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What changed in Cushman & Wakefield Ltd.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cushman & Wakefield Ltd.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+397 added−442 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-24)

Top changes in Cushman & Wakefield Ltd.'s 2023 10-K

397 paragraphs added · 442 removed · 298 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe leverage our technology platform, workflow processes and key strategic partnerships to provide data driven insights to deliver value to our clients. Our systems and processes are scalable enabling us to efficiently onboard new businesses and employees without the need for significant additional capital investment in new systems.
Biggest changeOur scalable systems and processes enable us to efficiently onboard new businesses and employees without the need for significant additional capital investment in new systems. In addition, our investments in technology have helped us attract and retain key employees. 7 Table of Contents Competition We compete across various geographies, markets and service lines within the commercial real estate services industry.
Leasing fees are typically earned after a lease is signed and are calculated as a percentage of the total value of rent payable over the life of the lease. Capital Markets . We represent both buyers and sellers in real estate purchase and sale transactions, and arrange financing supporting purchases.
Leasing fees are typically earned after a lease is signed and are calculated as a percentage of the total value of rent payable over the life of the lease. Capital markets . We represent both buyers and sellers in real estate purchase and sale transactions, and we arrange financing supporting purchases.
Diversity, Equity and Inclusion We are committed to advancing diversity, equity and inclusion ("DEI") in our organization and supporting an environment where our employees can be their authentic selves and do their best work. Our DEI mission is to evolve our culture of inclusion and belonging through a nurturing environment of curiosity, continuous learning and growth.
Diversity, Equity and Inclusion We are committed to advancing diversity, equity and inclusion (“DEI”) in our organization and supporting an environment where our employees can be their authentic selves and do their best work. Our DEI mission is to evolve our culture of inclusion and belonging through a nurturing environment of curiosity, continuous learning and growth.
In alignment with our Environment Policy and ongoing environmental sustainability efforts, in 2021 we set and publicly announced science-based targets for greenhouse gas (“GHG”) emissions reductions across our value chain, in both our own offices and properties we manage on behalf of clients.
In alignment with our Environment Policy and ongoing sustainability efforts, in 2021 we set and publicly announced science-based targets for greenhouse gas (“GHG”) emissions reductions across our value chain, in both our own offices and properties we manage on behalf of clients.
The Property, facilities and project management service line partially mitigates this intra-year seasonality, due to the recurring nature of this service line, which generates more stable revenues throughout the year. The seasonality of service line fee revenue flows through to net income and cash flow from operations.
The Property, facilities and project management service line partially mitigates this intra-year seasonality due to the recurring nature of this service line, which comparatively generates more stable revenues throughout the year. The seasonality of service line fee revenue flows through to net income and cash flow from operations.
Depending on the product or service, we face competition from other commercial real estate services providers, in-house corporate real estate departments, developers, institutional lenders, insurance companies, investment banking firms, investment managers, accounting firms and consulting firms.
Depending on the product or service, we face competition from other commercial real estate services providers, outsourcing companies, in-house corporate real estate departments, developers, institutional lenders, insurance companies, investment banking firms, investment managers, and accounting and consulting firms.
Although many of our competitors across our larger service lines are smaller local or regional firms, they may have a stronger presence in certain markets. We are also subject to competition from other large national and multinational firms that have similar service competencies and geographic footprint to ours, including Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc.
Although many of our competitors across our larger service lines are smaller local or regional firms, they may have a stronger presence in certain markets. We are also subject to competition from other large national and multinational firms that have similar service competencies and geographic footprints to ours, including Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc.
Generally, our industry is focused on completing transactions by calendar year-end, with a significant concentration in the last quarter of the calendar year while certain expenses are recognized more evenly throughout the calendar year. Historically, our revenue and operating income typically tend to be lowest in the first quarter, and highest in the fourth quarter of each year.
Generally, our industry is focused on completing transactions by calendar year-end, with a high concentration in the last quarter of the calendar year, while certain expenses are recognized more evenly throughout the calendar year. Historically, our revenue and operating income typically tend to be lowest in the first quarter and highest in the fourth quarter of each year.
Our experienced management team has been focused on integrating companies, driving operating efficiencies, realizing cost savings, attracting and retaining top talent and improving financial performance. Today, Cushman & Wakefield is one of the top three real estate services providers as measured by revenue and workforce.
Our experienced management team has been focused on improving financial performance, driving operating efficiencies, realizing cost savings, and attracting and retaining top talent. Today, Cushman & Wakefield is one of the top three real estate services providers as measured by revenue and workforce.
In 2022, 2021 and 2020, we generated revenues of $10.1 billion, $9.4 billion and $7.8 billion, respectively, and service line fee revenue of $7.2 billion, $6.9 billion and $5.5 billion, respectively. Since 2014, we have built our company organically and through various mergers and acquisitions, giving us the scale and global footprint to effectively serve our clients’ multinational businesses.
In 2023, 2022 and 2021, we generated revenues of $9.5 billion, $10.1 billion and $9.4 billion, respectively, and service line fee revenue of $6.5 billion, $7.2 billion and $6.9 billion, respectively. Since 2014, we have built our company organically and through various mergers and acquisitions, giving us the scale and global footprint to effectively serve our clients’ multinational businesses.
As the parent company, Cushman & Wakefield plc does not conduct any operations other than with respect to its direct and indirect ownership of its subsidiaries, and its business operations are conducted primarily out of its indirect operating subsidiary, DTZ Worldwide Limited, and its subsidiaries. Our corporate headquarters are located at 225 West Wacker Drive, Chicago, Illinois.
As the parent company, Cushman & Wakefield plc does not conduct any operations other than with respect to its direct and indirect ownership of its subsidiaries, and its business operations are conducted primarily out of its indirect operating subsidiary, DTZ Worldwide Limited, and its subsidiaries. Our corporate headquarters are located at 225 West Wacker Drive, Suite 3000, Chicago, Illinois 60606.
Regardless of a client’s assignment, we view each interaction with our clients as an opportunity to deliver an exceptional experience by offering a full platform of services, while deepening and strengthening our relationships. Our comprehensive service offerings extend across all asset types including logistics, office, retail, healthcare, life sciences and multifamily. 6 Table of Contents Our Iconic Brand.
We view each interaction with our clients as an opportunity to deliver an exceptional experience by offering a full platform of services, while deepening and strengthening our relationships. Our comprehensive service offerings extend across almost all asset types including logistics, office, retail, healthcare, life sciences and multifamily. 6 Table of Contents Our Iconic Brand.
Our clients vary greatly in size and complexity, and include for-profit and non-profit entities, governmental entities and public and private companies. 8 Table of Contents Seasonality The market for some of our products and services is seasonal, especially in the Leasing and Capital markets service lines.
Our clients vary greatly in size and complexity and include for-profit and non-profit entities, governmental entities and public and private companies. Seasonality The market for some of our products and services is seasonal, especially in the Leasing and Capital markets service lines.
Our Owner and Occupier Clients Our clients include a full range of real estate owners and occupiers, including tenants, investors and multinational corporations in numerous markets, including office, retail, industrial, multifamily, student housing, hotels, data center, healthcare, self-storage, land, condominium conversions, subdivisions and special use.
Owner and Occupier Clients Our clients include a full range of real estate owners and occupiers, including tenants, investors and multinational companies in numerous markets, including office, retail, industrial, multifamily, student housing, hotels, data centers, healthcare, self-storage, land, condominium conversions, subdivisions and special use.
We have built a platform by investing in our people and technology to enable our approximately 52,000 employees to offer our clients services through an extensive network of over 400 offices across approximately 60 countries. This scale provides operational leverage, translating revenue growth into increased profitability. Breadth of Our Service Offerings.
We have built a platform through investment in our people and technology to enable our approximately 52,000 employees to offer our clients services through an extensive network of nearly 400 offices across approximately 60 countries. This scale provides operational leverage, translating revenue growth into increased profitability. Breadth of Our Service Offerings.
By revenue, our largest country was the United States, representing 74%, 72% and 69% of revenue in the years ended December 31, 2022, 2021 and 2020, respectively, followed by Australia, representing 4%, 5% and 6% of revenue in the years ended December 31, 2022, 2021 and 2020, respectively. 4 Table of Contents Our Service Lines Property, Facilities and Project Management .
By revenue, our largest country was the United States, representing 72%, 74% and 72% of revenue in the years ended December 31, 2023, 2022 and 2021, respectively, followed by Australia, representing 5%, 4% and 5% of revenue in the years ended December 31, 2023, 2022 and 2021, respectively. 4 Table of Contents Our Service Lines Property, facilities and project management .
Led by an experienced executive team and driven by approximately 52,000 employees in over 400 offices and approximately 60 countries, we deliver exceptional value for real estate occupiers and owners, managing over 5.1 billion square feet of commercial real estate space globally and offering a broad suite of services through our integrated and scalable platform.
Led by an experienced executive team and driven by approximately 52,000 employees in nearly 400 offices and approximately 60 countries, we deliver exceptional value for real estate occupiers and owners, managing 6.2 billion square feet of commercial real estate space globally and offering a broad suite of services through our integrated and scalable platform.
Increased institutional ownership drives demand for services in three ways: ◦ Increased demand for property management services - Institutional owners self-perform property management services at a lower rate than private owners, outsourcing more to services providers. ◦ Increased demand for transaction services - Institutional owners execute real estate transactions at a higher rate than private owners. ◦ Increased demand for advisory services - Because of a higher transaction rate, there is an opportunity for services providers to grow the number of ongoing advisory engagements.
An increase in institutional ownership drives demand for services in three ways: ◦ Demand for property management services - Institutional owners self-perform property management services at a lower rate than private owners, outsourcing more to services providers. ◦ Demand for transaction services - Institutional owners execute real estate transactions at a higher rate than private owners. ◦ Demand for advisory services - In periods with higher transaction rates, there is an opportunity for services providers to grow the number of ongoing advisory engagements.
We could be required to pay fines, return commissions, have a license suspended or revoked or be subject to other adverse action if we conduct regulated activities without a license or violate applicable rules and regulations.
If we or our employees conduct regulated activities without a required license, or otherwise violate applicable laws and regulations, we could be required to pay fines, return commissions, have a license suspended or revoked, or be subject to other adverse action.
We strive to attract, develop and retain the very best people through an inclusive culture, consistent talent measurement and continually modernizing our people management processes. We believe our employees produce superior client results and position us to win additional business across our platform.
We strive to attract, develop and retain the very best people through an inclusive culture, consistent talent management and continual modernization of our people management processes. We believe our employees produce superior client results and position us to win additional business across our platform.
Our real estate professionals come from a diverse set of backgrounds, cultures and expertise that creates a culture of collaboration and a tradition of excellence. We believe our people are the key to our business and we have instilled an atmosphere of collective success. 7 Table of Contents Deploy Technology to Improve Client Experience Through Data-Driven Insights .
Our employees and real estate professionals come from diverse backgrounds, cultures and areas of expertise that create a culture of collaboration and a tradition of excellence. We believe our people are the key to our business and we have instilled an atmosphere of collective success. Deploy Technology to Improve Client Experience Through Data-Driven Insights .
The result is a global real estate services firm with the iconic, more than 100-year-old, Cushman & Wakefield brand. In August 2018, Cushman & Wakefield successfully completed an initial public offering (the "IPO"), listing the firm on the New York Stock Exchange (NYSE: CWK). Our recent history has been a period of rapid growth and transformation for our company.
The result is a global real estate services firm with the iconic, more than 100-year-old, Cushman & Wakefield brand. In August 2018, Cushman & Wakefield completed an initial public offering (the “IPO”), listing its ordinary shares on the New York Stock Exchange (NYSE: CWK). Our recent history has been a period of transformation for our company.
We attribute our position to the following competitive strengths: Global Size and Scale. We believe multinational clients prefer to partner with real estate services providers with the scale necessary to meet their needs across multiple geographies and service lines. Often, this scale is a prerequisite to compete for complex global service mandates.
We believe multinational clients prefer to partner with real estate services providers with the scale necessary to meet their needs across multiple geographies and service lines. Often, this scale is a prerequisite to compete for complex global service mandates.
These macroeconomic trends and uncertainty are discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Risk Factors” in Part I, Item 1A in this Annual Report. 5 Table of Contents Key drivers of revenue growth for the largest commercial real estate services providers are expected to include: Occupier Demand for Real Estate Services.
These macroeconomic trends and uncertainties are discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K (this “Annual Report”). 5 Table of Contents Key drivers of revenue growth for the largest commercial real estate services providers, including us, are expected to include: Occupier Demand for Real Estate Services.
Within those segments, we operate the following service lines: (i) Property, facilities and project management, (ii) Leasing, (iii) Capital markets and (iv) Valuation and other, representing 48%, 29%, 16% and 7% of our 2022 service line fee revenue, respectively. Our Geographical Segments Our global presence and integrated platform enables us to provide a broad base of services across geographies.
Within those segments, we operate the following service lines: (i) Property, facilities and project management, (ii) Leasing, (iii) Capital markets and (iv) Valuation and other, representing 55%, 28%, 11% and 6% of our 2023 service line fee revenue, respectively. Our Geographical Segments Our global presence and integrated platform enable us to provide a broad base of services across geographies.
We hold leading positions in all of our key markets. This global footprint, complemented by a full suite of service offerings, positions us as one of a small number of providers able to respond to complex global mandates from large multinational occupiers and owners.
This global footprint, complemented by a full suite of service offerings, positions us as one of a small number of providers able to respond to complex global mandates from large multinational occupiers and owners.
Our employees include management, brokers and other sales staff, administrative specialists, valuation specialists, maintenance, landscaping, janitorial and office staff and others. Approximately 8,000 (or 15%) of our employees are covered by collective bargaining agreements, the substantial majority of whom are employed in facilities services. Costs related to approximately 41% of our employees are fully reimbursed by clients.
Our employees include management, brokers and other sales staff, administrative specialists, valuation specialists, maintenance, landscaping and janitorial personnel, office staff and others. Approximately 8,000 (or 16%) of our employees are covered by collective bargaining agreements, the substantial majority of whom are employed in facilities services.
Our website address is www.cushmanwakefield.com. The information contained on, or accessible through, our website is not part of or incorporated into this Form 10-K. All reports required to be filed with the U.S. Securities and Exchange Commission ("SEC") are available and can be accessed through the Investor Relations section of our website. Our History We collectively refer to TPG Inc.
Our website address is www.cushmanwakefield.com. The information contained on, or accessible through, our website is not part of or incorporated into this Annual Report. All reports required to be filed with the U.S. Securities and Exchange Commission (“SEC”) are available and can be accessed through the Investor Relations section of our website.
See “—We face risks associated with the effects of climate change, including physical and transition risks, and with our sustainability practices, goals and performance.” Additional information regarding our ESG practices can be found in our 2021 ESG Report, available on our website.
See “Risks Related to Our Business and Operations—We face risks associated with the effects of climate change, including physical and transition risks, and with our sustainability practices, goals and performance.” Additional information regarding our ESG practices and progress towards these targets can be found in our 2022 ESG Report, available on our website.
Our DEI policies and practices in place have earned Cushman & Wakefield recognition by various organizations including the following: (a) 2022 Bronze Top Global Supplier Diversity & Inclusion Champion from WEConnect International, (b) 2022 Human Rights Campaign Best Place to Work for LGBTQ+ Equality, and (c) 2023 Top 10 Military Friendly® Employer in the U.S.
Our DEI policies and practices in place have earned Cushman & Wakefield recognition by various organizations including the following: (a) 2023 Silver Top Global Supplier Diversity & Inclusion Champion from WEConnect International, (b) 2023-2024 Human Rights Campaign Foundation’s Equality 100 Award: Leader in LGBTQ+ Workplace Inclusion, and (c) 2024 Top 5 Military Friendly® Employer in the U.S.
Our Principal Services and Regions of Operation We have organized our business, and report our operating results, through three geographic segments: the Americas; Europe, Middle East and Africa ("EMEA"); and Asia Pacific ("APAC") representing 77%, 10% and 13% of our 2022 total revenue and 73%, 13% and 14% of our 2022 service line fee revenue, respectively.
Our Principal Services and Regions of Operation We have organized our business, and report our operating results, through three geographic segments: the Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific (“APAC”) representing 75%, 10% and 15% of our 2023 total revenue and 71%, 13% and 16% of our 2023 service line fee revenue, respectively.
