CBRE GROUP, INC. (CBRE) FY 2024 MD&A

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

The following discussion provides an analysis of the company’s financial condition and results of operations from management’s perspective and should be read in conjunction with the consolidated financial statements and related notes included in this Annual Report. Discussion regarding our financial condition and results of operations for the year ended December 31, 2023 and comparisons between the years ended December 31, 2023 and 2022 are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s 2023 Annual Report filed with the SEC on February 20, 2024.

Overview

CBRE is the world’s largest commercial real estate services and investment firm (based on 2024 revenue). In 2024, we served clients through three business segments – Advisory Services, Global Workplace Solutions (GWS) and Real Estate Investments (REI) – which are described in “Item 1. Business” in this Annual Report. We generate revenue from both resilient sources (large multi-year portfolio and per-project contracts) and non-recurring sources, including commissions generated by transactions. Our revenue mix has become more weighted towards resilient revenue sources, particularly occupier outsourcing, and our dependence on cyclical property sales and lease transaction revenue has declined. Non-recurring transactional revenue and earnings within our Advisory Services segment (notably property sales and leasing) have historically been highest in the year’s fourth quarter due to a focus on completing transactions prior to year-end, but such seasonality has decreased as transactions have comprised a smaller proportion of our total revenue.

Business Environment

The operating environment for commercial real estate improved in 2024, particularly in the second half of the year. This was most prominently evident in real estate leasing markets. A healthy economic outlook and improved return-to-office momentum made companies increasingly confident to move forward with office leasing plans. Demand was particularly strong for the highest-quality space and expanded from primary to secondary markets as the year progressed. Improved capital availability and lower borrowing costs – along with the perception that interest rates would fall further – buoyed investor sentiment and led to increased real estate sales and financing activity in the second half of 2024. These factors also improved the operating backdrop for development and investment asset sales late in the year. Meanwhile, outsourcing services continued to gain favor with major corporations and other large occupiers of space, boosting demand for facilities and project management services.

Results of Operations

The following presents highlights of CBRE’s performance for the year ended December 31, 2024 (percentages represent comparison to 2023 results):

An improved operating environment supported strong growth for CBRE in 2024. Overall, net revenue increased 14.2%. This included 14.1% net revenue growth in our resilient businesses(1) (including facilities management, project management, property management, loan servicing, recurring investment management fees and valuations), and 14.3% net revenue growth in our transactional businesses(1) (property sales, leasing, mortgage origination, carried interest and incentive fees in our investment management business, and development fees).

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(1)See Non-GAAP Financial Measures section in Item 7 of this Annual Report.

We allocated significant capital last year on projects designed to enhance our capabilities, augment our growth profile and expand our total addressable market. Our capital deployment totaled approximately $1.8 billion, and included $1.1 billion in M&A and other strategic investments, including the acquisition of J&J Worldwide Services, a provider of outsourcing

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services to the U.S. federal government and Direct Line Global, which provides technical data center management. In addition, we deployed $644 million in share buybacks (repurchasing 5,110,624 shares).

The following table sets forth items derived from our consolidated statements of operations for the years ended December 31, 2024 and 2023 (dollars in millions):

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

We reported consolidated net income of $968 million for the year ended December 31, 2024 on revenue of $35.8 billion as compared to consolidated net income of $986 million on revenue of $31.9 billion for the year ended December 31, 2023.

The revenue increase reflected growth in leasing activity, particularly for office and retail space, commercial mortgage origination, loan servicing, property management, and continued strong growth in the GWS segment, which benefited from strong new business activity, contract expansions, and acquisitions. We began to see an increase in property sales in our Advisory Services segment in the second half of 2024. Revenue increased in the REI segment, driven by higher incentive and development fees.

Foreign currency translation had minimal net impact on revenue during the year ended December 31, 2024. Foreign currency translation strength in the British pound sterling was offset by weakness in the Japanese yen.

