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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)

10/29/2020 | 04:16pm EST
This Quarterly Report on Form 10-Q (Quarterly Report) for CBRE Group, Inc. for
the three months ended September 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 leasing, property
sales, occupier outsourcing and valuations. 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 contractual revenue
earned by providing multiple services to occupiers and investors, who
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 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.

The outbreak of the novel coronavirus (COVID­19) global pandemic in the first
quarter of 2020 has created a tremendous amount of uncertainty, precipitated a
global economic contraction and severely disrupted both business activity and
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 stem 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.

                                       25

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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 September 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


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

                                       26

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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, negative effects on our operating margins of
difficult market conditions, such as we are currently experiencing with the
pandemic, 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 typically increased primarily as a result of growth in our outsourcing
business, and we believe this contractual revenue should help offset the
negative impacts that macroeconomic deterioration could have on other parts of
our business. Nevertheless, adverse global and regional economic trends could
pose significant risks to the performance of our consolidated operations and
financial condition.

From 2010 to early 2020, commercial real estate markets had generally been
characterized by increased demand for space, falling vacancies, higher rents and
strong capital flows, leading to solid property sales and leasing activity. This
healthy backdrop changed abruptly in the first quarter of 2020 with the
emergence of the 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, as many property owners and occupiers have put
transactions on hold and withdrawn existing mandates, sharply reducing sales and
leasing volumes. We expect to see this trend continue, as concerns about a
COVID-19 resurgence are high across our major markets. The recovery of real
estate markets around the world remained uncertain as of October 2020.



COVID-19 is putting downward pressure on parts of our business and creating
larger opportunities in other parts. The severe economic effects of the pandemic
continued to weigh heavily on higher-margin property lease and sales revenue in
the Advisory Services segment. However, global industrial leasing revenue,
fueled by e-commerce, and project management activities for occupier clients
were resilient during the third quarter. Also, during the third quarter, our
Continental Europe business showed signs of recovery and benefited from our
diverse service offering during the period.

The performance of our global real estate services and investment businesses
depends on an improvement in macroeconomic conditions, including 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. During the nine months ended September 30, 2020, we acquired
leading local facilities management firms in Spain and Italy, a U.S. firm that
helps companies reduce telecommunications costs, a leading provider of workplace
technology project management, consulting and procurement services to occupiers
across the U.S. and a firm specializing in performing real estate valuations in
South Korea.

                                       27
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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 September 30, 2020, we have accrued deferred consideration totaling $89.7
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 also 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 nine months ended September 30, 2020, approximately 43.1% 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 September 30,                          Nine Months Ended September 30,
                                       2020                        2019                         2020                         2019
United States dollar          $ 3,162,235        56.0 %   $ 3,442,570        58.1 %   $  9,632,592        56.9 %   $  9,851,477        58.7 %
British pound sterling            736,927        13.1 %       758,084        12.8 %      2,188,822        12.9 %      2,003,671        11.9 %
euro                              645,583        11.4 %       600,414        10.1 %      1,836,311        10.9 %      1,716,278        10.2 %
Canadian dollar                   184,967         3.3 %       204,009         3.4 %        549,098         3.2 %        562,470         3.4 %
Australian dollar                 108,060         1.9 %       112,543         1.9 %        296,124         1.8 %        311,185         1.9 %
Indian rupee                      106,956         1.9 %       127,376         2.2 %        353,080         2.1 %        361,567         2.2 %
Chinese yuan                       84,985         1.5 %        84,464         1.4 %        250,816         1.5 %        232,113         1.4 %
Swiss franc                        80,083         1.4 %        44,335         0.7 %        234,171         1.4 %        131,477         0.8 %
Japanese yen                       74,706         1.3 %        79,151         1.3 %        236,999         1.4 %        222,184         1.3 %
Singapore dollar                   63,151         1.1 %        77,605         1.3 %        193,556         1.1 %        218,511         1.3 %
Other currencies (1)              397,489         7.1 %       394,550         6.8 %      1,144,125         6.8 %      1,163,751         6.9 %
Total revenue                 $ 5,645,142       100.0 %   $ 5,925,101       100.0 %   $ 16,915,694       100.0 %   $ 16,774,684       100.0 %




(1)  Approximately 39 currencies comprise 7.1% and 6.8% of our revenues for the
     three and nine months ended September 30, 2020, respectively, and
     approximately 38 currencies comprise 6.8% and 6.9% of our revenues for the
     three and nine months ended September 30, 2019, respectively.




                                       28
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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
nine months ended September 30, 2020, the net impact would have been a decrease
in pre-tax income of $1.1 million. Had the euro-to-U.S. dollar exchange rates
been 10% higher during the nine months ended September 30, 2020, the net impact
would have been an increase in pre-tax income of $6.0 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.