Learning and Development We continue to build an inclusive workplace that fosters fair and equitable growth opportunities; focuses on the manager-employee relationship to drive operational performance; and provides our employees with learning and development opportunities to support their ongoing career progression.
Costs related to approximately 42% of our employees are fully reimbursed by clients. 8 Table of Contents Learning and Development We continue to build an inclusive workplace that fosters fair and equitable growth opportunities, focuses on the manager-employee relationship to drive operational performance, and provides our employees with learning and development opportunities to support their ongoing career progression.
Institutional owners, such as real estate investment trusts (known as REITs), pension funds, sovereign wealth funds and other financial entities, are acquiring more real estate assets and financing them in the capital markets.
Institutional owners, such as real estate investment trusts (REITs), pension funds, sovereign wealth funds and other financial entities, have in recent years acquired more real estate assets and historically financed them in the capital markets.
We have gained third-party recognition as a provider and employer of choice, having consistently been named in the top three in our industry’s leading brand study, the Lipsey Company’s Top 25 Commercial Real Estate Brands, and the world’s best commercial real estate advisor and consultant by Euromoney.
We have gained third-party recognition as a provider and employer of choice, having consistently been named in the top four in our industry’s leading brand study, the Lipsey Company’s Top 25 Commercial Real Estate Brands, and a leading global real estate services firm by the International Association of Outsourcing Professionals.
We believe that having a diverse and thriving workforce enables new perspectives, creativity, better risk management and problem solving, leading to superior results for our people, clients, partners and shareholders. Our global DEI strategy focuses on making an impact on our workforce, our workplace and the marketplace.
We believe that having a diverse and thriving workforce enables new perspectives, inspires creativity and strengthens risk management and problem-solving, all of which lead to superior results for our people, clients, partners and shareholders. Our global DEI strategy is centered around making an impact on our workforce and talent, our workplace and culture, and the marketplace and our service offerings.
Today, this pedigree, heritage and continuity continues to be recognized by our clients, employees and the industry. We are consistently named in the top three in our industry’s leading brand study, the Lipsey Company’s Top 25 Commercial Real Estate Brands. In addition, we have been consistently ranked among the International Association of Outsourcing Professionals’ top 100 outsourcing professional service firms.
Today, this pedigree, heritage and continuity continues to be recognized by our clients, employees and the industry. We are consistently named in the top four in our industry’s leading brand study, the Lipsey Company’s Top 25 Commercial Real Estate Brands.
Leasing and Capital markets real estate professionals in EMEA and APAC work on a salary basis, with an additional performance bonus based on a share of the profits of their business unit.
Leasing and Capital markets real estate professionals in EMEA and APAC work on a salary basis, with an additional performance bonus based on a share of the profits of their business unit. Even within our geographic segments, our service lines’ employee base includes a mix of professional and non-salaried employees.
In 2022, our Property, facilities and project management service line, which is recurring and contractual in nature, generated 62% of our total revenue and 48% of our service line fee revenue.
Significant Recurring Revenue Resilient to Changing Economic Conditions. In 2023, our Property, facilities and project management service line, which is recurring and contractual in nature, generated 69% of our total revenue and 55% of our service line fee revenue.
With respect to the Cushman & Wakefield name, we have processed and continuously maintain trademark registration for this trade name in most jurisdictions where we conduct business. We obtained our most recent U.S. trademark registrations for the Cushman & Wakefield name and logo in 2017, and these registrations would expire in 2027 if we failed to renew them.
With respect to the Cushman & Wakefield name, we have processed and continuously maintain trademark registration for this trade name in most jurisdictions where we conduct business.
In owner representation leasing, we typically contract with a building owner on a multi-month or multi-year agreement to lease their available space. In tenant representation leasing, we are typically engaged by a tenant to identify and negotiate a lease for them in the form of a renewal, expansion or relocation.
In owner representation leasing, we typically contract with a building owner on a multi-month or multi-year agreement to lease their available space.
We and our licensed associates may be subject to various obligations and we could become subject to claims by regulators and/or participants in real estate sales or other services claiming that we did not fulfill our obligations.
Licensing requirements could also impact our ability to engage in certain types of transactions or businesses or affect the cost of conducting business. We and our licensed associates could become subject to claims by regulators or participants in real estate sales or other services claiming that we did not fulfill our obligations.
Human Capital Resources and Management We continue to place our people at the center of everything we do. We are committed to attracting, developing and retaining a highly qualified, diverse and dedicated workforce. As of December 31, 2022, we had approximately 52,000 employees worldwide - approximately 70% in the Americas, 20% in APAC, and 10% in EMEA.
Human Capital Resources and Management We strive to place our people at the center of everything we do. We seek to hire, develop and advance diverse talent throughout the organization. As of December 31, 2023, we had approximately 52,000 employees worldwide – approximately 69% in the Americas, 21% in APAC, and 10% in EMEA.
Real estate service providers continue to develop and maintain solutions to help clients meet stricter environmental regulations and achieve their own sustainability goals. Our Competitive Strengths We believe we are well positioned to capitalize on the growth opportunities and globalization trends in the commercial real estate services industry, even in the current volatile and uncertain economic environment.
Our Competitive Strengths We believe we are well positioned to capitalize on the growth opportunities and globalization trends in the commercial real estate services industry, even in the current complicated and uncertain economic environment. We attribute our position to the following competitive strengths: Global Size and Scale.
We expect to continue to drive further margin expansion over time as we continuously improve our operating efficiency, through the application of proven and value-add technology, developing economies of scale and disciplined cost management. We view margin expansion as an important measure of productivity. Recruit, Hire, and Retain Top Talent .
We expect to drive margin expansion and a more balanced capital structure over time through operating efficiency, free cash flow generation, the application of proven and value-add technology, economies of scale and disciplined cost management. Recruit and Retain Top Talent and Maintain a High-Performance Culture .
Many of our clients realize more value by bundling multiple services, giving them access to global scale and better solutions through multidisciplinary service teams.
Our current scale, position and quality of our multidisciplinary service teams create a significant opportunity for growth by delivering an increased number of services to new and existing clients across multiple service lines. Many of our clients realize more value by bundling services, giving them access to our global scale and high-quality advisory solutions.
The information contained on or accessible through our website, including our 2021 ESG Report, is not incorporated by reference herein or otherwise made a part of this Annual Report on Form 10-K or any of our other filings with the SEC. 10 Table of Contents Regulation The brokerage of real estate sales and leasing transactions, property and facilities management, conducting real estate valuation and securing debt for clients, among other service lines, require that we comply with regulations affecting the real estate industry and maintain licenses in the various jurisdictions in which we operate.
Regulation The brokerage of real estate sales and leasing transactions, property and facilities management, project management, conducting real estate valuation and securing debt for clients, among other service lines, require that we comply with regulations and maintain licenses in the various jurisdictions in which we operate.
This could include claims with respect to alleged conflicts of interest where we act, or are perceived to be acting, for two or more clients. While management has overseen highly regulated businesses before and expects us to comply with all applicable regulations in a satisfactory manner, no assurance can be given that it will always be the case.
While management has overseen highly regulated businesses before and we expect to comply with all applicable laws and regulations, no assurance can be given that it will always be the case.
We are focused on executing the following strategies to support our growth objectives: Leverage Breadth of Services to Provide Superior Client Outcomes. Our current scale and position create a significant opportunity for growth by delivering more services to existing clients across multiple service lines.
Our primary business objective is growing revenue and profitability by leveraging this platform to provide our clients with excellent service. We are focused on executing the following strategies to support our growth objectives: Leverage Breadth of Services to Provide Superior Client Outcomes.
Our business has been impacted, like our peers in the commercial real estate sector and other companies across various sectors, by geopolitical uncertainty, higher inflation, and rising interest rates, among other macroeconomic challenges.
Our business has been negatively impacted, like our peers in the commercial real estate sector, by inflation and increased volatility in interest rates, among other macroeconomic challenges, which led to ongoing volatility within global capital and credit markets and delayed real estate transaction decision making in 2023.
Occupiers are focusing on their core competencies and choosing to outsource commercial real estate services. Multiple market trends like globalization and changes in workplace strategy are driving occupiers to seek third-party real estate services providers as an effective means to reduce costs and improve efficiency, maximize productivity and help determine long-term property strategy.
Market trends including globalization and changes in workplace strategy are increasing the complexity of real estate management and driving occupiers to seek qualified third-party real estate services providers to help determine long-term workplace strategy, reduce costs and maximize productivity. Institutional Investors Owning a Greater Proportion of Global Real Estate.
The global services providers with larger operating platforms can take advantage of economies of scale. Those few firms with scalable operating platforms are best positioned to drive profitability as consolidation in the highly fragmented commercial real estate services industry is expected to continue. Sustainability in Real Estate. Sustainability considerations are increasingly defining both investor and occupier decisions.
Global services providers with larger operating platforms can utilize economies of scale. Those few firms with scalable operating platforms are best positioned to improve their profitability and market share as real estate investors and occupiers become increasingly global and require commercial real estate services partners that can match their geographic reach and complex real estate needs. Sustainability in Real Estate.
For years, our people have earned a strong reputation by successfully executing on the most iconic and complex real estate assignments in the world. Because of this legacy of excellence, our leading platform and brand strength, we attract and retain top talent in the industry.
These revenue streams help provide greater stability to our cash flows and underlying business and have proven to be resilient to changing and challenging economic conditions. Top Talent in the Industry . For years, our people have earned a strong reputation by successfully executing on the most iconic and complex real estate assignments in the world.
We strive to build a diverse and engaged workforce and to support an inclusive environment in everything we do. We provide our employees with training and growth opportunities to support their ongoing success. In addition, we are focused on management development to drive strong operational performance and continuing innovation. Capital-Light Business Model .
Because of this legacy of excellence, and our leading platform and brand strength, we attract and retain top talent in the industry. We strive to build a diverse and engaged workforce and to support an inclusive environment in everything we do. We provide our employees with training and growth opportunities to support their ongoing success.
A number of our services, including the services provided by certain of our indirect wholly-owned subsidiaries in the U.S., the U.K., and elsewhere, are subject to regulation and oversight by the SEC, the Financial Industry Regulatory Authority ("FINRA"), the Financial Conduct Authority (U.K.), Companies House (U.K.) or other self-regulatory organizations and foreign and state regulators, and compliance failures or regulatory action could adversely affect our business.
Some of our service lines are also subject to regulation and oversight by the SEC, the Financial Industry Regulatory Authority (“FINRA”), the U.K. Financial Conduct Authority (the “UK FCA”) or other foreign and state regulators or self-regulatory organizations.
Even within our geographic segments, our service lines employee base includes a mix of professional and non-salaried employees. 9 Table of Contents Intellectual Property We hold various trademarks and trade names worldwide, which include the “Cushman & Wakefield” and “DTZ” names.
Intellectual Property We hold various trademarks and trade names worldwide, which include the “Cushman & Wakefield” and “DTZ” names.
Our Environment Policy, available on our website, outlines our commitment to being a responsible steward of the environment. We include sustainability principles in our policies and practices, engage employees in our collective efforts, and monitor and report our performance.
We include sustainability principles in our policies and practices as appropriate, engage employees in our collective environmental, social and governance (“ESG”) efforts, and monitor and report our performance.
Our Growth Strategy We have built an integrated, global services platform that delivers the best outcomes for clients locally, regionally and globally. Our primary business objective is growing revenue and profitability by leveraging this platform to provide our clients with excellent service.
In addition, we are focused on management development to drive strong operational performance and continuing innovation. Our Growth Strategy We have built an integrated, global services platform that is designed to deliver the best outcomes for clients locally, regionally and globally.
We have built a scalable platform that is well positioned to execute our growth strategy focused on: (i) participating in further industry consolidation; (ii) meeting the growing outsourcing and service needs of our target customer base; and (iii) leveraging our strong competitive position to increase our market share.
We have built a scalable platform that we believe is well positioned to support our growth strategy by focusing on: (i) leveraging our strong competitive position to meet the growing outsourcing and service needs of our clients; (ii) strengthening our core competencies to generate free cash flow and drive a more balanced capital structure; (iii) maintaining a high-performance culture; and (iv) utilizing our technology platform to provide data driven insights to our clients.
For the fifth consecutive year in 2022, we were recognized by Euromoney as the world’s best commercial real estate advisor and consultant. In 2022, we once again received the ENERGY STAR® Partner of the Year—Sustained Excellence Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy. Significant Recurring Revenue Resilient to Changing Economic Conditions.
For the 12th consecutive year, we have been named as a leader in the International Association of Outsourcing Professionals’ top 100 outsourcing professional service firms. In addition, in 2023, we once again received the ENERGY STAR® Partner of the Year—Sustained Excellence Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy.
As we continue to add depth and scale to our growing platform, through both organic and inorganic growth, we strive to deliver the value of our enterprise to each engagement by leveraging and sharing information to drive a seamless approach to client development and service delivery. Expand Margins Through Operational Excellence .
We strive to deliver the full value of our enterprise to each engagement by leveraging information across our platform to drive a seamless approach to client development and service delivery. Additionally, we plan to continue to align our service offerings to capture new demand from industry trends like demographic shifts, hybrid work culture, climate change, technology adoption and more.
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We have made significant investments in technology and workflows to support our growth strategy to improve our productivity and drive better outcomes for our clients.
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As a Company, we are focused on making an impact for our clients.
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Our proven track record of strong operational and financial performance leaves us well-positioned to capitalize on the attractive and growing commercial real estate services industry.
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In tenant representation leasing, we are typically engaged by a tenant to identify and negotiate a lease for them in the form of a renewal, expansion or relocation or occasionally to enter into a sublease or lease termination if they desire space reduction.
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We believe large corporations generally prefer outsourcing to global firms with fully developed platforms that can provide all the commercial real estate services needed. Institutional Investors Owning a Greater Proportion of Global Real Estate.
Added
Occupiers are focusing on their core competencies and choosing to outsource commercial real estate services to global firms that can provide a fully developed platform of commercial real estate services.
Removed
Additionally, services with high visibility including our Leasing and Valuation and other service lines generated 26% of our total revenue and 36% of our service line fee revenue in 2022. These revenue streams have provided greater stability to our cash flows and underlying business and have proven to be resilient to changing economic conditions. Top Talent in the Industry .
Added
Sustainability considerations are increasingly incorporated into both investor and occupier decisions. Real estate services providers continue to develop and maintain solutions to help clients meet stricter environmental regulations, operate more efficiently and achieve their own sustainability goals.
Removed
We generate strong cash flow through our low capital intensive business model and focused and disciplined capital deployment. We target average capital expenditures to be less than 1% of revenue in the near to medium term. We expect to reinvest this cash flow into our services platform as well as in-fill M&A to continue to drive growth.
Added
Operate with Rigor . Beginning with a strategic realignment of the Company in 2020, followed by concentrated cost actions during the market volatility experienced in 2023, we have demonstrated the ability to apply rigorous cost and capital allocation discipline.
Removed
Beginning with the successful integration of our businesses stemming from the merger in 2014, followed by a strategic realignment of the Company in 2020 to better align our operating model to our service delivery offerings, we have demonstrated the ability to expand adjusted EBITDA margins.
Added
We leverage our technology platform, including the integration of artificial intelligence (“AI”) and machine learning technologies, workflow processes and key strategic partnerships to provide value-add data driven insights to our clients. We seek to use AI to empower our brokers, services and research professionals to support client decision-making and other needs with real-time, AI-powered information and automation.
Removed
In addition, our investments in technology have helped us attract and retain key employees, enable productivity improvements that contribute to margin expansion, and have strongly positioned us to expand the number and types of service offerings we deliver to our key global customers.
Added
We obtained our most recent U.S. trademark registrations for the Cushman & Wakefield name and logo in 2017, and these registrations would expire in 2027 if we failed to renew them. 9 Table of Contents Environment Cushman & Wakefield strives to integrate climate considerations into our operations, business practices and service offerings.
Removed
We have made significant investments to streamline and integrate these systems, which are now part of a fully integrated platform supported by an efficient back-office. Competition We compete across a variety of geographies, markets and service lines within the commercial real estate services industry.
Added
We understand the importance of managing environmental risks, developing sustainability opportunities, protecting value and driving meaningful change for our business and our clients.