Cost of revenue increased 12.2%, during the year ended December 31, 2024 as compared to the same period in 2023 due to revenue growth, consisting of higher pass-through costs, higher compensation, and higher indirect reimbursed costs. Foreign currency translation had a 0.1% positive impact on total cost of revenue. Cost of revenue increased slightly to 80.6% of total revenue from 80.4% driven by higher costs to support growth in revenues.

Operating, administrative and other expenses increased 9.8% as compared to the same period last year. The increase was driven by an increase in restructuring and indirect tax expenses this year compared to 2023 as the cost savings initiatives in the GWS segment were largely completed. Foreign currency translation had a 0.1% positive impact on total operating expenses during the year ended December 31, 2024. Operating expenses as a percentage of revenue decreased to 14.0% from 14.3%, as operating expenses grew slower than revenue.

Depreciation and amortization expense increased by 8.4% during the year ended December 31, 2024, as compared to the same period in 2023, reflecting higher depreciation and amortization expense related to assets acquired from recent acquisitions such as J&J Worldwide Services.

Gain on disposition of real estate increased by $115 million in 2024, driven by the monetization of real estate development assets in the REI segment.

We incurred an equity loss of $19 million in 2024 compared to equity income of $248 million in the same period in 2023. This was mainly due to an unusually large development asset disposition in the first-quarter 2023 that did not recur in 2024. In addition, we recorded higher unrealized net losses related to our non-core strategic equity investments, including Altus Power, Inc. (Altus), during the year ended December 31, 2024. These losses were partially offset by equity income recognized in relation to investments in TCC real estate development projects.

Other income decreased to $39 million from $61 million, driven primarily by a one-time gain of approximately $34 million recognized in 2023 associated with the remeasurement of an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired. This decrease was partially offset by positive fair value adjustments on certain financial instruments this year as compared to the same period last year.

Interest expense, net of interest income, increased 44.3% in 2024 as compared to the same period 2023. This increase was primarily due to the issuance of new debt during the first quarter of 2024, the impact of higher interest rates, and increased borrowings on the revolving credit and commercial paper facilities.

Our provision for income taxes on a consolidated basis was $182 million for the year ended December 31, 2024 as compared to $250 million in 2023. Our effective tax rate decreased to 15.0% in 2024 from 19.5% in 2023. The decrease is primarily related to the reversal of unrecognized tax positions.

The Organization for Economic Co-operation & Development (OECD) Pillar Two Model Rules established a minimum global effective tax rate of 15% on country-by-country profits of large multinational companies. European Union member states along with many other countries adopted or expect to adopt the OECD Pillar Two Model effective January 1, 2024 or thereafter. The OECD and other countries continue to publish guidelines and legislation which include transition and safe harbor rules. We continue to monitor new legislative changes and assess the global impact of the Pillar Two Model Rules. The impact of Pillar Two top-up taxes was insignificant for 2024.

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Segment Operations

As of December 31, 2024, our operations were organized around, and we publicly report financial results for, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions; and (3) Real Estate Investments. We also have a Corporate and Other segment. For additional information on our segments, see Note 19 – Segments of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

In early January 2025, we combined our project management business with our Turner & Townsend majority-owned subsidiary and will publicly report financial results for a fourth business segment, Project Management, beginning in the first quarter of 2025. In addition, we acquired full ownership of Industrious, a provider of premium flexible workplace solutions in January 2025, and will establish a new business segment, Building Operations & Experience, in 2025, comprised of enterprise and local facilities management, property management and flexible workplace solutions. Our four business segments beginning in 2025 will be (1) Advisory Services; (2) Building Operations & Experience; (3) Project Management; and (4) Real Estate Investments.

Advisory Services

The following table summarizes our results of operations for our Advisory Services operating segment for the years ended December 31, 2024 and 2023 (dollars in millions):

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenue increased 13.0% in 2024 as compared to the same period in 2023. Global leasing revenue rose 12.2% driven by the Americas which grew 13.3%, including 15.8% in the United States, APAC which grew 10.6% and the United Kingdom, which grew 10.5%. Property sales revenue was up 10.1%, reflecting an increase in property sales in the second half of 2024. The company’s loan origination business benefited from higher loan fees, partially offset by a decrease in interest earnings on escrow balances. Property management also grew solidly, up 15.4%, fueled by growth across regions and in the U.S. and continued growth from the Brookfield portfolio. Foreign currency translation had a 0.2% negative impact on total revenue in 2024, primarily driven by weakness in the Japanese yen and Brazilian real, partially offset by strength in the British pound sterling.

