Business Wire | Oct 28, 2021 06:55AM EDT

CBRE Group, Inc. Reports Financial Results for Third-Quarter 2021

Oct. 28, 2021

DALLAS--(BUSINESS WIRE)--Oct. 28, 2021--CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the third quarter ended September 30, 2021.

"The benefits of our diversification strategy were clearly evident in the third quarter with both earnings per share and adjusted earnings per share 70% or more above the third-quarter 2019 peak," said Bob Sulentic, president and chief executive officer of CBRE. "Our leaders around the world have been adept at identifying and securing compelling opportunities to grow our business across the four dimensions of diversification - asset types, business lines, client types and geographies. While returning capital to our shareholders, we have committed approximately $2 billion of capital already this year to secularly favored areas, including green energy and infrastructure project management, logistics and multifamily assets and flex office solutions. These investments, and the opportunities they open up for us to make further capital and organic investments in these areas, will position us to drive earnings growth for years to come."

Consolidated Financial Results Overview

The following table presents highlights of CBRE performance (dollars in millions, except per share data):

% Change

Q3 2021 Q3 2020 USD LC^ (1)

Operating Results

Revenue $ 6,798 $ 5,645 20.4 % 18.6 %

Net revenue ^(2) 4,173 3,249 28.5 % 26.5 %

GAAP net income 436 184 136.6 % 133.2 %

GAAP EPS $ 1.28 $ 0.55 134.8 % 131.4 %

Adjusted EBITDA ^(3) 736 442 66.6 % 64.6 %

Adjusted net income ^(4) 474 245 93.4 % 90.6 %

Adjusted EPS ^(4) $ 1.39 $ 0.73 91.9 % 89.1 %



Cash Flow Results

Cash flow from operations $ 973 $ 866 12.3 %

Less: Capital expenditures 45 56 (19.4 )%

Free cash flow ^(5) $ 928 $ 810 14.5 %

Advisory Services Segment

The following table presents highlights of the Advisory Services segment performance (dollars in millions):

% Change

Q3 2021 Q3 2020 USD LC

Revenue $ 2,412 $ 1,630 48.0 % 46.2 %

Net revenue 2,402 1,624 47.9 % 46.1 %

Segment operating profit ^(6) 522 287 81.9 % 80.2 %

Segment operating profit on revenue 21.6 % 17.6 % 4.0 % 4.1 %margin ^(7)

Segment operating profit on net revenue 21.7 % 17.6 % 4.1 % 4.1 %margin ^(7)

The Advisory Services segment rebounded strongly from pandemic-suppressed levels of third-quarter 2020. Third-quarter 2021 revenue growth was very strong, with all business lines exceeding third-quarter 2019 levels. In addition to strong revenue growth, cost-saving actions taken in 2020 contributed to a more than 80% increase in segment operating profit.

Capital markets activity led the segment's recovery. Global property sales revenue rose 93% (91% local currency) from the weak levels of last year's third quarter and exceeded the third-quarter 2019 peak level by 27%. Compared with last year's third quarter, the United States posted a robust increase, with revenue up 116%, and CBRE's market share improved 20 basis points from last year's third quarter to a market-leading 16.8%, according to Real Capital Analytics. International markets also saw strong increases versus last year's third quarter, paced by Australia and the United Kingdom.

Commercial mortgage origination revenue jumped 41% (same local currency) from third-quarter 2020. Lending activity rose across all capital sources in step with increased investment market activity, with private lenders leading the upturn. During the quarter, industrial and multifamily assets remained in keen demand, while interest in hospitality, retail and well-leased office assets also increased. Government-Sponsored Enterprise lending picked up from earlier in the year, with an emphasis on affordable housing.

Leasing activity continued to revive. Compared with last year's third quarter, global leasing revenue increased 58% (57% local currency) and exceeded the third-quarter 2019 peak level by 7%. International markets continued to set the pace for leasing recovery with both EMEA and APAC increasing by double-digit percentages compared with the third-quarter 2019 peak level. United States revenue surged 67% compared with third-quarter 2020 and increased 5% from the third-quarter 2019 peak. Industrial properties once again saw very strong growth. Activity at United States office buildings improved notably compared with both second-quarter 2021 and third-quarter 2020 but remained below pre-pandemic levels.

Loan servicing revenue increased 35% (same local currency) from third-quarter 2020 and the loan servicing portfolio increased 19% to approximately $300 billion at quarter's end. Valuation revenue continued to bounce back strongly around the globe, rising 27% (25% local currency) from third-quarter 2020. Property management revenue rose 6% (5% local currency) compared with third-quarter 2020.

Global Workplace Solutions (GWS)Segment

The following table presents highlights of the GWS segment performance (dollars in millions):

% Change

Q3 2021 Q3 2020 USD LC

Revenue $ 4,167 $ 3,851 8.2 % 6.5 %

Net revenue ^(8) 1,552 1,460 6.3 % 4.4 %

Segment operating profit 187 161 16.5 % 14.4 %

Segment operating profit on revenue 4.5 % 4.2 % 0.3 % 0.3 %margin

Segment operating profit on net revenue 12.1 % 11.0 % 1.1 % 1.1 %margin

The GWS segment again posted solid revenue growth and 16% operating profit growth across its global business base.

Facilities management, which is largely contractual, saw an increase of 6% (4% local currency) in revenue compared with third-quarter 2020. This increase was propelled by significant strength with local clients.

Project management revenue rose 21% (19% local currency) from third-quarter 2020, reflecting a continued recovery of construction activity following last year's lockdowns.

The new business pipeline increased markedly from the second quarter and was up relative to third-quarter 2020 and 2019 levels, with representation from financial services, industrial, life sciences and technology companies.

Real Estate Investments (REI) Segment

The following table presents highlights of the REI segment performance (dollars in millions):

% Change

Q3 2021 Q3 2020 USD LC

Revenue $ 224 $ 170 32.0 % 27.7 %

Adjusted revenue ^(9) 358 215 66.7 % 64.7 %

Segment operating profit^ (10) 146 71 104.6 % 103.1 %

Continued strong growth in both development services and investment management drove a sharp increase in segment operating profit in the third quarter.