Removed
(together with its affiliates, “TPG”) and PAG Asia Capital (together with its affiliates, "PAG") as our "Principal Shareholders." We collectively refer to our Principal Shareholders together with Ontario Teachers' Pension Plan Board ("OTPP") as our "Founding Shareholders." In 2014, our Founding Shareholders started our company in its current form, with the purchase of the DTZ group property services business (“DTZ”) from UGL Limited.
Added
We aim to deliver our real estate services with high standards of environmental care and social responsibility, building on an enterprise-wide strategy to develop a more resilient business, strengthen corporate reputation, reduce risk and drive long-term, sustainable value creation. Our Environment Policy, available on our website, outlines our commitment to being a responsible steward of the planet and its resources.
Removed
At the end of 2014, the Founding Shareholders acquired and combined Cassidy Turley with DTZ. In 2015, we completed our transformative growth with the acquisition of C&W Group, Inc., the legacy Cushman & Wakefield business. The company was combined under the name Cushman & Wakefield in September 2015.
Added
The information contained on or accessible through our website, including our 2022 ESG Report, is not incorporated by reference herein or otherwise made a part of this Annual Report or any of our other filings with the SEC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

143 edited+28 added−70 removed64 unchanged
Biggest changeRisk Factors Summary The material risks summarized in further detail below include those relating to: Risks Related to Our Business and Operations • general macroeconomic conditions and global and regional demand for commercial real estate; • retaining management and qualified revenue producing employees; • the COVID-19 pandemic and other global health events; • acquisitions we have made or may make in the future; • the perception of our brand and reputation in the marketplace; • the concentration of our business with corporate clients; • actual or perceived conflicts of interest and their potential impact on our service lines; • our ability to maintain and execute our information technology strategies; • an interruption or failure of our information technology, communications systems or data services; • potential breaches in security relating to our information systems; • our ability to comply with current and future data privacy regulations and other confidentiality obligations; • infrastructure disruptions; • impairment of goodwill and other intangible assets; • our ability to comply with laws and regulations and any changes thereto and to make correct determinations in complex tax regimes; • our ability to execute on our strategy for operational efficiency; • the seasonal nature of significant portions of our business; • the failure of third parties to comply with contractual, regulatory or legal requirements; • potential effects of climate change and risks related to our sustainability goals; • our exposure to environmental liabilities as a result of our role as a real estate services provider; Risks Related to Our Industry • local, regional and global competition; • social, political and economic risks in different countries and foreign currency volatility; Risks Related to Our Common Stock • the ability of our Principal Shareholders to exert significant influence over us and potential conflicts of interest of certain directors; • potential price declines resulting from future sales of a large number of our ordinary shares; • our policy relating to the payment of cash dividends; • our dependence on dividends and distributions from our operating subsidiaries; • uncertainties facing to the timing and amount of any potential share repurchases; Risks Related to Our Indebtedness • restrictions imposed on us by our credit agreement; • our substantial amount of indebtedness and its potential impact on our available cash flow and the operation of our business; • our ability to incur additional debt; • our ability to service our existing debt; 12 Table of Contents Legal and Regulatory Risks • litigation that could subject us to financial liabilities and/or damage our reputation; • the fact that the rights of our shareholders may differ from the rights typically offered to shareholders of a Delaware corporation; • the ability of U.S.-based shareholders to enforce civil liabilities against us; • anti-takeover provisions in our articles of association; • the impact of the U.K.
Biggest changeRisk Factors Summary The material risks summarized in further detail below include those relating to: Risks Related to Our Business and Operations • general macroeconomic conditions and global and regional demand for commercial real estate; • attracting and retaining qualified revenue producing employees and senior management; • acquisitions we have made or may make in the future; • the perception of our brand and reputation in the marketplace; • the concentration of our business with specific corporate clients; • actual or perceived conflicts of interest and their potential impact on our service lines; • our ability to maintain and execute our information technology strategies; • an interruption or failure of our information technology, communications systems or data services; • potential breaches in security relating to our information systems; • our ability to comply with current and future data privacy regulations and other confidentiality obligations; • infrastructure disruptions; • impairment of goodwill and other intangible assets; • our ability to comply with existing and new laws and regulations; • changes in tax laws or tax rates and our ability to make correct determinations in complex tax regimes; • our ability to successfully execute on our strategy for operational efficiency; • the failure by third parties performing activities on our behalf to comply with contractual, regulatory or legal requirements; • climate change and our ability to achieve our sustainability goals; • foreign currency volatility; • social, geopolitical and economic risks associated with our international operations; • sociopolitical polarization; Risks Related to Our Indebtedness • restrictions imposed on us by the agreements governing our indebtedness; • our amount of indebtedness and its potential adverse impact on our available cash flow and the operation of our business; • our ability to incur more indebtedness; • our ability to generate sufficient cash to service our existing indebtedness; Risks Related to Our Industry • local, regional and global competition; • the seasonal nature of significant portions of our revenue and cash flow; • our exposure to environmental liabilities due to our role as a real estate services provider; Risks Related to Our Common Stock • the ability of our principal shareholders to exert influence over us; • potential price declines resulting from future sales of a large number of our ordinary shares; • our capital allocation strategy including current intentions to not pay cash dividends; 12 Table of Contents Legal and Regulatory Risks • litigation that could subject us to financial liabilities and/or damage our reputation; • the fact that the rights of our shareholders may differ from the rights typically offered to shareholders of a Delaware corporation; • the ability of U.S.-based shareholders to enforce civil liabilities against us or our directors or officers; • the potential anti-takeover effects of certain provisions in our articles of association, prohibitions under the U.K.
Any of these events could cause system interruption, delays or loss, corruption or exposure of critical data and may also disrupt our ability to provide services to or interact with our clients, business partners or other third parties. Furthermore, any such event could result in substantial recovery and remediation costs and liability to clients, business partners and other third parties.
Any of these events could cause system interruption, delays or loss, corruption or exposure of critical data and may also disrupt our ability to provide services to or interact with our clients or other business partners. Furthermore, any such event could result in substantial recovery and remediation costs and liability to clients or other third parties.
Such disagreements could result in disputes and, ultimately, in the payment of additional funds to the government authorities in the jurisdictions where we carry on business, which could have an adverse effect on our results of operations.
Such disagreements could result in disputes and, ultimately, in the payment of additional funds to government authorities in the jurisdictions where we carry on business, which could have an adverse effect on our results of operations.
Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom by looking at various factors, including the structure of our Board of Directors, the functions of the directors and where they are resident.
Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom by looking at various factors, including the structure of our Board, the functions of the directors and where they are resident.
Further deterioration or a protracted extension of these macroeconomic conditions, an economic slowdown or recession in the U.S. or global economy, or the public perception that any of these events may occur, could cause a decline in global and regional demand for commercial real estate and negatively affect the performance of some or all of our service lines.
A further deterioration or a protracted extension of these macroeconomic conditions, an economic slowdown or recession in the U.S. or global economy, or the public perception that any of these events may occur, could cause a continued decline in global and regional demand for commercial real estate and negatively affect the performance of some or all of our service lines.
Any future growth through acquisitions will depend in part upon the continued availability of suitable acquisition targets at favorable prices and upon advantageous terms and conditions, which may not be available to us, as well as sufficient funds from our cash on hand, cash flow from operations, or external financing, which may not be available to us on favorable terms.
Any future growth through acquisitions will depend in part upon the continued availability of suitable acquisition targets at favorable prices and upon advantageous terms and conditions, which may not be available to us, as well as sufficient funds from our cash on hand, cash flow from operations, or external financing, which may not be available to us on favorable terms or at all.
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, restrictions imposed by applicable law or the SEC and other factors that our board of directors may deem relevant.
Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, restrictions imposed by applicable law or the SEC and other factors that our Board may deem relevant.
For a discussion of these differences, see the section entitled “Description of Share Capital—Differences in Corporate Law” in our prospectus dated August 1, 2018, which is filed with the SEC. The Annual Report on Form 10-K does not represent a U.K. Companies statutory account filing.
For a discussion of these differences, see the section entitled “Description of Share Capital—Differences in Corporate Law” in our prospectus dated August 1, 2018, which is filed with the SEC. The Annual Report on Form 10-K does not represent a U.K. Companies Act statutory account filing.
For example, our articles of association include provisions that: • create a classified board of directors whose members serve staggered three-year terms (but remain subject to removal as provided in our articles of association); 28 Table of Contents • establish an advance notice procedure for shareholder approvals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our board of directors; • provide our board of directors the ability to grant rights to subscribe for our ordinary shares and/or depositary interests representing our ordinary shares without shareholder approval, which could be used to, among other things, institute a rights plan that would have the effect of significantly diluting the share ownership of a potential hostile acquirer; • provide certain mandatory offer provisions, including, among other provisions, that a shareholder, together with persons acting in concert, that acquires 30 percent or more of our issued shares without making an offer to all of our other shareholders that is in cash or accompanied by a cash alternative would be at risk of certain sanctions from our board of directors unless they acted with the consent of our board of directors or the prior approval of the shareholders; and • provide that vacancies on our board of directors may be filled by a vote of the directors or by an ordinary resolution of the shareholders, including where the number of directors is reduced below the minimum number fixed in accordance with the articles of association.
For example, our articles of association include provisions that: • create a classified Board whose members serve staggered three-year terms (but remain subject to removal as provided in our articles of association); • establish an advance notice procedure for shareholder approvals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our Board; • provide our Board the ability to grant rights to subscribe for our ordinary shares and/or depositary interests representing our ordinary shares without shareholder approval, which could be used to, among other things, institute a rights plan that would have the effect of significantly diluting the share ownership of a potential hostile acquirer; • provide certain mandatory offer provisions, including, among other provisions, that a shareholder, together with persons acting in concert, that acquires 30 percent or more of our issued shares without making an offer to all of our other shareholders that is in cash or accompanied by a cash alternative would be at risk of certain sanctions from our Board unless they acted with the consent of our Board or the prior approval of the shareholders; and • provide that vacancies on our Board may be filled by a vote of the directors or by an ordinary resolution of the shareholders, including where the number of directors is reduced below the minimum number fixed in accordance with the articles of association.
We compete across a variety of service lines within the commercial real estate services industry, including Property, facilities and project management, Leasing, Capital markets (including representation of both buyers and sellers in real estate sales transactions and the arrangement of financing), Valuation and advisory on real estate debt and equity decisions.
We compete across a variety of service lines within the commercial real estate services industry, including Property, facilities and project management, Leasing, Capital markets (including representation of both buyers and sellers in real estate sales transactions and the arrangement of financing), Valuation and advisory on real estate appraisals and debt and equity decisions.
Given that a majority of the members of our Board of Directors currently reside outside the United Kingdom, we do not anticipate that we will be subject to the Takeover Code.
Given that a majority of the members of our Board currently reside outside the United Kingdom, we do not anticipate that we will be subject to the Takeover Code.
These restrictions affect, and in many respects limit or prohibit, our ability to: • plan for or react to market conditions; • meet capital needs or otherwise carry out our activities or business plans; and • finance ongoing operations, strategic acquisitions, investments or other capital needs or engage in other business activities that would be in our interest, including: ◦ incurring or guaranteeing additional indebtedness; ◦ granting liens on our assets; ◦ undergoing fundamental changes; ◦ making investments; ◦ selling assets; ◦ making acquisitions; ◦ engaging in transactions with affiliates; ◦ amending or modifying certain agreements relating to junior financing and charter documents; ◦ paying dividends or making distributions on or repurchases of share capital; ◦ repurchasing equity interests or debt; ◦ transferring or selling assets, including the stock of subsidiaries; and ◦ issuing subsidiary equity or entering into consolidations and mergers.
Specifically, these restrictions may affect, and in many respects may limit or prohibit, our ability to: • plan for or react to market conditions; • meet capital needs or otherwise carry out our activities or business plans; and • finance ongoing operations, strategic acquisitions, investments or other capital needs or engage in other business activities that would be in our interest, including: ◦ incurring or guaranteeing additional indebtedness; ◦ granting liens on our assets; ◦ undergoing fundamental changes; ◦ making investments; ◦ selling assets; ◦ making acquisitions; ◦ engaging in transactions with affiliates; ◦ amending or modifying certain agreements relating to junior financing and charter documents; ◦ paying dividends or making distributions on or repurchases of share capital; ◦ repurchasing indebtedness; ◦ transferring or selling assets, including the equity interests of subsidiaries; and ◦ issuing subsidiary equity or entering into consolidations and mergers.
A disruption of our ability to access such software, including an inability to renew such licenses on the same or similar terms, or provide data to our professionals or our clients, contractors and vendors could adversely affect our operating results. A material breach in security relating to our information systems could adversely affect us.
A disruption of our ability to access such software, including an inability to renew such licenses on the same or similar terms or to provide data to our professionals, clients or vendors, could adversely affect our operating results. A material breach in security relating to our information systems could adversely affect us.
Information security risks have generally increased in recent years, in part because of the proliferation of new technologies and the increased sophistication and activity of organized crime, hackers, activists, cybercriminals and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments.
Information security risks have generally increased in recent years, in part because of the proliferation of new technologies and the increased sophistication and activity of hackers, activists, cybercriminals and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments.
In the ordinary course of our business, we collect and store sensitive data in our data centers, on our networks and via third-party cloud hosting providers. This data includes proprietary business information and intellectual property of ours and of our clients, as well as personal identifiable information (“PII”) of our employees, clients, contractors and vendors.
In the ordinary course of our business, we collect and store sensitive data in our data centers, on our networks and via third-party providers. This data includes proprietary business information and intellectual property of ours and of our clients, as well as personal identifiable information (“PII”) of our employees, clients, contractors and vendors.
Additionally, we rely on third parties to support our information and technology networks, including cloud storage solution providers, and as a result we have less direct control over our data and information technology systems. We also engage other third parties to support the services we perform for our clients.
Additionally, we rely on third parties to support our information and technology networks, including cloud storage solution providers, and as a result we have less direct control over certain of our data and information technology systems. We also engage other third parties to support the services we perform for our clients.
Further, as a result of the seasonal nature of our business, political, economic or other unforeseen disruptions occurring in the fourth quarter that impact our ability to close large transactions may have a disproportionate effect on our financial condition and results of operations.
Further, as a result of the seasonal nature of our business, geopolitical, economic or other unforeseen disruptions occurring in the fourth quarter that impact our ability to close large transactions may have a disproportionate effect on our financial condition and results of operations.
Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance our obligations at all or on commercially reasonable terms, could affect our ability to satisfy our debt obligations and have a material adverse effect on our business, prospects, results of operations and financial condition.
Our inability to generate sufficient cash flow to satisfy our debt servicing obligations, or to refinance our obligations at all or on commercially reasonable terms, could affect our ability to satisfy our debt obligations and have a material adverse effect on our business, prospects, results of operations and financial condition.
If we do not generate sufficient cash flow from operations to satisfy our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets or seeking to raise additional capital.
If we do not generate sufficient cash flow from operations to satisfy our debt servicing obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets or seeking to raise additional capital.
You should carefully consider the risks and uncertainties described below as well as our audited consolidated financial statements and the related notes ("Consolidated Financial Statements"), when evaluating the information contained in this Annual Report.
You should carefully consider the risks and uncertainties described below as well as our audited consolidated financial statements and the related notes (“Consolidated Financial Statements”), when evaluating the information contained in this Annual Report.
We depend on our business relationships and our reputation for high-caliber professional services to attract and retain clients. As a result, allegations against us, irrespective of the ultimate outcome of that allegation, may harm our professional reputation and as such materially damage our business and its prospects, in addition to any financial impact.
We depend on our business relationships and our reputation for high-caliber professional services to attract and retain clients. As a result, allegations against us, irrespective of the ultimate outcome of those allegations, may harm our professional reputation and, as such, materially damage our business and its prospects, in addition to any financial impact.
Cybersecurity attacks are becoming more sophisticated and include malicious software, phishing and spear phishing attacks, wire fraud and payment diversion, account and email takeover attacks, ransomware, attempts to gain unauthorized access to data and other electronic security breaches. We have experienced cybersecurity attacks in the past, including ransomware attacks by cybercriminals, and we expect additional attacks in the future.
Cybersecurity attacks are becoming more sophisticated and include malicious software, ransomware, phishing and spear phishing attacks, wire fraud and payment diversion, account and email takeover attacks, attempts to gain unauthorized access to data and other electronic security breaches. We have experienced cybersecurity attacks in the past and we expect additional attacks in the future.
