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MarketScreener Homepage  >  Equities  >  Nyse  >  CBRE Group, Inc.    CBRE

CBRE GROUP, INC.

(CBRE)
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CBRE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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08/04/2020 | 02:51pm EDT
This Quarterly Report on Form 10-Q (Quarterly Report) for CBRE Group, Inc. for
the three months ended June 30, 2020 represents an update to the more detailed
and comprehensive disclosures included in our   Annual Report on Form 10­K for
the fiscal year ended December 31, 2019 (2019 Annual Report)  . Accordingly, you
should read the following discussion in conjunction with the information
included in our 2019 Annual Report as well as the unaudited financial statements
included elsewhere in this Quarterly Report.

In addition, the statements and assumptions in this Quarterly Report that are
not statements of historical fact are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 or Section 21E of the
Securities Exchange Act of 1934, each as amended, including, in particular,
statements about our plans, strategies and prospects as well as estimates of
industry growth for the next quarter and beyond. For important information
regarding these forward-looking statements, please see the discussion below
under the caption "Cautionary Note on Forward-Looking Statements."

Overview


CBRE Group, Inc. is a Delaware corporation. References to "CBRE," "the company,"
"we," "us" and "our" refer to CBRE Group, Inc. and include all of its
consolidated subsidiaries, unless otherwise indicated or the context requires
otherwise.

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

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

Our revenue mix has shifted in recent years toward more revenue earned as part
of contracts encompassing multiple business lines as occupiers and investors
increasingly prefer to purchase integrated, account-based services from firms
that meet the full spectrum of their needs nationally and globally. We believe
we are well-positioned to capture a substantial share of this growing market
opportunity. We generate revenue from both management fees (large multi-year
portfolio and per-project contracts) and commissions on transactions. Our
contractual, fee-for-services businesses generally involve occupier outsourcing
(including facilities and project management), property management, investment
management, appraisal/valuation and loan servicing. In addition, our leasing
services business line is largely recurring in nature over time.

In 2019, we generated revenue from a highly diversified base of clients,
including more than 90 of the Fortune 100 companies. We have been an S&P 500
company since 2006 and in 2020 we were ranked #128 on the Fortune 500. We have
been voted the most recognized commercial real estate brand in the Lipsey
Company survey for 19 years in a row (including 2020). We have also been rated a
World's Most Ethical Company by the Ethisphere Institute for seven consecutive
years (including 2020) and are included in the Dow Jones World Sustainability
Index and the Bloomberg Gender Equality Index.

In the first half of 2020, the outbreak of the widespread novel coronavirus
(COVID­19) created a tremendous amount of uncertainty, disrupted business
activity and severely impacted global real estate markets. As of the date of
this Quarterly Report, many of our locations and those of our clients remain
subject to significant operational limitations intended to mitigate the spread
of COVID­19 and a substantial portion of our employee population continues to
work remotely, even in jurisdictions where government stay-at-home orders have
been eased.

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Critical Accounting Policies


Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, or GAAP, which
require us to make estimates and assumptions that affect reported amounts. The
estimates and assumptions are based on historical experience and on other
factors that we believe to be reasonable. Actual results may differ from those
estimates. Critical accounting policies represent the areas where more
significant judgments and estimates are used in the preparation of our
consolidated financial statements. A discussion of such critical accounting
policies, which include revenue recognition, goodwill and other intangible
assets, and income taxes can be found in our   2019 Annual Report  . There have
been no material changes to these policies as of June 30, 2020.

New Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Seasonality


A significant portion of our revenue is seasonal, which an investor should keep
in mind when comparing our financial condition and results of operations on a
quarter-by-quarter basis. Historically, our revenue, operating income, net
income and cash flow from operating activities tend to be lowest in the first
quarter, and highest in the fourth quarter of each year. Revenue, earnings and
cash flow have generally been concentrated in the fourth calendar quarter due to
the focus on completing sales, financing and leasing transactions prior to
year-end. In light of the severe economic dislocations caused by COVID­19, and
the resulting uncertainty in the business outlook, the quarterly distribution of
financial results in 2020 may not conform with historical patterns.

Inflation

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

Items Affecting Comparability


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

Macroeconomic Conditions


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

                                       25

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

Since 2010, commercial real estate markets had generally been characterized by
increased demand for space, falling vacancies, higher rents and strong capital
flows, leading to solid property sales and leasing activity. This healthy
backdrop changed abruptly in the first quarter of 2020 with the emergence of the
COVID­19 pandemic and resultant sharp contraction of economic activity across
much of the world. There has been a significant impact on commercial real estate
markets throughout the first half of 2020. Many property owners and occupiers
have put transactions on hold and withdrawn existing mandates, driving lower
sales and leasing volumes. We expect to see this trend continue in the second
half of 2020, as concerns about a COVID-19 resurgence across our major markets
are high. The timing of the negative impact varies by geography with Asian
markets, which experienced the earliest effects of the pandemic, showing
tentative signs of recovering. The recovery of markets in other parts of the
world remained uncertain as of mid-year 2020.

Real estate investment management and property development markets have also
been, and we expect them to continue to be, affected by the abrupt
macroeconomic, real estate and capital markets challenges brought about by
COVID­19. Additionally, actively managed public real estate equity funds and
programs continue to be pressured by a shift in investor preferences from active
to passive portfolio strategies.

The performance of our global real estate services and investment businesses
depends on an improvement in macroeconomic conditions, including a return to
restored business and consumer confidence, sustained economic growth, solid job
creation and, stable, functioning global credit markets.

Effects of Acquisitions


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

Strategic in-fill acquisitions have also played a key role in strengthening our
service offerings. The companies we acquired have generally been regional or
specialty firms that complement our existing platform, or independent affiliates
in which, in some cases, we held a small equity interest. During 2019, we
completed eight in-fill acquisitions: a leading advanced analytics software
company based in the United Kingdom, a commercial and residential real estate
appraisal firm headquartered in Florida, our former affiliate in Omaha, a
project management firm in Australia, a valuation and consulting business in
Switzerland, a leading project management firm in Israel, a full-service real
estate firm in San Antonio with a focus on retail, office, medical office and
land, and a debt-focused real estate investment management business in the
United Kingdom. In the first quarter of 2020, we acquired leading local
facilities management firms in Spain and Italy, a U.S. firm that helps companies
reduce telecommunications costs and a leading provider of workplace technology
project management, consulting and procurement services to occupiers across the
U.S. In July 2020, we acquired a firm specializing in performing real estate
valuations in South Korea.

                                       26
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We believe strategic acquisitions can significantly decrease the cost, time and
resources necessary to attain a meaningful competitive position - or expand our
capabilities - within targeted markets or business lines. In general, however,
most acquisitions will initially have an adverse impact on our operating income
and net income as a result of transaction-related expenditures, including
severance, lease termination, transaction and deferred financing costs, as well
as costs and charges associated with integrating the acquired business and
integrating its financial and accounting systems into our own.

Our acquisition agreements often require us to pay deferred and/or contingent
purchase price payments, subject to the acquired company achieving certain
performance metrics, and/or the passage of time as well as other conditions. As
of June 30, 2020, we have accrued deferred consideration totaling $112.1
million, which is included in accounts payable and accrued expenses and in other
long-term liabilities in the accompanying consolidated balance sheets set forth
in Item 1 of this Quarterly Report.

International Operations


We are closely monitoring the impact of the COVID­19 global pandemic on business
conditions across all regions worldwide. COVID­19 has significantly impacted our
operations and has the potential to further reduce our business activity. In
addition, we continue to monitor developments related to the United Kingdom's
withdrawal from the European Union (Brexit) and the uncertainty of the long-term
economic and trade relationship between the United Kingdom and European Union.
The continued uncertainty has the potential to impact our businesses in the
United Kingdom and the rest of Europe, particularly sales and leasing activity
in the United Kingdom. Any currency volatility associated with COVID­19, Brexit
or other economic dislocations could impact our results of operations.

