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. ☐¨

~~Our policies, procedures and programs to safeguard the health, safety and security of our employees and others may not be adequate.~~

We have more than 100,000 employees as well as independent contractors working in over 100 countries. We have undertaken to implement what we believe to be best practices to safeguard the health, safety and security of our employees, independent contractors, clients and others at our worksites. However, if these policies, procedures and programs are not adequate, or employees do not receive related adequate training or follow them for any reason, the consequences may be severe to us, including serious injury or loss of life, which could impair our operations and cause us to incur significant legal liability or fines as well as reputational damage. Our insurance may not cover, or may be insufficient to cover, any legal liability or fines that we incur for health, safety or security incidents.

Our debt instruments impose, and the terms of any future debt may impose, operating and other restrictions on us and many of our subsidiaries. These restrictions affect, and in many respects limit or prohibit, our ability to:

~~plan for or react to market conditions;~~

~~meet capital needs or otherwise restrict our activities or business plans; and~~

o◦plan for or react to market conditions;

~~finance ongoing operations, strategic acquisitions, investments or other capital needs or to engage in other business activities that would be in our interest, including:~~

o◦meet capital needs or otherwise restrict our activities or business plans; and

~~incurring or guaranteeing additional indebtedness;~~

~~entering into consolidations and mergers;~~

o◦finance ongoing operations, strategic acquisitions, investments or other capital needs or to engage in other business activities that would be in our interest, including:

~~creating liens; and~~

~~entering into sale/leaseback transactions.~~

◦incurring or guaranteeing additional indebtedness;

◦entering into mergers and consolidations;

◦creating liens; and

◦entering into sale/leaseback transactions.

Our credit agreement requires us to maintain a minimum interest coverage ratio of consolidated EBITDA (as defined in the credit agreement) to consolidated interest expense (as defined in the credit agreement) ~~of 2.00x~~ and a maximum leverage ratio of total debt (as defined in the credit agreement) less available cash (as defined in the credit agreement) to consolidated EBITDA ~~of 4.25x (and, in the case of the first four full fiscal quarters following the consummation of a qualified acquisition (as defined in the credit agreement), 4.75x)~~ as of the end of each fiscal quarter. On this basis, our coverage ratio of consolidated EBITDA to consolidated interest expense was 22.62x for the year ended December 31, 2019, and our leverage ratio of total debt less available cash to consolidated EBITDA was 0.44x as of December 31, 2019. Our ability to meet these financial ratios ~~can~~may be affected by events beyond our control, and we cannot give assurance that we will be able to meet those ratios when required. We continue to monitor our projected compliance with these financial ratios and other terms of our credit agreement.

A breach of any of these restrictive covenants or the inability to comply with the required financial ratios could result in a default under our debt instruments. If any such default occurs, the lenders under our credit agreement may elect to declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable. The lenders under our credit agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, a default under our credit agreement could trigger a cross default or cross acceleration under our other debt instruments.

~~In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation~~

Table of LIBOR after 2021. The Alternative Reference Rates Committee, or ARRC, has proposed that the Secured Overnight Financing Rate, or SOFR, is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. Establishing a replacement rate for LIBOR in this manner may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on our debt if LIBOR was available in its current form.

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We have limited restrictions on the amount of additional recourse debt we are able to incur, which may intensify the risks associated with our leverage, including our ability to service our indebtedness. In addition, in the event of a credit-ratings downgrade, our ability to borrow and the costs of such borrowings could be adversely affected.

Subject to the maximum amounts of indebtedness permitted by our credit agreement covenants, we are not restricted in the amount of additional recourse debt we are able to incur, and so we may in the future incur such indebtedness in order to finance our operations and investments. In addition, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services, rate our significant outstanding debt. These ratings, and any downgrades of them, may affect our ability to borrow as well as the costs of our current and future borrowings.

Risks Related to our Information Technology, Cybersecurity and Data Protection

Failure to maintain and execute information technology strategies and ensure that our employees adapt to changes in technology could materially and adversely affect our ability to remain competitive in the market.

Our business relies heavily on information technology, including solutions provided by third parties, to deliver services that meet the needs of our clients. If we are unable to effectively execute or maintain our information technology strategies or adopt new technologies and processes relevant to our service platform, our ability to deliver high-quality services may be materially impaired. In addition, we make significant investments in new systems and tools to achieve competitive advantages and efficiencies. Implementation of such investments in information technology could exceed estimated budgets and we may experience challenges that prevent new strategies or

technologies from being realized according to anticipated schedules. If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans may be disrupted. Similarly, our employees require effective tools and techniques to perform functions integral to our business. Failure to successfully provide such tools and systems, or ensure that employees have properly adopted them, could materially and adversely impact our ability to achieve positive business outcomes.

Failure to maintain the security of our information and technology networks, including personally identifiable and client information, intellectual property and proprietary business information could significantly adversely affect us.

Security breaches and other disruptions of our information and technology networks, as well as that of third-party vendors, could compromise our information and intellectual property and expose us to liability, reputational harm and significant remediation costs, which could cause material harm to our business and financial results. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and intellectual property, and that of our clients and personally identifiable information of our employees, contractors and vendors, in our data centers and on our networks. The secure processing, maintenance and transmission of this information are critical to our operations. Although we and our vendors continue to implement new security measures and regularly conduct employee training, our information technology and infrastructure may nevertheless be vulnerable to cyberattacks by third parties or breached due to employee error, malfeasance or other disruptions. An increasing number of companies that rely on information and technology networks have disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their websites or infrastructure. The techniques used to obtain unauthorized access, disable, or degrade service, or sabotage systems, change frequently, may be difficult to detect, and often are not recognized until launched against a target. To date, we have not yet experienced any cybersecurity breaches that have been material, either individually or in the aggregate. However, there can be no assurance that we will be able to prevent any material events from occurring in the future.

We are subject to numerous laws and regulations designed to protect sensitive information, such as the European Union’s General Data Protection Regulation, China’s Cyber Security Law, various U.S. federal and state laws governing the protection of health or other personally identifiable information, including the California Consumer Privacy Act, and data privacy and cybersecurity laws in other regions. These laws and regulations are increasing in complexity and number, change frequently and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us.

A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of client, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us. Such an event could additionally disrupt our operations and the services we provide to clients, harm our relationships with contractors and vendors, damage our reputation, result in the loss of a competitive advantage, impact our ability to provide timely and accurate financial data and cause a loss of confidence in our services and financial reporting, which could adversely affect our business, revenues, competitive position and investor confidence. Additionally, we rely on third parties to support our information and technology networks, including cloud storage solution providers, and as a result have less direct control over our data and information technology systems. Such third parties are also vulnerable to security breaches and compromised security systems, for which we may not be indemnified and which could materially adversely affect us and our reputation.

Interruption or failure of our information technology, communications systems or data services could impair our ability to provide our services effectively, which could damage our reputation and materially harm our operating results.

Our business requires the continued operation of information technology and communication systems and network infrastructure. Our ability to conduct our global business may be materially adversely affected by disruptions to these systems or our infrastructure. Our information technology and communications systems are

vulnerable to damage or disruption from fire, power loss, telecommunications failure, system malfunctions, computer viruses, cyberattacks, natural disasters such as hurricanes, earthquakes and floods, acts of war or terrorism, employee errors or malfeasance, or other events which are beyond our control. With respect to cyberattacks and viruses, these pose growing threats to many companies, and we have been a target and may continue to be a target of such threats, which could expose us to liability, reputational harm and significant remediation costs and cause material harm to our business and financial results. In addition, the operation and maintenance of these systems and networks is in some cases dependent on third-party technologies, systems and service providers for which there is no certainty of uninterrupted availability. Any of these events could cause system interruption, delays and loss, corruption or exposure of critical data or intellectual property and may also disrupt our ability to provide services to or interact with our clients, contractors and vendors, and we may not be able to successfully implement contingency plans that depend on communication or travel. Furthermore, while we have certain business interruption insurance coverage and various contractual arrangements that can serve to mitigate costs, damages and liabilities, any such event could result in substantial recovery and remediation costs and liability to customers, business partners and other third parties. We have crises management, business continuity and disaster recovery plans and backup systems to reduce the potentially adverse effect of such events, but our disaster recovery planning may not be sufficient and cannot account for all eventualities, and a catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations, and as a result, our future operating results could be materially adversely affected.

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Our business relies heavily on the use of commercial real estate data. A portion of this data is purchased or licensed from third-party providers for which there is no certainty of uninterrupted availability. A disruption of our ability to provide data to our professionals and/or our clients or an inadvertent exposure of proprietary data could damage our reputation and competitive position, and our operating results could be adversely affected.

Security breaches and other disruptions of our information and technology networks, as well as that of third-party vendors, could compromise our information and intellectual property and expose us to liability, reputational harm and significant remediation costs, which could cause material harm to our business and financial results. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and intellectual property, and that of our clients and personally identifiable information of our employees, contractors and vendors, in our data centers, networks and third-party cloud hosting providers. The secure processing, maintenance and transmission of this information are critical to our operations. Although we and our vendors continue to implement new security measures and regularly conduct employee training, our information technology and infrastructure may nevertheless be vulnerable to cyberattacks by third parties or breached due to employee error, malfeasance or other disruptions. An increasing number of companies that rely on information and technology networks have disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their websites or infrastructure. The techniques used to obtain unauthorized access, disable, or degrade service, or sabotage systems, change frequently, may be difficult to detect, and often are not recognized until launched against a target. To date, we have not yet experienced any cybersecurity breaches that have been material, either individually or in the aggregate. However, there can be no assurance that we will be able to prevent any material events from occurring in the future.

We are subject to numerous laws and regulations designed to protect sensitive information, such as the European Union’s General Data Protection Regulation, China’s Cyber Security Laws, various U.S. federal and state laws governing the protection of health or other personally identifiable information, including the California Consumer Privacy Act, and data privacy and cybersecurity laws in other regions. These laws and regulations are increasing in complexity and number, change frequently and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us.

Legal and Regulatory Related Risks

We are subject to various litigation and regulatory risks and may face financial liabilities and/or damage to our reputation as a result of litigation or regulatory proceedings.

Our businesses are exposed to various litigation and regulatory risks, especially within our valuations business. Although we maintain insurance coverage for most of this risk, insurance coverage is unavailable at commercially reasonable pricing for certain types of exposures. Additionally, our insurance policies may not cover us in the event of grossly negligent or intentionally wrongful conduct. Accordingly, an adverse result in a litigation against us, or a lawsuit that results in a substantial

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legal liability for us (and particularly a lawsuit that is not insured), could have a disproportionate and material adverse effect on our business, financial condition and results of operations. Furthermore, an adverse result in regulatory proceedings, if applicable, could result in fines or other liabilities or adversely impact our operations. In addition, we depend on our business relationships and our reputation for high-caliber professional services to attract and retain clients. As a result, allegations against us, or the announcement of a regulatory investigation involving us, irrespective of the ultimate outcome of that allegation or investigation, may harm our professional reputation and as such materially damage our business and its prospects.

Our businesses, financial condition, results of operations and prospects could be adversely affected by new laws or regulations or by changes in existing laws or regulations or the application thereof. If we fail to comply with laws and regulations applicable to us, or make incorrect determinations in complex tax regimes, we may incur ~~significant~~material financial penalties.

We are subject to numerous federal, state, local and non-U.S. laws and regulations specific to the services we perform in our business. Brokerage of real estate sales and leasing transactions and the provision of property management and valuation services require us and our employees to maintain applicable licenses in each U.S. state and certain non-U.S. jurisdictions in which we perform these services. If we and our employees fail to maintain our licenses or conduct these activities without a license, or violate any of the regulations covering our licenses, we may be required to pay fines (including treble damages in certain states) or return commissions received or have our licenses suspended or revoked. A number of our services, including the services provided by our indirect wholly-owned subsidiaries, CBRE Capital Markets and CBRE Global Investors, are subject to regulation by the SEC, Financial Industry Regulatory Authority ~~or FINRA,~~(FINRA), or other self-regulatory organizations and state securities regulators and compliance failures or regulatory action could adversely affect our business. We could be subject to

disciplinary or other actions in the future due to claimed noncompliance with these regulations, which could have a material adverse effect on our operations and profitability.

We are also subject to laws of broader applicability, such as tax, securities, environmental, employment laws and anti-bribery, anti-money laundering and corruption laws, including the Fair Labor Standards Act, occupational health and safety regulations, U.S. state wage-and-hour laws, the U.S. FCPA and the U.K. Bribery Act. Failure to comply with these requirements could result in the imposition of significant fines by governmental authorities, awards of damages to private litigants and significant amounts paid in legal fees or settlements of these matters.

As the size and scope of our business has increased significantly, ~~both the difficulty of ensuring~~ compliance with numerous licensing and other regulatory requirements and the possible loss resulting from non-compliance have both increased. The global economic crisis resulted in increased government and legislative activity and we expect that we will continue to see the introduction of new legislation and additional changes to rules and regulations in the future. New or revised legislation or regulations applicable to our business, both within and outside of the ~~United States,~~U.S., as well as changes in administrations or enforcement priorities may have an adverse effect on our business, including increasing the costs of regulatory compliance or preventing us from providing certain types of services in certain jurisdictions or in connection with certain transactions or clients. We are unable to predict how any of these new laws, rules, regulations and proposals will be implemented or in what form, or whether any additional or similar changes to laws or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our businesses, financial condition, results of operations and prospects.

We also operate in many jurisdictions with complex and varied tax regimes and are subject to different forms of taxation resulting in a variable effective tax rate. In addition, from time to time we engage in transactions across different tax jurisdictions. Due to the different tax laws in the many jurisdictions where we operate, we are often required to make subjective determinations. The tax authorities in the various jurisdictions where we carry on business may not agree with the determinations that are made by us with respect to the application of tax law. Such disagreements could result in disputes and, ultimately, in the payment of additional funds to the government authorities in the jurisdictions where we carry on business, which could have an adverse effect on our results of operations. In addition, changes in tax rules or the outcome of tax assessments and audits could have an adverse effect on our results in any particular quarter.

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We may be subject to environmental liability as a result of our role as a property or facility manager or developer of real estate.

Various laws and regulations impose liability on real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at a property. In our role as a property or facility manager or developer, we could be held liable as an operator for such costs. This liability may be imposed without regard to the legality of the original actions and without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. If we fail to disclose environmental issues, we could also be liable to a buyer or lessee of a property. If we incur any such liability, our business could suffer significantly as it could be difficult for us to develop or sell such properties, or borrow funds using such properties as collateral. In the event of a substantial liability, our insurance coverage might be insufficient to pay the full damages, or the scope of available coverage may not cover certain of these liabilities. Additionally, liabilities incurred to comply with more stringent future environmental requirements could adversely affect any or all of our lines of business.

Risks Related to our Internal Controls and Accounting Policies

If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and our results of operations and stock price could be materially adversely affected.

The accuracy of our financial reporting is dependent on the effectiveness of our internal controls. We are required to provide a report from management to our stockholders on our internal control over financial reporting that includes an assessment of the effectiveness of these controls. As disclosed in Part II, Item 9A, during the fourth quarter of 2019, management identified several material weaknesses in internal control related to our Global Workplace Solutions segment in the Europe, Middle East & Africa region, or GWS EMEA. ~~Management concluded that during 2019, as GWS EMEA increased in complexity and grew in both size and scale, management did not prioritize an appropriate level~~Remediation of ~~oversight, a sufficient number of capable resources or training for control preparers and reviewers to address internal controls over financial reporting.~~these material weaknesses is ongoing. As a result, even though a material misstatement was not identified in the GWS EMEA financial statements, it was determined that there was a reasonable possibility that a material misstatement in the GWS EMEA financial statements would not have been prevented or detected on a timely basis and, therefore, management concluded that our internal control over financial reporting was not effective as of December 31, 2019. We are committed to remediating the GWS EMEA material weaknesses in a timely manner and have begun the process of executing remediation plans. These measures will result in additional administrative expenses related to enhanced training and hiring of additional personnel.2020. Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of these inherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud. If we are unable to remediate the material weaknesses in a timely manner, or are otherwise unable to maintain and execute adequate internal control over financial reporting or implement required new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, incur incremental compliance costs, fail to meet our public reporting requirements on a timely basis, be unable to properly report on our business and our results of operations, or be required to restate our financial statements, and our results of operations, our stock price and our ability to obtain new business could be materially adversely affected.

Our goodwill and other intangible assets could become impaired, which may require us to take ~~significant~~material non-cash charges against earnings.

Under current accounting guidelines, we must assess, at least annually and potentially more frequently, whether the value of our goodwill and other intangible assets has been impaired. Any impairment of goodwill or other intangible assets as a result of such analysis would result in a non-cash charge against earnings, and such charge could materially adversely affect our reported results of operations, stockholders’ equity and our stock price. A significant and sustained decline in our future cash flows, a significant adverse change in the economic environment, slower growth rates or if our stock price falls below our net book value per share for a sustained period, could result in the need to perform additional impairment analysis in future periods. If we were to conclude that a future write-down of goodwill or other intangible assets is necessary, then we would record such additional charges, which could materially adversely affect our results of operations.

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Cautionary Note on Forward-Looking Statements

This Annual Report ~~on Form 10-K includes~~contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ~~or the~~(the Securities ~~Act,~~Act) and Section 21E of ~~the Securities Exchange Act of 1934, as amended, or~~ the Exchange Act. The words “anticipate,” “believe,” “could,” “should,” “propose,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases are used in this Annual Report ~~on Form 10-K~~ to identify forward-looking statements. Except for historical information contained herein, the matters addressed in this Annual Report ~~on Form 10-K~~ are forward-looking statements. These statements relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies.

These forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These uncertainties and factors could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.

The following factors are among those, but are not only those, that may cause actual results to differ materially from the forward-looking statements:

•

~~disruptions in general economic, political and regulatory conditions, particularly in geographies or industry sectors where our business may be concentrated;~~

•

~~volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the United States;~~

•disruptions in general economic, political and regulatory conditions and significant public health events, particularly in geographies or industry sectors where our business may be concentrated;

poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate;

•

~~foreign currency fluctuations and changes in currency restrictions, trade sanctions and import-export and transfer pricing rules;~~

•volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the U.S.;

changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions;

•

~~our ability to compete globally, or in specific geographic markets or business segments that are material to us;~~

•poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate;

~~our ability to identify, acquire and integrate accretive businesses;~~

•

~~costs and potential future capital requirements relating to businesses we may acquire;~~

•foreign currency fluctuations and changes in currency restrictions, trade sanctions and import/export and transfer pricing rules;

~~integration challenges arising out of companies we may acquire;~~

•

~~our ability to retain and incentivize key personnel;~~

•disruptions to business, market and operational conditions related to the Covid-19 pandemic and the impact of government rules and regulations intended to mitigate the effects of this pandemic, including, without limitation, rules and regulations that impact us as a loan originator and servicer for U.S. GSEs;

~~our ability to manage organizational challenges associated with our size;~~

•

~~negative publicity or harm to our brand and reputation;~~

•our ability to compete globally, or in specific geographic markets or business segments that are material to us;

~~increases in unemployment and general slowdowns in commercial activity;~~

•

~~trends in pricing and risk assumption for commercial real estate services;~~

•our ability to identify, acquire and integrate accretive businesses;

~~the effect of significant changes in capitalization rates across different property types;~~

•

~~a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance;~~

•costs and potential future capital requirements relating to businesses we may acquire;

~~client actions to restrain project spending and reduce outsourced staffing levels;~~

•

~~declines in lending activity of U.S. Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market;~~

•integration challenges arising out of companies we may acquire;

~~our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry;~~

•

~~our ability to attract new user and investor clients;~~

•increases in unemployment and general slowdowns in commercial activity;

~~our ability to retain major clients and renew related contracts;~~

•

~~our ability to leverage our global services platform to maximize and sustain long-term cash flow;~~

•trends in pricing and risk assumption for commercial real estate services;

•

~~our ability to continue investing in our platform and client service offerings;~~

•the effect of significant changes in capitalization rates across different property types;

~~our ability to maintain expense discipline;~~

•

~~the emergence of disruptive business models and technologies;~~

•a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance;

the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so;

•

our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments;

•client actions to restrain project spending and reduce outsourced staffing levels;

our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade;

•

~~the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit;~~

•our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry;

~~variations in historically customary seasonal patterns that cause our business not to perform as expected;~~

•

~~litigation and its financial and reputational risks to us;~~

•our ability to attract new user and investor clients;

~~our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms;~~

•

~~liabilities under guarantees, or for construction defects, that we incur in our development services business;~~

•

~~our and our employees’ ability to execute on, and adapt to, information technology strategies and trends;~~

•

cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

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•our ability to retain major clients and renew related contracts;

our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries;

•

~~changes in applicable tax or accounting requirements;~~

•our ability to leverage our global services platform to maximize and sustain long-term cash flow;

~~any inability for us to implement and maintain effective internal controls over financial reporting;~~

•

~~the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; and~~

•our ability to continue investing in our platform and client service offerings;

the other factors described elsewhere in this Annual Report on Form 10-K, included under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies,” “Quantitative and Qualitative Disclosures About Market Risk” or as described in the other documents and reports we file with the SEC.

•our ability to maintain expense discipline;

•the emergence of disruptive business models and technologies;

•negative publicity or harm to our brand and reputation;

•the failure by third parties to comply with service level agreements or regulatory or legal requirements;

•the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so;

•our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments;

•the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit;

•declines in lending activity of U.S. GSEs, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market;

•changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions;

•litigation and its financial and reputational risks to us;

•our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms;

•our ability to retain and incentivize key personnel;

•our ability to manage organizational challenges associated with our size;

•liabilities under guarantees, or for construction defects, that we incur in our development services business;

•variations in historically customary seasonal patterns that cause our business not to perform as expected;

•our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade;

•our and our employees’ ability to execute on, and adapt to, information technology strategies and trends;

•cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

•our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries;

•changes in applicable tax or accounting requirements;

•any inability for us to implement and maintain effective internal controls over financial reporting;

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•the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; and

•the other factors described elsewhere in this Annual Report, included under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies,” “Quantitative and Qualitative Disclosures About Market Risk” or as described in the other documents and reports we file with the SEC.

Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC.

~~Item 1B.~~

~~Unresolved Staff Comments.~~

~~None.~~

~~Item 2.~~

~~Properties.~~

Investors and others should note that we routinely announce financial and other material information using our Investor Relations website (https://ir.cbre.com), SEC filings, press releases, public conference calls and webcasts. We use these channels of distribution to communicate with our investors and members of the public about our company, our services and other items of interest. Information contained on our website is not part of this Annual Report or our other filings with the SEC.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

As of December 31, ~~2019,~~2020, we occupied offices, excluding affiliates, in the following geographical regions:

Sales
Offices

Corporate
Offices

Total

Americas

255

3

258

Europe, Middle East and Africa (EMEA)

182

1

183

Asia Pacific

95

1

96

Total

532

5

537


	Sales Offices	Corporate Offices	Total
Americas	220	2	222
Europe, Middle East and Africa (EMEA)	181	1	182
Asia Pacific	93	1	94
Total	494	4	498

Some of our offices house employees from more than one of our business segments (i.e. an office might house employees from all three of our business segments). As such, we have provided the above office totals by geographic region rather than by business segment in order to avoid double counting or triple counting our offices.

~~In general, these leased offices are fully utilized.~~

We lease all of our office space and believe it is adequate for our current needs. The most significant terms of the leasing arrangements for our offices are the length of the lease and ~~the~~ rent. Our leases have terms varying in duration. The rent payable under our office leases varies significantly from location to location as a result of differences in prevailing commercial real estate rates in different geographic ~~locations.~~areas. Our management believes that no single office lease is material to our business, results of operations or financial condition. In addition, we believe there is adequate alternative office space available at acceptable rental rates to meet our needs, although adverse movements in rental rates in some markets may negatively affect our profits in those markets when we enter into new leases.

~~We do not own any of these offices.~~

~~Item 3.~~

~~Legal Proceedings.~~

Item 3. Legal Proceedings.

We are a party to a number of pending or threatened lawsuits arising out of, or incident to, our ordinary course of business. We believe that any losses in excess of the amounts accrued therefore as liabilities on our consolidated financial statements are unlikely to be significant, but litigation is inherently uncertain and there is the potential for a material adverse effect on our consolidated financial statements if one or more matters are resolved in a particular period in an amount materially in excess of what we anticipated.

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

~~Item 5.~~

~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.~~

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Stock Price Information

Our Class A common stock has traded on the ~~New York Stock Exchange~~NYSE under the symbol “CBRE” since March 19, 2018. Prior to that, from June 10, 2004 to March 18, 2018, our Class A common stock traded on the ~~New York Stock Exchange~~NYSE under the ~~“CBG” symbol.~~

symbol “CBG.”

As of February ~~14, 2020,~~18, 2021, there were 52 stockholders of record of our Class A common stock.

Dividend Policy

We have not declared or paid any cash dividends on any class of our common stock since our inception on February 20, 2001, and we do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain any future earnings to finance future growth and possibly reduce debt or repurchase shares of our common stock. Any future determination to pay cash dividends will be at the discretion of our board of directors and will depend on our financial condition, acquisition or other opportunities to invest capital, results of operations, capital requirements and other factors that the board of directors deems relevant.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

~~Open~~

There were no open market ~~share repurchase activity~~stock repurchases during the three months ended December 31, ~~2019 was as follows (dollars in thousands, except per share amounts):~~

Period

Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs

Approximate
Dollar Value
of Shares
That May
Yet Be
Purchased
Under the
Plans or
Programs (1)

October 1, 2019 - October 31, 2019

1,003,485

$
50.85

1,003,485

November 1, 2019 - November 30, 2019

—

$
—

—

December 1, 2019 - December 31, 2019

—

$
—

—

Total

1,003,485

$
50.85

1,003,485

$
400,000

~~(1)~~

In February 2019, our board of directors authorized a new program for the company to repurchase up to $300.0 million of our Class A common stock over three years, effective March 11, 2019. In both August and November 2019, our board of directors authorized an additional $100.0 million under our new program, bringing the total authorized amount under the new program to a total of $500.0 million. The remaining $400.0 million in the table represents the amount available to repurchase shares under the authorized repurchase program as of December 31, 2019.

2020. Our stock repurchase ~~programs do~~program does not obligate us to acquire any specific number of shares. Under ~~these programs,~~this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Our stock repurchases have been funded with cash on hand and we intend to continue funding future repurchases with existing cash. We may utilize our stock repurchase program to continue offsetting the impact of our stock-based compensation program and on a more opportunistic basis if we believe our stock presents a compelling investment compared to other discretionary uses. The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors.

As of December 31, 2020, we had $350.0 million of capacity remaining under our repurchase program.

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Equity Compensation Plan Information

The following table summarizes information about our equity compensation plans as of December 31, ~~2019.~~2020. All outstanding awards relate to our Class A common stock.

Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights

Weighted-average
Exercise Price of
Outstanding
Options, Warrants
and Rights

Number of
Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column ( a ))

( a )

( b )

( c )

Equity compensation plans approved by
security holders (1)

10,309,128

$
—

7,538,712

Equity compensation plans not approved
by security holders

—

—

—

Total

10,309,128

$
—

7,538,712

~~(1)~~

Consists of restricted stock units, or RSUs, issued under our 2019 Equity Incentive Plan, or the 2019 Plan, our 2017 Equity Incentive Plan, or the 2017 Plan, and our 2012 Equity Incentive Plan, or the 2012 Plan. Our 2012 Plan terminated in May 2017 in connection with the adoption of the 2017 Plan. ~~Our 2017 Plan terminated in May 2019 in connection with the adoption of the 2019 Plan.~~ ~~We cannot issue any further awards under both the 2017 Plan and the 2012 Plan.~~


	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights ( a )	Weighted-average Exercise Price of Outstanding Options, Warrants and Rights ( b )		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column ( a )) ( c )
Equity compensation plans approved by security holders (1)	8,947,330	$	—	6,265,195
Equity compensation plans not approved by security holders	—	—		—
Total	8,947,330	$	—	6,265,195

_______________

(1)Consists of restricted stock units (RSUs) issued under our 2019 Equity Incentive Plan (the 2019 Plan), our 2017 Equity Incentive Plan (the 2017 Plan) and our 2012 Equity Incentive Plan (the 2012 Plan). Our 2012 Plan terminated in May 2017 in connection with the adoption of the 2017 Plan. Our 2017 Plan terminated in May 2019 in connection with the adoption of the 2019 Plan. We cannot issue any further awards under both the 2012 Plan and the 2017 Plan.

In addition:

•

~~The figures in the foregoing table include:~~

~~6,209,669 RSUs that are performance vesting in nature, with the figures in the table reflecting the maximum number of RSUs that may be issued if all performance-based targets are satisfied and~~

o•The figures in the foregoing table include:

~~4,099,459 RSUs that are time vesting in nature.~~

◦5,297,733 RSUs that are performance vesting in nature, with the figures in the table reflecting the maximum number of RSUs that may be issued if all performance-based targets are satisfied and

◦3,649,597 RSUs that are time vesting in nature.

Stock Performance Graph

~~The following graph shows our cumulative total stockholder return for the period beginning December 31, 2014 and ending on December 31, 2019.~~

The graph ~~also shows~~below matches the 5 Year Cumulative Total Return of holders of CBRE Group, Inc.’s common stock with the cumulative total returns of the ~~Standard & Poor’s 500 Stock~~S&P-500 Index ~~or S&P 500 Index, in which we are included,~~ and ~~two industry peer groups.~~

The comparison below assumes $100 was invested on December 31, 2014 in our Class A common stock and in each of the indices shown and assumes that all dividends were reinvested. Our stock price performance shown in the following graph is not necessarily indicative of future stock price performance. The 2019 industrya customized peer group ~~is comprised~~ of nine companies that includes: JLL, a global commercial real estate services company publicly traded in the ~~United States,~~U.S., as well as the following companies that have significant commercial real estate or real estate capital markets businesses within the ~~United States~~U.S. or globally, that in each case are publicly traded in the ~~United States~~U.S. or abroad: Colliers International Group Inc. ~~(CIGI)~~, Cushman & Wakefield ~~Inc. (CWK) ,~~plc, ISS A/S, ~~(ISS),~~ Marcus & Millichap, Inc. ~~(MMI)~~, Newmark Group Inc. ~~(NMRK)~~, Savills plc, ~~(SVS.L, traded on the London Stock Exchange),~~ Sodexo S.A. ~~(SW.PA)~~, and Walker & Dunlop, Inc. ~~(WD).~~ These companies are or include divisions with business lines reasonably comparable to some or all of ours, and which represent our current primary competitors. ~~In 2019, we elected to remove HFF, L.P. from~~

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The graph assumes that the value of the investment in our common stock, in each index, and in the peer group ~~(given JLL acquired them)~~(including reinvestment of dividends) was $100 on December 31, 2015 and ~~replaced~~tracks it ~~with SW.PA.~~

through December 31, 2020. Our stock price performance shown in the graph below is not necessarily indicative of future stock price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

(1)

12/31/14

12/15

12/16

12/17

12/18

12/19

CBRE Group, Inc.

100.00

100.96

91.94

126.45

116.91

178.95

S&P 500

100.00

101.38

113.51

138.29

132.23

173.86

2018 Peer Group

100.00

120.09

97.31

133.11

105.56

137.39

2019 Peer Group

100.00

111.30

109.75

140.04

110.26

138.59

AMONG CBRE GROUP, INC., THE S&P 500 INDEX (2),

~~(1)~~AND PEER GROUP (3)

~~$100 invested on 12/31/13 in stock or index-including reinvestment of dividends.~~


	12/31/15		12/16		12/17		12/18		12/19		12/20
CBRE Group, Inc.	$	100.00	$	91.06	$	125.25	$	115.79	$	177.24	$	181.38
S&P 500	100.00		111.96		136.40		130.42		171.49		203.04
Peer Group	100.00		98.60		125.82		99.07		124.52		102.16

_______________

(1)$100 invested on December 31, 2015 in stock or index-including reinvestment of dividends. Fiscal year ending December 31.

(3)Peer group contains companies with the following ticker symbols: JLL, CIGI, CWK, ISS, MMI, NMRK, SVS.L (London), SW and WD.

This graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report ~~on Form 10-K~~ into any filing under the Securities Act or ~~under~~ the Exchange Act, except to the extent that we specifically incorporate this information by reference therein, and shall not otherwise be deemed filed under the Securities Act or ~~under~~ the Exchange Act.

~~Item 6.~~

~~Selected Financial Data.~~

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Item 6. Selected Financial Data.

The following table sets forth our selected historical consolidated financial information for each of the five years in the period ended December 31, ~~2019.~~2020. The ~~statement~~statements of operations, ~~data, the statement~~statements of cash flows ~~data~~ and ~~the~~ other data for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018 and the balance sheet data as of December 31, ~~2019~~2020 and ~~2018~~2019 were derived from our audited consolidated financial statements included elsewhere in this Annual ~~Report on Form 10-K (Annual Report).~~Report. The statement of operations, ~~data, the~~ statement of cash flows ~~data~~ and ~~the~~ other data for the years ended December 31, ~~2016~~2017 and ~~2015,~~2016, and the balance sheet data as of December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 were derived from our audited consolidated financial statements that are not included in this Annual Report.

The selected financial data presented below is not necessarily indicative of results of future operations and should be read in conjunction with our consolidated financial statements and the information described elsewhere in this Annual Report included under the ~~headings~~heading Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ~~included elsewhere in this Annual Report~~ (dollars in thousands, except share and per share data).

Year Ended December 31,

2019 (1)

2018

2017

2016

2015 (2)

STATEMENTS OF OPERATIONS DATA:

Revenue

$
23,894,091

$
21,340,088

$
18,628,787

$
17,369,108

$
10,855,810

Operating income

1,259,875

1,087,989

1,078,682

816,831

835,944

Interest expense, net of interest income

85,754

98,685

126,961

136,800

112,569

Write-off of financing costs on extinguished debt

2,608

27,982

—

—

2,685

Net income

1,291,450

1,065,948

703,576

585,170

558,877

Net income attributable to non-controlling interests

9,093

2,729

6,467

12,091

11,745

Net income attributable to CBRE Group, Inc.

1,282,357

1,063,219

697,109

573,079

547,132

Income per share attributable to CBRE Group, Inc. (3)

Basic income per share

$
3.82

$
3.13

$
2.06

$
1.71

$
1.64

Diluted income per share

3.77

3.10

2.05

1.69

1.63

Weighted average shares:

Basic

335,795,654

339,321,056

337,658,017

335,414,831

332,616,301

Diluted

340,522,871

343,122,741

340,783,556

338,424,563

336,414,856

STATEMENTS OF CASH FLOWS DATA (4):

																	Year Ended December 31,
																	2020		2019 (1)		2018 (2)		2017		2016
STATEMENTS OF OPERATIONS DATA:																STATEMENTS OF OPERATIONS DATA:
Revenue																Revenue	$	23,826,195	$	23,894,091	$	21,340,088	$	18,628,787	$	17,369,108
Operating income																Operating income	969,759		1,259,875		1,087,989		1,078,682		816,831
Interest expense, net of interest income																Interest expense, net of interest income	67,753		85,754		98,685		126,961		136,800
Write-off of financing costs on extinguished debt																Write-off of financing costs on extinguished debt	75,592		2,608		27,982		—		—
Net income																Net income	755,868		1,291,450		1,065,948		703,576		585,170
Net income attributable to non-controlling interests																Net income attributable to non-controlling interests	3,879		9,093		2,729		6,467		12,091
Net income attributable to CBRE Group, Inc.																Net income attributable to CBRE Group, Inc.	751,989		1,282,357		1,063,219		697,109		573,079
Income per share attributable to CBRE Group, Inc. (3)																Income per share attributable to CBRE Group, Inc. (3)
Basic income per share																Basic income per share	$	2.24	$	3.82	$	3.13	$	2.06	$	1.71
Diluted income per share																Diluted income per share	2.22		3.77		3.10		2.05		1.69
Weighted average shares:																Weighted average shares:
Basic																Basic	335,196,296		335,795,654		339,321,056		337,658,017		335,414,831
Diluted																Diluted	338,392,210		340,522,871		343,122,741		340,783,556		338,424,563

STATEMENTS OF CASH FLOWS DATA (4):																STATEMENTS OF CASH FLOWS DATA (4):
Net cash provided by operating activities	$	1,223,380		$	1,131,249		$	894,411		$	616,985		$	651,897		Net cash provided by operating activities	$	1,830,779	$	1,223,380	$	1,131,249	$	894,411	$	616,985
Net cash used in investing activities		(721,024	)		(560,684	)		(302,600	)		(150,524	)		(1,618,959	)	Net cash used in investing activities	(341,585)		(721,024)		(560,684)		(302,600)		(150,524)
Net cash (used in) provided by financing activities		(271,949	)		(506,600	)		(627,742	)		(220,677	)		789,548
Net cash used in financing activities																Net cash used in financing activities	(625,256)		(271,949)		(506,600)		(627,742)		(220,677)

OTHER DATA:																OTHER DATA:
Adjusted EBITDA (5)	$	2,063,783		$	1,905,168		$	1,716,774		$	1,562,347		$	1,412,724		Adjusted EBITDA (5)	$	1,892,385	$	2,063,783	$	1,905,168	$	1,716,774	$	1,562,347

BALANCE SHEET DATA:																BALANCE SHEET DATA:
Cash and cash equivalents	$	971,781		$	777,219		$	751,774		$	762,576		$	540,403		Cash and cash equivalents	$	1,896,188	$	971,781	$	777,219	$	751,774	$	762,576
Total assets		16,197,196			13,456,793			11,718,396			10,994,338			11,017,943		Total assets	18,039,143		16,197,196		13,456,793		11,718,396		10,994,338
Long-term debt, including current portion, net		1,763,059			1,770,406			1,999,611			2,548,137			2,679,539		Long-term debt, including current portion, net	1,381,716		1,763,059		1,770,406		1,999,611		2,548,137
Total liabilities		9,924,084			8,446,891			7,543,782			7,848,438			8,258,873		Total liabilities	10,533,483		9,924,084		8,446,891		7,543,782		7,848,438
Non-controlling interest subject to possible redemption - special purpose acquisition company (6)																Non-controlling interest subject to possible redemption - special purpose acquisition company (6)	385,573		—		—		—		—
Total CBRE Group, Inc. stockholders’ equity		6,232,693			4,938,797			4,114,496			3,103,142			2,712,652		Total CBRE Group, Inc. stockholders’ equity	7,078,326		6,232,693		4,938,797		4,114,496		3,103,142

_______________

Note: We have not declared any cash dividends on common stock for the periods shown.

~~(1)~~

We adopted new lease accounting guidance in the first quarter of 2019 using the optional transitional method. Accordingly, no adjustments were made to the financial statements presented for prior periods. As a result of the adoption of the leasing guidance, the consolidated balance sheet as of January 1, 2019 reflected $1.2 billion of additional lease liabilities, along with corresponding right-of-use assets of $1.0 billion, reflecting adjustments for items such as prepaid and deferred rent, unamortized initial direct costs, and unamortized lease incentive balances. The adoption of the leasing guidance did not have a material impact on our consolidated statement of operations. See Note 3 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(1)~~(2)~~

On September 1, 2015, CBRE, Inc., our wholly-owned subsidiary, closed on a Stock and Asset Purchase Agreement with Johnson Controls, Inc. (JCI) to acquire JCI’s Global Workplace Solutions (JCI-GWS) business (which we refer to as the GWS Acquisition). The results for the year ended December 31, 2015 include the operations of JCI-GWS from September 1, 2015, the date such business was acquired.

We ~~also~~adopted new lease accounting guidance effective January 1, 2019 using the optional transitional method. Accordingly, no adjustments were made to the financial statements presented for prior periods. As a result of the adoption of the leasing guidance, the consolidated balance sheet as of January 1, 2019 included $1.2 billion of additional lease liabilities, along with corresponding right-of-use assets of $1.0 billion, reflecting adjustments for items such

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as prepaid and deferred rent, unamortized initial direct costs, and unamortized lease incentive balances. The adoption of the leasing guidance did not have a material impact on our consolidated statement of operations. See Note 2 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(2)We adopted new revenue recognition guidance in 2018 and restated the 2017 and 2016 consolidated financial statements to conform with the new guidance. ~~Amounts~~See our Annual Report for the year ended December 31, ~~2015 have not been restated. See our~~ ~~Annual Report~~2018 filed with the SEC on ~~Form 10-K for the year ended December 31, 2018~~March 1, 2019 for additional information.

~~(3)~~

~~See Income Per Share information in Note 17 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.~~

~~(4)~~(3)See Income Per Share information in Note17of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

In the first quarter of 2018, we adopted Accounting Standards Updated (ASU) 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Certain reclassifications were made to the 2017 and 2016 statements of cash flows to conform with the 2018 presentation. Amounts for the year ended December 31, 2015 have not been reclassified.

~~(5)~~

Adjusted EBITDA is not a recognized measurement under accounting principles generally accepted in the United States, or GAAP. When analyzing our operating performance, investors should use this measure in addition to, and not as an alternative for, the most directly comparable financial measure calculated and presented in accordance with GAAP. We generally use this non-GAAP financial measure to evaluate operating performance and for other discretionary purposes. We believe this measure provides a more complete understanding of ongoing operations, enhances comparability of current results to prior periods and may be useful for investors to analyze our financial performance because it eliminates the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

(4)In the first quarter of 2018, we adopted Accounting Standards Update (ASU) 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Certain reclassifications were made to the 2017 and 2016 consolidated statements of cash flows to conform with the 2018 presentation.

(5)Adjusted EBITDA is not a recognized measurement under accounting principles generally accepted in the United States, (GAAP). When analyzing our operating performance, investors should use this measure in addition to, and not as an alternative for, the most directly comparable financial measure calculated and presented in accordance with GAAP. We generally use this non-GAAP financial measure to evaluate operating performance and for other discretionary purposes. We believe this measure provides a more complete understanding of ongoing operations, enhances comparability of current results to prior periods and may be useful for investors to analyze our financial performance because it eliminates the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

EBITDA represents earnings before ~~net~~depreciation and amortization, asset impairments, interest expense, net of interest income, write-off of financing costs on extinguished debt, and provision for income ~~taxes, depreciation and amortization and intangible asset impairments.~~taxes. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of ~~certain cash and non-cash items~~costs associated with transformation initiatives, costs associated with workforce optimization efforts, fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, ~~certain~~ carried interest incentive compensation expense (reversal) ~~expense~~ to align with the timing of associated revenue, costs associated with our reorganization, including cost-savings initiatives, costs incurred in connection with litigation settlement, a one-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired, and cost-elimination ~~expenses and other non-recurring costs.~~expenses. We believe that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income taxes and the accounting effects of capital spending.

Adjusted EBITDA is not intended to be a measure of free cash flow for our discretionary use because it does not consider certain cash requirements such as tax and debt service payments. This measure may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional ~~debt and making certain restricted payments.~~debt. We also use adjusted EBITDA as a significant component when measuring our operating performance under our employee incentive compensation programs.

See below for a reconciliation of adjusted EBITDA to net income attributable to CBRE Group, Inc.

(6)See Non-controlling interest subject to possible redemption - special purpose acquisition company in Note 2 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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Adjusted EBITDA is calculated as follows (dollars in thousands):

Year Ended December 31,

2019

2018

2017

2016

2015 (2)

Net income attributable to CBRE Group, Inc.

$
1,282,357

$
1,063,219

$
697,109

$
573,079

$
547,132

Add:

Depreciation and amortization

439,224

451,988

406,114

366,927

314,096

Intangible asset impairment

89,787

—

—

—

—

Interest expense, net of interest income

85,754

98,685

126,961

136,800

112,569

Write-off of financing costs on extinguished debt

2,608

27,982

—

—

2,685

Provision for income taxes

69,895

313,058

467,757

296,900

320,853

EBITDA

1,969,625

1,954,932

1,697,941

1,373,706

1,297,335

Adjustments:

Costs associated with our reorganization, including
   cost-savings initiatives (i)

49,565

37,925

—

—

—

Integration and other costs related to acquisitions

15,292

9,124

27,351

125,743

48,865

Carried interest incentive compensation expense (reversal)
   to align with the timing of associated revenue

13,101

(5,261
)

(8,518
)

(15,558
)

26,085

Impact of fair value adjustments to real estate assets acquired
   in the Telford Acquisition (purchase accounting) that were
   sold in period

9,301

—

—

—

—

Costs incurred related to legal entity restructuring

6,899

—

—

—

—

Costs incurred in connection with litigation settlement

—

8,868

—

—

—

One-time gain associated with remeasuring an investment in
   an unconsolidated subsidiary to fair value as of the date the
   remaining controlling interest was acquired

—

(100,420
)

—

—

—

Cost-elimination expenses

—

—

—

78,456

40,439

Adjusted EBITDA

$
2,063,783

$
1,905,168

$
1,716,774

$
1,562,347

$
1,412,724

~~(i)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.~~

~~Item 7.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~


	Year Ended December 31,
	2020		2019		2018		2017		2016
Net income attributable to CBRE Group, Inc.	$	751,989	$	1,282,357	$	1,063,219	$	697,109	$	573,079
Add:
Depreciation and amortization	501,728		439,224		451,988		406,114		366,927
Asset impairments	88,676		89,787		—		—		—
Interest expense, net of interest income	67,753		85,754		98,685		126,961		136,800
Write-off of financing costs on extinguished debt	75,592		2,608		27,982		—		—
Provision for income taxes	214,101		69,895		313,058		467,757		296,900
EBITDA	1,699,839		1,969,625		1,954,932		1,697,941		1,373,706
Adjustments:
Costs associated with transformation initiatives (1)	155,148		—		—		—		—
Costs associated with workforce optimization efforts (2)	37,594		—		—		—		—
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period	11,598		9,301		—		—		—
Costs incurred related to legal entity restructuring	9,362		6,899		—		—		—
Integration and other costs related to acquisitions	1,756		15,292		9,124		27,351		125,743
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue	(22,912)		13,101		(5,261)		(8,518)		(15,558)
Costs associated with our reorganization, including cost-savings initiatives (3)	—		49,565		37,925		—		—
Costs incurred in connection with litigation settlement	—		—		8,868		—		—
One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired	—		—		(100,420)		—		—
Cost-elimination expenses	—		—		—		—		78,456
Adjusted EBITDA	$	1,892,385	$	2,063,783	$	1,905,168	$	1,716,774	$	1,562,347

_______________

(1)Commencing during the third quarter of 2020, management began the implementation of certain transformation initiatives to enable the company to reduce costs, streamline operations and support future growth. The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees. See Note 21 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(2)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $7.4 million was included within the “Cost of revenue” line item and $30.2 million was included in the “Operating, administrative and other” line item in the accompanying consolidated statement of operations for the year ended December 31, 2020.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. Discussion regarding our financial condition and results of operations for the year ended December 31, 2018 and comparisons between the years ended December 31, 2019 and 2018 is included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report filed with the SEC on March 2, 2020.

Overview

We are the world’s largest commercial real estate services and investment firm, based on ~~2019~~2020 revenue, with leading global market positions in our leasing, property sales, occupier outsourcing and valuation businesses. As of December 31, ~~2019, we operated in more than 530 offices worldwide and have~~2020, the company has more than 100,000 employees ~~excluding independent affiliates.~~

(excluding affiliates) serving clients in more than 100 countries.

Our business is focused on providing services to real estate ~~occupiers~~investors and ~~investors.~~occupiers. For investors, we provide capital markets (property sales, mortgage origination, sales and servicing), property leasing, investment management, property management, valuation and development services, among others. For occupiers, we provide facilities management, project management, transaction (both property sales and leasing) and consulting services, among others. For investors, we provide capital markets (property sales, mortgage origination, sales and servicing), leasing, investment management, property management, valuation and development services, among others. We provide services under the following brand names: “CBRE” (real estate advisory and outsourcing services); “CBRE Global Investors” (investment management); “Trammell Crow Company” (U.S. development); “Telford Homes” (U.K. development) and “Hana” (flexible-space solutions).

In 2020, CBRE sponsored a SPAC, CBRE Acquisition Holdings, which has the sole purpose of acquiring a privately held company with significant growth potential and to create value by supporting the company in the public markets. The company that it acquires is expected to operate in an industry that will benefit from the experience, expertise and operating skills of CBRE. CBRE Acquisition Holdings trades on the NYSE under the symbols “CBAH,” “CBAH.U,” and “CBAH.W.”

Our revenue mix has shifted ~~in recent years~~ toward more ~~contractual~~stable revenue ~~as occupiers~~sources, particularly occupier outsourcing, and ~~investors increasingly prefer to purchase integrated, account-based services from firms that meet~~our dependence on highly cyclical property sales and lease transaction revenue has declined markedly over the ~~full spectrum of their needs nationally and globally.~~past decade. We believe we are well-positioned to capture a substantial and growing share of ~~growing~~ market ~~opportunities.~~opportunities at a time when investors and occupiers increasingly prefer to purchase integrated, account-based services on a national and global basis. We generate revenue from both management fees (large multi-year portfolio and per-project contracts) and commissions on transactions. Our contractual, fee-for-services businesses generally involve occupier outsourcing (including facilities and project management), property management, investment management, appraisal/valuation and loan servicing.

In ~~addition, our leasing services business line is largely recurring in nature over time.~~

~~In 2019,~~2020, we generated revenue from a highly diversified base of clients, including more than 90 of the Fortune 100 companies. We have been an S&P500 company since 2006 and in ~~2019~~2020 we were ranked ~~#146~~#128 on the Fortune 500. We have been voted the most recognized commercial real estate brand in the Lipsey Company survey for 1920 years in a row (including ~~2020)~~2021). We have also been rated a World’s Most Ethical Company by the EthisphereInstitute for ~~seven~~eight consecutive years (including ~~2020)~~2021), and are included in both the Dow Jones World Sustainability Index and the Bloomberg ~~Gender Equality Index.~~

Gender-Equality Index for two years in a row.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with ~~accounting principles generally accepted in the United States, or~~ GAAP, which require us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We believe that the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements.

Revenue Recognition

To recognize revenue in a transaction with a customer, we evaluate the five steps of the Accounting Standards Codification (ASC) Topic 606 revenue recognition framework: (1) identify the contract; (2) identify the performance obligations(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation(s) and (5) recognize revenue when (or as) the performance obligations are satisfied.

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Our revenue recognition policies are consistent with this five step framework. Understanding the complex terms of agreements and determining the appropriate time, amount, and method to recognize revenue for each transaction requires significant judgement. These significant judgements include: (i) determining what point in time or what measure of progress depicts the transfer of control to the customer; (ii) applying the series guidance to certain performance obligations satisfied over time; (iii) estimating how and when contingencies, or other forms of variable consideration, will impact the timing and amount of recognition of revenue and (iv) determining whether we control third party services before they are transferred to the customer in order to appropriately recognize the

associated fees on either a gross or net basis. The timing and amount of revenue recognition in a period could vary if different judgments were made. Our revenues subject to the most judgment are brokerage commission revenue, incentive-based management fees, development fees and third party fees associated with our occupier outsourcing and property management services. For a detailed discussion of our revenue recognition policies, see the Revenue Recognition section within Note 2 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual ~~Report on Form 10-K, or this Annual~~ Report.

Goodwill and Other Intangible Assets

Assumptions must often be made in determining fair values, particularly where observable market values do not exist. Assumptions may include discount rates, growth rates, cost of capital, royalty rates, tax rates and remaining useful lives. These assumptions can have a significant impact on the value of identifiable assets and accordingly can impact the value of goodwill recorded. Different assumptions could result in different values being attributed to assets and liabilities. Since these values impact the amount of annual depreciation and amortization expense, different assumptions could also impact our statement of operations and could impact the results of future asset impairment reviews.

We are required to test goodwill and other intangible assets deemed to have indefinite useful lives for impairment at least annually, or more often if circumstances or events indicate a change in the impairment status, in accordance with ~~the~~Financial Accounting Standards Board (FASB) ASC Topic 350, “Intangibles – Goodwill and Other” ~~Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC,~~ (Topic 350). We have the option to perform a qualitative assessment with respect to any of our reporting units to determine whether a quantitative impairment test is needed. We are permitted to assess based on qualitative factors whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the quantitative goodwill impairment test. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would conduct a quantitative goodwill impairment test. If not, we do not need to apply the quantitative test. The qualitative test is elective and we can go directly to the quantitative test rather than making a more-likely-than-not assessment based on an evaluation of qualitative factors. When performing a quantitative test, we use a discounted cash flow approach to estimate the fair value of our reporting units. Management’s judgment is required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margin percentages, discount rates, etc. Due to the many variables inherent in the estimation of a business’s fair value and the relative size of our goodwill, if different assumptions and estimates were used, it could have an adverse effect on our impairment analysis.

For additional information on goodwill and intangible asset impairment testing, see Notes 2 and 9 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with the “Accounting for Income Taxes,” Topic of the FASB ASC (Topic 740). Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Accounting for tax positions requires judgments, including estimating reserves for potential uncertainties. We also assess our ability to utilize tax attributes, including those in the form of carryforwards, for which the benefits have already been reflected in the financial statements. We do not record valuation allowances for deferred tax assets that we believe will be realized in future periods. While we believe the resulting tax balances as of December 31, ~~2019~~2020 and ~~2018~~2019 are appropriately accounted for in accordance with Topic 740, as applicable, the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material.

On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was signed into law making significant changes to the Internal Revenue Code, including a decrease to the U.S. corporate tax rate from 35% to 21% and a one-time transition tax (i.e. toll charge or, the Transition Tax) on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act.

On March 18, 2020, the Families First Coronavirus Response Act (FFCR Act), and on March 27, 2020, the CARES Act were each enacted in response to the Covid-19 pandemic. The FFCR Act and the CARES Act contain numerous tax provisions, such as net operating loss carry-back periods, alternative minimum tax credit refunds, deferral of employer payroll taxes deferring payroll tax payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property. This legislation currently has no material impact to income tax expense on the company’s financial statements.

Our future effective tax rate could be adversely affected by earnings being lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates, changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws, regulations, or accounting principles, as well as certain discrete items.

See Note 15 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for further information regarding income taxes.

New Accounting Pronouncements

See New Accounting Pronouncements discussion within Note 3 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Seasonality

In a typical year, a significant portion of our revenue is seasonal, which an investor should keep in mind when comparing our financial condition and results of operations on a quarter-by-quarter basis. Historically, our revenue, operating income, net income and cash flow from operating activities ~~tend~~have tended to be lowest in the first quarter and highest in the fourth quarter of each year. Revenue, earnings and cash flow have generally been concentrated in the fourth calendar quarter due to the focus on completing sales, financing and leasing transactions prior to year-end.

The severe and ongoing impact of the Covid-19 pandemic may cause seasonality to deviate from historical patterns.

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Inflation

Our commissions and other variable costs related to revenue are primarily affected by commercial real estate market supply and demand, which may be affected by inflation. However, to date, we believe that general inflation has not had a material impact upon our operations.

Items Affecting Comparability

When you read our financial statements and the information included in this Annual Report, you should consider that we have experienced, and continue to experience, several material trends and uncertainties (particularly those caused or exacerbated by Covid-19) that have affected our financial condition and results of operations that make it challenging to predict our future performance based on our historical results. We believe that the following material trends and uncertainties are crucial to an understanding of the variability in our historical earnings and cash flows and the potential for continued variability in the future.

