cbre-10q_20200930.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 October 20, 2020 was 335,456,246.

	September 30,			December 31,
	2020			2019
ASSETS
Current Assets:
Cash and cash equivalents	$	1,481,924		$	971,781
Restricted cash		164,633			121,964
Receivables, less allowance for doubtful accounts of $111,777 and $72,725 at September 30, 2020 and December 31, 2019, respectively		3,997,998			4,466,674
Warehouse receivables		1,211,886			993,058
Prepaid expenses		284,947			282,741
Contract assets		282,031			328,012
Income taxes receivable		62,736			93,915
Other current assets		285,220			276,319
Total Current Assets		7,771,375			7,534,464
Property and equipment, net		818,333			836,206
Goodwill		3,744,269			3,753,493
Other intangible assets, net of accumulated amortization of $1,496,563 and $1,358,528 at September 30, 2020 and December 31, 2019, respectively		1,333,917			1,379,546
Operating lease assets		1,057,992			997,966
Investments in unconsolidated subsidiaries		392,569			426,711
Real estate under development		228,038			185,508
Non-current contract assets		177,801			201,760
Deferred tax assets, net		95,380			73,864
Non-current income taxes receivable		39,467			139,136
Other assets, net		687,935			668,542
Total Assets	$	16,347,076		$	16,197,196
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,428,845		$	2,436,084
Compensation and employee benefits payable		1,222,607			1,324,990
Accrued bonus and profit sharing		808,353			1,261,974
Operating lease liabilities		189,641			168,663
Contract liabilities		132,499			108,671
Income taxes payable		50,965			30,207
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)		1,191,834			977,175
Other		5,028			4,534
Total short-term borrowings		1,196,862			981,709
Current maturities of long-term debt		1,526			1,814
Other current liabilities		120,974			122,339
Total Current Liabilities		6,152,272			6,436,451
Long-term debt, net of current maturities		1,783,212			1,761,245
Non-current operating lease liabilities		1,125,005			1,057,758
Non-current tax liabilities		84,633			85,966
Deferred tax liabilities, net		71,892			34,593
Non-current income taxes payable		40,562			93,647
Other liabilities		495,198			454,424
Total Liabilities		9,752,774			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; 335,438,893 and 334,752,283 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		3,354			3,348
Additional paid-in capital		1,064,849			1,115,944
Accumulated earnings		6,216,292			5,793,149
Accumulated other comprehensive loss		(731,399	)		(679,748	)
Total CBRE Group, Inc. Stockholders’ Equity		6,553,096			6,232,693
Non-controlling interests		41,206			40,419
Total Equity		6,594,302			6,273,112
Total Liabilities and Equity	$	16,347,076		$	16,197,196

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue	$	5,645,142	$	5,925,101	$	16,915,694	$	16,774,684
Costs and expenses:
Cost of revenue		4,564,579		4,687,336		13,676,790		13,155,160
Operating, administrative and other		794,227		809,584		2,355,099		2,479,857
Depreciation and amortization		127,725		111,560		357,903		323,862
Asset impairments		—		—		75,171		89,037
Total costs and expenses		5,486,531		5,608,480		16,464,963		16,047,916
Gain on disposition of real estate		52,797		9		75,132		19,266
Operating income		211,408		316,630		525,863		746,034
Equity income from unconsolidated subsidiaries		32,376		25,796		72,487		120,233
Other income		7,947		941		12,974		26,163
Interest expense, net of interest income		17,829		21,846		51,795		67,638
Write-off of financing costs on extinguished debt		—		—		—		2,608
Income before provision for income taxes		233,902		321,521		559,529		822,184
Provision for income taxes		49,062		63,468		119,047		169,867
Net income		184,840		258,053		440,482		652,317
Less: Net income attributable to non-controlling interests		708		1,454		2,258		7,578
Net income attributable to CBRE Group, Inc.	$	184,132	$	256,599	$	438,224	$	644,739
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.55	$	0.76	$	1.31	$	1.92
Weighted average shares outstanding for basic income per share		335,287,245		336,203,747		335,128,531		336,149,719
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.55	$	0.75	$	1.30	$	1.89
Weighted average shares outstanding for diluted income per share		337,665,848		341,100,182		338,255,859		340,590,007