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

During the six months ended June 30, 2020, approximately 42.6% of our business
was transacted in non-U.S. dollar currencies, the majority of which included the
Australian dollar, British pound sterling, Canadian dollar, Chinese yuan, euro,
Indian rupee, Japanese yen, Singapore dollar and Swiss franc. The following
table sets forth our revenue derived from our most significant currencies (U.S.
dollars in thousands):



                                          Three Months Ended June 30,                               Six Months Ended June 30,
                                       2020                        2019                         2020                         2019
United States dollar          $ 3,089,794        57.4 %   $ 3,372,201        59.0 %   $  6,470,357        57.4 %   $  6,408,907        59.1 %
British pound sterling            677,880        12.6 %       657,005        11.5 %      1,451,895        12.9 %      1,245,587        11.5 %
euro                              573,761        10.7 %       585,438        10.2 %      1,190,729        10.6 %      1,115,864        10.3 %
Canadian dollar                   170,896         3.2 %       196,565         3.4 %        364,131         3.2 %        358,461         3.3 %
Indian rupee                      110,598         2.1 %       121,718         2.1 %        246,124         2.2 %        234,191         2.1 %
Australian dollar                  93,923         1.7 %       111,252         2.0 %        188,064         1.7 %        198,642         1.8 %
Chinese yuan                       90,375         1.7 %        74,057         1.3 %        165,831         1.5 %        147,649         1.4 %
Swiss franc                        78,411         1.5 %        43,797         0.8 %        154,088         1.4 %         87,142         0.8 %
Japanese yen                       63,911         1.2 %        76,196         1.3 %        162,293         1.4 %        143,033         1.3 %
Singapore dollar                   62,501         1.1 %        76,195         1.3 %        130,405         1.1 %        140,906         1.3 %
Other currencies (1)              369,334         6.8 %       399,649         7.1 %        746,635         6.6 %        769,201         7.1 %
Total revenue                 $ 5,381,384       100.0 %   $ 5,714,073       100.0 %   $ 11,270,552       100.0 %   $ 10,849,583       100.0 %




(1)  Approximately 37 currencies comprise 6.8% and 6.6% of our revenues for the

three and six months ended June 30, 2020, respectively, and approximately 37

     currencies comprise 7.1% of our revenues for both the three and six months
     ended June 30, 2019.




                                       27
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Although we operate globally, we report our results in U.S. dollars. As a
result, the strengthening or weakening of the U.S. dollar may positively or
negatively impact our reported results. For example, we estimate that had the
British pound sterling-to-U.S. dollar exchange rates been 10% higher during the
six months ended June 30, 2020, the net impact would have been a decrease in
pre-tax income of $1.6 million. Had the euro-to-U.S. dollar exchange rates been
10% higher during the six months ended June 30, 2020, the net impact would have
been an increase in pre-tax income of $3.6 million. These hypothetical
calculations estimate the impact of translating results into U.S. dollars and do
not include an estimate of the impact that a 10% change in the U.S. dollar
against other currencies would have had on our foreign operations.

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

                                       28
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Results of Operations


The following table sets forth items derived from our consolidated statements of
operations for the three and six months ended June 30, 2020 and 2019 (dollars in
thousands):



                                            Three Months Ended June 30,                                Six Months Ended June 30,
                                         2020                         2019                         2020                         2019
Revenue:
Fee revenue:
Global workplace solutions      $   755,335        14.0 %    $   764,325

13.4 % $ 1,562,897 13.9 % $ 1,456,220 13.4 % Property and advisory project

  management                        298,388         5.5 %        312,370         5.5 %        607,067         5.4 %        600,489         5.5 %
Valuation                           131,845         2.5 %        149,051         2.6 %        279,597         2.5 %        287,377         2.6 %
Loan servicing                       57,050         1.1 %         49,740         0.9 %        113,730         1.0 %         95,758         0.9 %
Advisory leasing                    510,124         9.5 %        817,788        14.3 %      1,117,235         9.9 %      1,440,428        13.3 %
Capital markets:
Advisory sales                      241,247         4.5 %        466,558         8.2 %        672,203         6.0 %        852,213         7.9 %
Commercial mortgage
  origination                       100,445         1.8 %        139,999         2.5 %        223,527         1.9 %        260,878         2.4 %
Investment management               103,132         1.9 %        101,646         1.8 %        224,810         2.0 %        207,954         1.9 %
Development services                 58,479         1.1 %         48,017         0.7 %        148,271         1.3 %         76,902         0.7 %
Total fee revenue                 2,256,045        41.9 %      2,849,494        49.9 %      4,949,337        43.9 %      5,278,219        48.6 %
Pass through costs also
recognized as
  revenue                         3,125,339        58.1 %      2,864,579        50.1 %      6,321,215        56.1 %      5,571,364        51.4 %
Total revenue                     5,381,384       100.0 %      5,714,073       100.0 %     11,270,552       100.0 %     10,849,583       100.0 %
Costs and expenses:
Cost of revenue                   4,399,537        81.8 %      4,445,790   

77.8 % 9,112,211 80.8 % 8,467,824 78.0 % Operating, administrative and

  other                             770,806        14.3 %        877,397    

15.4 % 1,560,872 13.8 % 1,670,273 15.4 % Depreciation and amortization 116,384 2.1 % 106,479

     1.8 %        230,178         2.1 %        212,302         2.0 %
Asset impairments                         -         0.0 %              -         0.0 %         75,171         0.7 %         89,037         0.8 %
Total costs and expenses          5,286,727        98.2 %      5,429,666   

95.0 % 10,978,432 97.4 % 10,439,436 96.2 % (Loss) gain on disposition of real estate

                            (492 )      (0.1 %)            10    

0.0 % 22,335 0.2 % 19,257 0.2 % Operating income

                     94,165         1.7 %        284,417         5.0 %        314,455         2.8 %        429,404         4.0 %
Equity income from
unconsolidated
  subsidiaries                       19,480         0.4 %         21,773         0.3 %         40,111         0.4 %         94,437         0.9 %
Other income                          5,220         0.1 %          4,369   

0.1 % 5,027 0.0 % 25,222 0.2 % Interest expense, net of interest income

                      17,950         0.3 %         24,600    

0.4 % 33,966 0.3 % 45,792 0.4 % Write-off of financing costs on

  extinguished debt                       -         0.0 %              -         0.0 %              -         0.0 %          2,608         0.1 %
Income before provision for
income taxes                        100,915         1.9 %        285,959    

5.0 % 325,627 2.9 % 500,663 4.6 % Provision for income taxes

           18,803         0.4 %         62,521    

1.1 % 69,985 0.6 % 106,399 1.0 % Net income

                           82,112         1.5 %        223,438    

3.9 % 255,642 2.3 % 394,264 3.6 % Less: Net income (loss) attributable to

  non-controlling interests             215         0.0 %           (293 )       0.0 %          1,550         0.0 %          6,124         0.0 %
Net income attributable to
CBRE Group,
  Inc.                          $    81,897         1.5 %    $   223,731         3.9 %   $    254,092         2.3 %   $    388,140         3.6 %
Adjusted EBITDA                 $   267,304         5.0 %    $   468,492         8.2 %   $    697,655         6.2 %   $    918,524         8.5 %




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

                                       29

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

EBITDA represents earnings before net interest expense, write-off of financing
costs on extinguished debt, income taxes, depreciation and amortization and
asset impairments. Amounts shown for adjusted EBITDA further remove (from
EBITDA) the impact of costs primarily associated with workforce optimization
efforts in response to the COVID-19 pandemic, fair value adjustments to real
estate assets acquired in the Telford Acquisition (purchase accounting) that
were sold in the period, costs incurred related to legal entity restructuring,
integration and other costs related to acquisitions, certain carried interest
incentive compensation (reversal) expense to align with the timing of associated
revenue, and costs associated with our reorganization, including cost-savings
initiatives. We believe that investors may find these measures useful in
evaluating our operating performance compared to that of other companies in our
industry because their calculations generally eliminate the effects of
acquisitions, which would include impairment charges of goodwill and intangibles
created from acquisitions, the effects of financings and income taxes and the
accounting effects of capital spending.