Macroeconomic Conditions

Economic trends and government policies affect global and regional commercial real estate markets as well as our operations directly. These ~~include:~~include overall economic activity and employment ~~growth;~~growth, with specific sensitivity to growth in office-based employment; interest rate levels and changes in interest rates; the cost and availability of credit; and the impact of tax and regulatory policies. Periods of economic weakness or recession, significantly rising interest rates, fiscal uncertainty, declining employment levels, decreasing demand for commercial real estate, falling real estate values, disruption to the global capital or credit markets, or the public perception that any of these events may occur, will negatively affect the performance of our business.

Compensation is our largest expense and our sales and leasing professionals generally are paid on a commission and/or bonus basis that correlates with their revenue production. As a result, the negative ~~effect~~effects on our operating margins of difficult market conditions, ~~on our operating margins~~such as we are currently experiencing with the Covid-19 pandemic, is partially mitigated by the inherent variability of our compensation cost structure. In addition, when negative economic conditions have been particularly severe, like during the current Covid-19 pandemic, we have moved decisively to lower operating expenses to improve financial performance, and then have restored certain expenses as economic conditions improved. Additionally, our contractual ~~revenues have continued to increase~~revenue has increased primarily as a result of growth in our outsourcing business, and we believe this contractual revenue should help offset the negative impacts that macroeconomic deterioration could have on other parts of our business. Nevertheless, adverse global and regional economic trends could pose significant risks to the performance of our consolidated operations and financial condition.

~~Commercial~~

From 2010 to early 2020, commercial real estate markets ~~in the United States have~~had generally been ~~marked~~characterized by increased demand for space, falling vacancies, ~~and~~ higher rents ~~since 2010. During this time, healthy U.S.~~and strong capital flows, leading to solid property sales and leasing activity. This healthy backdrop changed abruptly in the first quarter of 2020 with the emergence of the Covid-19 pandemic and resultant sharp contraction of economic activity across much of the world. Since then, there has been sustained by gradually improving market fundamentals, including higher occupancy rates and rents, broad, low-cost credit availability and increased institutional capital allocations to commercial real estate. In 2019, U.S. sales market activity improved from 2018 levels, as significant capital continued to be targeted ata severe impact on commercial real estate markets, as many property owners and ~~relatively low-cost financing remained plentiful.~~occupiers have put transactions on hold and withdrawn existing mandates, sharply reducing sales and leasing volumes. We expect to see the highly challenging operating environment continue, as Covid-19 caseloads remain elevated across our major markets, business travel and face-to-face business dealings are limited and the overwhelming majority of workers remain out of their offices. The ~~market for commercial~~recovery of real estate ~~leasing was solid in 2019, though leasing market volumes weakened somewhat in~~markets around the ~~latter stages~~world remain uncertain as of the ~~year.~~

~~In Europe, leasing activity was relatively stable~~date of this report.

Covid-19 is putting downward pressure on parts of our business and creating larger opportunities in ~~2019; sales market volumes were soft for much~~other parts. The severe economic effects of the ~~year, but rebounded strongly in the fourth quarter. The United Kingdom’s economy and~~pandemic continued to weigh most heavily on higher-margin property market were generally solid from the June 2016 referendum to leave the European Union through 2018. However, in 2019, continued uncertainty throughout the year about the date and the terms on which the United Kingdom would leave the European Union led to lower lease and sales volumes. The December 2019 United Kingdom general election and exit from the European Union on January 31, 2020 brought some clarity and a return of investor confidence, but uncertainty remains over the United Kingdom’s long-term economic and trade relationship with the European Union.

In Asia Pacific, leasing activity declined significantly in 2019 amid rising geopolitical uncertainty and slowing regional economies. However, investment activity was more resilient, declining only modestly from 2018 levels. Asia Pacific investors continue to be a significant source of real estate investment capitalrevenue in the ~~region~~Advisory Services segment. However, global industrial leasing revenue, fueled by e-commerce, grew strongly during the fourth quarter, reflecting the resiliency of this asset type. Also, during the fourth quarter, we saw improvement in sales activity in the U.S. and ~~globally.~~

~~Real estate investment management~~certain North Asia markets, but transaction volumes there and property development markets have been generally favorable with abundant debt and equity capital flows into commercial real estate. Actively managed public real estate equity funds and programs have been pressured by a shiftelsewhere in ~~investor preferences from active to passive portfolio strategies.~~

the world remain well below pre-pandemic levels.

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The future performance of our global real estate services and investment businesses depends on a recovery of global market conditions, including restored business and consumer confidence, sustained economic growth, solid and ~~solid~~consistent job ~~creation;~~creation, stable, functioning global credit ~~markets;~~markets and ~~positive business and investor sentiment.~~

a receding of the Covid-19 pandemic.

Effects of Acquisitions

We have historically ~~have~~ made significant use of strategic acquisitions to add and enhance service ~~competencies~~capabilities around the world. On ~~October 1, 2019,~~Most recently, we acquired Telford Homes Plc (Telford) ~~to expand our real estate development business outside the United States (Telford Acquisition). A~~, a leading developer of multifamily residential properties in the London area, in October 2019. Telford, which is reported in our Real Estate Investments ~~segment. Telford was acquired~~segment, expanded our real estate development business outside the U.S. for ~~£267.1 million, or $328.5 million along with~~ the assumption of $110.7 million (£90.0 million) of debt and the acquisition of cash from Telford of $7.9 million (£6.4 million). The Telford Acquisition was funded with borrowings under our revolving credit facility.first time.

OnIn June ~~12,~~ 2018, we acquired FacilitySource ~~through a stock purchase and merger agreement with its stockholders, including FacilitySource~~ Holdings, LLC ~~WP X Finance, LP and Warburg Pincus X Partners, LP (FacilitySource Acquisition). FacilitySource, which is reported in our Global Workplace Solutions segment, was acquired~~(FacilitySource) to help us build a tech-enabled supply chain capability for the occupier outsourcing industry, which would drive meaningfully differentiated outcomes for leading occupiers of real estate. ~~The net purchase price was approximately $266.5 million~~FacilitySource results are reflected in ~~cash, with $263.0 million paid in 2018 and $3.5 million paid in 2019. We financed the transaction with a combination of cash on hand and borrowings under~~ our ~~revolving credit facility.~~Global Workplace Solutions segment.

Strategic in-fill acquisitions have also played a key role in strengthening our service offerings. The companies we acquired have generally been regional or specialty firms that complement our existing platform, or independent affiliates, in which, in some cases, we held a small equity interest. In early 2021, we acquired a construction and project management firm based in Southern California.

During 2020, we ~~acquired~~completed six in-fill acquisitions: leading local facilities management firms in Spain and Italy, ~~and~~ a U.S. firm that helps companies reduce telecommunications ~~costs.~~

costs, a technology-focused project management firm based in Florida, a firm specializing in performing real estate valuations in South Korea, and a facilities management and technical maintenance firm in Australia. During 2019, in addition to the Telford strategic acquisition, we completed eight in-fill acquisitions: a leading advanced analytics software company based in the ~~United Kingdom,~~U.K., a commercial and residential real estate appraisal firm ~~headquartered~~ in Florida, our former affiliate in Omaha, a project management firm in Australia, a valuation and consulting business in Switzerland, a leading project management firm in Israel, a full-service real estate firm in San Antonio with a focus on retail, office, medical office and land, and a debt-focused real estate investment management business in the ~~United Kingdom.~~ U.K.

During 2018, we completed six in-fill acquisitions, the largest of which was the purchase of the remaining 50% equity interest in our longstanding New England joint venture. We also acquired a retail leasing and property management firm in Australia, two firms in Israel (our former affiliate and a majority interest in a local facilities management provider), a commercial real estate services provider in San Antonio, and a provider of real estate and facilities consulting services to healthcare companies across the United States.

We believe strategic acquisitions can significantly decrease the cost, time and resources necessary to attain a meaningful competitive position – or expand our capabilities – within targeted markets or business lines. In general, however, most acquisitions will initially have an adverse impact on our operating income and net income as a result of transaction-related expenditures, including severance, lease termination, transaction and deferred financing costs, as well as costs and charges associated with integrating the acquired business and integrating its financial and accounting systems into our own.

Our acquisition ~~agreements~~structures often ~~require us to pay~~include deferred and/or contingent purchase ~~price payments,~~consideration in future periods that are subject to ~~the acquired company achieving certain performance metrics, and/or~~ the passage of time ~~as well as~~or achievement of certain performance metrics and other conditions. As of December 31, ~~2019,~~2020, we have accrued deferred purchase consideration totaling ~~$111.7~~$82.5 million, which is included in ~~accounts~~“Accounts payable and accrued ~~expenses~~expenses” and in ~~other~~“Other long-term ~~liabilities~~liabilities” in the accompanying consolidated balance sheets set forth in Item 8 of this Annual Report.

International Operations

We ~~continue to monitor developments related to the United Kingdom’s withdrawal from the European Union~~conduct a significant portion of our business and ~~the uncertainty~~employ a substantial number of the long-term economic and trade relationship between the United Kingdom and European Union. The continued uncertainty has the potential to impact our businesses in the United Kingdom and the rest of Europe, particularly sales and leasing activity in the United Kingdom. In addition, any associated currency volatility could impact our results of operations. We are also monitoring the impact of a coronavirus that emerged in Wuhan, China in December 2019 on business conditions and operations in China and other regions in which we operate.

~~As we continue to increase our international operations through either acquisitions or organic growth, fluctuations in the value~~people outside of the U.S. ~~dollar relative~~and, as a result, we are subject to ~~the other currencies in which we may generate earnings could adversely affect our~~risks associated with doing business ~~financial condition and operating results.~~globally. Our Real Estate Investments business has a significant amount of euro-denominated assets under management, ~~or AUM,~~ as well as associated revenue and earnings in Europe. In addition, our Global Workplace Solutions business also has a significant amount of its revenue and earnings denominated in foreign currencies, such as the euro and ~~the~~ British pound sterling. Fluctuations in foreign currency exchange rates have resulted and may continue to result in corresponding fluctuations in our AUM, revenue and earnings.

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We are closely monitoring the impact of the Covid-19 pandemic on business conditions across all regions worldwide. Covid-19 has significantly impacted our operations and has the potential to further constrain our business activity. See “The Covid-19 pandemic could have a material adverse effect on our business, results of operations, cash flows and financial condition” in Part I, Item 1A. “Risk Factors” for additional risks related to the Covid-19 pandemic.

Our businesses could also suffer from political or economic disruptions (or the perception that such disruptions may occur) that affect interest rates or liquidity or create financial, market or regulatory uncertainty. For example, we are continuing to monitor the trade and economic effects of the U.K.’s withdrawal from the European Union (Brexit), particularly its impact on sales and office and retail leasing activity in the U.K. Any currency volatility associated with the Covid-19 pandemic, Brexit or other economic dislocations could impact our results of operations.

During the year ended December 31, ~~2019,~~2020, approximately ~~42%~~44% of our ~~business~~revenue was transacted in non-U.S. dollar currencies, the majority of which included the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, Chinese yuan, Czech koruna, Danish krone, euro, Hong Kong dollar, Indian rupee, Israeli shekel, Japanese yen, Korean won, Mexican peso, New Zealand dollar, Polish zloty, Singapore dollar, Swedish krona, Swiss franc and Thai baht.foreign currencies. The following table sets forth our revenue derived from our most significant currencies (U.S. dollars in thousands):

Year Ended December 31,

2019

2018

2017

United States dollar

$
13,852,018

58.0
%

$
12,264,188

57.5
%

$
10,954,608

58.8
%
British pound sterling

2,972,704

12.5
%

2,586,890

12.1
%

2,242,973

12.1
%
euro

2,492,952

10.4
%

2,329,832

10.9
%

1,740,764

9.3
%
Canadian dollar

774,825

3.2
%

717,692

3.3
%

617,923

3.3
%
Indian rupee

503,630

2.1
%

418,390

2.0
%

370,705

2.0
%
Australian dollar

453,847

1.9
%

482,749

2.3
%

467,623

2.5
%
Chinese yuan

349,762

1.5
%

303,600

1.4
%

244,717

1.3
%
Japanese yen

325,558

1.4
%

277,636

1.3
%

269,835

1.4
%
Singapore dollar

300,116

1.3
%

268,193

1.3
%

256,319

1.4
%
Brazilian real

197,981

0.8
%

174,728

0.8
%

198,270

1.1
%
Swiss franc

194,354

0.8
%

182,641

0.9
%

153,078

0.8
%
Hong Kong dollar

167,463

0.7
%

169,449

0.8
%

148,174

0.8
%
Mexican peso

135,279

0.6
%

135,187

0.6
%

115,812

0.6
%
Israeli shekel

125,402

0.5
%

57,779

0.3
%

22,628

0.1
%
Polish zloty

117,697

0.5
%

90,343

0.4
%

71,849

0.4
%
Thai baht

82,252

0.3
%

79,373

0.4
%

65,553

0.4
%
Danish krone

80,026

0.3
%

81,804

0.4
%

82,061

0.4
%
New Zealand dollar

71,192

0.3
%

63,251

0.3
%

51,353

0.3
%
Swedish krona

70,101

0.3
%

70,471

0.3
%

71,849

0.4
%
Korean won

62,572

0.3
%

59,912

0.3
%

48,475

0.3
%
Czech koruna

55,984

0.2
%

54,986

0.3
%

42,008

0.2
%
Other currencies

508,376

2.1
%

470,994

2.1
%

392,210

2.1
%
Total revenue

$
23,894,091

100.0
%

$
21,340,088

100.0
%

$
18,628,787

100.0
%


	Year Ended December 31,
	2020				2019
United States dollar	$	13,472,013	56.5	%	$	13,852,018	58.0	%
British pound sterling	3,083,810		13.0	%	2,972,704		12.5	%
euro	2,612,421		11.0	%	2,492,952		10.4	%
Canadian dollar	788,497		3.3	%	774,825		3.2	%
Indian rupee	469,977		2.0	%	503,630		2.1	%
Australian dollar	417,060		1.8	%	453,847		1.9	%
Chinese yuan	387,099		1.6	%	349,762		1.5	%
Japanese yen	341,447		1.4	%	325,558		1.4	%
Swiss franc	334,558		1.4	%	194,354		0.8	%
Singapore dollar	259,721		1.1	%	300,116		1.3	%
Other currencies (1)	1,659,592		6.9	%	1,674,325		6.9	%
Total revenue	$	23,826,195	100.0	%	$	23,894,091	100.0	%

_______________

(1)Approximately 40 currencies comprise 6.9% of our revenue for the years ended December 31, 2020 and 2019.

Although we operate globally, we report our results in U.S. dollars. As a result, the strengthening or weakening of the U.S. dollar may positively or negatively impact our reported results. For example, we estimate that had the British pound sterling-to-U.S. dollar exchange rates been 10% higher during the year ended December 31, ~~2019,~~2020, the net impact would have been ~~an increase~~a decrease in pre-tax income of ~~$3.6~~$3.1 million. Had the euro-to-U.S. dollar exchange rates been 10% higher during the year ended December 31, ~~2019,~~2020, the net impact would have been an increase in pre-tax income of ~~$9.5~~$9.3 million. These hypothetical calculations estimate the impact of translating results into U.S. dollars and do not include an estimate of the impact that a 10% change in the U.S. dollar against other currencies would have had on our foreign operations.

Fluctuations in foreign currency exchange rates may result in corresponding fluctuations in revenue and earnings as well as the assets under management for our investment management business, which could have a material adverse effect on our business, financial condition and operating results. Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. Our international operations also are subject to, among other things, political instability and changing regulatory environments, which affect the currency markets and which as a result may adversely affect our future financial condition and results of operations. We routinely monitor these risks and related costs and evaluate the appropriate amount of oversight to allocate towards business activities in foreign countries where such risks and costs are particularly significant.

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Results of Operations

The following table sets forth items derived from our consolidated statements of operations for the years ended December 31, ~~2019, 2018~~2020 and ~~2017~~2019 (dollars in thousands):


	Year Ended December 31,													Year Ended December 31,
	2019				2018				2017					2020				2019
Revenue:													Revenue:
Fee revenue:													Fee revenue:
Global workplace solutions	$	3,126,931	13.1	%	$	2,739,107	12.8	%	$	2,317,693	12.4	%	Global workplace solutions	$	3,307,083	13.9	%	$	3,126,931	13.1	%
Property and advisory project management		1,259,222	5.3	%		1,181,152	5.5	%		1,003,113	5.4	%	Property and advisory project management	1,257,569		5.3	%	1,259,222		5.3	%
Valuation		630,399	2.6	%		598,806	2.8	%		556,008	3.0	%	Valuation	614,307		2.6	%	630,399		2.6	%
Loan servicing		206,736	0.9	%		183,366	0.9	%		157,449	0.8	%	Loan servicing	239,596		1.0	%	206,736		0.9	%
Advisory leasing		3,269,993	13.7	%		3,080,117	14.4	%		2,592,203	13.9	%	Advisory leasing	2,404,273		10.1	%	3,269,993		13.7	%
Capital markets:													Capital markets:
Advisory sales		2,130,979	8.9	%		1,980,932	9.3	%		1,869,872	10.0	%	Advisory sales	1,658,702		7.0	%	2,130,979		8.9	%
Commercial mortgage origination		575,963	2.4	%		539,348	2.5	%		455,599	2.4	%	Commercial mortgage origination	577,851		2.4	%	575,963		2.4	%
Investment management		424,882	1.8	%		434,405	2.0	%		377,644	2.0	%	Investment management	474,939		2.0	%	424,882		1.8	%
Development services		235,740	0.9	%		100,319	0.6	%		79,455	0.6	%	Development services	356,591		1.4	%	235,740		0.9	%
Total fee revenue		11,860,845	49.6	%		10,837,552	50.8	%		9,409,036	50.5	%	Total fee revenue	10,890,911		45.7	%	11,860,845		49.6	%
Pass through costs also recognized as revenue		12,033,246	50.4	%		10,502,536	49.2	%		9,219,751	49.5	%	Pass through costs also recognized as revenue	12,935,284		54.3	%	12,033,246		50.4	%
Total revenue		23,894,091	100.0	%		21,340,088	100.0	%		18,628,787	100.0	%	Total revenue	23,826,195		100.0	%	23,894,091		100.0	%
Costs and expenses:													Costs and expenses:
Cost of revenue		18,689,013	78.2	%		16,449,212	77.1	%		14,305,099	76.8	%	Cost of revenue	19,047,620		79.9	%	18,689,013		78.2	%
Operating, administrative and other		3,436,009	14.4	%		3,365,773	15.8	%		2,858,720	15.3	%	Operating, administrative and other	3,306,205		13.9	%	3,436,009		14.4	%
Depreciation and amortization		439,224	1.8	%		451,988	2.1	%		406,114	2.2	%	Depreciation and amortization	501,728		2.1	%	439,224		1.8	%
Intangible asset impairment		89,787	0.4	%		—	0.0	%		—	0.0	%
Asset impairments													Asset impairments	88,676		0.4	%	89,787		0.4	%
Total costs and expenses		22,654,033	94.8	%		20,266,973	95.0	%		17,569,933	94.3	%	Total costs and expenses	22,944,229		96.3	%	22,654,033		94.8	%
Gain on disposition of real estate		19,817	0.1	%		14,874	0.1	%		19,828	0.1	%	Gain on disposition of real estate	87,793		0.4	%	19,817		0.1	%
Operating income		1,259,875	5.3	%		1,087,989	5.1	%		1,078,682	5.8	%	Operating income	969,759		4.1	%	1,259,875		5.3	%
Equity income from unconsolidated subsidiaries		160,925	0.7	%		324,664	1.5	%		210,207	1.0	%	Equity income from unconsolidated subsidiaries	126,161		0.5	%	160,925		0.7	%
Other income		28,907	0.1	%		93,020	0.4	%		9,405	0.1	%	Other income	17,394		0.1	%	28,907		0.1	%
Interest expense, net of interest income		85,754	0.4	%		98,685	0.4	%		126,961	0.6	%	Interest expense, net of interest income	67,753		0.3	%	85,754		0.4	%
Write-off of financing costs on extinguished debt		2,608	0.0	%		27,982	0.1	%		—	0.0	%	Write-off of financing costs on extinguished debt	75,592		0.3	%	2,608		0.0	%
Income before provision for income taxes		1,361,345	5.7	%		1,379,006	6.5	%		1,171,333	6.3	%	Income before provision for income taxes	969,969		4.1	%	1,361,345		5.7	%
Provision for income taxes		69,895	0.3	%		313,058	1.5	%		467,757	2.5	%	Provision for income taxes	214,101		0.9	%	69,895		0.3	%
Net income		1,291,450	5.4	%		1,065,948	5.0	%		703,576	3.8	%	Net income	755,868		3.2	%	1,291,450		5.4	%
Less: Net income attributable to non-controlling interests		9,093	0.0	%		2,729	0.0	%		6,467	0.1	%	Less: Net income attributable to non-controlling interests	3,879		0.0	%	9,093		0.0	%
Net income attributable to CBRE Group, Inc.	$	1,282,357	5.4	%	$	1,063,219	5.0	%	$	697,109	3.7	%	Net income attributable to CBRE Group, Inc.	$	751,989	3.2	%	$	1,282,357	5.4	%
Adjusted EBITDA	$	2,063,783	8.6	%	$	1,905,168	8.9	%	$	1,716,774	9.2	%	Adjusted EBITDA	$	1,892,385	7.9	%	$	2,063,783	8.6	%

Fee revenue and adjusted EBITDA are not recognized measurements under GAAP. When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP. We generally use these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. We believe these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of fee revenue and adjusted EBITDA may not be comparable to similarly titled measures of other companies.

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Fee revenue is gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. We believe that investors may find this measure useful to analyze the company’s overall financial performance because it excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business.

EBITDA represents earnings before ~~net~~depreciation and amortization, asset impairments, interest expense, net of interest income, write-off of financing costs on extinguished debt, and provision for income ~~taxes, depreciation and amortization and intangible asset impairments.~~taxes. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of ~~certain cash and non-cash items~~costs associated with transformation initiatives, costs associated with workforce optimization efforts, fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, ~~certain~~ carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, and costs associated with our reorganization, including cost-savings ~~initiatives, and other non-recurring costs.~~initiatives. We believe that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income taxes and the accounting effects of capital spending.

Adjusted EBITDA is calculated as follows (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Net income attributable to CBRE Group, Inc.

$
1,282,357

$
1,063,219

$
697,109

Add:

Depreciation and amortization

439,224

451,988

406,114

Intangible asset impairment

89,787

—

—

Interest expense, net of interest income

85,754

98,685

126,961

Write-off of financing costs on extinguished debt

2,608

27,982

—

Provision for income taxes

69,895

313,058

467,757

EBITDA

1,969,625

1,954,932

1,697,941

Adjustments:

Costs associated with our reorganization, including
   cost-savings initiatives (1)

49,565

37,925

—

Integration and other costs related to acquisitions

15,292

9,124

27,351

Carried interest incentive compensation expense (reversal) to
   align with the timing of associated revenue

13,101

(5,261
)

(8,518
)
Impact of fair value adjustments to real estate assets acquired
   in the Telford Acquisition (purchase accounting) that were
   sold in period

9,301

—

—

Costs incurred related to legal entity restructuring

6,899

—

—

Costs incurred in connection with litigation settlement

—

8,868

—

One-time gain associated with remeasuring an investment
   in an unconsolidated subsidiary to fair value as of the date
   the remaining controlling interest was acquired

—

(100,420
)

—

Adjusted EBITDA

$
2,063,783

$
1,905,168

$
1,716,774

~~(1)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.~~


	Year Ended December 31,
	2020		2019
Net income attributable to CBRE Group, Inc.	$	751,989	$	1,282,357
Add:
Depreciation and amortization	501,728		439,224
Asset impairments	88,676		89,787
Interest expense, net of interest income	67,753		85,754
Write-off of financing costs on extinguished debt	75,592		2,608
Provision for income taxes	214,101		69,895
EBITDA	1,699,839		1,969,625
Adjustments:
Costs associated with transformation initiatives (1)	155,148		—
Costs associated with workforce optimization efforts (2)	37,594		—
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period	11,598		9,301
Costs incurred related to legal entity restructuring	9,362		6,899
Integration and other costs related to acquisitions	1,756		15,292
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue	(22,912)		13,101
Costs associated with our reorganization, including cost-savings initiatives (3)	—		49,565
Adjusted EBITDA	$	1,892,385	$	2,063,783

_______________

(1)During 2020, management began the implementation of certain transformation initiatives to enable the company to reduce costs, streamline operations and support future growth. The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.See Note 21 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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(2)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $7.4 million was included within the “Cost of revenue” line item and $30.2 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the year ended December 31, 2020.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

Year Ended December 31, ~~2019~~2020 Compared to Year Ended December 31, ~~2018~~

2019

We reported consolidated net income of ~~$1.3 billion~~$752.0 million for the year ~~ended~~ December 31, ~~2019~~2020 on revenue of ~~$23.9~~$23.8 billion as compared to consolidated net income of ~~$1.1~~$1.3 billion on revenue of ~~$21.3~~$23.9 billion for the year ended December 31, ~~2018.~~

2019.

Our revenue on a consolidated basis for the year ended December 31, ~~2019 increased~~2020 decreased by ~~$2.6 billion,~~$67.9 million, or ~~12.0%~~0.3%, as compared to the year ended December 31, ~~2018.~~2019. The revenue ~~increase~~decrease reflects ~~strong organic growth fueled~~decreases in our Advisory Services segment due to the impact of Covid-19, including lower sales (down 22.2% as compared to the same period in 2019) and leasing revenue (down 26.5% as compared to the same period in 2019). These decreases were partially offset by ~~higher~~increases in revenue in our Global Workplace Solutions segment (up ~~14.5%)~~8.0% as compared to the same period in 2019) led by growth in our facilities management line of business, driven by its contractual nature, and improved ~~revenue in our Advisory Services segment due to property and advisory project management revenue (up 9.6%) as well as~~

~~increased advisory leasing (up 6.2%), advisory sales (up 7.6%) and commercial mortgage origination activity (up 12.7%). Higher~~ revenue in our Real Estate Investments segment (up ~~23.5%) driven by~~25.9% as compared to the same period in 2019) largely due to the Telford Acquisition ~~also contributed to the increase.~~and an increase in investment management fees. Foreign currency translation had a ~~2.1% negative~~negligible impact on total revenue during the year ended December 31, ~~2019, primarily driven by weakness in the Argentine peso, Australian dollar, Brazilian real, British pound sterling, Canadian dollar, euro and Indian rupee.~~2020.

Our cost of revenue on a consolidated basis increased by ~~$2.2 billion,~~$358.6 million, or ~~13.6%~~1.9%, during the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018.~~2019. This increase was primarily due to higher costs associated with our Global Workplace Solutions ~~segment. In addition,~~segment due to growth in our facilities management business and higher costs in our Real Estate Investments segment due to the Telford Acquisition. We also incurred $42.1 million of costs (primarily employee separation benefits) related to the company’s transformation initiatives during 2020 to enable the company to reduce costs, streamline operations and support future growth. These items were partially offset by lower commission expense incurred during the year ended December 31, 2020. Our sales and leasing professionals generally are paid on a commission basis, which substantially correlates with our ~~transaction~~sales and lease revenue performance. Accordingly, the ~~increase~~decrease in advisory ~~leasing~~sales and ~~sales transaction~~leasing revenue led to a corresponding ~~increase~~decrease in commission expense. ~~Higher costs in our property and advisory project management business as well as higher costs in our Real Estate Investments segment (due to the Telford Acquisition) also contributed to the increase.~~ These items were partially offset by the impact of foreign currency translation which had a ~~2.2%~~0.12% positive impact on total cost of revenue during the year ended December 31, ~~2019.~~2020. Cost of revenue as a percentage of revenue increased from ~~77.1% for the year ended December 31, 2018 to~~ 78.2% for the year ended December 31, 2019 to 79.9% for the year ended December 31, 2020, primarily driven by our mix of revenue, with revenue from our Global Workplace Solutions segment, which has a lower margin than our other revenue streams, comprising a higher percentage of revenue than in the prior period.

Our operating, administrative and other expenses on a consolidated basis ~~increased~~decreased by ~~$70.2~~$129.8 million, or ~~2.1%~~3.8%, during the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018. During the year ended December 31, 2019, we incurred $47.0 million~~2019. The negative impact of ~~costs in connection with~~Covid-19 on our reorganization (including cost-savings initiatives) as compared to $35.2 million of such costs incurred in the prior year. Additionally, in the current year, we incurred higher payroll-related costs, higher integration and other costs associated with acquisitions (primarily due to the Telford Acquisition), costs relatedoperating results led to a ~~legal entity restructuring~~corresponding reduction in certain operating expenses such as travel and ~~increased occupancy costs.~~entertainment, marketing and employee events to manage financial performance as well as reduced stock compensation expense. These items were partially offset by $113.0 million of costs, primarily related to employee separation benefits, lease termination costs and professional fees related to the ~~impact~~company’s transformation initiatives mentioned above, as well as $30.2 million of ~~foreign~~costs related to workforce optimization efforts executed primarily in the second quarter of 2020. We also incurred higher incremental costs associated with Telford, which we acquired on October 1, 2019, rent expense for our new flexible space offering, higher bad debt expense as a result of Covid-19, and higher charitable contributions due to donations to our Covid-19 relief fund. Foreign currency translation ~~which~~ had a ~~2.2% positive~~negligible impact on total operating, administrative and other expenses during the year ended December 31, 2019, as well as lower bonuses in our Real Estate Investment segment (driven by lower property sales during 2019 as compared to the same period in the prior year, which were reflected in equity income from unconsolidated subsidiaries). During the year ended December 31, 2018, we also incurred $8.9 million of costs as a result of a litigation settlement, which did not recur during the year ended December 31, 2019.2020. Operating expenses as a percentage of revenue decreased from ~~15.8% for the year ended December 31, 2018 to~~ 14.4% for the year ended December 31, 2019 to 13.9% for the year ended December 31, 2020, reflecting the operating leverage inherent in our ~~business.~~

business and reduced discretionary spending.

Our depreciation and amortization expense on a consolidated basis ~~decreased~~increased by ~~$12.8~~$62.5 million, or ~~2.8%~~14.2%, during the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018.~~2019. This ~~decrease~~increase was primarily attributable to ~~$27.4 million of lower amortization expense largely associated with intangibles from prior acquisitions. The decrease in amortization expense was partially offset by~~ a rise in depreciation expense of ~~$14.6~~$60.5 million during the year ended December 31, ~~2019~~2020 driven by technology-related capital ~~expenditures.~~

expenditures and accelerated depreciation related to lease terminations included in our transformation initiatives.

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Our asset impairments on a consolidated basis totaled $88.7 million and $89.8 million during the years ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, asset impairments comprised the following: $50.2 million of non-cash asset impairment charges in our Global Workplace Solutions segment; a non-cash goodwill impairment charge of $25.0 million and non-cash asset impairment charges of $13.5 million in our Real Estate Investments segment. Primarily as a result of the recent global economic disruption and uncertainty due to Covid-19, we deemed there to be triggering events during 2020 that required testing of goodwill and certain assets for impairment. Based on these events, we recorded the aforementioned non-cash impairment charges, which were primarily driven by lower anticipated cash flows in certain businesses directly resulting from a downturn in forecasts as well as increased forecast risk due to Covid-19 and changes in our business going forward. During the year ended December 31, 2019, we recorded ana non-cash intangible asset impairment charge of $89.8 million in our Real Estate Investments segment. This non-cash write-off resulted from a review of the anticipated cash flows and the decrease in assets under management in our public securities business driven in part by a continued industry-wide shift in investor preference for passive investment programs.

Our gain on disposition of real estate on a consolidated basis increased by ~~$4.9~~$68.0 million, or ~~33.2%~~343.0%, during the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018.~~2019. These gains resulted from property sales within our Real Estate Investments segment.

Our equity income from unconsolidated subsidiaries on a consolidated basis decreased by ~~$163.7~~$34.8 million, or ~~50.4%~~21.6%, during the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018,~~2019, primarily driven by lower equity earnings associated with gains on property sales reported in our Real Estate Investments segment.

Our other income on a consolidated basis was ~~$28.9~~$17.4 million for the year ended December 31, ~~2019~~2020 versus ~~$93.0~~$28.9 million for the same period in the prior year. The ~~income during the year ended December 31, 2019~~decrease was primarily ~~driven by~~due to higher net ~~realized and~~ unrealized gains ~~related to co-investments in our real estate securities business within our Real Estate Investments segment. The income~~ in the prior year ~~included a one-time gain~~compared to the current year on certain of ~~$100.4 million associated with remeasuring~~ our ~~investment in a previously unconsolidated subsidiary in New England in our Advisory Services segment to fair value as of the date we acquired the remaining controlling interest.~~co-investments.

Our consolidated interest expense, net of interest income, decreased by ~~$12.9~~$18.0 million, or ~~13.1%~~21.0%, for the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018.~~2019. This decrease was primarily ~~driven by the early redemption, in full, of the $800.0 million aggregate outstanding principal amount of our 5.00% senior notes in the first quarter of 2018. Lower~~due to lower interest expense on borrowings associated with ~~the term loans under~~ our credit agreement (driven by ~~more favorable~~lower interest ~~rates stemming from our amendment to our credit agreement in 2019) also contributed to the decrease.~~

rates) as well as reduced net interest expense overseas associated with cash pooling arrangements.

Our write-off of financing costs on extinguished debt on a consolidated basis was $75.6 million for the year ended December 31, 2020 as compared to $2.6 million for the year ended December 31, ~~2019 as compared to $28.0 million~~2019. The costs for the year ended December 31, ~~2018.~~2020 included a $73.6 million premium paid and the write-off of $2.0 million of unamortized premium and debt issuance costs in connection with the redemption, in full, of the $425.0 million aggregate outstanding principal amount of our 5.25% senior notes. The costs for the year ended December 31, 2019 were incurred in connection with the refinancing of our credit agreement. The costs for the year ended December 31, 2018 included a $20.0 million premium paid and the write-off of $8.0 million of unamortized deferred financing costs in connection with the early redemption, in full, of the $800.0 million aggregate outstanding principal amount of our 5.00% senior notes.

Our provision for income taxes on a consolidated basis was ~~$69.9~~$214.1 million for the year ended December 31, ~~2019~~2020 as compared to ~~$313.1~~$69.9 million for the same period in ~~2018.~~2019. Our effective tax rate ~~decreased~~increased from ~~22.7% for the year ended December 31, 2018 to~~ 5.1% for the year ended December 31, ~~2019.~~2019 to 22.1% for the year ended December 31, 2020. The lower tax rate for year ended December 31, 2019 was primarily driven by a $277.2 million net tax benefit recorded in 2019 attributable to outside basis differences recognized as a result of a legal entity restructuring.

~~Year Ended December 31, 2018 Compared to Year Ended December 31, 2017~~

We reported consolidated net income of $1.1 billion for the year ended December 31, 2018 on revenue of $21.3 billion as compared to consolidated net income of $697.1 million on revenue of $18.6 billion for the year ended December 31, 2017.

Our revenue on a consolidated basis for the year ended December 31, 2018 increased by $2.7 billion, or 14.6%, as compared to the year ended December 30, 2017. The revenue increase reflects strong organic growth fueled by higher revenue in our Global Workplace Solutions segment (up 14.6%) and improved revenue in our Advisory Services segment due to property and advisory project management revenue (up 17.7%), increased advisory leasing (up 18.8%), advisory sales (up 5.9%) and commercial mortgage origination activity (up 18.4%). Higher revenue in our Real Estate Investments segment (up 17.0%) also contributed to the increase. In addition, foreign currency translation had a 0.5% positive impact on total revenue during the year ended December 31, 2018, primarily driven by strength in the British pound sterling and euro, partially offset by weakness in the Argentine peso and Brazilian real.

Our cost of revenue on a consolidated basis increased by $2.1 billion, or 15.0%, during the year ended December 31, 2018 as compared to the same period in 2017. This increase was primarily due to higher costs associated with our Global Workplace Solutions segment. In addition, as previously mentioned, our sales professionals generally are paid on a commission basis, which substantially correlates with our transaction revenue performance. Accordingly, the increase in advisory leasing and sales transaction revenue led to a corresponding increase in commission expense. Higher costs in our property and advisory project management business also contributed to the increase. Lastly, foreign currency translation had a 0.5% negative impact on total cost of revenue during the year ended December 31, 2018. Cost of revenue as a percentage of revenue increased from 76.8% for the year ended December 31, 2017 to 77.1% for the year ended December 31, 2018, primarily driven by our revenue mix, with revenue from our Global Workplace Solutions segment, which has a lower margin than our other revenue streams, comprising a higher percentage of revenue in 2018 than in 2017.

Our operating, administrative and other expenses on a consolidated basis increased by $507.1 million, or 17.7%, during the year ended December 31, 2018 as compared to the same period in 2017. The increase was mostly driven by higher payroll-related costs (including increases in bonus and stock compensation expense), higher carried interest expense and increases in consulting, marketing and occupancy costs. During 2018, we also incurred $35.2 million of costs incurred in connection with our reorganization (including cost-savings initiatives) and $8.9 million of costs as a result of a litigation settlement, the impact of which was partly offset by lower integration and other costs associated with acquisitions. Foreign currency translation also had a 0.8% negative impact on total operating expenses during the year ended December 31, 2018. Operating expenses as a percentage of revenue increased from 15.3% for the year ended December 31, 2017 to 15.8% for the year ended December 31, 2018, partially driven by higher bonus expense in our Real Estate Investments segment with no corresponding increase in revenue (as bonus expense was attributable to an increase in equity income from unconsolidated subsidiaries) as well as due to the costs incurred in connection with our reorganization.

Our depreciation and amortization expense on a consolidated basis increased by $45.9 million, or 11.3%, during the year ended December 31, 2018 as compared to the same period in 2017. This increase was primarily attributable to a rise in depreciation expense of $25.9 million during the year ended December 31, 2018 driven by technology-related capital expenditures. Higher amortization expense of $20.0 million associated with mortgage servicing rights and intangibles acquired in acquisitions also contributed to the increase.

Our equity income from unconsolidated subsidiaries on a consolidated basis increased by $114.5 million, or 54.5%, during the year ended December 31, 2018 as compared to the same period in 2017, primarily driven by higher equity earnings associated with gains on property sales reported in our Real Estate Investments segment.

~~Our other income on a consolidated basis was $93.0 million for the year ended December 31, 2018 as compared to $9.4 million for the same period in 2017.~~ Included in other income for the year ended December 31, 2018 was a one-time gain of $100.4 million associated with remeasuring our investment in a previously unconsolidated subsidiary in New England to fair value as of the date we acquired the remaining controlling interest.

Our consolidated interest expense, net of interest income, decreased by $28.3 million, or 22.3%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. This decrease was primarily driven by the early redemption, in full, of the $800.0 million aggregate outstanding principal amount of our 5.00% senior notes in the first quarter of 2018.

Our write-off of financing costs on extinguished debt on a consolidated basis was $28.0 million for the year ended December 31, 2018. These costs included a $20.0 million premium paid and the write-off of $8.0 million of unamortized deferred financing costs in connection with the early redemption, in full, of the $800.0 million aggregate outstanding principal amount of our 5.00% senior notes.

Our provision for income taxes on a consolidated basis was $313.1 million for the year ended December 31, 2018 as compared to $467.8 million for the same period in 2017. Our provision for income taxes for 2018 included a net expense true-up of $13.3 million resulting from completion of accounting for the Tax Act. Our provision for income taxes for 2017 included net expense of $143.4 million for the provisional charge related to the Tax Act. These net expenses were primarily comprised of a transition tax on accumulated foreign earnings, net of a tax benefit from the re-measurement of certain deferred tax assets and liabilities using the lower U.S. corporate income tax rate and the release of valuation allowances on foreign tax credits that will decrease the liability related to the transition tax. Excluding these net charges associated with the Tax Act, our effective tax rate, would have been 21.7% for the year ended December 31, 2018 compared to 27.7% for the year ended December 31, 2017. We benefited from a lower U.S. corporate tax rate, with such rate being 35% in 2017 versus 21% in 2018.The effect of the decrease in the U.S. corporate tax rate was partially offset by discrete tax benefits for the year ended December 31, 2017 from the re-measurement of income tax exposures relating to prior periods and release of valuation allowances on foreign income tax credits that were expected to be utilized with no similar items for the year ended December 31, 2018.

Segment Operations

~~On August 17, 2018, we announced a new organizational structure that became effective on January 1, 2019. Under the new structure, we~~

We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions; and (3) Real Estate Investments. For additional information on our segments, see Note 19 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Table of Contents

Advisory Services

The following table summarizes our results of operations for our Advisory Services operating segment for the years ended December 31, ~~2019, 2018~~2020 and ~~2017~~2019 (dollars in thousands):


	Year Ended December 31,															Year Ended December 31,
	2019				2018					2017						2020				2019
Revenue:															Revenue:
Fee revenue:															Fee revenue:
Property and advisory project management	$	1,259,222	13.9	%	$	1,181,152		14.0	%	$	1,003,113		13.6	%	Property and advisory project management	$	1,257,569	16.3	%	$	1,259,222	13.9	%
Valuation		630,399	6.9	%		598,806		7.1	%		556,008		7.5	%	Valuation	614,307		7.9	%	630,399		6.9	%
Loan servicing		206,736	2.3	%		183,366		2.1	%		157,449		2.1	%	Loan servicing	239,596		3.1	%	206,736		2.3	%
Advisory leasing		3,269,993	36.0	%		3,080,117		36.5	%		2,592,203		35.1	%	Advisory leasing	2,404,273		31.1	%	3,269,993		36.0	%
Capital markets:															Capital markets:
Advisory sales		2,130,979	23.5	%		1,980,932		23.5	%		1,869,872		25.4	%	Advisory sales	1,658,702		21.5	%	2,130,979		23.5	%
Commercial mortgage origination		575,963	6.4	%		539,348		6.4	%		455,599		6.2	%	Commercial mortgage origination	577,851		7.5	%	575,963		6.4	%
Total fee revenue		8,073,292	89.0	%		7,563,721		89.6	%		6,634,244		89.9	%	Total fee revenue	6,752,298		87.7	%	8,073,292		89.0	%
Pass through costs also recognized as revenue		996,176	11.0	%		876,281		10.4	%		745,481		10.1	%	Pass through costs also recognized as revenue	946,694		12.3	%	996,176		11.0	%
Total revenue		9,069,468	100.0	%		8,440,002		100.0	%		7,379,725		100.0	%	Total revenue	7,698,992		100.0	%	9,069,468		100.0	%
Costs and expenses:															Costs and expenses:
Cost of revenue		5,465,391	60.3	%		5,043,807		59.8	%		4,358,248		59.1	%	Cost of revenue	4,693,684		61.0	%	5,465,391		60.3	%
Operating, administrative and other		2,169,980	23.9	%		2,160,957		25.6	%		1,894,133		25.7	%	Operating, administrative and other	2,030,873		26.4	%	2,169,980		23.9	%
Depreciation and amortization		304,766	3.4	%		280,921		3.3	%		243,791		3.3	%	Depreciation and amortization	348,669		4.5	%	304,766		3.4	%
Operating income		1,129,331	12.4	%		954,317		11.3	%		883,553		11.9	%	Operating income	625,766		8.1	%	1,129,331		12.4	%
Equity income from unconsolidated subsidiaries		6,894	0.1	%		16,017		0.3	%		20,740		0.3	%	Equity income from unconsolidated subsidiaries	2,245		0.0	%	6,894		0.1	%
Other income (loss)		7,532	0.1	%		103,808		1.2	%		(31	)	0.0	%
Other income															Other income	17,329		0.2	%	7,532		0.1	%
Less: Net income attributable to non-controlling interests		1,021	0.0	%		55		0.0	%		461		0.0	%	Less: Net income attributable to non-controlling interests	887		0.0	%	1,021		0.0	%
Add-back: Depreciation and amortization		304,766	3.4	%		280,921		3.3	%		243,791		3.3	%	Add-back: Depreciation and amortization	348,669		4.5	%	304,766		3.4	%
EBITDA		1,447,502	16.0	%		1,355,008		16.1	%		1,147,592		15.5	%	EBITDA	993,122		12.9	%	1,447,502		16.0	%
Adjustments:															Adjustments:
Costs associated with our reorganization, including cost-savings initiatives (1)		11,088	0.1	%		37,219		0.4	%		—		0.0	%
Costs incurred in connection with litigation settlement		—	0.0	%		8,868		0.1	%		—		0.0	%
Costs associated with transformation initiatives (1)															Costs associated with transformation initiatives (1)	113,987		1.5	%	—		0.0	%
Costs associated with workforce optimization efforts (2)															Costs associated with workforce optimization efforts (2)	27,418		0.4	%	—		0.0	%
Costs incurred related to legal entity restructuring		6,899	0.1	%		—		0.0	%		—		0.0	%	Costs incurred related to legal entity restructuring	9,362		0.1	%	6,899		0.1	%
Costs associated with our reorganization, including cost-savings initiatives (3)															Costs associated with our reorganization, including cost-savings initiatives (3)	—		0.0	%	11,088		0.1	%
Integration and other costs related to acquisitions		303	0.0	%		2,576		0.0	%		27,351		0.4	%	Integration and other costs related to acquisitions	—		0.0	%	303		0.0	%
One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired		—	0.0	%		(100,420	)	(1.2	%)		—		0.0	%
Adjusted EBITDA and Adjusted EBITDA on revenue margin	$	1,465,792	16.2	%	$	1,303,251		15.4	%	$	1,174,943		15.9	%	Adjusted EBITDA and Adjusted EBITDA on revenue margin	$	1,143,889	14.9	%	$	1,465,792	16.2	%
Adjusted EBITDA on fee revenue margin			18.2	%				17.2	%				17.7	%	Adjusted EBITDA on fee revenue margin			16.9	%			18.2	%

~~(1)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective on January 1, 2019.~~

_______________

(2)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $6.1 million was included within the “Cost of revenue” line item and $21.3 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the year ended December 31, 2020.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

Table of Contents

Year Ended December 31, ~~2019~~2020 Compared to Year Ended December 31, ~~2018~~

2019

Revenue ~~increased~~decreased by ~~$629.5 million,~~$1.4 billion, or ~~7.5%~~15.1%, for the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018.~~2019. The revenue ~~increase~~decrease primarily reflects ~~strong organic growth fueled by higher leasing,~~the impact of Covid-19, which resulted in lower sales and ~~commercial mortgage origination activity as well as improved property and project management~~leasing revenue. Foreign currency translation had a ~~1.7% negative~~negligible impact on total revenue during the year ended December 31, ~~2019, primarily driven by weakness in the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, Chinese yuan, euro and Indian rupee.~~

2020.

Cost of revenue ~~increased~~decreased by ~~$421.6~~$771.7 million, or ~~8.4%~~14.1%, for the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018,~~2019, primarily due to ~~higher~~reduced commission expense resulting from ~~improved~~lower sales and leasing ~~and sales transaction revenue. Higher costs in our property and project management business also contributed to the increase.~~revenue as a result of Covid-19. Foreign currency translation had a ~~1.7% positive~~negligible impact on total cost of revenue during the year ended December 31, ~~2019.~~2020. Cost of revenue as a percentage of revenue ~~was relatively consistent at 60.3%~~increased to 61.0% for the year ended December 31, ~~2019~~2020 versus ~~59.8%~~60.3% for the same period in ~~2018.~~2019, primarily as a result of costs incurred during the year ended December 31, 2020 for the transformation initiatives and workforce optimization that were not incurred during the year ended December 31, 2019.

Operating, administrative and other expenses ~~increased~~decreased by ~~$9.0~~$139.1 million, or ~~0.4%~~6.4%, for the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018.~~2019. The ~~increase was largely driven by higher payroll-related costs (partially driven by increased headcount)~~negative impact of Covid-19 on our operating results led to corresponding decreases in bonus and ~~higher occupancy costs. Additionally, in the current year,~~stock compensation expense. In addition, to manage financial performance, we ~~incurred $6.9 million of costs related to a legal entity restructuring.~~reduced certain operating expenses such as travel and entertainment, marketing and employee events. These items were partially offset by $80.8 million of costs, primarily related to employee separation benefits, lease termination costs and professional fees, as management commenced the ~~impact~~implementation of ~~foreign~~certain transformation initiatives during the year ended December 31, 2020 to enable the company to reduce costs, streamline operations and support future growth. Lastly, we saw an increase in charitable donations largely driven by a sizeable donation by the company to its Covid-19 relief fund. Foreign currency translation ~~which~~ had a ~~2.1% positive~~negligible impact on total operating expenses during the year ended December 31, ~~2019. During~~2020.

For the year ended December 31, ~~2019, we also incurred $10.5~~2020, mortgage servicing rights (MSRs) contributed to operating income $207.8 million of ~~costs~~gains recognized in connection with our reorganization (including cost-savings initiatives) as compared to $34.5 million of such costs incurred in the prior year. Lastly, during the year ended December 31, 2018, we incurred $8.9 million of costs as a result of a litigation settlement, which did not recur in 2019.

~~In connection~~conjunction with the origination and sale of mortgage loans, ~~for which the company retains servicing rights, we record servicing assets or liabilities based on the fair value~~offset by $134.3 million of ~~the retained mortgage servicing rights (MSRs) on the date the loans are sold. Upon origination~~amortization of a mortgage loan held for sale, the fair value of the mortgage servicing rights to be retained is included in the forecasted proceeds from the anticipated loan sale and results in a net gain (which is reflected in revenue). Subsequent to the initial recording, MSRs are amortized (within amortization expense) and carried at the lower of amortized cost or fair value in otherrelated intangible ~~assets in the accompanying consolidated balance sheets. They are amortized in proportion to and over the estimated period that the servicing income is expected to be received.~~assets. For the year ended December 31, 2019, MSRs contributed to operating income $182.4 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $123.0 million of amortization of related intangible assets. ~~For the year ended December 31, 2018, MSRs contributed to operating income $173.7 million~~

Table of ~~gains recognized in conjunction with the origination and sale of mortgage loans, offset by $115.7 million of amortization of related intangible assets.~~

~~Year Ended December 31, 2018 Compared to Year Ended December 31, 2017~~

Revenue increased by $1.1 billion, or 14.4%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The revenue increase reflects strong organic growth fueled by higher leasing, sales and commercial mortgage origination activity as well as improved property and project revenue. Foreign currency translation had a 0.3% positive impact on total revenue during the year ended December 31, 2018, primarily driven by the strength in the British pound sterling and euro, partially offset by weakness in the Australian dollar and Brazilian real.

Cost of revenue increased by $685.6 million, or 15.7%, for the year ended December 31, 2018 as compared to the same period in 2017, primarily due to higher commission expense resulting from improved leasing and sales transaction revenue. Higher costs in our property and project management business also contributed to the increase. Foreign currency translation had a 0.4% negative impact on total cost of revenue during the year ended December 31, 2018. Cost of revenue as a percentage of revenue was relatively consistent at 59.8% for the year ended December 31, 2018 versus 59.1% for the same period in 2017.

Operating, administrative and other expenses increased by $266.8 million, or 14.1%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increase was largely driven by higher payroll-related costs (partially driven by increased headcount) and higher occupancy costs. During the year ended December 31, 2018, we also incurred $34.5 million of severance costs in connection with our reorganization, including cost-savings initiatives, as well as $8.9 million of costs as a result of a litigation settlement. Foreign currency translation had a 0.7% negative impact on total operating expenses during the year ended December 31, 2018.

Contents

For the year ended December 31, 2018, MSRs contributed to operating income $173.7 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $115.7 million of amortization of related intangible assets. For the year ended December 31, 2017, MSRs contributed to operating income $145.1 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $98.6 million of amortization of related intangible assets.

Global Workplace Solutions

The following table summarizes our results of operations for our Global Workplace Solutions operating segment for the years ended December 31, ~~2019, 2018~~2020 and ~~2017~~2019 (dollars in thousands):


	Year Ended December 31,															Year Ended December 31,
	2019					2018				2017						2020				2019
Revenue:															Revenue:
Fee revenue:															Fee revenue:
Global workplace solutions	$	3,126,931		22.1	%	$	2,739,107	22.2	%	$	2,317,693		21.5	%	Global workplace solutions	$	3,307,083	21.6	%	$	3,126,931	22.1	%
Total fee revenue		3,126,931		22.1	%		2,739,107	22.2	%		2,317,693		21.5	%
Pass through costs also recognized as revenue		11,037,070		77.9	%		9,626,255	77.8	%		8,474,270		78.5	%	Pass through costs also recognized as revenue	11,988,590		78.4	%	11,037,070		77.9	%
Total revenue		14,164,001		100.0	%		12,365,362	100.0	%		10,791,963		100.0	%	Total revenue	15,295,673		100.0	%	14,164,001		100.0	%
Costs and expenses:															Costs and expenses:
Cost of revenue		13,138,627		92.8	%		11,405,405	92.2	%		9,946,851		92.2	%	Cost of revenue	14,180,395		92.7	%	13,138,627		92.8	%
Operating, administrative and other		637,282		4.5	%		620,924	5.0	%		511,133		4.7	%	Operating, administrative and other	643,207		4.2	%	637,282		4.5	%
Depreciation and amortization		120,975		0.9	%		147,222	1.2	%		136,127		1.3	%	Depreciation and amortization	125,692		0.8	%	120,975		0.9	%
Asset impairments															Asset impairments	50,171		0.3	%	—		0.0	%
Operating income		267,117		1.8	%		191,811	1.6	%		197,852		1.8	%	Operating income	296,208		2.0	%	267,117		1.8	%
Equity (loss) income from unconsolidated subsidiaries		(1,423	)	0.0	%		115	0.0	%		—		0.0	%
Other (loss) income		(1,170	)	0.0	%		52	0.0	%		1		0.0	%
Less: Net (loss) income attributable to non-controlling interests		(271	)	0.0	%		188	0.1	%		(397	)	0.0	%
Equity income (loss) from unconsolidated subsidiaries															Equity income (loss) from unconsolidated subsidiaries	368		0.0	%	(1,423)		0.0	%
Other income (loss)															Other income (loss)	1,192		0.0	%	(1,170)		0.0	%
Less: Net loss attributable to non-controlling interests															Less: Net loss attributable to non-controlling interests	—		0.0	%	(271)		0.0	%
Add-back: Depreciation and amortization		120,975		0.9	%		147,222	1.2	%		136,127		1.3	%	Add-back: Depreciation and amortization	125,692		0.8	%	120,975		0.9	%
Add-back: Asset impairments															Add-back: Asset impairments	50,171		0.3	%	—		0.0	%
EBITDA		385,770		2.7	%		339,012	2.7	%		334,377		3.1	%	EBITDA	473,631		3.1	%	385,770		2.7	%
Costs associated with our reorganization, including cost-savings initiatives (1)		38,256		0.3	%		—	0.0	%		—		0.0	%
Integration and other costs related to acquisitions		—		0.0	%		6,548	0.1	%		—		0.0	%
Costs associated with transformation initiatives (1)															Costs associated with transformation initiatives (1)	38,179		0.2	%	—		0.0	%
Costs associated with workforce optimization efforts (2)															Costs associated with workforce optimization efforts (2)	5,004		0.0	%	—		0.0	%
Costs associated with our reorganization, including cost savings initiatives (3)															Costs associated with our reorganization, including cost savings initiatives (3)	—		0.0	%	38,256		0.3	%
Adjusted EBITDA and Adjusted EBITDA on revenue margin	$	424,026		3.0	%	$	345,560	2.8	%	$	334,377		3.1	%	Adjusted EBITDA and Adjusted EBITDA on revenue margin	$	516,814	3.3	%	$	424,026	3.0	%
Adjusted EBITDA on fee revenue margin				13.6	%			12.6	%				14.4	%	Adjusted EBITDA on fee revenue margin			15.6	%			13.6	%

~~(1)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective on January 1, 2019.~~

_______________

(2)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $1.2 million was included within the “Cost of revenue” line item and $3.8 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the year ended December 31, 2020.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

Year Ended December 31, ~~2019~~2020 Compared to Year Ended December 31, ~~2018~~

2019

Revenue increased by ~~$1.8~~$1.1 billion, or ~~14.5%~~8.0%, for the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018.~~2019. The revenue increase was ~~fueled by~~primarily attributable to growth in ~~the market for real estate outsourcing services.~~our facilities management line of business, which is contractual in nature. Foreign currency translation had a ~~2.4%~~0.13% negative impact on total revenue during the year ended December 31, ~~2019,~~2020, primarily driven by weakness in the Argentine peso ~~Australian dollar,~~and Brazilian real partially offset by strength in the British pound sterling ~~Canadian dollar, Chinese yuan, euro,~~ and ~~Indian rupee.~~

euro.