                                       29
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Results of Operations

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




                                         Three Months Ended September 30,                          Nine Months Ended September 30,
                                         2020                        2019                         2020                         2019
Revenue:
Fee revenue:
Global workplace solutions      $   837,698        14.8 %   $   793,213        13.4 %   $  2,400,595        14.2 %   $  2,249,433        13.4 %
Property and advisory project
  management                        312,381         5.5 %       305,354         5.1 %        919,448         5.4 %        905,843         5.4 %
Valuation                           139,019         2.5 %       154,861         2.6 %        418,616         2.5 %        442,238         2.6 %
Loan servicing                       58,013         1.0 %        56,623         0.9 %        171,743         1.0 %        152,381         0.9 %
Advisory leasing                    536,132         9.5 %       781,246        13.2 %      1,653,367         9.8 %      2,221,674        13.3 %
Capital markets:
Advisory sales                      346,650         6.1 %       526,104         8.9 %      1,018,853         6.0 %      1,378,317         8.2 %
Commercial mortgage
  origination                       129,026         2.4 %       163,839         2.8 %        352,553         2.1 %        424,717         2.5 %
Investment management                99,935         1.8 %       104,927         1.8 %        324,745         1.9 %        312,881         1.9 %
Development services                 69,677         1.2 %        24,286         0.4 %        217,948         1.3 %        101,188         0.6 %
Total fee revenue                 2,528,531        44.8 %     2,910,453        49.1 %      7,477,868        44.2 %      8,188,672        48.8 %
Pass through costs also
recognized as
  revenue                         3,116,611        55.2 %     3,014,648        50.9 %      9,437,826        55.8 %      8,586,012        51.2 %
Total revenue                     5,645,142       100.0 %     5,925,101       100.0 %     16,915,694       100.0 %     16,774,684       100.0 %
Costs and expenses:
Cost of revenue                   4,564,579        80.9 %     4,687,336        79.1 %     13,676,790        80.9 %     13,155,160        78.4 %
Operating, administrative and
  other                             794,227        14.1 %       809,584        13.7 %      2,355,099        13.9 %      2,479,857        14.8 %
Depreciation and amortization       127,725         2.2 %       111,560         1.9 %        357,903         2.1 %        323,862         2.0 %
Asset impairments                         -         0.0 %             -         0.0 %         75,171         0.4 %         89,037         0.5 %
Total costs and expenses          5,486,531        97.2 %     5,608,480        94.7 %     16,464,963        97.3 %     16,047,916        95.7 %
Gain on disposition of real
estate                               52,797         0.9 %             9         0.0 %         75,132         0.4 %         19,266         0.1 %
Operating income                    211,408         3.7 %       316,630         5.3 %        525,863         3.1 %        746,034         4.4 %
Equity income from
unconsolidated
  subsidiaries                       32,376         0.6 %        25,796         0.5 %         72,487         0.4 %        120,233         0.7 %
Other income                          7,947         0.1 %           941         0.0 %         12,974         0.1 %         26,163         0.2 %
Interest expense, net of
interest income                      17,829         0.3 %        21,846         0.4 %         51,795         0.3 %         67,638         0.4 %
Write-off of financing costs
on
  extinguished debt                       -         0.0 %             -         0.0 %              -         0.0 %          2,608         0.0 %
Income before provision for
income taxes                        233,902         4.1 %       321,521         5.4 %        559,529         3.3 %        822,184         4.9 %
Provision for income taxes           49,062         0.8 %        63,468         1.0 %        119,047         0.7 %        169,867         1.0 %
Net income                          184,840         3.3 %       258,053         4.4 %        440,482         2.6 %        652,317         3.9 %
Less: Net income attributable
to
  non-controlling interests             708         0.0 %         1,454         0.1 %          2,258         0.0 %          7,578         0.1 %
Net income attributable to
CBRE Group,
  Inc.                          $   184,132         3.3 %   $   256,599         4.3 %   $    438,224         2.6 %   $    644,739         3.8 %
Adjusted EBITDA                 $   441,764         7.8 %   $   454,630         7.7 %   $  1,139,419         6.7 %   $  1,373,154         8.2 %




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.

                                       30

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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 associated with transformation initiatives, certain
carried interest incentive compensation expense (reversal) to align with the
timing of associated revenue, fair value adjustments to real estate assets
acquired in the Telford Acquisition (purchase accounting) that were sold in the
period, costs incurred related to legal entity restructuring, integration and
other costs related to acquisitions, costs associated with workforce
optimization efforts in response to the COVID-19 pandemic 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             Nine Months Ended
                                                September 30,                 September 30,
                                              2020          2019           2020            2019
Net income attributable to CBRE Group,
Inc.                                       $ 184,132$ 256,599$   438,224$   644,739
Add:
Depreciation and amortization                127,725       111,560         357,903         323,862
Asset impairments                                  -             -          75,171          89,037
Interest expense, net of interest income      17,829        21,846          51,795          67,638
Write-off of financing costs on
extinguished debt                                  -             -               -           2,608
Provision for income taxes                    49,062        63,468         119,047         169,867
EBITDA                                       378,748       453,473       1,042,140       1,297,751
Adjustments:
Costs associated with transformation
initiatives (1)                               55,374             -          55,374               -
Carried interest incentive compensation
expense (reversal) to align
  with the timing of associated revenue        3,767        (3,360 )       (11,517 )        12,284
Impact of fair value adjustments to real
estate assets acquired in
  the Telford Acquisition (purchase
accounting) that were sold in
  period                                       2,289             -           9,289               -
Costs incurred related to legal entity
restructuring                                  1,061             -           4,995               -
Integration and other costs related to
acquisitions                                     525         4,517           1,544          13,554
Costs associated with workforce
optimization efforts (2)                           -             -          37,594               -
Costs associated with our
reorganization, including cost-savings
  initiatives (3)                                  -             -               -          49,565
Adjusted EBITDA                            $ 441,764$ 454,630$ 1,139,419$ 1,373,154

(1) Commencing during the quarter ended September 30, 2020, management began the

implementation of certain transformation initiatives to enable the company

to reduce costs, streamline operations and support future growth. The

majority of expenses incurred were cash in nature and primarily related to

employee separation benefits, lease termination costs and professional fees.

     See Note 15 for further discussion.


(2)  Primarily represents costs incurred related to workforce optimization

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

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

are cash expenditures primarily for severance costs incurred related to this

     effort. Of the total costs, $7.4 million was included within the "Cost of
     revenue" line item and $30.2 million was included in the "Operating,
     administrative, and other" line item in the accompanying consolidated
     statements of operations for the nine months ended September 30, 2020.