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

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



                                             Three Months Ended           Six Months Ended
                                                  June 30,                    June 30,
                                              2020          2019          2020          2019
Net income attributable to CBRE Group,
Inc.                                       $  81,897$ 223,731$ 254,092$ 388,140
Add:
Depreciation and amortization                116,384       106,479       230,178       212,302
Asset impairments                                  -             -        75,171        89,037
Interest expense, net of interest income      17,950        24,600        33,966        45,792
Write-off of financing costs on
extinguished debt                                  -             -             -         2,608
Provision for income taxes                    18,803        62,521        69,985       106,399
EBITDA                                       235,034       417,331       663,392       844,278
Adjustments:
Costs associated with workforce
optimization efforts (1)                      37,594             -        37,594             -
Impact of fair value adjustments to real
estate assets acquired in
  the Telford Acquisition (purchase
accounting) that were sold in
  period                                       1,247             -         7,000             -
Costs incurred related to legal entity
restructuring                                    693             -         3,934             -
Integration and other costs related to
acquisitions                                     236         9,037         1,019         9,037
Carried interest incentive compensation
(reversal) expense to align
  with the timing of associated revenue       (7,500 )       8,308       (15,284 )      15,644
Costs associated with our
reorganization, including cost-savings
  initiatives (2)                                  -        33,816             -        49,565
Adjusted EBITDA                            $ 267,304$ 468,492$ 697,655$ 918,524




(1)  Primarily represents costs incurred related to workforce optimization

initiated and executed in the second quarter of 2020 as part of management's

cost containment efforts in response to the COVID-19 pandemic. The charges

are cash expenditures primarily for severance costs incurred related to this

effort. 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 both the three and six months ended June 30,

2020.

(2) Primarily represents severance costs related to headcount reductions in

connection with our reorganization announced in the third quarter of 2018

     that became effective January 1, 2019.


                                       30
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Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019


We reported consolidated net income of $81.9 million for the three months ended
June 30, 2020 on revenue of $5.4 billion as compared to consolidated net income
of $223.7 million on revenue of $5.7 billion for the three months ended June 30,
2019.

Our revenue on a consolidated basis for the three months ended June 30, 2020
decreased by $332.7 million, or 5.8%, as compared to the three months ended June
30, 2019. The revenue decrease reflects the impact of COVID-19 on our Advisory
Services segment, which resulted in lower sales (down 49.3%) and leasing revenue
(down 37.6%) as well as decreased commercial mortgage origination activity (down
28.3%). These declines were partially offset by higher revenue in our Global
Workplace Solutions segment (up 8.3%) led by growth in our facilities management
line of business, driven by its contractual nature, and improved revenue in our
Real Estate Investments segment (up 8.0%) largely due to the Telford
Acquisition. Foreign currency translation had a 1.6% negative impact on total
revenue during the three months ended June 30, 2020, primarily driven by
weakness in the Australian dollar, Brazilian real, British pound sterling, euro
and Indian rupee.

Our cost of revenue on a consolidated basis decreased by $46.3 million, or 1.0%,
during the three months ended June 30, 2020 as compared to the same period in
2019, primarily driven by lower commission expense. Our sales and leasing
professionals generally are paid on a commission basis, which substantially
correlates with our sales and lease revenue performance. Accordingly, the
decrease in advisory sales and leasing revenue as a result of COVID-19 led to a
corresponding decrease in commission expense. Lower bonuses in our Advisory
Services segment attributable to lower revenue as a result of COVID-19 also
contributed to the variance. Foreign currency translation had a 1.7% positive
impact on total cost of revenue during the three months ended June 30, 2020.
These items were largely offset by higher costs associated with our Global
Workplace Solutions segment. Cost of revenue as a percentage of revenue
increased from 77.8% for the three months ended June 30, 2019 to 81.8% for the
three months ended June 30, 2020, primarily driven by our mix of revenue, with
revenue from our Global Workplace Solutions segment, which has a lower margin
than our other revenue streams, comprising a higher percentage of revenue than
in the prior year period.

Our operating, administrative and other expenses on a consolidated basis
decreased by $106.6 million, or 12.1%, for the three months ended June 30, 2020
as compared to the same period in 2019. The negative impact of COVID-19 on our
operating results led to a corresponding decrease in bonus, stock compensation
and carried interest expense. In addition, we reduced certain operating expenses
such as travel and entertainment, marketing and employee events to improve
financial performance. During the second quarter of 2019, we incurred $32.7
million of costs in connection with our reorganization, which did not recur in
the current period. Foreign currency translation also had a 1.7% positive impact
on total operating expenses during the three months ended June 30, 2020. These
items were partially offset by an increase in certain costs as a result of
COVID-19, including higher bad debt expense. We also incurred $30.2 million of
costs (mainly severance) primarily related to workforce optimization initiated
and executed in the second quarter of 2020 as part of management's cost
containment efforts in response to the COVID-19 pandemic. Lastly, in the second
quarter of 2020, we saw an increase in charitable donations largely driven by a
sizeable donation by the Company to its COVID-19 Relief Fund. Operating expenses
as a percentage of revenue decreased from 15.4% for the three months ended June
30, 2019 to 14.3% for the three months ended June 30, 2020, reflecting the
operating leverage inherent in our business.

Our depreciation and amortization expense on a consolidated basis increased by
$9.9 million, or 9.3%, during the three months ended June 30, 2020 as compared
to the same period in 2019. This increase was attributable to a rise in
depreciation expense of $9.9 million during the three months ended June 30, 2020
driven by technology-related capital expenditures.

Our equity income from unconsolidated subsidiaries on a consolidated basis
decreased by $2.3 million, or 10.5%, during the three months ended June 30, 2020
as compared to the same period in 2019, primarily driven by lower equity
earnings associated with an investment in our Advisory Services segment,
partially offset by higher equity earnings in our investment management line of
business within our Real Estate Investments segment.

                                       31

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Our consolidated interest expense, net of interest income, decreased by $6.7
million, or 27.0%, for the three months ended June 30, 2020 as compared to the
same period in 2019. This was primarily due to lower interest expense on
borrowings associated with our credit agreement (driven by lower interest rates)
as well as reduced net interest expense overseas as a result of higher cash
balances, particularly within our cash pooling arrangement in Europe.

Our provision for income taxes on a consolidated basis was $18.8 million for the
three months ended June 30, 2020 as compared to $62.5 million for the three
months ended June 30, 2019. The decrease of $43.7 million was primarily related
to the corresponding decrease in our consolidated pre-tax book income. Our
effective tax rate decreased from 21.9% for the three months ended June 30, 2019
to 18.6% for the three months ended June 30, 2020 primarily due to a higher
benefit on a percentage basis of favorable permanent book tax differences in
certain non-U.S. jurisdictions due to lower pre-tax book income. On March 27,
2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was
enacted in the United States in response to the COVID­19 pandemic. The CARES Act
has not had, nor is it expected to have, a significant impact on our effective
tax rate for 2020.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019


We reported consolidated net income of $254.1 million for the six months ended
June 30, 2020 on revenue of $11.3 billion as compared to consolidated net income
of $388.1 million on revenue of $10.8 billion for the six months ended June 30,
2019.

Our revenue on a consolidated basis for the six months ended June 30, 2020
increased by $421.0 million, or 3.9%, as compared to the six months ended June
30, 2019. The revenue increase reflects higher revenue in our Global Workplace
Solutions segment (up 13.2%) led by growth in our facilities management line of
business, driven by its contractual nature, and improved revenue in our Real
Estate Investments segment (up 31.0%) largely due to the Telford Acquisition.
These increases were partially offset by decreases in revenue in our Advisory
Services segment due to the impact of COVID-19, including lower leasing (down
22.4%) and sales revenue (down 21.1%) as well as decreased commercial mortgage
origination activity (down 14.3%). Foreign currency translation had a 1.2%
negative impact on total revenue during the six months ended June 30, 2020,
primarily driven by weakness in the Australian dollar, Brazilian real, British
pound sterling, euro, and Indian rupee.

Our cost of revenue on a consolidated basis increased by $644.4 million, or
7.6%, during the six months ended June 30, 2020 as compared to the same period
in 2019. This increase was primarily due to higher costs associated with our
Global Workplace Solutions segment and higher costs in our Real Estate
Investments segment due to the Telford Acquisition. These items were partially
offset by lower commission expense incurred during the six months ended June 30,
2020. As previously mentioned, our sales and leasing professionals generally are
paid on a commission basis, which substantially correlates with our sales and
lease revenue performance. Accordingly, the decrease in advisory leasing and
sales revenue led to a corresponding decrease in commission expense. Foreign
currency translation had a 1.2% positive impact on total cost of revenue during
the six months ended June 30, 2020. Cost of revenue as a percentage of revenue
increased from 78.0% for the six months ended June 30, 2019 to 80.8% for the six
months ended June 30, 2020, primarily driven by our mix of revenue, with revenue
from our Global Workplace Solutions segment, which has a lower margin than our
other revenue streams, comprising a higher percentage of revenue than in the
prior year period.