Table of Contents

Cost of revenue increased by ~~$1.7~~$1.0 billion, or ~~15.2%~~7.9%, for the year ended December 31, ~~2019~~2020 as compared to the same period in ~~2018,~~2019, driven by the higher ~~revenue.~~revenue leading to higher pass through costs. Foreign currency translation had a ~~2.4%~~0.14% positive impact on total cost of revenue during the year ended December 31, ~~2019.~~2020. Cost of revenue as a percentage of revenue was relatively consistent at ~~92.8%~~92.7% for the year ended December 31, ~~2019~~2020 versus ~~92.2%~~92.8% for the same period in ~~2018.~~

2019.

Operating, administrative and other expenses increased by ~~$16.4~~$5.9 million, or ~~2.6%~~0.9%, for the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018.~~2019. This increase was attributable to costs incurred as a result of Covid-19, including higher bad debt expense, $3.8 million of costs incurred (mainly severance) primarily related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic, and increased staff bonus accruals. During the year ended December 31, ~~2019, we incurred $36.3 million of severance costs~~2020, investments were also made in ~~connection~~both people and technology associated with ongoing efforts to remediate material weaknesses in our ~~reorganization, including cost-savings initiatives, as well as higher overall costs attributable to the FacilitySource acquisition (acquired in June 2018).~~Europe, Middle East and Africa (EMEA) region. These ~~costs~~increases were partially offset by a targeted reduction in certain operating expenses, such as travel and entertainment costs, during the ~~impact~~year ended December 31, 2020 as a result of ~~foreign~~Covid-19. Foreign currency translation ~~which~~ had a ~~2.7% positive~~negligible impact on total operating expenses during the year ended December 31, ~~2019.~~

2020.

~~Year Ended December 31, 2018 Compared to Year Ended December 31, 2017~~

Revenue increased by $1.6 billion, or 14.6%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The revenue increase was fueled by growth in the market for real estate outsourcing services. Foreign currency translation had a 0.5% positive impact on total revenue during the year ended December 31, 2018, primarily driven by strength in the British pound sterling and euro, partially offset by weakness in the Argentine peso, Brazilian real and Indian rupee.

Cost of revenue increased by $1.5 billion, or 14.7%, for the year ended December 31, 2018 as compared to the same period in 2017, driven by the higher revenue. Foreign currency translation had a 0.5% negative impact on total cost of revenue during the year ended December 31, 2018. Cost of revenue as a percentage of revenue was constant at 92.2% for both the year ended December 31, 2018 and 2017.

Operating, administrative and other expenses increased by $109.8 million, or 21.5%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. This increase was primarily driven by higher payroll-related costs. Additionally, during the year ended December 31, 2018, we incurred $6.5 million of integration costs associated primarily with the FacilitySource acquisition (acquired in June 2018). These costs were also impacted by foreign currency translation, which had a 0.7% negative impact on total operating expenses during the year ended December 31, 2018.

Real Estate Investments

The following table summarizes our results of operations for our Real Estate Investments operating segment for the years ended December 31, ~~2019, 2018~~2020 and ~~2017~~2019 (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Revenue:

Investment management

$
424,882

64.3
%

$
434,405

81.2
%

$
377,644

82.6
%
Development services

235,740

35.7
%

100,319

18.8
%

79,455

17.4
%
Total revenue

660,622

100.0
%

534,724

100.0
%

457,099

100.0
%
Costs and expenses:

Cost of revenue

84,995

12.9
%

—

0.0
%

—

0.0
%
Operating, administrative and other

628,747

95.2
%

583,892

109.2
%

453,454

99.2
%
Depreciation and amortization

13,483

2.0
%

23,845

4.5
%

26,196

5.7
%
Intangible asset impairment

89,787

13.6
%

—

0.0
%

—

0.0
%
Gain on disposition of real estate

19,817

3.0
%

14,874

2.8
%

19,828

4.3
%
Operating loss

(136,573
)

(20.7
%)

(58,139
)

(10.9
%)

(2,723
)

(0.6
%)
Equity income from unconsolidated subsidiaries

155,454

23.5
%

308,532

57.7
%

189,467

41.4
%
Other income (loss)

22,545

3.4
%

(10,840
)

(2.0
%)

9,435

2.2
%
Less: Net income attributable to non-controlling interests

8,343

1.2
%

2,486

0.5
%

6,403

1.4
%
Add-back: Depreciation and amortization

13,483

2.0
%

23,845

4.5
%

26,196

5.7
%
Add-back: Intangible asset impairment

89,787

13.6
%

—

0.0
%

—

0.0
%
EBITDA

136,353

20.6
%

260,912

48.8
%

215,972

47.3
%
Integration and other costs related to acquisitions

14,989

2.3
%

—

0.0
%

—

0.0
%
Carried interest incentive compensation expense
   (reversal) to align with the timing of associated
   revenue

13,101

2.0
%

(5,261
)

(1.0
%)

(8,518
)

(1.9
%)
Impact of fair value adjustments to real estate assets
   acquired in the Telford Acquisition (purchase
   accounting) that were sold in period

9,301

1.4
%

—

0.0
%

—

0.0
%
Costs associated with our reorganization, including
   cost-savings initiatives (1)

221

0.0
%

706

0.1
%

—

0.0
%
Adjusted EBITDA

$
173,965

26.3
%

$
256,357

47.9
%

$
207,454

45.4
%

~~(1)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective on January 1, 2019.~~


	Year Ended December 31,
	2020				2019
Revenue:
Investment management	$	474,939	57.1	%	$	424,882	64.3	%
Development services	356,591		42.9	%	235,740		35.7	%
Total revenue	831,530		100.0	%	660,622		100.0	%
Costs and expenses:
Cost of revenue	173,541		20.9	%	84,995		12.9	%
Operating, administrative and other	632,125		76.0	%	628,747		95.2	%
Depreciation and amortization	27,367		3.3	%	13,483		2.0	%
Asset impairments	38,505		4.6	%	89,787		13.6	%
Gain on disposition of real estate	87,793		10.6	%	19,817		3.0	%
Operating income (loss)	47,785		5.8	%	(136,573)		(20.7)	%
Equity income from unconsolidated subsidiaries	123,548		14.9	%	155,454		23.5	%
Other (loss) income	(1,127)		(0.1)	%	22,545		3.4	%
Less: Net income attributable to non-controlling interests	2,992		0.3	%	8,343		1.2	%
Add-back: Depreciation and amortization	27,367		3.3	%	13,483		2.0	%
Add-back: Asset impairments	38,505		4.6	%	89,787		13.6	%
EBITDA	233,086		28.0	%	136,353		20.6	%
Adjustments:
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period	11,598		1.4	%	9,301		1.4	%
Costs associated with workforce optimization efforts (1)	5,172		0.6	%	—		0.0	%
Costs associated with transformation initiatives (2)	2,982		0.4	%	—		0.0	%
Integration and other costs related to acquisitions	1,756		0.2	%	14,989		2.3	%
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue	(22,912)		(2.8)	%	13,101		2.0	%
Costs associated with our reorganization, including cost-savings initiatives (3)	—		0.0	%	221		0.0	%
Adjusted EBITDA	$	231,682	27.8	%	$	173,965	26.3	%

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_______________

(1)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort and were included in the “Operating, administrative and other” line in the accompanying consolidated statements of operations for the year ended December 31, 2020.

(2)During 2020, management began the implementation of certain transformation initiatives to enable the company to reduce costs, streamline operations and support future growth. The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.See Note 21 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

Year Ended December 31, ~~2019~~2020 Compared to Year Ended December 31, ~~2018~~2019

Revenue increased by ~~$125.9~~$170.9 million, or ~~23.5%~~25.9%, for the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018,~~2019, primarily driven by the Telford Acquisition in our development services line of ~~business.~~business and an increase in investment management fees primarily related to growth in AUM. Foreign currency translation had a ~~2.6% negative~~0.7% positive impact on total revenue during the year ended December 31, ~~2019,~~2020 primarily driven by ~~weakness~~strength in the British pound sterling and euro.

Cost of revenue ~~was $85.0~~increased by $88.5 million, or 104.2%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019, driven by the Telford Acquisition, which we acquired on October 1, 2019.

Operating, administrative and ~~was attributable~~other expenses increased by $3.4 million, or 0.5%, for the year ended December 31, 2020 as compared to the same period in 2019, primarily driven by incremental costs associated with Telford which we acquired on October 1, ~~2019.~~

~~Operating, administrative and other expenses~~2019, increased ~~by $44.9 million, or 7.7%, for the year ended December 31, 2019 as compared to the same period in 2018, primarily~~results driven by costs incurred in connection with the Telford Acquisition as well as higher carried interest expense. Higher costs (primarily payroll-related and occupancy) attributable to investments in our new flexible space offering also contributed to the increase. These items were partially offset by lower bonusesbonus expense in our development services line of business (driven by ~~lower~~higher property sales in ~~2019~~2020), rent expense for our new flexible space offering, workforce optimization costs, and transformation initiative costs. These increases are partially offset by decreases in certain operating expenses, such as ~~compared to 2018, which were reflected~~travel and entertainment costs, as a result of Covid-19, a reduction in ~~equity income from unconsolidated subsidiaries).~~integration and transaction costs for Telford, and a reduction in carried interest expense. Foreign currency translation ~~also~~ had a ~~1.8% positive~~negligible impact on total operating expenses during the year ended December 31, ~~2019.~~

2020.

A roll forward of our AUM by product type for the year ended December 31, ~~2019~~2020 is as follows (dollars in billions):

Funds

Separate Accounts

Securities

Total

Balance at January 1, 2019

$
35.0

$
60.2

$
10.3

$
105.5

Inflows

5.0

10.1

0.7

15.8

Outflows

(2.0
)

(6.6
)

(5.3
)

(13.9
)
Market appreciation

2.1

1.2

2.2

5.5

Balance at December 31, 2019

$
40.1

$
64.9

$
7.9

$
112.9


	Funds		Separate Accounts		Securities		Total
Balance at January 1, 2020	$	40.1	$	64.9	$	7.9	$	112.9
Inflows	5.3		9.1		1.4		15.8
Outflows	(2.1)		(7.5)		(1.6)		(11.2)
Market appreciation (depreciation)	3.9		1.4		(0.1)		5.2
Balance at December 31, 2020	$	47.2	$	67.9	$	7.6	$	122.7

AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, securities portfolios and investments in operating companies and joint ventures. Our AUM is intended principally to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our assets under management consist of:

•

the total fair market value of the real estate properties and other assets either wholly-owned or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested or to which they have provided financing. Committed (but unfunded) capital from investors in our sponsored funds is not included in this component of our AUM. The value of development properties is included at estimated completion cost. In the case of real estate operating companies, the total value of real properties controlled by the companies, generally through joint ventures, is included in AUM; and

•

the net asset value of our managed securities portfolios, including investments (which may be comprised of committed but uncalled capital) in private real estate funds under our fund of funds investments.

•the total fair market value of the real estate properties and other assets either wholly-owned or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested or to which they have provided financing. Committed (but unfunded) capital from investors in our sponsored funds is not included in this component of our AUM. The value of development properties is included at estimated completion cost. In the case of real estate operating companies, the total value of real properties controlled by the companies, generally through joint ventures, is included in AUM; and

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•the net asset value of our managed securities portfolios, including investments (which may be comprised of committed but uncalled capital) in private real estate funds under our fund of funds investments.

Our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.

~~Year Ended December 31, 2018 Compared to Year Ended December 31, 2017~~

Revenue increased by $77.6 million, or 17.0%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017, primarily driven by higher asset management and incentive fees as well as carried interest revenue in our global investment management line of business and higher incentive and development fees in our development services line of business. Foreign currency translation also had a 2.0% positive impact on total revenue during the year ended December 31, 2018, primarily driven by the strength of the British pound sterling and euro.

Operating, administrative and other expenses increased by $130.4 million, or 28.8%, for the year ended December 31, 2018 as compared to the same period in 2017, primarily driven by higher payroll-related costs (including bonuses) and higher carried interest expense. Foreign currency translation had a 1.5% negative impact on total operating expenses during the year ended December 31, 2018.

~~A roll forward of our AUM by product type for the year ended December 31, 2018 is as follows (dollars in billions):~~

Funds

Separate Accounts

Securities

Total

Balance at January 1, 2018

$
31.7

$
56.7

$
14.8

$
103.2

Inflows

7.1

7.6

1.6

16.3

Outflows

(5.4
)

(4.0
)

(4.5
)

(13.9
)
Market appreciation (depreciation)

1.6

(0.1
)

(1.6
)

(0.1
)
Balance at December 31, 2018

$
35.0

$
60.2

$
10.3

$
105.5

We describe above how we calculate AUM. Also, as noted above, our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.

Liquidity and Capital Resources

We believe that we can satisfy our working capital and funding requirements with internally generated cash flow and, as necessary, borrowings under our revolving credit facility. Our expected capital requirements for ~~2020~~2021 include up to approximately ~~$385~~$235 million of anticipated capital expenditures, net of tenant concessions. As of December 31, ~~2019,~~2020, we had aggregate commitments of ~~$72.1~~$76.5 million to fund future co-investments in our Real Estate Investments business, ~~$46.3~~$30.1 million of which is expected to be funded in ~~2020.~~2021. Additionally, as of December 31, ~~2019,~~2020, we are committed to fund ~~$50.1~~$34.8 million of additional capital to unconsolidated subsidiaries within our Real Estate Investments business, which we may be required to fund at any time. As of December 31, ~~2019,~~2020, we had $2.8 billion of borrowings available under our revolving credit ~~facility.~~

facility and $1.8 billion of cash and cash equivalents available for general corporate use.

We have historically relied on our internally generated cash flow and our revolving credit facility to fund our working capital, capital expenditure and general investment requirements (including strategic in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements. In the absence of extraordinary events or a large strategic acquisition, we anticipate that our cash flow from operations and our revolving credit facility would be sufficient to meet our anticipated cash requirements for the foreseeable future, and at a minimum for the next 12 months. Given compensation is our largest expense and our sales and leasing professionals are generally paid on a commission and/or bonus basis that correlates with their revenue production, the negative effect of difficult market conditions is partially mitigated by the inherent variability of our compensation cost structure. In addition, when negative economic conditions have been particularly severe, we have moved decisively to lower operating expenses to improve financial performance, and then have restored certain expenses as economic conditions improved. We may seek to take advantage of market opportunities to refinance existing debt instruments, as we have done in the past, with new debt instruments at interest rates, maturities and terms we deem attractive. We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

On December 28, 2020, we redeemed the $425.0 million aggregate outstanding principal amount of our 5.25% senior notes due 2025 in full. We funded this redemption using cash on hand.

As noted above, we believe that any future significant acquisitions ~~that~~ we may make could require us to obtain additional debt or equity financing. In the past, we have been able to obtain such financing for material transactions on terms that we believed to be reasonable. However, it is possible that we may not be able to obtain acquisition financing on favorable terms, or at all, in the future if we decide to make any further significant acquisitions.

Our long-term liquidity needs, other than those related to ordinary course obligations and commitments such as operating leases, are generally comprised of three elements. The first is the repayment of the outstanding and anticipated principal amounts of our long-term indebtedness. If our cash flow is insufficient to repay our long-term debt when it comes due, then we expect that we would need to refinance such indebtedness or otherwise amend its terms to extend the maturity dates. We cannot make any assurances that such refinancing or amendments would be available on attractive terms, if at all.

The second long-term liquidity need is the payment of obligations related to acquisitions. Our acquisition structures often include deferred and/or contingent purchase ~~price payments~~consideration in future periods that are subject to the passage of time or achievement of certain performance metrics and other conditions. As of December 31, ~~2019~~2020 and ~~2018,~~2019, we had accrued deferred purchase consideration totaling $82.5 million ($14.3 million of which was a current liability) and $111.7 million ($41.6 million of which was a current liability) ~~and $136.3 million ($41.7 million of which was a current liability)~~, respectively, ~~of deferred purchase consideration,~~ which was included in ~~accounts~~“Accounts payable and accrued ~~expenses~~expenses” and in ~~other long-term liabilities~~“Other liabilities” in the accompanying consolidated balance sheets set forth in Item 8 of this Annual Report.

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Lastly, as described in ~~October 2016, we announced that~~Note 16 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, our board of directors ~~had~~ authorized a program for the ~~company to~~ repurchase of up to ~~an aggregate of $250.0~~$500.0 million of our Class A common stock over three years. ~~As of~~During the year ended December 31, ~~2018,~~2020, we spent ~~$161.0~~$50.0 million to repurchase ~~3,980,656~~1,050,084 shares of our Class A common stock ~~with~~at an average price ~~paid~~of $47.62 per share of $40.43. During the month of January 2019, under the October 2016 program, we spent $45.1 million to repurchase an additional 1,144,449 shares of our Class A common stock with an average price paid per share of $39.38. In February 2019, our board of directors authorized a new program for the company to repurchase up to $300.0 million of our Class A common stock over three years, effective March 11, 2019. The previous program terminated upon the effectiveness of the new program. In both August 2019 and November 2019, our board of directors authorized an additional $100.0 million under our new program, bringing the total authorized amount under the new program to a total of $500.0 million as of March 2, 2020.

During the year ended December 31, 2019, under the March 2019 program, we spent $100.0 million to repurchase 1,936,458 shares of our Class A common stock with an average price paid per share of $51.64. As of March 2, 2020, we had $400.0 million of capacity remaining under our current stock repurchase program.using cash on hand. Our stock repurchases have been funded with cash on hand and we intend to continue funding future ~~stock~~ repurchases with existing cash. We may utilize our stock repurchase program to continue offsetting the impact of our stock-based compensation program and on a more opportunistic basis if we believe our stock presents a compelling investment compared to other discretionary uses. The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors.

As of December 31, 2020, we had $350.0 million of capacity remaining under our repurchase program.

Historical Cash Flows

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Operating Activities

Net cash provided by operating activities totaled ~~$1.2~~$1.8 billion for the year ended December 31, ~~2019,~~2020, an increase of ~~$92.1~~$607.4 million as compared to the year ended December 31, ~~2018.~~2019. The company experienced an overall increase in net ~~cash provided by operating activities was primarily due to improved operating performance,~~working capital of approximately $1.1 billion, partially offset by lower ~~distribution~~net income of ~~earnings~~$535.6 million as compared to the same period in the previous year. The positive impact from ~~unconsolidated subsidiaries during~~net working capital was largely attributable to a decrease in accounts receivable due to a heightened focus on cash collections across our businesses, and lower net income tax payments due to the refunds received in the current year ~~ended December 31, 2019.~~

related to the prior year tax restructuring, partially offset by a net decrease to accounts payable and accrued expenses, as well as compensation payable and accrued bonus.

Investing Activities

Net cash ~~provided by operating~~used in investing activities totaled ~~$1.1 billion~~$341.6 million for the year ended December 31, ~~2018, an increase~~2020, a decrease of ~~$236.8~~$379.4 million as compared to the year ended December 31, ~~2017. The increase~~2019. This decrease was largely driven by a decrease of $26.9 million in ~~net cash provided~~capital expenditures during 2020 and lower amounts paid for acquisitions compared to 2019 which was driven primarily by ~~operating activities was primarily due to improved operating performance as well as a higher distribution of earnings from unconsolidated subsidiaries during~~ the ~~year ended December 31, 2018.~~

~~Investing~~Telford Acquisition.

Financing Activities

Net cash used in ~~investing~~financing activities totaled ~~$721.0~~$625.3 million for the year ended December 31, ~~2019,~~2020, an increase of ~~$160.3~~$353.3 million as compared to the year ended December 31, ~~2018.~~2019. This increase was largely driven by an increase of $65.7 million in capital expenditures and higher amounts paid for acquisitions (driven by the Telford Acquisition) during the year ended December 31, 2019. Additionally, higher contributions to unconsolidated subsidiaries and lower distributions received from unconsolidated subsidiaries during the year ended December 31, 2019 contributed to the higher net use of cash in investing activities.

Net cash used in investing activities totaled $560.7 million for the year ended December 31, 2018, an increase of $258.1 million as compared to the year ended December 31, 2017. The increase in cash used in investing activities was primarily driven by $204.1 million more incurred for acquisitions (driven by the FacilitySource Acquisition) and an increase of $49.8 million in capital expenditures during the year ended December 31, 2018.

~~Financing Activities~~

~~Net cash used in financing activities totaled $271.9 million for the year ended December 31, 2019, a decrease of $234.7 million as compared to the year ended December 31, 2018. This decrease~~ was primarily due to the impact of the full redemption of the ~~$800.0~~$425.0 million aggregate outstanding principal amount of our ~~5.00%~~5.25% senior notes (including ~~$20.0~~a premium of $73.6 million) and due to $44.8 million ~~premium)~~in lower net contributions received from non-controlling interests during the year ended December 31, ~~2018.~~2020. This was partially offset by the impact of ~~higher net borrowings of $552.7 million from our senior term loans during the year ended December 31, 2018 and the~~ repayment of debt assumed in the Telford Acquisition of $110.7 million during ~~the year ended December 31,~~ 2019.

~~Net cash~~ In addition, we used ~~in financing activities totaled $506.6~~$95.1 million less for the year ended December 31, 2018, a decrease of $121.1 million as compared to the year ended December 31, 2017. This decrease was primarily due to $1.1 billion of higher net borrowings from our senior term loans during the year ended December 31, 2018, largely offset by the full redemption of the $800.0 million aggregate outstanding principal amount of our 5.00% senior notes (including $20.0 million premium) as well as the $161.0 million repurchase of ~~our~~ common stock during the year ended December 31, ~~2018.~~

2020.

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Summary of Contractual Obligations and Other Commitments

The following is a summary of our various contractual obligations and other commitments as of December 31, ~~2019~~2020 (dollars in thousands):

Payments Due by Period

Contractual Obligations

Total

Less than
1 year

1 - 3 years

3 - 5 years

More than
5 years

Total gross long-term debt (1)

$
1,775,392

$
1,814

$
47

$
748,531

$
1,025,000

Short-term borrowings (2)

981,709

981,709

—

—

—

Operating leases (3)

1,432,656

175,958

378,357

308,981

569,360

Financing leases (3)

99,041

35,532

46,578

16,931

—

Defined benefit pension liability (4)

107,996

107,996

—

—

—

Total gross notes payable on real estate (5)

13,271

6,773

6,498

—

—

Deferred purchase consideration (6)

111,664

41,569

25,211

40,100

4,784

Total Contractual Obligations

$
4,521,729

$
1,351,351

$
456,691

$
1,114,543

$
1,599,144

Amount of Other Commitments Expiration

Other Commitments

Total

Less than
1 year

1 - 3 years

3 - 5 years

More than
5 years

Self-insurance reserves (7)

$
125,837

$
125,837

$
—

$
—

$
—

Tax liabilities (8)

108,301

14,654

38,198

55,449

—

Co-investments (9) (10)

122,270

96,487

14,939

4,567

6,277

Letters of credit (9)

91,766

91,766

—

—

—

Guarantees (9) (11)

80,143

80,143

—

—

—

Total Other Commitments

$
528,317

$
408,887

$
53,137

$
60,016

$
6,277

~~(1)~~

Reflects gross outstanding long-term debt balances as of December 31, 2019, assumed to be paid at maturity, excluding unamortized discount, premium and deferred financing costs. See Note 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report. Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make the following interest payments (dollars in thousands): 2020 – $63,000; 2021 to 2022 – $126,000; 2023 to 2024 – $115,874 and thereafter – $38,582.

~~(2)~~

The majority of this balance represents our warehouse lines of credit, which are recourse only to our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) and are secured by our related warehouse receivables. See Notes 5 and 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.

~~(3)~~

~~See Note 12 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.~~


	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Total gross long-term debt (1)	$	1,390,273	$	1,514	$	488,759	$	300,000	$	600,000
Short-term borrowings (2)	1,389,294		1,389,294		—		—		—
Operating leases (3)	1,517,258		214,887		411,882		338,828		551,661
Financing leases (3)	539,243		64,363		87,077		23,702		364,101
Total gross notes payable on real estate (4)	80,064		—		65,064		—		15,000
Deferred purchase consideration (5)	82,539		14,301		52,754		10,934		4,550
Total contractual obligations	$	4,998,671	$	1,684,359	$	1,105,536	$	673,464	$	1,535,312

~~(4)~~

See Note 14 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report. These obligations are related, either wholly or partially, to the future retirement of our employees and such retirement dates are not predictable. An undeterminable portion of this amount will be paid in years one through five.

~~(5)~~

Reflects gross outstanding notes payable on real estate as of December 31, 2019 (only $0.6 million of which is recourse to us, beyond being recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable), assumed to be paid at maturity, excluding unamortized deferred financing costs. Amounts do not include scheduled interest payments. The notes have either fixed or variable interest rates, ranging from 4.29% to 4.75% at December 31, 2019.


	Amount of Other Commitments Expiration
Other Commitments	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Self-insurance reserves (6)	$	140,458	$	140,458	$	—	$	—	$	—
Tax liabilities (7)	54,761		—		24,328		30,433		—
Co-investments (8) (9)	111,252		64,845		27,317		5,472		13,618
Letters of credit (8)	154,484		154,484		—		—		—
Guarantees (8) (10)	42,078		42,078		—		—		—
Total other commitments	$	503,033	$	401,865	$	51,645	$	35,905	$	13,618

~~(6)~~

Represents deferred obligations related to previous acquisitions, which are included in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets at December 31, 2019The table above excludes estimated payment obligations for our qualified defined benefit pension plans. For information about our future estimated payment obligations for these plans, see Note 14 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.

~~(7)~~

Represents outstanding reserves for claims under certain insurance programs, which are included in other current and other long-term liabilities in the consolidated balance sheets at December 31, 2019 set forth in Item 8 of this Annual Report. Due to the nature of this item, payments could be due at any time upon the occurrence of certain events. Accordingly, the entire balance has been reflected as expiring in less than one year.

_______________

~~(8)~~(1)Reflects gross outstanding long-term debt balances as of December 31, 2020, assumed to be paid at maturity, excluding unamortized discount, premium and deferred financing costs. See Note 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report. Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make the following interest payments (dollars in thousands): 2021 – $36,380; 2022 to 2023 – $72,649; 2024 to 2025 – $59,098 and thereafter – $4,808.

As of December 31, 2019, we have a remaining federal tax liability of $107.8 million (of which $14.2 million is due in less than one year) associated with the Transition Tax on mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act.

(2)The majority of this balance represents our warehouse lines of credit, which are recourse only to our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) and are secured by our related warehouse receivables. See Notes 5 and 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(3)See Note 12 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(4)Reflects gross outstanding notes payable on real estate as of December 31, 2020 (none of which is recourse to us, beyond being recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable), assumed to be paid at maturity, excluding unamortized deferred financing costs. Amounts do not include scheduled interest payments. The notes have either fixed or variable interest rates, ranging from 2.00% to 4.00% at December 31, 2020.

(5)Represents deferred obligations related to previous acquisitions, which are included in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets at December 31, 2020 set forth in Item 8 of this Annual Report.

(6)Represents outstanding reserves for claims under certain insurance programs, which are included in other current and other long-term liabilities in the consolidated balance sheets at December 31, 2020 set forth in Item 8 of this Annual Report. Due to the nature of this item, payments could be due at any time upon the occurrence of certain events. Accordingly, the entire balance has been reflected as expiring in less than one year.

(7)As of December 31, 2020, we have a remaining federal tax liability of $54.8 million associated with the Transition Tax on mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act.

In addition, as of December 31, ~~2019,~~2020, our current and non-current tax liabilities (including interest and penalties) for uncertain tax positions, totaled ~~$141.1~~$168.5 million. Of this amount, we can reasonably estimate that ~~$0.5 million~~none will require cash settlement in less than one year. We are unable to reasonably estimate the timing of the effective settlement of tax positions for the remaining ~~$140.6~~$168.5 million. See Note 15 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

~~(9)~~

~~See Note 13 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.~~

~~(10)~~

Includes $72.1 million to fund future co-investments in our Real Estate Investments segment, $46.3 million of which is expected to be funded in 2020, and $50.1 million committed to invest in unconsolidated real estate subsidiaries as a principal, which is callable at any time.

~~(11)~~

Due to the nature of guarantees, payments could be due at any time upon the occurrence of certain triggering events, including default. Accordingly, all guarantees are reflected as expiring in less than one year.

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(8)See Note 13 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(9)Includes $76.5 million to fund future co-investments in our Real Estate Investments segment, $30.1 million of which is expected to be funded in 2021, and $34.8 million committed to invest in unconsolidated real estate subsidiaries as a principal, which is callable at any time.

(10)Due to the nature of guarantees, payments could be due at any time upon the occurrence of certain triggering events, including default. Accordingly, all guarantees are reflected as expiring in less than one year.

Indebtedness

Our level of indebtedness increases the possibility that we may be unable to pay the principal amount of our indebtedness and other obligations when due. In addition, we may incur additional debt from time to time to finance strategic acquisitions, investments, joint ventures or for other purposes, subject to the restrictions contained in the documents governing our indebtedness. If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase.

Long-Term Debt

We maintain credit facilities with third-party lenders, which we use for a variety of purposes. On ~~October 31, 2017,~~March 4, 2019, CBRE Services, Inc. (CBRE Services)~~, our wholly-owned subsidiary,~~ entered into a Credit Agreement (the 2017 Credit Agreement), which refinanced and replaced our prior credit agreement (the 2015 Credit Agreement). We used $200.0 million of borrowings from the tranche A term loan facility and $83.0 million of revolving credit facility borrowings under the 2017 Credit Agreement, in addition to cash on hand, to repay all amounts outstanding under the 2015 Credit Agreement. On December 20, 2018, CBRE Global Acquisition Company, a wholly-owned subsidiary of CBRE Services, entered into an incremental term loan assumption agreement with a syndicate of banks jointly led by Wells Fargo Bank and National Westminster Bank plc to establish a euro term loan facility under the 2017 Credit Agreement in an aggregate principal amount of €400.0 million. The proceeds from the euro term loan facility were used to repay a portion of the U.S. dollar denominated term loans outstanding under the 2017 Credit Agreement. On March 4, 2019, CBRE Services entered into an additional incremental assumption agreement with respect to ~~the~~its credit agreement, dated October 31, 2017 ~~Credit Agreement (the 2017 Agreement~~(such agreement, as amended by a December 20, 2018 incremental loan assumption agreement and such March 4, 2019 incremental assumption agreement, is collectively referred to in this Annual Report as the 2019 Credit Agreement), which (i) extended the maturity of the U.S. dollar tranche A term loans under ~~the 2017 Credit Agreement,~~such credit agreement, (ii) extended the termination date of the revolving credit commitments available under ~~the 2017 Credit Agreement~~such credit agreement and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit ~~commitments.~~commitments under such credit agreement. The proceeds from the new tranche A term loan facility under the 2019 Credit Agreement were used to repay the $300.0 million of tranche A term loans outstanding under the ~~2017 Credit Agreement.~~

credit agreement in effect prior to the entry into the 2019 incremental assumption agreement.

The 2019 Credit Agreement is a senior unsecured credit facility that is jointly and severally guaranteed by us and certain of our subsidiaries. As of December 31, ~~2019,~~2020, the 2019 Credit Agreement provided for the following: (1) a $2.8 billion incremental revolving credit facility, which includes the capacity to obtain letters of credit and swingline loans and terminates on March 4, 2024; (2) a $300.0 million incremental tranche A term loan facility maturing on March 4, 2024, requiring quarterly principal payments unless our leverage ratio (as defined in the 2019 Credit Agreement) is less than or equal to 2.50 to 1.00 on the last day of the fiscal quarter immediately preceding any such payment date and (3) a €400.0 million term loan facility due and payable in full at maturity on December 20, 2023.

We redeemed these notes in full on December 28, 2020 and incurred charges of $75.6 million, including a premium of $73.6 million and the write-off of $2.0 million of unamortized premium and debt issuance costs. We funded this redemption using cash on hand.

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On March 14, 2013, CBRE Services issued $800.0 million in aggregate principal amount of 5.00% senior notes due March 15, 2023. The 5.00% senior notes were unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 5.00% senior notes were jointly and severally guaranteed on a senior basis by us and each domestic subsidiary of CBRE Services that guaranteed our 2017 Credit Agreement. Interest accrued at a rate of 5.00% per year and was payable semi-annually in arrears on March 15 and September 15. The 5.00% senior notes were redeemable at our option, in whole or in part, on March 15, 2018 at a redemption price of 102.5% of the principal amount on that date. We redeemed these notes in full on March 15, 2018 and incurred charges of $28.0 million, including a premium of $20.0 million and the write-off of $8.0 million of unamortized deferred financing costs. We funded this redemption with $550.0 million of borrowings from our tranche A term loan facility and $270.0 million of borrowings from our revolving credit facility under our 2017 Credit Agreement.

In addition, this indenture requires that the 4.875% senior notes be jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and each domestic subsidiary of CBRE Services that guarantees the 2019 Credit Agreement.

Our 2019 Credit Agreement and 4.875% senior notes are fully and unconditionally and jointly and severally guaranteed by us and certain subsidiaries (see Exhibit 22.1 to this Annual Report for a listing of all such subsidiary guarantors). Combined summarized financial information for CBRE Group, Inc. (parent); CBRE Services (subsidiary issuer); and the guarantor subsidiaries (collectively referred to as the obligated group), which excludes investment balances in non-guarantor subsidiaries as well as income from consolidated non-guarantor subsidiaries, is as follows (dollars in thousands):


	December 31,
	2020		2019
Balance Sheet Data:
Current assets	$	3,307,147	$	2,901,618
Noncurrent assets (1)	5,252,455		5,610,084
Total assets (1)	8,559,602		8,511,702

Current liabilities	$	3,241,264	$	2,893,775
Noncurrent liabilities	1,884,629		2,201,269
Total liabilities	5,125,893		5,095,044


	Year Ended December 31,
	2020		2019
Statement of Operations Data:
Revenue	$	13,117,846	$	13,550,005
Operating income	363,829		670,145
Net income	353,068		998,319

_______________

(1)Includes $360.0 million and $574.6 million of intercompany loan receivables from non-guarantor subsidiaries as of December 31, 2020 and 2019, respectively. All intercompany balances and transactions between CBRE Group, CBRE Services and the guarantor subsidiaries have been eliminated.

The €400.0 million term loan facility under our 2019 Credit Agreement is jointly and severally guaranteed by five of our foreign subsidiaries. Such subsidiaries have been omitted from the table above given they do not jointly and severally guarantee other amounts under the 2019 Credit Agreement or the 4.875% senior notes. Additionally, such subsidiaries, if considered in the aggregate as if they were a single subsidiary, would not constitute a significant subsidiary.

For additional information on all of our long-term debt, see Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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Short-Term Borrowings

~~Our wholly-owned subsidiary, CBRE Capital Markets, has~~

We maintain a $2.8 billion revolving credit facility under the ~~following~~2019 Credit Agreement and warehouse lines of ~~credit: i)~~ credit ~~agreements~~ with JP Morgan Chase Bank, N.A., Bank of America, N.A., TD Bank, N.A., Capital One, N.A. and MUFG Union Bank, N.A. for the purpose of funding mortgage loans that will be resold; and ii) a funding arrangement with Federal National Mortgage Association, or Fannie Mae, for the purpose of selling a percentage of certain ~~closed multifamily loans to Fannie Mae.~~third-party lenders. For ~~more~~additional information on ~~these warehouse lines,~~all of our short-term borrowings, see Notes 5 and 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Subsequent Event

As described in Note 10 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, the company made a $50.0 million non-controlling investment in Industrious in the fourth quarter of 2020. On February 19, 2021, the company made an additional non-controlling investment in Industrious, for approximately $150.0 million in the form of primary and secondary shares, as well as shares issued in anticipation of Industrious closing on the transfer of Hana in the second quarter of 2021. Following this transaction, CBRE holds a 35% interest in Industrious. In addition, CBRE has entered into a series of agreements to acquire additional shares, whereby the company will increase its interest in Industrious from 35% to 40%.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

~~Item 7A.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

Our exposure to market risk primarily consists of foreign currency exchange rate fluctuations related to our international operations and changes in interest rates on debt obligations. We manage such risk primarily by managing the amount, sources, and duration of our debt funding and by using derivative financial instruments. We apply ~~the~~FASB ASC (Topic 815), “Derivatives and Hedging,” ~~Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) (Topic 815)~~ when accounting for derivative financial instruments. In all cases, we view derivative financial instruments as a risk management tool and, accordingly, do not use derivatives for trading or speculative purposes.

Exchange Rates

Our foreign operations expose us to fluctuations in foreign exchange rates. These fluctuations may impact the value of our cash receipts and payments in terms of our functional (reporting) currency, which is the U.S. ~~dollars.~~dollar. See the discussion of international operations, which is included in Item 7. ~~“Management's~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “International Operations” and is incorporated by reference herein.

Interest Rates

We manage our interest expense by using a combination of fixed and variable rate debt. Historically, we have entered into interest rateswap agreements to attempt to hedge the variability of future interest payments due to changes in interest rates. As of December 31, ~~2019,~~2020, we do not have any outstanding interest rate swap agreements.

The estimated fair value of our senior term loans was approximately ~~$745.5~~$772.2 million at December 31, ~~2019.~~2020. Based on dealers’ quotes, the estimated fair ~~values~~value of our 4.875% senior notes ~~and 5.25% senior notes were $670.7~~was $702.5 million ~~and $478.3 million, respectively,~~ at December 31, ~~2019.~~

2020.

We utilize sensitivity analyses to assess the potential effect on our variable rate debt. If interest rates were to increase 100 basis points on our outstanding variable rate debt at December 31, ~~2019,~~2020, the net impact of the additional interest cost would be a decrease of $7.5 million on pre-tax income and a decrease of $7.5 million in cash provided by operating activities for the year ended December 31, ~~2019.~~

2020.

~~Item 8.~~

~~Financial Statements and Supplementary Data.~~

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Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULES

	~~Page~~
		Page

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements		52 55

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		54 57

Consolidated Balance Sheets at December 31, ~~2019~~2020 and ~~2018~~2019		56 59

Consolidated Statements of Operations for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018		57 60

Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018		58 61

Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018		59 62

Consolidated Statements of Equity for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018		61 64

Notes to Consolidated Financial Statements		63 66

Quarterly Results of Operations (Unaudited)		~~117~~ 115


FINANCIAL STATEMENT SCHEDULES:

Schedule II -Valuation and Qualifying Accounts		122

All other schedules are omitted because they are either not applicable, not required or the information required is included in the Consolidated Financial Statements, including the notes thereto.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

CBRE Group, Inc.:

Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance sheets of CBRE Group, Inc. and subsidiaries (the Company) as of December 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the years in the three‑year period ended December 31, ~~2019,~~2020, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2019~~2020 and ~~2018,~~2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, ~~2019,~~2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2019,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated ~~March 2, 2020~~February 24, 2021 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 32 to the consolidated financial statements, the Company has changed its method of accounting for leases ~~in 2019~~ due to the adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases.

, as of January 1, 2019.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex ~~judgment.~~judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of Gross Unrecognized Tax Benefits

As discussed in Notes 2 and 15 to the consolidated financial statements, the Company has recorded gross unrecognized tax benefits of ~~$141.2~~$168.5 million as of December 31, ~~2019.~~2020. The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates there is more than a 50% likelihood that the position will be sustained upon examination, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.

We identified the assessment of the gross unrecognized tax benefits as a critical audit matter. Complex auditor judgment ~~was~~and the involvement of tax professionals with specialized skills and knowledge were required in evaluating the Company’s interpretation of tax law and its estimate of the resolution of the tax positions underlying the unrecognized tax benefits.

The following are the primary procedures we performed to address this critical audit ~~matter included~~matter. We evaluated the ~~following. We~~design and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefits process, including the interpretation of tax ~~law and the estimate of the unrecognized tax benefits.~~law. Since tax law is complex and often subject to interpretations, we involved tax ~~and valuation~~ professionals with specialized skills and knowledge, who assisted in:

•

~~Evaluating the Company’s interpretation of tax law and the potential impact on the Company’s tax positions,~~

•

~~Assessing transfer pricing policies for compliance with applicable laws and regulations,~~

•Obtaining an understanding of the Company’s tax planning strategies including changes in legal entity structures and intercompany financing arrangements,

~~Inspecting settlement documents with applicable taxing authorities, and assessing the expiration of statutes of limitations, and~~

•

~~Performing an independent assessment of certain of the Company’s tax positions and comparing the results to the Company’s assessment.~~

•Evaluating the Company’s interpretation of tax law and the potential impact on the Company’s tax positions,

•Inspecting correspondence with applicable taxing authorities, and assessing the expiration of statutes of limitations, and

•Performing an independent assessment of certain of the Company’s tax positions and comparing the results to the Company’s assessment.

/s/ KPMG LLP

We have served as the Company’s auditor since 2008.

Los Angeles, California

~~March 2, 2020~~

February 24, 2021

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

CBRE Group, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited CBRE Group, Inc. and subsidiaries’~~(the~~ (the Company) internal control over financial reporting as of December 31, ~~2019,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, ~~2019,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the years in the three-year period ended December 31, ~~2019,~~2020, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated ~~March 2, 2020~~February 24, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Telford Homes Plc during 2019 and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 Telford Homes Plc’s internal control over financial reporting associated with total assets of $525.4 million and total revenues of $97.5 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Telford Homes Plc.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The ~~following~~ material weaknesses described as follows have been identified and included in management’s assessment:

•

The Global Workplace Solutions segment in the Company’s EMEA region (GWS EMEA) did not have sufficient resources with the appropriate reporting lines, roles and responsibilities, authority, training and skill sets to design and operate financial activities, including controls, in an appropriate and timely manner.

•

GWS EMEA did not effectively assess and address the risks posed by changes in the business and the related effect on the GWS EMEA system of internal controls. In relation to this, specific to the rollout of GWS EMEA’s primary financial system, GWS EMEA did not effectively operate general information technology controls related to financial data migrations, user access, system changes and financial data processing. Because of the deficiencies in general information technology controls, the business process controls (automated and manual) that are dependent on this system were also deemed ineffective because they could have been adversely impacted.

•The Global Workspace Solutions segment in the Company’s EMEA region (GWS EMEA) did not have sufficient resources in the local GWS EMEA territories with the appropriate reporting lines, roles and responsibilities, authority, training and skill sets to design and operate financial activities, including controls, in an appropriate and timely manner.

~~GWS EMEA did not design or execute control activities that sufficiently mitigated the financial reporting risks related to GWS EMEA.~~

•

~~GWS EMEA did not have an effective information and communication process to identify, capture and process relevant information necessary for financial accounting and reporting.~~

•GWS EMEA did not effectively assess and address the risks posed by changes in the business and the related effect on the GWS EMEA system of internal controls. In relation to this, specific to the rollout of GWS EMEA’s primary financial system, GWS EMEA did not effectively operate general information technology controls related to financial data migrations, user access, system changes and financial data processing. Because of the deficiencies in general information technology controls, the business process controls (automated and manual) that are dependent on this system were also deemed ineffective because they could have been adversely impacted.

The Company did not monitor the presentation and effectiveness of components of internal control through evaluation and remediation in an appropriate manner within GWS EMEA and GWS EMEA was not sufficiently integrated with the corporate oversight function.

•GWS EMEA did not design or execute control activities that sufficiently mitigated the financial reporting risks related to GWS EMEA.

•GWS EMEA did not have an effective information and communication process to identify, capture and process relevant information necessary for financial accounting and reporting.

•The Company did not monitor the presentation and effectiveness of components of internal control through evaluation and remediation in an appropriate manner within GWS EMEA and GWS EMEA was not sufficiently integrated with the corporate oversight function.

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Consequently, there were control failures for GWS EMEA in the areas of revenue and receivables, balance sheet account reconciliations, journal entries and general information technology controls. The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the ~~2019~~2020 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial ~~Reporting~~.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Los Angeles, California

~~March 2, 2020~~

February 24, 2021

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CBRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

December 31,

2019

2018

ASSETS

Current Assets:

Cash and cash equivalents

$
971,781

$
777,219

Restricted cash

121,964

86,725

Receivables, less allowance for doubtful accounts of $72,725 and $60,348 at
   December 31, 2019 and 2018, respectively

4,466,674

3,668,591

Warehouse receivables

993,058

1,342,468

Contract assets

328,012

307,020

Prepaid expenses

282,741

254,892

Income taxes receivable

93,915

71,684

Other current assets

276,319

245,611

Total Current Assets

7,534,464

6,754,210

Property and equipment, net

836,206

721,692

Goodwill

3,753,493

3,652,309

Other intangible assets, net of accumulated amortization of $1,358,528 and $1,180,393 at
   December 31, 2019 and 2018, respectively

1,379,546

1,441,308

Operating lease assets

997,966

—

Investments in unconsolidated subsidiaries

426,711

216,174

Non-current contract assets

201,760

74,762

Real estate under development

185,508

4,586

Non-current income taxes receivable

139,136

—

Deferred tax assets, net

73,864

51,703

Other assets, net

668,542

540,049

Total Assets

$
16,197,196

$
13,456,793

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable and accrued expenses

$
2,436,084

$
1,919,827

Compensation and employee benefits payable

1,324,990

1,121,179

Accrued bonus and profit sharing

1,261,974

1,189,395

Operating lease liabilities

168,663

—

Contract liabilities

108,671

82,227

Income taxes payable

30,207

68,100

Short-term borrowings:

Warehouse lines of credit (which fund loans that U.S. Government Sponsored
   Enterprises have committed to purchase)

977,175

1,328,761

Other

4,534

—

Total short-term borrowings

981,709

1,328,761

Current maturities of long-term debt

1,814

3,146

Other current liabilities

122,339

90,745

Total Current Liabilities

6,436,451

5,803,380

Long-term debt, net of current maturities

1,761,245

1,767,260

Non-current operating lease liabilities

1,057,758

—

Non-current income taxes payable

93,647

—

Non-current tax liabilities

85,966

172,626

Deferred tax liabilities, net

34,593

107,425

Other liabilities

454,424

596,200

Total Liabilities

9,924,084

8,446,891

Commitments and contingencies

—

—

Equity:

CBRE Group, Inc. Stockholders’ Equity:

Class A common stock; $0.01 par value; 525,000,000 shares authorized; 334,752,283 and
   336,912,783 shares issued and outstanding at December 31, 2019 and 2018, respectively

3,348

3,369

Additional paid-in capital

1,115,944

1,149,013

Accumulated earnings

5,793,149

4,504,684

Accumulated other comprehensive loss

(679,748
)

(718,269
)
Total CBRE Group, Inc. Stockholders’ Equity

6,232,693

4,938,797

Non-controlling interests

40,419

71,105

Total Equity

6,273,112

5,009,902

Total Liabilities and Equity

$
16,197,196

$
13,456,793


	December 31,
	2020		2019
ASSETS
Current Assets:
Cash and cash equivalents	$	1,896,188	$	971,781
Restricted cash	143,059		121,964
Receivables, less allowance for doubtful accounts of $95,533 and $72,725 at December 31, 2020 and 2019, respectively	4,394,954		4,466,674
Warehouse receivables	1,411,170		993,058
Contract assets	318,191		328,012
Prepaid expenses	294,992		282,741
Income taxes receivable	93,756		93,915
Other current assets	293,321		276,319
Total Current Assets	8,845,631		7,534,464
Property and equipment, net	815,009		836,206
Goodwill	3,821,609		3,753,493
Other intangible assets, net of accumulated amortization of $1,556,537 and $1,358,528 at December 31, 2020 and 2019, respectively	1,367,913		1,379,546
Operating lease assets	1,020,352		997,966
Investments in unconsolidated subsidiaries (with $116,314 and $124,262 at fair value at December 31, 2020 and 2019, respectively)	452,365		426,711
Non-current contract assets	153,636		201,760
Real estate under development	277,630		185,508
Non-current income taxes receivable	43,555		139,136
Deferred tax assets, net	91,529		73,864
Investments held in trust - special purpose acquisition company	402,501		0
Other assets, net	747,413		668,542
Total Assets	$	18,039,143	$	16,197,196
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,692,939	$	2,436,084
Compensation and employee benefits payable	1,287,383		1,324,990
Accrued bonus and profit sharing	1,183,786		1,261,974
Operating lease liabilities	208,526		168,663
Contract liabilities	162,045		108,671
Income taxes payable	57,892		30,207
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)	1,383,964		977,175
Other short-term borrowings	5,330		4,534
Current maturities of long-term debt	1,514		1,814
Other current liabilities	160,604		122,339
Total Current Liabilities	7,143,983		6,436,451
Long-term debt, net of current maturities	1,380,202		1,761,245
Non-current operating lease liabilities	1,116,795		1,057,758
Non-current income taxes payable	54,761		93,647
Non-current tax liabilities	87,954		85,966
Deferred tax liabilities, net	124,485		34,593
Other liabilities	625,303		454,424
Total Liabilities	10,533,483		9,924,084
Commitments and contingencies	0		0
Non-controlling interest subject to possible redemption - special purpose acquisition company	385,573		0
Equity:
CBRE Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 335,561,345 and 334,752,283 shares issued and outstanding at December 31, 2020 and 2019, respectively	3,356		3,348
Additional paid-in capital	1,074,639		1,115,944
Accumulated earnings	6,530,057		5,793,149
Accumulated other comprehensive loss	(529,726)		(679,748)
Total CBRE Group, Inc. Stockholders’ Equity	7,078,326		6,232,693
Non-controlling interests	41,761		40,419
Total Equity	7,120,087		6,273,112
Total Liabilities and Equity	$	18,039,143	$	16,197,196

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Year Ended December 31,

2019

2018

2017

Revenue

$
23,894,091

$
21,340,088

$
18,628,787

Costs and expenses:

Cost of revenue

18,689,013

16,449,212

14,305,099

Operating, administrative and other

3,436,009

3,365,773

2,858,720

Depreciation and amortization

439,224

451,988

406,114

Intangible asset impairment

89,787

—

—

Total costs and expenses

22,654,033

20,266,973

17,569,933

Gain on disposition of real estate

19,817

14,874

19,828

Operating income

1,259,875

1,087,989

1,078,682

Equity income from unconsolidated subsidiaries

160,925

324,664

210,207

Other income

28,907

93,020

9,405

Interest expense, net of interest income

85,754

98,685

126,961

Write-off of financing costs on extinguished debt

2,608

27,982

—

Income before provision for income taxes

1,361,345

1,379,006

1,171,333

Provision for income taxes

69,895

313,058

467,757

Net income

1,291,450

1,065,948

703,576

Less:  Net income attributable to non-controlling interests

9,093

2,729

6,467

Net income attributable to CBRE Group, Inc.

$
1,282,357

$
1,063,219

$
697,109

Basic income per share:

Net income per share attributable to CBRE Group, Inc.

$
3.82

$
3.13

$
2.06

Weighted average shares outstanding for basic income per
   share

335,795,654

339,321,056

337,658,017

Diluted income per share:

Net income per share attributable to CBRE Group, Inc.

$
3.77

$
3.10

$
2.05

Weighted average shares outstanding for diluted income per
   share

340,522,871

343,122,741

340,783,556


	Year Ended December 31,
	2020		2019		2018
Revenue	$	23,826,195	$	23,894,091	$	21,340,088
Costs and expenses:
Cost of revenue	19,047,620		18,689,013		16,449,212
Operating, administrative and other	3,306,205		3,436,009		3,365,773
Depreciation and amortization	501,728		439,224		451,988
Asset impairments	88,676		89,787		0
Total costs and expenses	22,944,229		22,654,033		20,266,973
Gain on disposition of real estate	87,793		19,817		14,874
Operating income	969,759		1,259,875		1,087,989
Equity income from unconsolidated subsidiaries	126,161		160,925		324,664
Other income	17,394		28,907		93,020
Interest expense, net of interest income	67,753		85,754		98,685
Write-off of financing costs on extinguished debt	75,592		2,608		27,982
Income before provision for income taxes	969,969		1,361,345		1,379,006
Provision for income taxes	214,101		69,895		313,058
Net income	755,868		1,291,450		1,065,948
Less: Net income attributable to non-controlling interests	3,879		9,093		2,729
Net income attributable to CBRE Group, Inc.	$	751,989	$	1,282,357	$	1,063,219
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	2.24	$	3.82	$	3.13
Weighted average shares outstanding for basic income per share	335,196,296		335,795,654		339,321,056
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	2.22	$	3.77	$	3.10
Weighted average shares outstanding for diluted income per share	338,392,210		340,522,871		343,122,741

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Year Ended December 31,

2019

2018

2017

Net income

$
1,291,450

$
1,065,948

$
703,576

Other comprehensive income (loss):

Foreign currency translation (loss) gain

(14,092
)

(161,384
)

218,001

Adoption of Accounting Standards Update 2016-01, net of $2,141 income tax
   benefit for the year ended December 31, 2018

—

(3,964
)

—

Amounts reclassified from accumulated other comprehensive loss to interest
   expense, net of $471, $876 and $3,066 income tax expense for the years
   ended December 31, 2019, 2018 and 2017, respectively

1,320

2,439

4,964

Unrealized gains on interest rate swaps, net of $254 and $362 income tax
   expense for the years ended December 31, 2018 and 2017, respectively

—

708

585

Unrealized holding gains (losses) on available for sale debt securities, net of
   $559 income tax expense, $349 income tax benefit and $1,685 income tax
   expense for the years ended December 31, 2019, 2018 and 2017, respectively

2,101

(971
)

2,737

Pension liability adjustments, net of $194, $269 and $2,601 income tax expense
   for the years ended December 31, 2019, 2018 and 2017, respectively

944

1,315

12,701

Legal entity restructuring, net of $17,694 income tax expense for the year
   ended December 31, 2019

63,149

—

—

Other, net of $3,795 and $3,550 income tax benefit and $342 income tax
   expense for the years ended December 31, 2019, 2018 and 2017, respectively

(14,946
)

(5,070
)

364

Total other comprehensive income (loss)

38,476

(166,927
)

239,352

Comprehensive income

1,329,926

899,021

942,928

Less: Comprehensive income attributable to non-controlling interests

9,048

1,657

6,879

Comprehensive income attributable to CBRE Group, Inc.

