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 March 31, 2023

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 incorporation or organization)	(I.R.S. Employer 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 April 24, 2023 was 310,832,322.

FORM 10-Q

March 31, 2023

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	1
	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	2
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
	Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	50
Signatures		51

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share data)

	March 31, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	1,231,325	$	1,318,290
Restricted cash	88,464		86,559
Receivables, less allowance for doubtful accounts of $92,086 and $92,354 at    March 31, 2023 and December 31, 2022, respectively	5,468,926		5,326,807
Warehouse receivables	792,294		455,354
Contract assets	384,010		391,626
Prepaid expenses	329,361		311,508
Income taxes receivable	140,922		81,528
Other current assets	611,098		557,009
Total Current Assets	9,046,400		8,528,681
Property and equipment, net of accumulated depreciation and amortization of $1,458,857 and $1,386,261 at    March 31, 2023 and December 31, 2022, respectively	833,269		836,041
Goodwill	4,933,818		4,868,382
Other intangible assets, net of accumulated amortization of $1,983,009 and $1,915,725 at    March 31, 2023 and December 31, 2022, respectively	2,152,939		2,192,706
Operating lease assets	980,741		1,033,011
Investments in unconsolidated subsidiaries (with $950,985 and $973,635 at fair value at    March 31, 2023 and December 31, 2022, respectively)	1,295,088		1,317,705
Non-current contract assets	138,690		137,480
Real estate under development	180,290		172,253
Non-current income taxes receivable	59,471		51,910
Deferred tax assets, net	274,843		265,554
Other assets, net	1,134,548		1,109,666
Total Assets	$	21,030,097	$	20,513,389
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,008,485	$	3,078,781
Compensation and employee benefits payable	1,410,582		1,459,001
Accrued bonus and profit sharing	932,619		1,691,118
Operating lease liabilities	232,369		229,591
Contract liabilities	262,189		276,334
Income taxes payable	192,754		184,453
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	782,637		447,840
Revolving credit facility	1,209,000		178,000
Other short-term borrowings	17,153		42,914
Total short-term borrowings	2,008,790		668,754
Current maturities of long-term debt	433,433		427,792
Other current liabilities	236,241		226,170
Total Current Liabilities	8,717,462		8,241,994
Long-term debt, net of current maturities	1,086,268		1,085,712
Non-current operating lease liabilities	1,052,823		1,080,385
Non-current income taxes payable	54,761		54,761
Non-current tax liabilities	154,943		148,806
Deferred tax liabilities, net	276,681		282,073
Other liabilities	1,044,749		1,013,926
Total Liabilities	12,387,687		11,907,657
Commitments and contingencies	—		—
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 310,786,159 and 311,014,160 shares    issued and outstanding at March 31, 2023 and December 31, 2022, respectively	3,108		3,110
Additional paid-in capital	—		—
Accumulated earnings	8,809,824		8,832,943
Accumulated other comprehensive loss	(953,098)		(982,780)
Total CBRE Group, Inc. Stockholders’ Equity	7,859,834		7,853,273
Non-controlling interests	782,576		752,459
Total Equity	8,642,410		8,605,732
Total Liabilities and Equity	$	21,030,097	$	20,513,389

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 March 31,
	2023		2022
Revenue	$	7,411,114	$	7,332,933
Costs and expenses:
Cost of revenue	6,006,413		5,752,194
Operating, administrative and other	1,208,904		1,065,996
Depreciation and amortization	161,491		149,032
Asset impairments	—		10,351
Total costs and expenses	7,376,808		6,977,573
Gain on disposition of real estate	3,059		21,592
Operating income	37,365		376,952
Equity income from unconsolidated subsidiaries	141,682		42,871
Other income (loss)	2,475		(14,464)
Interest expense, net of interest income	28,414		12,826
Income before provision for (benefit from) income taxes	153,108		392,533
Provision for (benefit from) income taxes	28,036		(3,738)
Net income	125,072		396,271
Less: Net income attributable to non-controlling interests	8,180		3,974
Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.38	$	1.18
Weighted average shares outstanding for basic income per share	310,464,609		331,925,104
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.37	$	1.16
Weighted average shares outstanding for diluted income per share	315,358,147		337,140,325

