UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______________ to _______________

Commission File Number

001-32205

___________________________________________________________

CBRE GROUP, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________

Delaware		94-3391143
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
2100 McKinney Avenue, Suite 1250
Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)
	(214) 979-6100
	(Registrant's telephone number, including area code)

_____________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

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

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.

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

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 29, 2022 was 321,171,475.

FORM 10-Q

June 30, 2022

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets at June 30, 2022 and December 31, 2021	1
	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	4
	Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	55
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 6.	Exhibits	57
Signatures		58

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share data)

	June 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	1,192,783	$	2,430,951
Restricted cash	137,933		108,830
Receivables, less allowance for doubtful accounts of $94,568 and $97,588 at    June 30, 2022 and December 31, 2021, respectively	5,122,787		5,150,473
Warehouse receivables	1,034,025		1,303,717
Prepaid expenses	350,409		333,885
Contract assets	344,750		338,749
Income taxes receivable	20,759		44,104
Other current assets	668,770		371,656
Total Current Assets	8,872,216		10,082,365
Property and equipment, net of accumulated depreciation and amortization of $1,352,276 and $1,288,509 at    June 30, 2022 and December 31, 2021, respectively	778,535		816,092
Goodwill	4,794,847		4,995,175
Other intangible assets, net of accumulated amortization of $1,809,034 and $1,725,280 at    June 30, 2022 and December 31, 2021, respectively	2,256,613		2,409,427
Operating lease assets	1,040,233		1,046,377
Investments in unconsolidated subsidiaries (with $770,898 and $813,031 at fair value at    June 30, 2022 and December 31, 2021, respectively)	1,201,745		1,196,088
Non-current contract assets	147,964		135,626
Real estate under development	234,341		326,416
Non-current income taxes receivable	41,488		33,150
Deferred tax assets, net	157,997		157,032
Other assets, net	912,693		875,743
Total Assets	$	20,438,672	$	22,073,491
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,825,499	$	2,916,331
Compensation and employee benefits payable	1,478,874		1,539,291
Accrued bonus and profit sharing	1,082,161		1,694,590
Contract liabilities	281,988		280,659
Operating lease liabilities	224,982		232,423
Income taxes payable	178,160		246,035
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	1,017,949		1,277,451
Revolving credit facility	310,000		—
Other short-term borrowings	37,633		32,668
Total short-term borrowings	1,365,582		1,310,119
Other current liabilities	186,547		199,421
Total Current Liabilities	7,623,793		8,418,869
Long-term debt, net of current maturities	1,503,494		1,538,123
Non-current operating lease liabilities	1,095,047		1,116,562
Non-current tax liabilities	127,754		144,884
Non-current income taxes payable	54,761		54,761
Deferred tax liabilities, net	269,717		405,258
Other liabilities	869,122		1,035,917
Total Liabilities	11,543,688		12,714,374
Commitments and contingencies	—		—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 322,117,764 and 332,875,959 shares    issued and outstanding at June 30, 2022 and December 31, 2021, respectively	3,221		3,329
Additional paid-in capital	—		798,892
Accumulated earnings	9,084,358		8,366,631
Accumulated other comprehensive loss	(951,569)		(640,659)
Total CBRE Group, Inc. Stockholders’ Equity	8,136,010		8,528,193
Non-controlling interests	758,974		830,924
Total Equity	8,894,984		9,359,117
Total Liabilities and Equity	$	20,438,672	$	22,073,491

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

1

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	7,771,278	$	6,458,613	$	15,104,211	$	12,397,492
Costs and expenses:
Cost of revenue	6,053,984		5,016,759		11,806,178		9,736,305
Operating, administrative and other	1,188,819		957,216		2,254,815		1,785,543
Depreciation and amortization	162,359		119,085		311,391		241,163
Asset impairments	26,405		—		36,756		—
Total costs and expenses	7,431,567		6,093,060		14,409,140		11,763,011
Gain on disposition of real estate	177,226		929		198,818		1,085
Operating income	516,937		366,482		893,889		635,566
Equity income from unconsolidated subsidiaries	119,168		212,132		162,039		295,726
Other (loss) income	(6,909)		12,045		(21,373)		14,777
Interest expense, net of interest income	18,518		13,772		31,344		23,878
Income before provision for income taxes	610,678		576,887		1,003,211		922,191
Provision for income taxes	120,762		133,445		117,024		209,772
Net income	489,916		443,442		886,187		712,419
Less: Net income attributable to non-controlling interests	2,594		805		6,568		3,580
Net income attributable to CBRE Group, Inc.	$	487,322	$	442,637	$	879,619	$	708,839
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	1.50	$	1.32	$	2.68	$	2.11
Weighted average shares outstanding for basic income per share	325,415,305		335,643,233		328,692,585		335,751,530
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	1.48	$	1.30	$	2.64	$	2.09
Weighted average shares outstanding for diluted income per share	329,843,710		339,502,871		333,514,398		339,541,354

