cbre-10q_20200630.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 July 22, 2020 was 335,277,797.

	June 30,			December 31,
	2020			2019
ASSETS
Current Assets:
Cash and cash equivalents	$	1,214,213		$	971,781
Restricted cash		99,521			121,964
Receivables, less allowance for doubtful accounts of $94,368 and $72,725 at June 30, 2020 and December 31, 2019, respectively		4,134,789			4,466,674
Warehouse receivables		765,130			993,058
Prepaid expenses		315,823			282,741
Contract assets		288,896			328,012
Income taxes receivable		103,067			93,915
Other current assets		267,996			276,319
Total Current Assets		7,189,435			7,534,464
Property and equipment, net		824,748			836,206
Goodwill		3,695,742			3,753,493
Other intangible assets, net of accumulated amortization of $1,439,882 and $1,358,528 at June 30, 2020 and December 31, 2019, respectively		1,330,599			1,379,546
Operating lease assets		1,063,529			997,966
Investments in unconsolidated subsidiaries		386,123			426,711
Real estate under development		191,425			185,508
Non-current contract assets		189,583			201,760
Deferred tax assets, net		102,858			73,864
Non-current income taxes receivable		34,414			139,136
Other assets, net		691,958			668,542
Total Assets	$	15,700,414		$	16,197,196
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,329,218		$	2,436,084
Compensation and employee benefits payable		1,101,275			1,324,990
Accrued bonus and profit sharing		638,349			1,261,974
Operating lease liabilities		191,895			168,663
Contract liabilities		128,415			108,671
Income taxes payable		107,549			30,207
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)		753,894			977,175
Revolving credit facility		451,000			—
Other		5,295			4,534
Total short-term borrowings		1,210,189			981,709
Current maturities of long-term debt		1,540			1,814
Other current liabilities		144,468			122,339
Total Current Liabilities		5,852,898			6,436,451
Long-term debt, net of current maturities		1,763,113			1,761,245
Non-current operating lease liabilities		1,118,476			1,057,758
Non-current tax liabilities		93,300			85,966
Deferred tax liabilities, net		72,607			34,593
Non-current income taxes payable		40,562			93,647
Other liabilities		474,407			454,424
Total Liabilities		9,415,363			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; 335,240,052 and 334,752,283 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		3,352			3,348
Additional paid-in capital		1,046,999			1,115,944
Accumulated earnings		6,032,160			5,793,149
Accumulated other comprehensive loss		(838,517	)		(679,748	)
Total CBRE Group, Inc. Stockholders’ Equity		6,243,994			6,232,693
Non-controlling interests		41,057			40,419
Total Equity		6,285,051			6,273,112
Total Liabilities and Equity	$	15,700,414		$	16,197,196

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020		2019
Revenue	$	5,381,384		$	5,714,073		$	11,270,552	$	10,849,583
Costs and expenses:
Cost of revenue		4,399,537			4,445,790			9,112,211		8,467,824
Operating, administrative and other		770,806			877,397			1,560,872		1,670,273
Depreciation and amortization		116,384			106,479			230,178		212,302
Asset impairments		—			—			75,171		89,037
Total costs and expenses		5,286,727			5,429,666			10,978,432		10,439,436
(Loss) gain on disposition of real estate		(492	)		10			22,335		19,257
Operating income		94,165			284,417			314,455		429,404
Equity income from unconsolidated subsidiaries		19,480			21,773			40,111		94,437
Other income		5,220			4,369			5,027		25,222
Interest expense, net of interest income		17,950			24,600			33,966		45,792
Write-off of financing costs on extinguished debt		—			—			—		2,608
Income before provision for income taxes		100,915			285,959			325,627		500,663
Provision for income taxes		18,803			62,521			69,985		106,399
Net income		82,112			223,438			255,642		394,264
Less: Net income (loss) attributable to non-controlling interests		215			(293	)		1,550		6,124
Net income attributable to CBRE Group, Inc.	$	81,897		$	223,731		$	254,092	$	388,140
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.24		$	0.67		$	0.76	$	1.15
Weighted average shares outstanding for basic income per share		335,126,126			336,222,471			335,048,115		336,122,100
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.24		$	0.66		$	0.75	$	1.14
Weighted average shares outstanding for diluted income per share		337,361,419			340,508,931			338,549,805		340,334,315