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 March 31,
	2023		2022
Net income	$	125,072	$	396,271
Other comprehensive income (loss):
Foreign currency translation gain (loss)	37,734		(81,285)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	110		108
Unrealized holding losses on available for sale debt securities, net of tax	(70)		(1,731)
Other, net of tax	5,558		100
Total other comprehensive income (loss)	43,332		(82,808)
Comprehensive income	168,404		313,463
Less: Comprehensive income (loss) attributable to non-controlling interests	21,830		(18,053)
Comprehensive income attributable to CBRE Group, Inc.	$	146,574	$	331,516

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)

	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	125,072	$	396,271
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	161,491		149,032
Amortization of financing costs	1,161		1,663
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(23,481)		(28,422)
Asset impairments	—		10,351
Net realized and unrealized losses, primarily from investments	319		16,690
Provision for doubtful accounts	3,969		3,303
Net compensation expense for equity awards	18,113		36,863
Equity income from unconsolidated subsidiaries	(141,682)		(42,871)
Distribution of earnings from unconsolidated subsidiaries	177,710		146,743
Proceeds from sale of mortgage loans	2,166,609		3,336,084
Origination of mortgage loans	(2,494,589)		(3,221,312)
Increase (decrease) in warehouse lines of credit	334,797		(105,326)
Tenant concessions received	528		2,114
Purchase of equity securities	(2,137)		(8,902)
Proceeds from sale of equity securities	2,120		20,750
Increase in real estate under development	(5,943)		(41,358)
Increase in receivables, prepaid expenses and other assets (including contract and lease assets)	(73,437)		(156,061)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	(73,960)		(108,355)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing	(843,509)		(725,216)
(Increase) decrease in net income taxes receivable/payable	(56,713)		17,722
Other operating activities, net	(21,195)		(93,270)
Net cash used in operating activities	(744,757)		(393,507)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(60,284)		(42,056)
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired	(44,653)		(16,792)
Contributions to unconsolidated subsidiaries	(28,998)		(44,387)
Distributions from unconsolidated subsidiaries	14,794		12,101
Other investing activities, net	4,074		(4,487)
Net cash used in investing activities	(115,067)		(95,621)

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)

	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility	1,660,000		210,000
Repayment of revolving credit facility	(629,000)		—
Proceeds from notes payable on real estate	48		19,368
Repayment of notes payable on real estate	—		(13,954)
Repurchase of common stock	(129,808)		(367,863)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(60,034)		(13,556)
Units repurchased for payment of taxes on equity awards	(46,161)		(31,395)
Non-controlling interest contributions	567		210
Non-controlling interest distributions	(101)		(213)
Other financing activities, net	(34,474)		(11,606)
Net cash provided by (used in) financing activities	761,037		(209,009)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	13,727		(49,015)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(85,060)		(747,152)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD	1,404,849		2,539,781
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,319,789	$	1,792,629
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	39,379	$	12,826
Income tax payments, net	$	82,059	$	88,649

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 December 31, 2022	$	3,110	$	—	$	8,832,943	$	(982,780)	$	752,459	$	8,605,732
Net income	—		—		116,892		—		8,180		125,072
Net compensation expense for equity awards	—		18,113		—		—		—		18,113
Units repurchased for payment of taxes on equity awards	—		(12,566)		(33,595)		—		—		(46,161)
Repurchase of common stock	(14)		—		(114,235)		—		—		(114,249)
Foreign currency translation gain	—		—		—		24,084		13,650		37,734
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		110		—		110
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(70)		—		(70)
Contributions from non-controlling interests	—		—		—		—		567		567
Distributions to non-controlling interests	—		—		—		—		(101)		(101)
Other	12		(5,547)		7,819		5,558		7,821		15,663
Balance at March 31, 2023	$	3,108	$	—	$	8,809,824	$	(953,098)	$	782,576	$	8,642,410