Our operating, administrative and other expenses on a consolidated basis
decreased by $109.4 million, or 6.6%, for the six months ended June 30, 2020 as
compared to the same period in 2019. The negative impact of COVID-19 on our
operating results led to corresponding decreases in bonus, stock compensation
and carried interest expense. In addition, we reduced certain operating expenses
such as travel and entertainment, marketing and employee events to improve
financial performance. During the first half of 2019, we incurred $47.0 million
of costs in connection with our reorganization, which did not recur in the
current period. Foreign currency translation also had a 1.3% positive impact on
total operating expenses during the six months ended June 30, 2020. These items
were partially offset by an increase in certain costs, including higher costs as
a result of the Telford Acquisition, investments made in both people and
technology associated with efforts to remediate material weaknesses in our
Europe, Middle East and Africa (EMEA) region of our Global Workplace Solutions
segment, investments in our new flexible space offering and higher costs as a
result of COVID-19, including higher bad debt expense and accruals for losses on
loans. We also incurred $30.2 million of costs (mainly severance) primarily
related to workforce optimization initiated and executed in the second quarter
of 2020 as part of management's cost containment efforts in response to the
COVID-19 pandemic. Lastly, in the first half of 2020, we saw an increase in
charitable donations largely driven by a sizeable donation by the Company to its
COVID-19 Relief Fund. Operating expenses as a percentage of revenue decreased
from 15.4% for the six months ended June 30, 2019 to 13.8% for the six months
ended June 30, 2020, reflecting the operating leverage inherent in our business.

                                       32

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Our depreciation and amortization expense on a consolidated basis increased by
$17.9 million, or 8.4%, during the six months ended June 30, 2020 as compared to
the same period in 2019. This increase was primarily attributable to a rise in
depreciation expense of $19.3 million during the six months ended June 30, 2020
driven by technology-related capital expenditures.

Our asset impairments on a consolidated basis totaled $75.2 million and $89.0
million for the six months ended June 30, 2020 and 2019, respectively. During
the six months ended June 30, 2020, we recorded $50.2 million of non-cash asset
impairment charges in our Global Workplace Solutions segment and a non-cash
goodwill impairment charge of $25.0 million in our Real Estate Investments
segment. As a result of the recent global economic disruption and uncertainty
due to COVID­19, we deemed there to be triggering events in the first quarter of
2020 that required testing of certain assets for impairment at that time. Based
on these tests, we recorded the aforementioned non-cash impairment charges,
which were driven by lower anticipated cash flows in certain businesses directly
resulting from a downturn in forecasts as well as increased forecast risk due to
COVID­19. During the six months ended June 30, 2019, we recorded a non-cash
intangible asset impairment charge of $89.0 million in our Real Estate
Investments segment. This non-cash write-off resulted from a review of the
anticipated cash flows and the decrease in assets under management in our public
securities business driven in part by continued industry-wide shift in investor
preference for passive investment programs.

Our gain on disposition of real estate on a consolidated basis increased by $3.1
million, or 16.0%, during the six months ended June 30, 2020 as compared to the
same period in 2019. These gains resulted from property sales within our Real
Estate Investments segment.

Our equity income from unconsolidated subsidiaries on a consolidated basis
decreased by $54.3 million, or 57.5%, during the six months ended June 30, 2020
as compared to the same period in 2019, primarily driven by lower equity
earnings associated with gains on property sales reported in our Real Estate
Investments segment.

Our consolidated interest expense, net of interest income, decreased by $11.8
million, or 25.8%, for the six months ended June 30, 2020 as compared to the
same period in 2019. This was primarily due to lower interest expense on
borrowings associated with our credit agreement (driven by lower interest rates)
as well as reduced net interest expense overseas as a result of higher cash
balances, particularly within our cash pooling arrangement in Europe.

Our write-off of financing costs on extinguished debt on a consolidated basis was $2.6 million for the six months ended June 30, 2019. These costs were incurred in connection with the refinancing of our credit agreement.


Our provision for income taxes on a consolidated basis was $70.0 million for the
six months ended June 30, 2020 as compared to $106.4 million for the six months
ended June 30, 2019. The decrease of $36.4 million was primarily related to the
corresponding decrease in consolidated pre-tax book income. There was no
material difference between our effective tax rate of 21.5% and 21.3% for the
six months ended June 30, 2020 and 2019, respectively.

Segment Operations


We organize our operations around, and publicly report our financial results on,
three global business segments: (1) Advisory Services; (2) Global Workplace
Solutions; and (3) Real Estate Investments. For additional information on our
segments, see Note 14 of the Notes to Consolidated Financial Statements
(Unaudited) set forth in Item 1 of this Quarterly Report.

                                       33

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Advisory Services

The following table summarizes our results of operations for our Advisory Services operating segment for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):



                                                               Three Months Ended June 30,                               Six Months Ended June 30,
                                                            2020                         2019                        2020                        2019
Revenue:
Fee revenue:
Property and advisory project management           $   298,388        19.2 %    $   312,370        14.3 %   $   607,067        17.4 %   $   600,489        15.0 %
Valuation                                              131,845         8.5 %        149,051         6.8 %       279,597         8.0 %       287,377         7.2 %
Loan servicing                                          57,050         3.7 %         49,740         2.3 %       113,730         3.3 %        95,758         2.4 %
Advisory leasing                                       510,124        32.8 %        817,788        37.5 %     1,117,235        32.1 %     1,440,428        35.9 %
Capital markets:
Advisory sales                                         241,247        15.5 %        466,558        21.5 %       672,203        19.3 %       852,213        21.1 %
Commercial mortgage origination                        100,445         6.5 %        139,999         6.4 %       223,527         6.4 %       260,878         6.5 %
Total fee revenue                                    1,339,099        86.2 %      1,935,506        88.8 %     3,013,359        86.5 %     3,537,143        88.1 %
Pass through costs also recognized as revenue          213,830        13.8 %        243,452        11.2 %       471,094        13.5 %       476,217        11.9 %
Total revenue                                        1,552,929       100.0 %      2,178,958       100.0 %     3,484,453       100.0 %     4,013,360       100.0 %
Costs and expenses:
Cost of revenue                                        967,241        62.3 %      1,309,940        60.1 %     2,125,250        61.0 %     2,393,039        59.6 %
Operating, administrative and other                    483,281        31.1 

% 544,696 25.0 % 970,744 27.9 % 1,041,314

     25.9 %
Depreciation and amortization                           81,145         5.2 %         74,754         3.4 %       160,097         4.6 %       146,401         3.7 %
Operating income                                        21,262         1.4 %        249,568        11.5 %       228,362         6.5 %       432,606        10.8 %
Equity (loss) income from unconsolidated
  subsidiaries                                          (1,751 )      (0.1 %)         3,136         0.1 %          (414 )       0.0 %         3,811         0.1 %
Other income                                             4,542         0.3 %          1,480         0.1 %         6,819         0.2 %         3,159         0.0 %
Less: Net income (loss) attributable to
  non-controlling interests                                203         0.0 %            135         0.0 %           456         0.0 %           (10 )       0.0 %
Add-back: Depreciation and amortization                 81,145         5.2 %         74,754         3.4 %       160,097         4.6 %       146,401         3.7 %
EBITDA                                                 104,995         6.8 %        328,803        15.1 %       394,408        11.3 %       585,987        14.6 %
Adjustments:
Costs associated with workforce optimization
  efforts (1)                                           27,418         1.8 %              -         0.0 %        27,418         0.8 %             -         0.0 %
Costs incurred related to legal entity
  restructuring                                            693         0.0 %              -         0.0 %         3,934         0.1 %             -         0.0 %
Costs associated with our reorganization,
  including cost-savings initiatives (2)                     -         0.0 %          4,422         0.2 %             -         0.0 %        11,088         0.3 %
Integration and other costs related to
  acquisitions                                               -         0.0 %            303         0.0 %             -         0.0 %           303         0.0 %
Adjusted EBITDA and Adjusted EBITDA on
  revenue margin                                   $   133,106         8.6 

% $ 333,528 15.3 % $ 425,760 12.2 % $ 597,378

     14.9 %
Adjusted EBITDA on fee revenue margin                                  9.9 %                       17.2 %                      14.1 %                      16.9 %



(1) Primarily represents costs incurred related to workforce optimization

initiated and executed in the second quarter of 2020 as part of management's

cost containment efforts in response to the COVID-19 pandemic. The charges

are cash expenditures primarily for severance costs incurred related to this

effort. Of the total costs, $6.1 million was included within the "Cost of

revenue" line item and $21.3 million was included in the "Operating,

administrative, and other" line item in the accompanying consolidated

statements of operations for both the three and six months ended June 30,

2020.