Global real estate development operating profit (11) nearly doubled from third-quarter 2020 to approximately $100 million, fueled by a strong pace of industrial asset sales at high valuations.

The in-process development portfolio ended the quarter at $16.8 billion, a record level for the company and up $1.6 billion from second-quarter 2021. Build-to-suits and fee development comprised approximately half of the in-process portfolio. The pipeline remained relatively stable at $9.6 billion, largely comprised of industrial and multifamily assets.

Investment management revenue rose 35% (32% local currency) from third-quarter 2020 to $135 million, driven by a record level of asset management fees and higher incentive, acquisition and disposition fees. Operating profit(11) surged 68% (64% local currency) from third-quarter 2020 to $49 million, reflecting strong revenue gains and prudent cost management.

Assets under management ended the quarter at $133.1 billion, a record high for the company and an increase of $4.0 billion ($5.8 billion local currency) from second-quarter 2021. The increase reflected higher asset valuations and strong net capital inflows, partly offset by unfavorable foreign currency movement.

Corporate and Other Segment

Corporate segment expense, which primarily reflects overhead costs, increased to $118.8 million from $77.1 million in the prior-year quarter. The increase was primarily due to an increase in stock compensation expense tied to significant growth in performance this quarter as compared to the three months ended September 30, 2020, when the operating results were impacted by the pandemic.

Capital Allocation Overview

* Free Cash Flow - During the third quarter of 2021, free cash flow increased 14.5% to $927.5 million. This reflected cash from operating activities of $973.0 million, less total capital expenditures of $45.5 million. Net capital expenditures totaled $39.7 million. (12) * Stock Repurchase Program - The company spent $100.0 million to repurchase more than 1.0 million shares at an average price of $97.55 per share during the third quarter of 2021, and $188.3 million to repurchase 2.2 million shares at an average price of $87.29 per share during the first nine months of 2021. There was $161.7 million of capacity remaining under the company's authorized stock repurchase program as of September 30, 2021. * Acquisitions and Investments - As announced in July 2021, the company signed an agreement to acquire a 60% ownership interest in Turner & Townsend Holdings Limited, a global leader in program management, project management and cost consulting, for approximately $1.3 billion. Of this amount, an initial payment of approximately $0.7 billion will be made in early November, when the transaction is expected to close. In addition, the company made in-fill acquisitions totaling $21.0 million in cash and deferred consideration during the third quarter.

Leverage and Financing Overview

* Leverage - The company's net leverage ratio (net cash (13) to trailing twelve-month adjusted EBITDA) was (0.31x) as of September 30, 2021, which is substantially below the company's primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):

As of

September 30, 2021

Total debt $ 1,849

Less: Cash ^(14) 2,676

Net debt (cash) ^(13) $ (827 )



Divided by: Trailing twelve month adjusted EBITDA $ 2,699



Net leverage ratio (0.31x)

* Liquidity - As of September 30, 2021, the company had approximately $5.8 billion of total liquidity, consisting of approximately $2.7 billion in cash, plus the ability to borrow an aggregate of approximately $3.1 billion under its revolving credit facilities, net of any outstanding letters of credit.

Conference Call Details

The company's third quarter earnings webcast and conference call will be held today, Thursday, October 28, 2021 at 8:30 a.m. Eastern Time. Investors are encouraged to access the webcast via this link or they can click this link beginning at 8:15 a.m. Eastern Time for automated access to the conference call.

Alternatively, investors may dial into the conference call using these operator-assisted phone numbers: 877.407.8037 (U.S.) or 201.689.8037 (International). A replay of the call will be available starting at 1:00 p.m. Eastern Time on October 28, 2021. The replay is accessible by dialing 877.660.6853 (U.S.) or 201.612.7415 (International) and using the access code: 13723947#. A transcript of the call will be available on the company's Investor Relations website at https://ir.cbre.com.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world's largest commercial real estate services and investment firm (based on 2020 revenue). The company has more than 100,000 employees serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

Safe Harbor and Footnotes

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's future growth momentum, operations, market share, business outlook, capital deployment and financial performance as well as the completion of the Turner & Townsend acquisition. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company's actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this press release. Any forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable securities laws, the company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: 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; 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; 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; 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. Government Sponsored Enterprises (GSEs); our ability to compete globally, or in specific geographic markets or business segments that are material to us; our ability to identify, acquire and integrate accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of companies we may acquire; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; 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; client actions to restrain project spending and reduce outsourced staffing levels; 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; 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; our ability to continue investing in our platform and client service offerings; 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 our indirect subsidiary, CBRE Capital Markets, Inc., 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; and any inability for us to implement and maintain effective internal controls over financial reporting; and the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; and the satisfaction of the Turner & Townsend acquisition's closing conditions.

Additional information concerning factors that may influence the company's financial information is discussed under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and "Cautionary Note on Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2020, our quarterly report on Form 10-Q for the quarterly period ended June 30, 2021, as well as in the company's press releases and other periodic filings with the Securities and Exchange Commission (SEC). Such filings are available publicly and may be obtained on the company's website at www.cbre.com or upon written request from CBRE's Investor Relations Department at investorrelations@cbre.com.

The terms "net revenue," "adjusted revenue," "adjusted net income," "adjusted earnings per share" (or adjusted EPS), "adjusted EBITDA," "business line operating profit," "segment operating profit on revenue margin," "segment operating profit on net revenue margin" and "free cash flow," all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the "Non-GAAP Financial Measures" section in this press release for a further explanation of these measures. We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods.

Totals may not sum in tables in millions included in this release due to rounding.

Local currency percentage change is calculated by comparing^(1) current-period results at prior-period exchange rates versus prior-period results.

Net revenue is gross revenue less costs largely associated with^(2) subcontracted vendor work performed for clients. These costs are reimbursable by clients and generally have no margin.