Cost of revenue increased 13.8%, primarily reflecting business growth, higher reimbursable expenses in property management, higher professional compensation and higher commission expense. Foreign currency translation had a 0.1% positive impact on cost of revenue. Cost of revenue slightly increased to 61.0% of total revenue from 60.6% for the same period in 2023 primarily due to higher commissions, driven by revenue growth.

Operating, administrative and other expenses slightly increased by 1.1%, in 2024 as compared to the same period in 2023, driven by higher variable employee compensation costs. The increase was partially offset by lower restructuring expenses as the Advisory Services segment recorded significant restructuring expenses in the first half of 2023, as the segment went through cost reduction initiatives that did not recur this year. Foreign currency translation had a 0.2% positive impact on total operating expenses.

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 mortgage servicing rights (MSRs) on the date the loans are sold. Upon origination 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). Our MSRs are initially recorded at fair value. Subsequent to the initial recording, MSRs are amortized in proportion to and over the period that the servicing income is expected to be received based on projections and timing of estimated future net cash flows and assessed for impairment based on the fair value each reporting period.

For the year ended December 31, 2024, MSRs contributed $123 million to operating income, offset by $138 million of amortization of related intangible assets. For the year ended December 31, 2023, MSRs contributed $84 million to operating income, offset by $144 million of amortization of related intangible assets. The increase was associated with higher origination activity given an increase in financing activities in the second half of 2024.

Other income was $5 million in 2024 versus $46 million in 2023. In 2023, we recognized a one-time gain of approximately $34 million associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired.

Depreciation and amortization expense decreased 5.9% primarily due to lower amortization of mortgage servicing rights as described above and due to accelerated depreciation expense recorded in the first half of 2023, as part of cost savings initiatives that did not recur this year.

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Global Workplace Solutions

The following table summarizes our results of operations for our Global Workplace Solutions (GWS) operating segment for the years ended December 31, 2024 and 2023 (dollars in millions):

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenue increased 11.7% in 2024 as compared to 2023, reflecting a double-digit increase in facilities management, led by the Enterprise and Local business, and growth in project management due to continued strong growth from Turner & Townsend. Foreign currency translation had minimal net impact on total revenue during the year ended December 31, 2024. Foreign currency translation weakness in the Japanese yen was partially offset by strength in the British pound sterling.

Cost of revenue increased 11.6%, driven by higher pass-through costs, higher indirect reimbursed costs, and increased professional compensation to support the growth in the business. Foreign currency translation had a 0.1% positive impact on total cost of revenue. Cost of revenue was 90.3% of total revenue, a slight decrease from 90.4% in 2023.

Operating, administrative and other expenses increased 6.8%, primarily due to restructuring charges incurred related to cost savings initiatives and the inclusion of J&J Worldwide Services’ operating results since acquisition at the end of February 2024. Foreign currency translation had minimal net impact on total operating expenses in 2024.

Depreciation and amortization expense increased 26.7%, primarily due to increased amortization expense on intangibles related to the J&J Worldwide Services and certain other in-fill acquisitions.

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Real Estate Investments

The following table summarizes our results of operations for our Real Estate Investments (REI) operating segment for the years ended December 31, 2024 and 2023 (dollars in millions):

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenue increased 9.0% in 2024 as compared to 2023. This reflected an increase in incentive fees in our investment management business and higher construction management fees in our development services business. Foreign currency translation had a 0.9% positive impact on total revenue during the year ended December 31, 2024, primarily driven by strength in British pound sterling.

Cost of revenue increased 20.4% in 2024 as compared to the same period in 2023 due to higher construction and consulting costs incurred on our real estate development projects. Foreign currency translation had a 3.2% negative impact on total cost of revenue during the year ended December 31, 2024.