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

2

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	489,916	$	443,442	$	886,187	$	712,419
Other comprehensive (loss) income:
Foreign currency translation (loss) gain	(303,894)		18,402		(385,179)		(33,944)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	107		107		215		214
Unrealized holding losses on available for sale debt securities, net of tax	(2,116)		(508)		(3,847)		(1,186)
Other, net of tax	(100)		—		—		—
Total other comprehensive (loss) income	(306,003)		18,001		(388,811)		(34,916)
Comprehensive income	183,913		461,443		497,376		677,503
Less: Comprehensive (loss) income attributable to non-controlling interests	(53,280)		835		(71,333)		3,502
Comprehensive income attributable to CBRE Group, Inc.	$	237,193	$	460,608	$	568,709	$	674,001

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

3

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	886,187	$	712,419
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	311,391		241,163
Amortization of financing costs	3,407		3,317
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(87,150)		(132,004)
Asset impairments	36,756		—
Net realized and unrealized losses (gains), primarily from investments	27,251		(14,777)
Provision for doubtful accounts	7,781		12,789
Net compensation expense for equity awards	82,322		85,233
Equity income from unconsolidated subsidiaries	(162,039)		(295,726)
Distribution of earnings from unconsolidated subsidiaries	315,255		232,627
Proceeds from sale of mortgage loans	7,270,423		7,902,512
Origination of mortgage loans	(6,984,779)		(7,578,056)
Decrease in warehouse lines of credit	(259,502)		(281,808)
Tenant concessions received	4,250		12,874
Purchase of equity securities	(13,931)		(3,896)
Proceeds from sale of equity securities	25,296		5,488
Decrease (increase) in real estate under development	74,127		(27,894)
Increase in receivables, prepaid expenses and other assets (including contract and lease assets)	(509,350)		(100,368)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	(194,236)		(275,591)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing	(573,809)		(359,365)
(Increase) decrease in net income taxes receivable/payable	(60,160)		83,325
Other operating activities, net	(138,574)		4,856
Net cash provided by operating activities	60,916		227,118
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(96,722)		(75,944)
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	(45,377)		(57,920)
Contributions to unconsolidated subsidiaries	(220,492)		(245,714)
Distributions from unconsolidated subsidiaries	42,006		36,207
Other investing activities, net	(8,357)		(1,120)
Net cash used in investing activities	(328,942)		(344,491)

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

4

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving credit facility	310,000		—
Proceeds from notes payable on real estate	15,706		48,548
Repayment of notes payable on real estate	(16,544)		—
Proceeds from issuance of 2.500% senior notes	—		492,255
Repurchase of common stock	(993,769)		(88,275)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(28,431)		(3,421)
Units repurchased for payment of taxes on equity awards	(34,841)		(36,275)
Non-controlling interest contributions	713		527
Non-controlling interest distributions	(370)		(3,377)
Other financing activities, net	(12,960)		(30,958)
Net cash (used in) provided by financing activities	(760,496)		379,024
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	(180,543)		(44,089)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(1,209,065)		217,562
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	2,539,781		2,039,247
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,330,716	$	2,256,809
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	27,745	$	16,212
Income tax payments, net	$	336,266	$	131,156

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

5

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in thousands)