As a result, in the absence of us returning capital to our shareholders through a cash dividend or otherwise, you may not receive any return on an investment in our ordinary shares unless you sell our ordinary shares for a price greater than that which you paid for it.
As a result, in the absence of us returning capital 23 Table of Contents to our shareholders through a cash dividend or otherwise, you may not receive any return on an investment in our ordinary shares unless you sell our ordinary shares for a price greater than that which you paid for it.
If confidential information, including material non-public information or personal information we or our vendors and suppliers maintain, is inappropriately disclosed due to an information security breach, or if any person, including any of our employees, negligently disregards or intentionally breaches our confidentiality policies, contractual commitments or other controls or procedures with respect to such data, we may incur substantial liabilities to our clients or be subject to fines or penalties imposed by governmental authorities.
If confidential information, including material non-public information or personal information we or our vendors and suppliers maintain, is inappropriately disclosed due to an information security breach, or if any person negligently disregards or intentionally breaches our policies, contractual commitments or other controls with respect to such data, we may incur substantial liabilities to our clients or be subject to fines or penalties imposed by governmental authorities.
In addition, we leverage technology and service providers to help us better screen vendors, with the aim of gaining a deeper understanding of the compliance, data privacy, health and safety, environmental and other risks posed to our business by potential and existing vendors.
In addition, we leverage technology and service providers to help us screen vendors, with the aim of gaining a deeper understanding of the compliance, data privacy, health and safety, environmental and other risks posed to our business by potential and existing vendors, as applicable.
In addition, any breach or alleged breach of our confidentiality agreements with our clients may result in termination of their engagements, resulting in associated loss of revenue and increased costs. Infrastructure disruptions may impede our ability to manage real estate for clients.
In addition, any breach or alleged breach of our confidentiality agreements with our clients may result in termination of their engagements, resulting in associated loss of revenue and increased costs. 16 Table of Contents Infrastructure disruptions may impede our ability to manage real estate for clients.
If any such event of default occurs, the lenders under our 2018 Credit Agreement or the holders of our 2020 Notes may elect to declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable and to foreclose on collateral pledged thereunder.
If any such event of default occurs, the lenders under the 2018 Credit Agreement or the holders of the Senior Secured Notes may elect to declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable and to foreclose on collateral pledged thereunder.
City Code on Takeovers and Mergers (“Takeover Code”) applies, among other things, to an offer for a public company whose registered office is in the United Kingdom (or the Channel Islands or the Isle of Man) and whose securities are not admitted to trading on a regulated market in the United Kingdom (or the Channel Islands or the Isle of Man) if the company is considered by the Panel on Takeovers and Mergers (“Takeover Panel”) to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man).
City Code on Takeovers and Mergers (“Takeover Code”) applies, among other things, to an offer for a public company whose registered office is in the United Kingdom and whose securities are not admitted to trading on a regulated market in the United Kingdom if the company is considered by the Panel on Takeovers and Mergers (“Takeover Panel”) to have its place of central management and control in the United Kingdom.
Failure to maintain and execute information technology strategies and ensure that our employees adapt to changes in technology could materially and adversely affect our ability to remain competitive in the market. Our business relies heavily on information technology, including on solutions provided by third parties, to deliver services that meet the needs of our clients.
Failure to maintain and execute information technology strategies could materially and adversely affect our ability to remain competitive in the market. Our business relies heavily on information technology, including on solutions provided by third parties, to deliver services that meet the needs of our clients.
In addition, especially given the size of our operations, there is always a risk that a third party may claim that our systems or offerings, including those used by our brokers and clients, may infringe such third party’s intellectual property rights and may result in claims or suits by third parties.
In addition, especially given the size of our operations, there is always a risk that a third party may claim that our systems or offerings, including those used by our brokers and clients, may infringe such third party’s intellectual property rights.
In addition, under certain circumstances we will be required to satisfy and maintain a specified financial ratio under the 2018 Credit Agreement. See “Note 10: Long-Term Debt and Other Borrowings” of the Notes to the Consolidated Financial Statements for additional information.
In addition, under certain circumstances we will be required to satisfy and maintain a specified financial ratio under the 2018 Credit Agreement. See Note 10: Long-Term Debt and Other Borrowings of the Notes to the Consolidated Financial Statements for additional information.
The lenders under our 2018 Credit Agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, an event of default under our 2018 Credit Agreement or 2020 Notes could trigger a cross-default or cross-acceleration under our other material debt instruments and credit agreements, if any.
The lenders under the 2018 Credit Agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, an event of default under the 2018 Credit Agreement or the indentures governing the Senior Secured Notes could trigger a cross-default or cross-acceleration under our other material debt instruments and credit agreements, if any.
We may incur significant additional debt from time to time to finance any such acquisitions, subject to the restrictions contained in the documents governing our then-existing indebtedness. If we incur additional debt, the risks associated with our leverage, including our ability to service our then-existing debt, would increase.
We may incur significant additional indebtedness from time to time to finance potential acquisitions, subject to the restrictions contained in the documents governing our then-existing indebtedness. If we incur additional indebtedness, the risks associated with our leverage, including our ability to service our then-existing indebtedness, would increase.
Our ability to comply with the financial ratio and the other terms of our 2018 Credit Agreement and our 2020 Notes can be affected by events beyond our control, including prevailing economic, financial market and industry conditions, and we cannot give assurance that we will be able to comply when required.
Our ability to comply with the financial ratio and the other terms of the 2018 Credit Agreement and the indentures governing the Senior Secured Notes can be affected by events beyond our control, including prevailing economic, financial market and industry conditions, and we cannot give assurance that we will be able to comply when required.
All such third parties are also vulnerable to security breaches and compromised security systems, for which we may not be indemnified, and which could materially adversely affect us and our reputation. 17 Table of Contents Failure to comply with current and future data privacy regulation and other confidentiality obligations could damage our reputation and materially harm our operating results.
Any such third parties are also vulnerable to security breaches and compromised security systems, for which we may not be indemnified, and which could materially adversely affect us and our reputation. Failure to comply with current and future data privacy regulation and other confidentiality obligations could damage our reputation and materially harm our operating results.
Also, business decisions or other actions or omissions of our joint venture partners, alliance firms, the Principal Shareholders or management may adversely affect the value of our investments, result in litigation or regulatory action against us and otherwise damage our reputation and brand.
Also, business decisions or other actions or omissions of our joint venture and strategic partners, alliance and affiliate firms or their management may adversely affect the value of our investments, result in litigation or regulatory action against us and otherwise damage our reputation and brand.
Companies Act 2006, and by our articles of association. These rights, including rights relating to removing directors, calling general meetings or initiating litigation on behalf of the Company, differ in certain respects from the rights of shareholders in typical U.S. corporations organized in Delaware, and may in some instances be less favorable to our shareholders.
These rights, including rights relating to removing directors, calling general meetings or initiating litigation on behalf of the Company, differ in certain respects from the rights of shareholders in typical U.S. corporations organized in Delaware and may in some instances be less favorable to our shareholders.
English law and provisions in our articles of association may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our shareholders to replace or remove our current management. Certain provisions of the U.K.
Certain provisions in our articles of association and prohibitions under the U.K. Companies Act may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our shareholders to replace or remove our current management.
These ratings, and any downgrades or any written notice of any intended downgrading or of any possible change, may affect our ability to borrow as well as the costs of our future borrowings. 25 Table of Contents We have a substantial amount of indebtedness, which may adversely affect our available cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness.
These ratings, and any downgrades or any written notice of any intended downgrading or of any possible change, may affect our ability to borrow as well as the costs of our future borrowings. 20 Table of Contents Our amount of indebtedness may adversely affect our available cash flow and our ability to operate our business, remain in compliance with our debt covenants and make payments on our indebtedness.
This is known as the “residency test.” The test for central management and control under the Takeover Code is different from that used by the U.K. tax authorities.
This is known as the 25 Table of Contents “residency test.” The test for central management and control under the Takeover Code is different from that used by the U.K. tax authorities.
Our information technology and communications systems are vulnerable to damage or disruption from fire, power loss, telecommunications failure, system malfunctions, computer viruses, cybersecurity attacks, natural disasters such as hurricanes, earthquakes and floods, acts of war or terrorism, employee errors or malfeasance, or other events which are beyond our control.
Information technology and communications systems of us and our providers are vulnerable to damage or disruption from fire, power loss, system malfunctions, telecommunications failure, computer viruses, cybersecurity attacks, natural disasters, acts of war or terrorism, employee errors or malfeasance, or other events which are beyond our control.
As a result, fires, earthquakes, tornadoes, hurricanes, floods, other natural disasters, global health crises (including COVID-19), building defects, terrorist attacks or mass shootings could result in significant damage to property and infrastructure as well as personal injury or loss of life, which could disrupt our ability to effectively manage client properties.
Events like fires, earthquakes, tornadoes, hurricanes, floods, other natural disasters, global health crises (including new or resurging pandemics), building defects, terrorist attacks or mass shootings could result in significant damage to property and infrastructure as well as personal injury or loss of life, which could disrupt our ability to effectively manage client properties.
A failure by third parties to comply with contractual, regulatory or legal requirements could result in economic and reputational harm to us. We rely on third parties, and in some cases subcontractors, to perform activities on behalf of our organization to improve quality, increase efficiencies, cut costs and lower operational risks across our business and support functions.
A failure by third parties to comply with contractual, regulatory or legal requirements could result in economic and reputational harm to us. We rely on third parties, including subcontractors, to perform activities on behalf of our organization to improve quality, increase efficiencies, cut costs and lower operational risks across our business and the services we provide.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under such instruments; • make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • expose us to the risk that if unhedged, or if our hedges are ineffective, interest expense on our variable rate indebtedness will increase; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that are less highly leveraged and therefore able to take advantage of opportunities that our indebtedness prevents us from exploiting; • limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other purposes; and • cause us to pay higher rates if we need to refinance our indebtedness at a time when prevailing market interest rates are unfavorable.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure by us to comply with the obligations under the agreements governing our indebtedness including restrictive covenants, could result in an event of default under such agreements; • require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • expose us to the risk that if unhedged, or if our hedges are ineffective, interest expense on our variable rate indebtedness will increase; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that are less highly leveraged; • limit our ability to borrow additional amounts for capital expenditures, acquisitions, execution of our business strategy or other purposes; and • cause us to pay higher interest rates if we need to refinance our indebtedness at a time when prevailing market interest rates are unfavorable.
Having an increasingly concentrated base of large corporate clients also can lead to greater or more concentrated risks if, among other possibilities, any such client (1) experiences its own financial problems; (2) becomes bankrupt or insolvent, which can lead to our failure to be paid for services we have previously provided or funds we have previously advanced; (3) decides to reduce its operations or its real estate facilities; (4) makes a change in its real estate strategy, such as no longer outsourcing its real estate operations; (5) decides to change its providers of real estate services; or (6) merges with another corporation or otherwise undergoes a change of control, which may result in new management taking over with a different real estate philosophy or in different relationships with other real estate providers.
Having an increasingly concentrated base of large corporate clients can lead to greater or more concentrated risks if, among other possibilities, any such client (1) experiences its own financial problems or becomes insolvent, which can lead to our failure to be paid for services we have previously provided; (2) decides to reduce its operations or its real estate facilities; (3) makes a change in its real estate strategy, such as no longer outsourcing its real estate operations; (4) decides to change its providers of real estate services; or (5) merges with another corporation or otherwise undergoes a change of control.
Negative perceptions or publicity regarding these matters, even if related to seemingly isolated incidents and whether or not factually correct, could erode trust and confidence and damage our reputation among existing and potential clients, which could make it difficult for us to attract new clients and maintain existing ones.
Negative perceptions or publicity regarding these matters, even if related to seemingly isolated incidents and whether or not factually correct, could erode trust and confidence and damage our reputation, which could make it difficult for us to attract or retain clients.
In addition, disruptive innovation or new technologies by existing or new competitors could alter the competitive landscape in the future and require us to make timely and effective changes to our services or business model to compete effectively. 21 Table of Contents Furthermore, we are dependent on long-term client relationships and on revenue received for services under various service agreements.
In addition, disruptive innovation or new technologies, including AI, could alter the competitive landscape in the future and require us to make timely and effective changes to our services or business model to compete effectively. Furthermore, we are dependent on long-term client relationships and on revenue received for services under various service agreements.
There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business. 20 Table of Contents In addition, we have announced certain greenhouse gas emissions targets and other environmental goals. These targets and goals are voluntary, subject to change and should be considered aspirational.
There can be no assurance that physical and transition climate-related risks will not have a material adverse effect on our operations or business. In addition, we have announced certain greenhouse gas emissions targets and other environmental goals. These targets and goals are voluntary, subject to change and should be considered aspirational.
U.S. investors may have difficulty enforcing civil liabilities against our company, our directors or members of senior management. We are incorporated under the laws of England and Wales. The United States and the United Kingdom do not currently have a treaty providing for the recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters.
U.S. investors may have difficulty enforcing civil liabilities against our company or our directors or officers. We are incorporated under the laws of England and Wales. The United States and the United Kingdom do not currently have a treaty providing for the recognition and enforcement of judgments in certain civil and commercial matters.
Achieving the anticipated benefits of an acquisition is subject to a number of uncertainties and is not guaranteed. Failure to achieve the anticipated benefits could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could in turn materially and adversely affect our overall business, financial condition and operating results.
Failure to achieve the anticipated benefits of an acquisition could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could in turn materially and adversely affect our overall business, financial condition and operating results.
Additional circumstances and developments related to international operations that could negatively affect our business, financial condition or results of operations include, but are not limited to, the following factors: • political and economic instability in certain countries, including continued or worsening hostilities in Ukraine; • difficulties and costs of staffing and managing international operations among diverse geographies, languages and cultures; • currency restrictions, transfer pricing regulations and adverse tax consequences, which may affect our ability to transfer capital and profits; • adverse changes in regulatory or tax requirements and regimes or uncertainty about the application of or the future of such regulatory or tax requirements and regimes; • the responsibility of complying with numerous, potentially conflicting and frequently complex and changing laws in multiple jurisdictions, e.g., with respect to data protection, privacy regulations, corrupt practices, embargoes, trade sanctions, employment and licensing; • the impact of regional or country-specific business cycles and economic instability; • greater difficulty in collecting accounts receivable or delays in client payments in some geographic regions; • foreign ownership restrictions with respect to operations in certain countries, particularly in Asia Pacific and the Middle East, or the risk that such restrictions will be adopted in the future; and • changes in laws or policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments as a result of any such changes to laws or policies or due to trends such as populism, economic nationalism and against multinational companies. 22 Table of Contents Our business activities are subject to a number of laws that prohibit various forms of corruption, including local anti-bribery laws and anti-bribery laws that have a global reach, such as the FCPA and the U.K.
Additional circumstances and developments related to international operations that could negatively affect our business, financial condition or results of operations include the following factors, among others: • political instability in certain countries, including continued or worsening hostilities in certain regions; • difficulties and costs of staffing and managing international operations among diverse geographies, languages and cultures; • currency restrictions, transfer pricing regulations and adverse tax consequences, which may affect our ability to transfer capital and profits; • adverse changes in regulatory or tax requirements and regimes or uncertainty about the application of or the future of such regulatory or tax requirements and regimes; • the responsibility of complying with numerous, potentially conflicting and frequently complex and changing laws in multiple jurisdictions, e.g., with respect to data protection, privacy regulations, corrupt practices, embargoes, trade sanctions, employment and licensing; • the impact of regional or country-specific business cycles and economic instability; • greater difficulty in collecting accounts receivable or delays in client payments in some geographic regions; • foreign ownership restrictions with respect to operations in certain countries, particularly in Asia Pacific and the Middle East, or the risk that such restrictions will be adopted in the future; • operational, cultural and compliance risks of operating in emerging markets; and • changes in laws or policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments as a result of any such changes to laws or policies or due to trends such as populism, economic nationalism and against multinational companies.
If we do not continue to develop and maintain effective strategies and solutions, including technological solutions, to help clients meet stricter environmental regulations or their own sustainability goals, we may not be able to compete effectively for certain business opportunities in the future, demand for our services may decrease and our reputation may be damaged.