Adjusted EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to certain carried interest incentive compensation expense (reversal) to^(3) align with the timing of associated revenue, 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, costs associated with workforce optimization, transformation initiatives, and integration and other costs related to acquisitions.

Adjusted net income and adjusted earnings per diluted share (or adjusted EPS) exclude the effect of select items from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes for such charges. Adjustments during the periods presented included non-cash depreciation and amortization expense related to certain assets attributable to acquisitions, certain carried interest incentive^(4) compensation expense (reversal) to align with the timing of associated revenue, the impact of 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, costs associated with workforce optimization, transformation initiatives and asset impairments.

Free cash flow is calculated as cash flow from operations, less capital^(5) expenditures (reflected in the investing section of the consolidated statement of cash flows).

Segment operating profit 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. Segment operating profit represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments, as well as^(6) adjustments related to the following: certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate acquired in the Telford Acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, costs associated with workforce optimization, transformation initiatives and integration and other costs related to acquisitions. Prior period results have been recast to conform to this definition.

Segment operating profit on revenue and net revenue margins represent^(7) segment operating profit divided by revenue and net revenue, respectively.

Third-quarter 2021 GWS net revenue growth was negatively impacted by^(8) approximately 3% due to a reclassification of pass-through revenue in project management. There was no impact to GWS revenue in the period.

Adjusted revenue for the Real Estate Investments segment reflects revenue for this segment, less the direct cost of revenue, along with equity income from unconsolidated subsidiaries and gain on disposition of real^(9) estate, net of non-controlling interests. Adjusted revenue also removes the impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in the period.

Segment operating profit in the Real Estate Investments segment includes^ equity income from unconsolidated subsidiaries and gain on disposition of(10) real estate, net of non-controlling interests, and the associated compensation expense.

^ Represents line of business profitability/losses, as adjusted.(11)

For the three months ended September 30, 2021, the company incurred^ capital expenditures of $45.5 million (reflected in the investing section(12) of the condensed consolidated statement of cash flows) and received tenant concessions from landlords of $5.8 million (reflected in the operating section of the condensed consolidated statement of cash flows).

^ Net debt (cash) is calculated as cash available for company use less(13) total debt (excluding non-recourse debt).

^ Cash represents cash and cash equivalents (excluding restricted cash) and(14) excludes $92.2 million of cash in consolidated funds and other entities not available for company use at September 30, 2021.

CBRE GROUP, INC.

OPERATING RESULTS

FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(in thousands, except share and per share data)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenue:

Net revenue

$

4,172,973

$

3,248,513

11,443,648

9,667,416

Pass through costs also recognized as revenue

2,625,354

2,396,629

7,752,171

7,248,278

Total revenue

6,798,327

5,645,142

19,195,819

16,915,694

Costs and expenses:

Cost of revenue

5,258,947

4,564,579

14,995,252

13,676,790

Operating, administrative and other

1,025,681

794,227

2,811,224

2,355,099

Depreciation and amortization

122,564

127,725

363,727

357,903

Asset impairments

-

-

-

75,171

Total costs and expenses

6,407,192

5,486,531

18,170,203

16,464,963

Gain on disposition of real estate (1)

18,530

52,797

19,615

75,132

Operating income

409,665

211,408

1,045,231

525,863

Equity income from unconsolidated subsidiaries (1)

163,809

32,376

459,535

72,487

Other income

7,693

7,947

22,470

12,974

Interest expense, net of interest income

11,038

17,829

34,916

51,795

Income before provision for income taxes

570,129

233,902

1,492,320

559,529

Provision for income taxes

133,507

49,062

343,279

119,047

Net income

436,622

184,840

1,149,041

440,482

Less: Net income attributable to non-controlling interests (1)

879

708

4,459

2,258

Net income attributable to CBRE Group, Inc.

$

435,743

$

184,132

$

1,144,582

$

438,224

Basic income per share:

Net income per share attributable to CBRE Group, Inc.

$

1.30

$

0.55

$

3.41

$

1.31

Weighted average shares outstanding for basic income per share

335,364,942

335,287,245

335,621,337

335,128,531

Diluted income per share:

Net income per share attributable to CBRE Group, Inc.

$

1.28

$

0.55

$

3.37

$

1.30

Weighted average shares outstanding for diluted income per share

340,337,159

337,665,848

339,805,292

338,255,859

Adjusted EBITDA

$

736,069

$

441,764

$

1,945,584

$

1,139,419

CBRE GROUP, INC.

OPERATING RESULTS

FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(in thousands, except share and per share data)

(Unaudited)

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

Revenue:

Net revenue $ 4,172,973 $ 3,248,513 11,443,648 9,667,416

Pass throughcosts also 2,625,354 2,396,629 7,752,171 7,248,278 recognized asrevenue

Total revenue 6,798,327 5,645,142 19,195,819 16,915,694



Costs and expenses:

Cost of revenue 5,258,947 4,564,579 14,995,252 13,676,790

Operating,administrative 1,025,681 794,227 2,811,224 2,355,099 and other

Depreciation and 122,564 127,725 363,727 357,903 amortization

Asset - - - 75,171 impairments

Total costs and 6,407,192 5,486,531 18,170,203 16,464,963 expenses



Gain ondisposition of 18,530 52,797 19,615 75,132 real estate ^(1)



Operating income 409,665 211,408 1,045,231 525,863



Equity incomefromunconsolidated 163,809 32,376 459,535 72,487 subsidiaries ^(1)

Other income 7,693 7,947 22,470 12,974

Interestexpense, net of 11,038 17,829 34,916 51,795 interest income

Income beforeprovision for 570,129 233,902 1,492,320 559,529 income taxes

Provision for 133,507 49,062 343,279 119,047 income taxes

Net income 436,622 184,840 1,149,041 440,482

Less: Net incomeattributable to 879 708 4,459 2,258 non-controllinginterests ^(1)

Net incomeattributable to $ 435,743 $ 184,132 $ 1,144,582 $ 438,224 CBRE Group, Inc.



