income taxes		51,182			43,878
Net income		173,530			170,826
Less: Net income attributable to non-controlling interests		1,335			6,417
Net income attributable to CBRE Group, Inc.	$	172,195		$	164,409
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.51		$	0.49
Weighted average shares outstanding for basic income per share		334,969,826			336,020,431
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.51		$	0.48
Weighted average shares outstanding for diluted income per share		339,737,911			340,158,399

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

	Three Months Ended
	March 31,
	2020			2019
Net income	$	173,530		$	170,826
Other comprehensive (loss) income:
Foreign currency translation (loss) gain		(172,374	)		937
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		114			410
Unrealized losses on interest rate swaps, net of tax		—			(59	)
Unrealized holding gains on available for sale debt securities, net of tax		909			755
Other, net		—			1
Total other comprehensive (loss) income		(171,351	)		2,044
Comprehensive income		2,179			172,870
Less: Comprehensive income attributable to non-controlling interests		1,275			6,361
Comprehensive income attributable to CBRE Group, Inc.	$	904		$	166,509

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

	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	173,530		$	170,826
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		113,794			105,823
Amortization and write-off of financing costs on extinguished debt		1,501			4,175
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(52,373	)		(53,517	)
Asset impairments		75,171			89,037
Net realized and unrealized losses (gains), primarily from investments		193			(20,853	)
Provision for doubtful accounts		9,059			1,867
Net compensation (reversal) expense for equity awards		(1,239	)		29,271
Equity income from unconsolidated subsidiaries		(20,631	)		(72,664	)
Distribution of earnings from unconsolidated subsidiaries		29,185			77,158
Proceeds from sale of mortgage loans		3,595,631			4,453,797
Origination of mortgage loans		(3,859,407	)		(4,646,348	)
Increase in warehouse lines of credit		281,657			232,446
Tenant concessions received		13,292			3,464
Purchase of equity securities		(3,559	)		(62,117	)
Proceeds from sale of equity securities		4,925			25,730
Decrease (increase) in real estate under development		7,742			(3,356	)
Decrease (increase) in receivables, prepaid expenses and other assets (including contract and lease assets)		52,796			(168,862	)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)		(34,597	)		(33,982	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(605,950	)		(510,405	)
Decrease (increase) in net income taxes receivable/payable		108,609			(11,344	)
Other operating activities, net		(25,610	)		(2,721	)
Net cash used in operating activities		(136,281	)		(392,575	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(62,241	)		(56,979	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(25,897	)		(2,142	)
Contributions to unconsolidated subsidiaries		(32,155	)		(23,562	)
Distributions from unconsolidated subsidiaries		18,994			5,974
Other investing activities, net		9,068			2,771
Net cash used in investing activities		(92,231	)		(73,938	)

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

	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior term loans		—			300,000
Repayment of senior term loans		—			(300,000	)
Proceeds from revolving credit facility		331,671			507,000
Repayment of revolving credit facility		(331,701	)		(171,000	)
Repurchase of common stock		(50,028	)		(45,088	)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)		(6,230	)		(17,185	)
Units repurchased for payment of taxes on equity awards		(36,873	)		(9,186	)
Non-controlling interest contributions		622			40,774
Non-controlling interest distributions		(497	)		(1,347	)
Other financing activities, net		(869	)		(3,940	)
Net cash (used in) provided by financing activities		(93,905	)		300,028
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash		(38,633	)		(9,791	)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(361,050	)		(176,276	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD		1,093,745			863,944
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	732,695		$	687,668
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	27,290		$	33,606
Income tax (refunds) payments, net	$	(55,897	)	$	54,241

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, 2019	$	3,348	$	1,115,944		$	5,793,149		$	(679,748	)	$	40,419		$	6,273,112
Net income		—		—			172,195			—			1,335			173,530
Compensation reversal for equity awards		—		(1,239	)		—			—			—			(1,239	)
Units repurchased for payment of taxes on equity awards		—		(36,873	)		—			—			—			(36,873	)
Repurchase of common stock		—		(50,028	)		—			—			—			(50,028	)
Foreign currency translation loss		—		—			—			(172,314	)		(60	)		(172,374	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—		—			—			114			—			114
Unrealized holding gains on available for sale debt securities, net of tax		—		—			—			909			—			909
Contributions from non-controlling interests		—		—			—			—			622			622
Distributions to non-controlling interests		—		—			—			—			(497	)		(497	)
Other		3		(1,036	)		(15,081	)		—			(1,615	)		(17,729	)
Balance at March 31, 2020	$	3,351	$	1,026,768		$	5,950,263		$	(851,039	)	$	40,204		$	6,169,547

	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	)		—		—			—

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
(Registrant's telephone number, including area code)

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, 2020 and December 31, 2019	1

	Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019	2

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019	3

	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	4

	Consolidated Statements of Equity for the three months ended March 31, 2020 and 2019	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 6.	Exhibits	44

Signatures		45

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