Operating, administrative and other expenses increased 9.9%, primarily due to an increase in incentive compensation in our development services and investment management line of business consistent with higher revenue growth, partially offset by lower bonus expense to align with overall segment performance, and a decrease in charges associated with the company’s efficiency and cost-reduction initiatives. Foreign currency translation had a 0.6% negative impact on total operating expenses in 2024.

Gain on disposition of real estate increased by $115 million compared to the same period in 2023 due primarily to gains recognized upon monetization of real estate development projects.

We recorded equity income from unconsolidated subsidiaries of approximately $117 million in 2024 as compared to equity income of $216 million in the same period in 2023, which included an unusually large gain on a development portfolio asset sale.

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A roll forward of our assets under management (AUM) by product type for the year ended December 31, 2024 is as follows (dollars in billions):

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 to be 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.

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.

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Corporate and Other

Our Corporate segment primarily consists of corporate overhead costs. Other consists of activities from strategic non-core, non-controlling equity investments and is considered an operating segment but does not meet the aggregation criteria for presentation as a separate reportable segment and is, therefore, combined with our core Corporate function and reported as Corporate and other. The following table summarizes our results of operations for our Corporate and other segment for the years ended December 31, 2024 and 2023 (dollars in millions):

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(1)Percentage of revenue calculations are not meaningful and therefore not included.

(2)Primarily relates to inter-segment eliminations.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Core corporate

Operating, administrative and other expenses for our core corporate function rose 57.5%, to $723 million in 2024, mainly due to an increase in our provision related to indirect taxes, increased charges associated with employee separation and integration and other costs related to acquisitions. In addition, we recorded higher incentive compensation expense reflecting improved business performance.

Other (non-core)

We recorded equity loss of approximately $134 million in 2024 versus an equity income of $27 million in 2023. This reflects lower value of our investments, primarily driven by our investments in Altus and Industrious, partially offset by equity income from investments in other unconsolidated subsidiaries.

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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 facilities and commercial paper program. Our expected capital requirements for 2025 include up to $360 million of anticipated capital expenditures, net of tenant concessions. During the year ended December 31, 2024, we incurred $279 million of capital expenditures, net of tenant concessions received. As of December 31, 2024, we had aggregate future commitments of $205 million related to co-investments funds in our REI segment, $74 million of which is expected to be funded in 2025. Additionally, as of December 31, 2024, we are committed to fund additional capital of $330 million and $67 million to consolidated and unconsolidated projects, respectively, within our REI segment. As of December 31, 2024, we had $3.3 billion of borrowings available under our revolving credit facilities (under both the Revolving Credit Agreement, as described below, and the Turner & Townsend revolving credit facility) and $1.1 billion of cash and cash equivalents. We intend to maintain available commitments under the Revolving Credit Agreement in an amount at least equal to the amount of commercial paper notes outstanding from time to time. As of December 31, 2024, we had $175 million in outstanding borrowings under the commercial paper program.

We have historically relied on our internally generated cash flow and our revolving credit facilities to fund our working capital, capital expenditure and general investment requirements (including in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements. In the absence of extraordinary events, large strategic acquisitions or large returns of capital to shareholders, we anticipate that our cash flow from operations and our revolving credit facilities 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. 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.

As noted above, we believe that any future significant acquisitions 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.

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 element is the payment of obligations related to acquisitions. Our acquisition structures often include deferred and/or contingent purchase 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, 2024 and 2023, we had accrued deferred purchase consideration totaling $292 million ($199 million of which was a current liability) and $530 million ($264 million of which was a current liability), respectively, which was included in “Accounts payable and accrued expenses” and in “Other long-term liabilities” in the accompanying consolidated balance sheets set forth in Item 8 of this Annual Report.