	CBRE Group, Inc. Stockholders'
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at March 31, 2022	$	3,296	$	409,187	$	8,758,928	$	(701,440)	$	812,854	$	9,282,825
Net income	—		—		487,322		—		2,594		489,916
Net compensation expense for equity awards	—		45,459		—		—		—		45,459
Units repurchased for payment of taxes on equity awards	—		(3,446)		—		—		—		(3,446)
Repurchase of common stock	(75)		(449,342)		(161,892)		—		—		(611,309)
Foreign currency translation loss	—		—		—		(248,020)		(55,874)		(303,894)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		107		—		107
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(2,116)		—		(2,116)
Contributions from non-controlling interests	—		—		—		—		503		503
Distributions to non-controlling interests	—		—		—		—		(157)		(157)
Other	—		(1,858)		—		(100)		(946)		(2,904)
Balance at June 30, 2022	$	3,221	$	—	$	9,084,358	$	(951,569)	$	758,974	$	8,894,984

	CBRE Group, Inc. Stockholders'
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss		Non- controlling interests		Total
Balance at March 31, 2021	$	3,359	$	1,013,287	$	6,796,259	$	(582,535)	$	41,014	$	7,271,384
Net income	—		—		442,637		—		805		443,442
Net compensation expense for equity awards	—		49,447		—		—		—		49,447
Units repurchased for payment of taxes on equity awards	—		(1,392)		—		—		—		(1,392)
Repurchase of common stock	(3)		(24,130)		—		—		—		(24,133)
Foreign currency translation gain	—		—		—		18,372		30		18,402
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		107		—		107
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(508)		—		(508)
Contributions from non-controlling interests	—		—		—		—		455		455
Distributions to non-controlling interests	—		—		—		—		(725)		(725)
Other	1		(35,380)		—		—		(424)		(35,803)
Balance at June 30, 2021	$	3,357	$	1,001,832	$	7,238,896	$	(564,564)	$	41,155	$	7,720,676

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

6

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(Unaudited)

(Dollars in thousands)

	CBRE Group, Inc. Stockholders'
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated  other comprehensive loss		Non- controlling interests		Total
Balance at December 31, 2021	$	3,329	$	798,892	$	8,366,631	$	(640,659)	$	830,924	$	9,359,117
Net income	—		—		879,619		—		6,568		886,187
Net compensation expense for equity awards	—		82,322		—		—		—		82,322
Units repurchased for payment of taxes on equity awards	—		(34,841)		—		—		—		(34,841)
Repurchase of common stock	(117)		(840,163)		(161,892)		—		—		(1,002,172)
Foreign currency translation loss	—		—		—		(307,278)		(77,901)		(385,179)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		215		—		215
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(3,847)		—		(3,847)
Contributions from non-controlling interests	—		—		—		—		713		713
Distributions to non-controlling interests	—		—		—		—		(370)		(370)
Other	9		(6,210)		—		—		(960)		(7,161)
Balance at June 30, 2022	$	3,221	$	—	$	9,084,358	$	(951,569)	$	758,974	$	8,894,984

	CBRE Group, Inc. Stockholders'
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated  other comprehensive loss		Non- controlling interests		Total
Balance at December 31, 2020	$	3,356	$	1,074,639	$	6,530,057	$	(529,726)	$	41,761	$	7,120,087
Net income	—		—		708,839		—		3,580		712,419
Net compensation expense for equity awards	—		85,233		—		—		—		85,233
Units repurchased for payment of taxes on equity awards	—		(36,275)		—		—		—		(36,275)
Repurchase of common stock	(11)		(88,264)		—		—		—		(88,275)
Foreign currency translation loss	—		—		—		(33,866)		(78)		(33,944)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		214		—		214
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(1,186)		—		(1,186)
Contributions from non-controlling interests	—		—		—		—		527		527
Distributions to non-controlling interests	—		—		—		—		(3,377)		(3,377)
Other	12		(33,501)		—		—		(1,258)		(34,747)
Balance at June 30, 2021	$	3,357	$	1,001,832	$	7,238,896	$	(564,564)	$	41,155	$	7,720,676

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

7

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Basis of Presentation

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, 2021, which are included in our 2021 Annual Report on Form 10-K (2021 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 2021 Annual Report for further discussion of our significant accounting policies and estimates.