If we do not continue to develop and maintain effective strategies, solutions and technologies to help clients meet stricter environmental regulations or their own sustainability goals, we may not be able to compete effectively for certain business opportunities in the future or our reputation could suffer.
Nevertheless, failure to achieve such targets, goals, commitments or initiatives, or a perception (whether valid or invalid) of our failure to achieve them, could result in reputational damage, client dissatisfaction, and, in turn, reduced revenue and profitability.
Nevertheless, failure to achieve such goals, or a perception of our failure to achieve them, could result in reputational damage, client dissatisfaction and, in turn, reduced revenue and profitability.
If we are unable to effectively execute and maintain these information technology strategies, our ability to deliver high-quality services may be materially impaired. In addition, we make significant investments in new systems and tools to achieve competitive advantages and efficiencies.
If we are unable to effectively execute and maintain these information technology strategies, our ability to deliver high-quality services may be materially impaired. In addition, we make significant investments in new systems and tools to achieve competitive advantages and efficiencies, including the adoption and integration of AI and machine learning technologies.
These terms could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition, capital expenditures or other opportunities. We continue to monitor our projected compliance with the terms of our 2018 Credit Agreement and 2020 Notes.
These terms could have an adverse effect on our business by limiting our ability to take advantage of financing, mergers and acquisitions, capital expenditures or other opportunities. We continue to monitor our projected compliance with the terms of the 2018 Credit Agreement, and the indentures governing the Senior Secured Notes.
Also, we have historically relied on our operating cash flow to fund our working capital needs and ongoing capital expenditures on an annual basis. Our operating cash flow is seasonal and is typically lowest in the first quarter of the year, when revenue is lowest, and highest in the fourth quarter of the year, when revenue is highest.
Historically, our revenue and operating income tend to be lowest in the first quarter and highest in the fourth quarter of each year. Also, we have historically relied on our operating cash flow to fund our working capital needs and ongoing capital expenditures on an annual basis.
Demand for our services is largely dependent on the relative strength of the global and regional commercial real estate markets, which are highly sensitive to general macroeconomic conditions and the ability of market participants to access liquidity in the capital and credit markets.
Demand for our services is largely dependent on the relative strength of the global and regional commercial real estate markets, which are highly sensitive to general macroeconomic conditions and the ability of market participants to access credit and the capital markets. There continues to be significant macroeconomic uncertainty in many markets around the world.
Although our 2018 Credit Agreement and the indenture governing the 2020 Notes contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and the debt incurred in compliance with these restrictions could be substantial.
Although the 2018 Credit Agreement and the indentures governing the Senior Secured Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.
This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.
This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. 26 Table of Contents Item 1B. Unresolved Staff Comments None.
The Principal Shareholders, their affiliates and their advisors are also in the business of making or advising on investments in companies and may from time to time in the future acquire interests in, or provide advice to, businesses that directly or indirectly compete with certain portions of our business or are suppliers or clients of ours.
The Principal Shareholders, their affiliates and their advisors are also in the business of making or advising on investments in companies and may from time to time acquire interests in, or provide advice to, businesses that directly or indirectly compete with us or work with us.
In addition, public limited companies are prohibited under the U.K. Companies Act 2006 from taking shareholder action by written resolution. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. See also “—Provisions in the U.K.
In addition, shareholders of public limited companies like us are prohibited under the U.K. Companies Act from taking action by written resolution. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. See also “Legal and Regulatory Risks—Provisions in the U.K.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. 23 Table of Contents We do not currently intend to pay cash dividends on our ordinary shares for the foreseeable future.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to issue equity securities in the future at a time and at a price that we deem appropriate. Under our current capital allocation strategy, we do not intend to pay cash dividends on our ordinary shares for the foreseeable future.
The 2018 First Lien Loan and the 2020 Notes are jointly and severally guaranteed by substantially all of our material subsidiaries organized in the United States and certain of our subsidiaries organized in the United Kingdom that directly or indirectly own material U.S. operations, subject to certain exceptions.
Borrowings under the 2018 Credit Agreement and the Senior Secured Notes are jointly and severally guaranteed by substantially all of our material subsidiaries organized in the United States and certain of our subsidiaries organized in the United Kingdom that directly or indirectly own material U.S. operations, subject to certain exceptions.
Each guarantee is secured by a pledge of substantially all of the assets of the subsidiary giving the pledge. Moody’s Investors Service, Inc. and S&P Global Ratings rate our significant outstanding debt.
Each guarantee is secured by a pledge of substantially all of the assets of the subsidiary giving the pledge. Moody’s Investors Service, Inc. and S&P Global Ratings rate the Term Loans and the Senior Secured Notes.
Companies Act 2006 and our articles of association may have the effect of delaying or preventing a change in control of us or changes in our management.
Certain provisions in our articles of association and prohibitions under the U.K. Companies Act may have the effect of delaying or preventing a change in control of us or changes in our management.
In addition, these third parties face their own technology, operating, business and economic risks, and any significant failures by them, including the improper use or disclosure of our confidential client, employee or company information, could cause damage to our reputation and harm to our business.
In addition, these third parties face their own technology, operating and economic risks, and any significant failures by them, including the improper use or disclosure of confidential information, could cause damage to our reputation and harm to our business. We face risks related to climate change, including physical and transition risks, and to the achievement of our sustainability goals.
Our brand and reputation may also be harmed by actions taken by third parties that are outside our control. For example, any shortcoming of or controversy related to a third-party vendor may be attributed to us, thus damaging our reputation and brand value and increasing the attractiveness of our competitors’ services.
For example, any shortcoming of or controversy related to a third-party vendor may be attributed to us, thus damaging our reputation and brand value and increasing the attractiveness of our competitors’ services.
Due to the different tax laws in the many jurisdictions where we operate, we are often required to make subjective determinations. The tax authorities in the various jurisdictions where we carry on business may not agree with the determinations that are made by us with respect to the application of tax law.
The tax authorities in the various jurisdictions where we carry on business may not agree with the determinations that are made by us with respect to the application of tax law.
Further, the value of otherwise valid claims we hold under insurance policies could become uncollectible in the event of the covering insurance company’s insolvency, although we seek to limit this risk by placing our commercial insurance only with highly rated companies. Any of these events could materially negatively impact our business, financial condition, results of operations and prospects.
Further, the value of otherwise valid claims we hold under insurance policies could become uncollectible in the event of the covering insurance company’s insolvency, although we seek to limit this risk by placing our commercial insurance only with highly rated companies.
Additionally, costs incurred to comply with more stringent future environmental requirements could adversely affect any or all of our service lines. Risks Related to Our Industry We have numerous local, regional and global competitors across all of our service lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition.
Risks Related to Our Industry We have numerous local, regional and global competitors across all of our service lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition.
Under English law, the declaration and payment of any dividends would be subject to relevant legislation and our articles of association, which provide that all dividends must be approved by our board of directors and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
Companies Act and our articles of association, which provide that all dividends must be approved by our Board and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
We are dependent upon the retention of our Leasing and Capital markets professionals, who generate a significant amount of our revenues, as well as other revenue producing professionals.
Our success depends upon our ability to attract and retain qualified revenue-producing employees and senior management. We are dependent upon the retention of our Leasing and Capital markets professionals, who generate a significant amount of our revenues, as well as other revenue producing professionals.
The market price of our ordinary shares could decline as a result of sales of a large number of ordinary shares in the market, including us or by our Founding Shareholders or Vanke Service, to which we granted certain registration rights at the time of the IPO, or as a result of the perception that such sales could occur.
The market price of our ordinary shares could decline as a result of sales of a large number of ordinary shares in the market, including by us or by our Principal Shareholders, or as a result of the perception that such sales could occur, which could occur at any time.
Further, achievement of our sustainability goals may require us to incur additional costs or to make changes to our operations which could adversely affect our business and results of operations.
Achievement of our sustainability goals may also require us to incur additional costs or to make changes to our operations which could adversely affect our business and results of operations. 18 Table of Contents Our operations are subject foreign currency volatility.
We value the expansion of business relationships with individual corporate clients because of the increased efficiency and economics that can result from performing an increasingly broad range of services for the same client.
The concentration of business with specific corporate clients can increase business risk, and our business can be adversely affected by a loss of certain of these clients. We value the expansion of business relationships with individual corporate clients because of the increased efficiency and economics that can result from performing an increasingly broad range of services for the same client.
Our operations are subject to social, political and economic risks in different countries as well as foreign currency volatility. We conduct a significant portion of our business and employ a substantial number of people outside of the United States and as a result, we are subject to risks associated with doing business globally.
We conduct a significant portion of our business and employ a substantial number of people outside of the United States and, as a result, we are subject to risks associated with doing business globally. Our international operations expose us to international economic trends as well as foreign government policy measures.
To a lesser degree, we have occasionally entered into strategic partnerships and joint ventures to conduct certain businesses or operate in certain geographies, and we will consider doing so in appropriate situations in the future.
To a lesser degree, we have entered into strategic partnerships, investments and joint ventures from time-to-time to conduct certain businesses or to operate in certain geographies, and we will consider doing so in appropriate situations in the future. These arrangements have many of the same risk characteristics as acquisitions.
The physical effects of climate change, such as extreme weather conditions and natural disasters occurring more frequently or with more intense effects, or the occurrence of unexpected or extreme events, including extreme temperatures, wildfires, tornadoes, hurricanes, earthquakes, floods and rising sea levels or drought, could have a material adverse effect on our operations and business.
The physical effects of climate change, such as extreme weather conditions and natural disasters occurring more frequently or with more intense effects, could have a material adverse effect on our operations and business.
Depending on the geography, property type or service line, we face competition from other commercial real estate services providers, including outsourcing companies that have traditionally competed in limited portions of our Property, facilities and project management service line and have expanded their offerings from time to time, in-house corporate real estate departments, developers, institutional lenders, insurance companies, investment banking firms, investment managers, accounting firms and consulting firms.
Depending on the geography, property type or service line, we face competition from other commercial real estate services providers, outsourcing companies, in-house corporate real estate departments, developers, institutional lenders, insurance companies, investment banking firms, investment managers, accounting firms and consulting firms.
Moreover, our clients may seek to hold us accountable for the actions of contractors because of our role as property or facilities manager or project manager, even if we have technically disclaimed liability as a contractual matter, in which case we may be pressured to participate in a financial settlement for purposes of preserving the client relationship. 27 Table of Contents Because we employ large numbers of building staff in facilities that we manage, we face the risk of potential claims relating to employment injuries, termination and other employment matters.
Moreover, our clients may seek to hold us accountable for the actions of contractors because of our role as property manager, facilities manager or project manager, even if we have technically disclaimed liability as a contractual matter, in which case we may be pressured to participate in a financial settlement for purposes of preserving the client relationship.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur strategy is to lease rather than own offices. In general, these leased offices are fully utilized. The most significant terms of the leasing arrangements for our offices are the term of the lease and the rent. Our leases have terms varying in duration.
Biggest changeOur strategy is to lease rather than own offices. The most significant terms of the leasing arrangements for our offices are the term of the lease and the rent. Our leases have terms varying in duration.
In addition, we believe there is adequate alternative office space available at acceptable rental rates to meet our needs, although adverse movements in rental rates in some markets may negatively affect our profits in those markets when we enter into new leases.
In addition, we believe there is adequate alternative office space available at acceptable rental rates to meet our needs, although adverse movements in rental rates in some markets could negatively affect our profits in those markets when we enter into new leases.
Item 2. Properties Our principal executive offices are located at 125 Old Broad Street, London, United Kingdom, EC2N 1AR, and our telephone number is +44 20 3296 3000. We operate from over 400 company and affiliated offices in approximately 60 countries. We operate 241 offices in the Americas, 102 offices in EMEA and 64 offices in APAC.
Item 2. Properties Our principal executive offices are located at 125 Old Broad Street, London, United Kingdom, EC2N 1AR, and our telephone number is +44 20 3296 3000. We operate from nearly 400 company and affiliated offices in approximately 60 countries. We operate 214 offices in the Americas, 117 offices in EMEA and 67 offices in APAC.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe establish reserves in accordance with FASB guidance on accounting for contingencies should a liability arise that is both probable and reasonably estimable. We adjust these reserves as needed to respond to subsequent changes in events. Refer to Note 16: Commitments and Contingencies in our Consolidated Financial Statements. Item 4.
Biggest changeWe establish reserves in accordance with the Financial Accounting Standards Board (“FASB”) guidance on accounting for contingencies should a liability arise that is both probable and reasonably estimable. We adjust these reserves as needed to respond to subsequent changes in events. Refer to Note 16: Commitments and Contingencies of the Notes to the Consolidated Financial Statements. Item 4.
However, litigation is inherently uncertain and there could be a material adverse impact on our financial position and results of operations if one or more matters are resolved in a particular period in an amount materially in excess of what we anticipate. Refer to "Risk Factors" under Part I, Item 1A in this Annual Report.
However, litigation is inherently uncertain and there could be a material adverse impact on our financial position and results of operations if one or more matters are resolved in a particular period in an amount materially in excess of what we anticipate. Refer to “Risk Factors” under Part I, Item 1A in this Annual Report.
Mine Safety Disclosures Not applicable. 32 Table of Contents PART II
Mine Safety Disclosures Not applicable. 28 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph also shows the cumulative total returns of the Standard & Poor’s 500 Stock Index, or S&P 500 Index, and our industry peer group. The comparison below assumes $100 was invested on August 2, 2018 in our ordinary shares and in each of the indices shown and assumes that all dividends were reinvested.
Biggest changeThe graph below assumes $100 was invested in our ordinary shares, the S&P 500 and the industry peer group on December 31, 2018, assuming that all dividends were reinvested.
Future cash dividends, if any, will be at the discretion of our board of directors and will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, restrictions in our existing and future indebtedness, and other factors the board of directors may deem relevant.
Future cash dividends, if any, will be at the discretion of our Board and will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, restrictions in the agreements governing our existing and future indebtedness, and other factors our Board may deem relevant.
This graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act or under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that we specifically incorporate this information by reference therein, and shall not otherwise be deemed filed under the Securities Act or under the Exchange Act.
This graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report into any filing under the Securities Act or under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate this information by reference therein, and shall not otherwise be deemed filed under the Securities Act or under the Exchange Act.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Price Information Our ordinary shares have been listed for trading on the NYSE under the symbol "CWK" since August 2, 2018.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Price Information Our ordinary shares have been listed for trading on the NYSE under the symbol “CWK” since August 2, 2018. The number of record holders of the Company’s ordinary shares as of February 15, 2024 was 2.
Our stock price performance shown in the following graph is not necessarily indicative of future stock price performance. Our industry peer group is comprised of three global commercial real estate services companies publicly traded in the United States, representing our current primary competitors: Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), and Colliers International Group Inc.
Our industry peer group is comprised of three global commercial real estate services companies publicly traded in the United States, representing our current primary competitors: Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), and Colliers International Group Inc. (NASDAQ: CIGI).
Under English law, any payment of dividends would be subject to relevant legislation and our articles of association, which provide that all dividends must be approved by our board of directors and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
We do not expect to pay dividends on our ordinary shares for the foreseeable future. Under the U.K. Companies Act and our articles of association, any payment of dividends must be approved by our Board and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
The timing and amount of any future dividend payments will be at the discretion of our board of directors. Stock Performance Graph The following graph shows our cumulative total shareholder return for the period beginning August 2, 2018, the day public trading of shares began, and ending on December 31, 2022.
The timing and amount of any future dividend payments will be at the discretion of our Board. Stock Performance Graph The following graph shows our cumulative 5-year total shareholder return of Cushman & Wakefield’s ordinary shares relative to the cumulative 5-year total returns of the Standard & Poor’s 500 Stock Index (“S&P 500”) and our industry peer group.
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Prior to this, the share price was based off an internally calculated value developed based on the enterprise value of the Company. The approximate number of record holders of the Company's ordinary shares as of February 21, 2023 was 2.
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Our share price performance shown in the following graph is not necessarily indicative of future share price performance. 29 Table of Contents 12/18 12/19 12/20 12/21 12/22 12/23 CWK $ 100.00 $ 141.26 $ 102.49 $ 153.70 $ 86.11 $ 74.64 S&P 500 100.00 128.88 149.83 190.12 153.16 190.27 Peer Group 100.00 141.36 135.44 237.52 148.13 184.27 (1) $100 invested on December 31, 2018 in stock or index-including reinvestment of dividends.