Lastly, as described in Note 16 – Stockholders’ Equity of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, in November 2024, our Board of Directors (Board) authorized an additional $5.0 billion to our existing $4.0 billion share repurchase program (as amended, the 2024 program) bringing the total authorized amount under the 2024 program to a total of $9.0 billion as of December 31, 2024. The Board also extended the term of the 2024 program through December 31, 2029. During the year ended December 31, 2024, we repurchased 5,110,624 shares of our Class A common stock with an average price of $126.02 per share using cash on hand for an aggregate of $644 million. During the period January 1, 2025 through February 11, 2025, we repurchased 2,060,012 shares of our Class A common stock with an average price of $132.38 per share using cash on hand for an aggregate of $273 million. As of December 31, 2024 and February 11, 2025, we had $5.8 billion and $5.5 billion, respectively, of capacity remaining under the 2024 program.

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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 programs 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 more fully described in Note 22 – Telford Fire Safety Remediation of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, on March 16, 2023, Telford Homes entered into a legally binding agreement with the U.K. government, under which Telford Homes will (1) take responsibility for performing or funding remediation works relating to certain life-critical fire-safety issues on all Telford Homes-constructed buildings of 11 meters in height or greater in England constructed in the last 30 years (in-scope buildings) and (2) withdraw Telford Homes-developed buildings from the government-sponsored Building Safety Fund (BSF) and Aluminum Composite Material (ACM) Funds or reimburse the government funds for the cost of remediation of in-scope buildings.

We had an estimated liability of approximately $204 million (of which $102 million was current) and $192 million (of which $82 million was current) as of December 31, 2024 and 2023, respectively, related to the remediation efforts. We recognized additional provision in the year ended December 31, 2024 based on additional information obtained and evaluations performed allowing for a more refined estimate on a building-by-building basis.

The estimated remediation costs for in-scope buildings are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control. These include, but are not limited to, individual remediation requirements for each building, the time required for the remediation to be completed, cost of construction or remediation materials, availability of construction materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, availability of qualified fire safety engineers, potential business disruption costs, potential changes to or new regulations and regulatory approval. We will continue to assess new information as it becomes available during the remediation process and adjust our estimated liability accordingly.

Historical Cash Flows

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Operating Activities

Net cash provided by operating activities totaled $1,708 million for the year ended December 31, 2024 as compared to $480 million in the prior year. The primary drivers that contributed to the increase in net cash provided by operating activities were as follows: (1) higher net cash flows from operations, driven by revenue growth and (2) working capital improvements, driven by timing of payment of accounts payable and accrued expenses and lower accounts receivable.

Investing Activities

Net cash used in investing activities totaled $1,514 million for the year ended December 31, 2024, an increase of $833 million as compared to the year ended December 31, 2023. The increase was primarily due to the acquisition of J&J Worldwide Services in February 2024 and Direct Line Global in June 2024.

Financing Activities

Net cash used in financing activities totaled $221 million for the year ended December 31, 2024 as compared to net cash provided by financing activities of $154 million for the year ended December 31, 2023. The increased outflow was primarily driven by higher payments of deferred purchase consideration, share repurchase, and taxes on equity awards; partially offset by proceeds from our commercial paper program, net proceeds from the revolver, and lower inflows from fixed term debt financing compared to prior year.

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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, 2024 (dollars in millions):

The 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 – Employee Benefit Plans of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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(1)Reflects gross outstanding long-term debt balances as of December 31, 2024, assumed to be paid at maturity, excluding unamortized discount, premium and deferred financing costs. See Note 11 – Long-Term Debt and Short-Term Borrowings of the Notes to 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 $918 million of interest payments, $164 million of which will be made in 2025.

(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 Note 5 – Warehouse Receivables & Warehouse Lines of Credit and Note 11 – Long-Term Debt and Short-Term Borrowings of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

(3)Includes forecasted interest expense. See Note 12 – Leases of the Notes to 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, 2024 ($9 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 3.0% to 8.1% at December 31, 2024.

(5)Represents deferred obligations, excluding contingent considerations, 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, 2024 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 as of December 31, 2024 set forth in Item 8 of this Annual Report. While $4 million of the $197 million in claim payments are expected to be payable within one year, due to the nature of this item, claim payments representing the remaining balance of $193 million 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, 2024, we have a remaining federal tax liability of $30 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. The next installment is due in 2025 for the 2024 fiscal year.