Considerations Related to the Covid-19 Pandemic and the war in Ukraine

During the first quarter of 2020, the emergence of the novel coronavirus (Covid-19) resulted in sharp contraction of economic and commercial real estate activity across much of the world. Commercial real estate markets recovered strongly beginning in 2021 and continuing into the second quarter of 2022. However, it is expected the pandemic has structurally changed the utilization of many types of commercial real estate, which likely will impact our business. In addition, Russia’s invasion of Ukraine and ongoing military conflict pose heightened risk for our operations in Europe, and have exacerbated supply chain disruptions, high inflation and other macro challenges already affecting the global economy. As a result of Russia’s invasion, we elected to exit most of our business in Russia, although we have a limited number of employees managing facilities for existing global clients that continue to operate there.

Financial Statement Preparation

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 General Accepted Accounting Principles (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, including the impact Covid-19 and the war in Ukraine may have on our business. These estimates and the underlying assumptions affect the reported amounts of assets, liabilities, revenues 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.

8

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2.    New Accounting Pronouncements

Recent Accounting Pronouncements Pending Adoption

In March 2020 and January 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform: Scope,” respectively. Together, the ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective for a limited time for all entities through December 31, 2022. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires that an acquirer entity in a business combination recognize and measure contract assets and liabilities acquired in a business combination at the acquisition date in accordance with Topic 606 as if the acquirer entity had originated the contracts. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those years. Early application of the amendments is permitted but should be applied to all acquisitions occurring in the annual period of adoption. The amendment should be applied prospectively to business combinations occurring on or after the effective date of the amendments. We are evaluating the effect that ASU 2021-08 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method." This ASU allows nonprepayable financial assets to be included in a closed portfolio hedged using the portfolio layer method. The expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. This guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In March 2022, the FASB issued ASU 2022-02, " Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures." This ASU eliminates the accounting guidance for Troubled Debt Restructuring by creditors in 310-40 and enhances disclosure requirements for certain loan refinancings and restrucuturings by creditors when a borrower is experiencing financial difficulty. Additionally, this ASU requires entities to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20. This guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." Topic 820, Fair Value Measurement, states that a reporting entity should consider the characteristics of the asset or liability when measuring the fair value, including restrictions on the sale of the asset or liability, if a market participant would take those characteristics into account and the key to that determination is the unit of account for the asset or liability being measured at fair value. Topic 820 contains conflicting guidance on what the unit of account is when measuring the fair value of an equity security and this has resulted in diversity in practice on whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring equity security’s fair value. To address this, the amendments in the ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU introduces new disclosure requirements to provide investors with information about the restriction including the nature and remaining duration of the restriction. This guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3.    Turner & Townsend Acquisition

On November 1, 2021, we acquired a 60% ownership interest in, and entered into a strategic partnership with Turner & Townsend Holdings Limited (Turner & Townsend). Turner & Townsend is a leading professional services company specializing in program management, project management, cost and commercial management and advisory services across the real estate, infrastructure and natural resources sectors, and is reported in our Global Workplace Solutions segment. The Turner & Townsend acquisition was funded with cash on hand. The preliminary purchase accounting has been recorded in the accompanying consolidated financial statements (with no changes made in 2022). The excess purchase price over the fair value of net assets acquired and non-controlling interest has been recorded to goodwill. The goodwill arising from the Turner & Townsend acquisition consists largely of the synergies and opportunities to deliver a premier project, program and cost management services. The goodwill recorded in connection with the Turner & Townsend acquisition was not deductible for tax purposes. The purchase price allocation for the business combination is preliminary, primarily for intangibles, and subject to change within the respective measurement period which will not extend beyond one year from the acquisition date.

4.    Warehouse Receivables & Warehouse Lines of Credit

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 June 30, 2022 and December 31, 2021, 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):

Beginning balance at December 31, 2021	$	1,303,717
Origination of mortgage loans	6,984,779
Gains (premiums on loan sales)	23,563
Proceeds from sale of mortgage loans:
Sale of mortgage loans	(7,246,860)
Cash collections of premiums on loan sales	(23,563)
Proceeds from sale of mortgage loans	(7,270,423)
Net decrease in mortgage servicing rights included in warehouse receivables	(7,611)
Ending balance at June 30, 2022	$	1,034,025

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table is a summary of our warehouse lines of credit in place as of June 30, 2022 and December 31, 2021 (dollars in thousands):