Basic income per share:

Net income pershare $ 1.30 $ 0.55 $ 3.41 $ 1.31 attributable toCBRE Group, Inc.

Weighted averagesharesoutstanding for 335,364,942 335,287,245 335,621,337 335,128,531 basic income pershare



Diluted income per share:

Net income pershare $ 1.28 $ 0.55 $ 3.37 $ 1.30 attributable toCBRE Group, Inc.

Weighted averagesharesoutstanding for 340,337,159 337,665,848 339,805,292 338,255,859 diluted incomeper share



Adjusted EBITDA $ 736,069 $ 441,764 $ 1,945,584 $ 1,139,419

_______________

(1)

Equity income from unconsolidated subsidiaries and gain on disposition of real estate, less net income attributable to non-controlling interests, includes income of $183.2 million and $83.2 million for the three months ended September 30, 2021 and 2020, respectively, and $483.6 million and $144.6 million for the nine months ended September 30, 2021 and 2020, respectively, attributable to Real Estate Investments but does not include significant related compensation expense (which is included in operating, administrative and other expenses). In the Real Estate Investments segment, related equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense, are all included in adjusted EBITDA.

_______________

Equity income from unconsolidated subsidiaries and gain on disposition of real estate, less net income attributable to non-controlling interests, includes income of $183.2 million and $83.2 million for the three months ended September 30, 2021 and 2020, respectively, and $483.6 million and^ $144.6 million for the nine months ended September 30, 2021 and 2020,(1) respectively, attributable to Real Estate Investments but does not include significant related compensation expense (which is included in operating, administrative and other expenses). In the Real Estate Investments segment, related equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense, are all included in adjusted EBITDA.

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

(in thousands)

(Unaudited)

Three Months Ended September 30, 2021

Advisory

Services

Global Workplace

Solutions

Real Estate

Investments

Corporate, Other and Eliminations (1)

Consolidated

Revenue:

Net revenue

$

2,402,141

$

1,551,795

$

223,832

$

(4,795

)

$

4,172,973

Pass through costs also recognized as revenue

10,006

2,615,348

-

-

2,625,354

Total revenue

2,412,147

4,167,143

223,832

(4,795

)

6,798,327

Costs and expenses:

Cost of revenue

1,433,315

3,788,156

40,224

(2,748

)

5,258,947

Operating, administrative and other

466,189

209,232

229,303

120,957

1,025,681

Depreciation and amortization

76,249

34,580

4,617

7,118

122,564

Total costs and expenses

1,975,753

4,031,968

274,144

125,327

6,407,192

Gain on disposition of real estate

-

-

18,530

-

18,530

Operating income (loss)

436,394

135,175

(31,782

)

(130,122

)

409,665

Equity income (loss) from unconsolidated subsidiaries

19,567

749

156,479

(12,986

)

163,809

Other (loss) income

(10,531

)

617

447

17,160

7,693

Less: Net income attributable to non-controlling interests

140

17

722

-

879

Add-back: Depreciation and amortization

76,249

34,580

4,617

7,118

122,564

Adjustments:

Integration and other costs related to acquisitions

-

16,211

-

-

16,211

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

-

-

16,959

-

16,959

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

-

-

47

-

47

Segment operating profit (loss)

$

521,539

$

187,315

$

146,045

$

(118,830

)

Adjusted EBITDA

$

736,069

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

(in thousands)

(Unaudited)

Three Months Ended September 30, 2021

Advisory Global Real Estate Corporate, Workplace Other and Consolidated Services Investments Eliminations Solutions ^(1)

Revenue:

Net revenue $ 2,402,141 $ 1,551,795 $ 223,832 $ (4,795 ) $ 4,172,973

Pass throughcosts also 10,006 2,615,348 - - 2,625,354 recognized asrevenue

Total revenue 2,412,147 4,167,143 223,832 (4,795 ) 6,798,327



Costs and expenses:

Cost of revenue 1,433,315 3,788,156 40,224 (2,748 ) 5,258,947

Operating,administrative 466,189 209,232 229,303 120,957 1,025,681 and other

Depreciationand 76,249 34,580 4,617 7,118 122,564 amortization

Total costs and 1,975,753 4,031,968 274,144 125,327 6,407,192 expenses



Gain ondisposition of - - 18,530 - 18,530real estate



Operating 436,394 135,175 (31,782 ) (130,122 ) 409,665 income (loss)



Equity income(loss) from 19,567 749 156,479 (12,986 ) 163,809 unconsolidatedsubsidiaries

Other (loss) (10,531 ) 617 447 17,160 7,693 income

Less: Netincomeattributable to 140 17 722 - 879 non-controllinginterests

Add-back:Depreciation 76,249 34,580 4,617 7,118 122,564 andamortization

Adjustments:

Integration andother costs - 16,211 - - 16,211 related toacquisitions

Carriedinterestincentivecompensationexpense to - - 16,959 - 16,959 align with thetiming ofassociatedrevenue

Impact of fairvalueadjustments toreal estateassets acquiredin the Telford - - 47 - 47 Acquisition(purchaseaccounting)that were soldin period



Segmentoperating $ 521,539 $ 187,315 $ 146,045 $ (118,830 ) profit (loss)

Adjusted EBITDA $ 736,069

_______________

(1)

Includes elimination of inter-segment revenue.

_______________

^(1) Includes elimination of inter-segment revenue.

CBRE GROUP, INC.