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We do not expect to pay dividends on our ordinary shares for the foreseeable future.
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(2) Copyright © 2024 Standard & Poor’s, a division of S&P Global. All rights reserved.
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(NASDAQ: CIGI). 33 Table of Contents 8/2/18 12/18 12/19 12/20 12/21 12/22 CWK 100.00 81.25 114.77 83.27 124.87 69.96 S&P 500 100.00 88.67 113.94 132.85 168.58 135.80 Peer Group 100.00 74.51 105.32 100.91 176.97 110.37 (1) $100 invested on August 2, 2018 in stock or index-including reinvestment of dividends and adjustment for stock splits.
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(2) Copyright © 2023 Standard & Poor's, a division of S&P Global. All rights reserved. On August 2, 2018, the Company successfully completed an initial public offering, listing the firm on the New York Stock Exchange (NYSE: CWK). All periods presented after August 2, 2018 in the graph above are presented as of year-end.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth items derived from our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 (in millions): Year Ended December 31, 2022 2021 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 3,481.1 $ 3,185.4 9 % 12 % Leasing 2,083.7 1,843.4 13 % 15 % Capital markets 1,187.8 1,350.2 (12) % (10) % Valuation and other 495.5 512.1 (3) % 2 % Total service line fee revenue (1) 7,248.1 6,891.1 5 % 8 % Gross contract reimbursables (2) 2,857.6 2,497.6 14 % 16 % Total revenue $ 10,105.7 $ 9,388.7 8 % 10 % Costs and expenses: Cost of services provided to clients $ 5,295.9 $ 4,950.8 7 % 10 % Cost of gross contract reimbursables 2,857.6 2,497.6 14 % 16 % Total costs of services 8,153.5 7,448.4 9 % 12 % Operating, administrative and other 1,261.3 1,226.7 3 % 6 % Depreciation and amortization 146.9 172.1 (15) % (13) % Restructuring, impairment and related charges 8.9 44.5 (80) % (79) % Total costs and expenses 9,570.6 8,891.7 8 % 10 % Operating income 535.1 497.0 8 % 9 % Interest expense, net of interest income (193.1) (179.5) 8 % 10 % Earnings from equity method investments 85.0 21.2 n.m. n.m.
Biggest changeWe exclude such losses from the calculation of Adjusted EBITDA to improve the comparability of our operating results for the current period to prior and future periods. 36 Table of Contents Results of Operations In accordance with Item 303 of Regulation S-K, the Company has excluded the discussion of 2021 results in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as this discussion can be found in our 2022 Annual Report on Form 10-K filed with the SEC under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following table sets forth items derived from our Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, 2023 2022 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 3,573.0 $ 3,481.1 3 % 3 % Leasing 1,826.7 2,083.7 (12) % (12) % Capital markets 695.0 1,187.8 (41) % (41) % Valuation and other 436.7 495.5 (12) % (11) % Total service line fee revenue (1) 6,531.4 7,248.1 (10) % (10) % Gross contract reimbursables (2) 2,962.3 2,857.6 4 % 4 % Total revenue $ 9,493.7 $ 10,105.7 (6) % (6) % Costs and expenses: Cost of services provided to clients $ 4,879.3 $ 5,295.9 (8) % (8) % Cost of gross contract reimbursables 2,962.3 2,857.6 4 % 4 % Total costs of services 7,841.6 8,153.5 (4) % (4) % Operating, administrative and other 1,262.8 1,261.3 0 % 0 % Depreciation and amortization 145.6 146.9 (1) % (1) % Restructuring, impairment and related charges 38.1 8.9 n.m. n.m.
The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies and are based on management’s assumptions and estimates about future operating results and levels of taxable income, and judgments regarding the interpretation of the provisions of current accounting principles.
The carrying values of deferred tax assets and liabilities reflect the application of our income tax accounting policies and are based on management’s assumptions and estimates about future operating results and levels of taxable income, and judgments regarding the interpretation of the provisions of current accounting principles.
In order to assist our investors and improve comparability of results, we present the year-over-year changes in certain of our non-GAAP financial measures, such as Fee-based operating expenses and Adjusted EBITDA, in "local" currency. The local currency change represents the year-over-year change assuming no movement in foreign exchange rates from the prior year.
In order to assist our investors and improve comparability of results, we present the year-over-year changes in certain of our non-GAAP financial measures, such as Fee-based operating expenses and Adjusted EBITDA, in “local” currency. The local currency change represents the year-over-year change assuming no movement in foreign exchange rates from the prior year.
If the fair value of a reporting unit is less than the carrying value, a goodwill impairment loss is recognized for the amount that the carrying amount of the RU, including goodwill, exceeds its fair value, limited to the total amount of the goodwill allocated to the reporting unit.
If the fair value of an RU is less than the carrying value, a goodwill impairment loss is recognized for the amount that the carrying amount of the RU, including goodwill, exceeds its fair value, limited to the total amount of the goodwill allocated to the reporting unit.
We believe that strategic acquisitions and partnerships will increase revenue, provide cost synergies and generate incremental income in the long term. 38 Table of Contents Seasonality A significant portion of our revenue is seasonal, especially for service lines such as Leasing and Capital markets. This impacts the comparison of our financial condition and results of operations on a quarter-by-quarter basis.
We believe that strategic acquisitions and partnerships will increase revenue, provide cost synergies and generate incremental income in the long term. 33 Table of Contents Seasonality A significant portion of our revenue is seasonal, especially for service lines such as Leasing and Capital markets. This impacts the comparison of our financial condition and results of operations on a quarter-by-quarter basis.
Generally, our industry is focused on completing transactions by calendar year-end with a significant concentration of activity in the last quarter of the calendar year while certain expenses are recognized more evenly throughout the calendar year. Historically, our revenue and operating income typically tend to be lowest in the first quarter, and highest in the fourth quarter of each year.
Generally, our industry is focused on completing transactions by calendar year-end with a high concentration of activity in the last quarter of the calendar year while certain expenses are recognized more evenly throughout the calendar year. Historically, our revenue and operating income typically tend to be lowest in the first quarter, and highest in the fourth quarter of each year.
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.
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, or joint ventures or for other purposes, subject to the restrictions contained in the agreements governing our indebtedness.
For additional discussion on our goodwill impairment assessment, refer to Note 6: Goodwill and Other Intangible Assets in the Consolidated Financial Statements. Income Taxes Income taxes are accounted for under the asset and liability method in accordance with ASC Topic 740, Income Taxes .
For additional discussion on our goodwill impairment assessment, refer to Note 6: Goodwill and Other Intangible Assets of the Notes to the Consolidated Financial Statements. Income Taxes Income taxes are accounted for under the asset and liability method in accordance with ASC Topic 740, Income Taxes .
The seasonal nature of our operating cash flow can result in a mismatch with funding needs, which we manage using available cash on hand and, as necessary, borrowings under our revolving credit facility or A/R Securitization arrangement.
The seasonal nature of our operating cash flow can result in a mismatch with funding needs, which we manage using available cash on hand and, as necessary, borrowings under our revolving credit facility or funding from our A/R Securitization.
Our future effective tax rate is sensitive to changes in the mix of our geographic earnings, changes in local statutory tax rates, changes in the valuation of deferred taxes, or changes in tax laws or regulations, and could be adversely affected by these items.
Our future effective tax rate is sensitive to changes in the mix of our geographic earnings, changes in local statutory tax rates, changes in the valuation of deferred taxes, or changes in tax laws, regulations or accounting principles, and could be adversely affected by these items.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in “Risk Factors” in Part I, Item 1A in this Annual Report. Our fiscal year ends December 31. With respect to presentation, all statements asserting an "increase" or "decrease" relate to changes from prior applicable periods of comparison.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in “Risk Factors” in Part I, Item 1A in this Annual Report. Our fiscal year ends December 31. With respect to presentation, all statements asserting an “increase” or “decrease” relate to changes from prior applicable periods of comparison.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes thereto included elsewhere in this Annual Report.
Led by an experienced executive team and driven by approximately 52,000 employees in over 400 offices and approximately 60 countries, we deliver exceptional value for real estate occupiers and owners, managing over 5.1 billion square feet of commercial real estate space globally and offering a broad suite of services through our integrated and scalable platform.
Led by an experienced executive team and driven by approximately 52,000 employees in nearly 400 offices and approximately 60 countries, we deliver exceptional value for real estate occupiers and owners, managing 6.2 billion square feet of commercial real estate space globally and offering a broad suite of services through our integrated and scalable platform.
If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase. See "Risk Factors" included in Item 1A. Despite our current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.
If we incur additional indebtedness, the risks associated with our leverage, including our ability to service our debt, would increase. See “Risk Factors” included in Item 1A. Despite our current indebtedness levels, we and our subsidiaries may still be able to incur more debt, which could further exacerbate the risks associated with our leverage.
Acquisitions are often structured with deferred and/or contingent payments in future periods that are subject to the passage of time, achievement of certain performance metrics and/or other conditions. As of December 31, 2022, the maximum potential payment for earn-outs was $32.8 million, subject to the achievement of certain performance conditions.
Acquisitions are often structured with deferred and/or contingent payments in future periods that are subject to the passage of time, achievement of certain performance metrics and/or other conditions. As of December 31, 2023, the maximum potential payment for earn-outs was $28.6 million, subject to the achievement of certain performance conditions.
For segment reporting, Service line fee revenue represents revenue for fees generated from each of our of service lines. Gross contract reimbursables reflect revenue paid by clients which have substantially no margin.
For segment reporting, Service line fee revenue represents revenue for fees generated from each of our service lines. Gross contract reimbursables reflects revenue from clients which have substantially no margin.
The final amount of related payments cannot be determined due to their nature as estimates or outcomes having connection to future events. As of December 31, 2022, we had accrued total deferred consideration and contingent earn-outs payable of $10.1 million in Accounts payable and accrued expenses and $43.7 million in Other non-current liabilities in the accompanying Consolidated Balance Sheets.
The final amount of related payments cannot be determined due to their nature as estimates or outcomes having connection to future events. As of December 31, 2023, we had accrued total deferred consideration and contingent earn-outs payable of $13.8 million in Accounts payable and accrued expenses and $27.0 million in Other non-current liabilities in the accompanying Consolidated Balance Sheets.
Macroeconomic Trends and Uncertainty Demand for our services is largely dependent on the relative strength of the global and regional commercial real estate markets, which are highly sensitive to general macroeconomic conditions and the ability of market participants to access liquidity in the capital and credit markets.
Macroeconomic Trends and Uncertainty Demand for our services is largely dependent on the relative strength of the global and regional commercial real estate markets, which are highly sensitive to general macroeconomic conditions and the ability of market participants to access credit and the capital markets. There continues to be significant macroeconomic uncertainty in many markets around the world.
While macroeconomic challenges and geopolitical uncertainty are present, we believe that we have maintained sufficient liquidity to satisfy our working capital and other funding requirements, including capital expenditures, and expenditures for human capital and contractual obligations, with operating cash flow and, as necessary, cash on hand and borrowings under our revolving credit facility.
While macroeconomic challenges and uncertainty continue to be present, we believe that we have maintained sufficient liquidity to satisfy our working capital and other funding requirements, including capital expenditures, and expenditures for human capital and contractual obligations, with operating cash flow and cash on hand and, as necessary, borrowings under our revolving credit facility or funding from our A/R Securitization.
As of December 31, 2022 the Company had operating lease obligations of $496.7 million, with $124.4 million due within 12 months. Refer to Note 15: Leases of the Notes to the Consolidated Financial Statements for further discussion. Defined benefit plan obligations.
As of December 31, 2023, the Company had operating lease obligations of $489.8 million, with $130.4 million due within 12 months. Refer to Note 15: Leases of the Notes to the Consolidated Financial Statements for further discussion. Defined benefit plan obligations.
Adjusted EBITDA $ 106.0 $ 117.9 (10) % 3 % n.m. not meaningful (1) Service line fee revenue represents revenue for fees generated from each of our service lines. (2) Gross contract reimbursables reflects revenue from clients which have substantially no margin.
Adjusted EBITDA $ 63.1 $ 77.3 (18) % (15) % n.m. not meaningful (1) Service line fee revenue represents revenue for fees generated from each of our service lines. (2) Gross contract reimbursables reflects revenue from clients which have substantially no margin.
See "Use of Non-GAAP Financial Measures" and "Results of Operations" below. 39 Table of Contents Use of Non-GAAP Financial Measures We have used the following measures, which are considered "non-GAAP financial measures" under SEC guidelines: i. Segment operating expenses and Fee-based operating expenses; ii. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and Adjusted EBITDA margin; and iii.
See “Use of Non-GAAP Financial Measures” and “Results of Operations” below. 34 Table of Contents Use of Non-GAAP Financial Measures We have used the following measures, which are considered “non-GAAP financial measures” under SEC guidelines: i. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and Adjusted EBITDA margin; ii. Segment operating expenses and Fee-based operating expenses; and iii.
Income tax liabilities . As of December 31, 2022, our current and non-current tax liabilities, including interest and penalties, totaled $70.9 million. Of this amount, we can reasonably estimate that $33.1 million will require cash settlement in less than one year.
Income tax liabilities . As of December 31, 2023, our current and non-current tax liabilities, including interest and penalties, totaled $48.5 million. Of this amount, we can reasonably estimate that $20.8 million will require cash settlement in less than one year.
The Company believes that they are useful to investors for the additional purposes described below. Segment operating expenses and Fee-based operating expenses: Consistent with GAAP, reimbursed costs for certain customer contracts are presented on a gross basis in both revenue and operating expenses for which the Company recognizes substantially no margin.
Segment operating expenses and Fee-based operating expenses: Consistent with GAAP, reimbursed costs for certain customer contracts are presented on a gross basis in both revenue and operating expenses for which the Company recognizes substantially no margin.
Adjusted EBITDA margin, measured against service line fee revenue, of 12.4% for the year ended December 31, 2022 decreased 46 basis points compared to 12.9% in the year ended December 31, 2021. Segment Operations We report our operations through the following segments: (1) Americas, (2) Europe, Middle East and Africa ("EMEA") and (3) Asia Pacific ("APAC").
Adjusted EBITDA margin, measured against service line fee revenue, of 8.7% for the year ended December 31, 2023 decreased 367 basis points compared to 12.4% in the year ended December 31, 2022. Segment Operations We report our operations through the following segments: (1) Americas, (2) EMEA and (3) APAC.
Adjusted EBITDA also excludes the effects of financings, income tax and the non-cash accounting effects of depreciation and intangible asset amortization. Adjusted EBITDA margin, a non-GAAP measure of profitability as a percent of revenue, is measured against service line fee revenue. Local currency: In discussing our results, we refer to percentage changes in local currency.
Adjusted EBITDA also excludes the effects of financings, income tax and the non-cash accounting effects of depreciation and intangible asset amortization. Adjusted EBITDA margin, a non-GAAP measure of profitability as a percent of revenue, is measured against service line fee revenue.
Investing Activities We used $120.7 million in cash for investing activities during the year ended December 31, 2022, which primarily reflects capital expenditures of $50.7 million, acquisitions of $32.8 million and investments in equity securities of $26.4 million in line with our multi-year growth strategy.
Cash used in investing activity during the year ended December 31, 2022 primarily reflects our capital expenditures of $50.7 million, acquisitions of $32.8 million and investments in equity securities of $26.4 million.
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. Americas: Year ended December 31, 2022 compared to year ended December 31, 2021 Americas revenue was $7.8 billion, an increase of $735.7 million or 10% from the prior year.
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. Americas: Year ended December 31, 2023 compared to year ended December 31, 2022 Americas revenue for 2023 was $7.1 billion, a decrease of $622.0 million or 8% from the prior year.
We believe Fee-based operating expenses more accurately reflects the costs we incur during the course of delivering services to our clients and is more consistent with how we manage our expense base and operating margins. Adjusted EBITDA and Adjusted EBITDA margin: We have determined Adjusted EBITDA to be our primary measure of segment profitability.
Segment operating expenses includes Fee-based operating expenses and Cost of gross contract reimbursables. We believe Fee-based operating expenses more accurately reflects the costs we incur during the course of delivering services to our clients and is more consistent with how we manage our expense base and operating margins.
Goodwill Goodwill is not amortized, but rather tested for impairment at least annually, typically in the fourth quarter. The Company will test more frequently if there are indicators of impairment or whenever business and economic circumstances change, suggesting the carrying value of goodwill may not be recoverable.