	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	—		—		392,297		—		3,974		396,271
Net compensation expense for equity awards	—		36,863		—		—		—		36,863
Units repurchased for payment of taxes on equity awards	—		(31,395)		—		—		—		(31,395)
Repurchase of common stock	(42)		(390,821)		—		—		—		(390,863)
Foreign currency translation loss	—		—		—		(59,258)		(22,027)		(81,285)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—		—		—		108		—		108
Unrealized holding losses on available for sale debt securities, net of tax	—		—		—		(1,731)		—		(1,731)
Contributions from non-controlling interests	—		—		—		—		210		210
Distributions to non-controlling interests	—		—		—		—		(213)		(213)
Other	9		(4,352)		—		100		(14)		(4,257)
Balance at March 31, 2022	$	3,296	$	409,187	$	8,758,928	$	(701,440)	$	812,854	$	9,282,825

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

6

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, 2022, which are included in our 2022 Annual Report on Form 10-K (2022 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 2022 Annual Report for further discussion of our significant accounting policies and estimates.

Considerations Related to Tightening Monetary Policy

The macroeconomic environment remains challenging as central banks continue to rapidly raise interest rates. The rising rate environment, coupled with certain bank failures in the first quarter of 2023, has limited credit availability to all asset classes, including commercial real estate. Less available and more expensive debt capital has had pronounced effects on our capital markets (mortgage origination and property sales) businesses, making property acquisitions and dispositions harder to finance. Similar factors also impact the timing of and proceeds generated from asset sales within our investment management and development businesses and our ability to obtain debt capital to begin new development projects.

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, such as weakening global macroeconomic conditions and stress in the banking system, including less available and more expensive debt capital. 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.

7

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2.    New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 adopted ASU 2021-08 in the first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

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 adopted ASU 2022-01 in the first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

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 restructurings 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 adopted ASU 2022-02 in the first quarter of 2023 and the adoption did not have a material impact on our consolidated financial statements and related disclosures.

In September 2022, the FASB issued ASU 2022-04, “Supplier Finance Programs (Sub Topic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period including the key terms of the program and the following for obligations that the buyer has confirmed as valid to the provider: (1) the amount outstanding that remains unpaid by the buyer as of the end of the annual period, (2) a description of where those obligations are presented in the balance sheet, and (3) a rollforward of those obligations during the annual period, including the amount of obligations confirmed and the amount of obligations subsequently paid. Additionally, in each interim period, the buyer should disclose the amount of obligations outstanding that the buyer has confirmed as valid to the finance provider as of the end of the interim period. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We adopted ASU 2022-04 in the first quarter of 2023. The obligation outstanding under the applicable program was not material as of March 31, 2023.

Recent Accounting Pronouncements Pending Adoption

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 the 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

8

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the nature and remaining duration of the restriction. This guidance is effective for fiscal years beginning after December 15, 2023, 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 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” This update requires that leasehold improvements associated with common control leases be amortized over the useful life of the leasehold improvements to the common control group (regardless of the lease term) and accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. This update also provides a practical expedient for private companies and not-for-profit entities to use written terms and conditions of a common control arrangement to determine if a lease exists and the classification and accounting for that lease. This guidance is effective for fiscal years beginning after December 15, 2023, 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 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization method.” This update permits an accounting election to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. This guidance is effective for fiscal years beginning after December 15, 2023, 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.