$
1,320,878

$
897,364

$
936,049


	Year Ended December 31,
	2020		2019		2018
Net income	$	755,868	$	1,291,450	$	1,065,948
Other comprehensive income (loss):
Foreign currency translation gain (loss)	124,260		(14,092)		(161,384)
Adoption of Accounting Standards Update 2016-01, net of $2,141 income tax benefit for the year ended December 31, 2018	0		0		(3,964)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of $156, $471 and $876 income tax expense for the years ended December 31, 2020, 2019 and 2018, respectively	426		1,320		2,439
Unrealized gains on interest rate swaps, net of $254 income tax expense for the year ended December 31, 2018	0		0		708
Unrealized holding gains (losses) on available for sale debt securities, net of $382 and $559 income tax expense and $349 income tax benefit for the years ended December 31, 2020, 2019 and 2018, respectively	1,436		2,101		(971)
Pension liability adjustments, net of $1,663, $194 and $269 income tax expense for the years ended December 31, 2020, 2019 and 2018, respectively	7,343		944		1,315
Legal entity restructuring, net of $17,694 income tax expense for the year ended December 31, 2019	0		63,149		0
Other, net of $3,068 income tax expense and $3,795 and $3,550 income tax benefit for the years ended December 31, 2020, 2019 and 2018, respectively	16,772		(14,946)		(5,070)
Total other comprehensive income (loss)	150,237		38,476		(166,927)
Comprehensive income	906,105		1,329,926		899,021
Less: Comprehensive income attributable to non-controlling interests	4,094		9,048		1,657
Comprehensive income attributable to CBRE Group, Inc.	$	902,011	$	1,320,878	$	897,364

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Year Ended December 31,

2019

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$
1,291,450

$
1,065,948

$
703,576

Adjustments to reconcile net income to net cash provided by operating
   activities:

Depreciation and amortization

439,224

451,988

406,114

Amortization and write-off of financing costs on extinguished debt

8,662

35,175

10,783

Gains related to mortgage servicing rights, premiums on loan sales
   and sales of other assets

(246,690
)

(229,376
)

(200,386
)
Intangible asset impairment

89,787

—

—

Gain associated with remeasuring our investment in a joint venture
   entity to fair value at the date we acquired the remaining interest

—

(100,420
)

—

Net realized and unrealized (gains) losses from investments

(28,907
)

7,400

(9,405
)
Provision for doubtful accounts

20,373

19,760

8,044

Compensation expense for equity awards

127,738

128,171

93,087

Equity income from unconsolidated subsidiaries

(160,925
)

(324,664
)

(210,207
)
Distribution of earnings from unconsolidated subsidiaries

199,011

336,925

211,855

Proceeds from sale of mortgage loans

19,805,060

20,230,676

18,052,756

Origination of mortgage loans

(19,389,979
)

(20,591,602
)

(17,655,104
)
(Decrease) increase in warehouse lines of credit

(351,586
)

417,995

(343,887
)
Tenant concessions received

21,249

38,400

19,337

Purchase of equity securities

(83,001
)

(99,789
)

(110,570
)
Proceeds from sale of equity securities

46,949

75,120

68,547

Decrease (increase) in real estate under development

34,776

(4,586
)

2,472

Increase in receivables, prepaid expenses and other assets (including
   contract and lease assets)

(824,490
)

(773,361
)

(534,190
)
Increase in accounts payable and accrued expenses and other liabilities
   (including contract and lease liabilities)

306,677

273,782

159,145

Increase in compensation and employee benefits payable and accrued
   bonus and profit sharing

244,895

270,371

148,714

(Increase) decrease in net income taxes receivable/payable

(274,436
)

(47,074
)

108,151

Other operating activities, net

(52,457
)

(49,590
)

(34,421
)
Net cash provided by operating activities

1,223,380

1,131,249

894,411

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(293,514
)

(227,803
)

(178,042
)
Acquisition of businesses, including net assets acquired, intangibles and
   goodwill, net of cash acquired

(355,926
)

(322,573
)

(118,427
)
Contributions to unconsolidated subsidiaries

(105,947
)

(62,802
)

(68,700
)
Distributions from unconsolidated subsidiaries

33,289

61,709

63,664

Purchase of equity securities

(12,017
)

(21,402
)

(15,584
)
Proceeds from sale of equity securities

15,623

16,314

15,587

Purchase of available for sale debt securities

(8,853
)

(23,360
)

(19,280
)
Proceeds from the sale of available for sale debt securities

4,671

5,792

15,790

Other investing activities, net

1,650

13,441

2,392

Net cash used in investing activities

(721,024
)

(560,684
)

(302,600
)


	Year Ended December 31,
	2020		2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	755,868	$	1,291,450	$	1,065,948
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	501,728		439,224		451,988
Amortization and write-off of financing costs on extinguished debt	82,705		8,662		35,175
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets	(297,980)		(246,690)		(229,376)
Asset impairments	88,676		89,787		0
Gain associated with remeasuring our investment in a joint venture entity to fair value at the date we acquired the remaining interest	0		0		(100,420)
Net realized and unrealized (gains) losses, primarily from investments	(17,394)		(28,907)		7,400
Provision for doubtful accounts	44,366		20,373		19,760
Net compensation expense for equity awards	60,391		127,738		128,171
Equity income from unconsolidated subsidiaries	(126,161)		(160,925)		(324,664)
Distribution of earnings from unconsolidated subsidiaries	155,975		199,011		336,925
Proceeds from sale of mortgage loans	20,937,521		19,805,060		20,230,676
Origination of mortgage loans	(21,268,114)		(19,389,979)		(20,591,602)
Increase (decrease) in warehouse lines of credit	406,789		(351,586)		417,995
Tenant concessions received	48,030		21,249		38,400
Purchase of equity securities	(11,113)		(83,001)		(99,789)
Proceeds from sale of equity securities	13,741		46,949		75,120
(Increase) decrease in real estate under development	(105,619)		31,420		(4,586)
Decrease (increase) in receivables, prepaid expenses and other assets (including contract and lease assets)	371,009		(821,134)		(773,361)
Increase in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)	105,491		306,677		273,782
(Decrease) increase in compensation and employee benefits payable and accrued bonus and profit sharing	(100,142)		244,895		270,371
Decrease (increase) in net income taxes receivable/payable	173,648		(274,436)		(47,074)
Other operating activities, net	11,364		(52,457)		(49,590)
Net cash provided by operating activities	1,830,779		1,223,380		1,131,249
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(266,575)		(293,514)		(227,803)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired	(27,848)		(355,926)		(322,573)
Contributions to unconsolidated subsidiaries	(146,409)		(105,947)		(62,802)
Distributions from unconsolidated subsidiaries	88,731		33,289		61,709
Other investing activities, net	10,516		1,074		(9,215)
Net cash used in investing activities	(341,585)		(721,024)		(560,684)

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

Table of Contents

CBRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Year Ended December 31,

2019

2018

2017

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from senior term loans

300,000

1,002,745

200,000

Repayment of senior term loans

(300,000
)

(450,000
)

(751,876
)
Proceeds from revolving credit facility

3,609,000

3,258,000

1,521,000

Repayment of revolving credit facility

(3,609,000
)

(3,258,000
)

(1,521,000
)
Repayment of 5.00% senior notes (including premium)

—

(820,000
)

—

Repayment of debt assumed in acquisition of Telford Homes

(110,687
)

—

—

Repayment of debt assumed in acquisition of FacilitySource

—

(26,295
)

—

Repurchase of common stock

(145,137
)

(161,034
)

—

Acquisition of businesses (cash paid for acquisitions more than
   three months after purchase date)

(42,147
)

(18,660
)

(24,006
)
Units repurchased for payment of taxes on equity awards

(18,426
)

(29,386
)

(29,549
)
Non-controlling interest contributions

46,612

25,355

5,301

Non-controlling interest distributions

(3,957
)

(13,413
)

(8,715
)
Other financing activities, net

1,793

(15,912
)

(18,897
)
Net cash used in financing activities

(271,949
)

(506,600
)

(627,742
)
Effect of currency exchange rate changes on cash and cash
   equivalents and restricted cash

(606
)

(24,840
)

29,338

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS AND RESTRICTED CASH

229,801

39,125

(6,593
)
CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT BEGINNING OF PERIOD

863,944

824,819

831,412

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT END OF PERIOD

$
1,093,745

$
863,944

$
824,819

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION:

Cash paid during the period for:

Interest

$
86,666

$
104,165

$
117,164

Income taxes, net

$
365,065

$
375,849

$
356,997


	Year Ended December 31,
	2020		2019		2018
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior term loans	0		300,000		1,002,745
Repayment of senior term loans	0		(300,000)		(450,000)
Proceeds from revolving credit facility	835,671		3,609,000		3,258,000
Repayment of revolving credit facility	(835,671)		(3,609,000)		(3,258,000)
Repayment of 5.25% senior notes (including premium)	(499,652)		0		0
Repayment of 5.00% senior notes (including premium)	0		0		(820,000)
Repayment of debt assumed in acquisition of Telford Homes	0		(110,687)		0
Repayment of debt assumed in acquisition of FacilitySource	0		0		(26,295)
Establishment of trust account for special purpose acquisition company	(402,500)		0		0
Sale of non-controlling interest - special purpose acquisition company	393,661		0		0
Proceeds from notes payable on real estate	90,552		6,694		7,599
Repayments of notes payable on real estate	(24,704)		0		(19,058)
Repurchase of common stock	(50,028)		(145,137)		(161,034)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)	(44,700)		(42,147)		(18,660)
Units repurchased for payment of taxes on equity awards	(43,835)		(18,426)		(29,386)
Non-controlling interest contributions	2,173		46,612		25,355
Non-controlling interest distributions	(4,330)		(3,957)		(13,413)
Other financing activities, net	(41,893)		(4,901)		(4,453)
Net cash used in financing activities	(625,256)		(271,949)		(506,600)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	81,564		(606)		(24,840)
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	945,502		229,801		39,125
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF YEAR	1,093,745		863,944		824,819
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF YEAR	$	2,039,247	$	1,093,745	$	863,944
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	67,463	$	86,666	$	104,165
Income tax payments, net	$	51,681	$	365,065	$	375,849

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

~~CBRE GROUP, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY~~

~~(Dollars in thousands)~~

CBRE Group, Inc. Shareholders

Accumulated other
comprehensive loss

Shares

Class A
common stock

Additional
paid-in
capital

Accumulated
earnings

Minimum
pension
liability

Foreign currency
translation and
other

Non-
controlling
interests

Total

Balance at December 31, 2016

337,279,449

$
3,373

$
1,145,226

$
2,745,897

$
(165,670
)

$
(625,684
)

$
42,758

$
3,145,900

Net income

—

—

—

697,109

—

—

6,467

703,576

Pension liability adjustments, net of tax

—

—

—

—

12,701

—

—

12,701

Non-cash issuance of common stock related to
   acquisition

495,828

5

11,688

—

—

—

—

11,693

Restricted stock awards vesting

1,660,269

17

(17
)

—

—

—

—

—

Compensation expense for equity awards

—

—

93,087

—

—

—

—

93,087

Units repurchased for payment of taxes on equity
   awards

—

—

(29,549
)

—

—

—

—

(29,549
)
Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net of tax

—

—

—

—

—

4,964

—

4,964

Unrealized gains on interest rate swaps, net of tax

—

—

—

—

—

585

—

585

Unrealized holding gains on available for sale debt
   securities, net of tax

—

—

—

—

—

2,737

—

2,737

Foreign currency translation gain

—

—

—

—

—

217,589

412

218,001

Contributions from non-controlling interests

—

—

—

—

—

—

5,301

5,301

Distributions to non-controlling interests

—

—

—

—

—

—

(8,715
)

(8,715
)
Acquisition of non-controlling interests

—

—

—

—

—

—

12,671

12,671

Other

23,592

—

73

1

—

364

1,224

1,662

Balance at December 31, 2017

339,459,138

3,395

1,220,508

3,443,007

(152,969
)

(399,445
)

60,118

4,174,614

Net income

—

—

—

1,063,219

—

—

2,729

1,065,948

Adoption of Accounting Standards Update 2016-01,
   net of tax

—

—

—

3,964

—

(3,964
)

—

—

Pension liability adjustments, net of tax

—

—

—

—

1,315

—

—

1,315

Restricted stock awards vesting

1,424,462

14

(14
)

—

—

—

—

—

Compensation expense for equity awards

—

—

128,171

—

—

—

—

128,171

Reclassification of stock incentive plan award from
   an equity award to a liability award

—

—

(9,074
)

—

—

—

—

(9,074
)
Units repurchased for payment of taxes on equity
   awards

—

—

(29,386
)

—

—

—

—

(29,386
)

Table of Contents


CBRE GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except share data)
	CBRE Group, Inc. Stockholders
								Accumulated other comprehensive loss
	Shares	Class A common stock		Additional paid-in capital		Accumulated earnings		Minimum pension liability		Foreign currency translation and other		Non- controlling interests		Total
Balance at December 31, 2017	339,459,138	$	3,395	$	1,220,508	$	3,443,007	$	(152,969)	$	(399,445)	$	60,118	$	4,174,614
Net income	—	—		—		1,063,219		—		—		2,729		1,065,948
Adoption of Accounting Standards Update 2016-01, net of tax	—	—		—		3,964		—		(3,964)		—		0
Pension liability adjustments, net of tax	—	—		—		—		1,315		—		—		1,315
Restricted stock awards vesting	1,424,462	14		(14)		—		—		—		—		—
Compensation expense for equity awards	—	—		128,171		—		—		—		—		128,171
Reclassification of stock incentive plan award from an equity award to a liability award	—	—		(9,074)		—		—		—		—		(9,074)
Units repurchased for payment of taxes on equity awards	—	—		(29,386)		—		—		—		—		(29,386)
Repurchase of common stock	(3,980,656)	(40)		(160,994)		—		—		—		—		(161,034)
Foreign currency translation loss	—	—		—		—		—		(160,312)		(1,072)		(161,384)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—	—		—		—		—		2,439		—		2,439
Unrealized gains on interest rate swaps, net of tax	—	—		—		—		—		708		—		708
Unrealized holding (losses) gains on available for sale debt securities, net of tax	—	—		—		—		—		(971)		—		(971)
Contributions from non-controlling interests	—	—		—		—		—		—		25,355		25,355
Distributions to non-controlling interests	—	—		—		—		—		—		(13,413)		(13,413)
Other	9,839	0		(198)		(5,506)		3,747		(8,817)		(2,612)		(13,386)
Balance at December 31, 2018	336,912,783	3,369		1,149,013		4,504,684		(147,907)		(570,362)		71,105		5,009,902
Net income	—	—		—		1,282,357		—		—		9,093		1,291,450
Pension liability adjustments, net of tax	—	—		—		—		944		—		—		944
Restricted stock awards vesting	920,407	9		(9)		—		—		—		—		—
Compensation expense for equity awards	—	—		127,738		—		—		—		—		127,738
Units repurchased for payment of taxes on equity awards	—	—		(18,426)		—		—		—		—		(18,426)
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents


CBRE GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except share data)
	CBRE Group, Inc. Stockholders
								Accumulated other comprehensive loss
	Shares	Class A common stock		Additional paid-in capital		Accumulated earnings		Minimum pension liability		Foreign currency translation and other		Non- controlling interests		Total
Repurchase of common stock	(3,080,907)	(31)		(145,106)		—		—		—		—		(145,137)
Foreign currency translation loss	—	—		—		—		—		(14,047)		(45)		(14,092)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—	—		—		—		—		1,320		—		1,320
Unrealized holding (losses) gains on available for sale debt securities, net of tax	—	—		—		—		—		2,101		—		2,101
Contributions from non-controlling interests	—	—		—		—		—		0		46,612		46,612
Distributions to non-controlling interests	—	—		—		—		—		—		(3,957)		(3,957)
Deconsolidation of investments	—	—		—		—		—		—		(76,349)		(76,349)
Legal entity restructuring, net	—	—		—		—		—		63,149		—		63,149
Other	0	1		2,734		6,108		0		(14,946)		(6,040)		(12,143)
Balance at December 31, 2019	334,752,283	3,348		1,115,944		5,793,149		(146,963)		(532,785)		40,419		6,273,112
Net income	—	—		—		751,989		—		—		3,879		755,868
Pension liability adjustments, net of tax	—	—		—		—		7,343		—		—		7,343
Restricted stock awards vesting	1,859,146	19		(19)		—		—		—		—		—
Compensation expense for equity awards	—	—		60,391		—		—		—		—		60,391
Units repurchased for payment of taxes on equity awards	—	—		(43,835)		—		—		—		—		(43,835)
Repurchase of common stock	(1,050,084)	(11)		(50,017)		—		—		—		—		(50,028)
Foreign currency translation gain	—	—		—		—		—		124,045		215		124,260
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	—	—		—		—		—		426		—		426
Unrealized holding (losses) gains on available for sale debt securities, net of tax	—	—		—		—		—		1,436		—		1,436
Contributions from non-controlling interests	—	—		—		—		—		—		2,173		2,173
Distributions to non-controlling interests	—	—		—		—		—		—		(4,330)		(4,330)
Other	—	0		(7,825)		(15,081)		—		16,772		(595)		(6,729)
Balance at December 31, 2020	335,561,345	$	3,356	$	1,074,639	$	6,530,057	$	(139,620)	$	(390,106)	$	41,761	$	7,120,087

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

Table of Contents

CBRE GROUP, INC.

~~CONSOLIDATED STATEMENTS OF EQUITY~~

~~(Dollars in thousands)~~

CBRE Group, Inc. Shareholders

Accumulated other
comprehensive loss

Shares

Class A
common stock

Additional
paid-in
capital

Accumulated
earnings

Minimum
pension
liability

Foreign currency
translation and
other

Non-
controlling
interests

Total

Repurchase of common stock

(3,980,656
)

(40
)

(160,994
)

—

—

—

—

(161,034
)
Foreign currency translation loss

—

—

—

—

—

(160,312
)

(1,072
)

(161,384
)
Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net of tax

—

—

—

—

—

2,439

—

2,439

Unrealized gains on interest rate swaps, net of tax

—

—

—

—

—

708

—

708

Unrealized holding losses on available for sale debt
   securities, net of tax

—

—

—

—

—

(971
)

—

(971
)
Contributions from non-controlling interests

—

—

—

—

—

—

25,355

25,355

Distributions to non-controlling interests

—

—

—

—

—

—

(13,413
)

(13,413
)
Other

9,839

—

(198
)

(5,506
)

3,747

(8,817
)

(2,612
)

(13,386
)
Balance at December 31, 2018

336,912,783

3,369

1,149,013

4,504,684

(147,907
)

(570,362
)

71,105

5,009,902

Net income

—

—

—

1,282,357

—

—

9,093

1,291,450

Pension liability adjustments, net of tax

—

—

—

—

944

—

—

944

Restricted stock awards vesting

920,407

9

(9
)

—

—

—

—

—

Compensation expense for equity awards

—

—

127,738

—

—

—

—

127,738

Units repurchased for payment of taxes on equity
   awards

—

—

(18,426
)

—

—

—

—

(18,426
)
Repurchase of common stock

(3,080,907
)

(31
)

(145,106
)

—

—

—

—

(145,137
)
Foreign currency translation loss

—

—

—

—

—

(14,047
)

(45
)

(14,092
)
Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net of tax

—

—

—

—

—

1,320

—

1,320

Unrealized holding gains on available for sale debt
   securities, net of tax

—

—

—

—

—

2,101

—

2,101

Contributions from non-controlling interests

—

—

—

—

—

—

46,612

46,612

Distributions to non-controlling interests

—

—

—

—

—

—

(3,957
)

(3,957
)
Deconsolidation of investments

—

—

—

—

—

—

(76,349
)

(76,349
)
Legal entity restructuring, net

—

—

—

—

—

63,149

—

63,149

Other

—

1

2,734

6,108

—

(14,946
)

(6,040
)

(12,143
)
Balance at December 31, 2019

334,752,283

$
3,348

$
1,115,944

$
5,793,149

$
(146,963
)

$
(532,785
)

$
40,419

$
6,273,112

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

~~CBRE GROUP, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	~~Nature of Operations~~

1.Nature of Operations

CBRE Group, Inc., a Delaware corporation (which may be referred to in these financial statements as “the company,” “we,” “us” and “our”), was incorporated on February 20, 2001. We are the world’s largest commercial real estate services and investment firm, based on ~~2019~~2020 revenue, with leading global market positions in our leasing, property sales, occupier outsourcing and valuation businesses.

Our business is focused on providing services to real estate ~~occupiers~~investors and ~~investors.~~occupiers. For investors, we provide capital markets (property sales, mortgage origination, sales and servicing), property leasing, investment management, property management, valuation and development services, among others. For occupiers, we provide facilities management, project management, transaction (both property sales and leasing) and consulting services, among others. For investors, we provide capital markets (property sales, mortgage origination, sales and servicing), leasing, investment management, property management, valuation and development services, among others. We generate revenue from both management fees (large multi-year portfolio and per-project contracts) and commissions on transactions. As of December 31, ~~2019, we operated in more than 530 offices worldwide with~~2020, the company has more than 100,000 employees ~~excluding independent affiliates,~~(excluding affiliates) serving clients in more than 100 countries providing services under the following brand names: “CBRE” (real estate advisory and outsourcing services); “CBRE Global Investors” (investment management); “Trammell Crow Company” (U.S. development); “Telford Homes” (U.K. development) and “Hana” (flexible-space solutions).

In 2020, CBRE sponsored a special purpose acquisition company (SPAC), CBRE Acquisition Holdings, Inc. (CBRE Acquisition Holdings), which has the sole purpose of acquiring a privately held company with significant growth potential and to create value by supporting the company in the public markets. The company that it acquires will operate in an industry that will benefit from the experience, expertise and operating skills of CBRE. CBRE Acquisition Holdings trades on the New York Stock Exchange under the symbols “CBAH,” “CBAH.U,” and “CBAH.W.”

2.	~~Significant Accounting Policies~~

Considerations Related to the Covid-19 Pandemic

From 2010 to early 2020, commercial real estate markets had generally been characterized by increased demand for space, falling vacancies, higher rents and strong capital flows, leading to solid property sales and leasing activity. This healthy backdrop changed abruptly in the first quarter of 2020 with the emergence of the novel coronavirus (Covid-19) and resultant sharp contraction of economic activity across much of the world. There has been a significant impact on commercial real estate markets, as many property owners and occupiers have put transactions on hold and withdrawn existing mandates, sharply reducing sales and leasing volumes. We expect to see the highly challenging operating environment continue, as Covid-19 caseloads remain elevated across our major markets, business travel and face-to-face business dealings are limited and the overwhelming majority of workers remain out of their offices. The recovery of real estate markets around the world remain uncertain as of the date of this report.

The effects of Covid-19 adversely impacted our financial position, results of operations, and cash flows for fiscal year 2020. The consolidated financial statements and related notes presented herein reflect our current estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of sales and expenses during the reporting periods presented. See Note 7 (Fair Value Measurements), Note 9 (Goodwill and Other Intangible Assets) and Note 13 (Commitments and Contingencies) for further discussion of Covid-19 considerations.

2.Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries, which are comprised of variable interest entities in which we are the primary beneficiary and voting interest entities, in which we determined we have a controlling financial interest, under the “Consolidations” Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) (Topic 810). The permanent and redeemable equity attributable to non-controlling interests in subsidiaries is shown separately in the accompanying consolidated balance sheets. All significant intercompany accounts and transactions have been eliminated in consolidation.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Variable Interest Entities (VIEs)

We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. Our determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in the VIE. Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative approach focused on identifying which reporting entity has both: (i) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion continually.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

We consolidate any VIE of which we are the primary beneficiary and disclose significant VIEs of which we are not the primary beneficiary, if any, as well as disclose our maximum exposure to loss related to VIEs that are not consolidated (see Note 6).

Voting Interest Entities (VOEs)

For VOEs, we consolidate the entity if we have a controlling financial interest. We have a controlling financial interest in a VOE if: (i) for legal entities other than limited partnerships, we own a majority voting interest in the VOE or, for limited partnerships and similar entities, we own a majority of the entity’s kick-out rights through voting limited partnership interests; and (ii) non-controlling shareholders or partners do not hold substantive participating rights and no other conditions exist that would indicate that we do not control the entity.

Marketable Securities and Other Investments

Our investments in unconsolidated subsidiaries in which we have the ability to exercise significant influence over operating and financial policies, but do not control, or entities which are variable interest entities in which we are not the primary beneficiary are accounted for under the equity method. We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such subsidiaries. Accordingly, our share of the earnings from these equity-method basis companies is included in consolidated net income. All other investments held on a long-term basis are valued at cost less any impairment in value.

~~Marketable Securities~~

Debt securities are classified as held to maturity when we have the positive intent and ability to hold the securities to maturity. Marketable debt securities not classified as held to maturity are classified as available for sale. Available for sale debt securities are carried at their fair value and any difference between cost and fair value is recorded as an unrealized gain or loss, net of income taxes, and is reported as accumulated other comprehensive income (loss) in the consolidated ~~statement~~statements of equity. Premiums and discounts are recognized in interest using the effective interest method. Realized gains and losses and declines in value ~~expected to be other-than-temporary~~resulting from credit losses on available for sale debt securities have not been significant. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available for sale are included in interest income.

Our investments in unconsolidated subsidiaries in which we have the ability to exercise significant influence over operating and financial policies, but do not control, or entities which are VIEs in which we are not the primary beneficiary are accounted for under the equity method in accordance with the “Instruments - Equity Method and Joint Ventures” topic of the FASB ASC (Topic 323). We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such subsidiaries. Accordingly, our share of the earnings from these equity-method basis companies is included in consolidated net income. We have elected to account for certain eligible investments at fair value in accordance with the “Financial Instruments” topic of the FASB ASC (Topic 825).

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For a portion of our investments in unconsolidated subsidiaries reported at fair value, we estimate fair value using the net asset value (NAV) per share (or its equivalent) our investees provide. These investments are considered investment companies, or are the equivalent of investment companies, as they carry all investments at fair value, with unrealized gains and losses resulting from changes in fair value reflected in earnings. Accordingly, we effectively carry our investments at an amount that is equivalent to our proportionate share of the net assets of each investment that would be allocated to us if each investment was liquidated at the net asset value as of the measurement date.

All equity ~~securities~~investments that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. Equity instruments that do not have readily determinable fair values and do not qualify for using the net asset value per share practical expedient in the “Fair Value ~~Measurements and Disclosures”~~Measurements” topic ~~(Topic 820)~~ of the FASB ASC (Topic 820) are measured at cost, less any impairment.

Impairment Evaluation

Impairment losses on investments, other than available for sale debt securities and investments otherwise measured at fair value, are recognized upon evidence of other-than-temporary losses of value. When testing for impairment on investments that are not actively traded on a public market, we generally use a discounted cash flow approach to estimate the fair value of our investments and/or look to comparable activities in the marketplace. Management’s judgment is required in developing the assumptions for the discounted cash flow approach. These assumptions include net asset values, internal rates of return, discount and capitalization rates, interest rates and financing terms, rental rates, timing of leasing activity, estimates of lease terms and related concessions, etc. When determining if impairment is other-than-temporary, we also look to the length of time and the extent to which fair value has been less than cost as well as the financial condition and near-term prospects of each investment. Based on our review, we did 0tnot record any significant other-than-temporary impairment losses during the years ~~ending~~ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

2018.

Use of Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ~~(U.S.)~~(GAAP), ~~or GAAP,~~ which require management to make estimates and assumptions about future ~~events.~~events, including the impact Covid-19 may have on our business. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported and reported amounts of revenue and ~~expenses we report.~~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 ~~management’s~~our best ~~judgment,~~judgment. We evaluate our estimates and ~~are evaluated~~assumptions on an ongoing basis ~~and adjusted, as needed,~~ using historical experience and other factors, including consideration of the ~~macroeconomic environment.~~current economic environment, and adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be ~~forecast~~determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Cash and Cash Equivalents

Cash and cash equivalents generally consist of cash and highly liquid investments with an original maturity of three months or less. Included in the accompanying consolidated balance sheets as of December 31, ~~2019~~2020 and ~~2018~~2019 is cash and cash equivalents of ~~$70.5~~$102.9 million and ~~$155.2~~$70.5 million, respectively, from consolidated funds and other entities, which are not available for general corporate use. We also manage certain cash and cash equivalents as an agent for our investment and property and facilities management clients. These amounts are not included in the accompanying consolidated balance sheets (see Fiduciary Funds discussion below).

Restricted Cash

Included in the accompanying consolidated balance sheets as of December 31, ~~2019~~2020 and ~~2018~~2019 is restricted cash of ~~$122.0~~$143.1 million and ~~$86.7~~$122.0 million, respectively. The balances primarily include restricted cash set aside to cover funding obligations as required by contracts executed by us in the ordinary course of business.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiduciary Funds

The accompanying consolidated balance sheets do not include the net assets of escrow, agency and fiduciary funds, which are held by us on behalf of clients and which amounted to ~~$6.1~~$8.1 billion and ~~$5.9~~$6.1 billion at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

Concentration of Credit Risk

Financial instruments that potentially subject us to credit risk consist principally of trade receivables and interest-bearing investments. Users of real estate services account for a substantial portion of trade receivables and collateral is generally not required. The risk associated with this concentration is limited due to the large number of users and their geographic dispersion.

We place substantially all of our interest-bearing investments with several major financial institutions to limit the amount of credit exposure with any one financial institution.

Property and Equipment

Property and equipment, which includes leasehold improvements, is stated at cost, net of accumulated ~~depreciation.~~depreciation and impairment. Depreciation and amortization of property and equipment is computed primarily using the straight-line method over estimated useful lives ranging up to 10 years. Leasehold improvements are amortized over the term of their associated leases, excluding options to renew, since such leases generally do not carry prohibitive penalties for non-renewal. We capitalize expenditures that significantly increase the life of our assets and expense the costs of maintenance and repairs.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If this review indicates that such assets are considered to be impaired, the impairment is recognized in the period the changes occur and represents the amount by which the carrying value exceeds the fair value of the asset.

Certain costs related to the development or purchase of internal-use software are capitalized. Internal-use software costs that are incurred in the preliminary project stage are expensed as incurred. Significant direct consulting costs and certain payroll and related costs, which are incurred during the development stage of a project are generally capitalized and amortized over a three-year period (except for enterprise software development platforms, which range from three to seven years) when placed into production.

Real Estate

Classification and Impairment Evaluation

We classify real estate in accordance with the criteria of the “Property, Plant and Equipment” Topic of the FASB ASC (Topic 360) as follows: (i) real estate held for sale, which includes completed assets or land for sale in its present condition that meet all of Topic 360’s “held for sale” criteria; (ii) real estate under development (current), which includes real estate that we are in the process of developing that is expected to be completed and disposed of within one year of the balance sheet date; (iii) real estate under development (non-current), which includes real estate that we are in the process of developing that is expected to be completed and disposed of more than one year from the balance sheet date; or (iv) real estate held for investment, which consists of land on which development activities have not yet commenced and completed assets or land held for disposition that do not meet the “held for sale” criteria. Any asset reclassified from real estate held for sale to real estate under development (current or non-current) or real estate held for investment is recorded individually at the lower of its fair value at the date of the reclassification or its carrying amount before it was classified as “held for sale,” adjusted (in the case of real estate held for investment) for any depreciation that would have been recognized had the asset been continuously classified as real estate held for investment.

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Real estate held for sale is recorded at the lower of cost or fair value less cost to sell. If an asset’s fair value less cost to sell, based on discounted future cash flows, management estimates or market comparisons, is less than its carrying amount, an allowance is recorded against the asset. Real estate under development and real estate held for investment are carried at cost less depreciation and impairment, as applicable. Buildings and improvements included in real estate held for investment are depreciated using the straight-line method over estimated useful lives, generally up to 39 years. Tenant improvements included in real estate held for investment are amortized using the straight-line method over the shorter of their estimated useful lives or terms of the respective leases. Land improvements included in real estate held for investment are depreciated over their estimated useful lives, up to 15 years.

~~A summary of our real estate assets is as follows (dollars in thousands):~~

December 31,

2019

2018

Real estate under development, current (included in other current assets)

$
14,757

$
—

Real estate and other assets held for sale (included in other current assets)

5,066

24

Real estate under development

185,508

4,586

Real estate held for investment (included in other assets, net)

8,101

9,923

Total real estate

$
213,432

$
14,533

Real estate under development and real estate held for investment are evaluated for impairment and losses are recorded when undiscounted cash flows estimated to be generated by an asset are less than the asset’s carrying amount. The amount of the impairment loss, if any, is calculated as the excess of the asset’s carrying value over its fair value, which is determined using a discounted cash flow analysis, management estimates or market comparisons.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

A summary of our real estate assets is as follows (dollars in thousands):


	December 31,
	2020		2019
Real estate under development, current (included in other current assets)	$	55,072	$	14,757
Real estate and other assets held for sale (included in other current assets)	3,710		5,066
Real estate under development	277,630		185,508
Real estate held for investment (included in other assets, net)	3,795		8,101
Total real estate	$	340,207	$	213,432

Cost Capitalization and Allocation

When acquiring, developing and constructing real estate assets, we capitalize recoverable costs. Capitalization begins when the activities related to development have begun and ceases when activities are substantially complete and the asset is available for occupancy. Recoverable costs capitalized include pursuit costs, or pre-acquisition/pre-construction costs, taxes and insurance, interest, development and construction costs and costs of incidental operations. We do not capitalize any internal costs when acquiring, developing and constructing real estate assets. We expense transaction costs for acquisitions that qualify as a business in accordance with the “Business Combinations” Topic of the FASB ASC (Topic 805). Pursuit costs capitalized in connection with a potential development project that we have determined not to pursue are written off in the period that determination is made.

At times, we purchase bulk land that we intend to sell or develop in phases. The land basis allocated to each phase is based on the relative estimated fair value of the phases before construction. We allocate construction costs incurred relating to more than one phase between the various phases; if the costs cannot be specifically attributed to a certain phase or the improvements benefit more than one phase, we allocate the costs between the phases based on their relative estimated sales values, where practicable, or other value methods as appropriate under the circumstances. Relative allocations of the costs are revised as the sales value estimates are revised.

When acquiring real estate with existing buildings, we allocate the purchase price between land, land improvements, building and intangibles related to in-place leases, if any, based on their relative fair values. The fair values of acquired land and buildings are determined based on an estimated discounted future cash flow model with lease-up assumptions as if the building was vacant upon acquisition. The fair value of in-place leases includes the value of lease intangibles for above or below-market rents and tenant origination costs, determined on a lease by lease basis. The capitalized values for both lease intangibles and tenant origination costs are amortized over the term of the underlying leases. Amortization related to lease intangibles is recorded as either an increase to or a reduction of rental income and amortization for tenant origination costs is recorded to amortization expense.

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Disposition of Real Estate

We account for gains and losses on the sale of real estate and other nonfinancial assets or in substance ~~nonfinancial~~nonfinancial assets to noncustomers that are not a output of our ordinary activities and are not a business in accordance with Topic 610-20, “Other Income – Gains and Losses from the Derecognition of Nonfinancial ~~Assets”~~Assets.” Where we do not have a controlling financial interest in the entity that holds the transferred assets after the transaction, we derecognize the assets or in substance nonfinancial assets and recognize a gain or loss when control of the underlying assets transfer to the counterparty.

We may also dispose of real estate through the transfer of a long-term leasehold representing a major part of the remaining economic life of the property. We account for these transfers as sales-type leases in accordance with the “Leases” Topic of the FASB ASC (Topic 842) by derecognizing the carrying amount of the underlying asset, recognizing any net investment in the lease and recognizing selling profit or loss in net income.

Goodwill and Other Intangible Assets

Our acquisitions require the application of purchase accounting, which results in tangible and identifiable intangible assets and liabilities of the acquired entity being recorded at fair value. The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill. The majority of our goodwill balance has resulted from our acquisition of CBRE Services, Inc. (CBRE Services) in 2001 (the 2001 Acquisition), our acquisition of Insignia Financial Group, Inc. (Insignia) in 2003 (the Insignia Acquisition), our acquisition of the Trammell Crow Company in 2006 (the Trammell Crow Company Acquisition), our acquisition of substantially all of the ING Group N.V. (ING) Real Estate Investment Management (REIM) operations in Europe and Asia, as well as substantially all of Clarion Real Estate Securities (CRES) in 2011 (collectively referred to as the REIM Acquisitions), our acquisition of Norland Managed Services Ltd (Norland) in 2013 (the Norland Acquisition), our acquisition of Johnson Controls, Inc. (JCI)’s Global Workplace Solutions (JCI-GWS) business in 2015, our acquisition of FacilitySource Holdings, LLC (FacilitySource) in 2018 and our acquisition of Telford Homes Plc (Telford) on October 1, ~~2019~~.2019. Other intangible assets that have indefinite estimated useful lives that are not being

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

amortized include certain management contracts identified in the REIM Acquisitions, a trademark, which was separately identified as a result of the 2001 Acquisition, as well as a trade name separately identified as a result of the REIM Acquisitions. The remaining other intangible assets primarily include customer relationships, mortgage servicing rights and trade names/trademarks, which are all being amortized over estimated useful lives ranging up to 20 years.

We are required to test goodwill and other intangible assets deemed to have indefinite useful lives for impairment at least annually, or more often if circumstances or events indicate a change in the impairment status, in accordance with FASB ASC Topic 350, “Intangibles – Goodwill and ~~Other~~Other.” ~~(Topic 350).~~ ASC paragraphs 350-20-35-3 through 35-3B permit, but do not require an entity to perform a qualitative assessment with respect to any of its reporting units to determine whether a quantitative impairment test is needed. Entities are permitted to assess based on qualitative factors whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the quantitative goodwill impairment test. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the entity conducts the quantitative goodwill impairment test. If not, the entity does not need to apply the quantitative test. The qualitative test is elective and an entity can go directly to the quantitative test rather than making a more-likely-than-not assessment based on an evaluation of qualitative factors. When performing a quantitative test, we use a discounted cash flow approach to estimate the fair value of our reporting units. Management’s judgment is required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margin percentages, discount rates, etc.

Leases

We are the lessee in contracts for our office space tenancies, for leased vehicles and for our indirect wholly-owned subsidiary CBRE Hana, LLC (Hana). We monitor our service arrangements to evaluate whether they meet the definition of a lease.

Effective January 1, 2019, we adopted the guidance in Leases (Topic 842) using the optional transitional method associated with no adjustment to comparative financial statements presented for prior periods. We elected certain practical expedients, including the package of transition practical expedients and the practical expedient to forego separating lease and

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non-lease components in our lease contracts. As a result of the adoption of Topic 842, the consolidated balance sheet as of January 1, 2019 included $1.2 billion of additional lease liabilities, along with corresponding right-of-use assets of $1.0 billion, reflecting adjustments for items such as prepaid and deferred rent, unamortized initial direct costs, and unamortized lease incentive balances. The adoption of the leasing guidance did not have a material impact on our consolidated statement of operations.

The present value of lease payments, which are either fixed payments, in-substance fixed payments, or variable payments tied to an index or rate are recognized on the consolidated balance sheet with corresponding lease liabilities and right-of-use assets upon the commencement of the lease. These lease costs are expensed over the respective lease term in accordance with the classification of the lease (i.e., operating versus finance classification). Variable lease payments not tied to an index or rate are expensed as incurred and are not subject to capitalization.

The base terms for our lease arrangements typically do not extend beyond 10 years. We commonly have renewal options in our leases, but most of these options do not create a significant economic incentive for us to extend the lease term. Therefore, payments during periods covered by these renewal options are typically not included in our lease liabilities and right-of-use assets. Specific to our vehicle leases, early termination options are common and economic penalties associated with early termination of these contracts are typically significant enough to make it reasonably certain that we will not exercise such options. Therefore, payments during periods covered by these early termination options in vehicle leases are typically included in our lease liabilities and right-of-use assets. As an accounting policy election, our short-term leases with an initial term of 12 months or less are not recognized as lease liabilities and right-of-use assets in the consolidated balance sheets. The rent expense associated with short term leases is recognized on a straight-line basis over the lease term and was not significant.

Most of our office space leases include variable payments based on our share of actual common area maintenance and operating costs of the leased property. Many of our vehicle leases include variable payments based on actual service and fuel costs. For both office space and vehicle leases, we have elected the practical expedient to not separate lease components from non-lease components. Therefore, these costs are classified as variable lease payments.

Lease payments are typically discounted at our incremental borrowing rate because the interest rate implicit in the lease cannot be readily determined in the absence of key inputs which are typically not reported by our lessors. Because we do not generally borrow on a collateralized basis, judgement was used to estimate the secured borrowing rate associated with our leases based on relevant market data and our inputs applied to accepted valuation methodologies. The incremental borrowing rate calculated for each lease also reflects the lease term, currency, and geography specific to each lease.

Deferred Financing Costs

Costs incurred in connection with financing activities are generally deferred and amortized over the terms of the related debt agreements ranging up to ten years. D~~ebt~~Debt issuance costs related to a recognized debt liability are presented in the accompanying consolidated balance sheets as a direct deduction from the carrying amount of that debt liability. Amortization of these costs is charged to interest expense in the accompanying consolidated statements of operations. Accounting Standards Update (ASU) 2015-15, “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” permits classifying debt issuance costs associated with a line of credit arrangement as an asset, regardless of whether there are any outstanding borrowings on the arrangement. Total deferred financing costs, net of accumulated amortization, related to our revolving line of credit have been included in other assets in the accompanying consolidated balance sheets and were ~~$17.0~~$13.0 million and ~~$18.3~~$17.0 million as of December 31, 2020 and 2019, respectively.

During 2020, we redeemed in full our $425.0 million aggregate outstanding principal amount of 5.25% senior notes. In connection with this early redemption, we incurred costs, including a $73.6 million premium paid and ~~2018, respectively.~~

the write-off of $2.0 million of unamortized premium and debt issuance costs, both of which were included in write-off of financing costs on extinguished debt in the accompanying consolidated statements of operations.

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During 2019, we entered into an additional incremental assumption agreement with respect to our credit agreement which: (i) extended the maturity of the U.S. dollar tranche A term loans, (ii) extended the termination date of the revolving credit commitments available and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit commitments. During the year ended December 31, 2019, we incurred approximately $5.8 million of financing costs, of which $2.6 million were included in write-off of financing costs on extinguished debt in the accompanying consolidated statements of operations.

During 2018, we redeemed in full our $800.0 million aggregate outstanding principal amount of 5.00% senior notes. In connection with this early redemption, we incurred costs, including a $20.0 million premium paid and the write-off of $8.0 million of unamortized deferred financing costs, both of which were included in write-off of financing costs on extinguished debt in the accompanying consolidated statements of operations. Additionally, as referenced above during ~~2018,~~2019, we entered into an incremental term loan assumption agreement with respect to our credit agreement in connection with which we incurred approximately $1.6 million of financing costs.

~~During 2017, we entered into a credit agreement in connection with which we incurred approximately $8.0 million of financing costs.~~

See Note 11 for additional information on activities associated with our debt.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Revenue Recognition

We account for revenue with customers in accordance with FASB ASC Topic, “Revenue from Contracts with Customers” (Topic 606). Topic 606 also includes Subtopic 340-40, “Other Assets and Deferred Costs – Contracts with Customers,” which requires deferral of incremental costs to obtain and fulfill a contract with a customer. We adopted the new revenue recognition guidance on January 1, 2018, using the full retrospective method. Revenue is recognized when or as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

The following is a description of principal activities – separated by reportable segments – from which we generate revenue. For more detailed information about our reportable segments, see Notes 18 and 19.

Advisory Services

Our Advisory Services segment provides a comprehensive range of services globally, including property leasing, property sales, mortgage services, property management, project management services and valuation services.

Property Leasing and Property Sales

We provide strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office, industrial and retail space. We also offer clients fully integrated property sales services under the CBRE Capital Markets brand. We are compensated for our services in the form of a commission and, in some instances may earn various forms of variable incentive consideration. Our commission is paid upon the occurrence of certain contractual event(s) which may be contingent. For example, a portion of our leasing commission may be paid upon signing of the lease by the tenant, with the remaining paid upon occurrence of another future contingent event (e.g. payment of first month’s rent or tenant move-in). For leases, we typically satisfy our performance obligation at a point in time when control is transferred; generally, at the time of the first contractual event where there is a present right to payment. We look to history, experience with a customer, and deal specific considerations as part of the most likely outcome estimation approach to support our judgement that the second contingency (if applicable) will be met. Therefore, we typically accelerate the recognition of the revenue associated with the second contingent event. For sales, our commission is typically paid at the closing of the sale, which represents transfer of control for services to the customer.

In addition to our commission, we may recognize other forms of variable consideration which can include, but are not limited to, commissions subject to concession or claw back and volume based discounts or rebates. We assess variable consideration on a contract by contract basis, and when appropriate, recognize revenue based on our assessment of the outcome (using the most likely outcome approach or weighted probability) and historical results, if comparable and representative. We recognize variable consideration if it is deemed probable that there will not be significant reversal in the future.

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Mortgage Originations and Loan Sales

We offer clients commercial mortgage and structured financing services. Fees from services within our mortgage brokerage business that are in the scope of Topic 606 include fees earned for the brokering of commercial mortgage loans primarily through relationships established with investment banking firms, national and regional banks, credit companies, insurance companies and pension funds. We are compensated for our brokerage services via a fee paid upon successful placement of a commercial mortgage borrower with a lender who will provide financing. The fee earned is contingent upon the funding of the loan, which represents the transfer of control for services to the customer. Therefore, we typically satisfy our performance obligation at the point in time of the funding of the loan.

We also earn fees from the origination and sale of commercial mortgage loans for which the company retains the servicing rights. These fees are governed by the “Fair Value Measurements and Disclosures” topic (Topic 820) and “Transfers and Servicing” topic (Topic 860) of the FASB ASC. Upon origination of a mortgage loan held for

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

sale, the fair value of the mortgage servicing rights (MSR) to be retained is included in the forecasted proceeds from the anticipated loan sale and results in a net gain (which is reflected in revenue). Upon sale, we record a servicing asset or liability based on the fair value of the retained MSR associated with the transferred loan. Subsequent to the initial recording, MSRs are amortized and carried at the lower of amortized cost or fair value in other intangible assets in the accompanying consolidated balance sheets. They are amortized in proportion to and over the estimated period that the servicing income is expected to be received.

Property Management and Project Management Services

We provide property management services on a contractual basis for owners of and investors in office, industrial and retail properties. These services include construction management, marketing, building engineering, accounting and financial services. We are compensated for our services through a monthly management fee earned based on either a specified percentage of the monthly rental income, rental receipts generated from the property under management or a fixed fee. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management. Property management services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is recognized at the end of each period for the fees associated with the services performed. The amount of revenue recognized is presented gross for any services provided by our employees, as we control them. We generally do not control third-party services delivered to property management clients. As such, we generally report revenues net of third-party reimbursements.

Project management services are often provided on a portfolio wide or programmatic basis. Revenues from project management services generally include fixed management fees, variable fees, and incentive fees if certain agreed-upon performance targets are met. Revenues from project management may also include reimbursement of payroll and related costs for personnel providing the services and subcontracted vendor costs. Project management services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is typically recognized at the end of each period for the fees associated with the services performed.

The amount of revenue recognized is presented gross for any services provided by our employees, as we control them. This is evidenced by our obligation for their performance and our ability to direct and redirect their work, as well as negotiate the value of such services. The amount of revenue recognized related to certain project management arrangements is presented gross (with offsetting expense recorded in cost of revenue) for reimbursements of costs of third-party services because we control those services that are delivered to the client. In the instances where we do not control third-party services delivered to the client, we report revenues net of the third-party reimbursements.

In addition to our management fee, we receive various types of variable consideration which can include, but is not limited to; key performance indicator bonuses or penalties which may be linked to subcontractor performance, gross maximum price, glidepaths, savings guarantees, shared savings, or fixed fee structures. We assess variable consideration on a contract by contract basis, and when appropriate, recognize revenue based on our assessment of the outcome (using the most likely outcome approach or weighted probability) and historical results, if comparable and representative. Using management assessment, historical results and statistics, we recognize revenue if it is deemed probable there will not be significant reversal in the future.

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Valuation Services

We provide valuation services that include market-value appraisals, litigation support, discounted cash flow analyses, feasibility studies as well as consulting services such as property condition reports, hotel advisory and environmental consulting. We are compensated for valuation services in the form of a fee, which is payable on the occurrence of certain events (e.g., a portion on the delivery of a draft report with the remaining on the delivery of the final report). For consulting services, we may be paid based on the occurrence of time or event-based milestones (such as the delivery of draft reports). We typically satisfy our performance obligation for valuation services as services are rendered over time.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Global Workplace Solutions

Our Global Workplace Solutions segment provides a broad suite of integrated, contractually-based outsourcing services globally for occupiers of real estate, including facilities management, project management and transaction ~~services.~~

services (leasing and sales).

Facilities Management and Project Management Services

Facilities management involves the day-to-day management of client-occupied space and includes headquarter buildings, regional offices, administrative offices, data centers and other critical facilities, manufacturing and laboratory facilities, distribution facilities and retail space. Contracts for facilities management services are often structured so we are reimbursed for client-dedicated personnel costs and subcontracted vendor costs as well as associated overhead expenses plus a monthly fee, and, in some cases, annual incentives tied to agreed-upon performance targets, with any penalties typically capped. In addition, we have contracts for facilities management services based on fixed fees or guaranteed maximum prices. Fixed fee contracts are typically structured where an agreed upon scope of work is delivered for a fixed price while guaranteed maximum price contracts are structured with an agreed upon scope of work that will be provided to the client for a not to exceed price. Facilities management services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is typically recognized at the end of each period for the fees associated with the services performed.

Project management services are often provided on a portfolio wide or programmatic basis. Revenues from project management services generally ~~includes~~include fixed management fees, variable fees, and incentive fees if certain agreed-upon performance targets are met. Revenues from project management may also include reimbursement of payroll and related costs for personnel providing the services and subcontracted vendor costs. Project management services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is typically recognized at the end of each period for the fees associated with the services performed.

The amount of revenue recognized is presented gross for any services provided by our employees, as we control them. This is evidenced by our obligation for their performance and our ability to direct and redirect their work, as well as negotiate the value of such services. The amount of revenue recognized related to the majority of facilities management contracts and certain project management arrangements is presented gross (with offsetting expense recorded in cost of revenue) for reimbursements of costs of third-party services because we control those services that are delivered to the client. In the instances when we do not control third-party services delivered to the client, we report revenues net of the third-party reimbursements.

In addition to our management fee, we receive various types of variable consideration which can include, but is not limited to; key performance indicator bonuses or penalties which may be linked to subcontractor performance, gross maximum price, glidepaths, savings guarantees, shared savings, or fixed fee structures. We assess variable consideration on a contract by contract basis, and when appropriate, recognize revenue based on our assessment of the outcome (using the most likely outcome approach or weighted probability) and historical results, if comparable and representative. Using management assessment and historical results and statistics, we recognize revenue if it is deemed probable there will not be significant reversal in the future.

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Transaction Services

We provide strategic advice and execution for occupiers of real estate in connection with the leasing, sale or acquisition of office, industrial and retail space. Within the Global Workplace Solutions business, transaction services are performed for account-based clients, often as a key part of an integrated suite of commercial real estate services (with leasing being the most meaningful revenue stream included in our Global Workplace Solutions revenue). Similar to the transaction services (leasing sale or acquisition of space) we perform in our Advisory Services segment, we are compensated for our services in the form of a commission whereby a portion of our leasing commission may be paid upon signing of the lease by the client, with the remaining paid upon occurrence of another future contingent event. We typically satisfy our performance obligation at a point in time when control is

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

transferred; generally, at the time of the first contractual event where there is a present right to payment. We look to history, experience with a customer, and deal specific considerations as part of the most likely outcome estimation approach to support our judgement that the second contingency (if applicable) will be met. Therefore, we typically accelerate the recognition of the revenue associated with the second contingent event.

Real Estate Investments

Our Real Estate Investments segment is comprised of investment management services provided globally; development services in the U.S. and United Kingdom (U.K.) and a service designed to help property occupiers and owners meet the growing demand for flexible office space solutions on a global basis.

Investment Management Services

Our investment management services are provided to pension funds, insurance companies, sovereign wealth funds, foundations, endowments and other institutional investors seeking to generate returns and diversification through investment in real assets. We sponsor investment programs that span the risk/return spectrum in: North America, Europe, Asia and Australia. We are typically compensated in the form of a base management fee, disposition fees, acquisition fees and incentive fees in the form of performance fees or carried interest based on fund type (open or closed ended, respectively). For the base management fee, we typically satisfy the performance obligation as service is rendered over time pursuant to the series guidance. Consistent with the transfer of control for distinct, daily services to the customer, revenue is recognized at the end of each period for the fees associated with the services performed. For acquisition and disposition services, we typically satisfy the performance obligation at a point in time (at acquisition or upon disposition). For contracts with contingent fees, including performance fees, incentive fees and carried interest, we assess variable consideration on a contract by contract basis, and when appropriate, recognize revenue based on our assessment of the outcome (using the most likely outcome approach or weighted probability) and historical results, if comparable and representative. Revenue associated with performance fees and carried interest are typically constrained due to volatility in the real estate market, a broad range of possible outcomes, and other factors in the market that are outside of our control.

Development Services

Our development services consist of real estate development and investment activities in the ~~United States~~U.S. to users of and investors in commercial real estate, as well as for our own account. In addition, with our recent acquisition of Telford Homes, we also develop residential-led, mixed-use sites in locations across London.

We pursue opportunistic, risk-mitigated development and investment in commercial real estate across a wide spectrum of property types, including: industrial, office and retail properties; healthcare facilities of all types (medical office buildings, hospitals and ambulatory surgery centers); and residential/mixed-use projects. We pursue development and investment activity on behalf of our clients on a fee basis with 0, or limited, ownership interest in a property, in partnership with our clients through co-investment – either on an individual project basis or through programs with certain strategic capital partners or for our own account with 100% ownership. Development services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is recognized at the end of each period for the fees associated with the services performed. Fees are typically payable monthly over the service term or upon contractual defined events, like project milestones. In addition to development fee revenue, we receive various types of variable

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consideration which can include, but is not limited to, contingent lease-up bonuses, cost saving incentives, profit sharing on sales and at-risk fees. We assess variable consideration on a contract by contract basis, and when appropriate, recognize revenue based on our assessment of the outcome (using the most likely outcome approach or weighted probability) and historical results, if comparable and representative. We accelerate revenue if it is deemed probable there will not be significant reversal in the future. Sales of real estate to customers which are considered an output of ordinary activities are recognized as revenue when or as control of the assets are transferred to the customer.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Flexible-Space Solutions

Flexible-space solutions operations are conducted through our indirect wholly-owned subsidiary, ~~CBRE Hana, LLC, which we also refer to as~~ Hana. Hana develops and operates integrated, scalable, flexible workspaces, which contain office suites, conference rooms and event space and communal co-working space. Hana helps institutional property owners meet the rapidly growing demand from real estate occupiers for flexible office space solutions. Member services represent a series of distinct daily services rendered over time. Revenue is recognized at the end of each period for the fees associated with the services performed.