(2) Primarily represents severance costs related to headcount reductions in

connection with our reorganization announced in the third quarter of 2018

     that became effective January 1, 2019.


                                       34
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Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019


Revenue decreased by $626.0 million, or 28.7%, for the three months ended June
30, 2020 as compared to the three months ended June 30, 2019. The revenue
decrease primarily reflects the impact of COVID-19, which resulted in lower
sales and leasing revenue as well as decreased commercial mortgage origination
activity. Foreign currency translation had a 1.3% negative impact on total
revenue during the three months ended June 30, 2020, primarily driven by
weakness in the Australian dollar, Brazilian real, British pound sterling, euro
and Indian rupee.

Cost of revenue decreased by $342.7 million, or 26.2%, for the three months
ended June 30, 2020 as compared to the same period in 2019, primarily due to
reduced commission expense resulting from lower sales and leasing revenue as a
result of COVID-19. Lower bonuses attributable to lower revenue as a result of
COVID-19 also contributed to the decrease. In addition, foreign currency
translation had a 1.4% positive impact on total cost of revenue during the three
months ended June 30, 2020. Cost of revenue as a percentage of revenue increased
slightly from 60.1% for the three months ended June 30, 2019 to 62.3% for the
three months ended June 30, 2020.

Operating, administrative and other expenses decreased by $61.4 million, or
11.3%, for the three months ended June 30, 2020 as compared to the three months
ended June 30, 2019. The negative impact of COVID-19 on our operating results
led to corresponding decreases in bonus and stock compensation expense. In
addition, to improve financial performance, we reduced certain operating
expenses such as travel and entertainment, marketing and employee events. During
the second quarter of 2019, we incurred $4.9 million of costs in connection with
our reorganization, which did not recur in the current period. Foreign currency
translation also had a 1.6% positive impact on total operating expenses during
the three months ended June 30, 2020. These items were partially offset by $21.3
million of costs incurred (mainly severance) primarily related to workforce
optimization initiated and executed in the second quarter of 2020 as part of
management's cost containment efforts in response to the COVID-19 pandemic.
Lastly, in the second quarter of 2020, we saw an increase in charitable
donations largely driven by a sizeable donation by the Company to its COVID-19
Relief Fund.

In connection with the origination and sale of mortgage loans for which the
company retains servicing rights, we record servicing assets or liabilities
based on the fair value of the retained 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). Subsequent to the initial recording, MSRs are
amortized (within amortization expense) and carried at the lower of amortized
cost or fair value in other intangible assets in the accompanying consolidated
balance sheets. They are amortized in proportion to and over the estimated
period that the servicing income is expected to be received. For the three
months ended June 30, 2020, MSRs contributed to operating income $37.7 million
of gains recognized in conjunction with the origination and sale of mortgage
loans, offset by $31.9 million of amortization of related intangible assets. For
the three months ended June 30, 2019, MSRs contributed to operating income $44.3
million of gains recognized in conjunction with the origination and sale of
mortgage loans, offset by $29.3 million of amortization of related intangible
assets.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019


Revenue decreased by $528.9 million, or 13.2%, for the six months ended June 30,
2020 as compared to the six months ended June 30, 2019. The revenue decrease
primarily reflects the impact of COVID-19, which resulted in lower leasing and
sales revenue as well as decreased commercial mortgage origination activity.
Foreign currency translation had a 1.1% negative impact on total revenue during
the six months ended June 30, 2020, primarily driven by weakness in the
Australian dollar, Brazilian real, British pound sterling, euro and Indian
rupee.

Cost of revenue decreased by $267.8 million, or 11.2%, for the six months ended
June 30, 2020 as compared to the same period in 2019, primarily due to reduced
commission expense resulting from lower leasing and sales revenue as a result of
COVID-19. Foreign currency translation also had a 1.2% positive impact on total
cost of revenue during the six months ended June 30, 2020. Cost of revenue as a
percentage of revenue was relatively consistent at 61.0% for the six months
ended June 30, 2020 versus 59.6% for the same period in 2019.

                                       35

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Operating, administrative and other expenses decreased by $70.6 million, or
6.8%, for the six months ended June 30, 2020 as compared to the six months ended
June 30, 2019. The negative impact of COVID-19 on our operating results led to
corresponding decreases in bonus and stock compensation expense. In addition, to
improve financial performance, we reduced certain operating expenses such as
travel and entertainment, marketing and employee events. During the first half
of 2019, we incurred $10.5 million of costs in connection with our
reorganization, which did not recur in the current period. Foreign currency
translation also had a 1.3% positive impact on total operating expenses during
the six months ended June 30, 2020. These items were partially offset by $21.3
million of costs incurred (mainly severance) primarily related to workforce
optimization initiated and executed in the second quarter of 2020 as part of
management's cost containment efforts in response to the COVID-19 pandemic. We
also incurred certain costs as a result of COVID-19, including higher bad debt
expense and accruals for losses on loans. Lastly, in the first half of 2020, we
saw an increase in charitable donations largely driven by a sizeable donation by
the Company to its COVID-19 Relief Fund.

For the six months ended June 30, 2020, MSRs contributed to operating income
$73.3 million of gains recognized in conjunction with the origination and sale
of mortgage loans, offset by $62.4 million of amortization of related intangible
assets. For the six months ended June 30, 2019, MSRs contributed to operating
income $82.6 million of gains recognized in conjunction with the origination and
sale of mortgage loans, offset by $57.0 million of amortization of related
intangible assets.

Global Workplace Solutions

The following table summarizes our results of operations for our Global Workplace Solutions operating segment for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):



                                                    Three Months Ended June 30,                              Six Months Ended June 30,
                                                 2020                        2019                        2020                        2019
Revenue:
Fee revenue:
Global workplace solutions              $   755,335        20.6 %   $  
764,325        22.6 %   $ 1,562,897        21.1 %   $ 1,456,220        22.2 %
Total fee revenue                           755,335        20.6 %       764,325        22.6 %     1,562,897        21.1 %     1,456,220        22.2 %
Pass through costs also recognized
as revenue                                2,911,509        79.4 %     2,621,127        77.4 %     5,850,121        78.9 %     5,095,147        77.8 %
Total revenue                             3,666,844       100.0 %     3,385,452       100.0 %     7,413,018       100.0 %     6,551,367       100.0 %
Costs and expenses:
Cost of revenue                           3,402,275        92.8 %     3,135,850        92.6 %     6,901,891        93.1 %     6,074,785        92.7 %
Operating, administrative and
other                                       153,504         4.2 %       

176,238 5.2 % 301,325 4.1 % 311,710 4.8 % Depreciation and amortization

                30,546         0.8 %        29,839         0.9 %        60,944         0.8 %        59,322         0.9 %
Asset impairments                                 -         0.0 %             -         0.0 %        50,171         0.7 %             -         0.0 %
Operating income                             80,519         2.2 %        43,525         1.3 %        98,687         1.3 %       105,550         1.6 %
Equity (loss) income from
unconsolidated
  subsidiaries                                  (65 )       0.0 %          (325 )       0.0 %           327         0.0 %        (1,158 )       0.0 %
Other (loss) income                             (57 )       0.0 %         1,522         0.0 %           112         0.0 %         1,506         0.0 %
Less: Net loss attributable to
non-controlling
  interests                                       -         0.0 %          (105 )       0.0 %             -         0.0 %          (263 )       0.0 %
Add-back: Depreciation and
amortization                                 30,546         0.8 %       

29,839 0.9 % 60,944 0.8 % 59,322 0.9 % Add-back: Asset impairments

                       -         0.0 %             -         0.0 %        50,171         0.7 %             -         0.0 %
EBITDA                                      110,943         3.0 %        74,666         2.2 %       210,241         2.8 %       165,483         2.5 %
Adjustments:
Costs associated with workforce
optimization
  efforts (1)                                 5,004         0.2 %             -         0.0 %         5,004         0.1 %             -         0.0 %
Costs associated with our
reorganization,
  including cost-savings
initiatives (2)                                   -         0.0 %        29,394         0.9 %             -         0.0 %        38,256         0.6 %
Adjusted EBITDA and Adjusted
EBITDA on
  revenue margin                        $   115,947         3.2 %   $   104,060         3.1 %   $   215,245         2.9 %   $   203,739         3.1 %
Adjusted EBITDA on fee revenue
margin                                                     15.4 %                      13.6 %                      13.8 %                      14.0 %




(1)  Primarily represents costs incurred related to workforce optimization

initiated and executed in the second quarter of 2020 as part of management's

cost containment efforts in response to the COVID-19 pandemic. The charges

are cash expenditures primarily for severance costs incurred related to this

effort. Of the total costs, $1.2 million was included within the "Cost of

revenue" line item and $3.8 million was included in the "Operating,

administrative, and other" line item in the accompanying consolidated

statements of operations for both the three and six months ended June 30,

2020.