3.    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 March 31, 2023 and December 31, 2022, 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, 2022	$	455,354
Origination of mortgage loans	2,494,589
Gains (premiums on loan sales)	6,807
Proceeds from sale of mortgage loans:
Sale of mortgage loans	(2,159,802)
Cash collections of premiums on loan sales	(6,807)
Proceeds from sale of mortgage loans	(2,166,609)
Net increase in mortgage servicing rights included in warehouse receivables	2,153
Ending balance at March 31, 2023	$	792,294

9

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 March 31, 2023 and December 31, 2022 (dollars in thousands):

			March 31, 2023				December 31, 2022
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	12/15/2023	daily floating rate SOFR rate plus 1.60%, with a SOFR adjustment rate of 0.05%	$	1,335,000	$	580,133	$	1,335,000	$	330,509
JP Morgan (Business Lending Activity) (1)	12/15/2023	daily floating rate SOFR rate plus 2.75%, with a SOFR adjustment rate of 0.05%	15,000		—		15,000		—
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program	Cancelable anytime	daily one-month LIBOR plus 1.45%, with a LIBOR floor of 0.25%	650,000		15,393		650,000		—
TD Bank, N.A. (TD Bank) (2)	7/15/2023	daily floating rate SOFR rate 1.30%, with a SOFR adjustment rate of 0.10%	800,000		22,701		800,000		—
Bank of America, N.A. (BofA) (3)	5/24/2023	daily floating rate SOFR rate plus 1.25%, with a SOFR adjustment rate of 0.10%	350,000		163,308		350,000		115,206
BofA (4)	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) (5)	6/27/2023	daily floating rate SOFR plus 1.30%	200,000		1,102		200,000		2,125
			$	3,600,000	$	782,637	$	3,600,000	$	447,840

_______________________________

(1)Effective October 18, 2021, this facility was renewed and amended and the maximum facility size was increased to $1,350.0 million. This facility was revised on October 17, 2022 with 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%. Effective December 16, 2022, this facility was renewed with a revised maturity date of December 15, 2023.

(2)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 July 15, 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 March 31, 2023, the uncommitted $400.0 million temporary line of credit was not utilized.

(3)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 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 March 31, 2023, the sublimit borrowing has not been utilized.

(4)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 plus 1.25%, with a SOFR adjustment rate of 0.10%, and a maturity date of May 24, 2023.

(5)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 plus 1.30% and a maturity date of June 27, 2023.

During the three months ended March 31, 2023, we had a maximum of $938.6 million of warehouse lines of credit principal outstanding.

10

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4.    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 March 31, 2023 and December 31, 2022, our maximum exposure to loss related to VIEs which are not consolidated was as follows (dollars in thousands):

	March 31, 2023		December 31, 2022
Investments in unconsolidated subsidiaries	$	165,015	$	152,762
Co-investment commitments	70,387		83,835
Maximum exposure to loss	$	235,402	$	236,597

5.    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 2022 Annual Report.

The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (dollars in thousands):

	As of March 31, 2023
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
Debt securities:
U.S. treasury securities	$	6,127	$	—	$	—	$	6,127
Debt securities issued by U.S. federal agencies	—		7,702		—		7,702
Corporate debt securities	—		41,704		—		41,704
Asset-backed securities	—		2,952		—		2,952
Total available for sale debt securities	6,127		52,358		—		58,485
Equity securities	33,512		—		—		33,512
Investments in unconsolidated subsidiaries	134,567		—		456,556		591,123
Warehouse receivables	—		792,294		—		792,294
Other assets	—		—		20,445		20,445
Total assets at fair value	$	174,206	$	844,652	$	477,001	$	1,495,859

11

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	As of December 31, 2022
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
Debt securities:
U.S. treasury securities	$	6,164	$	—	$	—	$	6,164
Debt securities issued by U.S. federal agencies	—		8,249		—		8,249
Corporate debt securities	—		44,091		—		44,091
Asset-backed securities	—		3,201		—		3,201
Total available for sale debt securities	6,164		55,541		—		61,705
Equity securities	33,724		—		—		33,724
Investments in unconsolidated subsidiaries	160,093		—		460,540		620,633
Warehouse receivables	—		455,354		—		455,354
Other assets	—		—		14,452		14,452
Total assets at fair value	$	199,981	$	510,895	$	474,992	$	1,185,868

There were no liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

Fair value measurements for our available for sale debt securities are obtained from independent pricing services which utilize observable market data that may include quoted market prices, dealer quotes, market spreads, cash flows, the U.S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

The equity securities are generally valued at the last reported sales price on the day of valuation or, if no sales occurred on the valuation date, at the mean of the bid and ask prices on such date. The above tables do not include our $100.7 million capital investment in VTS, a leading proptech company, made during the third quarter of 2022 as it is a non-marketable equity investment accounted for under the measurement alternative, defined as cost minus impairment. No adjustments or impairments were recorded during the three months ended March 31, 2023. It is included in “other assets, net” in the accompanying consolidated balance sheets.