SEGMENT RESULTS-(CONTINUED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

(in thousands)

(Unaudited)

Three Months Ended September 30, 2020 (3)

Advisory

Services

Global Workplace

Solutions

Real Estate

Investments

Corporate, Other and Eliminations (1)

Consolidated

Revenue:

Net revenue

$

1,624,164

$

1,460,495

$

169,612

$

(5,758

)

$

3,248,513

Pass through costs also recognized as revenue

5,846

2,390,783

-

-

2,396,629

Total revenue

1,630,010

3,851,278

169,612

(5,758

)

5,645,142

Costs and expenses:

Cost of revenue

986,777

3,540,856

40,384

(3,438

)

4,564,579

Operating, administrative and other

384,692

166,959

147,662

94,914

794,227

Depreciation and amortization

80,407

33,839

5,902

7,577

127,725

Total costs and expenses

1,451,876

3,741,654

193,948

99,053

5,486,531

Gain on disposition of real estate

-

-

52,797

-

52,797

Operating income (loss)

178,134

109,624

28,461

(104,811

)

211,408

Equity income (loss) from unconsolidated subsidiaries

1,241

247

30,914

(26

)

32,376

Other income

539

45

117

7,246

7,947

Less: Net income attributable to non-controlling interests

116

39

553

-

708

Add-back: Depreciation and amortization

80,407

33,839

5,902

7,577

127,725

Adjustments:

Costs associated with transformation initiatives (2)

26,450

17,113

-

11,811

55,374

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

-

-

2,289

-

2,289

Costs incurred related to legal entity restructuring

-

-

-

1,061

1,061

Integration and other costs related to acquisitions

-

-

525

-

525

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

-

-

3,767

-

3,767

Segment operating profit (loss)

$

286,655

$

160,829

$

71,422

$

(77,142

)

Adjusted EBITDA

$

441,764

CBRE GROUP, INC.

SEGMENT RESULTS-(CONTINUED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

(in thousands)

(Unaudited)

Three Months Ended September 30, 2020 ^(3)



Advisory Global Real Estate Corporate, Workplace Other and Consolidated Services Investments Eliminations Solutions ^(1)

Revenue:

Net revenue $ 1,624,164 $ 1,460,495 $ 169,612 $ (5,758 ) $ 3,248,513

Pass throughcosts also 5,846 2,390,783 - - 2,396,629recognized asrevenue

Total revenue 1,630,010 3,851,278 169,612 (5,758 ) 5,645,142



Costs and expenses:

Cost of revenue 986,777 3,540,856 40,384 (3,438 ) 4,564,579

Operating,administrative 384,692 166,959 147,662 94,914 794,227 and other

Depreciationand 80,407 33,839 5,902 7,577 127,725 amortization

Total costs and 1,451,876 3,741,654 193,948 99,053 5,486,531 expenses



Gain ondisposition of - - 52,797 - 52,797 real estate



Operating 178,134 109,624 28,461 (104,811 ) 211,408 income (loss)



Equity income(loss) from 1,241 247 30,914 (26 ) 32,376 unconsolidatedsubsidiaries

Other income 539 45 117 7,246 7,947

Less: Netincomeattributable to 116 39 553 - 708 non-controllinginterests

Add-back:Depreciation 80,407 33,839 5,902 7,577 127,725 andamortization

Adjustments:

Costsassociated withtransformation 26,450 17,113 - 11,811 55,374 initiatives ^(2)

Impact of fairvalueadjustments toreal estateassets acquiredin the Telford - - 2,289 - 2,289 Acquisition(purchaseaccounting)that were soldin period

Costs incurredrelated to - - - 1,061 1,061 legal entityrestructuring

Integration andother costs - - 525 - 525 related toacquisitions

Carriedinterestincentivecompensationexpense to - - 3,767 - 3,767 align with thetiming ofassociatedrevenue



Segmentoperating $ 286,655 $ 160,829 $ 71,422 $ (77,142 ) profit (loss)

Adjusted EBITDA $ 441,764

_______________

(1)

Includes elimination of inter-segment revenue.

(2)

Commencing during the quarter ended September 30, 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.

(3)

Prior-period results have been recast to conform to changes announced in first-quarter 2021 and were previously disclosed in our supplemental financial disclosure provided during that quarter.

_______________

^ Includes elimination of inter-segment revenue.(1)

Commencing during the quarter ended September 30, 2020, management began the implementation of certain transformation initiatives to enable the^ company to reduce costs, streamline operations and support future growth.(2) The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.

^ Prior-period results have been recast to conform to changes announced in(3) first-quarter 2021 and were previously disclosed in our supplemental financial disclosure provided during that quarter.

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

September 30, 2021

December 31, 2020

Assets:

Cash and cash equivalents (1)

$

2,767,820

$

1,896,188

Restricted cash

108,302

143,059

Receivables, net

4,445,790

4,394,954

Warehouse receivables (2)

1,409,038

1,411,170

Contract assets

476,473

471,827

Income taxes receivable

209,753

137,311

Property and equipment, net

722,646

815,009

Operating lease assets

973,335

1,020,352

Goodwill and other intangibles, net

5,220,389

5,189,522

Investments in unconsolidated subsidiaries

845,621

452,365

Investments held in trust - special purpose acquisition company

402,519

402,501

Other assets, net

2,148,674

1,704,885

Total assets

$

19,730,360

$

18,039,143

Liabilities:

Current liabilities, excluding debt and operating lease liabilities

$

5,818,050

$

5,544,649

Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) (2)

1,383,772

1,383,964

Senior term loans, net

760,770

785,678

4.875% senior notes, net

595,224

594,524

2.500% senior notes, net

487,855

-

Other debt

5,311

6,844

Operating lease liabilities

1,257,352

1,325,321

Other long-term liabilities

1,021,347

892,503

Total liabilities

11,329,681

10,533,483

Non-controlling interest subject to possible redemption - special purpose acquisition company

402,519

385,573

Equity:

CBRE Group, Inc. stockholders' equity

7,962,593

7,078,326

Non-controlling interests

35,567

41,761

Total equity

7,998,160

7,120,087

Total liabilities and equity

$

19,730,360

$

18,039,143

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

September 30, December 31, 2021 2020

Assets:

Cash and cash equivalents ^(1) $ 2,767,820 $ 1,896,188

Restricted cash 108,302 143,059

Receivables, net 4,445,790 4,394,954

Warehouse receivables ^(2) 1,409,038 1,411,170

Contract assets 476,473 471,827

Income taxes receivable 209,753 137,311

Property and equipment, net 722,646 815,009

Operating lease assets 973,335 1,020,352

Goodwill and other intangibles, net 5,220,389 5,189,522

Investments in unconsolidated subsidiaries 845,621 452,365

Investments held in trust - special purpose 402,519 402,501 acquisition company

Other assets, net 2,148,674 1,704,885



Total assets $ 19,730,360 $ 18,039,143



Liabilities:

Current liabilities, excluding debt and $ 5,818,050 $ 5,544,649 operating lease liabilities

Warehouse lines of credit (which fund loansthat U.S. Government Sponsored Enterprises 1,383,772 1,383,964 have committed to purchase) ^(2)

Senior term loans, net 760,770 785,678

4.875% senior notes, net 595,224 594,524

2.500% senior notes, net 487,855 -

Other debt 5,311 6,844

Operating lease liabilities 1,257,352 1,325,321

Other long-term liabilities 1,021,347 892,503



Total liabilities 11,329,681 10,533,483



Non-controlling interest subject to possibleredemption - special purpose acquisition 402,519 385,573 company



Equity:

CBRE Group, Inc. stockholders' equity 7,962,593 7,078,326

Non-controlling interests 35,567 41,761



Total equity 7,998,160 7,120,087



Total liabilities and equity $ 19,730,360 $ 18,039,143

_______________

(1)

Includes $92.2 million and $102.9 million of cash in consolidated funds and other entities not available for company use as of September 30, 2021 and December 31, 2020, respectively.

(2)

Represents loan receivables, the majority of which are offset by borrowings under related warehouse line of credit facilities.



_______________

^ Includes $92.2 million and $102.9 million of cash in consolidated funds(1) and other entities not available for company use as of September 30, 2021 and December 31, 2020, respectively.

^ Represents loan receivables, the majority of which are offset by(2) borrowings under related warehouse line of credit facilities.

CBRE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Nine Months Ended September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

1,149,041

$

440,482

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

Depreciation and amortization

363,727

357,903

Amortization of financing costs

5,080

4,632

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

(198,131

)

(179,506

)

Asset impairments

-

75,171

Net realized and unrealized gains, primarily from investments

(26,898

)

(12,974

)

Provision for doubtful accounts

24,489

49,498

Net compensation expense for equity awards

133,308

41,841

Equity income from unconsolidated subsidiaries

(459,535

)

(72,487

)

Distribution of earnings from unconsolidated subsidiaries

382,831

103,796

Proceeds from sale of mortgage loans

12,767,544

11,565,281

Origination of mortgage loans

(12,712,118

)

(11,727,227

)

(Decrease) increase in warehouse lines of credit

(192

)

214,659

Tenant concessions received

18,645

28,617

Purchase of equity securities

(5,281

)

(8,932

)

Proceeds from sale of equity securities

6,856

11,210

Increase in real estate under development

(123,580

)

(68,178

)

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

(255,161

)

610,058

Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)

(107,756

)

(98,977

)

Increase (decrease) in compensation and employee benefits payable and accrued bonus and profit sharing

176,413

(550,932

)

Decrease in net income taxes receivable/payable

42,100

118,736

Other operating activities, net

18,739

(12,313

)

Net cash provided by operating activities

1,200,121

890,358

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(121,409

)

(190,546

)

Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired

(71,373

)

(25,923

)

Contributions to unconsolidated subsidiaries

(400,967

)

(72,058

)

Distributions from unconsolidated subsidiaries

63,776

66,409

Other investing activities, net

(25,433

)

15,631

Net cash used in investing activities

(555,406

)

(206,487

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facility

-

835,671

Repayment of revolving credit facility

-

(835,671

)

Proceeds from notes payable on real estate

71,157

40,263

Repayment of notes payable on real estate

(13,944

)

(24,704

)

Proceeds from issuance of 2.500% senior notes

492,255

-

Repurchase of common stock

(188,285

)

(50,028

)

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

(3,421

)

(34,400

)

Units repurchased for payment of taxes on equity awards

(36,747

)

(41,627

)

Non-controlling interest contributions

652

1,977

Non-controlling interest distributions

(4,026

)

(2,471

)

Other financing activities, net

(42,767

)

(30,050

)

Net cash provided by (used in) financing activities

274,874

(141,040

)

Effect of currency exchange rate changes on cash and cash equivalents and restricted cash

(82,714

)

9,981

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

836,875

552,812

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

2,039,247

1,093,745

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

$

2,876,122

$

1,646,557

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

29,131

$

60,415

Income tax payments, net

$

220,955

$

4,137

Non-GAAP Financial Measures

The following measures are considered "non-GAAP financial measures" under SEC guidelines:

CBRE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Nine Months Ended September 30,

2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 1,149,041 $ 440,482

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

Depreciation and amortization 363,727 357,903

Amortization of financing costs 5,080 4,632

Gains related to mortgage servicing rights,premiums on loan sales and sales of other (198,131 ) (179,506 )assets

Asset impairments - 75,171

Net realized and unrealized gains, primarily (26,898 ) (12,974 )from investments

Provision for doubtful accounts 24,489 49,498

Net compensation expense for equity awards 133,308 41,841

Equity income from unconsolidated (459,535 ) (72,487 )subsidiaries

Distribution of earnings from unconsolidated 382,831 103,796 subsidiaries

Proceeds from sale of mortgage loans 12,767,544 11,565,281

Origination of mortgage loans (12,712,118 ) (11,727,227 )

(Decrease) increase in warehouse lines of (192 ) 214,659 credit

Tenant concessions received 18,645 28,617

Purchase of equity securities (5,281 ) (8,932 )

Proceeds from sale of equity securities 6,856 11,210

Increase in real estate under development (123,580 ) (68,178 )

(Increase) decrease in receivables, prepaidexpenses and other assets (including (255,161 ) 610,058 contract and lease assets)

Decrease in accounts payable and accruedexpenses and other liabilities (including (107,756 ) (98,977 )contract and lease liabilities)

Increase (decrease) in compensation andemployee benefits payable and accrued bonus 176,413 (550,932 )and profit sharing

Decrease in net income taxes receivable/ 42,100 118,736 payable

Other operating activities, net 18,739 (12,313 )