(2) Primarily represents severance costs related to headcount reductions in

connection with our reorganization announced in the third quarter of 2018

     that became effective January 1, 2019.


                                       36
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Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019


Revenue increased by $281.4 million, or 8.3%, for the three months ended June
30, 2020 as compared to the three months ended June 30, 2019. The increase was
primarily attributable to growth in our facilities management line of business,
which is contractual in nature. Foreign currency translation had a 1.8% negative
impact on total revenue during the three months ended June 30, 2020, primarily
driven by weakness in the Brazilian real, British pound sterling, euro and
Indian rupee.

Cost of revenue increased by $266.4 million, or 8.5%, for the three months ended
June 30, 2020 as compared to the same period in 2019, driven by the higher
revenue. Foreign currency translation had a 1.8% positive impact on total cost
of revenue during the three months ended June 30, 2020. Cost of revenue as a
percentage of revenue was consistent at 92.8% for the three months ended June
30, 2020 versus 92.6% for the same period in 2019.

Operating, administrative and other expenses decreased by $22.7 million, or
12.9%, for the three months ended June 30, 2020 as compared to the three months
ended June 30, 2019. During the three months ended June 30, 2019, we incurred
$27.8 million of costs in connection with our reorganization, which did not
recur in the current period. We also reduced certain operating expenses, such as
travel and entertainment costs, in the second quarter of 2020 as a result of
COVID-19. Additionally, foreign currency translation had a 2.3% positive impact
on total operating expenses during the three months ended June 30, 2020. These
items were partially offset by an increase in certain costs as a result of
COVID-19, including higher bad debt expense and $3.8 million of costs incurred
(mainly severance) primarily related to workforce optimization initiated and
executed in the second quarter of 2020 as part of management's cost containment
efforts in response to the COVID-19 pandemic. Lastly, in the second quarter of
2020, we saw an increase in charitable donations largely driven by a sizeable
donation by the Company to its COVID-19 Relief Fund.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019


Revenue increased by $861.7 million, or 13.2%, for the six months ended June 30,
2020 as compared to the six months ended June 30, 2019. The increase was
primarily attributable to growth in our facilities management line of business,
which is contractual in nature. Foreign currency translation had a 1.3% negative
impact on total revenue during the six months ended June 30, 2020, primarily
driven by weakness in the Brazilian real, British pound sterling, euro and
Indian rupee.

Cost of revenue increased by $827.1 million, or 13.6%, for the six months ended
June 30, 2020 as compared to the same period in 2019, driven by the higher
revenue. Foreign currency translation had a 1.3% positive impact on total cost
of revenue during the six months ended June 30, 2020. Cost of revenue as a
percentage of revenue was consistent at 93.1% for the six months ended June 30,
2020 versus 92.7% for the same period in 2019.

Operating, administrative and other expenses decreased by $10.4 million, or
3.3%, for the six months ended June 30, 2020 as compared to the six months ended
June 30, 2019. During the six months ended June 30, 2019, we incurred $36.3
million of costs in connection with our reorganization, which did not recur in
the current period. We also reduced certain operating expenses, such as travel
and entertainment costs, in the first half of 2020 as a result of COVID-19.
Additionally, foreign currency translation had a 1.8% positive impact on total
operating expenses during the six months ended June 30, 2020. These items were
partially offset by an increase in certain costs as a result of COVID-19,
including higher bad debt expense and $3.8 million of costs incurred (mainly
severance) primarily related to workforce optimization initiated and executed in
the second quarter of 2020 as part of management's cost containment efforts in
response to the COVID-19 pandemic. In the first half of 2020, we also saw an
increase in charitable donations largely driven by a sizeable donation by the
Company to its COVID-19 Relief Fund. Lastly, during the first half of 2020,
investments were made in both people and technology associated with efforts to
remediate material weaknesses in our Europe, Middle East and Africa (EMEA)
region.

                                       37

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Real Estate Investments


The following table summarizes our results of operations for our Real Estate
Investments operating segment for the three and six months ended June 30, 2020
and 2019 (dollars in thousands):



                                                  Three Months Ended June 30,                             Six Months Ended June 30,
                                                2020                       2019                       2020                        2019
Revenue:
Investment management                   $ 103,132        63.8 %    $ 101,646        67.9 %    $ 224,810        60.3 %    $  207,954        73.0 %
Development services                       58,479        36.2 %       48,017        32.1 %      148,271        39.7 %        76,902        27.0 %
Total revenue                             161,611       100.0 %      149,663       100.0 %      373,081       100.0 %       284,856       100.0 %
Costs and expenses:
Cost of revenue                            30,021        18.6 %            -         0.0 %       85,070        22.8 %             -         0.0 %
Operating, administrative and
other                                     134,021        82.9 %      

156,463 104.5 % 288,803 77.4 % 317,249 111.4 % Depreciation and amortization

               4,693         2.9 %        

1,886 1.3 % 9,137 2.4 % 6,579 2.2 % Asset impairments

                               -         0.0 %            -         0.0 %       25,000         6.7 %        89,037        31.3 %
(Loss) gain on disposition of real
estate                                       (492 )      (0.3 %)          10         0.0 %       22,335         5.9 %        19,257         6.8 %
Operating loss                             (7,616 )      (4.7 %)      (8,676 )      (5.8 %)     (12,594 )      (3.4 %)     (108,752 )     (38.1 %)
Equity income from unconsolidated
subsidiaries                               21,296        13.2 %       18,962        12.7 %       40,198        10.8 %        91,784        32.2 %
Other income (loss)                           735         0.4 %        1,367         0.9 %       (1,904 )      (0.5 %)       20,557         7.2 %
Less: Net income (loss)
attributable to
  non-controlling interests                    12         0.0 %         

(323 ) (0.2 %) 1,094 0.3 % 6,397 2.2 % Add-back: Depreciation and amortization

                                4,693         2.9 %        

1,886 1.3 % 9,137 2.4 % 6,579 2.2 % Add-back: Asset impairments

                     -         0.0 %            

- 0.0 % 25,000 6.7 % 89,037 31.3 % EBITDA

                                     19,096        11.8 %       13,862         9.3 %       58,743        15.7 %        92,808        32.6 %
Adjustments:
Costs associated with workforce
optimization
  efforts (1)                               5,172         3.2 %            -         0.0 %        5,172         1.4 %             -         0.0 %
Impact of fair value adjustments
to real estate
  assets acquired in the Telford
Acquisition
  (purchase accounting) that were
sold in
  period                                    1,247         0.8 %            -         0.0 %        7,000         1.9 %             -         0.0 %
Integration and other costs
related to
  acquisitions                                236         0.1 %       

8,734 5.7 % 1,019 0.3 % 8,734 3.0 % Carried interest incentive compensation

  (reversal) expense to align with
the timing
  of associated revenue                    (7,500 )      (4.6 %)       8,308         5.6 %      (15,284 )      (4.1 %)       15,644         5.5 %
Costs associated with our
reorganization,
  including cost-savings
initiatives (2)                                 -         0.0 %            -         0.0 %            -         0.0 %           221         0.1 %
Adjusted EBITDA                         $  18,251        11.3 %    $  30,904        20.6 %    $  56,650        15.2 %    $  117,407        41.2 %




(1)  Primarily represents costs incurred related to workforce optimization

initiated and executed in the second quarter of 2020 as part of management's

cost containment efforts in response to the COVID-19 pandemic. The charges

are cash expenditures primarily for severance costs incurred related to this

effort and were included in the "Operating, administrative, and other" line

item in the accompanying consolidated statements of operations for both the

three and six months ended June 30, 2020.