The fair values of the warehouse receivables are primarily calculated based on already locked in purchase prices. At March 31, 2023 and December 31, 2022, 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 (See Note 3). These assets are classified as Level 2 in the fair value hierarchy as a substantial majority of inputs are readily observable.

As of March 31, 2023 and December 31, 2022, investments in unconsolidated subsidiaries at fair value using NAV were $359.9 million and $353.0 million, respectively. These investments fall under practical expedient rules that do not require them to be included in the fair value hierarchy and as a result have been excluded from the tables above.

12

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in thousands):

	Investment in Unconsolidated Subsidiaries		Other assets
Balance as of December 31, 2022	$	460,540	$	14,452
Transfer out	(230)		—
Net change in fair value	(3,753)		3,400
Purchases/ Additions	—		2,593
Balance as of March 31, 2023	$	456,556	$	20,445

Net change in fair value, included in the table above, is reported in Net income as follows:

Category of Assets/Liabilities using Unobservable Inputs	Consolidated Statements of Operations
Investments in unconsolidated subsidiaries	Equity income from unconsolidated subsidiaries
Other assets (liabilities)	Other income (loss)

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments as of March 31, 2023:

	Valuation Technique	Unobservable Input	Range		Weighted Average
Investment in unconsolidated subsidiaries	Discounted cash flow	Discount rate	23.5	%	—
	Monte Carlo	Volatility	45.0% - 70.0%		47.6	%
		Risk free interest rate	4.5	%
		Discount Yield	25.0	%	—
Other assets	Discounted cash flow	Discount rate	23.0	%	—

There were no asset impairment charges recorded during the three months ended March 31, 2023. During the three months ended March 31, 2022, we recorded $10.4 million in non-cash asset impairment charges (primarily comprised of receivables), on a pretax basis, related to the exit of our Advisory Services business in Russia. There were no other significant non-recurring fair value measurements recorded during the three months ended March 31, 2023 and 2022.

FASB ASC Topic 825, “Financial Instruments” requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets. Our financial instruments are as follows:

•Cash and Cash Equivalents and Restricted Cash – These balances include cash and cash equivalents as well as restricted cash with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

•Receivables, less Allowance for Doubtful Accounts – Due to their short-term nature, fair value approximates carrying value.

•Warehouse Receivables – These balances are carried at fair value. The primary source of value is either a contractual purchase commitment from Freddie Mac or a confirmed forward trade commitment for the issuance and purchase of a Fannie Mae or Ginnie Mae MBS (see Note 3).

•Investments in Unconsolidated Subsidiaries – A portion of these investments are carried at fair value as discussed above. It includes our equity investment and related interests in both public and non-public entities. Our ownership of common shares in Altus Power Inc. (Altus) is considered level 1 and is measured at fair value using a quoted price in an active market. Our ownership of alignment shares of Altus and our investment in Industrious and certain other non-controlling equity investments are considered level 3 which are measured at fair value using Monte Carlo and discounted cash flows. The valuation of Altus’ common shares and alignment shares are dependent on its stock price which could be volatile and subject to wide fluctuations in response to various market

13

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

conditions. Transfer out activities from level 3, as shown in the table above, represent annual conversion of a portion of our alignment shares in Altus to its common shares.

•Available for Sale Debt Securities – Primarily held by our wholly-owned captive insurance company, these investments are carried at their fair value.

•Equity Securities – Primarily held by our wholly-owned captive insurance company, these investments are carried at their fair value.