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

connection with our reorganization announced in the third quarter of 2018

that became effective January 1, 2019.

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


We reported consolidated net income of $184.1 million for the three months ended
September 30, 2020 on revenue of $5.6 billion as compared to consolidated net
income of $256.6 million on revenue of $5.9 billion for the three months ended
September 30, 2019.

Our revenue on a consolidated basis for the three months ended September 30,
2020 decreased by $280.0 million, or 4.7%, as compared to the three months ended
September 30, 2019. The revenue decrease reflects the impact of COVID-19 on our
Advisory Services segment, which resulted in lower sales (down 34.1%) and
leasing revenue (down 31.4%) as well as decreased commercial mortgage
origination activity (down 21.2%). These declines were partially offset by
higher revenue in our Global Workplace Solutions segment (up 4.7%) 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 31.3%) largely
due to the Telford Acquisition. Foreign currency translation had a 0.6% positive
impact on total revenue during the three months ended September 30, 2020,
primarily driven by strength in the Australian dollar, British pound sterling
and euro, partially offset by weakness in the Argentine peso, Brazilian real and
Indian rupee.

Our cost of revenue on a consolidated basis decreased by $122.8 million, or
2.6%, during the three months ended September 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
0.6% negative impact on total cost of revenue during the three months ended
September 30, 2020. These items were largely offset by higher costs associated
with our Global Workplace Solutions segment. We also incurred $15.7 million of
costs (primarily employee separation benefits) related to certain transformation
initiatives implemented by the company in the third quarter of 2020. Cost of
revenue as a percentage of revenue increased to 80.9% for the three months ended
September 30, 2020 from 79.1% for the three months ended September 30, 2019,
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 $15.4 million, or 1.9%, for the three months ended September 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 compensation expense
for equity awards. In addition, we reduced general business operating expenses
such as travel and entertainment, marketing and employee events to improve
financial performance for the three months ended September 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 $39.7 million of costs,
primarily related to employee separation benefits, lease termination costs and
professional fees, as management commenced the implementation of certain
transformation initiatives during the quarter ended September 30, 2020 to enable
the company to prospectively reduce costs, streamline operations and support
future growth. Additionally, investments were 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. Foreign
currency translation also had a 0.9% negative impact on total operating expenses
during the three months ended September 30, 2020. Operating expenses as a
percentage of revenue increased slightly to 14.1% for the three months ended
September 30, 2020 from 13.7% for the three months ended September 30, 2019,
primarily attributable to our Advisory Services segment.

Our depreciation and amortization expense on a consolidated basis increased by
$16.2 million, or 14.5%, during the three months ended September 30, 2020 as
compared to the same period in 2019. This increase was primarily attributable to
a rise in depreciation expense of $15.5 million during the three months ended
September 30, 2020 driven by technology-related capital expenditures.

                                       32

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Our gain on disposition of real estate on a consolidated basis was $52.8 million
for the three months ended September 30, 2020, which was a substantial increase
over the prior year period. These gains resulted from property sales within our
Real Estate Investments segment.

Our equity income from unconsolidated subsidiaries on a consolidated basis
increased by $6.6 million, or 25.5%, during the three months ended September 30,
2020 as compared to the same period in 2019, primarily driven by higher equity
earnings in our investment management line of business within our Real Estate
Investments segment, partially offset by lower equity earnings in our Advisory
Services segment.

Our consolidated interest expense, net of interest income, decreased by $4.0
million, or 18.4%, for the three months ended September 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 associated with cash pooling
arrangements.

Our provision for income taxes on a consolidated basis was $49.1 million for the
three months ended September 30, 2020 as compared to $63.5 million for the three
months ended September 30, 2019. The decrease of $14.4 million was primarily
related to the corresponding decrease in our consolidated pre-tax book income.
Our effective tax rate increased to 21.0% for the three months ended September
30, 2020 from 19.7% for the three months ended September 30, 2019 primarily due
to a larger impact on a percentage basis of unfavorable permanent book tax
differences in certain non-U.S. jurisdictions due to lower pre-tax book income.

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019


We reported consolidated net income of $438.2 million for the nine months ended
September 30, 2020 on revenue of $16.9 billion as compared to consolidated net
income of $644.7 million on revenue of $16.8 billion for the nine months ended
September 30, 2019.

Our revenue on a consolidated basis for the nine months ended September 30, 2020
increased by $141.0 million, or 0.8%, as compared to the nine months ended
September 30, 2019. The revenue increase reflects higher revenue in our Global
Workplace Solutions segment (up 10.2%) 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 31.1%) 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 sales (down 26.1%) and leasing revenue (down 25.6%) as well as
decreased commercial mortgage origination activity (down 17.0%). Foreign
currency translation had a 0.6% negative impact on total revenue during the nine
months ended September 30, 2020, primarily driven by weakness in the Australian
dollar, Argentine peso, Brazilian real and Indian rupee, partially offset by
strength in the British pound sterling.

Our cost of revenue on a consolidated basis increased by $521.6 million, or
4.0%, during the nine months ended September 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. We also incurred $15.7
million of costs (primarily employee separation benefits) related to certain
transformation initiatives implemented by the company in the third quarter of
2020. These items were partially offset by lower commission expense incurred
during the nine months ended September 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 sales and leasing revenue led to a
corresponding decrease in commission expense. Foreign currency translation had a
0.6% positive impact on total cost of revenue during the nine months ended
September 30, 2020. Cost of revenue as a percentage of revenue increased to
80.9% for the nine months ended September 30, 2020 from 78.4% for the nine
months ended September 30, 2019, 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.