Accounts Receivable and Allowance for Doubtful Accounts

We record accounts receivable for our unconditional rights to consideration arising from our performance under contracts with customers. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. We estimate our allowance for doubtful accounts for specific accounts receivable balances based on historical collection trends, the age of outstanding accounts receivables and existing economic conditions associated with the receivables. Past-due accounts receivable balances are written off when our internal collection efforts have been unsuccessful. As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised service to a customer and when the customer pays for that service will be one year or less. We do not typically include extended payment terms in our contracts with customers.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction prices for contracts where our performance obligations have not yet been satisfied. As of December 31, ~~2019,~~2020, the aggregate amount of transaction price allocated to remaining performance obligations in our property leasing business was not significant. We apply the practical expedient related to remaining performance obligations that are part of a contract that has an original expected duration of one year or less and the practical expedient related to variable consideration from remaining performance obligations pursuant to the series guidance. All of our remaining performance obligations apply to one of these practical expedients.

Contract Assets and Contract Liabilities

Contract assets represent assets for revenue that has been recognized in advance of billing the customer and for which the right to bill is contingent upon something other than the passage of time. This is common for contingent portions of commissions in brokerage, development and construction revenue in development services and incentive fees present in various businesses. Billing requirements vary by contract but are generally structured around fixed monthly fees, reimbursement of employee and other third-party costs, and the achievement or completion of certain contingent events.

When we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring services to the customer under the terms of the services contract, we record deferred revenue, which represents a contract liability. We recognize the contract liability as revenue once we have transferred control of service to the customer and all revenue recognition criteria are met.

Contract assets and contract liabilities are determined for each contract on a net basis. For contract assets, we classify the short-term portion as a separate line item within current assets and the long-term portion within other assets, long-term in the accompanying consolidated balance sheets. For contract liabilities, we classify the short-term portion as a separate line item within current liabilities and the long-term portion within other liabilities, long-term in the accompanying consolidated balance sheets.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract Costs

Contract costs primarily consist of upfront costs incurred to obtain or to fulfill a contract. These costs are typically found within our Global Workplace Solutions segment. Such costs relate to transition costs to fulfill

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

contracts prior to services being rendered and are included within other intangible assets in the accompanying consolidated balance sheets. Capitalized transition costs are amortized based on the transfer of services to which the assets relate which can vary on a contract by contract basis, and are included in cost of revenue in the accompanying consolidated statement of operations. For contract costs that are recognized as assets, we periodically review for impairment.

Applying the contract cost practical expedient, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less.

Business Promotion and Advertising Costs

The costs of business promotion and advertising are expensed as incurred. Business promotion and advertising costs of $57.2 million, $76.1 million ~~$74.8 million~~ and ~~$63.1~~$74.8 million were included in operating, administrative and other expenses for the years ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

Foreign Currencies

The financial statements of subsidiaries located outside the U.S. are generally measured using the local currency as the functional currency. The assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date, and income and expenses are translated at the average monthly rate. The resulting translation adjustments are included in the accumulated other comprehensive loss component of equity. Gains and losses resulting from foreign currency transactions are included in the results of operations.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive (loss) income. In the accompanying consolidated balance sheets, accumulated other comprehensive loss primarily consists of foreign currency translation adjustments, fees associated with the termination of interest rate swaps, unrealized gains (losses) on interest rate swaps, unrealized holding (losses) gains on available for sale debt securities and pension liability adjustments. Foreign currency translation adjustments exclude any income tax effect given that earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time (see Note 15).

Warehouse Receivables

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 December 31, ~~2019~~2020 and ~~2018,~~2019, 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.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Mortgage Servicing Rights (MSRs)

In connection with the origination and sale of mortgage loans with servicing rights retained, we record servicing assets or liabilities based on the fair value of the mortgage servicing rights on the date the loans are sold. Our MSRs are initially recorded at fair value. Subsequent to the initial recording, MSRs are amortized and carried at the lower of amortized cost or fair value in other intangible assets in the accompanying consolidated balance sheets. They are amortized in proportion to and over the estimated period that net servicing income is expected to be received based on projections and timing of estimated future net cash flows.

Our initial recording of MSRs at their fair value resulted in net gains, as the fair value of servicing contracts that result in MSR assets exceeded the fair value of servicing contracts that result in MSR liabilities. The net assets and net gains are presented in the accompanying consolidated financial statements. The amount of MSRs recognized during the years ended December 31, ~~2019~~2020 and ~~2018~~2019 was as follows (dollars in thousands):

Year Ended December 31,

2019

2018

Beginning balance, mortgage servicing rights

$
424,470

$
373,131

Mortgage servicing rights recognized

182,443

173,737

Mortgage servicing rights sold

—

—

Amortization expense

(123,008
)

(115,743
)
Other

(413
)

(6,655
)
Ending balance, mortgage servicing rights

$
483,492

$
424,470


	Year Ended December 31,
	2020		2019
Beginning balance, mortgage servicing rights	$	483,492	$	424,470
Mortgage servicing rights recognized	207,827		182,443
Mortgage servicing rights sold	(122)		0
Amortization expense	(134,266)		(123,008)
Other	0		(413)
Ending balance, mortgage servicing rights	$	556,931	$	483,492

MSRs do not actively trade in an open market with readily available observable prices; therefore, fair value is determined based on certain assumptions and judgments, including the estimation of the present value of future cash flows realized from servicing the underlying mortgage loans. Management’s assumptions include the benefits of servicing (servicing fee income and interest on escrow deposits), inflation, the cost of servicing, prepayment rates, delinquencies, discount rates and the estimated life of servicing cash flows. The assumptions used are subject to change based on management’s judgments and estimates of changes in future cash flows and interest rates, among other things. The key assumptions used during the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018 in measuring fair value were as follows:

Year Ended December 31,

2019

2018

2017

Discount rate

10.12
%

10.00
%

10.06
%
Conditional prepayment rate

10.34
%

8.89
%

8.88
%


	Year Ended December 31,
	2020		2019		2018
Discount rate	11.73	%	10.12	%	10.00	%
Conditional prepayment rate	9.80	%	10.34	%	8.89	%

The estimated fair value of our MSRs was ~~$579.8~~$650.6 million and ~~$554.2~~$579.8 million as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Impairment is evaluated through a comparison of the carrying amount and fair value of the MSRs, and recognized with the establishment of a valuation allowance. We did not incur any impairment charges related to our MSRs during the years ended December 31, 2020, 2019 ~~2018~~ or ~~2017.~~2018. NaN valuation allowance was created previously and we did not record a valuation allowance for MSRs in ~~2019~~2020 or ~~2018.~~

2019.

Included in revenue in the accompanying consolidated statements of operations are contractually specified servicing fees from loans serviced for others of $212.9 million, $191.8 million ~~$167.5 million~~ and ~~$144.2~~$167.5 million for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, respectively, and includes prepayment fees/late fees/ancillary income earned from loans serviced for others of $11.0 million, $14.9 million ~~$15.9 million~~ and ~~$13.2~~$15.9 million for the years ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting for Broker Draws

As part of our recruitment efforts relative to new U.S. brokers, we offer a transitional broker draw arrangement. Our broker draw arrangements generally last until such time as a broker’s pipeline of business is sufficient to allow him or her to earn sustainable commissions. This program is intended to provide the broker with a minimal amount of cash flow to allow adequate time for his or her training as well as time for him or her to develop business relationships. Similar to traditional salaries, the broker draws are paid irrespective of the actual revenues

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

generated by the broker. Often these broker draws represent the only form of compensation received by the broker. Furthermore, it is not our general policy to pursue collection of unearned broker draws paid under this arrangement. As a result, we have concluded that broker draws are economically equivalent to salaries paid and accordingly charge them to compensation expense as incurred. The broker is also entitled to earn a commission on completed revenue transactions. This amount is calculated as the commission that would have been payable under our full commission program, less any amounts previously paid to the broker in the form of a draw.

Stock-Based Compensation

We account for all employee awards under the fair value recognition provisions of the “Compensation – Stock Compensation” Topic of the FASB ASC (Topic 718). Topic 718 requires the measurement of compensation cost at the grant date, based upon the estimated fair value of the award, and requires amortization of the related expense over the employee’s requisite service period. We do not estimate forfeitures, but instead recognize forfeitures when they occur.

See Note 14 for additional information on our stock-based compensation plans.

Income Per Share

Basic income per share attributable to CBRE Group, Inc. is computed by dividing net income attributable to CBRE Group, Inc. ~~shareholders~~stockholders by the weighted average number of common shares outstanding during each period. The computation of diluted income per share attributable to CBRE Group, Inc. generally further assumes the dilutive effect of potential common shares, which include stock options and certain contingently issuable shares. Contingently issuable shares consist of non-vested stock awards.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with the “Accounting for Income Taxes” Topic of the FASB ASC (Topic 740). Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

We utilize a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates there is more than a 50% likelihood that the position will be sustained upon examination, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.

The Tax Cuts and Jobs Act (the Tax Act) includes provisions for Global Intangible Low-Taxed Income (GILTI) wherein taxes on foreign earnings are imposed for more than a deemed return on tangible assets of foreign corporations. An accounting policy election allows to either: (i) account for GILTI as a component of tax expense in the period in which we are subject to the rules (the “period cost method”) or (ii) account for GILTI in our measurement of deferred taxes (the “deferred method”). During 2018, as a result of completing our analysis of the Tax Act, we made an accounting policy election to account for GILTI using the period cost method.

See Note 15 for additional information on income taxes.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Self-Insurance

Our wholly-owned captive insurance company, which is subject to applicable insurance rules and regulations, insures our exposure related to workers’ compensation insurance, general liability insurance and automotive insurance for our U.S. operations risk on a primary basis and we purchase excess coverage from unrelated insurance carriers. The captive insurance company also insures primary risk relating to professional indemnity claims globally. Given the nature of these types of claims, it may take several years for resolution and determination of the cost of these claims. We are required to estimate the cost of these claims in our financial statements.

The estimates that we utilize to record our potential losses on claims are inherently subjective, and actual claims could differ from amounts recorded, which could result in increased or decreased expense in future periods. As of December 31, ~~2019~~2020 and ~~2018,~~2019, our reserves for claims under these insurance programs were ~~$125.8~~$140.5 million and ~~$113.0~~$125.8 million, respectively, of which ~~$1.8~~$2.8 million and ~~$2.7~~$1.8 million, respectively, represented our estimated current liabilities.

Special Purpose Acquisition Company

CBRE Acquisition Holdings is a consolidated VIE that is included in the accompanying consolidated balance sheet under the following captions:

Investments Held in Trust - Special Purpose Acquisition Company

As part of the initial public offering of CBRE Acquisition Holdings, $402.5 million has been deposited in an interest-bearing U.S. based trust account (Trust Account). The funds in the Trust Account will be invested only in specified U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act that invest only in direct U.S. government treasury obligations (collectively “permitted investments”).

These funds do not qualify as either cash or restricted cash and will remain in the Trust Account except for the withdrawal of interest earned on the funds that may be released to CBRE Acquisition Holdings to pay taxes.

Non-controlling Interest Subject to Possible Redemption - Special Purpose Acquisition Company

The company accounts for the non-controlling interest in CBRE Acquisition Holdings as subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” CBRE Acquisition Holdings’ common stock features certain redemption rights that are considered to be outside of the company’s control and subject to occurrence of uncertain future events. Accordingly, this non-controlling interest subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section in the accompanying consolidated financial statements as of December 31, 2020.

CBRE will recognize changes in redemption value immediately as they occur – i.e. adjust the carrying amount of the instrument to its current redemption amount at each reporting date. For the year ended December 31, 2020, there was no material change in the redemption value of the redeemable non-controlling interest.

Presentation on our Consolidated Statements of Cash Flows

We consider both the funds raised through the sale of the non-controlling interest and the placement of such funds in the Trust Account to be financing activities on our consolidated statements of cash flows as the substance of the transaction as a whole is to raise financing for a future potential business combination, and any proceeds from the Trust Account are restricted for such purposes.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reclassifications

Certain reclassifications have been made to the ~~2018 and 2017~~2019 consolidated financial statements to conform with the ~~2019~~2020 presentation.

3.	~~New Accounting Pronouncements~~

3.New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The FASB previously issued ~~six ASUs related to leases. The ASUs issued were: (1) in February 2016, ASU 2016-02, “Leases (Topic 842)”, (2) in January 2018, ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”, (3) in July 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases”, (4) in July 2018, ASU 2018-11, “Targeted Improvements”, (5) in December 2018, ASU 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors” and (6) in March 2019, ASU 2019-01, “Leases (Topic 842): Codification Improvements.~~” ASU 2016-02 requires lessees to recognize most leases on the balance sheet as liabilities, with corresponding right-of-use assets. For income statement recognition purposes, leases will be classified as either a finance or operating lease in a manner similar to the requirements under the previous lease accounting literature, but without relying upon the bright-line tests. The amendments in ASU 2018-01 specify how land easements are within the scope of Accounting Standards Codification (ASC) 842 and permit a practical expedient to not assess whether expired or existing land easements that were not previously accounted for as leases are leases under ASC 842. The amendments in ASU 2018-10 affect narrow aspects of the guidance issued in the amendments in ASU 2016-02. The amendments in ASU 2018-11 provide an optional method for adopting the new leasing guidance and provide lessors with a practical expedient to combine lease and associated non-lease components by class of underlying asset in contracts that meet certain criteria. The amendments in ASU 2018-20 provide an accounting policy election permitting lessors to treat certain sales and other similar taxes incurred as lessee costs, guidance on the treatment of certain lessor costs and guidance on recognizing variable payments for contracts with a lease and non-lease component. The amendments in ASU 2019-01 affect narrow aspects of the guidance issued in the amendments in ASU 2016-02. These ASUs are effective for annual periods in fiscal years beginning after December 15, 2018.

~~We adopted these ASUs in the first quarter of 2019 by using the optional transitional method associated with~~ ~~no adjustment to comparative period financial statements presented for prior periods~~. We elected certain practical expedients, including the package of transition practical expedients and the practical expedient to forego separating lease and non-lease components in our lessee contracts. We also made an accounting policy election to exempt short-term leases of 12 months or less from balance sheet recognition requirements associated with the new standard; fixed rental payments for short-term leases will be recognized as a straight-line expense over the lease term.

As a result of the adoption of the leasing guidance, the consolidated balance sheet as of January 1, 2019 reflected $1.2 billion of additional lease liabilities, along with corresponding right-of-use assets of $1.0 billion, reflecting adjustments for items such as prepaid and deferred rent, unamortized initial direct costs, and unamortized

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~lease incentive balances. The adoption of the leasing guidance did not have a material impact on our consolidated statements of operations.~~

As of January 1, 2019, we account for leases in accordance with Topic 842. The present value of lease payments, which are either fixed payments, in-substance fixed payments, or variable payments tied to an index or rate are recognized on the balance sheet with corresponding lease liabilities and right-of-use assets upon the commencement of the lease. These lease costs are expensed over the respective lease term in accordance with the classification of the lease (i.e. operating versus finance classification). Variable lease payments not tied to an index or rate are expensed as incurred and not subject to capitalization.

~~Recent Accounting Pronouncements Pending Adoption~~

~~The FASB issued four~~five ASUs related to financial ~~instruments –~~ instruments—credit losses. The ASUs issued were: (1) in June 2016, ASU 2016-13, “Financial ~~Instruments –~~ Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments”~~Instruments,”, (2) in November 2018, ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit ~~Losses”~~Losses,” (3) in April 2019, ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, ~~(3)~~ and Topic 825, Financial Instruments,” (4) in May 2019, ASU 2019-05, “Financial ~~Instruments –~~ Instruments—Credit Losses (Topic 326): Targeted Transition ~~Relief”~~Relief,” and ~~(4)~~(5) in November 2019, ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses.” Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326)” and “Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to ASU 2016-02, Leases (Topic 842)” and ASU 2020-03, “Codification Improvements to Financial Instruments,” respectively, which include amendments to Topic 326.

ASU 2016-13 is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ~~Additionally, ASU 2019-04, discussed further below, also includes amendments to ASU 2016-13.~~ ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leasing standard. ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on financial instruments—credit losses, derivatives and hedging, and financial instruments. ASU 2019-05 ~~provide~~provides entities that have certain instruments within the scope of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost,” with an option to irrevocably elect the fair value option in Subtopic 825-10, “Financial Instruments—Overall.” ASU 2019-11 clarifies guidance around how to report expected recoveries and reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities, among other narrow scope and technical improvements. ~~These ASUs are~~ASU 2020-02 adds an SEC paragraph pursuant to the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to Topic 326 and also updates the SEC section of the codification for the change in the effective ~~for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted.~~date of Topic 842. ASU 2020-03 makes narrow-scope improvements to various aspects of the financial instrument guidance as part of the FASB’s ongoing codification improvement project aimed at clarifying specific areas of accounting guidance to help avoid unintended application. We ~~have completed our evaluation of~~adopted ASU 2016-13, ASU 2018-19 (as it relates to financial instruments—credit losses), ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU ~~2019-11~~2020-03 in the first quarter of 2020 and ~~concluded they will~~the adoption did not have a material impact on our consolidated financial statements and related disclosures.

~~In August 2018, the FASB issued ASU 2018‑14,~~

~~“Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.”~~
This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted. As ASU 2018-14 only revises disclosure requirements, it will not have any impact on our consolidated financial statements. We are evaluating the effect, if any, that ASU 2018‑14 will have on our disclosures, but do not expect it to have a material impact.

In November 2018, the FASB issued ASU 2018‑18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.” This ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard and provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. We ~~have completed our evaluation of~~adopted ASU 2018‑18 in the first quarter of 2020 and ~~concluded it will~~the adoption did not have a material impact on our consolidated financial statements and related disclosures.

In ~~April 2019,~~August 2018, the FASB issued ASU ~~2019‑04,~~ 2018‑14, “~~Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.”~~ ~~The amendments in ASU 2019-04 clarify and improve areas of guidance related~~Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the ~~recently issued standards on financial instruments – credit losses, derivatives and hedging, and financial instruments. The amendments in this~~Disclosure Requirements for Defined Benefit Plans.” This ASU makes minor changes to the disclosure requirements for employers that ~~are related to financial instruments – credit losses are~~sponsor defined benefit pension or other postretirement plans. This ASU is effective ~~at the same time as the effective date of~~for fiscal years ending after December 15, 2020, with early adoption permitted. ASU ~~2016-13.~~2018-14 only revises disclosure requirements. We ~~elected to early adopt the amendments in this~~adopted ASU ~~that are related to derivatives and hedging and financial instruments~~2018‑14 in the ~~second~~fourth quarter of ~~2019~~2020 and the adoption ~~of these amendments~~ did ~~not have any impact~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

on our consolidated financial statements and related disclosures. We have completed our evaluation of the amendments in this ASU that are related to financial instruments – credit losses and concluded they will not have a material impact on our consolidated financial statements and related disclosures.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Recent Accounting Pronouncements Pending Adoption

In December 2019, the FASB issued ASU 2019‑12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes specific exceptions to the general principles in Topic 740 and improves and simplifies financial statement preparers’ application of income tax-related guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2019‑12 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In January 2020, the FASB issued ASU 2020‑01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)~~—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.~~.” This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323 and clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU 2020‑01 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. This ASU is effective for a limited time for all entities through December 31, 2022. We are evaluating the effect that ASU 2020-04 will have on our consolidated financial statements and related disclosures.

4.	~~Telford Acquisition~~

In October 2020, the FASB issued ASU 2020-08, “Codification Improvements to Subtopic 310-20, Receivables — Nonrefundable Fees and Other Costs.” This ASU states that an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33 for each reporting period. The ASU is not expected to have a significant effect on current practice or create a large administrative cost for most entities. The amendments stated in this ASU are intended to make ASC 310-20 easier to understand and apply. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those years. Early application is not permitted. We are evaluating the effect that ASU 2020-08 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In October 2020, the FASB issued ASU 2020-09, “Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762.” This ASU aligns the SEC paragraphs in the codification with the new SEC rules issued in March 2020 relating to changes to the disclosure requirements for certain debt securities. Certain glossary terms were superseded, and amendments were made to debt and other topics as a result of this update. On March 2, 2020, the SEC issued Release No. 33-10762, which made significant changes to its disclosure requirements relating to certain debt securities. The new rules impact disclosures related to registered securities that are guaranteed and those that are collateralized by the securities of an affiliate. The final rules became effective on January 4, 2021. Voluntary compliance with the final amendments in advance of January 4, 2021 is permitted. We are evaluating the effect that ASU 2020-09 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” This ASU is intended to conform, clarify, simplify, and/or provide technical corrections to a wide variety of codification topics, including moving certain presentation and disclosure guidance to the appropriate codification section. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those years. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied retrospectively and at the beginning of the period that includes the adoption date. We are evaluating the effect that ASU 2020-10 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4.Telford Acquisition

On October 1, 2019, we acquired Telford Homes Plc (Telford) to expand our real estate development business outside of the U.S. (Telford ~~Acquisition)~~acquisition). A leading developer of multifamily residential properties in the London area, Telford is reported in our Real Estate Investments segment. Telford shareholders received £3.50 per share in cash, valuing Telford at £267.1 million, or $328.5 million as of the acquisition date. The Telford Acquisition was funded with borrowings under our revolving credit facility.

The following represents athe summary of the excess purchase price over the ~~estimated~~ fair value of net assets acquired (dollars in thousands):

Estimated purchase price

$
328,502

Less: Estimated fair value of net assets acquired (see table below)

297,669

Excess purchase price over estimated fair value of net assets
acquired

$
30,833

~~The preliminary purchase accounting related to the Telford Acquisition has been recorded in the accompanying consolidated financial statements.~~


Purchase price	$	328,502
Less: Final fair value of net assets acquired (see table below)	297,669
Excess purchase price over fair value of net assets acquired	$	30,833

The excess purchase price over the ~~estimated~~ fair value of net assets acquired has been recorded to goodwill. No significant changes were made during the year ended December 31, 2020 to the preliminary purchase accounting recorded during 2019. The goodwill arising from the Telford Acquisition consists largely of the synergies and economies of scale expected from combining the operations acquired from Telford with ours. ~~We are currently assessing if any portion of the~~The goodwill recorded in connection with the Telford Acquisition ~~will be~~that is deductible for tax purposes ~~but do~~was not ~~expect any tax deductible goodwill to be~~ significant. Given the complexity of the transaction, the calculation of the fair value of certain assets and liabilities acquired, primarily intangibles, real estate assets and income tax items, is still preliminary. The purchase price allocation is expected to be completed as soon as practicable, but no later than one year from the acquisition date. The following table summarizes the ~~aggregate estimated~~final fair values ofassigned to the identified assets acquired and ~~the~~ liabilities assumed ~~in the Telford Acquisition~~ (dollars in thousands):


Assets Acquired:
Cash and cash equivalents	$	7,896
Receivables	6,993
Contract assets, current	31,850
Prepaid expenses	2,704
Property and equipment	2,637
Other intangible assets	26,749
Operating lease assets	6,488
Investments in unconsolidated subsidiaries	79,667
Non-current contract assets	8,015
Real estate under development	208,402
Deferred tax assets, net	2,857
Other assets (current and non-current)	99,429
Total assets acquired	483,687
Liabilities Assumed:
Accounts payable and accrued expenses	47,552
Compensation and employee benefits payable	1,580
Accrued bonus	3,274
Operating lease liabilities	941
Contract liabilities, current	1,949
Income taxes payable	1,813
Line of credit	110,687
Non-current operating lease liabilities	5,547
Other liabilities (current and non-current)	12,675
Total liabilities assumed	186,018
Fair Value of Net Assets Acquired	$	297,669

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets Acquired:

Cash and cash equivalents

$
7,896

Receivables

6,993

Contract assets, current

31,850

Prepaid expenses

2,704

Property and equipment

2,637

Other intangible assets

26,749

Operating lease assets

6,488

Investments in unconsolidated subsidiaries

79,667

Non-current contract assets

8,015

Real estate under development

208,402

Deferred tax assets, net

2,857

Other assets (current and non-current)

99,429

Total assets acquired

483,687

Liabilities Assumed:

Accounts payable and accrued expenses

47,552

Compensation and employee benefits payable

1,580

Accrued bonus

3,274

Operating lease liabilities

941

Contract liabilities, current

1,949

Income taxes payable

1,813

Line of credit

110,687

Non-current operating lease liabilities

5,547

Other liabilities (current and non-current)

12,675

Total liabilities assumed

186,018

Estimated Fair Value of Net Assets Acquired

$
297,669

In connection with the Telford Acquisition, below is a summary of the ~~preliminary estimate of~~value allocated to the trademark acquired (dollars in thousands):

As of December 31, 2019

Asset Class

Amortization
Period

Amount
Assigned at
Acquisition
Date

Accumulated
Amortization and Foreign Currency Translation

Net Carrying
Value

Trademark

20 years

$
26,749

$
1,725

$
28,474

~~Upon close of the Telford Acquisition, we immediately repaid the line of credit assumed from Telford.~~


				December 31, 2019
Asset Class	Amortization Period	Amount Assigned at Acquisition Date		Accumulated Amortization and Foreign Currency Translation		Net Carrying Value
Trademark	20 Years	$	26,749	$	1,725	$	28,474

The accompanying consolidated statement of operations for the year ended December 31, 2019 includes revenue, operating income and operational net income of $97.5 million, $1.0 million and $1.4 million, respectively, attributable to the Telford Acquisition. This does not include direct transaction and integration costs of $15.0 million and amortization expense of $0.4 million related to the trademark acquired, all of which were incurred during the year ended December 31, 2019 in connection with the Telford Acquisition.

Unaudited pro forma results, assuming the Telford Acquisition had occurred as of January 1, 2018 for purposes of the pro forma disclosures for the years ended December 31, 2019 and 2018 are presented below. They include certain adjustments for increased amortization expense related to the trademark acquired (approximately $1.0 million and $1.5 million in 2019 and 2018, respectively) as well as increased interest expense (approximately $4.1 million in 2018) associated with borrowings under our revolving credit facility used to fund the acquisition.

Pro forma adjustments also include the removal of $15.0 million of direct costs incurred by us during the year ended December 31, 2019 as well as the tax impact of all pro forma adjustments for all periods presented. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the Telford Acquisition occurred on January 1, 2018 and may not be indicative of future operating results (dollars in thousands, except share data):

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Year Ended December 31,

2019

2018

Revenue

$
24,158,427

$
21,803,506

Operating income

1,294,480

1,157,051

Net income attributable to CBRE Group, Inc.

1,321,097

1,121,469

Basic income per share:

Net income per share attributable to CBRE Group, Inc.

$
3.93

$
3.31

Weighted average shares outstanding for basic income per share

335,795,654

339,321,056

Diluted income per share:

Net income per share attributable to CBRE Group, Inc.

$
3.88

$
3.27

Weighted average shares outstanding for diluted income per share

340,522,871

343,122,741

5.	~~Warehouse Receivables & Warehouse Lines of Credit~~


	Year Ended December 31,
	2019		2018
Revenue	$	24,158,427	$	21,803,506
Operating income	1,294,480		1,157,051
Net income attributable to CBRE Group, Inc.	1,321,097		1,121,469
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	3.93	$	3.31
Weighted average shares outstanding for basic income per share	335,795,654		339,321,056
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	3.88	$	3.27
Weighted average shares outstanding for diluted income per share	340,522,871		343,122,741

5.Warehouse Receivables & Warehouse Lines of Credit

A rollforward of our warehouse receivables is as follows (dollars in thousands):

Beginning balance at December 31, 2018

$
1,342,468

Origination of mortgage loans

19,389,979

Gains (premiums on loan sales)

64,002

Proceeds from sale of mortgage loans:

Sale of mortgage loans

(19,741,058
)
Cash collections of premiums on loan sales

(64,002
)
Proceeds from sale of mortgage loans

(19,805,060
)
Net increase in mortgage servicing rights included in warehouse
receivables

1,669

Ending balance at December 31, 2019

$
993,058


Beginning balance at December 31, 2019	$	993,058
Origination of mortgage loans	21,268,114
Gains (premiums on loan sales)	75,227
Proceeds from sale of mortgage loans:
Sale of mortgage loans	(20,862,294)
Cash collections of premiums on loan sales	(75,227)
Proceeds from sale of mortgage loans	(20,937,521)
Net increase in mortgage servicing rights included in warehouse receivables	12,292
Ending balance at December 31, 2020	$	1,411,170

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table is a summary of our warehouse lines of credit in place as of December 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):

December 31, 2019

December 31, 2018

Lender

Current
Maturity

Pricing

Maximum
Facility
Size

Carrying
Value

Maximum
Facility
Size

Carrying
Value

JP Morgan Chase Bank, N.A. (JP Morgan) (1)

10/19/2020

daily one-month LIBOR plus 1.30%

$
985,000

$
267,075

$
985,000

$
871,680

JP Morgan (1)

10/19/2020

daily one-month LIBOR plus 2.75%

15,000

—

15,000

—

Capital One, N.A. (Capital One)

7/27/2020

daily one-month LIBOR plus 1.25%

200,000

$
39,538

325,000

120,195

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 1.35%, with a
LIBOR floor of 0.35%

450,000

360,784

450,000

149,089

TD Bank, N.A. (TD Bank) (3)

6/30/2020

daily one-month LIBOR plus 1.15%

800,000

92,266

400,000

165,945

Bank of America, N.A. (BofA)

5/27/2020

daily one-month LIBOR plus 1.20%

350,000

189,465

—

—

BofA

5/27/2020

daily one-month LIBOR plus 1.15%

250,000

17,457

200,000

—

BofA

6/4/2019

daily one-month LIBOR plus 1.30%

—

—

225,000

21,852

MUFG Union Bank, N.A. (Union Bank) (4)

6/28/2020

daily one-month LIBOR plus 1.20%

350,000

10,590

—

—

$
3,400,000

$
977,175

$
2,600,000

$
1,328,761

~~(1)~~

~~Effective October 21, 2019, we amended this facility which extended the maturity date until October 19, 2020.~~

~~(2)~~

~~Effective February 6,~~


			December 31, 2020				December 31, 2019
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	10/18/2021	daily floating rate LIBOR plus 1.60%	$	1,585,000	$	561,726	$	985,000	$	267,075
JP Morgan (2)	10/18/2021	daily floating rate LIBOR plus 2.75%	15,000		—		15,000		—
Capital One, N.A. (Capital One) (3)			0		0		200,000		39,538
Fannie Mae Multifamily As Soon As Pooled Plus Agreement and Multifamily As Soon As Pooled Sale Agreement (ASAP) Program (4)	Cancelable anytime	daily one-month LIBOR plus 1.45%, with a LIBOR floor of 0.25%	450,000		132,692		450,000		360,784
TD Bank, N.A. (TD Bank) (5)	6/30/2021	2-Business Day Prior LIBOR plus 1.15%	800,000		401,849		800,000		92,266
Bank of America, N.A. (BofA) (6)	5/26/2021	(7)	350,000		175,862		350,000		189,465
BofA (8)			0		0		250,000		17,457
MUFG Union Bank, N.A. (Union Bank) (9)	6/28/2021	daily floating rate LIBOR plus 1.50%, with a LIBOR floor of 0.25%	300,000		111,835		350,000		10,590
			$	3,500,000	$	1,383,964	$	3,400,000	$	977,175

_______________

(1)Effective October 19, 2020, this facility was amended and the maximum facility size was temporarily increased to $1,585.0 million, and reverted back to $985.0 million on January 18, 2021. The interest rate increased to daily floating rate LIBOR plus 1.60% and the revised maturity date is October 18, 2021. Effective December 1, 2020, the maximum facility was temporarily increased to $2,085.0 million, which reverted back to $1,585.0 million on December 31, 2020.

(2)Effective October 19, 2020, the maturity date was extended to October 18, 2021.

(3)This facility expired on July 27, 2020 and was not renewed.

(4)Effective September 25, 2020, the spread was increased by 10 bps and the LIBOR floor was reduced to 0.25%.

(5)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, with an unchanged interest rate and revised maturity date of June 30, 2021. Effective September 21, 2020, ~~the maximum facility size was temporarily increased from $450.0 million to $600.0 million, and will revert back to $450.0 million on March 1, 2020.~~

CBRE ~~GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(3)~~utilized the additional $400.0 million as a temporary increase, which expired on December 31, 2020.

Effective July 1, 2019, this facility was amended with a revised interest rate of daily one-month LIBOR plus 1.15% and a maturity date of June 30, 2020. Effective August 1, 2019, this facility contained an accordion feature which provided for a temporary increase to $800.0 million, if needed, and expired on February 1, 2020. The temporary increase was never requested.

~~(4)~~

On June 28, 2019, we added a new warehouse facility for $200.0 million with Union Bank. This facility contains an accordion feature which allows for temporary increases not to exceed an additional $150.0 million. If utilized, the additional borrowings must be in predefined multiples and are not to occur more than three times within twelve consecutive months. Since inception, no short-term temporary increases have been requested.

(6)On June 10, 2020, this facility was amended with a revised maturity date of May 26, 2021. 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. As of December 31, 2020, the sublimit borrowing has not been utilized.

(7)Effective July 24, 2020, the interest rate on this facility was as follows: (i) daily floating rate LIBOR plus 1.40%, with a LIBOR floor of 0.25%, on the general facility and (ii) daily floating rate LIBOR plus 1.75% on the separate sublimit borrowing.

(8)This facility expired on May 27, 2020 and was not renewed.

(9)On June 28, 2019, we added a new warehouse facility for $200.0 million that contains an accordion feature which allowed for temporary increases not to exceed an additional $150.0 million. If utilized, the additional borrowings must be in predefined multiples and are not to occur more than three times within twelve consecutive months. On June 26, 2020, the maturity was extended to July 28, 2020 and on July 28, 2020 the maturity date was extended to August 27, 2020. Effective August 4, 2020, this facility was amended with a revised interest rate of daily floating rate LIBOR plus 1.50%, with a floor of 0.25%, and a maturity date of June 28, 2021. Additionally, this amendment decreased the accordion feature from $150.0 million to $100.0 million, with no changes to the predefined borrowing multiples. On September 22, 2020, the temporary increase of $100.0 million was utilized and expired on January 20, 2021.

During the year ended December 31, ~~2019,~~2020, we had a maximum of ~~$2.5~~$3.5 billion of warehouse lines of credit principal outstanding.

6.	~~Variable Interest Entities (VIEs)~~

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6.Variable Interest Entities

We hold variable interests in certain VIEs 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 December 31, ~~2019~~2020 and ~~2018,~~2019, our maximum exposure to loss related to the VIEs ~~which~~that are not consolidated was as follows (dollars in thousands):

December 31,

2019

2018

Investments in unconsolidated subsidiaries

$
30,484

$
23,266

Other current assets

4,307

3,827

Co-investment commitments

29,696

22,363

Maximum exposure to loss

$
64,487

$
49,456

7.	~~Fair Value Measurements~~


	December 31,
	2020		2019
Investments in unconsolidated subsidiaries	$	66,947	$	30,484
Other current assets	4,219		4,307
Co-investment commitments	47,957		29,696
Maximum exposure to loss	$	119,123	$	64,487

7.Fair Value Measurements

Topic 820 defines fair value as the ~~exchange~~ price that would be received ~~for~~to sell an asset or paid to transfer a ~~liability (an exit price) in the principal or most advantageous market for the asset or~~ 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 1 – Quoted prices in active markets for identical assets or liabilities.

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.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

•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.

The following tables present the fair value of assets ~~and liabilities~~ measured at fair value on a recurring basis as of December 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):

As of December 31, 2019

Fair Value Measured and Recorded Using

Level 1

Level 2

Level 3

Total

Assets

Available for sale securities:

Debt securities:

U.S. treasury securities

$
6,998

$
—

$
—

$
6,998

Debt securities issued by U.S. federal agencies

—

10,639

—

10,639

Corporate debt securities

—

29,098

—

29,098

Asset-backed securities

—

5,152

—

5,152

Collateralized mortgage obligations

—

2,222

—

2,222

Total available for sale debt securities

6,998

47,111

—

54,109

Equity securities

51,399

—

—

51,399

Warehouse receivables

—

993,058

—

993,058

Total assets at fair value

$
58,397

$
1,040,169

$
—

$
1,098,566


	As of December 31, 2018									December 31, 2020
	Fair Value Measured and Recorded Using									Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets									Assets
Available for sale securities:									Available for sale securities:
Debt securities:									Debt securities:
U.S. treasury securities	$	3,138	$	—	$	—	$	3,138	U.S. treasury securities	$	7,270	$	0	$	0	$	7,270
Debt securities issued by U.S. federal agencies		—		11,196		—		11,196	Debt securities issued by U.S. federal agencies	0		10,216		0		10,216
Corporate debt securities		—		27,201		—		27,201	Corporate debt securities	0		51,244		0		51,244
Asset-backed securities		—		5,017		—		5,017	Asset-backed securities	0		3,801		0		3,801
Collateralized mortgage obligations		—		2,224		—		2,224	Collateralized mortgage obligations	0		1,369		0		1,369
Total available for sale debt securities		3,138		45,638		—		48,776	Total available for sale debt securities	7,270		66,630		0		73,900
Equity securities		153,762		—		—		153,762	Equity securities	43,334		0		0		43,334
Investments in unconsolidated subsidiaries									Investments in unconsolidated subsidiaries	0		0		50,000		50,000
Warehouse receivables		—		1,342,468		—		1,342,468	Warehouse receivables	0		1,411,170		0		1,411,170
Total assets at fair value	$	156,900	$	1,388,106	$	—	$	1,545,006	Total assets at fair value	$	50,604	$	1,477,800	$	50,000	$	1,578,404
Liabilities
Interest rate swaps	$	—	$	1,070	$	—	$	1,070
Securities sold, not yet purchased		3,133		—		—		3,133
Total liabilities at fair value	$	3,133	$	1,070	$	—	$	4,203

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	December 31, 2019
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
Debt securities:
U.S. treasury securities	$	6,998	$	0	$	0	$	6,998
Debt securities issued by U.S. federal agencies	0		10,639		0		10,639
Corporate debt securities	0		29,098		0		29,098
Asset-backed securities	0		5,152		0		5,152
Collateralized mortgage obligations	0		2,222		0		2,222
Total available for sale debt securities	6,998		47,111		0		54,109
Equity securities	51,399		0		0		51,399

Warehouse receivables	0		993,058		0		993,058
Total assets at fair value	$	58,397	$	1,040,169	$	0	$	1,098,566

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.

We classify one investment as level 3 in the fair value hierarchy which represents an investment in a non-public entity where we elected the fair value option. The carrying value is deemed to approximate the fair value of this investment due to the proximity of the investment date to the balance sheet date as well as investee-level performance updates. As of December 31, 2020 and 2019, investments in unconsolidated subsidiaries at fair value using NAV were $66.3 million and $124.3 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.

The fair values of the warehouse receivables are primarily calculated based on already locked in purchase prices. At December 31, 2020 and 2019, 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 Notes 2 and 5). These assets are classified as Level 2 in the fair value hierarchy as a substantial majority of inputs are readily observable.

The following non-recurring fair value ~~measurement was~~measurements were recorded for the year ended December 31, 2020 (dollars in thousands):


	Net Carrying Value as of December 31, 2020		Fair Value Measured and Recorded Using						Total Impairment Charges for the Year Ended December 31, 2020
			Level 1		Level 2		Level 3
Property and equipment	$	12,870	$	0	$	12,870	$	0	$	29,168
Goodwill	443,305		0		0		443,305		25,000
Other intangible assets	12,562		0		0		12,562		34,508
Total	$	468,737	$	0	$	12,870	$	455,867	$	88,676

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the year ended December 31, 2020, we recorded $50.2 million of non-cash asset impairment charges in our Global Workplace Solutions segment; a non-cash goodwill impairment charge of $25.0 million and certain non-cash asset impairment charges of $13.5 million in our Real Estate Investments segment. Primarily as a result of the recent global economic disruption and uncertainty due to Covid-19, we deemed there to be triggering events during 2020 that required testing of goodwill and certain assets for impairment. Based on these events, we recorded the aforementioned non-cash impairment charges, which were primarily driven by lower anticipated cash flows in certain businesses directly resulting from a downturn in forecasts as well as increased forecast risk due to Covid-19 and changes in our business going forward.

The following non-recurring fair value measurements were recorded for the year ended December 31, 2019 (dollars in thousands):

Net Carrying
Value as of

Fair Value Measured and Recorded Using

Total
Impairment
Charges for
the Year Ended

December 31,
2019

Level 1

Level 2

Level 3

December 31,
2019

Other intangible assets

$
14,753

$
—

$
—

$
14,753

$
89,787


	Net Carrying Value as of December 31, 2019		Fair Value Measured and Recorded Using						Total Impairment Charges for the Year Ended December 31, 2019
	Net Carrying Value as of December 31, 2019		Level 1		Level 2		Level 3
Other intangible assets	$	14,753	$	0	$	0	$	14,753	$	89,787

During the year ended December 31, 2019, we recorded an intangible asset impairment of $89.8 million in our Real Estate Investments segment. ~~Such impairment charge was included as a separate line item in the accompanying consolidated statements of operations.~~

This non-cash write-off resulted from a review of the anticipated cash flows and the decrease in assets under management in our public securities business driven in part by continued industry-wide shift in investor preference for passive investment programs.

All of the above-mentioned asset impairment charges were included within the line item “Asset impairments” in the accompanying consolidated statements of operations. The fair value measurements employed for our impairment ~~evaluation was~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~generally~~evaluations were based ~~upon~~on a discounted cash flow approach. Inputs used in ~~such evaluation~~these evaluations included risk-free rates of return, estimated risk premiums, terminal growth rates, working capital assumptions, income tax rates as well as other economic variables.

During the year ended December 31, 2018, we recorded a gain of $100.4 million associated with remeasuring our 50% investment in a previously unconsolidated subsidiary in New England to fair value as of the date we acquired the remaining 50% controlling interest. Fair value of this investment in our unconsolidated subsidiary as of the acquisition date was $110.1 million based upon the purchase price paid for the remaining 50% interest acquired, excluding the estimated control premium paid, which falls under Level 3 of the fair value hierarchy. Such gain was reflected in other income in our Advisory Services segment in the accompanying consolidated statements of operations for the year ended December 31, 2018.

~~There were 0 significant non-recurring fair value measurements recorded during the year ended December 31, 2017.~~

The fair values of the warehouse receivables are primarily calculated based on already locked in purchase prices. At December 31, 2019 and 2018, 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 Notes 2 and 5). These assets are classified as Level 2 in the fair value hierarchy as a substantial majority of inputs are readily observable.

The equity securities and securities sold, not yet purchased are primarily in the U.S. and 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 asked prices on such date.

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.~~

•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.

~~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 Notes 2 and 5).

•

~~Available For Sale Debt Securities~~ ~~– These investments are carried at their fair value.~~

•

~~Equity Securities~~ ~~– These investments are carried at~~•Receivables, less Allowance for Doubtful Accounts – Due to their short-term nature, fair value approximates carrying value.

•

~~Securities Sold, not yet Purchased~~ ~~– These liabilities are carried at their fair value.~~

•

~~Short-Term Borrowings~~ – This balance primarily represents outstanding amounts under our warehouse lines of credit of our wholly-owned subsidiary, CBRE Capital Markets. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value (see Notes 5 and 11)•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 Notes 2 and 5).

•

~~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 $745.5 million and $757.0 million at December 31, 2019 and 2018, respectively. Their actual carrying value, net of

•Investments in Unconsolidated Subsidiaries – A portion of these investments are carried at fair value. At December 31, 2020, we did not classify any investments in unconsolidated subsidiaries as Level 1 in the fair value hierarchy. For investments in unconsolidated subsidiaries that are carried at fair value, we estimate the fair value of each investment using the NAV per share (or its equivalent).

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~unamortized debt issuance costs, totaled $744.6 million and $751.3 million at December 31, 2019 and 2018, respectively (see Note 11).~~

•Available for Sale Debt Securities – These investments are carried at their fair value.

~~Interest Rate Swaps~~ – These liabilities are carried at their fair value as calculated by using widely-accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative (see Note 11).

•

~~Senior Notes~~ ~~– Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair values of our4.875% senior notes and 5.25% senior notes were $670.7 millionand $478.3 million, respectively, at December 31, 2019 and $616.4 million and $443.7 million, respectively, at December 31, 2018. The actual carrying value of our4.875~~% senior notes and 5.25% senior notes, net of unamortized debt issuance costs as well as unamortized discount or premium, if applicable, totaled $593.6 million and $423.0 million, respectively, at December 31, 2019 and~~$592.8 million and $422.7 million, respectively, at December 31, 2018.~~

•

~~Notes Payable on Real Estate~~ – As of December 31, 2019 and 2018, the carrying value of our notes payable on real estate, net of unamortized debt issuance costs, was $13.1 million and $6.3 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•Equity Securities – These investments are carried at their 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.

8.	~~Property and Equipment~~

•Investments Held in Trust - special purpose acquisition company – Funds received as part of the initial public offering of CBRE Acquisition Holdings have been deposited in an interest-bearing U.S. based trust account. The funds will be invested only in specified U.S. government treasury bills with a maturity of 180 days or less or in money market funds. The carrying amount approximates fair value due to the short-term maturities of these instruments. (See Note 2).

•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 5 and 11).

•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 $772.2 million and $745.5 million at December 31, 2020 and 2019, respectively. Their actual carrying value, net of unamortized debt issuance costs, totaled $785.7 million and $744.6 million at December 31, 2020 and 2019, respectively (see Note 11).

•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 $702.5 million and $670.7 million at December 31, 2020 and 2019, respectively. The actual carrying value of our 4.875% senior notes, net of unamortized debt issuance costs and unamortized discount, totaled $594.5 million and $593.6 million at December 31, 2020 and 2019, respectively. On December 28, 2020, we redeemed the $425.0 million aggregate outstanding principal amount of our 5.25% senior notes in full (See Note 11). At December 31, 2019, the estimated fair value and actual carrying value (net of unamortized debt issuance costs as well as unamortized premium) of our 5.25% senior notes was $478.3 million and $423.0 million, respectively.

•Notes Payable on Real Estate – As of December 31, 2020 and 2019, the carrying value of our notes payable on real estate, net of unamortized debt issuance costs, was $79.6 million and $13.1 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.

8.Property and Equipment

Property and equipment consists of the following (dollars in thousands):

December 31,

Useful Lives

2019

2018

Computer hardware and software

2-10 years

$
1,011,704

$
848,955

Leasehold improvements

1-15 years

551,049

472,952

Furniture and equipment

1-10 years

344,351

307,812

Total cost

1,907,104

1,629,719

Accumulated depreciation and amortization

(1,070,898
)

(908,027
)
Property and equipment, net

$
836,206

$
721,692


		December 31,
	Useful Lives	2020		2019
Computer hardware and software	2-10 years	$	974,490	$	931,891
Leasehold improvements	1-15 years	554,252		510,917
Furniture and equipment	1-10 years	243,880		334,625
Construction in progress	N/A	117,274		129,671
Total cost		1,889,896		1,907,104
Less: Accumulated depreciation and amortization		1,074,887		1,070,898
Property and equipment, net		$	815,009	$	836,206

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Depreciation and amortization expense associated with property and equipment was $268.3 million, $207.8 million ~~$192.8 million~~ and ~~$166.0~~$192.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. During the year ended December 31, 2020, we recorded $29.2 million in asset impairment charges related to property and ~~2017, respectively.~~

equipment (see Note 7).

9.	~~Goodwill and Other Intangible Assets~~

Construction in progress includes capitalizable costs incurred during the development stage of computer software and leasehold improvements that have not yet been placed in service.

9.Goodwill and Other Intangible Assets

On August 17, 2018, we announced a new organizational structure that became effective on January 1, 2019. Under the new structure, we organize our operations around, and publicly report our financial results on, 3 global business segments: (1) Advisory Services; (2) Global Workplace Solutions and (3) Real Estate Investments (see Note 19). In connection with this change, we reassessed our reporting units as of January 1, 2019. As a result, we have reassigned the goodwill balance to reflect our new segment structure using a relative fair value allocation approach. Under this approach, the fair value of each impacted reporting unit was determined using a combination of the income approach and the market approach and was compared to the goodwill of the impacted regional segments immediately prior to the reorganization to arrive at the reassigned goodwill balance.

We are required to test goodwill for impairment at least annually, or more often if circumstances or events indicate there may be a change in the impairment status, in accordance with Topic 350. We considered the change to our reportable segments and the resulting change in our identified reporting units to be a triggering event that required testing of our goodwill for impairment as of January 1, 2019. We elected to perform a quantitative test using a discounted cash flow approach to estimate the fair value of our reporting units. Management’s judgment is

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margin percentages, discount rates, etc. When we performed our goodwill impairment review as of January 1, 2019, we determined that 0 impairment existed as the estimated fair value of each of our reporting units was in excess of their carrying value.

During the first quarter of 2020, as a result of the Covid-19 pandemic, we assessed at a reporting unit level whether any triggering events had occurred during the period that would require us to perform a quantitative impairment analysis of goodwill. As a result of this evaluation, we determined that there was a triggering event in our global investment management reporting unit (which falls within our Real Estate Investments segment) that required a quantitative test to be performed. In connection with this quantitative evaluation, we determined that this reporting unit’s goodwill was impaired and recorded a $25.0 million non-cash impairment charge during the first quarter.

Our annual assessment of goodwill and other intangible assets deemed to have indefinite lives has historically been completed as of the beginning of the fourth quarter of each year. We performed the 2020, 2019 ~~2018~~ and ~~2017~~2018 annual assessments as of October 1. During 2020, as part of our annual assessment, we identified a change in our reporting units due to an internal reorganization in our GWS segment. When we performed our required annual goodwill impairment review as of October 1, 2020, 2019 ~~2018~~ and ~~2017,~~2018, we determined that 0no impairment existed as the estimated fair value of our reporting units was in excess of their carrying value.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):

Advisory
Services

Global
Workplace
Solutions

Real Estate
Investments

Total

Balance as of December 31, 2017

Goodwill

$
3,107,787

$
623,355

$
592,104

$
4,323,246

Accumulated impairment losses

(761,448
)

(175,473
)

(131,585
)

(1,068,506
)

2,346,339

447,882

460,519

3,254,740

Purchase accounting entries related to acquisitions

188,071

288,243

(5,110
)

471,204

Foreign exchange movement

(25,904
)

(36,028
)

(11,703
)

(73,635
)
Balance as of December 31, 2018

Goodwill

3,269,954

875,570

575,291

4,720,815

Accumulated impairment losses

(761,448
)

(175,473
)

(131,585
)

(1,068,506
)

2,508,506

700,097

443,706

3,652,309

Purchase accounting entries related to acquisitions

29,544

7,657

42,176

79,377

Foreign exchange movement

2,720

16,279

2,808

21,807

Balance as of December 31, 2019

Goodwill

3,302,218

899,506

620,275

4,821,999

Accumulated impairment losses

(761,448
)

(175,473
)

(131,585
)

(1,068,506
)

$
2,540,770

$
724,033

$
488,690

$
3,753,493

~~In the fourth quarter of~~


	Advisory Services		Global Workplace Solutions		Real Estate Investments		Total
Balance as of December 31, 2018
Goodwill	$	3,269,954	$	875,570	$	575,291	4,720,815
Accumulated impairment losses	(761,448)		(175,473)		(131,585)		(1,068,506)
	2,508,506		700,097		443,706		3,652,309
Purchase accounting entries related to acquisitions	29,544		7,657		42,176		79,377
Foreign exchange movement	2,720		16,279		2,808		21,807
Balance as of December 31, 2019
Goodwill	3,302,218		899,506		620,275		4,821,999
Accumulated impairment losses	(761,448)		(175,473)		(131,585)		(1,068,506)
	2,540,770		724,033		488,690		3,753,493
Purchase accounting entries related to acquisitions	16,463		9,702		(7,984)		18,181
Impairment	0		0		(25,000)		(25,000)
Foreign exchange movement	30,107		28,589		16,239		74,935
Balance as of December 31, 2020
Goodwill	3,348,788		937,797		628,530		4,915,115
Accumulated impairment losses	(761,448)		(175,473)		(156,585)		(1,093,506)
	$	2,587,340	$	762,324	$	471,945	$	3,821,609

During 2020, we completed 6 in-fill acquisitions: leading local facilities management firms in Spain and Italy, a U.S. firm that helps companies reduce telecommunications costs, a technology focused project management firm based in Florida, a firm specializing in performing real estate valuations in South Korea, and a facilities management and technical maintenance firm in Australia.

During 2019, ~~we completed~~in addition to the Telford Acquisition (see Note 4)~~. Additionally, during 2019,~~ , we completed 8 in-fill acquisitions: a leading advanced analytics software company based in the U.K., a commercial and residential real estate appraisal firm ~~headquartered~~ in Florida, our former affiliate in Omaha, a project management firm in Australia, a valuation and consulting business in Switzerland, a leading project management firm in Israel, a full-service real estate firm in San Antonio with a focus on retail, office, medical office and land, and a debt-focused real estate investment management business in the U.K.

On June 12, 2018, we acquired FacilitySource through a stock purchase and merger agreement with its stockholders, including FacilitySource Holdings, LLC, WP X Finance, LP and Warburg Pincus X Partners, LP (FacilitySource Acquisition). FacilitySource, which is reported in our Global Workplace Solutions segment, was acquired to help us build a tech-enabled supply chain capability for the occupier outsourcing industry, which would drive meaningfully differentiated outcomes for leading occupiers of real estate. The final net purchase price was approximately $266.5 million paid in cash, with $263.0 million paid in 2018 and $3.5 million paid in 2019. We financed the transaction with cash on hand and borrowings under our revolving credit facility. The purchase accounting related to the FacilitySource Acquisition has been finalized (with no changes made in 2019 to the preliminary purchase accounting recorded in 2018). The excess purchase price over the estimated fair value of net assets acquired has been recorded to goodwill. The goodwill arising from the FacilitySource Acquisition consisted largely of the synergies and economies of scale expected from combining the operations acquired from FacilitySource with ours. The goodwill recorded in connection with the FacilitySource Acquisition that is deductible for tax purposes was not significant.