The Company will test more frequently if there are indicators of impairment or whenever business and economic circumstances change, suggesting the carrying value of goodwill may not be recoverable.
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. APAC: Year ended December 31, 2022 compared to year ended December 31, 2021 APAC revenue was $1.3 billion, an increase of $64.3 million or 5% from the prior year.
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. EMEA: Year ended December 31, 2023 compared to year ended December 31, 2022 EMEA revenue for 2023 was $1.0 billion, a decrease of $56.4 million or 5% from the prior year.
Provision for income taxes Provision for income taxes for 2022 was $141.6 million on earnings before income taxes of $338.0 million. For 2021, the provision for income taxes was $89.9 million on earnings before income taxes of $339.9 million.
For the year ended December 31, 2022, the provision for income taxes was $141.6 million on earnings before income taxes of $338.0 million.
Fee-based operating expenses of $962.5 million increased 14% on a local currency basis principally due to higher variable costs associated with revenue growth in our Property, facilities and project management service line.
Fee-based operating expenses of $1.0 billion increased 7% on a local currency basis principally due to higher variable costs associated with revenue growth in our Property, facilities and project management service line and higher employment costs, partially offset by our cost savings initiatives.
Refer to Note 11: Employee Benefits of the Notes to the Consolidated Financial Statements for further discussion. Deferred and earn-out obligations . Our material cash requirements require long-term liquidity to facilitate the payment of obligations related to acquisitions. For the year ended December 31, 2022, we paid $32.8 million in cash consideration for our various acquisitions, net of cash acquired.
Refer to Note 11: Employee Benefits of the Notes to the Consolidated Financial Statements for further discussion. Deferred and contingent earn-out obligations . Our material cash requirements require long-term liquidity to facilitate the payment of obligations related to acquisitions.
Highlights from full year 2022: • Revenue of $10.1 billion and service line fee revenue of $7.2 billion for the year ended December 31, 2022 increased 8% and 5%, respectively, from the year ended December 31, 2021. ◦ Leasing and Property, facilities and project management experienced continued growth, led by the Americas. ◦ Capital markets and Valuation and other declined 12% and 3%, respectively. • Net income and diluted earnings per share for the year ended December 31, 2022 were $196.4 million and $0.86, respectively. ◦ Adjusted EBITDA of $898.8 million increased 1% from the prior year. • Liquidity as of December 31, 2022 was $1.7 billion, consisting of availability on the Company's undrawn revolving credit facility of $1.1 billion and cash and cash equivalents of $0.6 billion.
Recent Developments and Outlook Highlights from full year 2023: • Revenue of $9.5 billion and service line fee revenue of $6.5 billion for the year ended December 31, 2023 decreased 6% and 10%, respectively, from the year ended December 31, 2022. ◦ Property, facilities and project management grew 3%, primarily driven by the Americas and APAC. ◦ Leasing, Capital markets and Valuation and other declined 12%, 41% and 12%, respectively. • Net loss and diluted loss per share for the year ended December 31, 2023 were $35.4 million and $0.16, respectively. ◦ Adjusted EBITDA of $570.1 million was down 37% from the year ended December 31, 2022. • Liquidity as of December 31, 2023 was $1.9 billion, consisting of availability on the Company’s undrawn revolving credit facility of $1.1 billion and cash and cash equivalents of $0.8 billion.
We have identified all significant accounting policies in Note 2: Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements. The following are the critical accounting policies where estimates and assumptions could materially affect the application of the policies.
We have identified all significant accounting policies in Note 2: Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements. The following are the critical accounting policies where estimates and assumptions could materially affect the application of the policies. Goodwill Goodwill is not amortized, but rather tested for impairment at least annually, typically in the fourth quarter.
These include the following: overall economic activity, volatility of the financial markets, changes in interest rates, inflation, the impact of tax and regulatory policies, the cost and availability of credit, changes in employment rates, level of commercial construction spending, demand for commercial real estate, the impact of the global COVID-19 pandemic, and the geopolitical environment including the uncertainty affecting global financial markets stemming from the Russia-Ukraine conflict.
These include the following: overall economic activity, volatility of the financial markets, changes in interest rates, inflation, pressure on the global banking system, the impact of tax and regulatory policies, the cost and availability of credit, changes in employment rates, demand for commercial real estate, and the geopolitical environment.
Our measure of segment results, Adjusted EBITDA, excludes depreciation and amortization, as well as integration and other costs related to merger, pre-IPO stock-based compensation, unrealized (gains) / losses on investments, acquisition related costs and efficiency initiatives, and other items. 44 Table of Contents Americas Results The following table summarizes our results of operations of our Americas operating segment for the years ended December 31, 2022 and 2021 (in millions): Year Ended December 31, 2022 2021 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 2,434.0 $ 2,221.9 10 % 10 % Leasing 1,669.7 1,392.8 20 % 20 % Capital markets 987.1 1,110.9 (11) % (11) % Valuation and other 198.1 193.7 2 % 3 % Total service line fee revenue (1) 5,288.9 4,919.3 8 % 8 % Gross contract reimbursables (2) 2,462.1 2,096.0 17 % 18 % Total revenue $ 7,751.0 $ 7,015.3 10 % 11 % Costs and expenses: Americas Fee-based operating expenses $ 4,650.3 $ 4,281.8 9 % 9 % Cost of gross contract reimbursables 2,462.1 2,096.0 17 % 18 % Segment operating expenses $ 7,112.4 $ 6,377.8 12 % 12 % Net income $ 202.6 $ 185.9 9 % 9 % Adjusted EBITDA $ 715.5 $ 647.0 11 % 11 % (1) Service line fee revenue represents revenue for fees generated from each of our service lines.
Our measure of segment profitability, Adjusted EBITDA, excludes the effects of financings, income taxes and depreciation and amortization, as well as unrealized loss on investments, net, integration and other costs related to merger, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs, servicing liability fees and amortization, certain legal and compliance matters, and other non-recurring items. 40 Table of Contents Americas Results The following table summarizes our results of operations of our Americas operating segment for the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, 2023 2022 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 2,494.7 $ 2,434.0 2 % 3 % Leasing 1,420.9 1,669.7 (15) % (15) % Capital markets 556.5 987.1 (44) % (44) % Valuation and other 150.0 198.1 (24) % (24) % Total service line fee revenue (1) 4,622.1 5,288.9 (13) % (12) % Gross contract reimbursables (2) 2,506.9 2,462.1 2 % 2 % Total revenue $ 7,129.0 $ 7,751.0 (8) % (8) % Costs and expenses: Americas Fee-based operating expenses $ 4,237.5 $ 4,650.3 (9) % (9) % Cost of gross contract reimbursables 2,506.9 2,462.1 2 % 2 % Segment operating expenses $ 6,744.4 $ 7,112.4 (5) % (5) % Net income $ 17.8 $ 202.6 (91) % (92) % Adjusted EBITDA $ 429.6 $ 715.5 (40) % (40) % (1) Service line fee revenue represents revenue for fees generated from each of our service lines.
As of December 31, 2022, the Company had $1.7 billion of liquidity, consisting of cash and cash equivalents of $0.6 billion and our undrawn revolving credit facility of $1.1 billion. The Company's amounts outstanding under its 2018 First Lien Loan and its 2020 Notes were $2.6 billion and $0.6 billion, respectively, as of December 31, 2022.
As of December 31, 2023, the Company had $1.9 billion of liquidity, consisting of cash and cash equivalents of $0.8 billion and availability on our undrawn revolving credit facility of $1.1 billion. As of December 31, 2023, the Company’s amounts outstanding under its Term Loans, 2028 Notes and 2031 Notes were $2.2 billion, $0.6 billion and $0.4 billion, respectively.
Our business is focused on meeting the increasing demands of our clients through a comprehensive offering of services including (i) Property, facilities and project management, (ii) Leasing, (iii) Capital markets and (iv) Valuation and other services. Recent Developments and Outlook In March 2022, as a result of the Russia-Ukraine conflict, the Company transferred our Russian operations to a local operator.
Our business is focused on meeting the increasing demands of our clients through a comprehensive offering of services including (i) Property, facilities and project management, (ii) Leasing, (iii) Capital markets and (iv) Valuation and other services.
We believe that investors find this measure useful in comparing our operating performance to that of other companies in our industry because these calculations generally eliminate integration and other costs related to merger, pre-IPO stock-based compensation, unrealized (gains) / losses on investments, acquisition related costs and efficiency initiatives, and other items.
We believe that investors find this measure useful in comparing our operating performance to that of other companies in our industry because these calculations generally eliminate unrealized loss on investments, net, integration and other costs related to merger, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs, servicing liability fees and amortization, certain legal and compliance matters, and other non-recurring items.
As we continue to grow our international operations, these currency fluctuations, most notably the Australian dollar, euro and British pound sterling, have the potential to positively or adversely affect our operating results measured in USD.
These currency fluctuations, most notably the Australian dollar, euro and British pound sterling, have positively and adversely affected our operating results measured in USD in the past and are likely to do so in the future.
Historical Cash Flows Year Ended December 31, Cash Flow Summary 2022 2021 Net cash provided by operating activities $ 49.1 $ 549.5 Net cash used in investing activities (120.7) (749.5) Net cash used in financing activities (79.3) (65.8) Effects of exchange rate fluctuations on cash, cash equivalents and restricted cash (20.4) (8.0) Total change in cash, cash equivalents and restricted cash $ (171.3) $ (273.8) Operating Activities We generated $49.1 million of cash from operating activities during the year ended December 31, 2022, a decrease of $500.4 million compared to the year ended December 31, 2021.
We are unable to reasonably estimate the timing of the effective settlement of tax positions for the remaining $27.7 million. 45 Table of Contents Historical Cash Flows Year Ended December 31, Cash Flow Summary 2023 2022 Net cash provided by operating activities $ 152.2 $ 49.1 Net cash provided by (used in) investing activities 48.9 (120.7) Net cash used in financing activities (120.8) (79.3) Effects of exchange rate fluctuations on cash, cash equivalents and restricted cash 1.9 (20.4) Total change in cash, cash equivalents and restricted cash $ 82.2 $ (171.3) Operating Activities We generated $152.2 million of cash from operating activities during the year ended December 31, 2023, an increase of $103.1 million compared to the year ended December 31, 2022.
EMEA: Year ended December 31, 2022 compared to year ended December 31, 2021 EMEA revenue was $1.0 billion, a decrease of $83.0 million or 7% from the prior year. Excluding the unfavorable impact of foreign currency of $124.2 million, EMEA revenue grew by 4% on a local currency basis.
APAC: Year ended December 31, 2023 compared to year ended December 31, 2022 APAC revenue for 2023 was $1.4 billion, an increase of $66.4 million or 5% from the prior year. Excluding the unfavorable impact of foreign currency of $35.6 million, APAC revenue increased 8% on a local currency basis.
For the year ended December 31, 2022, we used net working capital for operations of $538.8 million, an increase of $503.0 million compared to the year ended December 31, 2021.
For the year ended December 31, 2023, we used net working capital for operations of $124.5 million, a decrease of $414.3 million compared to the year ended December 31, 2022.
Earnings before income taxes 338.0 339.9 (1) % 1 % Provision for income taxes 141.6 89.9 58 % 61 % Net income $ 196.4 $ 250.0 (21) % (21) % Net income margin 1.9 % 2.7 % Adjusted EBITDA $ 898.8 $ 886.4 1 % 4 % Adjusted EBITDA margin (3) 12.4 % 12.9 % n.m. not meaningful (1) Service line fee revenue represents revenue for fees generated from each of our service lines.
Net (loss) income margin (0.4) % 1.9 % Adjusted EBITDA $ 570.1 $ 898.8 (37) % (37) % Adjusted EBITDA margin (3) 8.7 % 12.4 % n.m. not meaningful (1) Service line fee revenue represents revenue for fees generated from each of our service lines. (2) Gross contract reimbursables reflects revenue from clients which have substantially no margin.
On a local currency basis, Adjusted EBITDA increased 3% from the prior year. 46 Table of Contents APAC Results The following table summarizes our results of operations of our APAC operating segment for the years ended December 31, 2022 and 2021 (in millions): Year Ended December 31, 2022 2021 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 673.4 $ 593.2 14 % 20 % Leasing 180.1 204.1 (12) % (6) % Capital markets 58.6 70.5 (17) % (10) % Valuation and other 119.7 127.5 (6) % (2) % Total service line fee revenue (1) 1,031.8 995.3 4 % 10 % Gross contract reimbursables (2) 292.8 265.0 10 % 19 % Total revenue $ 1,324.6 $ 1,260.3 5 % 12 % Costs and expenses: APAC Fee-based operating expenses $ 962.5 $ 891.8 8 % 14 % Cost of gross contract reimbursables 292.8 265.0 10 % 19 % Segment operating expenses $ 1,255.3 $ 1,156.8 9 % 15 % Net income $ 18.5 $ 61.3 (70) % (62) % Adjusted EBITDA $ 77.3 $ 121.5 (36) % (32) % (1) Service line fee revenue represents revenue for fees generated from each of our service lines.
These trends were partially offset by our cost savings initiatives. 42 Table of Contents APAC Results The following table summarizes our results of operations of our APAC operating segment for the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, 2023 2022 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 706.9 $ 673.4 5 % 6 % Leasing 176.2 180.1 (2) % 2 % Capital markets 55.2 58.6 (6) % (2) % Valuation and other 112.5 119.7 (6) % (2) % Total service line fee revenue (1) 1,050.8 1,031.8 2 % 4 % Gross contract reimbursables (2) 340.2 292.8 16 % 21 % Total revenue $ 1,391.0 $ 1,324.6 5 % 8 % Costs and expenses: APAC Fee-based operating expenses $ 1,008.9 $ 962.5 5 % 7 % Cost of gross contract reimbursables 340.2 292.8 16 % 21 % Segment operating expenses $ 1,349.1 $ 1,255.3 7 % 10 % Net (loss) income $ (6.7) $ 18.5 n.m. n.m.
While the degree to which the Company will be affected by these macroeconomic challenges largely depends on the nature and duration of uncertain and unpredictable events, we believe that we are well suited to endure a shifting macroeconomic environment due to our diversification and resiliency. Refer to Part I, Item 1A. “Risk Factors” for further information.
While transactional markets remained under pressure during the year, our Property, facilities and project management service line continued to demonstrate resiliency and grew revenue by 3% over the prior year. 31 Table of Contents While the degree to which the Company will be affected by these macroeconomic challenges largely depends on the nature and duration of uncertain and unpredictable events, we believe that we are well suited to endure a shifting macroeconomic environment due to our diversification and resiliency.
(3) Adjusted EBITDA margin is measured against Total service line fee revenue. 41 Table of Contents Adjusted EBITDA is calculated as follows (in millions): Year Ended December 31, 2022 2021 Net income $ 196.4 $ 250.0 Add/(less): Depreciation and amortization 146.9 172.1 Interest expense, net of interest income 193.1 179.5 Provision for income taxes 141.6 89.9 Unrealized loss on investments, net (1) 84.2 10.4 Integration and other costs related to merger (2) 14.0 32.4 Pre-IPO stock-based compensation (3) 3.1 5.4 Acquisition related costs and efficiency initiatives (4) 93.8 140.4 Other (5) 25.7 6.3 Adjusted EBITDA $ 898.8 $ 886.4 (1) Represents net unrealized losses on fair value investments during the years ended December 31, 2022 and 2021, primarily related to our investment in WeWork, which closed during the fourth quarter of 2021.
(3) Adjusted EBITDA margin is measured against Total service line fee revenue. 37 Table of Contents Adjusted EBITDA is calculated as follows (in millions): Year Ended December 31, 2023 2022 Net (loss) income $ (35.4) $ 196.4 Add/(less): Depreciation and amortization 145.6 146.9 Interest expense, net of interest income 281.1 193.1 Provision for income taxes 5.4 141.6 Unrealized loss on investments, net 27.8 84.2 Integration and other costs related to merger 11.2 14.0 Pre-IPO stock-based compensation — 3.1 Acquisition related costs and efficiency initiatives 14.2 93.8 Cost savings initiatives 55.6 — CEO transition costs 8.3 — Servicing liability fees and amortization 11.7 7.9 Legal and compliance matters 23.0 — Other (1) 21.6 17.8 Adjusted EBITDA $ 570.1 $ 898.8 (1) For the year ended December 31, 2023, Other primarily reflects non-cash stock-based compensation expense associated with certain one-time retention awards, one-time consulting costs associated with certain legal entity reorganization projects, a loss on disposal of a business, and a one-time impairment of certain customer relationship intangible assets.