                                       33
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Our operating, administrative and other expenses on a consolidated basis
decreased by $124.8 million, or 5.0%, for the nine months ended September 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, compensation
expense for equity awards 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
0.6% positive impact on total operating expenses during the nine months ended
September 30, 2020. These items were partially offset by $39.7 million of costs,
primarily related to employee separation benefits, lease termination costs and
professional fees, as management commenced the implementation of certain
transformation initiatives during the quarter ended September 30, 2020 to enable
the company to prospectively reduce costs, streamline operations and support
future growth. During the nine months ended September 30, 2020, we also incurred
higher incremental costs associated with Telford, which we acquired on October
1, 2019 (nine months of operating expenses incurred in 2020 versus $13.3 million
of transaction costs incurred pre-acquisition during the nine months ended
September 30, 2019), rent expense for our new flexible space offering and higher
bad debt expense as a result of COVID-19. 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 to 13.9% for the nine months ended
September 30, 2020 from 14.8% for the nine months ended September 30, 2019,
reflecting the operating leverage inherent in our business.

Our depreciation and amortization expense on a consolidated basis increased by
$34.0 million, or 10.5%, during the nine months ended September 30, 2020 as
compared to the same period in 2019. This increase was primarily attributable to
a rise in depreciation expense of $34.8 million during the nine months ended
September 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 nine months ended September 30, 2020 and 2019, respectively.
During the nine months ended September 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 nine months ended September 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
$55.9 million, or 290.0%, during the nine months ended September 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 $47.7 million, or 39.7%, during the nine months ended September 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 $15.8
million, or 23.4%, for the nine months ended September 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 associated with cash pooling
arrangements.

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

                                       34

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Our provision for income taxes on a consolidated basis was $119.0 million for
the nine months ended September 30, 2020 as compared to $169.9 million for the
nine months ended September 30, 2019. The decrease of approximately $50.9
million was primarily related to the corresponding decrease in consolidated
pre-tax book income. Our effective tax rate increased to 21.3% for the nine
months ended September 30, 2020 from 20.7% for the nine months ended September
30, 2019 primarily due to a larger impact on a percentage basis of unfavorable
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.

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.

                                       35

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Advisory Services

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



                                                                Three Months Ended September 30,                         Nine Months Ended September 30,
                                                                2020                        2019                        2020                        2019
Revenue:
Fee revenue:
Property and advisory project management               $   312,381        17.8 %   $   305,354        13.6 %   $   919,448        17.6 %   $   905,843        14.5 %
Valuation                                                  139,019         7.9 %       154,861         6.9 %       418,616         8.0 %       442,238         7.1 %
Loan servicing                                              58,013         3.3 %        56,623         2.5 %       171,743         3.3 %       152,381         2.4 %
Advisory leasing                                           536,132        30.6 %       781,246        34.9 %     1,653,367        31.6 %     2,221,674        35.5 %
Capital markets:
Advisory sales                                             346,650       

19.8 % 526,104 23.5 % 1,018,853 19.4 % 1,378,317 22.0 % Commercial mortgage origination

                            129,026         7.3 %       163,839         7.3 %       352,553         6.7 %       424,717         6.8 %
Total fee revenue                                        1,521,221       

86.7 % 1,988,027 88.7 % 4,534,580 86.6 % 5,525,170 88.3 % Pass through costs also recognized as revenue

              232,944        13.3 %       252,685        11.3 %       704,038        13.4 %       728,902        11.7 %
Total revenue                                            1,754,165       100.0 %     2,240,712       100.0 %     5,238,618       100.0 %     6,254,072       100.0 %
Costs and expenses:
Cost of revenue                                          1,085,748       

61.9 % 1,369,710 61.1 % 3,210,998 61.3 % 3,762,749 60.2 % Operating, administrative and other

                        480,185        

27.4 % 530,919 23.7 % 1,450,929 27.7 % 1,572,233 25.1 % Depreciation and amortization

                               90,494         5.1 %        79,280         3.6 %       250,591         4.8 %       225,681         3.6 %
Operating income                                            97,738         5.6 %       260,803        11.6 %       326,100         6.2 %       693,409        11.1 %
Equity income from unconsolidated
  subsidiaries                                               1,183         0.1 %         3,616         0.1 %           769         0.0 %         7,427         0.1 %
Other income                                                 7,787         0.4 %         2,263         0.1 %        14,606         0.3 %         5,422         0.1 %
Less: Net income attributable to
  non-controlling interests                                    155         0.0 %           480         0.0 %           611         0.0 %           470         0.0 %
Add-back: Depreciation and amortization                     90,494         5.1 %        79,280         3.6 %       250,591         4.8 %       225,681         3.6 %
EBITDA                                                     197,047        11.2 %       345,482        15.4 %       591,455        11.3 %       931,469        14.9 %
Adjustments:
Costs associated with transformation initiatives (1)        38,261         2.2 %             -         0.0 %        38,261         0.7 %             -         0.0 %
Costs incurred related to legal entity
  restructuring                                              1,061         0.1 %             -         0.0 %         4,995         0.1 %             -         0.0 %
Costs associated with workforce optimization
  efforts (2)                                                    -         0.0 %             -         0.0 %        27,418         0.5 %             -         0.0 %
Costs associated with our reorganization,
  including cost-savings initiatives (3)                         -         0.0 %             -         0.0 %             -         0.0 %        11,088         0.2 %
Integration and other costs related to
  acquisitions                                                   -         0.0 %             -         0.0 %             -         0.0 %           303         0.0 %
Adjusted EBITDA and Adjusted EBITDA on
  revenue margin                                       $   236,369

13.5 % $ 345,482 15.4 % $ 662,129 12.6 % $ 942,860 15.1 % Adjusted EBITDA on fee revenue margin

15.5 %                      17.4 %                      14.6 %                      17.1 %



(1) Commencing during the quarter ended September 30, 2020, management began the

implementation of certain transformation initiatives to enable the company

to reduce costs, streamline operations and support future growth. The

majority of expenses incurred were cash in nature and primarily related to

employee separation benefits, lease termination costs and professional fees.