			June 30, 2022				December 31, 2021
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	10/17/2022	daily floating rate SOFR rate plus 1.60%, with a SOFR adjustment rate of 0.05%	$	1,335,000	$	782,673	$	1,335,000	$	742,124
JP Morgan	10/17/2022	daily floating rate SOFR rate plus 2.75%, with a SOFR adjustment rate of 0.05%	15,000		884		15,000		4,326
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 1.45%, with a LIBOR floor of 0.25%	650,000		58,705		650,000		133,084
TD Bank, N.A. (TD Bank) (3)	7/15/2022	daily floating rate LIBOR plus 1.30%	800,000		78,389		800,000		217,672
Bank of America, N.A. (BofA) (4)	5/24/2023	daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10%	350,000		93,458		350,000		178,600
BofA (5)	5/24/2023	daily floating rate SOFR rate 1.25%, with a SOFR adjustment rate of 0.10%	250,000		—		250,000		—
MUFG Union Bank, N.A. (Union Bank) (6)	6/27/2023	daily floating rate SOFR plus 1.30%	200,000		3,840		200,000		1,645
			$	3,600,000	$	1,017,949	$	3,600,000	$	1,277,451

_______________________________

(1)Effective October 18, 2021, this facility was renewed and amended and the maximum facility size was increased to $1,335.0 million. This facility has a revised maturity date of October 17, 2022 and a revised interest rate to a Secured Overnight Finance Rate (SOFR) term plus 1.60%, with a SOFR adjustment rate of 0.05%, noting the Business Lending sublimit has a revised interest rate of daily adjusted term SOFR plus 2.75%, with a SOFR adjustment rate of 0.05%.

(2)Effective January 15, 2021, the maximum facility was increased to $650.0 million.

(3)Effective July 1, 2020, this facility was amended and provides for a maximum aggregate principal amount of $400.0 million, in addition to an uncommitted $400.0 million temporary line of credit. Effective June 28, 2021, this facility was renewed with a revised interest rate of daily floating rate LIBOR plus 1.25% and a maturity date of July 15, 2022. Effective July 16, 2022, this facility was renewed with a revised interest rate of daily floating rate SOFR rate plus 1.30%, with a SOFR adjustment rate of 0.10% and a maturity date of July 15, 2023. As of June 30, 2022, the uncommitted $400.0 million temporary line of credit was not utilized.

(4)The total commitment amount of $350.0 million includes a separate sublimit borrowing in the amount of $100.0 million, which can be utilized for specific purposes as defined within the agreement. Effective May 25, 2022, this facility was renewed with a revised interest rate of daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10% and a maturity date of May 24, 2023. The sublimit is subject to an interest rate of daily floating rate SOFR plus 1.75%, with a SOFR adjustment rate of 0.10%. As of June 30, 2022, the sublimit borrowing has not been utilized.

(5)Effective May 25, 2022, the advised consent line was renewed for $250.0 million of capacity with a revised interest rate of daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10%, and a maturity date of May 24, 2023.

(6)Effective June 27, 2022, this facility was renewed with a facility size of $200.0 million and a revised interest rate of daily floating rate SOFR rate plus 1.30% and a maturity date of June 27, 2023.

During the six months ended June 30, 2022, we had a maximum of $1.5 billion of warehouse lines of credit principal outstanding.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5.    Variable Interest Entities (VIEs)

We hold variable interests in certain VIEs primarily in our Real Estate Investments segment which are not consolidated as it was determined that we are not the primary beneficiary. Our involvement with these entities is in the form of equity co-investments and fee arrangements.

As of June 30, 2022 and December 31, 2021, our maximum exposure to loss related to VIEs which are not consolidated was as follows (dollars in thousands):

	June 30, 2022		December 31, 2021
Investments in unconsolidated subsidiaries	$	111,220	$	109,530
Other current assets	—		4,219
Co-investment commitments	78,799		90,328
Maximum exposure to loss	$	190,019	$	204,077

6.    Fair Value Measurements

Topic 820 of the FASB ASC defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1 – Quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

There have been no significant changes to the valuation techniques and inputs used to develop the recurring fair value measurements from those disclosed in our 2021 Annual Report.

The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (dollars in thousands):

	As of June 30, 2022
	Fair Value Measured and Recorded Using
	Level 1		Level 2	Level 3	Total
Assets
Available for sale debt securities:
U.S. treasury securities	$	6,585	$