In addition, as of December 31, 2024, the total amount of gross unrecognized tax benefits totaled $347 million. Of this amount, we expect an insignificant amount of cash settlement in less than one year. See Note 15 – Income Taxes of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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

(9)Includes $205 million to fund future co-investments in our REI segment, $74 million of which is expected to be funded in 2025, and $67 million committed to invest in unconsolidated real estate projects. This amount does not include capital committed to consolidated projects of $330 million as of December 31, 2024.

(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.

(11)See Note 22 – Telford Fire Safety Remediation of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

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Indebtedness

We use a variety of financing arrangements, both long-term and short-term, to fund our operations in addition to cash generated from operating activities. We also use several funding sources to avoid becoming overly dependent on one financing source, and to lower funding costs.

Long-Term Debt

On July 10, 2023, CBRE Group, Inc., CBRE Services, Inc. (CBRE Services) and Relam Amsterdam Holdings B.V., a wholly-owned subsidiary of CBRE Services, entered into a new 5-year senior unsecured Credit Agreement (2023 Credit Agreement) maturing on July 10, 2028, which refinanced and replaced the previous credit agreement. The 2023 Credit Agreement provides for a senior unsecured term loan credit facility comprised of (i) tranche A Euro-denominated term loans in an aggregate principal amount of €367 million and (ii) tranche A U.S. Dollar-denominated term loans in an aggregate principal amount of $350 million with weighted average interest rate of 4.9% as of December 31, 2024, both requiring quarterly principal payments beginning on December 31, 2024 and continuing through maturity on July 10, 2028. The proceeds of the term loans under the 2023 Credit Agreement were applied to the repayment of all remaining outstanding senior term loans, approximately $437 million, under the previous credit agreement, the payment of related fees and expenses and other general corporate purposes.

The term loan borrowings under the 2023 Credit Agreement are fully and unconditionally guaranteed on a senior basis by CBRE Group, Inc. and CBRE Services.

On February 23, 2024, CBRE Services issued $500 million in aggregate principal amount of 5.500% senior notes due April 1, 2029 (the 5.500% senior notes) at a price equal to 99.837% of their face value. The 5.500% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 5.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024.

On June 23, 2023, CBRE Services issued $1.0 billion in aggregate principal amount of 5.950% senior notes due August 15, 2034 (the 5.950% senior notes) at a price equal to 98.174% of their face value. The 5.950% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 5.950% per year and is payable semi-annually in arrears on February 15 and August 15 of each year.

On March 18, 2021, CBRE Services issued $500 million in aggregate principal amount of 2.500% senior notes due April 1, 2031 (the 2.500% senior notes) at a price equal to 98.451% of their face value. The 2.500% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year.

On August 13, 2015, CBRE Services issued $600 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 (the 4.875% senior notes) at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services and are guaranteed on a senior basis by CBRE Group, Inc. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1 of each year.

The indentures governing our 5.950% senior notes, 5.500% senior notes, 4.875% senior notes and 2.500% senior notes contain 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.

Our 5.950% senior notes, 5.500% senior notes, 4.875% senior notes and 2.500% senior notes are fully and unconditionally guaranteed by CBRE Group, Inc.

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Combined summarized financial information for CBRE Group, Inc. (parent) and CBRE Services (subsidiary issuer) is as follows (dollars in millions):

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(1)Includes $3.3 billion and $933 million of intercompany loan payables to non-guarantor subsidiaries as of December 31, 2024 and 2023, respectively. All intercompany balances and transactions between CBRE Group, Inc. and CBRE Services have been eliminated.

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

Short-Term Borrowings

On August 5, 2022, we entered into a new 5-year senior unsecured Revolving Credit Agreement (the Revolving Credit Agreement). The Revolving Credit Agreement provides for a senior unsecured revolving credit facility available to CBRE Services with commitments in an aggregate principal amount of up to $3.5 billion and a maturity date of August 5, 2027.