     See Note 15 for further discussion.


(2)  Primarily represents costs incurred related to workforce optimization

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

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

are cash expenditures primarily for severance costs incurred related to this

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

     revenue" line item and $21.3 million was included in the "Operating,
     administrative, and other" line item in the accompanying consolidated
     statements of operations for the nine months ended September 30, 2020.

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

connection with our reorganization announced in the third quarter of 2018

     that became effective January 1, 2019.


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


Revenue decreased by $486.5 million, or 21.7%, for the three months ended
September 30, 2020 as compared to the three months ended September 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 0.4% positive impact on
total revenue during the three months ended September 30, 2020, primarily driven
by strength in the British pound sterling and euro, partially offset by weakness
in the Brazilian real.

Cost of revenue decreased by $284.0 million, or 20.7%, for the three months
ended September 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. These decreases were partially offset
by $11.8 million of costs (primarily employee separation benefits) related to
certain transformation initiatives implemented by the company in the third
quarter of 2020. In addition, foreign currency translation had a 0.5% negative
impact on total cost of revenue during the three months ended September 30,
2020. Cost of revenue as a percentage of revenue was relatively consistent at
61.9% for the three months ended September 30, 2020 versus 61.1% for the same
period in 2019.

Operating, administrative and other expenses decreased by $50.7 million, or
9.6%, for the three months ended September 30, 2020 as compared to the three
months ended September 30, 2019. The negative impact of COVID-19 on our
operating results led to corresponding decreases in bonus and compensation
expense for equity awards. In addition, to improve financial performance, we
reduced certain operating expenses such as travel and entertainment, marketing,
employee events and costs for 3rd party consultants. A reduction to general
business operating expenses such as timing for our E&O insurance premium expense
for the three months ended September 30, 2020, also contributed to the decline.
These items were partially offset by an increase in certain costs as a result of
COVID-19, including higher bad debt expense. Foreign currency translation also
had a 0.5% negative impact on total operating expenses during the three months
ended September 30, 2020. We also incurred $26.5 million of costs, primarily
related to employee separation benefits, lease termination costs and
professional fees, as management commenced the implementation of certain
transformation initiatives during the quarter ended September 30, 2020 to enable
the company to prospectively reduce costs, streamline operations and support
future growth.

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 September 30, 2020, MSRs contributed to operating income $54.5
million of gains recognized in conjunction with the origination and sale of
mortgage loans, offset by $34.0 million of amortization of related intangible
assets. For the three months ended September 30, 2019, MSRs contributed to
operating income $59.6 million of gains recognized in conjunction with the
origination and sale of mortgage loans, offset by $32.8 million of amortization
of related intangible assets.

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019


Revenue decreased by $1.0 billion, or 16.2%, for the nine months ended September
30, 2020 as compared to the nine months ended September 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 0.6% negative impact on total
revenue during the nine months ended September 30, 2020, primarily driven by
weakness in the Australian dollar, Brazilian real and Indian rupee.

                                       37

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Cost of revenue decreased by $551.8 million, or 14.7%, for the nine months ended
September 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. Foreign currency translation also had a 0.6% positive impact
on total cost of revenue during the nine months ended September 30, 2020. These
decreases were partially offset by $11.8 million of costs (primarily employee
separation benefits) related to certain transformation initiatives implemented
by the company in the third quarter of 2020. Cost of revenue as a percentage of
revenue increased slightly to 61.3% for the nine months ended September 30, 2020
from 60.2% for the nine months ended September 30, 2019.

Operating, administrative and other expenses decreased by $121.3 million, or
7.7%, for the nine months ended September 30, 2020 as compared to the nine
months ended September 30, 2019. The negative impact of COVID-19 on our
operating results led to corresponding decreases in bonus and compensation
expense for equity awards. 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 0.7% positive impact on total
operating expenses during the nine months ended September 30, 2020. These items
were partially offset by $26.5 million of costs, primarily related to employee
separation benefits, lease termination costs and professional fees, as
management commenced the implementation of certain transformation initiatives
during the quarter ended September 30, 2020 to enable the company to
prospectively reduce costs, streamline operations and support future growth. We
also incurred certain costs as a result of COVID-19, including higher bad debt
expense. We also incurred $21.3 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.

For the nine months ended September 30, 2020, MSRs contributed to operating
income $127.8 million of gains recognized in conjunction with the origination
and sale of mortgage loans, offset by $96.4 million of amortization of related
intangible assets. For the nine months ended September 30, 2019, MSRs
contributed to operating income $142.1 million of gains recognized in
conjunction with the origination and sale of mortgage loans, offset by $89.8
million of amortization of related intangible assets.