(2) Primarily represents severance costs related to headcount reductions in

connection with our reorganization announced in the third quarter of 2018

that became effective January 1, 2019.

Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019


Revenue increased by $11.9 million, or 8.0%, for the three months ended June 30,
2020 as compared to the three months ended June 30, 2019, primarily driven by
the Telford Acquisition in our development services line of business as well as
higher carried interest revenue and increased asset management fees. These
increases were partially offset by decreases in acquisition, disposition,
incentive and development fees due to the impact of COVID-19. Foreign currency
translation had a 1.5% negative impact on total revenue during the three months
ended June 30, 2020, primarily driven by weakness in the British pound sterling
and euro.

Cost of revenue was $30.0 million for the three months ended June 30, 2020 and was attributable to Telford, thus there is no prior period comparison.

                                       38

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Operating, administrative and other expenses decreased by $22.4 million, or
14.3%, for the three months ended June 30, 2020 as compared to the same period
in 2019. The negative impact of COVID-19 on our operating results led to a
corresponding decrease in bonus and carried interest expense. We also reduced
certain operating expenses, such as travel and entertainment costs, in the
second quarter of 2020 as a result of COVID-19. Additionally, foreign currency
translation had a 1.1% positive impact on total operating expenses during the
three months ended June 30, 2020. These items were partially offset by $5.2
million of costs incurred (mainly severance) primarily related to workforce
optimization initiated and executed in the second quarter of 2020 as part of
management's cost containment efforts in response to the COVID-19 pandemic.

A roll forward of our AUM by product type for the three months ended June 30, 2020 is as follows (dollars in billions):




                                             Funds        Separate Accounts      Securities        Total
Balance at March 31, 2020                  $    40.9     $              61.6     $       5.6$   108.1
Inflows                                          0.9                     1.1             0.4           2.4
Outflows                                        (0.2 )                  (1.2 )          (0.3 )        (1.7 )
Market appreciation (depreciation)               0.3                    (0.3 )           0.8           0.8
Balance at June 30, 2020                   $    41.9     $              61.2     $       6.5$   109.6




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

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

operating companies, the total value of real properties controlled by

          the companies, generally through joint ventures, is included in AUM; and


     •    the net asset value of our managed securities portfolios, including

investments (which may be comprised of committed but uncalled capital)

in private real estate funds under our fund of funds investments.

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.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019


Revenue increased by $88.2 million, or 31.0%, for the six months ended June 30,
2020 as compared to the six months ended June 30, 2019, primarily driven by the
Telford Acquisition in our development services line of business as well as
higher carried interest revenue and increased asset management fees. These
increases were partially offset by decreases in acquisition, disposition,
incentive and development fees due to the impact of COVID-19. Foreign currency
translation had a 1.1% negative impact on total revenue during the six months
ended June 30, 2020, primarily driven by weakness in the British pound sterling
and euro.

Cost of revenue was $85.1 million for the six months ended June 30, 2020 and was attributable to Telford, thus there is no prior period comparison.


Operating, administrative and other expenses decreased by $28.4 million, or
9.0%, for the six months ended June 30, 2020 as compared to the same period in
2019. The negative impact of COVID-19 on our operating results led to a
corresponding decrease in bonus and carried interest expense. We also reduced
certain operating expenses, such as travel and entertainment costs, in the first
half of 2020 as a result of COVID-19. Additionally, foreign currency translation
had a 0.8% positive impact on total operating expenses during the six months
ended June 30,

                                       39
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2020. These items were partially offset by higher incremental costs associated
with Telford, which we acquired on October 1, 2019 (six months of operating
expenses incurred in 2020 versus $8.7 million of transaction costs incurred
pre-acquisition during the first half of 2019) as well as investments in our new
flexible space offering. We also incurred $5.2 million of costs (mainly
severance) primarily related to workforce optimization initiated and executed in
the second quarter of 2020 as part of management's cost containment efforts in
response to the COVID-19 pandemic.



A roll forward of our AUM by product type for the six months ended June 30, 2020 is as follows (dollars in billions):




                                             Funds        Separate Accounts      Securities        Total
Balance at January 1, 2020                 $    40.1     $              64.9     $       7.9$   112.9
Inflows                                          2.8                     4.1             0.8           7.7
Outflows                                        (1.1 )                  (5.4 )          (1.0 )        (7.5 )
Market appreciation (depreciation)               0.1                    (2.4 )          (1.2 )        (3.5 )
Balance at June 30, 2020                   $    41.9     $              61.2     $       6.5$   109.6




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

Liquidity and Capital Resources


We believe that we can satisfy our working capital and funding requirements with
internally generated cash flow and, as necessary, borrowings under our revolving
credit facility. During the six months ended June 30, 2020, we incurred $110.8
million of capital expenditures, net of tenant concessions received, which
includes approximately $46.8 million related to technology enablement. Given the
uncertainty caused by COVID­19, we are not providing an estimate of net capital
expenditures anticipated for the fiscal year ending December 31, 2020 as we are
currently re-evaluating such spend, although we currently expect net capital
expenditures to be meaningfully lower than initially forecast in our 2019 Annual
Report. As of June 30, 2020, we had aggregate commitments of $91.2 million to
fund future co-investments in our Real Estate Investments business, $33.1
million of which is expected to be funded in 2020. Additionally, as of June 30,
2020, we are committed to fund $43.9 million of additional capital to
unconsolidated subsidiaries within our Real Estate Investments business, which
we may be required to fund at any time. As of June 30, 2020, we had $2.3 billion
of borrowings available under our revolving credit facility and $1.1 billion of
cash and cash equivalents available for general corporate use.

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

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

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

The second long-term liquidity need is the payment of obligations related to
acquisitions. Our acquisition structures often include deferred and/or
contingent purchase price payments in future periods that are subject to the
passage of time or achievement of certain performance metrics and other
conditions. As of June 30, 2020, we had accrued $112.1 million ($39.0 million of
which was a current liability) of deferred purchase consideration, 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 1
of this Quarterly Report.

As described in our   2019 Annual Report  , our board of directors has
authorized a program for the company to repurchase up to $500.0 million of our
Class A common stock. As of December 31, 2019, $400.0 million was available for
share repurchases under the authorized repurchase program. During the three
months ended March 31, 2020, we spent $50.0 million to repurchase, through an
existing stock repurchase plan entered into pursuant to Rule 10b5-1 under the
Exchange Act, 1,050,084 shares of our Class A common stock with an average price
paid per share of $47.62. We did not repurchase any of our stock during the
three months ended June 30, 2020. As of August 4, 2020, we had $350.0 million of
capacity remaining under our current stock repurchase program. Our stock
repurchases have been funded with cash on hand and we intend to continue funding
future stock repurchases with existing cash. We may utilize our stock repurchase
program to continue offsetting the impact of our stock-based compensation
program and on a more opportunistic basis if we believe our stock presents a
compelling investment compared to other discretionary uses. The timing of 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.

Historical Cash Flows

Operating Activities


Net cash provided by operating activities totaled $6.1 million for the six
months ended June 30, 2020 as compared to net cash used in operating activities
of $293.3 million for the six months ended June 30, 2019. The increase of
approximately $299.3 million was primarily driven by a lower overall net
increase in working capital during the first half of 2020 as compared to the
same period in 2019, including the impact of net income tax refunds of $53.8
million received during the six months ended June 30, 2020 as compared to net
income tax payments made of $208.9 million during the six months ended June 30,
2019. This positive impact from working capital movement was partially offset by
lower operating performance in the current period.

Investing Activities


Net cash used in investing activities totaled $135.9 million for the six months
ended June 30, 2020, a decrease of $12.2 million as compared to the six months
ended June 30, 2019. This decrease was largely driven by greater distributions
received from unconsolidated subsidiaries during the six months ended June 30,
2020. This was partially offset by higher amounts paid for in-fill acquisitions
and greater contributions to unconsolidated subsidiaries during the six months
ended June 30, 2020.

Financing Activities

Net cash provided by financing activities totaled $377.0 million for the six
months ended June 30, 2020, an increase of $191.0 million as compared to the six
months ended June 30, 2019. The increase was primarily due to an increase in net
borrowings of $221.0 million from our revolving credit facility for the six
months ended June 30, 2020 as compared to the six months ended June 30, 2019,
partially offset by the impact of $40.5 million of lower contributions received
from non-controlling interests in the current period.