During 2018, we completed 6 in-fill acquisitions, the largest of which was the purchase of the remaining 50% equity interest in our longstanding New England joint venture. We also acquired a retail leasing and property

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

management firm in Australia, two firms in Israel (our former affiliate and a majority interest in a local facilities management provider), a commercial real estate services provider in San Antonio, and a provider of real estate and facilities consulting services to healthcare companies across the U.S.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other intangible assets totaled $1,367.9 million, net of accumulated amortization of $1,556.5 million as of December 31, 2020, and $1,379.5 million, net of accumulated amortization of $1,358.5 million, as of December 31, 2019 and ~~$1,441.3 million, net of accumulated amortization of $1,180.4 million, as of December 31, 2018 and~~ are comprised of the following (dollars in thousands):

December 31,

2019

2018

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Unamortizable intangible assets:

Management contracts

$
62,338

$
86,585

Trademarks

56,800

56,800

Trade names

6,000

16,250

125,138

159,635

Amortizable intangible assets:

Customer relationships

857,772

$
(519,162
)

843,387

$
(435,225
)
Mortgage servicing rights

803,419

(319,927
)

697,322

(272,852
)
Trademarks/Trade names

345,834

(92,730
)

312,699

(76,514
)
Management contracts

142,767

(138,891
)

200,251

(135,835
)
Covenant not to compete

73,750

(73,750
)

73,750

(73,750
)
Other

389,394

(214,068
)

334,657

(186,217
)

2,612,936

(1,358,528
)

2,462,066

(1,180,393
)
Total intangible assets

$
2,738,074

$
(1,358,528
)

$
2,621,701

$
(1,180,393
)


	December 31,
	2020				2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Unamortizable intangible assets:
Management contracts	$	67,422			$	62,338
Trademarks	56,800				56,800
Trade name	0				6,000
	124,222				125,138
Amortizable intangible assets:
Customer relationships	880,104		$	(603,866)	857,772		$	(519,162)
Mortgage servicing rights	927,525		(370,634)		803,419		(319,927)
Trademarks/Trade names	354,060		(111,595)		345,834		(92,730)
Management contracts	152,312		(145,612)		142,767		(138,891)
Covenant not to compete	73,750		(73,750)		73,750		(73,750)
Other	412,477		(251,080)		389,394		(214,068)
	2,800,228		(1,556,537)		2,612,936		(1,358,528)
Total intangible assets	$	2,924,450	$	(1,556,537)	$	2,738,074	$	(1,358,528)

Unamortizable intangible assets include management contracts identified as a result of the REIM Acquisitions relating to relationships with open-end funds, a trademark separately identified as a result of the 2001 Acquisition and a trade name separately identified in connection with the REIM ~~Acquisitions, which represents the Clarion Partners trade name in the U.S. These intangible assets have indefinite useful lives and accordingly are not being amortized.~~

Acquisitions.

Customer relationships relate to existing relationships acquired through acquisitions mainly in our Global Workplace Solutions segment that are being amortized over useful lives of up to 20 years.

Mortgage servicing rights represent the carrying value of servicing assets in the U.S. in our Advisory Services segment. The mortgage servicing rights are being amortized over the estimated period that net servicing income is expected to be received, which is typically up to ~~ten~~10 years. See Mortgage Servicing Rights discussion within Note 2 for additional information.

In connection with the Telford Acquisition, a trademark of approximately $26.7 million was separately identified and is being amortized over 20 years (see Note 4). Trademarks of approximately $280 million were separately identified in connection with the GWS Acquisition and are being amortized over 20 years.

Management contracts consist primarily of asset management contracts relating to relationships with closed-end funds and separate accounts in the U.S., Europe and Asia that were separately identified as a result of the REIM Acquisitions. These management contracts are being amortized over useful lives of up to 13 years.

Other amortizable intangible assets mainly represent transition costs, which primarily get amortized to cost of revenue over the life of the associated contract.

During the year ended December 31, 2020, we recorded non-cash impairment charges of $28.5 million in our Global Workplace Solutions segment related to amortizable trade name and customer relationships. In addition, we recorded non-cash impairment charges of $6.0 million in our Real Estate Investments segment (see Note 7).

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the year ended December 31, 2019, we recorded an intangible asset impairment of $89.8 million in our Real Estate Investments ~~segment (see Note 7).~~segment. This non-cash write-off related to intangibles acquired in the REIM Acquisitions, including unamortizable management contracts relating to relationships with open-end funds and the

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Clarion Partners trade name in the ~~U.S,~~U.S., as well as amortizable management contracts relating to relationships with closed-end funds and separate accounts in the U.S.

Amortization expense related to intangible assets was $227.1 million, $225.7 million ~~$258.7 million~~ and ~~$238.7~~$258.7 million for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, respectively. The estimated annual amortization expense for each of the years ending December 31, ~~2020~~2021 through December 31, ~~2024~~2025 and thereafter approximates ~~$167.7~~$202.4 million, ~~$152.2~~$180.1 million, ~~$130.4~~$156.2 million, ~~$113.2~~$134.2 million and ~~$101.8~~$115.6 million, respectively.

~~10.~~

~~Investments in Unconsolidated Subsidiaries~~

10.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 up to 50.0%.

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

~~Condensed Balance Sheets Information:~~

December 31,

2019

2018

Current assets

$
5,407,082

$
3,931,111

Non-current assets

20,414,598

16,578,905

Total assets

$
25,821,680

$
20,510,016

Current liabilities

$
2,241,930

$
1,919,955

Non-current liabilities

5,857,413

4,495,117

Total liabilities

$
8,099,343

$
6,415,072

Non-controlling interests

$
461,018

$
261,654

~~Condensed Statements of Operations Information:~~

Year Ended December 31,

2019

2018

2017

Revenue

$
1,545,424

$
1,524,685

$
1,392,590

Operating income

549,111

906,889

1,425,824

Net income

419,966

679,712

1,254,345


	December 31,
	2020		2019
Combined Condensed Balance Sheets Information:
Current assets	$	6,508,718	$	5,407,082
Non-current assets	24,343,229		20,414,598
Total assets	$	30,851,947	$	25,821,680

Current liabilities	$	3,164,135	$	2,241,930
Non-current liabilities	6,696,352		5,857,413
Total liabilities	$	9,860,487	$	8,099,343

Non-controlling interests	$	460,904	$	461,018


	Year Ended December 31,
	2020		2019		2018
Combined Condensed Statements of Operations Information:
Revenue	$	2,036,818	$	1,545,424	$	1,524,685
Operating income	587,689		549,111		906,889
Net income	483,224		419,966		679,712

Our Real Estate Investments segment invests our own capital in certain real estate investments with clients. We ~~have~~ provided investment management, property management, brokerage and other professional services in connection with these real estate investments ~~on an arm’s length basis~~ and earned revenues from these unconsolidated subsidiaries of $145.9 million, $97.0 million ~~$134.3 million~~ and ~~$100.3~~$134.3 million during the years ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

During the fourth quarter 2020, the company made a $50.0 million non-controlling investment in Industrious National Management Company LLC (“Industrious”). See Subsequent Event (Note 22).

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

11.Long-Term Debt and Short-Term Borrowings

~~Long-Term Debt and Short-Term Borrowings~~

Total long-term debt and short-term borrowings consist of the following (dollars in thousands):

December 31,

2019

2018

Long-Term Debt

Senior term loans, with interest ranging from
   0.75% to 3.38%, due through 2024

$
748,531

$
758,452

4.875% senior notes due in 2026, net of
   unamortized discount

597,052

596,653

5.25% senior notes due in 2025, net of unamortized
   premium

425,952

426,134

Other

1,861

3,682

Total long-term debt

1,773,396

1,784,921

Less: current maturities of long-term debt

(1,814
)

(3,146
)
Less: unamortized debt issuance costs

(10,337
)

(14,515
)
Total long-term debt, net of current maturities

$
1,761,245

$
1,767,260

Short-Term Borrowings

Warehouse lines of credit, with interest ranging
   from 2.95% to 5.25%, due in 2020

$
977,175

$
1,328,761

Other

4,534

—

Total short-term borrowings

$
981,709

$
1,328,761


	December 31,
	2020		2019
Long-Term Debt
Senior term loans, with interest ranging from 0.75% to 1.15%, due quarterly through 2024	$	788,759	$	748,531
4.875% senior notes due in 2026, net of unamortized discount	597,470		597,052
5.25% senior notes, redeemed in December 2020	0		425,952
Other	1,514		1,861
Total long-term debt	1,387,743		1,773,396
Less: current maturities of long-term debt	1,514		1,814
Less: unamortized debt issuance costs	6,027		10,337
Total long-term debt, net of current maturities	$	1,380,202	$	1,761,245

Short-Term Borrowings
Warehouse lines of credit, with interest ranging from 1.65% to 2.89%, due in 2021	$	1,383,964	$	977,175
Other	5,330		4,534
Total short-term borrowings	$	1,389,294	$	981,709

Future annual aggregate maturities of total consolidated gross debt (excluding unamortized discount, premium and ~~deferred financing~~debt issuance costs) at December 31, ~~2019~~2020 are as follows (dollars in thousands): ~~2020—$983,523;~~ 2021—$~~47;~~1,390,808; 2022—$0; 2023—$~~448,531;~~488,759; 2024—$~~300,000~~300,000; 2025—$0 and ~~$1,025,000~~$600,000 thereafter.

Long-Term Debt

We maintain credit facilities with third-party lenders, which we use for a variety of purposes. On October 31, 2017, CBRE Services entered into a Credit Agreement (the 2017 Credit Agreement), which refinanced and replaced our prior credit agreement (the 2015 Credit Agreement). We used $200.0 million of borrowings from the tranche A term loan facility and $83.0 million of revolving credit facility borrowings under the 2017 Credit Agreement, in addition to cash on hand, to repay all amounts outstanding under the 2015 Credit Agreement. On December 20, 2018, CBRE Global Acquisition Company, a wholly-owned subsidiary of CBRE Services, entered into an incremental term loan assumption agreement with a syndicate of banks jointly led by Wells Fargo Bank and National Westminster Bank plc to establish a euro term loan facility under the 2017 Credit Agreement in an aggregate principal amount of 400.0 million euros. The proceeds from the euro term loan facility were used to repay a portion of the U.S. dollar denominated term loans outstanding under the 2017 Credit Agreement. On March 4, 2019, CBRE Services, Inc. (CBRE Services) entered into an ~~additional~~ incremental assumption agreement with respect to ~~the~~its credit agreement, dated October 31, 2017 ~~Credit Agreement (the 2017 Agreement~~(such agreement, as amended by a December 20, 2018 incremental loan assumption agreement and such March 4, 2019 incremental assumption agreement, collectively, the 2019 Credit Agreement), which (i) extended the maturity of the U.S. dollar tranche A term loans under ~~the 2017 Credit Agreement,~~such credit agreement, (ii) extended the termination date of the revolving credit commitments available under ~~the 2017 Credit Agreement~~such credit agreement and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit ~~commitments.~~commitments under such credit agreement. The proceeds from the new tranche A term loan facility under the 2019 Credit Agreement were used to repay the $300.0 million of tranche A term loans outstanding under the ~~2017 Credit Agreement.~~

credit agreement in effect prior to the entry into the 2019 incremental assumption agreement.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

As of December 31, ~~2019,~~2020, borrowings under the tranche A term loan facility under the 2019 Credit Agreement bear interest, based at our option, on either (1) the applicable fixed rate plus 0.875% to 1.25% or (2) the daily rate plus 0.0% to 0.25%, in each case as determined by reference to our Credit Rating (as defined in the 2019 Credit Agreement) and borrowings under the euro term loan facility under the 2019 Credit Agreement bear interest at a minimum rate of 0.75% plus EURIBOR.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We had ~~$297.3~~$297.9 million of tranche A term loan borrowings outstanding under the 2019 Credit Agreement (at an interest rate of ~~2.69%~~1.15%), net of unamortized debt issuance costs, included in the accompanying consolidated balance ~~sheets~~sheet at December 31, ~~2019.~~2020. In addition, as of December 31, ~~2019,~~2020, we had ~~$447.3~~$487.7 million of euro term loan borrowings outstanding under the 2019 Credit Agreement (at an interest rate of 0.75%), net of unamortized debt issuance costs, ~~which was~~ included in the accompanying consolidated balance ~~sheets.~~

The 2017 Credit Agreement was a senior unsecured credit facility that was jointly and severally guaranteed by us and certain of our subsidiaries. Our 2017 Credit Agreement provided for the following: (1) a $2.8 billion revolving credit facility, which included the capacity to obtain letters of credit and swingline loans and had a termination date of October 31, 2022; (2) a $750.0 million delayed draw tranche A term loan facility which would have matured on October 31, 2022 and which required quarterly principal payments unless our leverage ratio (as defined in the 2017 Credit Agreement) was less than or equal to 2.50 to 1.00 on the last day of the fiscal quarter immediately preceding any such payment date and (3) a €400.0 million term loan facility which would have been due and payable in full at maturity on December 20, 2023. We had $294.4 million of tranche A term loan borrowings outstanding under the 2017 Credit Agreement (at an interest rate of 3.36%), net of unamortized debt issuance costs, included in the accompanying consolidated balance sheets at December 31, 2018. In addition, as of December 31, 2018, we had $456.9 million of euro term loan borrowings outstanding under the 2017 Credit Agreement (at an interest rate of 0.75%), net of unamortized debt issuance costs, which was included in the accompanying consolidated balance sheets.

sheet.

In March 2011, we entered into 5 interest rate swap agreements, all with effective dates in October 2011, and immediately designated them as cash flow hedges in accordance with FASB ASC Topic 815, ~~“Derivatives~~“Derivatives and ~~Hedging”.~~Hedging.” The purpose of these interest rate swap agreements was to attempt to hedge potential changes to our cash flows due to the variable interest nature of our senior term loan facilities. The total notional amount of these interest rate swap agreements was $400.0 million, $200.0 million of which expired in October 2017 and ~~$200.0~~$200 million of which expired in September 2019. The ineffective portion of the change in fair value of the derivatives was recognized directly in earnings. There was 0no significant hedge ineffectiveness for the years ended December 31, 2019 ~~2018~~ and ~~2017.~~2018. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges was recorded in accumulated other comprehensive loss on the consolidated balance ~~sheet~~sheets and was subsequently reclassified into earnings in the period that the hedged forecasted transaction ~~affects~~affected earnings. We reclassified $1.2 million ~~$2.7 million~~ and ~~$7.4~~$2.7 million for the years ended December 31, 2019 ~~2018,~~ and ~~2017,~~2018, respectively, from accumulated other comprehensive loss to interest expense. In addition, we recorded a net loss of $0.1 million and a net ~~gains~~gain of $1.0 ~~million and $0.9~~ million for the years ended December 31, 2019 ~~2018~~ and ~~2017,~~2018, respectively, to other comprehensive loss in relation to such interest rate swap agreements. As of December 31, 2018, the fair value of such interest rate swap agreements were reflected as a $1.1 million liability (included in other current liabilities) in the accompanying consolidated balance sheets.

On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 4.875% senior notes are jointly and severally guaranteed on a senior basis by us and each domestic subsidiary of CBRE Services that guarantees our ~~2017~~2019 Credit Agreement. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1, with the first interest payment made on March 1, 2016. The 4.875% senior notes are redeemable at our option, in whole or in part, prior to December 1, 2025 at a redemption price equal to the greater of (1) 100% of the principal amount of the 4.875% senior notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon to December 1, 2025 (not including any portions of payments of interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture governing these notes). In addition, at any time on or after December 1, 2025, the 4.875% senior notes may be redeemed by us, in whole or in part, at a redemption price equal

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

to ~~100.0%~~100% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. If a change of control triggering event (as defined in the indenture governing these notes) occurs, we are obligated to make an offer to purchase the then outstanding 4.875% senior notes at a redemption price of ~~101.0%~~101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The amount of the 4.875% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheets was ~~$593.6~~$594.5 million and ~~$592.8~~$593.6 million at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

On September 26, 2014, CBRE Services issued $300.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025. On December 12, 2014, CBRE Services issued an additional $125.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025 at a price equal to 101.5% of their face value, plus interest deemed to have accrued from September 26, 2014. The 5.25% senior notes ~~are~~were unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 5.25% senior notes ~~are~~were jointly and severally guaranteed on a senior basis by us and each domestic subsidiary of CBRE Services that ~~guarantees~~guaranteed our ~~2017~~2019 Credit Agreement. Interest ~~accrues~~accrued at a rate of 5.25% per year and iswas payable semi-annually in arrears on March 15 and September ~~15, with~~15. We redeemed these notes in full on December 28, 2020 and incurred charges of $75.6 million, including a premium of $73.6 million and the ~~first interest payment made~~write-off of $2.0 million of unamortized premium and debt issuance costs. We funded this redemption using cash on March 15, 2015. The 5.25% senior notes are redeemable at our option, in whole or in part, prior to December 15, 2024 at a redemption price equal to the greater of (1) 100% of the principal amount of the 5.25% senior notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon to December 15, 2024 (not including any portions of payments of interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indentures governing these notes). In addition, at any time on or after December 15, 2024, the 5.25% senior notes may be redeemed by us, in whole or in part, at a redemption price equal to 100.0% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. If a change of control triggering event (as defined in the indenture governing these notes) occurs, ~~we are~~ obligated to make an offer to purchase the then outstanding 5.25% senior notes at a redemption price of 101.0% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase.hand. The amount of the 5.25% senior notes, net of unamortized premium and unamortized debt issuance costs, included in the accompanying consolidated balance ~~sheets~~sheet was $423.0 ~~million and $422.7~~ million at December 31, ~~2019 and 2018, respectively.~~

2019.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The ~~indentures~~indenture governing our 4.875% senior notes ~~and 5.25% senior notes contain~~contains restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. In addition, our 2019 Credit Agreement also requires us to maintain a minimum coverage ratio of consolidated EBITDA (as defined in the 2019 Credit Agreement) to consolidated interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to consolidated EBITDA (as defined in the 2019 Credit Agreement) of 4.25x (and in the case of the first four full fiscal quarters following consummation of a qualified acquisition (as defined in the 2019 Credit Agreement), 4.75x) as of the end of each fiscal quarter. On this basis, our coverage ratio of consolidated EBITDA to consolidated interest expense was ~~22.62x~~26.22x for the year ended December 31, ~~2019,~~2020, and our leverage ratio of total debt less available cash to consolidated EBITDA was ~~0.44x~~(0.17x) as of December 31, ~~2019.~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

2020.

Short-Term Borrowings

We had short-term borrowings of $1.4 billion and $981.7 million ~~and $1.3 billion~~ as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, with related weighted average interest rates of ~~3.1%~~1.7% and ~~3.8%~~3.1%, respectively, which are included in the accompanying consolidated balance sheets.

Revolving Credit Facility

The revolving credit facility under the 2019 Credit Agreement allows for borrowings outside of the U.S., with a $200.0 million sub-facility available to CBRE Services, one of our Canadian subsidiaries, one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $300.0 million sub-facility available to CBRE Services and one of our U.K. subsidiaries. Borrowings under the revolving credit facility bear interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.680% to 1.075% or (2) the daily rate plus 0.0% to 0.075%, in each case as determined by reference to our Credit Rating (as defined in the 2019 Credit Agreement). The 2019 Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). As of December 31, ~~2019,~~2020, 0 amount was outstanding under the revolving credit facility other than letters of credit totaling $2.0 million. These letters of credit, which reduce the amount we may borrow under the revolving credit facility, were primarily issued in the ordinary course of business.

The revolving credit facility under the 2017 Credit Agreement allowed for borrowings outside of the U.S., with a $200.0 million sub-facility available to CBRE Services, one of our Canadian subsidiaries, one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $300.0 million sub-facility available to CBRE Services and one of our U.K. subsidiaries. Borrowings under the revolving credit facility bore interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.775% to 1.075% or (2) the daily rate plus 0.0% to 0.075%, in each case as determined by reference to our Credit Rating (as defined in the 2017 Credit Agreement). The 2017 Credit Agreement required us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). As of December 31, 2018, 0 amount was outstanding under our revolving credit facility other than letters of credit totaling $2.0 million. These letters of credit, which reduced the amount we could have borrowed under the revolving credit facility, were primarily issued in the ordinary course of business.

Warehouse Lines of Credit

CBRE Capital Markets has warehouse lines of credit with third-party lenders for the purpose of funding mortgage loans that will be resold, and a funding arrangement with Fannie Mae for the purpose of selling a percentage of certain closed multifamily loans to Fannie Mae. These warehouse lines are recourse only to CBRE Capital Markets and are secured by our related warehouse receivables. See Note 5 for additional information.

~~12.~~

~~Leases~~

~~We are the lessee in contracts for our office space tenancies, for leased vehicles and for our wholly-owned subsidiary Hana. These arrangements account for the significant portion~~

Table of ~~our lease liabilities and right-of-use assets. We continually monitor our service arrangements to evaluate whether they meet the definition of a lease.~~

Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Leases

Supplemental balance sheet information related to our leases is as follows (dollars in thousands):

Category

Classification

December 31, 2019

Assets

Operating lease assets

Operating lease assets

$
997,966

Financing lease assets

Other assets, net

94,141

Total leased assets

$
1,092,107

Liabilities

Current:

Operating

Operating lease liabilities

$
168,663

Financing

Other current liabilities

34,966

Non-current:

Operating

Non-current operating lease liabilities

1,057,758

Financing

Other liabilities

60,001

Total lease liabilities

$
1,321,388


		December 31,
Category	Classification	2020		2019
Assets
Operating	Operating lease assets	$	1,020,352	$	997,966
Finance	Other assets, net	117,805		94,141
Total leased assets		$	1,138,157	$	1,092,107

Liabilities
Current:
Operating	Operating lease liabilities	$	208,526	$	168,663
Finance	Other current liabilities	39,298		34,966
Non-current:
Operating	Non-current operating lease liabilities	1,116,795		1,057,758
Finance	Other liabilities	78,881		60,001
Total lease liabilities		$	1,443,500	$	1,321,388

Components of lease cost are as follows (dollars in thousands):

Component

Classification

Year Ended December 31, 2019

Operating lease cost

Operating, administrative and other

$
189,106

Finance lease cost:

Amortization of right-to-use assets

(1)

31,081

Interest on lease liabilities

Interest expense

1,317

Variable lease cost

(2)

74,476

Sublease income

Revenue

(3,734
)
Total lease cost

$
292,246

~~(1)~~

Amortization costs of $25.5 million from vehicle finance leases utilized in client outsourcing arrangements are included in cost of revenue. Amortization costs of $5.6 million from all other finance leases are included in depreciation and amortization.

~~(2)~~

~~Variable lease costs of~~ $17.5 million from leases in client outsourcing arrangements are included in cost of revenue. Variable lease costs of $57.0 million from all other leases are included in operating, administrative and other.


		Year Ended December 31,
Component	Classification	2020		2019
Operating lease cost	Operating, administrative and other	$	204,415	$	189,106
Finance lease cost:
Amortization of right-of-use assets	(1)	38,568		31,081
Interest on lease liabilities	Interest expense	1,847		1,317
Variable lease cost	(2)	74,332		74,476
Sublease income	Revenue	(2,643)		(3,734)
Total lease cost		$	316,519	$	292,246

_______________

(1)Amortization costs of $32.7 million and $25.5 million from vehicle finance leases utilized in client outsourcing arrangements are included in the “Cost of revenue” line item in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively. Amortization costs of $5.9 million and $5.6 million from all other finance leases are included in the “Depreciation and amortization” line item in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively.

(2)Variable lease costs of $17.1 million and $17.5 million from leases in client outsourcing arrangements are included in the “Cost of revenue” line item in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively. Variable lease costs of $55.6 million and $57.0 million from all other leases are included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Weighted average remaining lease term and discount rate for our operating and finance leases are as follows:

		~~December 31, 2019~~
~~Weighted-average remaining lease term:~~
~~Operating leases~~		~~9 years~~
~~Finance leases~~		~~3 years~~
~~Weighted-average discount rate:~~
~~Operating leases~~		~~3.4%~~
~~Finance leases~~		~~2.3%~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~


	December 31,
	2020	2019
Weighted-average remaining lease term:
Operating leases	8 years	9 years
Finance leases (1)	71 years	3 years
Weighted-average discount rate:
Operating leases	3.1%	3.4%
Finance leases (1)	5.0%	2.3%

_______________

(1)Finance leases as of December 31, 2020 included a 99 year lease on a real estate under development. If excluded, the weighted-average remaining lease term and weighted-average discount rate would be 3 years and 2.1%, respectively.

Maturities of lease liabilities by fiscal year as of December 31, ~~2019~~2020 are as follows (dollars in thousands):

Operating
Leases

Financing
Leases

2020

$
175,958

$
35,532

2021

200,043

27,314

2022

178,314

19,264

2023

160,300

12,303

2024

148,681

4,628

Thereafter

569,360

—

Total remaining lease payments at December 31, 2019

$
1,432,656

$
99,041

Less: Interest

206,235

4,074

Present value of lease liabilities at December 31, 2019

$
1,226,421

$
94,967

~~As previously disclosed in our~~


	Operating Leases		Finance Leases
2021	$	214,887	$	64,363
2022	214,895		50,225
2023	196,987		36,852
2024	177,466		19,150
2025	161,362		4,552
Thereafter	551,661		364,101
Total remaining lease payments at December 31, 2020	1,517,258		539,243
Less: Interest	191,937		421,065
Present value of lease liabilities at December 31, 2020	$	1,325,321	$	118,178

~~Annual Report on Form 10-K~~
for the year ended December 31, 2018 and under the previous lease accounting standard, the following is a schedule by year of future minimum lease payments for noncancelable operating leases as of December 31, 2018 (dollars in thousands):

2019

$
238,954

2020

219,351

2021

202,205

2022

172,267

2023

145,705

Thereafter

510,741

Total minimum payment required

$
1,489,223

Supplemental cash flow information and non-cash activity related to our operating and finance leases are as follows (dollars in thousands):

Year Ended December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
167,652

Operating cash flows from financing leases

1,559

Financing cash flows from financing leases

32,352

Right-of-use assets obtained in exchange for new operating lease liabilities

168,972

Right-of-use assets obtained in exchange for new financing lease liabilities

63,041

Other non-cash increases in operating lease right-of-use assets (1)

47,851

Other non-cash decreases in finance lease right-of-use assets (1)

(1,826
)

~~(1)~~

~~These noncash increases in right-of-use assets resulted from lease modifications and remeasurements.~~

~~13.~~

~~Commitments and Contingencies~~


	Year Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	170,317	$	167,652
Operating cash flows from finance leases	2,077		1,559
Financing cash flows from finance leases (1)	40,304		31,006
Right-of-use assets obtained in exchange for new operating lease liabilities	177,384		168,972
Right-of-use assets obtained in exchange for new finance lease liabilities	61,218		63,041
Other non-cash (decrease) increase in operating lease right-of-use assets (2)	(17,621)		47,851
Other non-cash decreases in finance lease right-of-use assets (2)	(1,233)		(1,826)

_______________

(1)Financing cash flows from finance leases were included in “Accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)” within operating cash flows for 2019 due to immateriality. Given the increase in the outflow, it is included in “Other financing activities, net” within financing cash flows for 2020 in the accompanying consolidated statements of cash flows.

(2)The non-cash activity in the right-of-use assets resulted from lease modifications and remeasurements.

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13.Commitments and Contingencies

In January 2008, CBRE MCI, a wholly-owned subsidiary of CBRE Capital Markets, entered into an agreement with Fannie Mae under Fannie Mae’s DUS Program to provide financing for multifamily housing with five or more units. Under the DUS Program, CBRE MCI originates, underwrites, closes and services loans without prior approval by Fannie Mae, and typically, is subject to sharing up to one-third of any losses on loans originated under the DUS Program. CBRE MCI has funded loans subject to such loss sharing arrangements with unpaid principal balances of ~~$28.0~~$32.7 billion at December 31, ~~2019.~~2020. CBRE MCI, under its agreement with Fannie Mae, must post cash reserves or other acceptable collateral under formulas established by Fannie Mae to provide for sufficient

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

capital in the event losses occur. As of December 31, ~~2019~~2020 and ~~2018,~~2019, CBRE MCI had a ~~$72.0~~$95.0 million and a ~~$64.0~~$72.0 million, respectively, letter of credit under this reserve arrangement, and had recorded a liability of approximately $~~37.0~~$57.1 million and ~~$37.9~~$37.0 million, respectively, for its loan loss guarantee obligation under such arrangement. Fannie Mae’s recourse under the DUS Program is limited to the assets of CBRE MCI, which assets totaled approximately ~~$930.7 million~~$1.1 billion (including ~~$636.4~~$694.4 million of warehouse receivables, a substantial majority of which are pledged against warehouse lines of credit and are therefore not available to Fannie Mae) at December 31, ~~2019.~~2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in the U.S. in response to the Covid-19 pandemic. The CARES Act, among other things, permits borrowers with government-backed mortgages from Government Sponsored Enterprises who are experiencing a financial hardship to obtain forbearance of their loans. For Fannie Mae loans that we service, CBRE MCI is obligated to advance (for a forbearance period up to 90 consecutive days and potentially longer) scheduled principal and interest payments to Fannie Mae, regardless of whether the borrowers actually make the payments. These advances are reimbursable by Fannie Mae after 120 days. As of December 31, 2020, total advances for principal and interest were $7.0 million, of which $5.3 million have already been reimbursed.

CBRE Capital Markets participates in Freddie Mac’s Multifamily Small Balance Loan (SBL) Program. Under the SBL program, CBRE Capital Markets has certain repurchase and loss reimbursement obligations. ~~These obligations are~~We could potentially be obligated to repurchase any SBL loan originated by CBRE Capital Markets that remains in default for 120 days following the forbearance period, ~~from~~if the default occurred during the first 12 months after origination and such loan had not been earlier securitized. In addition, CBRE Capital Markets may be responsible for a loss not to exceed 10% of the original principal amount of any SBL loan tothat is not securitized and goes into default after the ~~securitization date.~~12-month repurchase period. CBRE Capital Markets must post a cash reserve or other acceptable collateral to provide for sufficient capital in the event the obligations are triggered. As of both December 31, ~~2019~~2020 and ~~2018,~~2019, CBRE Capital Markets had posted a $5.0 million letter of credit under this reserve arrangement.

We had outstanding letters of credit totaling ~~$91.8~~$154.5 million as of December 31, ~~2019,~~2020, excluding letters of credit for which we have outstanding liabilities already accrued on our consolidated balance sheet related to our subsidiaries’ outstanding reserves for claims under certain insurance programs as well as letters of credit related to operating leases. The CBRE Capital Markets letters of credit totaling ~~$77.0~~$100.0 million as of December 31, ~~2019~~2020 referred to in the preceding paragraphs represented the majority of the ~~$91.8~~$154.5 million outstanding letters of credit as of such date. The remaining letters of credit are primarily executed by us in the ordinary course of business and expire at ~~varying dates through September 2020.~~

the end of each of the respective agreements.

We had guarantees totaling ~~$80.1~~$42.1 million as of December 31, ~~2019,~~2020, excluding guarantees related to pension liabilities, consolidated indebtedness and other obligations for which we have outstanding liabilities already accrued on our consolidated balance sheet, and excluding guarantees related to operating leases. The ~~$80.1~~$42.1 million primarily represents guarantees executed by us in the ordinary course of business, including various guarantees of management and vendor contracts in our operations overseas, which expire at the end of each of the respective agreements.

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In addition, as of December 31, ~~2019,~~2020, we had issued numerous non-recourse carveout, completion and budget guarantees relating to development projects for the benefit of third parties. These guarantees are commonplace in our industry and are made by us in the ordinary course of our Real Estate Investments business. Non-recourse carveout guarantees generally require that our project-entity borrower not commit specified improper acts, with us potentially liable for all or a portion of such entity’s indebtedness or other damages suffered by the lender if those acts occur. Completion and budget guarantees generally require us to complete construction of the relevant project within a specified timeframe and/or within a specified budget, with us potentially being liable for costs to complete in excess of such timeframe or budget. While there can be no assurance, we do not expect to incur any material losses under these guarantees.

An important part of the strategy for our Real Estate Investments business involves investing our capital in certain real estate investments with our clients. These co-investments generally total up to 2.0% of the equity in a particular fund. As of December 31, ~~2019,~~2020, we had aggregate commitments of ~~$72.1~~$76.5 million to fund these future co-investments. Additionally, an important part of our Real Estate Investments business strategy is to invest in unconsolidated real estate subsidiaries as a principal (in most cases co-investing with our clients). As of December 31, ~~2019,~~2020, we had committed to fund ~~$50.1~~$34.8 million of additional capital to these unconsolidated subsidiaries.

~~14.~~

~~Employee Benefit Plans~~

14.Employee Benefit Plans

Stock Incentive Plans

2012 Equity Incentive Plan and 2017 Equity Incentive Plan

Our 2012 ~~equity incentive plan~~Equity Incentive Plan (the 2012 Plan) and 2017 ~~equity incentive plan~~Equity Incentive Plan (the 2017 Plan) were adopted by our board of directors and approved by our stockholders on May 8, 2012 and May 19, 2017, respectively. Both the 2012 Plan and 2017 ~~equity incentive plans~~Plan authorized the grant of stock-based awards to our employees, directors and independent contractors.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Our 2012 ~~equity incentive plan~~Plan was terminated in May 2017 in connection with the adoption of our 2017 ~~equity incentive plan.~~Plan. Our 2017 ~~equity incentive plan~~Plan was terminated in May 2019 in connection with the adoption of our 2019 ~~equity incentive plan,~~Equity Incentive Plan (the 2019 Plan), which is described below. At termination of the 2012 ~~equity incentive plan, 0~~Plan, no unissued shares from the 2012 ~~stock incentive plan~~Plan were allocated to the 2017 ~~equity incentive plan~~Plan for potential future issuance. At termination of the 2017 ~~equity incentive plan, 0~~Plan, no unissued shares from the 2017 ~~equity incentive plan~~Plan were allocated to the 2019 ~~equity incentive plan~~Plan for potential future issuance. Since our 2012 Plan and 2017 ~~equity incentive plans~~Plan have been terminated, no new awards may be granted under them. As of December 31, ~~2019,~~2020, assuming the maximum number of shares under our performance-based awards will later be issued, ~~2,166,537~~310,023 outstanding restricted stock unit (RSU) awards to acquire shares of our Class A common stock granted under the 2012 ~~equity incentive plan~~Plan remain outstanding according to their terms, and we will continue to issue shares to the extent required under the terms of such outstanding awards. Shares underlying awards that expire, terminate or lapse under the 2012 ~~equity incentive plan~~Plan will not become available for grant under the 2017 ~~equity incentive plan~~Plan or the 2019 ~~equity incentive plan.~~Plan. As of December 31, ~~2019, 5,736,560~~2020, 4,677,453 outstanding RSU awards to acquire shares of our Class A common stock granted under the 2017 ~~equity incentive plan~~Plan remain outstanding according to their terms, and we will continue to issue shares to the extent required under the terms of such outstanding awards (noting that any shares granted above target will get deducted from the 2019 ~~equity incentive plan~~Plan reserve as noted below). Shares underlying awards outstanding under the 2017 ~~equity incentive plan~~Plan at termination that are subsequently canceled, forfeited or terminated without issuance to the holder thereof will be available for grant under the 2019 ~~equity incentive plan.~~Plan.

2019 Equity Incentive Plan

Our 2019 ~~equity incentive plan~~Plan was adopted by our board of directors on March 1, 2019 and approved by our stockholders on May 17, 2019. The 2019 ~~equity incentive plan~~Plan authorizes the grant of stock-based awards to employees, directors and independent contractors. Unless terminated earlier, the 2019 ~~equity incentive plan~~Plan will terminate on March 1, 2029. A total of 9,900,000 shares of our Class A common stock are reserved for issuance under the 2019 ~~equity incentive plan,~~Plan, less 189,499 shares granted under the 2017 ~~equity incentive plan~~Plan between March 1, 2019, the date our board of directors approved the plan, and May 17, 2019, the date our stockholders approved the 2019 ~~equity incentive plan.~~ Plan. Additionally, as mentioned above, shares underlying awards outstanding under the 2017 ~~equity incentive plan~~Plan at termination that are subsequently canceled, forfeited or terminated without issuance to the holder thereof will be available for reissuance under the 2019 ~~equity incentive plan.~~Plan. As of December 31, ~~2019, 234,242~~ 2020, 575,506 shares were ~~canceled~~cancelled and 215,900 shares were withheld for payment of taxes under the 2017 ~~equity incentive plan~~Plan and added to the authorized pool for the 2019 ~~equity incentive plan,~~Plan, bringing the total authorized amount under the 2019 ~~equity incentive plan~~Plan to ~~9,944,743~~10,501,907 shares of our Class A common stock.

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Shares underlying expired, canceled, forfeited or terminated awards under the 2019 ~~equity incentive plan~~Plan (other than awards granted in substitution of an award previously granted), plus those utilized to pay tax withholding obligations with respect to an award (other than an option or stock appreciation right) will be available for reissuance. Awards granted under the 2019 ~~equity incentive plan~~Plan are subject to a minimum vesting condition of one year. As of December 31, ~~2019,~~2020, assuming the maximum number of shares under our performance-based awards will later be issued (which includes shares that could be issued over target related to performance awards issued and outstanding under the 2017 ~~equity incentive plan)~~Plan), ~~7,538,712~~6,265,195 shares remained available for future grants under this ~~plan~~plan.

The number of shares issued or reserved pursuant to the 2012 Plan, 2017 Plan and 2019 ~~equity incentive plans~~Plan are subject to adjustment on account of a stock split of our outstanding shares, stock dividend, dividend payable in a form other than shares in an amount that has a material effect on the price of the shares, consolidation, combination or reclassification of the shares, recapitalization, spin-off, or other similar occurrences.

Non-Vested Stock Awards

We have issued non-vested stock awards, including ~~restricted stock units~~RSUs and restricted shares, in our Class A common stock to certain of our employees, independent contractors and members of our board of directors. The following is a summary of the awards granted during the years ended December 31, 2020, 2019 and 2018.

•During the year ended December 31, 2020, we granted RSUs that are performance vesting in nature, with 910,346 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 1,150,761 RSUs that are time vesting in nature.

•During the year ended December 31, 2019, we granted RSUs that are performance vesting in nature, with 888,726 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 1,493,788 RSUs that are time vesting in nature.

•During the year ended December 31, 2018, we granted RSUs that are performance vesting in nature, with 1,014,269 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and ~~2017~~.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

•

During the year ended December 31, 2019, we granted RSUs that are performance vesting in nature, with 888,726 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 1,493,7881,332,085 RSUs that are time vesting in nature.

•

During the year ended December 31, 2018, we granted RSUs that are performance vesting in nature, with 1,014,269 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 1,332,085 RSUs that are time vesting in nature.

•

During the year ended December 31, 2017, we granted RSUs that are performance vesting in nature, with 1,458,033 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 1,466,986 RSUs that are time vesting in nature.

Our annual performance-vesting awards generally vest in full three years from the grant date, based on our achievement against various adjusted income per share performance targets. Our time-vesting awards generally vest 25% per year over four years from the grant ~~date~~date.

~~In addition, on December 1, 2017, we~~

We made a special grant of RSUs under our 2017 ~~equity incentive plan~~Plan (Special RSU grant) to certain of our employees, with 3,288,618 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 939,605 RSUs that are time vesting in nature. During ~~2018~~2019 and ~~2019,~~2018, we made ~~additional~~ grants under this Special RSU grant program to certain of our employees, with 195,907 reflecting the maximum number of RSUs that may be issued if all of the performance targets are satisfied at their highest levels, and 55,973 RSUs that are time vesting in nature. No such grants were made during 2020. As a condition to this Special RSU grant, each participant has agreed to execute a Restrictive Covenants Agreement. Each Special RSU grant consisted of:

~~(i)~~

~~Time Vesting RSUs with respect to 33.3% of the total number of target RSUs subject to the grant.~~

~~(ii)~~

Total Shareholder Return (TSR) Performance RSUs with respect to 33.3% of the total number of target RSUs subject to the grant. The actual number of TSR Performance RSUs that will vest is determined by measuring our cumulative TSR against the cumulative TSR of each of the other companies comprising the S&P 500 on the Grant Date (the Comparison Group) over a ~~six-year~~ measurement period commencing on the Grant Date and ending on December 1, 2023. For purposes of measuring TSR, the initial value of our common stock was the average closing price of such common stock for the 60 trading days immediately preceding the Grant Date and the final value of our common stock will be the average closing price of such common stock for the 60 trading days immediately preceding December 1, 2023.

~~(iii)~~(i)Time Vesting RSUs with respect to 33.3% of the total number of target RSUs subject to the grant.

EPS Performance RSUs with respect to 33.3% of the total number of target RSUs subject to the grant. The actual number of EPS Performance RSUs that will vest is determined by measuring our cumulative adjusted income per share growth against the cumulative EPS growth, as reported under GAAP (GAAP EPS), of each of the other members of the Comparison Group over a ~~six-year~~ ~~measurement period commencing on January 1, 2018 and ending on December 31, 2023.~~

(ii)Total Shareholder Return (TSR) Performance RSUs with respect to 33.3% of the total number of target RSUs subject to the grant. The actual number of TSR Performance RSUs that will vest is determined by measuring our cumulative TSR against the cumulative TSR of each of the other companies comprising the S&P 500 on the Grant Date (the Comparison Group) over a six year measurement period commencing on the Grant Date and ending on December 1, 2023. For purposes of measuring TSR, the initial value of our common stock was the average closing price of such common stock for the 60 trading days immediately preceding the Grant Date and the final value of our common stock will be the average closing price of such common stock for the 60 trading days immediately preceding December 1, 2023.

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(iii)EPS Performance RSUs with respect to 33.3% of the total number of target RSUs subject to the grant. The actual number of EPS Performance RSUs that will vest is determined by measuring our cumulative adjusted income per share growth against the cumulative EPS growth, as reported under GAAP (GAAP EPS), of each of the other members of the Comparison Group over a six year measurement period commencing on January 1, 2018 and ending on December 31, 2023.

The Time Vesting and TSR Performance RSUs subject to the Special RSU grants vest on December 1, 2023, while the EPS Performance RSUs subject to the Special RSU grants vest on December 31, 2023.

We estimated the fair value of the TSR Performance RSUs referred to above on the date of the grant using a Monte Carlo simulation with the following assumptions:

Year Ended December 31,

2019

2018

2017

Volatility of common stock

25.96
%

25.02
%

27.85
%
Expected dividend yield

0.00
%

0.00
%

0.00
%
Risk-free interest rate

2.12
%

2.73
%

2.33
%

~~Lastly, on December 15, 2017, we granted 127,160 RSUs that are time vesting in nature to certain senior brokers. Such awards generally vest in full three years from the grant date.~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~


	Year Ended December 31,
	2019		2018
Volatility of common stock	25.96	%	25.02	%
Expected dividend yield	0.00	%	0.00	%
Risk-free interest rate	2.12	%	2.73	%

A summary of the status of our non-vested stock awards is presented in the table below:

Shares/Units

Weighted Average
Market Value
Per Share

Balance at December 31, 2016

4,843,273

$
31.66

Granted

5,152,082

40.11

Performance award achievement adjustments

489,219

30.93

Vested

(2,510,031
)

29.98

Forfeited

(297,441
)

32.85

Balance at December 31, 2017

7,677,102

37.76

Granted

2,023,266

45.70

Performance award achievement adjustments

282,953

38.09

Vested

(2,177,800
)

34.78

Forfeited

(623,161
)

40.85

Balance at December 31, 2018

7,182,360

41.04

Granted

2,000,977

50.07

Performance award achievement adjustments

166,007

37.36

Vested

(1,323,351
)

37.43

Forfeited

(316,294
)

42.09

Balance at December 31, 2019

7,709,699

43.89


	Shares/Units	Weighted Average Market Value Per Share
Balance at December 31, 2017	7,677,102	$	37.76
Granted	2,023,266	45.70
Performance award achievement adjustments	282,953	38.09
Vested	(2,177,800)	34.78
Forfeited	(623,161)	40.85
Balance at December 31, 2018	7,182,360	41.04
Granted	2,000,977	50.07
Performance award achievement adjustments	166,007	37.36
Vested	(1,323,351)	37.43
Forfeited	(316,294)	42.09
Balance at December 31, 2019	7,709,699	43.89
Granted	1,605,934	56.45
Performance award achievement adjustments	560,563	39.89
Vested	(2,780,377)	39.81
Forfeited	(412,407)	48.27
Balance at December 31, 2020	6,683,412	47.99

Total compensation expense related to non-vested stock awards was $60.4 million, $127.7 million ~~$128.2 million~~ and ~~$93.1~~$128.2 million for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, respectively. At December 31, ~~2019,~~2020, total unrecognized estimated compensation cost related to non-vested stock awards was approximately ~~$173.8~~$121.1 million, which is expected to be recognized over a weighted average period of approximately 2.6 years.

Bonuses

~~2.9~~
~~years~~.

~~Bonuses~~

We have bonus programs covering select employees, including senior management. Awards are based on the position and performance of the employee and the achievement of pre-established financial, operating and strategic objectives. The amounts charged to expense for bonuses were ~~$309.4~~$557.6 million, ~~$363.6~~$554.6 million and ~~$286.5~~$595.2 million for the years ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

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401(k) Plan

Our CBRE 401(k) Plan (401(k) Plan) is a defined contribution savings plan that allows participant deferrals under Section 401(k) of the Internal Revenue Code (IRC). Most of our U.S. employees, other than qualified real estate agents having the status of independent contractors under section 3508 of the IRC of 1986, as amended, and non-plan electing union employees, are eligible to participate in the plan. The 401(k) Plan provides for participant contributions as well as a company match. A participant is allowed to contribute to the 401(k) Plan from 1% to 75% of his or her compensation, subject to limits imposed by applicable law. Effective January 1, 2007, all participants hired post January 1, 2007 vest in company match contributions 20% per year for each plan year they are employed. All participants hired before January 1, 2007 are immediately vested in company match contributions. For ~~both~~2020, 2019, ~~and~~ 2018, we contributed a 67% match on the first 6% of annual compensation for participants with an annual base salary of less than $100,000 and we contributed a 50% match on the first 6% of annual compensation for participants with an annual base salary of $100,000 or more (up to $150,000 of compensation). ~~For 2017, we contributed a 50% match on the first 6% of annual compensation (up to $150,000 of compensation) deferred by each participant.~~ In connection with the 401(k) Plan, we charged to expense $83.5 million, $59.9 million ~~$46.3 million~~ and ~~$38.8~~$46.3 million for the years ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

Participants are entitled to invest up to 25% of their 401(k) account balance in shares of our common stock. As of December 31, ~~2019,~~2020, approximately ~~1.3~~1.2 million shares of our common stock were held as investments by participants in our 401(k) Plan.

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Pension Plans

We have 2 major non-U.S. contributory defined benefit pension plans, in the U.K. The London-based firm of Hillier Parker May & Rowden, which we acquired in 1998, had a contributory defined benefit pension plan. A subsidiary of Insignia, which we acquired in connection with the Insignia Acquisition in 2003, also had a contributory defined benefit pension planboth based in the U.K. Our subsidiaries ~~based in the U.K.~~ maintain ~~the~~these plans to provide retirement benefits to existing and former employees participating in these plans. With respect to these plans, our historical policy has been to contribute annually to the plans, an amount to fund pension liabilities as actuarially determined and as required by applicable laws and regulations. Our contributions to these plans are invested by the plan trustee and, if these investments do not perform well in the future, we may be required to provide additional contributions to cover any pension underfunding. Effective July 1, 2007, we reached agreements with the active members of these plans to freeze future pension plan benefits. In return, the active members became eligible to enroll in a defined contribution plan. AsFor these plans, as of December 31, ~~2019~~2020 and ~~2018,~~2019, the fair values of pension plan assets were ~~$331.4~~$378.9 million and ~~$274.4~~$331.4 million, ~~respectively,~~ and the fair values of projected benefit obligations ~~in aggregate~~ were ~~$439.4~~$470.1 million and ~~$387.4~~$439.4 million, respectively. As a result, ~~the~~these plans were underfunded by approximately ~~$108.0~~$91.2 million and ~~$113.0~~$108.0 million at December 31, ~~2019~~2020 and ~~2018, respectively, and were recorded as net liabilities included in other long term liabilities~~2019.

0As of December 31, 2020, inclusive of individually immaterial plans not shown in the ~~accompanying consolidated balance sheets.~~ above table, for plans where total projected benefit obligations exceed plan assets, projected benefit obligations and the fair value of plan assets are $558.4 million and $403.5 million, respectively.

As of December 31, 2019, inclusive of individually immaterial plans not shown in the above table, for plans where total projected benefit obligations exceed plan assets, projected benefit obligations and the fair value of plan assets are $509.4 million and $351.8 million, respectively.

For plans where the accumulated benefit obligation exceeds plan assets, such obligations are the same as the projected benefit obligations.

Items not yet recognized as a component of net periodic pension cost (benefit) for the major plans were ~~$191.6~~$165.9 million and ~~$192.7~~$191.6 million at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and were included in accumulated other comprehensive loss in the accompanying consolidated balance sheets. During 2020 there were losses on plan obligations of $27.7 million. These are primarily as a result of changes in assumptions resulting in a loss of $37.1 million, partially offset by $9.5 million in net gains due to plan experience. Net periodic pension (benefit) cost was not material for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~2018.

~~15.~~

~~Income Taxes~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides amounts recognized related to our defined benefit pension plans within the following captions on our consolidated balance sheets (dollars in thousands):


	December 31,
	2020		2019
Other assets, net	$	58,410	$	25,469
Other current liabilities	19,432		12,144
Other liabilities	135,440		145,432

The following table presents estimated future benefit payments over the next ten years, as of December 31, 2020. We will fund these obligations from the assets held by these plans. If the assets these plans hold are not sufficient to fund these payments, the company will fund the remaining obligations (dollars in thousands):


	2021		2022		2023		2024		2025		2026 - 2030
Estimated future benefit payments for defined benefit plans	$	38,941	$	35,804	$	37,877	$	39,655	$	40,888	$	216,678

15.Income Taxes

The components of income before provision for income taxes consisted of the following (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Domestic

$
839,899

$
807,590

$
575,222

Foreign

521,446

571,416

596,111

$
1,361,345

$
1,379,006

$
1,171,333


	Year Ended December 31,
	2020		2019		2018
Domestic	$	470,181	$	839,899	$	807,590
Foreign	499,788		521,446		571,416
	$	969,969	$	1,361,345	$	1,379,006

Our tax provision (benefit) consisted of the following (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Federal:

Current

$
(51,980
)

$
166,024

$
275,475

Deferred

(74,432
)

(7,667
)

39,045

(126,412
)

158,357

314,520

State:

Current

52,403

43,320

21,212

Deferred

(5,760
)

(3,692
)

5,573

46,643

39,628

26,785

Foreign:

Current

163,833

149,194

123,840

Deferred

(14,169
)

(34,121
)

2,612

149,664

115,073

126,452

$
69,895

$
313,058

$
467,757


	Year Ended December 31,
	2020		2019		2018
Federal:
Current	$	18,951	$	(51,980)	$	166,024
Deferred	61,034		(74,432)		(7,667)
	79,985		(126,412)		158,357
State:
Current	33,291		52,403		43,320
Deferred	3,872		(5,760)		(3,692)
	37,163		46,643		39,628
Foreign:
Current	88,994		163,833		149,194
Deferred	7,959		(14,169)		(34,121)
	96,953		149,664		115,073
	$	214,101	$	69,895	$	313,058

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a reconciliation stated as a percentage of pre-tax income of the U.S. statutory federal income tax rate to our effective tax rate:

Year Ended December 31,

2019

2018

2017

Federal statutory tax rate

21
%

21
%

35
%
Foreign rate differential

4

—

(5
)
State taxes, net of federal benefit

3

3

2

Non-deductible expenses

1

2

2

Reserves for uncertain tax positions

1

—

(2
)
Credits and exemptions

(4
)

(2
)

(3
)
Outside basis differences recognized as a result of a
legal entity restructuring

(20
)

—

—

Tax Reform

—

1

12

Change in valuation allowance

—

(1
)

(2
)
Acquisition-related costs

—

(2
)

—

Other

(1
)

1

1

Effective tax rate

5
%

23
%

40
%


	Year Ended December 31,
	2020		2019		2018
Federal statutory tax rate	21	%	21	%	21	%
Foreign rate differential	0		4		0
State taxes, net of federal benefit	3		3		3
Non-deductible expenses	1		1		2
Reserves for uncertain tax positions	0		1		0
Credits and exemptions	(2)		(4)		(2)
Outside basis differences recognized as a result of a legal entity restructuring	0		(20)		0
Tax Reform	0		0		1
Change in valuation allowance	0		0		(1)
Acquisition-related costs	0		0		(2)
Other	(1)		(1)		1
Effective tax rate	22	%	5	%	23	%

In the fourth quarter of 2019, we recognized a net tax benefit of approximately $277.2 million attributable to outside basis differences recognized as a result of a legal entity restructuring. The recognition of the outside tax basis differences generated a capital loss that ~~will~~ offset capital gains generated during 2019. ~~In addition, a~~A portion of the capital loss ~~will be~~was carried back to tax years 2016, 2017 and 2018 to offset capital gains in those years. The remaining capital loss ~~will be~~was carried forward to tax years 2020 and ~~will~~forward to be ~~available~~utilized to offset ~~future~~ capital ~~gains.~~gains in these years. Based on our strong history of capital gains in the prior three years and the nature of our business we expect to generate sufficient capital gains in the ~~five~~remaining four year carry forward period and therefore concluded that it is more likely than not that we will realize the full tax benefit from the capital loss carried forward. Accordingly, we have not provided any valuation allowance against the deferred tax asset for the capital loss carried forward.

On December 22, 2017, the Tax Act was signed into law making significant changes to the IRC, including a decrease to the U.S. corporate tax rate from 35% to 21% and a one-time transition tax (i.e. toll charge, or the Transition Tax) on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We recorded a provisional amount for our one-time Transition Tax liability of $158.0 million for the year ended December 31, 2017, which represented our estimate of the U.S. federal and state tax impact of the Transition Tax, partially offset by a net income tax benefit of $14.6 million related to the re-measurement of U.S. federal deferred tax assets and liabilities. Our provision for income taxes for 2018 included a net expense true-up of $13.3 million associated with the Tax Act. As required, we paid the full state tax liability for the Transition Tax in 2018. We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act. As of December 31, ~~2019,~~2020, the company had $54.8 million remaining ~~amounts due for the~~ Transition Tax liability (including a 2019 true-up of the ~~Transaction~~Transition Tax liability) ~~include the third installment due in 2020 of $14.2 million, which is included within income taxes payable, and the remaining payable of $93.6 million, which is included within non-current income taxes~~ payable in ~~the accompanying consolidated balance sheets.~~

~~100~~

tax years 2023 and 2024.