                                       38

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Global Workplace Solutions

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



                                                      Three Months Ended September 30,                           Nine Months Ended September 30,
                                                      2020                        2019                          2020                         2019
Revenue:
Fee revenue:
Global workplace solutions                   $   837,698        22.5 %   $ 
 793,213        22.3 %    $  2,400,595        21.6 %   $  2,249,433        22.3 %
Total fee revenue                                837,698        22.5 %       793,213        22.3 %       2,400,595        21.6 %      2,249,433        22.3 %
Pass through costs also recognized as
revenue                                        2,883,667        77.5 %     2,761,963        77.7 %       8,733,788        78.4 %      7,857,110        77.7 %
Total revenue                                  3,721,365       100.0 %     3,555,176       100.0 %      11,134,383       100.0 %     10,106,543       100.0 %
Costs and expenses:
Cost of revenue                                3,438,447        92.4 %    

3,317,626 93.3 % 10,340,338 92.9 % 9,392,411 92.9 % Operating, administrative and other

              159,830         4.3 %      

139,919 3.9 % 461,155 4.1 % 451,629 4.5 % Depreciation and amortization

                     31,329         0.8 %        29,710         0.9 %          92,273         0.8 %         89,032         0.9 %
Asset impairments                                      -         0.0 %             -         0.0 %          50,171         0.5 %              -         0.0 %
Operating income                                  91,759         2.5 %     

67,921 1.9 % 190,446 1.7 % 173,471 1.7 % Equity income (loss) from unconsolidated

  subsidiaries                                       279         0.0 %           307         0.0 %             606         0.0 %           (851 )       0.0 %
Other income (loss)                                   43         0.0 %        (2,737 )      (0.1 %)            155         0.0 %         (1,231 )       0.0 %
Less: Net loss attributable to
non-controlling
  interests                                            -         0.0 %            (8 )       0.0 %               -         0.0 %           (271 )       0.0 %
Add-back: Depreciation and amortization           31,329         0.8 %        29,710         0.9 %          92,273         0.8 %         89,032         0.9 %
Add-back: Asset impairments                            -         0.0 %             -         0.0 %          50,171         0.5 %              -         0.0 %
EBITDA                                           123,410         3.3 %        95,209         2.7 %         333,651         3.0 %        260,692         2.6 %
Adjustments:
Costs associated with transformation
initiatives (1)                                   17,113         0.5 %             -         0.0 %          17,113         0.2 %              -         0.0 %
Costs associated with workforce
optimization
  efforts (2)                                          -         0.0 %             -         0.0 %           5,004         0.0 %              -         0.0 %
Costs associated with our reorganization,
  including cost-savings initiatives (3)               -         0.0 %             -         0.0 %               -         0.0 %         38,256         0.4 %
Adjusted EBITDA and Adjusted EBITDA on
  revenue margin                             $   140,523         3.8 %   $  

95,209 2.7 % $ 355,768 3.2 % $ 298,948 3.0 % Adjusted EBITDA on fee revenue margin

                           16.8 %                      12.0 %                        14.8 %                       13.3 %



(1) Commencing during the quarter ended September 30, 2020, management began the

implementation of certain transformation initiatives to enable the company

to reduce costs, streamline operations and support future growth. The

majority of expenses incurred were cash in nature and primarily related to

employee separation benefits, lease termination costs and professional fees.

     See Note 15 for further discussion.


(2)  Primarily represents costs incurred related to workforce optimization

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

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

are cash expenditures primarily for severance costs incurred related to this

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

     revenue" line item and $3.8 million was included in the "Operating,
     administrative, and other" line item in the accompanying consolidated
     statements of operations for the nine months ended September 30, 2020.

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

connection with our reorganization announced in the third quarter of 2018

that became effective January 1, 2019.

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


Revenue increased by $166.2 million, or 4.7%, for the three months ended
September 30, 2020 as compared to the three months ended September 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
0.7% positive impact on total revenue during the three months ended September
30, 2020, primarily driven by strength in the British pound sterling and euro,
partially offset by weakness in the Argentine peso, Brazilian real and Indian
rupee.

                                       39
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Cost of revenue increased by $120.8 million, or 3.6%, for the three months ended
September 30, 2020 as compared to the same period in 2019, driven by the higher
revenue. We also incurred $3.9 million of costs (primarily employee separation
benefits) related to certain transformation initiatives implemented by the
company in the third quarter of 2020. In addition, foreign currency translation
had a 0.7% negative impact on total cost of revenue during the three months
ended September 30, 2020. Cost of revenue as a percentage of revenue decreased
slightly to 92.4% for the three months ended September 30, 2020 from 93.3% for
the same period in 2019.

Operating, administrative and other expenses increased by $19.9 million, or
14.2%, for the three months ended September 30, 2020 as compared to the three
months ended September 30, 2019. This increase was largely attributable to $13.2
million of costs, primarily related to employee separation benefits, lease
termination costs and professional fees, as management commenced the
implementation of certain transformation initiatives during the quarter ended
September 30, 2020 to enable the company to prospectively reduce costs,
streamline operations and support future growth. In addition, in the nine months
ended September 30, 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. Foreign currency translation also had a 1.4%
negative impact on total operating expenses during the three months ended
September 30, 2020. These increases were partially offset by a reduction to
certain operating expenses, such as travel and entertainment costs, in the third
quarter of 2020 as a result of COVID-19.

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019


Revenue increased by $1.0 billion, or 10.2%, for the nine months ended September
30, 2020 as compared to the nine months ended September 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
0.6% negative impact on total revenue during the nine months ended September 30,
2020, primarily driven by weakness in the Argentine peso, Brazilian real and
Indian rupee, partially offset by strength in the British pound sterling.

Cost of revenue increased by $947.9 million, or 10.1%, for the nine months ended
September 30, 2020 as compared to the same period in 2019, driven by the higher
revenue. We also incurred $3.9 million of costs (primarily employee separation
benefits) related to certain transformation initiatives implemented by the
company in the third quarter of 2020. Foreign currency translation had a 0.6%
positive impact on total cost of revenue during the nine months ended September
30, 2020. Cost of revenue as a percentage of revenue was consistent at 92.9% for
the nine months ended September 30, 2020 and September 30, 2019.