Net cash provided by operating activities 1,200,121 890,358



CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures (121,409 ) (190,546 )

Acquisition of businesses, including netassets acquired, intangibles and goodwill, (71,373 ) (25,923 )net of cash acquired

Contributions to unconsolidated subsidiaries (400,967 ) (72,058 )

Distributions from unconsolidated 63,776 66,409 subsidiaries

Other investing activities, net (25,433 ) 15,631

Net cash used in investing activities (555,406 ) (206,487 )



CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facility - 835,671

Repayment of revolving credit facility - (835,671 )

Proceeds from notes payable on real estate 71,157 40,263

Repayment of notes payable on real estate (13,944 ) (24,704 )

Proceeds from issuance of 2.500% senior 492,255 - notes

Repurchase of common stock (188,285 ) (50,028 )

Acquisition of businesses (cash paid foracquisitions more than three months after (3,421 ) (34,400 )purchase date)

Units repurchased for payment of taxes on (36,747 ) (41,627 )equity awards

Non-controlling interest contributions 652 1,977

Non-controlling interest distributions (4,026 ) (2,471 )

Other financing activities, net (42,767 ) (30,050 )

Net cash provided by (used in) financing 274,874 (141,040 )activities

Effect of currency exchange rate changes oncash and cash equivalents and restricted (82,714 ) 9,981 cash



NET INCREASE IN CASH AND CASH EQUIVALENTS 836,875 552,812 AND RESTRICTED CASH

CASH AND CASH EQUIVALENTS AND RESTRICTED 2,039,247 1,093,745 CASH, AT BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS AND RESTRICTED $ 2,876,122 $ 1,646,557 CASH, AT END OF PERIOD



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest $ 29,131 $ 60,415

Income tax payments, net $ 220,955 $ 4,137

Non-GAAP Financial Measures

The following measures are considered "non-GAAP financial measures" under SEC guidelines:

(i) Net revenue

(ii) Adjusted revenue for the Real Estate Investments segment

(iii) Net income attributable to CBRE Group, Inc. stockholders, as adjusted (which we also refer to as "adjusted net income")

Diluted income per share attributable to CBRE Group, Inc. shareholders,(iv) as adjusted (which we also refer to as "adjusted earnings per diluted share" or "adjusted EPS")

(v) Adjusted EBITDA

(vi) Business line operating profit/loss

(vii) Segment operating profit on revenue and net revenue margins

(viii) Free cash flow

(ix) Net cash

These measures are not recognized measurements under United States generally accepted accounting principles (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. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. The company believes 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. The company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.

With respect to net revenue: net revenue is gross revenue less costs largely associated with 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 that generally have no margin, and as such provides greater visibility into the underlying performance of our business. Prior to 2021, the company utilized fee revenue to analyze the overall financial performance. This metric excluded additional reimbursed costs, primarily related to employees dedicated to clients, some of which included minimal margin.

With respect to adjusted revenue: the company believes that investors may find this measure useful to analyze the financial performance of our Real Estate Investments segment because it is more reflective of this segment's total operations.

With respect to adjusted net income, adjusted EPS, adjusted EBITDA, business line operating profit, and segment operating profit on revenue and net revenue margins: the company believes 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 accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions-and in the case of adjusted EBITDA, business line operating profit and segment operating profit on revenue and net revenue margins-the effects of financings and income tax and the accounting effects of capital spending. All of these measures and adjusted revenue may vary for different companies for reasons unrelated to overall operating performance. In the case of adjusted EBITDA, this measure is not intended to be a measure of free cash flow for our management's discretionary use because it does not consider cash requirements such as tax and debt service payments. The adjusted EBITDA measure calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts 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. The company also uses adjusted EBITDA, segment operating profit and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

With respect to free cash flow, the company believes that investors may find this measure useful to analyze the cash flow generated from operations after accounting for cash outflows to support operations and capital expenditures. With respect to net cash, the company believes that investors use this measure when calculating the company's net leverage ratio.

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2019 ^(3) 2021 2020



Net incomeattributable $ 435,743 $ 184,132 $ 256,599 $ 1,144,582 $ 438,224 to CBRE Group,Inc.



Plus / minus:

Costsassociatedwith - 55,374 - - 55,374 transformationinitiatives ^(1)

Non-cashdepreciationandamortizationexpense 17,323 18,774 19,330 52,991 57,281 related tocertain assetsattributabletoacquisitions

Integrationand othercosts related 16,211 525 4,517 24,345 1,544 toacquisitions

Carriedinterestincentivecompensationexpense 16,959 3,767 (3,360 ) 33,963 (11,517 )(reversal) toalign with thetiming ofassociatedrevenue

Impact of fairvalueadjustments toreal estateassetsacquired in 47 2,289 - 772 9,289 the TelfordAcquisition(purchaseaccounting)that were soldin period

Costs incurredrelated to - 1,061 - - 4,995 legal entityrestructuring

Asset - - - - 75,171 impairments

Costsassociatedwith workforce - - - - 37,594 optimizationefforts ^(2)

Tax impact of (12,386 ) (20,869 ) (7,244 ) (27,314 ) (51,044 )adjusted items



Net incomeattributableto CBRE Group, $ 473,897 $ 245,053 $ 269,842 $ 1,229,339 $ 616,911 Inc., asadjusted



Diluted incomeper shareattributable $ 1.39 $ 0.73 $ 0.79 $ 3.62 $ 1.82 to CBRE Group,Inc., asadjusted



Weightedaverage sharesoutstanding 340,337,159 337,665,848 341,100,182 339,805,292 338,255,859 for dilutedincome pershare

_______________

(1)

Commencing during the quarter ended September 30, 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.

(2)

Primarily represents costs incurred related to workforce optimization initiated and executed in 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 nine months ended September 30, 2020.

(3)

Third-quarter 2019 data included as it is being referenced in the document.