•Other assets / liabilities – Represents the fair value of the unfunded commitment related to a revolving facility. Valuations are based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market comparables and recovery assumptions. It also includes approximately $10 million of investment in a non-public entity designated as trading debt security that the company purchased in the fourth quarter of 2022 for which cost approximated fair value at March 31, 2023.

•Short-Term Borrowings – The majority of this balance represents outstanding amounts under our warehouse lines of credit of our wholly-owned subsidiary, CBRE Capital Markets, and our revolving credit facility. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value (see Notes 3 and 7).

•Senior Term Loans – Based upon information from third-party banks (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our senior term loans was approximately $432.3 million and $424.6 million at March 31, 2023 and December 31, 2022, respectively. Their actual carrying value, net of unamortized debt issuance costs, totaled $433.4 million and $427.8 million at March 31, 2023 and December 31, 2022, respectively (see Note 7).

•Senior Notes – Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our 4.875% senior notes was $591.8 million and $595.2 million at March 31, 2023 and December 31, 2022, respectively. The actual carrying value of our 4.875% senior notes, net of unamortized debt issuance costs and discount, totaled $596.7 million and $596.4 million at March 31, 2023 and December 31, 2022, respectively. The estimated fair value of our 2.500% senior notes was $395.3 million and $396.8 million at March 31, 2023 and December 31, 2022. The actual carrying value of our 2.500% senior notes, net of unamortized debt issuance costs and discount, totaled $489.6 million and $489.3 million at March 31, 2023 and December 31, 2022 (See Note 7).

•Notes Payable on Real Estate - As of March 31, 2023 and December 31, 2022, the carrying value of our notes payable on real estate, net of unamortized debt issuance costs, was $55.9 million and $52.7 million, respectively. These notes payable were not recourse to CBRE Group, Inc., except for being recourse to the single-purpose entities that held the real estate assets and were the primary obligors on the notes payable. These borrowings have either fixed interest rates or floating interest rates at spreads added to a market index. Although it is possible that certain portions of our notes payable on real estate may have fair values that differ from their carrying values, based on the terms of such loans as compared to current market conditions, or other factors specific to the borrower entity, we do not believe that the fair value of our notes payable is significantly different than their carrying value.

14

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6.    Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries are accounted for under the equity method of accounting. Our investment ownership percentages in equity method investments vary, generally ranging from 1.0% to 50.0%. The following table represents the composition of investment in unconsolidated subsidiaries under equity method of accounting and fair value option (dollars in thousands):

Investment type	March 31, 2023		December 31, 2022
Real estate investments (in projects and funds)	$	632,050	$	622,826
Investment in Altus:
Class A common stock (1)	134,567		160,093
Alignment shares (2)	44,809		59,530
Subtotal	179,376		219,624
Other (3)	483,662		475,256
Total investment in unconsolidated subsidiaries	$	1,295,088	$	1,317,705

_______________

(1)CBRE held 24,556,012 and 24,554,201 shares of Altus Class A common stock as of March 31, 2023, and December 31 2022, respectively.

(2)The alignment shares, also known as Class B common shares, will automatically convert into Altus Class A common shares based on the achievement of certain total return thresholds on Altus Class A common shares as of the relevant measurement date over the seven fiscal years following the merger. As of March 31, 2023 (the second measurement date), 201,250 alignment shares automatically converted into 2,011 shares of Class A common stock, of which CBRE was entitled to 1,811 shares.

(3)Consists of our investments in Industrious and other non-public entities.

Combined condensed financial information for the entities accounted for using the equity method is as follows (dollars in thousands):

	Three Months Ended March 31,
	2023		2022
Revenue	$	4,098,173	$	581,115
Operating income	3,627,503		273,693
Net income (1)	1,686,306		1,452,847

_______________

(1)Included in net income are realized and unrealized earnings and losses in investments in unconsolidated investment funds and realized earnings and losses from sales of real estate projects in investments in unconsolidated subsidiaries. These realized and unrealized earnings and losses are not included in revenue and operating income.

15

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7.    Long-Term Debt and Short-Term Borrowings

Long-Term Debt

Long-term debt consists of the following (dollars in thousands):