Operating, administrative and other expenses increased by $9.5 million, or 2.1%,
for the nine months ended September 30, 2020 as compared to the nine months
ended September 30, 2019. This increase was largely attributable to $13.2
million of costs, primarily related to employee separation benefits, lease
termination costs and professional fees, as management commenced the
implementation of certain transformation initiatives during the quarter ended
September 30, 2020 to enable the company to prospectively reduce costs,
streamline operations and support future growth. Certain costs were also
incurred 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.
During the nine months ended September 30, 2020, investments were also made in
both people and technology associated with efforts to remediate material
weaknesses in our Europe, Middle East and Africa (EMEA) region. Lastly, 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. These
increases were partially offset by a reduction to certain operating expenses,
such as travel and entertainment costs, during the nine months ended September
30, 2020 as a result of COVID-19. Additionally, during the first half of 2019,
we incurred $36.3 million of costs in connection with our reorganization, which
did not recur in the current period. Foreign currency translation also had a
0.8% positive impact on total operating expenses during the nine months ended
September 30, 2020.

                                       40
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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 nine months ended September 30,
2020 and 2019 (dollars in thousands):



                                               Three Months Ended September 30,                       Nine Months Ended September 30,
                                                2020                      2019                       2020                        2019
Revenue:
Investment management                   $  99,935        58.9 %   $ 104,927        81.2 %    $ 324,745        59.8 %    $  312,881        75.6 %
Development services                       69,677        41.1 %      24,286        18.8 %      217,948        40.2 %       101,188        24.4 %
Total revenue                             169,612       100.0 %     129,213       100.0 %      542,693       100.0 %       414,069       100.0 %
Costs and expenses:
Cost of revenue                            40,384        23.8 %           -         0.0 %      125,454        23.1 %             -         0.0 %

Operating, administrative and other 154,212 90.9 % 138,746

107.4 % 443,015 81.6 % 455,995 110.1 % Depreciation and amortization

               5,902         3.5 %       2,570 

2.0 % 15,039 2.8 % 9,149 2.2 % Asset impairments

                               -         0.0 %           - 

0.0 % 25,000 4.6 % 89,037 21.5 % Gain on disposition of real estate 52,797 31.1 %

           9 

0.0 % 75,132 13.8 % 19,266 4.7 % Operating income (loss)

                    21,911        12.9 %     (12,094 

) (9.4 %) 9,317 1.7 % (120,846 ) (29.1 %) Equity income from unconsolidated subsidiaries

                               30,914        18.2 %      21,873 

17.0 % 71,112 13.1 % 113,657 27.4 % Other income (loss)

                           117         0.1 %       1,415 

1.1 % (1,787 ) (0.3 %) 21,972 5.3 % Less: Net income attributable to

  non-controlling interests                   553         0.3 %         982         0.8 %        1,647         0.3 %         7,379         1.8 %
Add-back: Depreciation and
amortization                                5,902         3.5 %       2,570         2.0 %       15,039         2.8 %         9,149         2.2 %
Add-back: Asset impairments                     -         0.0 %           -         0.0 %       25,000         4.6 %        89,037        21.5 %
EBITDA                                     58,291        34.4 %      12,782         9.9 %      117,034        21.6 %       105,590        25.5 %
Adjustments:
Carried interest incentive
compensation
  expense (reversal) to align with
the timing
  of associated revenue                     3,767         2.2 %      (3,360 

) (2.6 %) (11,517 ) (2.2 %) 12,284 3.0 % Impact of fair value adjustments to real estate

  assets acquired in the Telford
Acquisition
  (purchase accounting) that were
sold in
  period                                    2,289         1.3 %           -         0.0 %        9,289         1.7 %             -         0.0 %
Integration and other costs related
to
  acquisitions                                525         0.3 %       4,517         3.5 %        1,544         0.3 %        13,251         3.1 %
Costs associated with workforce
optimization
  efforts (1)                                   -         0.0 %           -         0.0 %        5,172         1.0 %             -         0.0 %
Costs associated with our
reorganization,
  including cost-savings initiatives
(2)                                             -         0.0 %           -         0.0 %            -         0.0 %           221         0.1 %
Adjusted EBITDA                         $  64,872        38.2 %   $  13,939        10.8 %    $ 121,522        22.4 %    $  131,346        31.7 %




(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 the nine

months ended September 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 September 30, 2020 Compared to the Three Months Ended September 30, 2019


Revenue increased by $40.4 million, or 31.3%, for the three months ended
September 30, 2020 as compared to the three months ended September 30, 2019,
primarily driven by the Telford Acquisition in our development services line of
business as well as increased asset management fees. These increases were
partially offset by lower carried interest revenue and decreases in incentive
and development fees due to the impact of COVID-19. Foreign currency translation
had a 2.2% positive impact on total revenue during the three months ended
September 30, 2020, primarily driven by strength in the British pound sterling
and euro.

Cost of revenue was $40.4 million for the three months ended September 30, 2020 and was attributable to Telford, thus there is no prior period comparison.

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Operating, administrative and other expenses increased by $15.5 million, or
11.1%, for the three months ended September 30, 2020 as compared to the same
period in 2019. This was primarily attributable to an increase in bonuses in our
development services line of business given higher gains on property sales and
increased equity income from unconsolidated subsidiaries. Foreign currency
translation also had a 1.9% negative impact on total operating expenses during
the three months ended September 30, 2020. These items were partially offset by
a reduction to certain operating expenses, such as travel and entertainment
costs, in the third quarter of 2020 as a result of COVID-19.