106

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cumulative tax effects of temporary differences are shown below ~~at December 31, 2019 and 2018~~ (dollars in thousands):

December 31,

2019

2018

Asset (Liability)

Tax losses and tax credits

$
330,839

$
275,574

Operating lease liabilities

320,261

—

Bonus and deferred compensation

280,747

276,572

Bad debt and other reserves

66,504

57,506

Pension obligation

24,022

22,950

Investments

5,236

5,211

Tax effect on revenue items related to Topic 606 adoption

(25,620
)

(38,510
)
Property and equipment

(54,370
)

(49,935
)
Unconsolidated affiliates and partnerships

(63,594
)

(64,448
)
Capitalized costs and intangibles

(277,246
)

(289,674
)
Operating lease assets

(314,433
)

—

All other

(1,153
)

(2,457
)
Net deferred tax assets before valuation allowance

291,193

192,789

Valuation allowance

(251,922
)

(248,511
)
Net deferred tax assets (liabilities)

$
39,271

$
(55,722
)


	December 31,
	2020		2019
Asset (Liability)
Tax losses and tax credits	$	334,303	$	330,839
Operating lease liabilities	358,066		320,261
Bonus and deferred compensation	295,690		280,747
Bad debt and other reserves	73,061		66,504
Pension obligation	18,026		24,022
Investments	17,506		5,236
Tax effect on revenue items related to Topic 606 adoption	(16,784)		(25,620)
Property and equipment	(88,595)		(54,370)
Unconsolidated affiliates and partnerships	(59,544)		(63,594)
Capitalized costs and intangibles	(313,099)		(277,246)
Operating lease assets	(366,671)		(314,433)
All other	6,181		(1,153)
Net deferred tax assets before valuation allowance	258,140		291,193
Valuation allowance	(291,096)		(251,922)
Net deferred tax (liabilities) assets	$	(32,956)	$	39,271

In the first quarter of 2019 we adopted new lease accounting guidance (see Note 3)2). As a result of such adoption, as of December 31, 2019 we recorded deferred tax assets of $320.3 million and deferred tax liabilities of $314.4 million for book tax basis differences in the operating lease liabilities and operating lease assets, respectively. As of December 31, ~~2019,~~2020, we had a U.S. federal capital loss carryforward, net of related reserves for uncertain tax positions, of approximately ~~$327.9~~$135.2 million, translating to a net deferred tax asset before valuation allowance of ~~$64.9~~$28.4 million, which will expire after ~~the~~ ~~five-year~~ ~~carryforward period.~~2024. As of December 31, ~~2019,~~2020, we had U.S. federal ~~net operating losses (NOLs),~~NOLs, net of related reserves for uncertain tax positions, of approximately ~~$32.2~~$8.8 million, translating to a net deferred tax asset before valuation allowance of ~~$6.8~~$1.8 million, which will begin to expire in ~~2023.~~2037. As of December 31, ~~2019,~~2020, there were also deferred tax assets before valuation allowances of approximately ~~$3.5 million related to state NOLs as well as $255.9~~$300.2 million related to foreign NOLs. The ~~state and~~ foreign NOLs ~~both~~ begin to expire in 2020, but the majority carry forward indefinitely. The utilization of NOLs may be subject to certain limitations under U.S. federal, state and foreign laws. We have recorded a full valuation allowance for ~~NOLs~~deferred tax assets where we believe that ~~we believe~~it is more likely than not that the NOLs will not be fully utilized.

We determined that as of December 31, ~~2019, $251.9~~2020, $291.1 million of deferred tax assets do not satisfy the realization criteria set forth in Topic 740. Accordingly, a valuation allowance has been recorded for this amount. If released, the entire amount would result in a benefit to continuing operations. During the year ended December 31, ~~2019,~~2020, our valuation allowance increased by approximately ~~$3.4~~$39.2 million. The change in the valuation allowance was driven by an increase in the valuation allowance ~~of $7.9 million~~ associated with NOLs generated by our operations in Luxembourg and Norway and was partially offset by a decrease of $4.5 million due to tax rate changes, currency translation adjustments and utilization of foreign NOLs that had full valuation allowances.Luxembourg. We believe it is more likely than not that future operations will generate sufficient taxable income to realize the benefit of the deferred tax assets recorded net of these valuation allowances.

Our foreign subsidiaries have accumulated ~~$2.6~~$3.0 billion of undistributed earnings for which we have not recorded a deferred tax liability. NaN additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the Transition Tax, in connection with the enactment of the Tax Act, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. While federal and state current income tax expense have been recognized as a result of the Tax Act, we have not provided any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss that would be due when cash is actually repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional local taxes. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted is not practicable.

~~101~~

107

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total amount of gross unrecognized tax benefits was approximately ~~$141.2~~$168.5 million and ~~$95.0~~$141.2 million as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is ~~$44.5~~$54.9 million ($~~42.7~~52.3 million, net of federal benefit received from state positions) and ~~$50.2~~$44.5 million ($~~49.2~~42.7 million, net of federal benefit received from state positions) as of December 31, 2020 and 2019, ~~and 2018,~~ respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits ~~for the years ended December 31, 2019 and 2018~~ is as follows (dollars in thousands):

Year Ended December 31,

2019

2018

Beginning balance, unrecognized tax benefits

$
(94,962
)

$
(35,826
)
Gross increases - tax positions in prior period

(22,229
)

(49,412
)
Gross decreases - tax positions in prior period

17,390

—

Gross increases - current-period tax positions

(45,262
)

(18,861
)
Decreases relating to settlements

218

4,619

Reductions as a result of lapse of statute of limitations

3,680

4,531

Foreign exchange movement

1

(13
)
Ending balance, unrecognized tax benefits

$
(141,164
)

$
(94,962
)


	Year Ended December 31,
	2020		2019
Beginning balance, unrecognized tax benefits	$	(141,164)	$	(94,962)
Gross increases - tax positions in prior period	(31,070)		(22,229)
Gross decreases - tax positions in prior period	1,530		17,390
Gross increases - current-period tax positions	(9,688)		(45,262)
Decreases relating to settlements	0		218
Reductions as a result of lapse of statute of limitations	11,791		3,680
Foreign exchange movement	85		1
Ending balance, unrecognized tax benefits	$	(168,516)	$	(141,164)

During the year ended December 31, ~~2019,~~2020, we released ~~$3.7~~$11.8 million of gross unrecognized tax benefits primarily due to expiration of the ~~U.S. federal~~ statute of limitations related to the ~~2015~~2016 tax year. As a result, we recognized ~~$3.2~~$8.4 million of income tax benefits related to decreases in tax positions and ~~$0.5~~$3.4 million of income tax benefits related to interest and penalties. We believe the amount of gross unrecognized tax benefits that will be settled during the next twelve months due to filing amended returns and settling ongoing exams cannot be reasonably estimated but will not be significant.

Our continuing practice is to recognize potential accrued interest and/or penalties related to income tax matters within income tax expense. During the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, we accrued an additional $0.4 million, $0.3 million ~~$0.6 million~~ and ~~$1.0~~$0.6 million, respectively, in interest and penalties associated with uncertain tax positions. As of December 31, ~~2019~~2020 and ~~2018,~~2019, we have recognized a liability for interest and penalties of $1.6 million ($1.3 million, net of related federal benefit received from interest expense) and $3.8 million ($3.1 million, net of related federal benefit received from interest expense) ~~and $4.0 million ($3.5 million, net of related federal benefit received from interest expense)~~, respectively.

We conduct business globally and, as a result, one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and in multiple state, local and foreign tax jurisdictions. Our U.S. federal income tax returns for years 2016 through 2019 are currently under audit by the Internal Revenue Service. We are ~~no longer open to assessment~~also under audit by various states and foreign tax jurisdictions including Canada, Korea, and the ~~U.S. Internal Revenue Service for years prior to 2016.~~U.K. With limited exception, our significant ~~state and~~ foreign tax jurisdictions are no longer subject to audit by the various tax authorities for tax years prior to 2011.

~~16.~~

~~Stockholders’ Equity~~

16.Stockholders’ Equity

Our board of directors is authorized, subject to any limitations imposed by law, without the approval of our stockholders, to issue a total of 25,000,000 shares of preferred stock, in one or more series, with each such series having rights and preferences including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as our board of directors may determine.

As of December 31, 2020 and 2019, 0 shares of preferred stock have been issued.

Our board of directors is authorized to issue up to 525,000,000 shares of Class A common stock, $0.01 par value per share (common stock), of which 335,561,345 shares and 334,752,283 shares were issued and outstanding as of December 31, 2020 and 2019, respectively.

108

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock Repurchase Program

In ~~October~~ 2016, our board of directors authorized the company to repurchase up to an aggregate of $250.0 million of our ~~Class A~~ common stock over three years. ~~NaN shares were repurchased during~~During the ~~years~~year ended December 31, ~~2016 and 2017.~~2019, we spent $45.1 million to repurchase 1,144,449 shares of our common stock at an average price of $39.38 per share using cash on hand. During the year ended December 31, 2018, we spent $161.0 million to repurchase 3,980,656 shares of our ~~Class A~~ common stock ~~with~~at an average price ~~paid~~of $40.43 per share using cash on hand. This repurchase program terminated upon the effectiveness of ~~$40.43. During January 2019, under~~ the ~~October 2016~~new program ~~we spent $45.1 million to repurchase 1,144,449 shares of our Class A common stock with an average price paid per share of $39.38.~~

~~102~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

that took effect in March 2019.

In February 2019, our board of directors authorized a new program for the ~~company to~~ repurchase up to $300.0 million of our ~~Class A~~ common stock over three years, effective March 11, 2019. ~~The previous program terminated upon the effectiveness of the new program.~~ In both August and November 2019, our board of directors authorized an additional $100.0 million under ~~our~~the new program, bringing the total authorized repurchase amount under the ~~new~~ program to a total of $500.0 million. During the year ended December 31, ~~2019, under~~2020, we spent $50.0 million to repurchase 1,050,084 shares of our common stock at an average price of $47.62 per share using cash on hand. During the ~~March~~year ended December 31, 2019, ~~program,~~ we spent $100.0 million to repurchase ~~an additional~~ 1,936,458 shares of our ~~Class A~~ common stock ~~with~~at an average price ~~paid~~of $51.64 per share using cash on hand.

Our share repurchase program does not obligate us to acquire any specific number of ~~$51.64.~~shares. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934. Our stock repurchases have been funded with cash on hand and we intend to continue funding future repurchases with existing cash. We may utilize our stock repurchase program to continue offsetting the impact of our stock-based compensation program and on a more opportunistic basis if we believe our stock presents a compelling investment compared to other discretionary uses. The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors. As of December 31, ~~2019,~~2020, we had ~~$400.0~~$350.0 million of capacity remaining under our ~~current stock~~ repurchase program.

~~17.~~

~~Income Per Share Information~~

17.Income Per Share Information

The ~~following is a calculation~~calculations of basic and diluted income per share attributable to CBRE Group, Inc. stockholders are as follows (dollars in thousands, except share and per share data):

Year Ended December 31,

2019

2018

2017

Basic Income Per Share

Net income attributable to CBRE Group, Inc. shareholders

$
1,282,357

$
1,063,219

$
697,109

Weighted average shares outstanding for basic income per share

335,795,654

339,321,056

337,658,017

Basic income per share attributable to CBRE Group, Inc.
shareholders

$
3.82

$
3.13

$
2.06

Diluted Income Per Share

Net income attributable to CBRE Group, Inc. shareholders

$
1,282,357

$
1,063,219

$
697,109

Weighted average shares outstanding for basic income per share

335,795,654

339,321,056

337,658,017

Dilutive effect of contingently issuable shares

4,727,217

3,801,293

3,121,987

Dilutive effect of stock options

—

392

3,552

Weighted average shares outstanding for diluted income per share

340,522,871

343,122,741

340,783,556

Diluted income per share attributable to CBRE Group, Inc.
shareholders

$
3.77

$
3.10

$
2.05


	Year Ended December 31,
	2020		2019		2018
Basic Income Per Share
Net income attributable to CBRE Group, Inc. stockholders	$	751,989	$	1,282,357	$	1,063,219
Weighted average shares outstanding for basic income per share	335,196,296		335,795,654		339,321,056
Basic income per share attributable to CBRE Group, Inc. stockholders	$	2.24	$	3.82	$	3.13

Diluted Income Per Share
Net income attributable to CBRE Group, Inc. stockholders	$	751,989	$	1,282,357	$	1,063,219
Weighted average shares outstanding for basic income per share	335,196,296		335,795,654		339,321,056
Dilutive effect of contingently issuable shares	3,195,914		4,727,217		3,801,293
Dilutive effect of stock options	0		0		392
Weighted average shares outstanding for diluted income per share	338,392,210		340,522,871		343,122,741
Diluted income per share attributable to CBRE Group, Inc. stockholders	$	2.22	$	3.77	$	3.10

For the years ended December 31, 2020, 2019 and 2018, 567,589, 374,555 and ~~2017, 374,555,~~ 259,274, ~~and 621,805,~~ respectively, of contingently issuable shares were excluded from the computation of diluted income per share because their inclusion would have had an anti-dilutive effect.

~~103~~

109

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18.Revenue from Contracts with Customers

~~Revenue from Contracts with Customers~~

We account for revenuewith customers in accordance with Topic 606. Revenue is recognized when or as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those services.

Disaggregated Revenue

The following tables represent a disaggregation of revenue from contracts with customers ~~for the years ended December 31, 2019, 2018 and 2017~~ by type of service and/or segment (dollars in thousands):

Year Ended December 31, 2019

Advisory
Services

Global
Workplace
Solutions

Real Estate
Investments

Consolidated

Topic 606 Revenue:

Global workplace solutions

$
—

$
14,164,001

$
—

$
14,164,001

Advisory leasing

3,269,993

—

—

3,269,993

Advisory sales

2,130,979

—

—

2,130,979

Property and advisory project management

2,255,398

2,255,398

Valuation

630,399

—

—

630,399

Commercial mortgage origination (1)

154,227

—

—

154,227

Loan servicing (2)

30,943

—

—

30,943

Investment management

—

—

424,882

424,882

Development services

—

—

213,264

213,264

Topic 606 Revenue

8,471,939

14,164,001

638,146

23,274,086

Out of Scope of Topic 606 Revenue:

Commercial mortgage origination

421,736

—

—

421,736

Loan servicing

175,793

—

—

175,793

Development services (4)

—

—

22,476

22,476

Total Out of Scope of Topic 606 Revenue

597,529

—

22,476

620,005

Total revenue

$
9,069,468

$
14,164,001

$
660,622

$
23,894,091

Year Ended December 31, 2018 (3)

Advisory
Services

Global
Workplace
Solutions

Real Estate
Investments

Consolidated

Topic 606 Revenue:

Global workplace solutions

$
—

$
12,365,362

$
—

$
12,365,362

Advisory leasing

3,080,117

—

—

3,080,117

Advisory sales

1,980,932

1,980,932

Property and advisory project management

2,057,433

—

—

2,057,433

Valuation

598,806

—

—

598,806

Commercial mortgage origination (1)

136,534

—

—

136,534

Loan servicing (2)

24,192

—

—

24,192

Investment management

—

—

434,405

434,405

Development services

—

—

100,319

100,319

Topic 606 Revenue

7,878,014

12,365,362

534,724

20,778,100

Out of Scope of Topic 606 Revenue:

Commercial mortgage origination

402,814

—

—

402,814

Loan servicing

159,174

—

—

159,174

Total Out of Scope of Topic 606 Revenue

561,988

—

—

561,988

Total revenue

$
8,440,002

$
12,365,362

$
534,724

$
21,340,088

~~(1)~~

~~We earn fees for arranging financing for borrowers with third-party lender contacts. Such fees are in scope of Topic 606.~~

~~(2)~~

~~Loan servicing fees earned from servicing contracts for which we do not hold mortgage servicing rights are in scope of Topic 606.~~

~~(3)~~

~~Our new organizational structure became effective January 1, 2019. See Note 19 for additional information. Revenue classifications for 2018 and 2017 have been restated to conform to the new structure.~~


	Year Ended December 31, 2020
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Topic 606 Revenue:
Global workplace solutions	$	0	$	15,295,673	$	0	$	15,295,673
Advisory leasing	2,404,273		0		0		2,404,273
Advisory sales	1,658,702		0		0		1,658,702
Property and advisory project management	2,204,263		0		0		2,204,263
Valuation	614,307		0		0		614,307
Commercial mortgage origination (1)	130,883		0		0		130,883
Loan servicing (2)	45,692		0		0		45,692
Investment management	0		0		474,939		474,939
Development services	0		0		341,387		341,387
Topic 606 Revenue	7,058,120		15,295,673		816,326		23,170,119
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	446,968		0		0		446,968
Loan servicing	193,904		0		0		193,904
Development services (3)	0		0		15,204		15,204
Total Out of Scope of Topic 606 Revenue	640,872		0		15,204		656,076
Total revenue	$	7,698,992	$	15,295,673	$	831,530	$	23,826,195

~~(4)~~

~~Out of scope revenue for development services represents selling profit from transfers of sales-type leases in the scope of Topic 842.~~

~~104~~

110

Table of Contents

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Year Ended December 31, 2017 (3)

Advisory
Services

Global
Workplace
Solutions

Real Estate
Investments

Consolidated

Topic 606 Revenue:

Global workplace solutions

$
—

$
10,791,963

$
—

$
10,791,963

Advisory leasing

2,592,203

—

—

2,592,203

Advisory sales

1,869,872

—

—

1,869,872

Property and advisory project management

1,748,594

—

—

1,748,594

Valuation

556,008

556,008

Commercial mortgage origination (1)

117,009

—

—

117,009

Loan servicing (2)

19,759

—

—

19,759

Investment management

—

—

377,644

377,644

Development services

—

—

79,455

79,455

Topic 606 Revenue

6,903,445

10,791,963

457,099

18,152,507

Out of Scope of Topic 606 Revenue:

Commercial mortgage origination

338,590

—

—

338,590

Loan servicing

137,690

—

—

137,690

Total Out of Scope of Topic 606 Revenue

476,280

—

—

476,280

Total revenue

$
7,379,725

$
10,791,963

$
457,099

$
18,628,787

~~(1)~~

~~We earn fees for arranging financing for borrowers with third-party lender contacts. Such fees are in scope of Topic 606.~~

~~(2)~~

~~Loan servicing fees earned from servicing contracts for which we do not hold mortgage servicing rights are in scope of Topic 606.~~


	Year Ended December 31, 2019
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Topic 606 Revenue:
Global workplace solutions	$	0	$	14,164,001	$	0	$	14,164,001
Advisory leasing	3,269,993		0		0		3,269,993
Advisory sales	2,130,979		0		0		2,130,979
Property and advisory project management	2,255,398		0		0		2,255,398
Valuation	630,399		0		0		630,399
Commercial mortgage origination (1)	154,227		0		0		154,227
Loan servicing (2)	30,943		0		0		30,943
Investment management	0		0		424,882		424,882
Development services	0		0		213,264		213,264
Topic 606 Revenue	8,471,939		14,164,001		638,146		23,274,086
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	421,736		0		0		421,736
Loan servicing	175,793		0		0		175,793
Development services (3)	0		0		22,476		22,476
Total Out of Scope of Topic 606 Revenue	597,529		0		22,476		620,005
Total revenue	$	9,069,468	$	14,164,001	$	660,622	$	23,894,091

~~(3)~~


	Year Ended December 31, 2018 (4)
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Topic 606 Revenue:
Global workplace solutions	$	0	$	12,365,362	$	0	$	12,365,362
Advisory leasing	3,080,117		0		0		3,080,117
Advisory sales	1,980,932		0		0		1,980,932
Property and advisory project management	2,057,433		0		0		2,057,433
Valuation	598,806		—		0		598,806
Commercial mortgage origination (1)	136,534		0		0		136,534
Loan servicing (2)	24,192		0		0		24,192
Investment management	0		0		434,405		434,405
Development services	0		0		100,319		100,319
Topic 606 Revenue	7,878,014		12,365,362		534,724		20,778,100
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination	402,814		0		0		402,814
Loan servicing	159,174		0		0		159,174
Total Out of Scope of Topic 606 Revenue	561,988		0		0		561,988
Total revenue	$	8,440,002	$	12,365,362	$	534,724	$	21,340,088

_______________

(1)We earn fees for arranging financing for borrowers with third-party lender contacts. Such fees are in scope of Topic 606.

(2)Loan servicing fees earned from servicing contracts for which we do not hold mortgage servicing rights are in scope of Topic 606.

(3)Out of scope revenue for development services represents selling profit from transfers of sales-type leases in the scope of Topic 842.

(4)Our new organizational structure became effective January 1, 2019.See Note 19 for additional information. Revenue classifications for 2018 have been restated to conform to the new structure.

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract Assets and Liabilities

We had contract assets totaling $471.8 million ($318.2 million of which was current) and $529.8 million ($328.0 million of which was current) as of December 31, 2020 and ~~$381.8~~2019, respectively. During the year ended December 31, 2020, our contract assets decreased by $58.0 million, primarily due to a decrease in contract assets in our advisory business.

We had contract liabilities totaling $164.1 million ($~~307.0~~162.0 million of which was current) and $115.0 million ($108.7 million of which was current) as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. During the year ended December 31, 2019, our contract assets increased by $148.0 million, primarily due to an increase in contract assets in our leasing business as well as due to contract assets acquired in the Telford Acquisition (see Note 4).

We had contract liabilities totaling $115.0 million ($108.7 million of which was current) and $92.5 million ($82.2 million of which was current) as of December 31, 2019 and 2018, respectively. During the year ended December 31, 2019,2020, we recognized revenue of ~~$75.2~~$80.0 million that was included in the contract liability balance at December 31, ~~2018.~~

2019.

Contract Costs

Within our Global Workplace Solutions segment, we incur transition costs to ~~fulfil~~fulfill contracts prior to services being rendered. We capitalized $64.2 million, $69.3 million ~~$45.7 million~~ and ~~$31.9~~$45.7 million, respectively, of transition costs during the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~2018. We recorded amortization of transition costs of $46.9 million, $32.3 million ~~$23.4 million~~ and ~~$19.2~~$23.4 million, respectively, during the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~

2018.

~~19.~~

~~Segments~~

~~On August 17, 2018, we announced a new organizational structure that became effective on January 1, 2019. Under the new structure, we~~

19.Segments

We organize our operations around, and publicly report our financial results on, 3 global business segments: (1) Advisory Services; (2) Global Workplace Solutions and (3) Real Estate Investments.

~~105~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Advisory Services provides a comprehensive range of services globally, including property leasing, property sales, mortgage services, property management, project management and valuation. Global Workplace Solutions provides a broad suite of integrated, contractually-based outsourcing services to occupiers of real estate, including facilities management, project management and transaction services. Real Estate Investments includes: (i) investment management services provided globally; (ii) development services in the U.S. and U.K. and (iii) flexible office space solutions.

Summarized financial information by segment is as follows (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Revenue

Advisory Services

$
9,069,468

$
8,440,002

$
7,379,725

Global Workspace Solutions

14,164,001

12,365,362

10,791,963

Real Estate Investments

660,622

534,724

457,099

Total revenue

$
23,894,091

$
21,340,088

$
18,628,787

Depreciation and Amortization

Advisory Services

$
304,766

$
280,921

$
243,791

Global Workspace Solutions

120,975

147,222

136,127

Real Estate Investments

13,483

23,845

26,196

Total depreciation and amortization

$
439,224

$
451,988

$
406,114

Equity Income (Loss) from Unconsolidated Subsidiaries

Advisory Services

$
6,894

$
16,017

$
20,740

Global Workspace Solutions

(1,423
)

115

—

Real Estate Investments

155,454

308,532

189,467

Total equity income from unconsolidated
subsidiaries

$
160,925

$
324,664

$
210,207

Adjusted EBITDA

Advisory Services

$
1,465,792

$
1,303,251

$
1,174,943

Global Workspace Solutions

424,026

345,560

334,377

Real Estate Investments

173,965

256,357

207,454

Total Adjusted EBITDA

$
2,063,783

$
1,905,168

$
1,716,774


	Year Ended December 31,
	2020		2019		2018
Revenue
Advisory Services	$	7,698,992	$	9,069,468	$	8,440,002
Global Workspace Solutions	15,295,673		14,164,001		12,365,362
Real Estate Investments	831,530		660,622		534,724
Total revenue	$	23,826,195	$	23,894,091	$	21,340,088

Depreciation and Amortization
Advisory Services	$	348,669	$	304,766	$	280,921
Global Workspace Solutions	125,692		120,975		147,222
Real Estate Investments	27,367		13,483		23,845
Total depreciation and amortization	$	501,728	$	439,224	$	451,988

Equity Income (Loss) from Unconsolidated Subsidiaries
Advisory Services	$	2,245	$	6,894	$	16,017
Global Workspace Solutions	368		(1,423)		115
Real Estate Investments	123,548		155,454		308,532
Total equity income from unconsolidated subsidiaries	$	126,161	$	160,925	$	324,664

Adjusted EBITDA
Advisory Services	$	1,143,889	$	1,465,792	$	1,303,251
Global Workspace Solutions	516,814		424,026		345,560
Real Estate Investments	231,682		173,965		256,357
Total Adjusted EBITDA	$	1,892,385	$	2,063,783	$	1,905,168

112

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Adjusted EBITDA is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to ~~each segment~~ and assessing performance of each segment. EBITDA represents earnings before ~~net~~depreciation and amortization, asset impairments, interest expense, net of interest income, write-off of financing costs on extinguished debt, and provision for income ~~taxes, depreciation and amortization and intangible asset impairments.~~taxes. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of ~~certain cash and non-cash items~~costs associated with transformation initiatives, costs associated with workforce optimization efforts, fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, ~~certain~~ carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, costs associated with our reorganization, including cost-savings initiatives, costs incurred in connection with litigation settlement, and ~~other non-recurring costs.~~

~~106~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

a one-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired.

Adjusted EBITDA is calculated as follows (dollars in thousands):

~~(1)~~

~~Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.~~


	Year Ended December 31,
	2020		2019		2018
Net income attributable to CBRE Group, Inc.	$	751,989	$	1,282,357	$	1,063,219
Add:
Depreciation and amortization	501,728		439,224		451,988
Asset impairments	88,676		89,787		0
Interest expense, net of interest income	67,753		85,754		98,685
Write-off of financing costs on extinguished debt	75,592		2,608		27,982
Provision for income taxes	214,101		69,895		313,058
EBITDA	1,699,839		1,969,625		1,954,932
Adjustments:
Costs associated with transformation initiatives (1)	155,148		0		0
Costs associated with workforce optimization efforts (2)	37,594		0		0
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period	11,598		9,301		0
Costs incurred related to legal entity restructuring	9,362		6,899		0
Integration and other costs related to acquisitions	1,756		15,292		9,124
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue	(22,912)		13,101		(5,261)
Costs associated with our reorganization, including cost-savings initiatives (3)	0		49,565		37,925
Costs incurred in connection with litigation settlement	0		0		8,868
One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired	0		0		(100,420)
Adjusted EBITDA	$	1,892,385	$	2,063,783	$	1,905,168

_______________

(2)Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the Covid-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $7.4 million was included within the “Cost of revenue” line item and $30.2 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the year ended December 31, 2020.

(3)Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.

113

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CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our CODM is not provided with total asset information by segment and accordingly, does not measure or allocate total assets on a segment basis. As a result, we have not disclosed any asset information by segment.

Geographic Information

Revenue in the table below is allocated based upon the country in which services are performed (dollars in thousands):

Year Ended December 31,

2019

2018

2017

Revenue

United States

$
13,852,018

$
12,264,188

$
10,954,608

United Kingdom

2,972,704

2,586,890

2,242,973

All other countries

7,069,369

6,489,010

5,431,206

Total revenue

$
23,894,091

$
21,340,088

$
18,628,787

~~107~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~20.~~

~~Related Party Transactions~~


	Year Ended December 31,
	2020		2019		2018
Revenue
United States	$	13,472,013	$	13,852,018	$	12,264,188
United Kingdom	3,083,810		2,972,704		2,586,890
All other countries	7,270,372		7,069,369		6,489,010
Total revenue	$	23,826,195	$	23,894,091	$	21,340,088

20.Related Party Transactions

The accompanying consolidated balance sheets include loans to related parties, primarily employees other than our executive officers, of ~~$416.7~~$424.2 million and ~~$350.1~~$416.7 million as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The majority of these loans represent sign-on and retention bonuses issued or assumed in connection with acquisitions and prepaid commissions as well as prepaid retention and recruitment awards issued to employees. These loans are at varying principal amounts, bear interest at rates up to ~~5.25%~~3.25% per annum and mature on various dates through ~~2028.~~

2030.

~~21.~~

~~Guarantor and Nonguarantor Financial Statements~~

~~The~~

21.Transformation Initiatives

During the third quarter of 2020, management embarked on the implementation of certain transformation initiatives to enable the company to reduce costs, streamline operations and support future growth.

As part of these initiatives, we incurred the following condensed consolidating financial information includes condensed consolidating balance sheets as of December 31, 2019 and 2018, condensed consolidating statements of operations, condensed consolidating statements of comprehensive income and condensed consolidating statements ofcosts, primarily in cash, ~~flows~~ for the ~~years~~year ended December 31, ~~2019, 2018~~2020 (dollars in thousands):


	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Employee separation benefits	$	57,550	$	31,083	$	2,444	$	91,077
Lease termination costs	43,225		4,586		0		47,811
Professional fees and other	13,212		2,510		538		16,260
Subtotal	113,987		38,179		2,982		155,148
Depreciation expense	14,184		166		6,342		20,692
Total	$	128,171	$	38,345	$	9,324	$	175,840

Of the total charges incurred, net of depreciation expense, $42.1 million was included within the “Cost of revenue” line item and ~~2017 of:~~

•

~~CBRE Group, Inc., as the parent; CBRE Services, as the subsidiary issuer; the guarantor subsidiaries; the nonguarantor subsidiaries;~~

$113.0 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statement of operations for the year ended December 31, 2020.

•

~~Elimination entries necessary to consolidate CBRE Group, Inc., as the parent, with CBRE Services and its guarantor and nonguarantor subsidiaries; and~~

•

~~CBRE Group, Inc., on a consolidated basis.~~

~~Investments~~

22.Subsequent Event

As described in ~~consolidated subsidiaries are presented using~~Note 10, the ~~equity method~~company made a $50.0 million non-controlling investment in Industrious in the fourth quarter of ~~accounting. The principal elimination entries eliminate investments~~2020. On February 19, 2021, the company made an additional non-controlling investment in ~~consolidated subsidiaries~~Industrious, for approximately $150.0 million in the form of primary and ~~intercompany balances and transactions.~~

~~108~~

secondary shares, as well as shares issued in anticipation of Industrious closing on the transfer of Hana in the second quarter of 2021. Following this transaction, CBRE holds a 35% interest in Industrious. In addition, CBRE has entered into a series of agreements to acquire additional shares, whereby the company will increase its interest in Industrious from 35% to 40%.

114

Table of Contents

CBRE GROUP, INC.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Balance Sheet~~

As of December 31, 2019

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

ASSETS

Current Assets:

Cash and cash equivalents

$
7

$
13,453

$
254,992

$
703,329

$
—

$
971,781

Restricted cash

—

—

55,849

66,115

—

121,964

Receivables, net

—

16

1,627,598

2,839,060

—

4,466,674

Warehouse receivables (1)

—

—

303,559

689,499

—

993,058

Contract assets

—

—

286,225

41,787

—

328,012

Prepaid expenses

—

—

127,413

155,328

—

282,741

Income taxes receivable

—

—

91,398

2,517

—

93,915

Other current assets

—

—

70,554

205,765

—

276,319

Total Current Assets

7

13,469

2,817,588

4,703,400

—

7,534,464

Property and equipment, net

—

—

560,509

275,697

—

836,206

Goodwill

—

—

2,249,274

1,504,219

—

3,753,493

Other intangible assets, net

—

—

726,897

652,649

—

1,379,546

Operating lease assets

—

—

451,769

546,197

—

997,966

Investments in unconsolidated subsidiaries

—

—

273,532

153,179

—

426,711

Non-current contract assets

—

—

175,215

26,545

—

201,760

Real estate under development

—

—

—

185,508

—

185,508

Investments in consolidated subsidiaries

8,395,563

6,642,233

2,816,035

—

(17,853,831
)

—

Intercompany loan receivable

—

3,054,548

700,000

—

(3,754,548
)

—

Non-current income taxes receivable

—

—

113,194

25,942

—

139,136

Deferred tax assets, net

—

—

57,639

106,127

(89,902
)

73,864

Other assets, net

—

17,016

480,968

170,558

—

668,542

Total Assets

$
8,395,570

$
9,727,266

$
11,422,620

$
8,350,021

$
(21,698,281
)

$
16,197,196

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable and accrued expenses

$
—

$
17,790

$
947,817

$
1,470,477

$
—

$
2,436,084

Compensation and employee benefits payable

—

—

758,367

566,623

—

1,324,990

Accrued bonus and profit sharing

—

—

686,793

575,181

—

1,261,974

Operating lease liabilities

—

—

75,906

92,757

—

168,663

Contract liabilities

—

—

58,701

49,970

—

108,671

Income taxes payable

—

—

2,002

28,205

—

30,207

Short-term borrowings:

Warehouse lines of credit (which fund
loans that U.S. Government Sponsored
Enterprises have committed to purchase) (1)

—

—

300,260

676,915

—

977,175

Other

—

—

—

4,534

—

4,534

Total short-term borrowings

—

—

300,260

681,449

—

981,709

Current maturities of long-term debt

—

—

18

1,796

—

1,814

Other current liabilities

—

—

46,121

76,218

—

122,339

Total Current Liabilities

—

17,790

2,875,985

3,542,676

—

6,436,451

Long-Term Debt, net:

Long-term debt, net

—

1,313,913

—

447,332

—

1,761,245

Intercompany loan payable

2,162,877

—

1,017,046

574,625

(3,754,548
)

—

Total Long-Term Debt, net

2,162,877

1,313,913

1,017,046

1,021,957

(3,754,548
)

1,761,245

Non-current operating lease liabilities

—

—

520,155

537,603

—

1,057,758

Non-current income taxes payable

—

—

93,647

—

—

93,647

Non-current tax liabilities

—

—

40,066

45,900

—

85,966

Deferred tax liabilities, net

—

—

—

124,495

(89,902
)

34,593

Other liabilities

—

—

233,488

220,936

—

454,424

Total Liabilities

2,162,877

1,331,703

4,780,387

5,493,567

(3,844,450
)

9,924,084

Commitments and contingencies

—

—

—

—

—

—

Equity:

CBRE Group, Inc. Stockholders’ Equity

6,232,693

8,395,563

6,642,233

2,816,035

(17,853,831
)

6,232,693

Non-controlling interests

—

—

—

40,419

—

40,419

Total Equity

6,232,693

8,395,563

6,642,233

2,856,454

(17,853,831
)

6,273,112

Total Liabilities and Equity

$
8,395,570

$
9,727,266

$
11,422,620

$
8,350,021

$
(21,698,281
)

$
16,197,196

~~(1)~~

Although CBRE Capital Markets is included among our domestic subsidiaries that jointly and severally guarantee our 4.875% senior notes, 5.25% senior notes and our 2019 Credit Agreement, a substantial majority of warehouse receivables funded under Fannie Mae ASAP, JP Morgan, BofA, TD Bank, Capital One and Union Bank lines of credit are pledged to Fannie Mae, JP Morgan, BofA, TD Bank, Capital One and Union Bank, and accordingly, are not included as collateral for these notes or our other outstanding debt.

~~109~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Balance Sheet~~

As of December 31, 2018

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

ASSETS

Current Assets:

Cash and cash equivalents

$
7

$
34,063

$
261,181

$
481,968

$
—

$
777,219

Restricted cash

—

—

13,767

72,958

—

86,725

Receivables, net

—

5

1,340,120

2,328,466

—

3,668,591

Warehouse receivables (1)

—

—

664,095

678,373

—

1,342,468

Contract assets

—

—

289,214

17,806

—

307,020

Prepaid expenses

—

—

122,305

132,587

—

254,892

Income taxes receivable

6,099

—

18,992

52,692

(6,099
)

71,684

Other current assets

—

—

56,853

188,758

—

245,611

Total Current Assets

6,106

34,068

2,766,527

3,953,608

(6,099
)

6,754,210

Property and equipment, net

—

—

512,110

209,582

—

721,692

Goodwill

—

—

2,224,909

1,427,400

—

3,652,309

Other intangible assets, net

—

—

835,270

606,038

—

1,441,308

Investments in unconsolidated subsidiaries

—

—

170,698

45,476

—

216,174

Non-current contract assets

—

—

74,762

—

—

74,762

Real estate under development

—

—

4,586

—

—

4,586

Investments in consolidated subsidiaries

6,759,815

5,595,831

3,228,512

—

(15,584,158
)

—

Intercompany loan receivable

—

2,440,775

700,000

711,244

(3,852,019
)

—

Deferred tax assets, net

—

—

2,666

51,755

(2,718
)

51,703

Other assets, net

—

18,257

404,442

117,350

—

540,049

Total Assets

$
6,765,921

$
8,088,931

$
10,924,482

$
7,122,453

$
(19,444,994
)

$
13,456,793

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable and accrued expenses

$
40

$
17,450

$
655,582

$
1,246,755

$
—

$
1,919,827

Compensation and employee benefits payable

—

—

662,196

458,983

—

1,121,179

Accrued bonus and profit sharing

—

—

685,521

503,874

—

1,189,395

Contract liabilities

—

—

41,045

41,182

—

82,227

Income taxes payable

—

720

6,417

67,062

(6,099
)

68,100

Short-term borrowings:

Warehouse lines of credit (which fund
loans that U.S. Government Sponsored
Enterprises have committed to purchase) (1)

—

—

657,731

671,030

—

1,328,761

Total short-term borrowings

—

—

657,731

671,030

—

1,328,761

Current maturities of long-term debt

—

—

39

3,107

—

3,146

Other current liabilities

—

1,070

70,202

19,473

—

90,745

Total Current Liabilities

40

19,240

2,778,733

3,011,466

(6,099
)

5,803,380

Long-Term Debt, net:

Long-term debt, net

—

1,309,876

18

457,366

—

1,767,260

Intercompany loan payable

1,827,084

—

2,024,935

—

(3,852,019
)

—

Total Long-Term Debt, net

1,827,084

1,309,876

2,024,953

457,366

(3,852,019
)

1,767,260

Non-current tax liabilities

—

—

164,857

7,769

—

172,626

Deferred tax liabilities, net

—

—

—

110,143

(2,718
)

107,425

Other liabilities

—

—

360,108

236,092

—

596,200

Total Liabilities

1,827,124

1,329,116

5,328,651

3,822,836

(3,860,836
)

8,446,891

Commitments and contingencies

—

—

—

—

—

—

Equity:

CBRE Group, Inc. Stockholders’ Equity

4,938,797

6,759,815

5,595,831

3,228,512

(15,584,158
)

4,938,797

Non-controlling interests

—

—

—

71,105

—

71,105

Total Equity

4,938,797

6,759,815

5,595,831

3,299,617

(15,584,158
)

5,009,902

Total Liabilities and Equity

$
6,765,921

$
8,088,931

$
10,924,482

$
7,122,453

$
(19,444,994
)

$
13,456,793

~~(1)~~

Although CBRE Capital Markets is included among our domestic subsidiaries that jointly and severally guarantee our 4.875% senior notes, 5.25% senior notes and our 2017 Credit Agreement, a substantial majority of warehouse receivables funded under BofA, Fannie Mae ASAP, JP Morgan, Capital One and TD Bank lines of credit are pledged to BofA, Fannie Mae, JP Morgan, Capital One and TD Bank, and accordingly, are not included as collateral for these notes or our other outstanding debt.

~~110~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Operations~~

For the Year Ended December 31, 2019

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Revenue

$
—

$
—

$
13,550,005

$
10,344,086

$
—

$
23,894,091

Costs and expenses:

Cost of revenue

—

—

10,836,412

7,852,601

—

18,689,013

Operating, administrative and other

1,000

1,036

1,705,837

1,728,136

—

3,436,009

Depreciation and amortization

—

—

265,220

174,004

—

439,224

Intangible asset impairment

—

—

89,787

—

—

89,787

Total costs and expenses

1,000

1,036

12,897,256

9,754,741

—

22,654,033

Gain on disposition of real estate

—

—

19,432

385

—

19,817

Operating (loss) income

(1,000
)

(1,036
)

672,181

589,730

—

1,259,875

Equity income (loss) from unconsolidated subsidiaries

—

—

162,019

(1,094
)

—

160,925

Other income

—

—

7,842

21,065

—

28,907

Interest expense, net of interest income

—

(31,037
)

80,604

36,187

—

85,754

Write-off of financing costs on extinguished debt

—

2,608

—

—

—

2,608

Royalty and management service (income) expense

—

—

(92,728
)

92,728

—

—

Income from consolidated subsidiaries

1,283,103

1,262,674

284,038

—

(2,829,815
)

—

Income before (benefit of) provision for income taxes

1,282,103

1,290,067

1,138,204

480,786

(2,829,815
)

1,361,345

(Benefit of) provision for income taxes

(254
)

6,964

(124,470
)

187,655

—

69,895

Net income

1,282,357

1,283,103

1,262,674

293,131

(2,829,815
)

1,291,450

Less: Net income attributable to non-controlling
interests

—

—

—

9,093

—

9,093

Net income attributable to CBRE Group, Inc.

$
1,282,357

$
1,283,103

$
1,262,674

$
284,038

$
(2,829,815
)

$
1,282,357

~~Condensed Consolidating Statement of Operations~~

For the Year Ended December 31, 2018

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Revenue

$
—

$
—

$
11,998,469

$
9,341,619

$
—

$
21,340,088

Costs and expenses:

Cost of revenue

—

—

9,513,947

6,935,265

—

16,449,212

Operating, administrative and other

24,523

1,156

1,715,150

1,624,944

—

3,365,773

Depreciation and amortization

—

—

271,378

180,610

—

451,988

Total costs and expenses

24,523

1,156

11,500,475

8,740,819

—

20,266,973

Gain on disposition of real estate

—

—

7,705

7,169

—

14,874

Operating (loss) income

(24,523
)

(1,156
)

505,699

607,969

—

1,087,989

Equity income from unconsolidated subsidiaries

—

—

323,080

1,584

—

324,664

Other income (loss)

—

1

103,657

(10,638
)

—

93,020

Interest expense, net of interest income

—

(32,031
)

329,083

(198,367
)

—

98,685

Write-off of financing costs on extinguished debt

—

27,982

—

—

—

27,982

Royalty and management service (income) expense

—

—

(61,626
)

61,626

—

—

Income from consolidated subsidiaries

1,081,643

1,079,469

578,320

—

(2,739,432
)

—

Income before (benefit of) provision for income taxes

1,057,120

1,082,363

1,243,299

735,656

(2,739,432
)

1,379,006

(Benefit of) provision for income taxes

(6,099
)

720

163,830

154,607

—

313,058

Net income

1,063,219

1,081,643

1,079,469

581,049

(2,739,432
)

1,065,948

Less: Net income attributable to non-controlling
interests

—

—

—

2,729

—

2,729

Net income attributable to CBRE Group, Inc.

$
1,063,219

$
1,081,643

$
1,079,469

$
578,320

$
(2,739,432
)

$
1,063,219

~~111~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Operations~~

For the Year Ended December 31, 2017

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Revenue

$
—

$
—

$
10,702,005

$
7,926,782

$
—

$
18,628,787

Costs and expenses:

Cost of revenue

—

—

8,517,114

5,787,985

—

14,305,099

Operating, administrative and other

5,661

1,972

1,437,641

1,413,446

—

2,858,720

Depreciation and amortization

—

—

239,863

166,251

—

406,114

Total costs and expenses

5,661

1,972

10,194,618

7,367,682

—

17,569,933

Gain on disposition of real estate

—

—

6,037

13,791

—

19,828

Operating (loss) income

(5,661
)

(1,972
)

513,424

572,891

—

1,078,682

Equity income from unconsolidated subsidiaries

—

—

206,655

3,552

—

210,207

Other income

—

1

22

9,382

—

9,405

Interest expense, net of interest income

—

(10,648
)

110,494

27,115

—

126,961

Royalty and management service expense (income)

—

—

66,191

(66,191
)

—

—

Income from consolidated subsidiaries

700,608

695,245

464,046

—

(1,859,899
)

—

Income before (benefit of) provision for income taxes

694,947

703,922

1,007,462

624,901

(1,859,899
)

1,171,333

(Benefit of) provision for income taxes

(2,162
)

3,314

312,217

154,388

—

467,757

Net income

697,109

700,608

695,245

470,513

(1,859,899
)

703,576

Less: Net income attributable to non-controlling
interests

—

—

—

6,467

—

6,467

Net income attributable to CBRE Group, Inc.

$
697,109

$
700,608

$
695,245

$
464,046

$
(1,859,899
)
��
$
697,109

~~Condensed Consolidating Statement of Comprehensive Income~~

For the Year Ended December 31, 2019

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Net income

$
1,282,357

$
1,283,103

$
1,262,674

$
293,131

$
(2,829,815
)

$
1,291,450

Other comprehensive income:

Foreign currency translation loss

—

—

—

(14,092
)

—

(14,092
)
Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net

—

1,320

—

—

—

1,320

Unrealized holding gains on available for sale
   debt securities, net

—

—

2,101

—

—

2,101

Pension liability adjustments, net

—

—

—

944

—

944

Legal entity restructuring, net

—

—

—

63,149

—

63,149

Other, net

—

(104
)

—

(14,842
)

—

(14,946
)
Total other comprehensive income

—

1,216

2,101

35,159

—

38,476

Comprehensive income

1,282,357

1,284,319

1,264,775

328,290

(2,829,815
)

1,329,926

Less: Comprehensive income attributable to
   non-controlling interests

—

—

—

9,048

—

9,048

Comprehensive income attributable to CBRE Group,
   Inc.

$
1,282,357

$
1,284,319

$
1,264,775

$
319,242

$
(2,829,815
)

$
1,320,878

~~112~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

For the Year Ended December 31, 2018

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Net income

$
1,063,219

$
1,081,643

$
1,079,469

$
581,049

$
(2,739,432
)

$
1,065,948

Other comprehensive income (loss):

Foreign currency translation loss

—

—

—

(161,384
)

—

(161,384
)
Adoption of Accounting Standards Update
   2016-01, net

—

—

(3,964
)

—

—

(3,964
)
Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net

—

2,439

—

—

—

2,439

Unrealized gains on interest rate swaps, net

—

708

—

—

—

708

Unrealized holding losses on available for sale
   debt securities, net

—

—

(971
)

—

—

(971
)
Pension liability adjustments, net

—

—

—

1,315

—

1,315

Other, net

—

—

7

(5,077
)

—

(5,070
)
Total other comprehensive income (loss)

—

3,147

(4,928
)

(165,146
)

—

(166,927
)
Comprehensive income

1,063,219

1,084,790

1,074,541

415,903

(2,739,432
)

899,021

Less: Comprehensive income attributable to
   non-controlling interests

—

—

—

1,657

—

1,657

Comprehensive income attributable to CBRE Group,
    Inc.

$
1,063,219

$
1,084,790

$
1,074,541

$
414,246

$
(2,739,432
)

$
897,364

~~Condensed Consolidating Statement of Comprehensive Income~~

For the Year Ended December 31, 2017

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Eliminations

Consolidated
Total

Net income

$
697,109

$
700,608

$
695,245

$
470,513

$
(1,859,899
)

$
703,576

Other comprehensive (loss) income:

Foreign currency translation gain

—

—

—

218,001

—

218,001

Amounts reclassified from accumulated other
   comprehensive loss to interest expense, net

—

4,964

—

—

—

4,964

Unrealized gains on interest rate swaps, net

—

585

—

—

—

585

Unrealized holding gains on available for sale
   debt securities,  net

—

—

2,557

180

—

2,737

Pension liability adjustments, net

—

—

—

12,701

—

12,701

Other, net

(2
)

—

(21
)

387

—

364

Total other comprehensive (loss) income

(2
)

5,549

2,536

231,269

—

239,352

Comprehensive income

697,107

706,157

697,781

701,782

(1,859,899
)

942,928

Less: Comprehensive income attributable to
   non-controlling interests

—

—

—

6,879

—

6,879

Comprehensive income attributable to CBRE Group,
   Inc.

$
697,107

$
706,157

$
697,781

$
694,903

$
(1,859,899
)

$
936,049

~~113~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Cash Flow~~

For the Year Ended December 31, 2019

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Consolidated
Total

CASH FLOWS PROVIDED BY OPERATING
   ACTIVITIES:

$
133,051

$
28,603

$
906,398

$
155,328

$
1,223,380

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

—

—

(190,143
)

(103,371
)

(293,514
)
Acquisition of businesses, including net assets acquired,
   intangibles and goodwill, net of cash acquired

—

—

(13,788
)

(342,138
)

(355,926
)
Contributions to unconsolidated subsidiaries

—

—

(63,016
)

(42,931
)

(105,947
)
Distributions from unconsolidated subsidiaries

—

—

29,319

3,970

33,289

Purchase of equity securities

—

—

(12,017
)

—

(12,017
)
Proceeds from sale of equity securities

—

—

14,065

1,558

15,623

Purchase of available for sale debt securities

—

—

(8,853
)

—

(8,853
)
Proceeds from the sale of available for sale debt securities

—

—

4,671

—

4,671

Other investing activities, net

—

—

1,102

548

1,650

Net cash used in investing activities

—

—

(238,660
)

(482,364
)

(721,024
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from senior term loans

—

300,000

—

—

300,000

Repayment of senior term loans

—

(300,000
)

—

—

(300,000
)
Proceeds from revolving credit facility

—

3,609,000

—

—

3,609,000

Repayment of revolving credit facility

—

(3,609,000
)

—

—

(3,609,000
)
Repayment of debt assumed in the acquisition of Telford Homes

—

—

—

(110,687
)

(110,687
)
Repurchase of common stock

(145,137
)

—

—

—

(145,137
)
Acquisition of businesses (cash paid for acquisitions more than
   three months after purchase date)

—

—

(30,268
)

(11,879
)

(42,147
)
Units repurchased for payment of taxes on equity awards

(18,426
)

—

—

—

(18,426
)
Non-controlling interest contributions

—

—

—

46,612

46,612

Non-controlling interest distributions

—

—

—

(3,957
)

(3,957
)
Decrease (increase) in intercompany receivables, net

30,512

(45,862
)

(601,577
)

616,927

—

Other financing activities, net

—

(3,351
)

—

5,144

1,793

Net cash (used in) provided by financing activities

(133,051
)

(49,213
)

(631,845
)

542,160

(271,949
)
Effect of currency exchange rate changes on cash and cash
   equivalents and restricted cash

—

—

—

(606
)

(606
)
NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS AND RESTRICTED CASH

—

(20,610
)

35,893

214,518

229,801

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT BEGINNING OF PERIOD

7

34,063

274,948

554,926

863,944

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT END OF PERIOD

$
7

$
13,453

$
310,841

$
769,444

$
1,093,745

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION:

Cash paid during the period for:

Interest

$
—

$
69,667

$
—

$
16,999

$
86,666

Income taxes, net

$
—

$
—

$
188,329

$
176,736

$
365,065

~~114~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Cash Flows~~

For the Year Ended December 31, 2018

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Consolidated
Total

CASH FLOWS PROVIDED BY OPERATING
   ACTIVITIES:

$
105,850

$
21,834

$
429,540

$
574,025

$
1,131,249

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

—

—

(140,670
)

(87,133
)

(227,803
)
Acquisition of businesses, including net assets acquired,
   intangibles and goodwill, net of cash acquired

—

—

(305,315
)

(17,258
)

(322,573
)
Contributions to unconsolidated subsidiaries

—

—

(51,046
)

(11,756
)

(62,802
)
Distributions from unconsolidated subsidiaries

—

—

57,269

4,440

61,709

Purchase of equity securities

—

—

(21,402
)

—

(21,402
)
Proceeds from sale of equity securities

—

—

16,314

—

16,314

Purchase of available for sale debt securities

—

—

(23,360
)

—

(23,360
)
Proceeds from the sale of available for sale debt securities

—

—

5,792

—

5,792

Other investing activities, net

—

—

2,793

10,648

13,441

Net cash used in investing activities

—

—

(459,625
)

(101,059
)

(560,684
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from senior term loans

—

550,000

—

452,745

1,002,745

Repayment of senior term loans

—

(450,000
)

—

—

(450,000
)
Proceeds from revolving credit facility

—

3,258,000

—

—

3,258,000

Repayment of revolving credit facility

—

(3,258,000
)

—

—

(3,258,000
)
Repayment of 5.00% senior notes (including premium)

—

(820,000
)

—

—

(820,000
)
Repayment of debt assumed in acquisition of FacilitySource

—

—

(26,295
)

—

(26,295
)
Repurchase of common stock

(161,034
)

—

—

—

(161,034
)
Acquisition of businesses (cash paid for acquisitions more than
   three months after purchase date)

—

—

(16,774
)

(1,886
)

(18,660
)
Units repurchased for payment of taxes on equity awards

(29,386
)

—

—

—

(29,386
)
Non-controlling interest contributions

—

—

—

25,355

25,355

Non-controlling interest distributions

—

—

—

(13,413
)

(13,413
)
Decrease (increase) in intercompany receivables, net

84,213

716,837

233,975

(1,035,025
)

—

Other financing activities, net

357

(212
)

(16
)

(16,041
)

(15,912
)
Net cash (used in) provided by financing activities

(105,850
)

(3,375
)

190,890

(588,265
)

(506,600
)
Effect of currency exchange rate changes on cash and cash
   equivalents and restricted cash

—

—

—

(24,840
)

(24,840
)
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS AND RESTRICTED CASH

—

18,459

160,805

(140,139
)

39,125

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT BEGINNING OF PERIOD

7

15,604

114,143

695,065

824,819

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT END OF PERIOD

$
7

$
34,063

$
274,948

$
554,926

$
863,944

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION:

Cash paid during the period for:

Interest

$
—

$
102,491

$
—

$
1,674

$
104,165

Income taxes, net

$
—

$
—

$
198,930

$
176,919

$
375,849

~~115~~

~~CBRE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Condensed Consolidating Statement of Cash Flows~~

For the Year Ended December 31, 2017

Parent

CBRE
Services

Guarantor
Subsidiaries

Nonguarantor
Subsidiaries

Consolidated
Total

CASH FLOWS PROVIDED BY (USED IN) OPERATING
   ACTIVITIES:

$
89,341

$
37,990

$
424,787

$
342,293

$
894,411

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

—

—

(121,347
)

(56,695
)

(178,042
)
Acquisition of businesses, including net assets acquired,
   intangibles and goodwill, net of cash acquired

—

—

(87,248
)

(31,179
)

(118,427
)
Contributions to unconsolidated subsidiaries

—

—

(63,119
)

(5,581
)

(68,700
)
Distributions from unconsolidated subsidiaries

—

—

52,896

10,768

63,664

Purchase of equity securities

—

—

(15,584
)

—

(15,584
)
Proceeds from sale of equity securities

—

—

15,587

—

15,587

Purchase of available for sale debt securities

—

—

(19,280
)

—

(19,280
)
Proceeds from the sale of available for sale debt securities

—

—

15,790

—

15,790

Other investing activities, net

—

—

1,968

424

2,392

Net cash used in investing activities

—

—

(220,337
)

(82,263
)

(302,600
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from senior term loans

—

200,000

—

—

200,000

Repayment of senior term loans

—

(751,876
)

—

—

(751,876
)
Proceeds from revolving credit facility

—

1,521,000

—

—

1,521,000

Repayment of revolving credit facility

—

(1,521,000
)

—

—

(1,521,000
)
Acquisition of businesses (cash paid for acquisitions more than
   three months after purchase date)

—

—

(19,854
)

(4,152
)

(24,006
)
Units repurchased for payment of taxes on equity awards

(29,549
)

—

—

—

(29,549
)
Non-controlling interest contributions

—

—

—

5,301

5,301

Non-controlling interest distributions

—

—

—

(8,715
)

(8,715
)
(Increase) decrease in intercompany receivables, net

(60,271
)

520,579

(338,396
)

(121,912
)

—

Other financing activities, net

479

(7,978
)

(3,145
)

(8,253
)

(18,897
)
Net cash used in financing activities

(89,341
)

(39,275
)

(361,395
)

(137,731
)

(627,742
)
Effect of currency exchange rate changes on cash and cash
   equivalents and restricted cash

—

—

—

29,338

29,338

NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS AND RESTRICTED CASH

—

(1,285
)

(156,945
)

151,637

(6,593
)
CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT BEGINNING OF PERIOD

7

16,889

271,088

543,428

831,412

CASH AND CASH EQUIVALENTS AND RESTRICTED
   CASH, AT END OF PERIOD

$
7

$
15,604

$
114,143

$
695,065

$
824,819

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION:

Cash paid during the period for:

Interest

$
—

$
117,072

$
—

$
92

$
117,164

Income taxes, net

$
—

$
—

$
198,520

$
158,477

$
356,997

~~CBRE GROUP, INC.~~

QUARTERLY RESULTS OF OPERATIONS

~~(Unaudited)~~

Three Months
Ended
December 31,
2019

Three Months
Ended
September 30,
2019

Three Months
Ended
June 30,
2019

Three Months
Ended
March 31,
2019

(Dollars in thousands, except share data)

Revenue

$
7,119,407

$
5,925,101

$
5,714,073

$
5,135,510

Operating income

$
513,841

$
316,630

$
284,417

$
144,987

Net income attributable to CBRE Group, Inc.