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Net income	$	184,840	$	258,053		$	440,482		$	652,317
Other comprehensive income (loss):
Foreign currency translation gain (loss)		106,201		(78,177	)		(40,237	)		(79,772	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		106		377			320			1,212
Unrealized gains (losses) on interest rate swaps, net of tax		—		7			—			(104	)
Unrealized holding gains on available for sale debt securities, net of tax		811		881			1,311			2,341
Other, net		—		7,377			(13,045	)		7,378
Total other comprehensive income (loss)		107,118		(69,535	)		(51,651	)		(68,945	)
Comprehensive income		291,958		188,518			388,831			583,372
Less: Comprehensive income attributable to non-controlling interests		708		1,340			2,258			7,445
Comprehensive income attributable to CBRE Group, Inc.	$	291,250	$	187,178		$	386,573		$	575,927

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

	Nine Months Ended
	September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	440,482		$	652,317
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		357,903			323,862
Amortization and write-off of financing costs on extinguished debt		4,632			7,196
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(179,506	)		(191,103	)
Asset impairments		75,171			89,037
Net realized and unrealized gains, primarily from investments		(12,974	)		(26,163	)
Provision for doubtful accounts		49,498			18,083
Net compensation expense for equity awards		41,841			98,958
Equity income from unconsolidated subsidiaries		(72,487	)		(120,233	)
Distribution of earnings from unconsolidated subsidiaries		103,796			145,588
Proceeds from sale of mortgage loans		11,565,281			15,786,800
Origination of mortgage loans		(11,727,227	)		(15,381,864	)
Increase in warehouse lines of credit		214,659			19,849
Increase in advance warehouse funding		—			(376,707	)
Tenant concessions received		28,617			18,367
Purchase of equity securities		(8,932	)		(81,369	)
Proceeds from sale of equity securities		11,210			45,333
Increase in real estate under development		(68,178	)		(3,356	)
Decrease (increase) in receivables, prepaid expenses and other assets (including contract and lease assets)		610,058			(644,586	)
(Decrease) increase in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)		(128,693	)		158,708
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(550,932	)		(194,592	)
Decrease (increase) in net income taxes receivable/payable		118,736			(132,583	)
Other operating activities, net		(12,313	)		(36,793	)
Net cash provided by operating activities		860,642			174,749
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(190,546	)		(196,031	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(25,923	)		(14,844	)
Contributions to unconsolidated subsidiaries		(72,058	)		(84,648	)
Distributions from unconsolidated subsidiaries		66,409			20,960
Other investing activities, net		15,631			2,864
Net cash used in investing activities		(206,487	)		(271,699	)

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

	Nine Months Ended
	September 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			2,683,000
Repayment of revolving credit facility		(835,671	)		(2,631,000	)
Proceeds from notes payable on real estate		40,263			5,243
Repayment of notes payable on real estate		(24,704	)		—
Repurchase of common stock		(50,028	)		(94,088	)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)		(34,400	)		(36,089	)
Units repurchased for payment of taxes on equity awards		(41,627	)		(16,573	)
Non-controlling interest contributions		1,977			46,513
Non-controlling interest distributions		(2,471	)		(3,798	)
Other financing activities, net		(334	)		(5,171	)
Net cash used in financing activities		(111,324	)		(51,963	)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash		9,981			(12,726	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		552,812			(161,639	)
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	$	1,646,557		$	702,305
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:

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

2100 McKinney Avenue, 12th Floor Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)

(214) 979-6100
(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 September 30, 2020 and December 31, 2019	1

	Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019	2

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

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	4

	Consolidated Statements of Equity for the three and nine months ended September 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	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 6.	Exhibits	52

Signatures		53

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