The Revolving Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). In addition, the Revolving Credit Agreement also includes capacity for letters of credit not to exceed $300 million in the aggregate. The Revolving Credit Agreement is fully and unconditionally guaranteed by CBRE Group, Inc.

As of December 31, 2024, $132 million was outstanding under the revolving credit facility provided for by the Revolving Credit Agreement. No letters of credit were outstanding as of December 31, 2024. As of February 11, 2025 and December 31, 2023, no amounts were outstanding under this revolving credit facility. Letters of credit are issued in the ordinary course of business and would reduce the amount we may borrow under this revolving credit facility.

On December 2, 2024, CBRE Services established a commercial paper program pursuant to which we may issue and sell up to $3.5 billion of short-term, unsecured and unsubordinated commercial paper notes with up to 397-day maturities, under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. Payment of the commercial paper notes is guaranteed on an unsecured and unsubordinated basis by CBRE Group, Inc. The program notes and the guarantee will rank pari passu with all other unsecured and unsubordinated indebtedness. The proceeds from issuances under the program may be used for general corporate purposes. The company intends to maintain available commitments under the Revolving Credit Agreement in an amount at least equal to the amount of commercial paper notes outstanding from time to time. As of December 31, 2024, we had $175 million in outstanding borrowings under the commercial paper program with a weighted average annual interest rate of 4.77%. As of February 11, 2025, we had $1.3 billion in outstanding borrowings under the commercial paper program.

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In addition, Turner & Townsend maintains a £120 million revolving credit facility pursuant to a credit agreement dated March 31, 2022, with an additional accordion option of £20 million, that matures on March 31, 2027. As of December 31, 2024, $44 million (£35 million) was outstanding under this revolving credit facility and bears interest at the Sterling Overnight Index Average (SONIA) plus 0.78%. As of December 31, 2023, $10 million (£8 million) was outstanding under this revolving credit facility. As of February 11, 2025, no amount was outstanding under this revolving credit facility.

We also maintain warehouse lines of credit with certain third-party lenders. For additional information on all of our short-term borrowings, see Note 5 – Warehouse Receivables & Warehouse Lines of Credit and Note 11 – Long-Term Debt and Short-Term Borrowings of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with 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 Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers” revenue recognition framework: (1) identify the contract; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations and (5) recognize revenue when (or as) the performance obligations are satisfied.

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 revenue 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 sales and lease 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 – Significant Accounting Policies of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Goodwill and Other Intangible Assets

As of December 31, 2024, our consolidated balance sheets included goodwill of $5.6 billion and other intangible assets of $2.3 billion.

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. We engage a third-party valuation firm to assist us in identifying and determining the fair values of intangible assets acquired. The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill. 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 test goodwill and other intangible assets deemed to have indefinite lives as of the beginning of the fourth quarter of each year and more frequently if events and circumstances indicate the potential for impairment is more likely than not. We have the option to perform a qualitative assessment with respect to any of our reporting units and indefinite-lived intangible

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assets 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 the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount before applying the quantitative impairment test. Our procedures under qualitative tests include assessing our financial performance, macroeconomic conditions, industry and market considerations, various asset specific factors and entity specific events. If we determine that a reporting unit’s goodwill or an indefinite-lived intangible asset may be impaired after utilizing these qualitative impairment analysis procedures, we are required to perform a quantitative impairment test. When performing a quantitative test, we use a discounted cash flow approach to estimate the fair value of our reporting units and indefinite-lived intangible assets. 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 these fair values and the relative size of our goodwill and indefinite-lived intangible assets, if different assumptions and estimates were used, it could have an adverse effect on our impairment analysis.

We did not incur any impairment losses as a result of our 2024 annual impairment tests, as it was determined that it is more likely than not that the estimated fair values of our reporting units and indefinite-lived intangible assets were substantially in excess of their carrying values as of December 31, 2024. Additionally, we do not believe that the estimated fair values of our reporting units or indefinite-lived intangible assets are at risk of decreasing below their carrying values in the next twelve months. For additional information on goodwill and intangible asset impairment testing, see Note 2 – Significant Accounting Policies and Note 9 – Goodwill and Other Intangible Assets of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with FASB ASC Topic 740, “Accounting for Income Taxes” (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, 2024 and 2023 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.