Adjusted EBITDA is calculated as follows (in thousands):

_______________

Commencing during the quarter ended September 30, 2020, management began the implementation of certain transformation initiatives to enable the^ company to reduce costs, streamline operations and support future growth.(1) The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.

Primarily represents costs incurred related to workforce optimization initiated and executed in 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(2) 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 nine months ended September 30, 2020.

^ Third-quarter 2019 data included as it is being referenced in the(3) document.

Adjusted EBITDA is calculated as follows (in thousands):

Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020



Net income attributable $ 435,743 $ 184,132 $ 1,144,582 $ 438,224 to CBRE Group, Inc.



Add:

Depreciation and 122,564 127,725 363,727 357,903 amortization

Asset impairments - - - 75,171

Interest expense, net 11,038 17,829 34,916 51,795 of interest income

Provision for income 133,507 49,062 343,279 119,047 taxes

Costs associated withtransformation - 55,374 - 55,374 initiatives ^(1)

Integration and othercosts related to 16,211 525 24,345 1,544 acquisitions

Carried interestincentive compensationexpense (reversal) to 16,959 3,767 33,963 (11,517 )align with the timingof associated revenue

Impact of fair valueadjustments to realestate assets acquiredin the Telford 47 2,289 772 9,289 Acquisition (purchaseaccounting) that weresold in period

Costs incurred relatedto legal entity - 1,061 - 4,995 restructuring

Costs associated withworkforce optimization - - - 37,594 efforts ^(2)



Adjusted EBITDA $ 736,069 $ 441,764 $ 1,945,584 $ 1,139,419

_______________

(1)

Commencing during the quarter ended September 30, 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.

(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.

Adjusted EBITDA for the trailing twelve months ended September 30, 2021 is calculated as follows (in thousands):

_______________

Commencing during the quarter ended September 30, 2020, management began the implementation of certain transformation initiatives to enable the^ company to reduce costs, streamline operations and support future growth.(1) The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.

Primarily represents costs incurred related to workforce optimization^ initiated and executed in the second quarter of 2020 as part of(2) 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.

Adjusted EBITDA for the trailing twelve months ended September 30, 2021 is calculated as follows (in thousands):

Trailing

Twelve Months Ended September 30, 2021



Net income attributable to CBRE Group, Inc. $ 1,458,347



Add:

Depreciation and amortization 507,552

Asset impairments 13,505

Interest expense, net of interest income 50,874

Write-off of financing costs on extinguished debt 75,592

Provision for income taxes 438,333

Costs associated with transformation initiatives ^(1) 99,774

Impact of fair value adjustments to real estate assetsacquired in the Telford Acquisition (purchase accounting) 3,081 that were sold in period

Costs incurred related to legal entity restructuring 4,367

Integration and other costs related to acquisitions 24,557

Carried interest incentive compensation expense to align 22,568 with the timing of associated revenue



Adjusted EBITDA $ 2,698,550

_______________

(1)

Commencing during the quarter ended September 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.

Revenue includes client reimbursed pass-through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. Reimbursement related to subcontracted vendor work generally has no margin and has been excluded from net revenue. Reconciliations are shown below (dollars in thousands):

_______________

Commencing during the quarter ended September 2020, management began the implementation of certain transformation initiatives to enable the company^ to reduce costs, streamline operations and support future growth. The(1) majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees.

Revenue includes client reimbursed pass-through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. Reimbursement related to subcontracted vendor work generally has no margin and has been excluded from net revenue. Reconciliations are shown below (dollars in thousands):

Three Months Ended September 30,

2021 2020

Property Management Revenue

Net revenue $ 422,652 $ 400,709

Plus: Pass through costs also recognized as 10,006 5,846 revenue

Revenue $ 432,658 $ 406,556

Three Months Ended September 30,

2021

2020

Facilities Management Revenue

Net revenue (8)

$

1,231,101

$

1,122,209

Plus: Pass through costs also recognized as revenue

2,248,989

2,162,479

Revenue

$

3,480,090

$

3,284,688

Three Months Ended September 30,

2021 2020

Facilities Management Revenue

Net revenue ^(8) $ 1,231,101 $ 1,122,209

Plus: Pass through costs also recognized as 2,248,989 2,162,479 revenue

Revenue $ 3,480,090 $ 3,284,688

Three Months Ended September 30,

2021

2020

Project Management Revenue

Net revenue (8)

$

320,694

$

338,286

Plus: Pass through costs also recognized as revenue

366,358

228,304

Revenue

$

687,052

$

566,590

Real Estate Investments adjusted revenue is computed as follows (in thousands):

Three Months Ended September 30,

2021 2020

Project Management Revenue

Net revenue ^(8) $ 320,694 $ 338,286

Plus: Pass through costs also recognized as 366,358 228,304 revenue

Revenue $ 687,052 $ 566,590

Real Estate Investments adjusted revenue is computed as follows (in thousands):

Three Months Ended September 30,

2021 2020

Real Estate Investments

Revenue $ 223,832 $ 169,612



Adjustments:

Less: Cost of revenue 40,224 40,384

Add: Gain on disposition of real estate 18,530 52,797

Add: Equity income from unconsolidated subsidiaries 156,479 30,914

Less: Net income attributable to non-controlling 722 553 interests

Add: Impact of fair value adjustments to real estateassets acquired in the Telford Acquisition (purchase 47 2,289 accounting) that were sold in period

Net adjustments $ 134,110 $ 45,063



Adjusted revenue ^(9) $ 357,942 $ 214,675

Below represents a reconciliation of REI business line operating profitability to REI segment operating profit (in thousands):

Three Months Ended September 30,

Real Estate Investments 2021 2020

Investment management operating profit $ 48,706 $ 28,955

Global real estate development operating 99,701 51,777 profit

Hana and segment overhead operating loss (2,362 ) (9,310 )

Real estate investments segment operating $ 146,045 $ 71,422 profit

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005343/en/

CONTACT: For further information: Kristyn Farahmand 214.863.3145 Kristyn.Farahmand@cbre.com

CONTACT: Steve Iaco 212.984.6535 Steven.Iaco@cbre.com