                                       41

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Indebtedness


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

Long-Term Debt


We maintain credit facilities with third-party lenders, which we use for a
variety of purposes. On March 4, 2019, CBRE Services, Inc. (CBRE Services)
entered into an incremental assumption agreement with respect to its credit
agreement, dated October 31, 2017 (such credit agreement, as amended by a
December 20, 2018 incremental loan assumption agreement and such March 4, 2019
incremental assumption agreement, the 2019 Credit Agreement), which (i) extended
the maturity of the U.S. dollar tranche A term loans under such credit
agreement, (ii) extended the termination date of the revolving credit
commitments available under such credit agreement and (iii) made certain changes
to the interest rates and fees applicable to such tranche A term loans and
revolving credit commitments under such credit agreement. The proceeds from the
new tranche A term loan facility under the 2019 Credit Agreement were used to
repay the $300.0 million of tranche A term loans outstanding under the credit
agreement in effect prior to the entry into this 2019 incremental assumption
agreement.

The 2019 Credit Agreement is a senior unsecured credit facility. As of June 30,
2020, the 2019 Credit Agreement provided for the following: (1) a $2.8 billion
incremental revolving credit facility, which includes the capacity to obtain
letters of credit and swingline loans and terminates on March 4, 2024; (2) a
$300.0 million incremental tranche A term loan facility maturing on March 4,
2024, requiring quarterly principal payments unless our leverage ratio (as
defined in the 2019 Credit Agreement) is less than or equal to 2.50 to 1.00 on
the last day of the fiscal quarter immediately preceding any such payment date;
and (3) a €400.0 million term loan facility due and payable in full at maturity
on December 20, 2023.

On August 13, 2015, CBRE Services issued $600.0 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, senior to all of its current and future
subordinated indebtedness, but effectively subordinated to all of its current
and future secured indebtedness. Interest accrues at a rate of 4.875% per year
and is payable semi-annually in arrears on March 1 and September 1.

On September 26, 2014, CBRE Services issued $300.0 million in aggregate
principal amount of 5.25% senior notes due March 15, 2025 (the 5.25% senior
notes). On December 12, 2014, CBRE Services issued an additional $125.0 million
in aggregate principal amount of 5.25% senior notes due March 15, 2025 at a
price equal to 101.5% of their face value, plus interest deemed to have accrued
from September 26, 2014. The 5.25% senior notes are unsecured obligations of
CBRE Services, senior to all of its current and future subordinated
indebtedness, but effectively subordinated to all of its current and future
secured indebtedness. Interest accrues at a rate of 5.25% per year and is
payable semi-annually in arrears on March 15 and September 15.

The indentures governing our 4.875% senior notes and 5.25% 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. In addition, these
indentures require that the 4.875% senior notes and the 5.25% senior notes be
jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and each
domestic subsidiary of CBRE Services that guarantees the 2019 Credit Agreement.

                                       42

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Our 2019 Credit Agreement, 4.875% senior notes and 5.25% senior notes are all
fully and unconditionally and jointly and severally guaranteed by us and certain
subsidiaries (see Exhibit 22.1 for a listing of all such subsidiary guarantors).
Combined summarized financial information for CBRE Group, Inc., (parent); CBRE
Services (subsidiary issuer); and the guarantor subsidiaries (collectively
referred to as the obligated group), which excludes investment balances in
non-guarantor subsidiaries as well as income from consolidated non-guarantor
subsidiaries, is as follows (dollars in thousands):



                          June 30,        December 31,
                             2020              2019
Balance Sheet Data:
Current assets           $ 3,127,205$    2,901,618

Noncurrent assets (1) 5,177,571 5,610,084 Total assets (1)

           8,304,776          8,511,702

Current liabilities      $ 3,002,374$    2,893,775
Noncurrent liabilities     2,214,371          2,201,269
Total liabilities          5,216,745          5,095,044




                                  Six Months Ended June 30,
                                     2020             2019
Statement of Operations Data:
Revenue                         $    6,332,337$ 6,268,601
Operating income                       138,122         267,756
Net income                             118,459         283,825



(1) Includes $246.0 million and $574.6 million as of June 30, 2020 and December

31, 2019, respectively, of intercompany loan receivables from non-guarantor

subsidiaries. All intercompany balances and transactions between CBRE Group,

CBRE Services and the guarantor subsidiaries have been eliminated.



The €400.0 million term loan facility under our 2019 Credit Agreement is also
jointly and severally guaranteed by five of our foreign subsidiaries. Such
subsidiaries have been omitted from the table above given they do not jointly
and severally guarantee other amounts under the 2019 Credit Agreement, the
4.875% senior notes or the 5.25% senior notes. Additionally, such subsidiaries
if considered in the aggregate as if they were a single subsidiary, would not
constitute a significant subsidiary.

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

2019 Annual Report and Note 8 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Short-Term Borrowings


We maintain a $2.8 billion revolving credit facility under the 2019 Credit
Agreement. Given the uncertainty associated with COVID-19, we elected to borrow
amounts under such agreement during the second quarter of 2020. As of June 30,
2020, $451.0 million was outstanding under the revolving credit facility. During
the month of July 2020, we repaid $200.0 million, such that $251.0 million was
outstanding under the revolving credit facility as of July 31, 2020. We will
continue to monitor the impact of COVID-19 as well as our borrowings under the
revolving credit facility in response to it.

We also maintain warehouse lines of credit with certain third-party lenders. For
additional information on all of our short-term borrowings, see Note 11 of the
Notes to Consolidated Financial Statements set forth in Item 8 included in our

2019 Annual Report and Notes 4 and 8 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report.

Off -Balance Sheet Arrangements

Our off-balance sheet arrangements are described in Note 10 of the Notes to Consolidated Financial Statements (Unaudited) set forth in Item 1 of this Quarterly Report and are incorporated by reference herein.

                                       43

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Cautionary Note on Forward-Looking Statements


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

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

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

• disruptions in general economic, political and regulatory conditions,

particularly in geographies or industry sectors where our business may

be concentrated;

• volatility or adverse developments in the securities, capital or credit

markets, interest rate increases and conditions affecting the value of

real estate assets, inside and outside the United States;

• 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;

• disruptions to business, market and operational conditions related to

the COVID­19 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;

• foreign currency fluctuations and changes in currency restrictions,

trade sanctions and import-export and transfer pricing rules;

• changes in U.S. and international law and regulatory environments

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

• our ability to compete globally, or in specific geographic markets or

          business segments that are material to us;


  • 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;


  • our ability to retain and incentivize key personnel;

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


  • negative publicity or harm to our brand and reputation;

• 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;


                                       44
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• client actions to restrain project spending and reduce outsourced

staffing levels;

• declines in lending activity of U.S. Government Sponsored Enterprises,

regulatory oversight of such activity and our mortgage servicing revenue

from the commercial real estate mortgage market;

• 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;

• 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;


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

• the ability of CBRE Capital Markets to periodically amend, or replace,

          on satisfactory terms, the agreements for its warehouse lines of credit;


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


  • litigation and its financial and reputational risks to us;

• our exposure to liabilities in connection with real estate advisory and

property management activities and our ability to procure sufficient

          insurance coverage on acceptable terms;


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

• our and our employees' ability to execute on, and adapt to, information

technology strategies and trends;

• cybersecurity threats or other threats to our information technology

networks, including the potential misappropriation of assets or

sensitive information, corruption of data or operational disruption;

• our ability to comply with laws and regulations related to our global

operations, including real estate licensure, tax, labor and employment

          laws and regulations, as well as the anti-corruption laws and trade
          sanctions of the U.S. and other countries;


  • changes in applicable tax or accounting requirements;


• any inability for us to implement and maintain effective internal

controls over financial reporting;

• the effect of implementation of new accounting rules and standards or

the impairment of our goodwill and intangible assets; and

• the other factors described elsewhere in this Quarterly Report on Form

10-Q, included under the headings "Management's Discussion and Analysis

of Financial Condition and Results of Operations-Critical Accounting

          Policies," "Quantitative and Qualitative Disclosures About Market Risk"
          and Part II, Item 1A, "Risk Factors" or as described in our   2019
          Annual Report   and our   Quarterly Report on Form 10-Q for the quarter

ended Mach 31, 2020 , in particular in Part II, Item 1A "Risk Factors",

          or as described in the other documents and reports we file with the
          Securities and Exchange Commission (SEC).


                                       45

--------------------------------------------------------------------------------



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

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

© Edgar Online, source Glimpses


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