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 – Income Taxes of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for further information regarding income taxes.

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Telford Fire Safety Remediation

As of December 31, 2024, the company had an estimated liability of $204 million on the balance sheet which represents management’s best estimate of future losses associated with overall remediation efforts. It includes amounts that the U.K. government has already paid or quantified through the Building Safety Fund and estimates developed by Telford’s internal team and/or third-party experts for the remaining in-scope buildings. The estimates were developed using the best available data, including (i) industry data, (ii) fire safety assessments (also known as Publicly Available Specification (PAS) assessments and include fire risk appraisal of external wall construction) which identified remediation work to be performed on specific buildings, and (iii) bids from subcontractors. We applied an inflation factor to account for uncertainty in completion of remediation activities, which could take an extended period of time to complete, an estimate of direct costs associated with an internal team dedicated to this remediation, and a contingency to account for unknown remediation costs. Inherent uncertainties exist in such evaluations primarily due to its subjective, highly complex nature and other unknowns such as individual remediation requirements, time required for remediation, and cost of materials and resources amongst others. We will continue to assess new information as it becomes available during the remediation process and adjust our estimated liability accordingly.

See Note 22 – Telford Fire Safety Remediation of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for further information.

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Investments in unconsolidated subsidiaries – fair value option

We have elected the fair value option for certain of our investments in non-public entities to align with our strategy for these investments. Such investments without readily determinable fair values are classified as Level 3 in the fair value hierarchy. We estimate the fair market value on a recurring basis using significant unobservable inputs which requires judgment due to the absence of market prices or similar assets in active markets. In determining the estimated fair value of these investments, we utilize appropriate valuation techniques including discounted cash flow analyses and Monte Carlo simulations. Key inputs to the discounted cash flow analyses include projected cash flows, terminal growth rate, and discount rate. Key inputs to Monte Carlo simulations include stock price, volatility, risk free rate, and dividend yield.

Changes in the fair value of equity investments under the fair value option are recorded as equity income from unconsolidated subsidiaries in the Consolidated Statements of Operations.

New Accounting Pronouncements

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

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Non-GAAP Financial Measures

Net revenue, segment operating profit on revenue margin, segment operating profit on net revenue margin, core EBITDA, core adjusted net income and core earnings per diluted share (or core EPS) are not recognized measurements under accounting principles generally accepted in the United States, or 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 costs and charges that may obscure the underlying performance of our business and related trends. Because not all companies use identical calculations, our presentation of net revenue, core EBITDA, core adjusted net income and core EPS may not be comparable to similarly titled measures of other companies.

Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients and is passed through to the client generally with no margin. Segment operating profit on revenue margin is computed by dividing segment operating profit by revenue and provides a comparable profitability measure against our peers. Segment operating profit on net revenue margin is computed by dividing segment operating profit by net revenue and is a better indicator of the segment’s margin since it does not include the diluting effect of pass-through revenue which generally has no margin.

We use core EBITDA, core adjusted net income and core earnings per share (or core EPS) as indicators of the company’s operating financial performance. Core EBITDA and core adjusted net income represent earnings before the portion attributable to non-controlling interests, net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, costs incurred related to legal entity restructuring, efficiency and cost-reduction initiatives, integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, charges related to indirect tax audits and settlements, 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, fair value changes on certain non-core non-controlling equity investments, the impact of fair value adjustments related to unconsolidated equity investments, non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities and related impact on income taxes and non-controlling interest. 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.

Core EBITDA, core adjusted net income and core EPS are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments. These measures 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. We also use core EBITDA and core EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

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Core EBITDA is calculated as follows (dollars in millions):

Core net income attributable to CBRE Group, Inc. stockholders, as adjusted (or core adjusted net income), and core EPS, are calculated as follows (in millions, except share and per share data):

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Net revenue and gross revenue from resilient business lines is calculated as follows (dollars in millions):

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(1)Recurring investment management fees is included in Investment management revenue.

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