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net income	$	82,112		$	223,438		$	255,642		$	394,264
Other comprehensive income (loss):
Foreign currency translation gain (loss)		25,936			(2,532	)		(146,438	)		(1,595	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		100			425			214			835
Unrealized losses on interest rate swaps, net of tax		—			(52	)		—			(111	)
Unrealized holding (losses) gains on available for sale debt securities, net of tax		(409	)		705			500			1,460
Other, net		(13,045	)		—			(13,045	)		1
Total other comprehensive income (loss)		12,582			(1,454	)		(158,769	)		590
Comprehensive income		94,694			221,984			96,873			394,854
Less: Comprehensive income (loss) attributable to non-controlling interests		275			(256	)		1,550			6,105
Comprehensive income attributable to CBRE Group, Inc.	$	94,419		$	222,240		$	95,323		$	388,749

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

	Six Months Ended
	June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	255,642		$	394,264
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		230,178			212,302
Amortization and write-off of financing costs on extinguished debt		3,082			5,705
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(105,697	)		(114,283	)
Asset impairments		75,171			89,037
Net realized and unrealized gains, primarily from investments		(5,027	)		(25,222	)
Provision for doubtful accounts		29,923			11,438
Net compensation expense for equity awards		19,704			65,580
Equity income from unconsolidated subsidiaries		(40,111	)		(94,437	)
Distribution of earnings from unconsolidated subsidiaries		52,664			97,561
Proceeds from sale of mortgage loans		7,421,127			10,099,268
Origination of mortgage loans		(7,162,747	)		(10,090,347	)
(Decrease) increase in warehouse lines of credit		(223,281	)		21,227
Tenant concessions received		23,384			12,931
Purchase of equity securities		(6,627	)		(70,221	)
Proceeds from sale of equity securities		8,909			38,495
Decrease (increase) in real estate under development		701			(3,356	)
Decrease (increase) in receivables, prepaid expenses and other assets (including contract and lease assets)		276,065			(458,990	)
(Decrease) increase in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)		(130,264	)		163,502
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(816,621	)		(528,754	)
Decrease (increase) in net income taxes receivable/payable		125,361			(97,260	)
Other operating activities, net		(25,473	)		(21,724	)
Net cash provided by (used in) operating activities		6,063			(293,284	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(134,149	)		(124,222	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(25,911	)		(2,142	)
Contributions to unconsolidated subsidiaries		(51,168	)		(35,187	)
Distributions from unconsolidated subsidiaries		63,972			10,273
Other investing activities, net		11,314			3,146
Net cash used in investing activities		(135,942	)		(148,132	)

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

	Six Months Ended
	June 30,
	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		835,671			1,596,000
Repayment of revolving credit facility		(384,671	)		(1,366,000	)
Proceeds from notes payable on real estate		22,705			4,165
Repurchase of common stock		(50,028	)		(45,088	)
Units repurchased for payment of taxes on equity awards		(37,358	)		(9,565	)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)		(6,839	)		(28,517	)
Non-controlling interest contributions		1,428			41,977
Non-controlling interest distributions		(1,092	)		(2,563	)
Other financing activities, net		(2,853	)		(4,435	)
Net cash provided by financing activities		376,963			185,974
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash		(27,095	)		4,723
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		219,989			(250,719	)
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	$	1,313,734		$	613,225
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	31,145		$	46,525
Income tax (refunds) payments, net	$	(53,829	)	$	208,876

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

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 June 30, 2020 and December 31, 2019	1

	Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019	2

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019	3

	Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	4

	Consolidated Statements of Equity for the three and six months ended June 30, 2020 and 2019	6

	Notes to Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	47

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	49

Signatures		50

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