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




                                             Funds        Separate Accounts      Securities        Total
Balance at June 30, 2020                   $    41.9     $              61.2     $       6.5$   109.6
Inflows                                          1.6                     1.7             0.3           3.6
Outflows                                        (0.2 )                  (1.0 )          (0.3 )        (1.5 )
Market appreciation (depreciation)               1.5                     1.0             0.3           2.8
Balance at September 30, 2020              $    44.8     $              62.9     $       6.8$   114.5




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.

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019


Revenue increased by $128.6 million, or 31.1%, for the nine months ended
September 30, 2020 as compared to the nine months ended September 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 0.1% negative impact on total
revenue during the nine months ended September 30, 2020, primarily driven by
weakness in the euro.

Cost of revenue was $125.5 million for the nine months ended September 30, 2020 and was attributable to Telford, thus there is no prior period comparison.

                                       42

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Operating, administrative and other expenses decreased by $13.0 million, or
2.8%, for the nine months ended September 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 carried interest expense. We also reduced certain
operating expenses, such as travel and entertainment costs, in the nine months
ended September 30, 2020 as a result of COVID-19. During the first half of 2019,
we also incurred $5.2 million of costs in connection with our reorganization,
which did not recur in the current period. These decreases were partially offset
by higher incremental costs associated with Telford, which we acquired on
October 1, 2019 (nine months of operating expenses incurred in 2020 versus $13.3
million of transaction costs incurred pre-acquisition during the nine months
ended September 30, 2019) and rent expense for our new flexible space offering
for the nine months ended September 30, 2020. Foreign currency translation had a
negligible impact on total operating expenses during the nine months ended
September 30, 2020.



A roll forward of our AUM by product type for the nine months ended September 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                                          4.4                     5.8             1.1          11.3
Outflows                                        (1.3 )                  (6.4 )          (1.3 )        (9.0 )
Market appreciation (depreciation)               1.6                    (1.4 )          (0.9 )        (0.7 )
Balance at September 30, 2020              $    44.8     $              62.9     $       6.8$   114.5




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

Liquidity and Capital Resources


We believe that we can satisfy our working capital and funding requirements with
internally generated cash flow and, as necessary, borrowings under our revolving
credit facility. During the nine months ended September 30, 2020, we incurred
$161.9 million of capital expenditures, net of tenant concessions received,
which includes approximately $71.7 million related to technology enablement. Due
to the uncertainty caused by COVID­19, we expect our 2020 net capital
expenditures to be meaningfully lower than initially forecast in our   2019
Annual Report  . As of September 30, 2020, we had aggregate commitments of $84.0
million to fund future co-investments in our Real Estate Investments business,
$10.4 million of which is expected to be funded in 2020. Additionally, as of
September 30, 2020, we are committed to fund $41.0 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 September 30, 2020, we had
$2.8 billion of borrowings available under our revolving credit facility and
$1.4 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.

                                       43

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

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

The second long-term liquidity need is the payment of obligations related to
acquisitions. Our acquisition structures often include deferred and/or
contingent purchase price payments in future periods that are subject to the
passage of time or achievement of certain performance metrics and other
conditions. As of September 30, 2020, we had accrued $89.7 million ($20.6
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.

Lastly, 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 and the three months ended September 30, 2020.
As of October 29, 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 $860.6 million for the nine
months ended September 30, 2020, an increase of $685.9 million as compared to
the nine months ended September 30, 2019. The company experienced an overall
increase in net working capital of approximately $886.7 million, partially
offset by lower net income of $211.8 million as compared to the same period in
the previous year. The positive impact from net working capital was largely
attributable to a decrease in accounts receivable due to a heightened focus on
cash collections across our businesses, and lower corporate income tax payments,
partially offset by a net decrease to accounts payable and accrued expenses, as
well as compensation payable and accrued bonus.

Investing Activities


Net cash used in investing activities totaled $206.5 million for the nine months
ended September 30, 2020, a decrease of $65.2 million as compared to the nine
months ended September 30, 2019. This decrease was largely driven by lower
capital expenditures, greater distributions received from unconsolidated
subsidiaries as well as lower contributions to unconsolidated subsidiaries
during the nine months ended September 30, 2020. This was partially offset by
higher amounts paid for in-fill acquisitions during the nine months ended
September 30, 2020.

                                       44

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Financing Activities


Net cash used in financing activities totaled $111.3 million for the nine months
ended September 30, 2020, an increase of $59.4 million as compared to the nine
months ended September 30, 2019. The increase was primarily due to a decrease in
net borrowings of $52.0 million from our revolving credit facility and $43.2
million in lower net contributions received from non-controlling interests for
the nine months ended September 30, 2020 as compared to the nine months ended
September 30, 2019, partially offset by the impact of $44.1 million in less
proceeds used for repurchase of common stock during the current period.

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 September
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.

                                       45

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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.

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):



                          September 30,       December 31,
                                2020               2019
Balance Sheet Data:
Current assets           $     3,129,883$    2,901,618
Noncurrent assets (1)          5,200,369          5,610,084
Total assets (1)               8,330,252          8,511,702

Current liabilities      $     2,915,488$    2,893,775
Noncurrent liabilities         2,215,211          2,201,269
Total liabilities              5,130,699          5,095,044




                                    Nine Months Ended September 30,
                                      2020                   2019
Statement of Operations Data:
Revenue                         $      9,410,167$      9,626,821
Operating income                         207,270                439,104
Net income                               188,518                447,936



(1) Includes $303.1 million and $574.6 million as of September 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 and 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.

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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;



                                       47

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


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

• client actions to restrain project spending and reduce outsourced

staffing levels;

• 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


                                       48
--------------------------------------------------------------------------------

     •    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  , our   Quarterly Report on Form 10-Q for the quarter
          ended Mach 31, 2020  , and our   Quarterly Report on Form 10-Q for the
          quarter ended June, 30, 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).


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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