$
637,618

$
256,599

$
223,731

$
164,409

Basic income per share

$
1.90

$
0.76

$
0.67

$
0.49

Weighted average shares outstanding for basic
   income per share

334,745,003

336,203,747

336,222,471

336,020,431

Diluted income per share

$
1.87

$
0.75

$
0.66

$
0.48

Weighted average shares outstanding for diluted
   income per share

340,333,005

341,100,182

340,508,931

340,158,399

Three Months
Ended
December 31,
2018

Three Months
Ended
September 30,
2018

Three Months
Ended
June 30,
2018

Three Months
Ended
March 31,
2018

(Dollars in thousands, except share data)

Revenue

$
6,293,748

$
5,260,954

$
5,111,434

$
4,673,952

Operating income

$
459,347

$
189,717

$
225,316

$
213,609

Net income attributable to CBRE Group, Inc.

$
393,795

$
290,469

$
228,667

$
150,288

Basic income per share

$
1.16

$
0.86

$
0.67

$
0.44

Weighted average shares outstanding for basic
   income per share

339,823,278

339,477,316

339,081,556

338,890,098

Diluted income per share

$
1.15

$
0.85

$
0.67

$
0.44

Weighted average shares outstanding for diluted
   income per share

342,683,720

343,733,947

343,471,513

342,589,810

~~Item 9.~~

~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.~~

(Unaudited)


	Three Months Ended
	December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
	(Dollars in thousands, except share and per share data)
Revenue	$	6,910,501	$	5,645,142	$	5,381,384	$	5,889,168
Operating income	443,896		211,408		94,165		220,290
Net income attributable to CBRE Group, Inc.	313,765		184,132		81,897		172,195
Basic income per share	$	0.94	$	0.55	$	0.24	$	0.51
Weighted average shares outstanding for basic income per share	335,397,942		335,287,245		335,126,126		334,969,826
Diluted income per share	$	0.93	$	0.55	$	0.24	$	0.51
Weighted average shares outstanding for diluted income per share	338,799,615		337,665,848		337,361,419		339,737,911


	Three Months Ended
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
	(Dollars in thousands, except share and per share data)
Revenue	$	7,119,407	$	5,925,101	$	5,714,073	$	5,135,510
Operating income	513,841		316,630		284,417		144,987
Net income attributable to CBRE Group, Inc.	637,618		256,599		223,731		164,409
Basic income per share	$	1.90	$	0.76	$	0.67	$	0.49
Weighted average shares outstanding for basic income per share	334,745,003		336,203,747		336,222,471		336,020,431
Diluted income per share	$	1.87	$	0.75	$	0.66	$	0.48
Weighted average shares outstanding for diluted income per share	340,333,005		341,100,182		340,508,931		340,158,399

115

Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

~~Item 9A.~~

~~Controls and Procedures.~~

Item 9A. Controls and Procedures.

Management’s Report on Internal Control Over Financial Reporting

~~Our management~~

Management is responsible for establishing and maintaining adequate internal control over financial reporting ~~as such term is~~(as defined in ~~Securities~~Rules 13a-15(f) and 15d-15(f) of the Exchange ~~Act Rules 13a-15(f)~~Act). The Company’s management, with participation of the CEO and CFO, under the oversight of our Board of Directors, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 using the framework in Internal Control - Integrated Framework (2013), ~~including~~issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2020 due to the material weakness in internal control over financial reporting, described below.

A company’s internal control over financial reporting includes those policies and procedures that:

(1)pertain to the maintenance of ~~(i)~~ records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of ~~our~~the assets ~~and (ii) policies and procedures that~~ of the company;

(2)provide reasonable assurance that ~~(a)~~ transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, ~~generally accepted in the United States of America, (b) our~~and that receipts and expenditures of the company are being made only in accordance with authorizations of management and ~~our board~~directors of ~~directors~~the company; and ~~(c) we will prevent~~

(3)provide reasonable assurance regarding prevention or timely ~~detect~~detection of unauthorized acquisition, use, or disposition of ~~our~~the company’s assets that could have a material effect on the financial statements.

~~Internal control over financial reporting cannot provide absolute assurance~~

Because of ~~achieving financial reporting objectives because of the~~its inherent limitations, of any system of internal control. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses of judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper overriding of controls. As a result of such limitations, there is risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

~~Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our~~ internal control over financial reporting ~~based on the criteria established in~~ ~~Internal Control-Integrated Framework (2013)~~ ~~issued by the Committee~~may not prevent or detect misstatements. Also, projections of ~~Sponsoring Organizations (COSO)~~any evaluation of ~~the Treadway Commission. We acquired Telford Homes Plc during 2019, as defined in Note 4~~effectiveness to future periods are subject to the ~~consolidated financial statements, and excluded from our assessment~~risk that controls may become inadequate because of changes in conditions or that the ~~effectiveness~~degree of ~~our internal control over financial reporting as of December 31, 2019 Telford Homes Plc’s internal control over financial reporting associated~~compliance with ~~total assets of $525.4 million and total revenues of $97.5 million included in our consolidated financial statements as of December 31, 2019.~~

the policies or procedures may deteriorate.

Based on our evaluation under the COSO framework, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, ~~2019~~2020 due to the fact that material weaknesses existed in the company’s internal control over financial reporting as further described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report on Form 10-K, has expressed an adverse report on the operating effectiveness of the company’s internal control over financial reporting. KPMG LLP’s report is included herein on page 2.

57.

Material Weaknesses Identified Relating to Global Workplace Solutions Segment – Europe, Middle East & Africa Region (GWS EMEA)

116

Table of Contents

As of December 31, 2019 we determined that the severity of control failures isolated to GWS EMEA led management to conclude that the following material weaknesses existed in the internal control environment in GWS EMEA:

•

GWS EMEA did not have sufficient resources in the local GWS EMEA territories with the appropriate reporting lines, roles and responsibilities, authority, training and skill sets to design and operate financial activities, including controls, in an appropriate and timely manner.

•

•GWS EMEA did not have sufficient resources in the local GWS EMEA territories with the appropriate reporting lines, roles and responsibilities, authority, training and skill sets to design and operate financial activities, including controls, in an appropriate and timely manner.

~~GWS EMEA did not design or execute control activities that sufficiently mitigated the financial reporting risks related to GWS EMEA.~~

•

~~GWS EMEA did not have an effective information and communication process to identify, capture and process relevant information necessary for financial accounting and reporting.~~

The company did not monitor the presentation and effectiveness of components of internal control through evaluation and remediation in an appropriate manner within GWS EMEA and GWS EMEA was not sufficiently integrated with the corporate oversight function.

•GWS EMEA did not design or execute control activities that sufficiently mitigated the financial reporting risks related to GWS EMEA.

•GWS EMEA did not have an effective information and communication process to identify, capture and process relevant information necessary for financial accounting and reporting.

•The company did not monitor the presentation and effectiveness of components of internal control through evaluation and remediation in an appropriate manner within GWS EMEA and GWS EMEA was not sufficiently integrated with the corporate oversight function.

Consequently, there were control failures for GWS EMEA in the areas of revenue and receivables, balance sheet account reconciliations, journal entries and general information technology controls. During 2019, as GWS EMEA increased in complexity and grew in both size and scale, management did not prioritize an appropriate level of oversight, a sufficient number of capable resources or training for control owners to address internal controls over financial reporting. As a result,2020, even though a material misstatement was not identified in the GWS EMEA financial statements, it was determined that there was a reasonable possibility that a material misstatement in the GWS EMEA financial statements would not have been prevented or detected on a timely basis.

The Company’s Plan to Remediate the Material Weaknesses

The company, with the oversight from the Audit Committee of the Board of Directors, is committed to remediating the GWS EMEA material weaknesses in a timely manner. We ~~have begun the process of~~are executing remediation plans ~~that~~intended to address the material weaknesses in our internal controls over financial reporting. We are engaged in various stages of remedial actions to address the material weaknesses described above. We are using both internal and external resources to assist in the following actions:

•

Performing a comprehensive review of the GWS EMEA’s finance and accounting operating model to establish and implement a target operating model under the recently developed Finance Innovation Office under the Chief Financial Officer, which will assess people and headcount, reporting lines, roles and responsibilities, training, technology and tools.

•

Assessing key processes at material GWS EMEA locations to ensure that the processes, procedures and controls are adequately designed, are clearly documented, standardized and appropriately communicated to enhance control ownership throughout the GWS EMEA organization.

•Performing a comprehensive review of the GWS EMEA’s finance and accounting operating model to establish and implement a target operating model under the recently developed Finance Innovation Office under the Chief Financial Officer, which will assess people and headcount, reporting lines, roles and responsibilities, training, technology and tools.

•

Reviewing the GWS EMEA finance and accounting organization to ensure GWS EMEA compliance and Information Technology resources are under the CBRE Global SOX and Financial Reporting Systems governance programs led by the Chief Accounting Officer and that control preparers and reviewers align to an appropriate organizational structure to sustain the remedial actions, including those related to business process and general information technology controls.

•Assessing key processes at material GWS EMEA locations to ensure that the processes, procedures and controls are adequately designed, are clearly documented, standardized and appropriately communicated to enhance control ownership throughout the GWS EMEA organization.

Evaluating and designing controls to address the completeness and accuracy of data used to support key estimations, accounting transactions and disclosures, primarily associated with spreadsheets and other key reports.

•

Enhancing GWS EMEA’s risk assessment and monitoring procedures by implementing new training activities, hiring additional capable resources, and enhancing our Risk and Fraud Risk assessment processes to ensure appropriate resources and controls are in place to mitigate risks as commensurate with the global risk assessment and that GWS EMEA’s process is fully incorporated into the corporate oversight function.

•Reviewing the GWS EMEA finance and accounting organization to ensure GWS EMEA compliance and Information Technology resources are under the CBRE Global SOX and Financial Reporting Systems governance programs led by the Chief Accounting Officer and that control preparers and reviewers align to an appropriate organizational structure to sustain the remedial actions, including those related to business process and general information technology controls.

117

Table of Contents

•Evaluating and designing controls to address the completeness and accuracy of data used to support key estimations, accounting transactions and disclosures, primarily associated with spreadsheets and other key reports.

•Enhancing GWS EMEA’s risk assessment and monitoring procedures by implementing new training activities, hiring additional capable resources, and enhancing our Risk and Fraud Risk assessment processes to ensure appropriate resources and controls are in place to mitigate risks as commensurate with the global risk assessment and that GWS EMEA’s process is fully incorporated into the corporate oversight function.

Management has taken the following remediation actions related to the GWS EMEA material weaknesses during 2020:

•We performed a comprehensive review of the GWS EMEA finance and accounting organization and implemented a new operating model to establish accountability, reporting lines, and roles and responsibilities.

•We began hiring staff responsible for internal control over financial reporting in alignment with the new operating model.

•We began implementing an ongoing training program addressing internal control over financial reporting, including educating control owners concerning the requirements of each control.

•We are designing risk assessment procedures aligned with the global framework and corporate oversight to ensure internal control over financial reporting risks are evaluated in a timely and consistent manner.

•We developed documentation for underlying business processes and information technology general controls to promote control ownership and consistent operation of controls.

•We are designing standardized controls and procedures over completeness and accuracy of data used in performing controls, including information technology and financial reporting controls.

Our remediation efforts related to the material weaknesses are ongoing. The material weaknesses will not be considered remediated until the applicable controls have been fully designed, documented, implemented, and operate for a sufficient period of time for management to conclude, through testing, that these controls are operating effectively. While we intend to complete the remediation of the material weaknesses in 2021, given the inherent complexities and limitations caused by the ongoing Covid-19 pandemic, there can be no assurances that we will be able to successfully complete the remediation within the contemplated timeline.

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (“certifying officers”) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of December 31, 2020. Our certifying officers concluded that, as a result of the material weaknesses in internal control over financial reporting as described above, our disclosure controls and procedures were not effective as of December 31, 2020.

Rule 13a-15 of the Securities and Exchange Act of 1934, as amended, requires that we conduct an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report, and we have a disclosure policy in furtherance of the same. This evaluation is designed to ensure that all corporate disclosure is complete and accurate in all material respects. The evaluation is further designed to ensure that all information required to be disclosed in our SEC reports is accumulated and communicated to management to allow timely decisions regarding required disclosures and recorded, processed, summarized and reported within the time periods and in the manner specified in the SEC’s rules and forms. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of

118

Table of Contents

achieving the desired control objectives. Our Chief Executive Officer and Chief Financial Officer supervise and participate in this evaluation, and they are assisted by ~~our Chief Accounting Officer and other~~ members of our Disclosure Committee. ~~In addition to our Chief Accounting Officer, our~~Our Disclosure Committee consists of our General Counsel, our Senior Vice President, Corporate Finance, our Chief ~~Digital and Technology~~Administrative Officer, our Chief Communication Officer, our ~~Global Controller, our~~Senior Vice President, ~~of Global SOX~~Risk and Assurance, our Senior Officers of significant business lines and other select employees.

We conducted the required evaluation, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined by Securities Exchange Act Rule 13a-15(e)) were not effective as of December 31, 2019 to accomplish their objectives at the reasonable assurance level because

In light of the material weaknesses described ~~above.~~

~~Notwithstanding such material weaknesses in internal control over financial reporting, our~~above, management ~~concluded~~performed additional analysis and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP). Accordingly, management believes that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, ~~fairly,~~ in all material respects, ~~the company’s~~our financial position, results of operations and cash flows as of ~~the dates,~~ and for the periods presented, in ~~conformity~~accordance with ~~U.S.~~ GAAP.

Changes in Internal Control Over Financial Reporting

~~Other than the material weaknesses described above, there~~

There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our remediation efforts related to the material weaknesses are ongoing.

~~Item 9B.~~

~~Other Information.~~

Item 9B. Other Information.

None.

119

Table of Contents

PART III

~~Item 10.~~

~~Directors, Executive Officers and Corporate Governance.~~

Item 10. Directors, Executive Officers and Corporate Governance.

The information under the headings “Elect Directors,” “Corporate Governance,” “Executive Management” and “Stock Ownership” in the definitive proxy statement for our ~~2020~~2021 Annual Meeting of Stockholders is incorporated herein by reference.

We are filing the certifications by the Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act as exhibits to this Annual ~~Report on Form 10-K.~~

Report.

~~Item 11.~~

~~Executive Compensation.~~

Item 11. Executive Compensation.

The information contained under the headings “Corporate Governance,” “Compensation Discussion and Analysis” and “Executive Compensation” in the definitive proxy statement for our ~~2020~~2021 Annual Meeting of Stockholders is incorporated herein by reference.

~~Item 12.~~

~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.~~

~~We incorporate herein by reference the~~

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information contained under the heading “Stock Ownership” in the definitive proxy statement for our ~~2020~~2021 Annual Meeting of ~~Stockholders.~~

Stockholders is incorporated herein by reference.

~~Item 13.~~

~~Certain Relationships and Related Transactions, and Director Independence.~~

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information contained under the headings “Elect Directors,” “Corporate Governance” and “Related-Party Transactions” in the definitive proxy statement for our ~~2020~~2021 Annual Meeting of Stockholders is incorporated herein by reference.

~~Item 14.~~

~~Principal Accounting Fees and Services.~~

Item 14. Principal Accounting Fees and Services.

The information contained under the heading “Audit and Other Fees” in the definitive proxy statement for our ~~2020~~2021 Annual Meeting of Stockholders is incorporated herein by reference.

120

Table of Contents

PART IV

~~Item 15.~~

~~Exhibits, Financial Statement Schedules.~~

Item 15. Exhibits and Financial Statement Schedules.

1.Financial Statements

~~Financial Statements~~

See Index to Consolidated Financial Statements ~~set forth~~and Financial Statement Schedules located on page 54 of this report.

Financial Statement Schedules

~~Financial Statement Schedules~~

See Schedule II located on page 2.

122 of this report.

3.Exhibits

~~Exhibits~~

See Exhibit Index ~~beginning~~ located on page ~~2 hereof.~~

123 of this report.

~~Item 16.~~

~~Form 10-K Summary.~~

Item 16. Form 10-K Summary.

Not applicable.

121

Table of Contents

CBRE GROUP, INC.

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

(Dollars in thousands)

Allowance for
Doubtful Accounts

Balance, December 31, 2016

$
39,469

Charges to expense

8,044

Write-offs, payments and other

(724
)
Balance, December 31, 2017

46,789

Charges to expense

19,760

Write-offs, payments and other

(6,201
)
Balance, December 31, 2018

60,348

Charges to expense

20,373

Write-offs, payments and other

(7,996
)
Balance, December 31, 2019

$
72,725

~~EXHIBIT INDEX~~

Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
SEC File No.
Exhibit
Filing Date
Filed Herewith

2.1
Share Sale Agreement, dated November 12, 2013, by and among William Investments Limited, the individual vendors named therein, CBRE Holdings Limited, CBRE UK Acquisition Company Limited and CBRE Group, Inc.
8-K
001-32205
1.01
11/13/2013

2.2
Stock and Asset Purchase Agreement, dated as of March 31, 2015, by and between Johnson Controls, Inc. and CBRE, Inc.
8-K
001-32205
2.1
04/03/2015

3.1
Amended and Restated Certificate of Incorporation of CBRE Group, Inc.
8-K
001-32205
3.1
05/23/2018

3.2
Amended and Restated By-Laws of CBRE Group, Inc.
8-K
001-32205
3.2
05/23/2018

4.1
Form of Class A common stock certificate of CBRE Group, Inc.
10-Q
001-32205
4.1
08/09/2017

4.2(a)
Indenture, dated as of March 14, 2013, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee
10-Q
001-32205
4.4(a)
05/10/2013

4.2(b)
Second Supplemental Indenture, dated as of September 26, 2014, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the 5.25% Senior Notes due 2025, including the Form of 5.25% Senior Notes due 2025
8-K
001-32205
4.1
09/26/2014

4.2(c)
Third Supplemental Indenture, dated as of December 12, 2014, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the additional issuance of 5.25% Senior Notes due 2025
8-K
001-32205
4.1
12/12/2014

4.2(d)
Form of Supplemental Indenture among certain subsidiary guarantors of CBRE Services, Inc., CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the 5.25% Senior Notes due 2025
S-3ASR
333-201126
4.3(h)
12/19/2014

Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
SEC File No.
Exhibit
Filing Date
Filed Herewith
4.2(e)
Fourth Supplemental Indenture, dated as of August 13, 2015, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the issuance of 4.875% Senior Notes due 2026, including the Form of 4.875% Senior Notes due 2026
8-K
001-32205
4.2
08/13/2015

4.2(f)
Fifth Supplemental Indenture, dated as of September 25, 2015, between CBRE GWS LLC, CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 5.00% Senior Notes due 2023, the 5.25% Senior Notes due 2025 and the 4.875% Senior Notes due 2026
8-K
001-32205
4.1
09/25/2015

4.2(g)
Sixth Supplemental Indenture, dated as of January 28, 2020, among CBRE Holdings, LLC, CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 5.25% Senior Notes due 2025 and the 4.875% Senior Notes due 2026

X
4.3
Description of Securities

X
10.1
Credit Agreement, dated as of October  31, 2017, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent
8-K
001-32205
10.1
11/01/2017

10.2
Borrowing Subsidiary Agreement, dated as of December 20, 2018, among CBRE Group, Inc., CBRE Services, Inc., CBRE Global Acquisition Company and Credit Suisse AG, Cayman Islands Branch, as administrative agent
10-K
001-32205
10.2
03/01/2019

10.3
Incremental Term Loan Assumption Agreement, dated as of December  20, 2018, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent
8-K
001-32205
10.1
12/21/2018

10.4
Incremental Term Loan Assumption Agreement, dated as of March 4, 2019 among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent
8-K
001-32205
10.1
03/05/2019

Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
SEC File No.
Exhibit
Filing Date
Filed Herewith
10.5
Guarantee Agreement, dated as of October  31, 2017, among CBRE Group, Inc., CBRE Services, Inc., the subsidiary guarantors party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent
8-K
001-32205
10.2
11/01/2017

10.6
Supplement No. 1, dated December 20, 2018,  to the Guarantee Agreement, among CBRE Group, Inc., CBRE Services, Inc., the subsidiary guarantors party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent
10-K
001-32205
10.5
03/01/2019

10.7
CBRE Group, Inc. Executive Bonus Plan +

X
10.8
CBRE Group, Inc. Executive Incentive Plan +
8-K
001-32205
10.1
05/21/2015

10.9
Form of Indemnification Agreement for Directors and Officers +
8-K
001-32205
10.1
12/08/2009

10.10
Form of Indemnification Agreement for Directors and Officers +
10-Q
001-32205
10.3
05/10/2016

10.11
CBRE Group, Inc. 2012 Equity Incentive Plan +
S-8
333-181235
99.1
05/08/2012

10.12
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2012 Equity Incentive Plan (Performance Vest) +
8-K
001-32205
10.1
08/20/2013

10.13
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2012 Equity Incentive Plan  (Time Vest) +
8-K
001-32205
10.2
08/20/2013

10.14
CBRE Group, Inc. 2017 Equity Incentive Plan +
S-8
333-218113
99.1
05/19/2017

10.15

Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Time Vest) +
8-K
001-32205
10.2
03/5/2019

10.16

Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Performance Vest) +
8-K
001-32205
10.3
03/5/2019

10.17
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Groch Time Vest) +
8-K
001-32205
10.4
03/5/2019

Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
SEC File No.
Exhibit
Filing Date
Filed Herewith
10.18
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Groch Performance Vest) +
8-K
001-32205
10.5
03/5/2019

10.19

Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Non-Employee Director) +
S-8
333-218113
99.4
05/19/2017

10.20
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Time Vesting RSU) +
10-K
001-32205
10.27
03/1/2018

10.21
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (TSR Performance RSU) +
10-K
001-32205
10.28
03/1/2018

10.22
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (EPS Performance RSU) +
10-K
001-32205
10.29
03/1/2018

10.23
CBRE Group, Inc. 2019 Equity Incentive Plan +
S-8 POS
333-231572
99.1
05/29/2019

10.24
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Time Vest) +

X
10.25
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Performance Vest) +
10-Q
001-32205
10.4
08/09/2019

10.26
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Groch Time Vest) +

X
10.27
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Groch Performance Vest) +
10-Q
001-32205
10.6
08/09/2019

10.28
Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Non-Employee Director) +
10-Q
001-32205
10.7
08/09/2019

10.29
CBRE Deferred Compensation Plan, effective January 1, 2019 +
10-K
001-32205
10.22
03/1/2019

10.30
CBRE Adoption Agreement +
10-K
001-32205
10.23
03/1/2019

10.31
CBRE Group, Inc. Change in Control and Severance Plan for Senior Management, including form of Designation Letter +
8-K
001-32205
10.1
03/27/2015

Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
SEC File No.
Exhibit
Filing Date
Filed Herewith
10.32
Form of Restricted Covenants Agreement
10-K
001-32205
10.33
03/1/2018

10.33
Letter Agreement dated as of January 4, 2019 by and between CBRE, Inc. and James R. Groch +
10-Q
001-32205
10.1
05/10/2019

10.34
Letter Agreement dated as of April 4, 2019 by and between CBRE, Inc. and Leah C. Stearns +
10-Q
001-32205
10.2
05/10/2019

21
Subsidiaries of CBRE Group, Inc.

X
23.1
Consent of Independent Registered Public Accounting Firm

X
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

X
32
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

X
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

X
101.SCH
Inline XBRL Taxonomy Extension Schema Document

X
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document

X
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document

X
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document

X
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document

X
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

X

+	~~Denotes a management contract or compensatory arrangement~~
		Allowance for Doubtful Accounts
Balance, December 31, 2017		$	46,789
Additions: Charges to expense		19,760
Deductions: Write-offs, payments and other		6,201
Balance, December 31, 2018		60,348
Additions: Charges to expense		20,373
Deductions: Write-offs, payments and other		7,996
Balance, December 31, 2019		72,725
Additions: Charges to expense		47,240
Deductions: Write-offs, payments and other		24,432
Balance, December 31, 2020		$	95,533

122

Table of Contents

EXHIBIT INDEX

Incorporated by Reference

Exhibit
No.

Exhibit Description

Form

SEC File No.

Exhibit

Filing Date

Filed
Herewith

2.1

Share Sale Agreement, dated November 12, 2013, by and among William Investments Limited, the individual vendors named therein, CBRE Holdings Limited, CBRE UK Acquisition Company Limited and CBRE Group, Inc.

8-K

001-32205

1.01

11/13/2013

2.2

Stock and Asset Purchase Agreement, dated as of March 31, 2015, by and between Johnson Controls, Inc. and CBRE, Inc.

8-K

001-32205

2.1

04/03/2015

3.1

Amended and Restated Certificate of Incorporation of CBRE Group, Inc.

8-K

001-32205

3.1

05/23/2018

3.2

Amended and Restated By-Laws of CBRE Group, Inc.

8-K

001-32205

3.1

03/27/2020

4.1

Form of Class A common stock certificate of CBRE Group, Inc.

10-Q

001-32205

4.1

08/09/2017

4.2(a)

Indenture, dated as of March 14, 2013, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee

10-Q

001-32205

4.4(a)

05/10/2013

4.2(b)

Second Supplemental Indenture, dated as of September 26, 2014, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the 5.25% Senior Notes due 2025, including the Form of 5.25% Senior Notes due 2025

8-K

001-32205

4.1

09/26/2014

4.2(c)

Third Supplemental Indenture, dated as of December 12, 2014, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the additional issuance of 5.25% Senior Notes due 2025

8-K

001-32205

4.1

12/12/2014

4.2(d)

Fourth Supplemental Indenture, dated as of August 13, 2015, between CBRE Services, Inc., CBRE Group, Inc., certain subsidiaries of CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, for the issuance of 4.875% Senior Notes due 2026, including the Form of 4.875% Senior Notes due 2026

8-K

001-32205

4.2

08/13/2015

4.2(e)

Fifth Supplemental Indenture, dated as of September 25, 2015, between CBRE GWS LLC, CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 5.00% Senior Notes due 2023, the 5.25% Senior Notes due 2025 and the 4.875% Senior Notes due 2026

8-K

001-32205

4.1

09/25/2015

4.2(f)

Sixth Supplemental Indenture, dated as of January 28, 2020, among CBRE Holdings, LLC, CBRE Services, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 5.25% Senior Notes due 2025 and the 4.875% Senior Notes due 2026

10-K

001-32205

4.2(g)

03/02/2020

4.3

Description of Securities

10-K

001-32205

4.3

03/02/2020

123

Table of Contents


		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date	Filed Herewith
10.1	Credit Agreement, dated as of October 31, 2017, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent	8-K	001-32205	10.1	11/01/2017

10.2	Borrowing Subsidiary Agreement, dated as of December 20, 2018, among CBRE Group, Inc., CBRE Services, Inc., CBRE Global Acquisition Company and Credit Suisse AG, Cayman Islands Branch, as administrative agent	10-K	001-32205	10.2	03/01/2019

10.3	Incremental Term Loan Assumption Agreement, dated as of Decembe r 20, 2018, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent	8-K	001-32205	10.1	12/21/2018

10.4	Incremental Term Loan Assumption Agreement, dated as of March 4, 2019 among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent	8-K	001-32205	10.1	03/05/2019

10.5	Guarantee Agreement, dated as of October 31, 2017, among CBRE Group, Inc., CBRE Services, Inc., the subsidiary guarantors party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent	8-K	001-32205	10.2	11/01/2017

10.6	Supplement No. 1, dated December 20, 2018, to the Guarantee Agreement, among CBRE Group, Inc., CBRE Services, Inc., the subsidiary guarantors party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent	10-K	001-32205	10.5	03/01/2019

10.7	CBRE Group, Inc. Executive Bonus Plan +	10-K	001-32205	10.7	03/02/2020

10.8	Form of Indemnification Agreement for Directors and Officers +	8-K	001-32205	10.1	12/08/2009

10.9	Form of Indemnification Agreement for Directors and Officers +	10-Q	001-32205	10.3	05/10/2016

10.10	CBRE Group, Inc. 2012 Equity Incentive Plan +	S-8	333-181235	99.1	05/08/2012

10.11	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2012 Equity Incentive Plan (Performance Vest) +	8-K	001-32205	10.1	08/20/2013

10.12	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2012 Equity Incentive Plan (Time Vest) +	8-K	001-32205	10.2	08/20/2013

10.13	CBRE Group, Inc. 2017 Equity Incentive Plan +	S-8	333-218113	99.1	05/19/2017

10.14	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Time Vest) +	8-K	001-32205	10.2	03/05/2019

10.15	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Performance Vest) +	8-K	001-32205	10.3	03/05/2019

10.16	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Groch Time Vest) +	8-K	001-32205	10.4	03/05/2019

124

Table of Contents


		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date	Filed Herewith

10.17	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Groch Performance Vest) +	8-K	001-32205	10.5	03/05/2019
10.18	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Non-Employee Director) +	S-8	333-218113	99.4	05/19/2017

10.19	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (Time Vesting RSU) +	10-K	001-32205	10.27	03/01/2018

10.20	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (TSR Performance RSU) +	10-K	001-32205	10.28	03/01/2018

10.21	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2017 Equity Incentive Plan (EPS Performance RSU) +	10-K	001-32205	10.29	03/01/2018

10.22	CBRE Group, Inc. 2019 Equity Incentive Plan +	S-8 POS	333-231572	99.1	05/29/2019

10.23	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Time Vest) +	10-K	001-32205	10.24	03/02/2020

10.24	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Performance Vest) +	10-Q	001-32205	10.4	08/09/2019

10.25	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Groch Time Vest) +	10-K	001-32205	10.26	03/02/2020

10.26	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Groch Performance Vest) +	10-Q	001-32205	10.6	08/09/2019

10.27	Form of Grant Notice and Restricted Stock Unit Agreement for the CBRE Group, Inc. 2019 Equity Incentive Plan (Non-Employee Director) +	10-Q	001-32205	10.7	08/09/2019

10.28	CBRE Deferred Compensation Plan, effective January 1, 2019 +	10-K	001-32205	10.22	03/01/2019

10.29	CBRE Adoption Agreement +	10-K	001-32205	10.23	03/01/2019

10.30	CBRE Group, Inc. Amended and Restated Change in Control and Severance Plan for Senior Management, including form of Designation Letter +	10-Q	001-32205	10.1	10/29/2020

10.31	Form of Restricted Covenants Agreement +	10-K	001-32205	10.33	03/01/2018

10.32	Letter Agreement dated as of January 4, 2019 by and between CBRE, Inc. and James R. Groch +	10-Q	001-32205	10.1	05/10/2019

10.33	Employment and Transition Agreement dated as of April 21, 2020 by and between CBRE, Inc. and James R. Groch +	10-Q	001-32205	10.1	05/07/2020

10.34	Letter Agreement dated as of April 4, 2019 by and between CBRE, Inc. and Leah C. Stearns +	10-Q	001-32205	10.2	05/10/2019

125

Table of Contents

Incorporated by Reference

Exhibit
No.

Exhibit Description

Form

SEC File No.

Exhibit

Filing Date

Filed
Herewith

Subsidiaries of CBRE Group, Inc.

22.1

Subsidiary Guarantors of CBRE Group, Inc.’s Registered Debt

23.1

Consent of Independent Registered Public Accounting Firm

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_______________

+ Denotes a management contract or compensatory arrangement

126

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			CBRE GROUP, INC.
			Registrant
		~~By:~~
Date: February 24, 2021			/s/ ROBERT E. SULENTIC
			Robert E. Sulentic President and Chief Executive Officer

	~~Date: March 2, 2020~~

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

~~Signature~~

~~Title~~

~~Date~~

Signature

Title

Date

~~/s/ DARA A. BAZZANO~~

~~Chief Accounting Officer~~

~~March 2, 2020~~

~~Dara A. Bazzano~~

~~(Principal Accounting Officer)~~

/s/ BRANDON B. BOZE

Chair of the Board

~~March 2, 2020~~

February 24, 2021

Brandon B. Boze

/s/ BETH F. COBERT

Director

~~March 2, 2020~~

February 24, 2021

Beth F. Cobert

/s/ CURTIS F. FEENY

Director

~~March 2, 2020~~

February 24, 2021

Curtis F. Feeny

/s/ REGINALD H. GILYARD

Director

~~March 2, 2020~~

February 24, 2021

Reginald H. Gilyard

/s/ SHIRA D. GOODMAN

Director

~~March 2, 2020~~

February 24, 2021

Shira D. Goodman

/s/ CHRISTOPHER T. JENNY

Director

~~March 2, 2020~~

February 24, 2021

Christopher T. Jenny

/s/ GERARDO I. LOPEZ

Director

~~March 2, 2020~~

February 24, 2021

Gerardo I. Lopez

/s/ OSCAR MUNOZ

Director

February 24, 2021

Oscar Munoz

/s/ LEAH C. STEARNS

Chief Financial Officer

~~March 2, 2020~~

February 24, 2021

Leah C. Stearns

(Principal Financial and Accounting Officer)

/s/ ROBERT E. SULENTIC

Director and President and

Chief Executive Officer

~~March 2, 2020~~

February 24, 2021

Robert E. Sulentic

(Principal Executive Officer)

/s/ LAURA D. TYSON

Director

~~March 2, 2020~~

February 24, 2021

Laura D. Tyson

/s/ RAY WIRTA

Director

~~March 2, 2020~~

February 24, 2021

Ray Wirta

/s/ SANJIV YAJNIK

Director

~~March 2, 2020~~

February 24, 2021

Sanjiv Yajnik

~~128~~

127

~~Delaware~~	~~94-3391143~~
Delaware		94-3391143
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)
2100 McKinney Avenue, Suite 1250
~~400 South Hope Street, 25th Floor~~ ~~Los Angeles, California~~ Dallas, Texas		~~90071~~ 75201
(Address of principal executive offices)		(Zip Code)

~~(213) 613-3333~~
~~(Registrant's telephone number, including area code)~~


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	“CBRE”	New York Stock Exchange

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

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

	~~Page~~
			~~PART I~~Page
PART I
~~Item 1.~~				~~Business~~	1
Item ~~1A.~~ 1.		~~Risk Factors~~Business	7 1
Item 1A.		Risk Factors	9
Item 1B.		Unresolved Staff Comments	22 26
Item 2.		Properties	23 26
Item 3.		Legal Proceedings	23 26
Item 4.		Mine Safety Disclosures	23 26

PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24 27
Item 6.		Selected Financial Data	27 30
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	29 33
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk	49 53
Item 8.		Financial Statements and Supplementary Data	51 54
Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~118~~ 116
Item 9A.		Controls and Procedures	~~118~~ 116
Item 9B.		Other Information	~~120~~ 119

PART III

Item 10.		Directors, Executive Officers and Corporate Governance	~~121~~ 120
Item 11.		Executive Compensation	~~121~~ 120
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~121~~ 120
Item 13.		Certain Relationships and Related Transactions, and Director Independence	~~121~~ 120
Item 14.		Principal Accounting Fees and Services	~~121~~ 120

PART IV

Item 15.		Exhibits and Financial Statement Schedules	121
Item 16.		Form 10-K Summary	121

Schedule II – Valuation and Qualifying Accounts			122

SIGNATURES			~~128~~
	127

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2019 - October 31, 2019		1,003,485	$	50.85		1,003,485
November 1, 2019 - November 30, 2019		—	$	—		—
December 1, 2019 - December 31, 2019		—	$	—		—
Total		1,003,485	$	50.85		1,003,485	$	400,000

	12/31/14		12/15		12/16		12/17		12/18		12/19
CBRE Group, Inc.		100.00		100.96		91.94		126.45		116.91		178.95
S&P 500		100.00		101.38		113.51		138.29		132.23		173.86
2018 Peer Group		100.00		120.09		97.31		133.11		105.56		137.39
2019 Peer Group		100.00		111.30		109.75		140.04		110.26		138.59

	CBRE Group, Inc. Shareholders
										Accumulated other comprehensive loss
	Shares		Class A common stock		Additional paid-in capital			Accumulated earnings		Minimum pension liability			Foreign currency translation and other			Non- controlling interests			Total
Balance at December 31, 2016		337,279,449	$	3,373	$	1,145,226		$	2,745,897	$	(165,670	)	$	(625,684	)	$	42,758		$	3,145,900
Net income		—		—		—			697,109		—			—			6,467			703,576
Pension liability adjustments, net of tax		—		—		—			—		12,701			—			—			12,701
Non-cash issuance of common stock related to acquisition		495,828		5		11,688			—		—			—			—			11,693
Restricted stock awards vesting		1,660,269		17		(17	)		—		—			—			—			—
Compensation expense for equity awards		—		—		93,087			—		—			—			—			93,087
Units repurchased for payment of taxes on equity awards		—		—		(29,549	)		—		—			—			—			(29,549	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax		—		—		—			—		—			4,964			—			4,964
Unrealized gains on interest rate swaps, net of tax		—		—		—			—		—			585			—			585
Unrealized holding gains on available for sale debt securities, net of tax		—		—		—			—		—			2,737			—			2,737
Foreign currency translation gain		—		—		—			—		—			217,589			412			218,001
Contributions from non-controlling interests		—		—		—			—		—			—			5,301			5,301
Distributions to non-controlling interests		—		—		—			—		—			—			(8,715	)		(8,715	)
Acquisition of non-controlling interests		—		—		—			—		—			—			12,671			12,671
Other		23,592		—		73			1		—			364			1,224			1,662
Balance at December 31, 2017		339,459,138		3,395		1,220,508			3,443,007		(152,969	)		(399,445	)		60,118			4,174,614
Net income		—		—		—			1,063,219		—			—			2,729			1,065,948
Adoption of Accounting Standards Update 2016-01, net of tax		—		—		—			3,964		—			(3,964	)		—			—
Pension liability adjustments, net of tax		—		—		—			—		1,315			—			—			1,315
Restricted stock awards vesting		1,424,462		14		(14	)		—		—			—			—			—
Compensation expense for equity awards		—		—		128,171			—		—			—			—			128,171
Reclassification of stock incentive plan award from an equity award to a liability award		—		—		(9,074	)		—		—			—			—			(9,074	)
Units repurchased for payment of taxes on equity awards		—		—		(29,386	)		—		—			—			—			(29,386	)

Beginning balance at December 31, 2018	$	1,342,468
Origination of mortgage loans		19,389,979
Gains (premiums on loan sales)		64,002
Proceeds from sale of mortgage loans:
Sale of mortgage loans		(19,741,058	)
Cash collections of premiums on loan sales		(64,002	)
Proceeds from sale of mortgage loans		(19,805,060	)
Net increase in mortgage servicing rights included in warehouse receivables		1,669
Ending balance at December 31, 2019	$	993,058

			December 31, 2019				December 31, 2018
Lender	Current Maturity	Pricing	Maximum Facility Size		Carrying Value		Maximum Facility Size		Carrying Value
JP Morgan Chase Bank, N.A. (JP Morgan) (1)	10/19/2020	daily one-month LIBOR plus 1.30%	$	985,000	$	267,075	$	985,000	$	871,680
JP Morgan (1)	10/19/2020	daily one-month LIBOR plus 2.75%		15,000		—		15,000		—
Capital One, N.A. (Capital One)	7/27/2020	daily one-month LIBOR plus 1.25%		200,000	$	39,538		325,000		120,195
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 1.35%, with a LIBOR floor of 0.35%		450,000		360,784		450,000		149,089
TD Bank, N.A. (TD Bank) (3)	6/30/2020	daily one-month LIBOR plus 1.15%		800,000		92,266		400,000		165,945
Bank of America, N.A. (BofA)	5/27/2020	daily one-month LIBOR plus 1.20%		350,000		189,465		—		—
BofA	5/27/2020	daily one-month LIBOR plus 1.15%		250,000		17,457		200,000		—
BofA	6/4/2019	daily one-month LIBOR plus 1.30%		—		—		225,000		21,852
MUFG Union Bank, N.A. (Union Bank) (4)	6/28/2020	daily one-month LIBOR plus 1.20%		350,000		10,590		—		—
			$	3,400,000	$	977,175	$	2,600,000	$	1,328,761

	As of December 31, 2019
	Fair Value Measured and Recorded Using
	Level 1		Level 2		Level 3		Total
Assets
Available for sale securities:
Debt securities:
U.S. treasury securities	$	6,998	$	—	$	—	$	6,998
Debt securities issued by U.S. federal agencies		—		10,639		—		10,639
Corporate debt securities		—		29,098		—		29,098
Asset-backed securities		—		5,152		—		5,152
Collateralized mortgage obligations		—		2,222		—		2,222
Total available for sale debt securities		6,998		47,111		—		54,109
Equity securities		51,399		—		—		51,399
Warehouse receivables		—		993,058		—		993,058
Total assets at fair value	$	58,397	$	1,040,169	$	—	$	1,098,566

	Operating Leases		Financing Leases
2020	$	175,958	$	35,532
2021		200,043		27,314
2022		178,314		19,264
2023		160,300		12,303
2024		148,681		4,628
Thereafter		569,360		—
Total remaining lease payments at December 31, 2019	$	1,432,656	$	99,041
Less: Interest		206,235		4,074
Present value of lease liabilities at December 31, 2019	$	1,226,421	$	94,967

2019	$	238,954
2020		219,351
2021		202,205
2022		172,267
2023		145,705
Thereafter		510,741
Total minimum payment required	$	1,489,223

	Year Ended December 31, 2018 (3)
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Topic 606 Revenue:
Global workplace solutions	$	—	$	12,365,362	$	—	$	12,365,362
Advisory leasing		3,080,117		—		—		3,080,117
Advisory sales		1,980,932						1,980,932
Property and advisory project management		2,057,433		—		—		2,057,433
Valuation		598,806		—		—		598,806
Commercial mortgage origination (1)		136,534		—		—		136,534
Loan servicing (2)		24,192		—		—		24,192
Investment management		—		—		434,405		434,405
Development services		—		—		100,319		100,319
Topic 606 Revenue		7,878,014		12,365,362		534,724		20,778,100
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination		402,814		—		—		402,814
Loan servicing		159,174		—		—		159,174
Total Out of Scope of Topic 606 Revenue		561,988		—		—		561,988
Total revenue	$	8,440,002	$	12,365,362	$	534,724	$	21,340,088

	Year Ended December 31, 2017 (3)
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Consolidated
Topic 606 Revenue:
Global workplace solutions	$	—	$	10,791,963	$	—	$	10,791,963
Advisory leasing		2,592,203		—		—		2,592,203
Advisory sales		1,869,872		—		—		1,869,872
Property and advisory project management		1,748,594		—		—		1,748,594
Valuation		556,008						556,008
Commercial mortgage origination (1)		117,009		—		—		117,009
Loan servicing (2)		19,759		—		—		19,759
Investment management		—		—		377,644		377,644
Development services		—		—		79,455		79,455
Topic 606 Revenue		6,903,445		10,791,963		457,099		18,152,507
Out of Scope of Topic 606 Revenue:
Commercial mortgage origination		338,590		—		—		338,590
Loan servicing		137,690		—		—		137,690
Total Out of Scope of Topic 606 Revenue		476,280		—		—		476,280
Total revenue	$	7,379,725	$	10,791,963	$	457,099	$	18,628,787

	As of December 31, 2019
	Parent		CBRE Services		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current Assets:
Cash and cash equivalents	$	7	$	13,453	$	254,992	$	703,329	$	—		$	971,781
Restricted cash		—		—		55,849		66,115		—			121,964
Receivables, net		—		16		1,627,598		2,839,060		—			4,466,674
Warehouse receivables (1)		—		—		303,559		689,499		—			993,058
Contract assets		—		—		286,225		41,787		—			328,012
Prepaid expenses		—		—		127,413		155,328		—			282,741
Income taxes receivable		—		—		91,398		2,517		—			93,915
Other current assets		—		—		70,554		205,765		—			276,319
Total Current Assets		7		13,469		2,817,588		4,703,400		—			7,534,464
Property and equipment, net		—		—		560,509		275,697		—			836,206
Goodwill		—		—		2,249,274		1,504,219		—			3,753,493
Other intangible assets, net		—		—		726,897		652,649		—			1,379,546
Operating lease assets		—		—		451,769		546,197		—			997,966
Investments in unconsolidated subsidiaries		—		—		273,532		153,179		—			426,711
Non-current contract assets		—		—		175,215		26,545		—			201,760
Real estate under development		—		—		—		185,508		—			185,508
Investments in consolidated subsidiaries		8,395,563		6,642,233		2,816,035		—		(17,853,831	)		—
Intercompany loan receivable		—		3,054,548		700,000		—		(3,754,548	)		—
Non-current income taxes receivable		—		—		113,194		25,942		—			139,136
Deferred tax assets, net		—		—		57,639		106,127		(89,902	)		73,864
Other assets, net		—		17,016		480,968		170,558		—			668,542
Total Assets	$	8,395,570	$	9,727,266	$	11,422,620	$	8,350,021	$	(21,698,281	)	$	16,197,196
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	—	$	17,790	$	947,817	$	1,470,477	$	—		$	2,436,084
Compensation and employee benefits payable		—		—		758,367		566,623		—			1,324,990
Accrued bonus and profit sharing		—		—		686,793		575,181		—			1,261,974
Operating lease liabilities		—		—		75,906		92,757		—			168,663
Contract liabilities		—		—		58,701		49,970		—			108,671
Income taxes payable		—		—		2,002		28,205		—			30,207
Short-term borrowings:
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) (1)		—		—		300,260		676,915		—			977,175
Other		—		—		—		4,534		—			4,534
Total short-term borrowings		—		—		300,260		681,449		—			981,709
Current maturities of long-term debt		—		—		18		1,796		—			1,814
Other current liabilities		—		—		46,121		76,218		—			122,339
Total Current Liabilities		—		17,790		2,875,985		3,542,676		—			6,436,451
Long-Term Debt, net:
Long-term debt, net		—		1,313,913		—		447,332		—			1,761,245
Intercompany loan payable		2,162,877		—		1,017,046		574,625		(3,754,548	)		—
Total Long-Term Debt, net		2,162,877		1,313,913		1,017,046		1,021,957		(3,754,548	)		1,761,245
Non-current operating lease liabilities		—		—		520,155		537,603		—			1,057,758
Non-current income taxes payable		—		—		93,647		—		—			93,647
Non-current tax liabilities		—		—		40,066		45,900		—			85,966
Deferred tax liabilities, net		—		—		—		124,495		(89,902	)		34,593
Other liabilities		—		—		233,488		220,936		—			454,424
Total Liabilities		2,162,877		1,331,703		4,780,387		5,493,567		(3,844,450	)		9,924,084
Commitments and contingencies		—		—		—		—		—			—
Equity:
CBRE Group, Inc. Stockholders’ Equity		6,232,693		8,395,563		6,642,233		2,816,035		(17,853,831	)		6,232,693
Non-controlling interests		—		—		—		40,419		—			40,419
Total Equity		6,232,693		8,395,563		6,642,233		2,856,454		(17,853,831	)		6,273,112
Total Liabilities and Equity	$	8,395,570	$	9,727,266	$	11,422,620	$	8,350,021	$	(21,698,281	)	$	16,197,196

	For the Year Ended December 31, 2019
	Parent			CBRE Services			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Revenue	$	—		$	—		$	13,550,005		$	10,344,086		$	—		$	23,894,091
Costs and expenses:
Cost of revenue		—			—			10,836,412			7,852,601			—			18,689,013
Operating, administrative and other		1,000			1,036			1,705,837			1,728,136			—			3,436,009
Depreciation and amortization		—			—			265,220			174,004			—			439,224
Intangible asset impairment		—			—			89,787			—			—			89,787
Total costs and expenses		1,000			1,036			12,897,256			9,754,741			—			22,654,033
Gain on disposition of real estate		—			—			19,432			385			—			19,817
Operating (loss) income		(1,000	)		(1,036	)		672,181			589,730			—			1,259,875
Equity income (loss) from unconsolidated subsidiaries		—			—			162,019			(1,094	)		—			160,925
Other income		—			—			7,842			21,065			—			28,907
Interest expense, net of interest income		—			(31,037	)		80,604			36,187			—			85,754
Write-off of financing costs on extinguished debt		—			2,608			—			—			—			2,608
Royalty and management service (income) expense		—			—			(92,728	)		92,728			—			—
Income from consolidated subsidiaries		1,283,103			1,262,674			284,038			—			(2,829,815	)		—
Income before (benefit of) provision for income taxes		1,282,103			1,290,067			1,138,204			480,786			(2,829,815	)		1,361,345
(Benefit of) provision for income taxes		(254	)		6,964			(124,470	)		187,655			—			69,895
Net income		1,282,357			1,283,103			1,262,674			293,131			(2,829,815	)		1,291,450
Less: Net income attributable to non-controlling interests		—			—			—			9,093			—			9,093
Net income attributable to CBRE Group, Inc.	$	1,282,357		$	1,283,103		$	1,262,674		$	284,038		$	(2,829,815	)	$	1,282,357

	For the Year Ended December 31, 2018
	Parent			CBRE Services			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Revenue	$	—		$	—		$	11,998,469		$	9,341,619		$	—		$	21,340,088
Costs and expenses:
Cost of revenue		—			—			9,513,947			6,935,265			—			16,449,212
Operating, administrative and other		24,523			1,156			1,715,150			1,624,944			—			3,365,773
Depreciation and amortization		—			—			271,378			180,610			—			451,988
Total costs and expenses		24,523			1,156			11,500,475			8,740,819			—			20,266,973
Gain on disposition of real estate		—			—			7,705			7,169			—			14,874
Operating (loss) income		(24,523	)		(1,156	)		505,699			607,969			—			1,087,989
Equity income from unconsolidated subsidiaries		—			—			323,080			1,584			—			324,664
Other income (loss)		—			1			103,657			(10,638	)		—			93,020
Interest expense, net of interest income		—			(32,031	)		329,083			(198,367	)		—			98,685
Write-off of financing costs on extinguished debt		—			27,982			—			—			—			27,982
Royalty and management service (income) expense		—			—			(61,626	)		61,626			—			—
Income from consolidated subsidiaries		1,081,643			1,079,469			578,320			—			(2,739,432	)		—
Income before (benefit of) provision for income taxes		1,057,120			1,082,363			1,243,299			735,656			(2,739,432	)		1,379,006
(Benefit of) provision for income taxes		(6,099	)		720			163,830			154,607			—			313,058
Net income		1,063,219			1,081,643			1,079,469			581,049			(2,739,432	)		1,065,948
Less: Net income attributable to non-controlling interests		—			—			—			2,729			—			2,729
Net income attributable to CBRE Group, Inc.	$	1,063,219		$	1,081,643		$	1,079,469		$	578,320		$	(2,739,432	)	$	1,063,219

	For the Year Ended December 31, 2017
	Parent			CBRE Services			Guarantor Subsidiaries		Nonguarantor Subsidiaries			Eliminations				Consolidated Total
Revenue	$	—		$	—		$	10,702,005	$	7,926,782		$	—			$	18,628,787
Costs and expenses:
Cost of revenue		—			—			8,517,114		5,787,985			—				14,305,099
Operating, administrative and other		5,661			1,972			1,437,641		1,413,446			—				2,858,720
Depreciation and amortization		—			—			239,863		166,251			—				406,114
Total costs and expenses		5,661			1,972			10,194,618		7,367,682			—				17,569,933
Gain on disposition of real estate		—			—			6,037		13,791			—				19,828
Operating (loss) income		(5,661	)		(1,972	)		513,424		572,891			—				1,078,682
Equity income from unconsolidated subsidiaries		—			—			206,655		3,552			—				210,207
Other income		—			1			22		9,382			—				9,405
Interest expense, net of interest income		—			(10,648	)		110,494		27,115			—				126,961
Royalty and management service expense (income)		—			—			66,191		(66,191	)		—				—
Income from consolidated subsidiaries		700,608			695,245			464,046		—			(1,859,899	)			—
Income before (benefit of) provision for income taxes		694,947			703,922			1,007,462		624,901			(1,859,899	)			1,171,333
(Benefit of) provision for income taxes		(2,162	)		3,314			312,217		154,388			—				467,757
Net income		697,109			700,608			695,245		470,513			(1,859,899	)			703,576
Less: Net income attributable to non-controlling interests		—			—			—		6,467			—				6,467
Net income attributable to CBRE Group, Inc.	$	697,109		$	700,608		$	695,245	$	464,046		$	(1,859,899	)	��	$	697,109

	Three Months Ended December 31, 2019		Three Months Ended September 30, 2019		Three Months Ended June 30, 2019		Three Months Ended March 31, 2019
	(Dollars in thousands, except share data)
Revenue	$	7,119,407	$	5,925,101	$	5,714,073	$	5,135,510
Operating income	$	513,841	$	316,630	$	284,417	$	144,987
Net income attributable to CBRE Group, Inc.	$	637,618	$	256,599	$	223,731	$	164,409
Basic income per share	$	1.90	$	0.76	$	0.67	$	0.49
Weighted average shares outstanding for basic income per share		334,745,003		336,203,747		336,222,471		336,020,431
Diluted income per share	$	1.87	$	0.75	$	0.66	$	0.48
Weighted average shares outstanding for diluted income per share		340,333,005		341,100,182		340,508,931		340,158,399

	Three Months Ended December 31, 2018		Three Months Ended September 30, 2018		Three Months Ended June 30, 2018		Three Months Ended March 31, 2018
	(Dollars in thousands, except share data)
Revenue	$	6,293,748	$	5,260,954	$	5,111,434	$	4,673,952
Operating income	$	459,347	$	189,717	$	225,316	$	213,609
Net income attributable to CBRE Group, Inc.	$	393,795	$	290,469	$	228,667	$	150,288
Basic income per share	$	1.16	$	0.86	$	0.67	$	0.44
Weighted average shares outstanding for basic income per share		339,823,278		339,477,316		339,081,556		338,890,098
Diluted income per share	$	1.15	$	0.85	$	0.67	$	0.44
Weighted average shares outstanding for diluted income per share		342,683,720		343,733,947		343,471,513		342,589,810

	Allowance for Doubtful Accounts
Balance, December 31, 2016	$	39,469
Charges to expense		8,044
Write-offs, payments and other		(724	)
Balance, December 31, 2017		46,789
Charges to expense		19,760
Write-offs, payments and other		(6,201	)
Balance, December 31, 2018		60,348
Charges to expense		20,373
Write-offs, payments and other		(7,996	)
Balance, December 31, 2019	$	72,725