Operating, administrative and other expenses as a percentage of total revenue were 12% for 2022 compared to 13% for 2021. Restructuring, impairment and related charges Restructuring, impairment and related charges were $8.9 million, a decrease of $35.6 million compared to the year ended December 31, 2021.
Operating, administrative and other expenses as a percentage of total revenue were 13% for 2023 compared to 12% for 2022.
Our 2020 Notes bear interest at a rate of 6.75% per annum, and expected annual interest payments would be approximately $43.9 million until the notes mature in May 2028. 48 Table of Contents Lease obligations. Our lease obligations primarily consist of operating leases of office space in various buildings for our own use.
Because the 2018 Credit Agreement bears interest at a variable interest rate, the amount of expected future annual interest payments cannot be determined. Our 2028 Notes bear interest at a rate of 6.75% per annum and expected annual interest payments would be approximately $43.9 million until the notes mature in May 2028.
Below is a summary of Total costs and expenses (in millions): Year Ended December 31, 2022 2021 Americas Fee-based operating expenses $ 4,650.3 $ 4,281.8 EMEA Fee-based operating expenses 827.6 864.7 APAC Fee-based operating expenses 962.5 891.8 Cost of gross contract reimbursables 2,857.6 2,497.6 Segment operating expenses: 9,298.0 8,535.9 Depreciation and amortization 146.9 172.1 Integration and other costs related to merger (1) 14.0 32.4 Pre-IPO stock-based compensation (2) 3.1 5.4 Acquisition related costs and efficiency initiatives (3) 93.8 139.6 Other 14.8 6.3 Total costs and expenses $ 9,570.6 $ 8,891.7 (1) Integration and other costs related to merger include certain direct and incremental integration efforts.
Below is a summary of Total costs and expenses (in millions): Year Ended December 31, 2023 2022 Americas Fee-based operating expenses $ 4,237.5 $ 4,650.3 EMEA Fee-based operating expenses 779.3 827.6 APAC Fee-based operating expenses 1,008.9 962.5 Cost of gross contract reimbursables 2,962.3 2,857.6 Segment operating expenses: 8,988.0 9,298.0 Depreciation and amortization 145.6 146.9 Integration and other costs related to merger 11.2 14.0 Pre-IPO stock-based compensation — 3.1 Acquisition related costs and efficiency initiatives 14.2 93.8 Cost savings initiatives 55.6 — CEO transition costs 8.3 — Servicing liability fees and amortization 11.7 7.9 Legal and compliance matters 23.0 — Other, including foreign currency movements (1) 30.5 6.9 Total costs and expenses $ 9,288.1 $ 9,570.6 (1) For the year ended December 31, 2023, Other primarily reflects non-cash stock-based compensation expense associated with certain one-time retention awards, one-time consulting costs associated with certain legal entity reorganization projects, a one-time impairment of certain customer relationship intangible assets and the effects of movements in foreign currency.
Adjusted EBITDA of $715.5 million increased $68.5 million or 11%, and resulted in margin expansion of 38 basis points, principally driven Property, facilities and project management and Leasing growth and earnings from our equity method investment with Greystone, offset by declines in Capital markets and higher commissions expense. 45 Table of Contents EMEA Results The following table summarizes our results of operations of our EMEA operating segment for the years ended December 31, 2022 and 2021 (in millions): Year Ended December 31, 2022 2021 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 373.7 $ 370.3 1 % 14 % Leasing 233.9 246.5 (5) % 6 % Capital markets 142.1 168.8 (16) % (6) % Valuation and other 177.7 190.9 (7) % 5 % Total service line fee revenue (1) 927.4 976.5 (5) % 7 % Gross contract reimbursables (2) 102.7 136.6 (25) % (16) % Total revenue $ 1,030.1 $ 1,113.1 (7) % 4 % Costs and expenses: EMEA Fee-based operating expenses $ 827.6 $ 864.7 (4) % 7 % Cost of gross contract reimbursables 102.7 136.6 (25) % (16) % Segment operating expenses $ 930.3 $ 1,001.3 (7) % 4 % Net income (loss) $ (24.7) $ 2.8 n.m. n.m.
These trends were partially offset by our cost savings initiatives and growth in our Property, facilities and project management revenue. 41 Table of Contents EMEA Results The following table summarizes our results of operations of our EMEA operating segment for the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, 2023 2022 % Change in USD % Change in Local Currency Revenue: Property, facilities and project management $ 371.4 $ 373.7 (1) % (3) % Leasing 229.6 233.9 (2) % (5) % Capital markets 83.3 142.1 (41) % (43) % Valuation and other 174.2 177.7 (2) % (4) % Total service line fee revenue (1) 858.5 927.4 (7) % (10) % Gross contract reimbursables (2) 115.2 102.7 12 % 9 % Total revenue $ 973.7 $ 1,030.1 (5) % (8) % Costs and expenses: EMEA Fee-based operating expenses $ 779.3 $ 827.6 (6) % (8) % Cost of gross contract reimbursables 115.2 102.7 12 % 9 % Segment operating expenses $ 894.5 $ 930.3 (4) % (6) % Net loss $ (46.5) $ (24.7) 88 % 58 % Adjusted EBITDA $ 77.4 $ 106.0 (27) % (30) % (1) Service line fee revenue represents revenue for fees generated from each of our service lines.
Other (expense) income, net Other expense during the year ended December 31, 2022 of $89.0 million reflects net unrealized losses on fair value investments of $84.2 million, primarily related to our investment in WeWork, which closed during the fourth quarter of 2021, partially offset by royalty income.
Other expense, net Other expense of $12.6 million decreased $76.4 million or 86% compared to the year ended December 31, 2022, principally driven by lower net unrealized losses on our fair value investments, primarily related to our investment in WeWork.
Total costs and expenses include segment operating expenses as well as other expenses such as depreciation and amortization, integration and other costs related to merger, pre-IPO stock-based compensation, acquisition related costs and efficiency initiatives, and other items. Segment operating expenses includes Fee-based operating expenses and Cost of gross contract reimbursables.
Total costs and expenses include segment operating expenses as well as other expenses such as depreciation and amortization, integration and other costs related to merger, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs, servicing liability fees and amortization, certain legal and compliance matters, and other non-recurring items.
This growth was principally driven by Property, facilities and project management and Leasing, which increased 14% and 6%, respectively, on a local currency basis, partially offset by a decline in Capital markets of 6% on a local currency basis. Capital markets declined as a result of a less constructive macroeconomic environment resulting in lower commercial real estate transaction volumes.
Revenue growth in Property, facilities and project management and Gross contract reimbursables of 6% and 21%, respectively, on a local currency basis, driven by increases in facilities management and facilities services, was partially offset by declines in Capital markets and Valuation and other revenue of 2% and 2%, respectively, on a local currency basis, primarily due to a less constructive macroeconomic environment and continued interest rate uncertainty which resulted in lower transaction volumes.
In addition, the Company recognized a loss of $13.8 million in the first quarter of 2022 related to the disposal of our operations in Russia. Comparatively, other income during the year ended December 31, 2021 of $1.2 million reflects royalty income partially offset by net unrealized losses on fair value investments of $10.4 million.
In addition, the Company recognized a loss of $13.8 million in the first quarter of 2022 related to the disposal of our operations in Russia. 39 Table of Contents Provision for income taxes Provision for income taxes for the year ended December 31, 2023 was $5.4 million on a loss before income taxes of $30.0 million.
The Company is also party to an off-balance sheet A/R Securitization arrangement whereby it continuously sells trade receivables to an unaffiliated financial institution, which has an investment limit of $200.0 million. Receivables are derecognized from our balance sheet upon sale, for which we receive cash payment and record a deferred purchase price receivable.
Receivables are derecognized from our balance sheet upon sale, for which we receive cash payment and record a deferred purchase price receivable which is realized after collection of the underlying receivables. This program also provides funding from a committed purchaser against receivables sold into the program with a maximum facility limit of $200.0 million.
Cost of gross contract reimbursables increased 14% driven by the continued stability and growth in our Property, facilities and project management service line. Total costs of services as a percentage of total revenue were 81% for 2022 compared to 79% for 2021.
Cost of services provided to clients decreased 8% principally driven by a $450.0 million decrease in commissions, as a result of lower brokerage revenue, offset by an increase of $50.0 million in sub-contractor costs. Cost of gross contract reimbursables increased 4% driven by the continued stability and growth in our Property, facilities and project management service line and cost inflation.
Property, facilities and project management revenue growth was primarily driven by growth in our project management and facilities management businesses, which also resulted in Gross contract reimbursables growth of 14%. Partially offsetting these trends were unfavorable movements in foreign currency of $218.9 million or 2.0% compared to the year ended December 31, 2021 as a result of a stronger U.S.
Partially offsetting these trends was the continued growth of our Property, facilities and project management service line, namely in our property management and facilities management businesses, and Gross contract reimbursables revenue, which were up 3% and 4%, respectively. Costs of services Costs of services of $7.8 billion decreased $311.9 million or 4% compared to the year ended December 31, 2022.
Future uncertainty or weakness in the credit markets, including as a result of any future interest rate increases, could further affect commercial real estate transaction volumes and pricing, and clients may delay real estate transaction decisions until property values settle, which could reduce the commissions and fees we earn for brokering those transactions.
Clients may continue to delay real estate transaction decisions until property values and economic conditions stabilize, which could continue to reduce the commissions and fees we earn for brokering those transactions.
Fee-based operating expenses as a percentage of Total service line fee revenue remained flat at 89% in 2022 compared to 2021. Adjusted EBITDA of $106.0 million decreased $11.9 million, primarily driven by declines in Capital markets and unfavorable foreign currency movements.
Fee-based operating expenses as a percentage of Total service line fee revenue was 92% in 2023 compared to 88% in 2022. Adjusted EBITDA of $429.6 million decreased $285.9 million or 40%, primarily driven by declines in transactions-based revenue and a decline in earnings from the Greystone JV due to lower lending volumes.
(5) During the year ended December 31, 2022, Other includes a charge of $5.0 million related to the amendment of our accounts receivable securitization (“A/R Securitization”) arrangement, as well as a loss of $13.8 million related to the disposal of operations in Russia.
For the year ended December 31, 2022, Other predominantly includes a loss of $13.8 million related to the disposal of operations in Russia, as well as one-time consulting costs associated with certain statutory reporting and legal entity reorganization projects.
As a result of the corresponding revenue mix and associated variable costs, fee-based operating expenses as a percentage of Total service line fee revenue was 93% in 2022 compared to 90% in 2021.
Fee-based operating expenses as a percentage of Total service line fee revenue was 96% in 2023 compared to 93% in 2022. Adjusted EBITDA of $63.1 million decreased $14.2 million or 18%, primarily driven by declines in transactions-based revenue, higher variable costs and employment costs, and government subsidies in the prior year.
Financing Activities We used $79.3 million in cash for financing activities during the year ended December 31, 2022, an increase of $13.5 million from the prior year primarily driven an increase in cash paid for employee related taxes in connection with the vesting of equity awards, offset by lower payments of deferred and contingent consideration. 49 Table of Contents Indebtedness Refer to Note 10: Long-Term Debt and Other Borrowings and Note 9: Derivative Financial Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for further discussion.
Financing Activities We used $120.8 million in cash for financing activities during the year ended December 31, 2023, an increase of $41.5 million from the prior year primarily driven by debt issuance costs of $65.1 million associated with the refinancing of a portion of the borrowings under our 2018 Credit Agreement in both January and August 2023 and higher deferred and contingent consideration payments, partially offset by lower net settlement of equity awards for payment of employee related taxes.
Adjusted EBITDA of $898.8 million increased by $12.4 million or 1% compared to prior year, driven by the same factors impacting Net income discussed above, with the exception of unrealized losses on fair value investments.
Adjusted EBITDA of $570.1 million decreased $328.7 million or 37% compared to prior year, driven by the same factors impacting Net loss above, with the exception of the aggregate loss on debt extinguishment and estimated losses accrued during the current period related to certain legal and compliance matters.
We believe the implied control premium determined by our impairment analysis is reasonable based upon historic data of premiums paid on actual transactions within our industry. 37 Table of Contents In 2022 and 2021, we performed our goodwill impairment evaluation over five reporting units, resulting in no impairment charges as the estimated fair value of each reporting unit exceeded its carrying value.
If our share price declines and such decline is sustained, further evaluation would be necessary and an impairment of our goodwill may result. In 2022, we performed our goodwill impairment evaluation over five reporting units, resulting in no impairment charges as the estimated fair value of each RU exceeded its carrying value.
Benefits to be paid out by our defined benefit plans will be funded from the assets held by these plans. If the assets these plans hold are not sufficient to fund these payments, we will fund the remaining obligations through available cash. We have historically funded pension costs as actuarially determined and as applicable laws and regulations require.
Benefits to be paid out by our defined benefit plans will be funded from the assets held by these plans.
Fee-based operating expenses of $4.7 billion increased 9% principally due to higher variable costs, including commissions associated with Leasing revenue growth, higher costs for materials associated with Property, facilities and project management growth, and higher employment costs.
Partially offsetting these declines was growth in Property, facilities and project management revenue and Gross contract reimbursables of 2% and 2%, respectively. Fee-based operating expenses of $4.2 billion decreased 9% principally due to lower commissions expense associated with lower brokerage revenue, as well as our cost savings initiatives.
During 2022 we extended the borrowing capacity on our revolving credit facility and in January 2023 we extended the maturity date of a portion of our 2018 First Lien Loan to January 31, 2030 as discussed above. 36 Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), which requires us to make estimates and assumptions that affect reported amounts.
Refer to Part I, Item 1A. “Risk Factors” in this Annual Report for further information. Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”), which requires us to make estimates and assumptions that affect reported amounts.
As a result of the corresponding revenue mix and associated variable costs, fee-based operating expenses as a percentage of Total service line fee revenue was 88% in 2022 compared to 87% in 2021.
Fee-based operating expenses of $779.3 million decreased 8% on a local currency basis principally due to lower employment costs associated with lower brokerage revenue, as well as our cost savings initiatives. Fee-based operating expenses as a percentage of Total service line fee revenue was 91% in 2023 compared to 89% in 2022.
As of December 31, 2022, the Company had no outstanding balance drawn on the investment limit. The A/R Securitization terminates on June 20, 2023, unless extended or an earlier termination event occurs. Refer to Note 19: Accounts Receivable Securitization of the Notes to the Consolidated Financial Statements for further information. Debt obligations.
As of December 31, 2023, the Company had aggregate capital outstanding under this facility of $100.0 million. This amount was repaid in full in January 2024. The A/R Securitization expires on June 19, 2026, unless extended or an earlier termination event occurs.
Operating, administrative and other Operating, administrative and other expenses of $1.3 billion increased by $34.6 million or 3% compared to the year ended December 31, 2021, primarily driven by higher salaries and wages, as well as higher technology, communication and consulting expenses.
Operating, administrative and other Operating, administrative and other expenses of $1.3 billion increased $1.5 million compared to the year ended December 31, 2022, principally driven by an increase in stock-based compensation expense of $15.4 million, primarily as a result of the accelerated expense associated with our 2023 CEO transition and new awards granted during 2023, and an increase of $23.0 million in technology and other miscellaneous costs, offset by a decrease of approximately $40.0 million in consulting expenses.
In addition, as discussed above, in January 2023, we extended the maturity date of $1.0 billion of our $2.6 billion 2018 First Lien Loan to January 31, 2030. As a professional services firm, funding our operating activities is not capital intensive. Total capital expenditures for the year ended December 31, 2022 were $50.7 million.
During 2023, the Company extended the maturity date of the majority of our Term Loans to January 2030. Subsequent to these refinancings, $192.9 million of our total borrowings remains due in 2025; all other borrowings are due between 2027 and 2031. As a professional services firm, funding our operating activities is not capital intensive.
On January 31, 2023, we amended the 2018 Credit Agreement to extend the maturity date of $1.0 billion of the $2.6 billion aggregate principal amount outstanding under our 2018 First Lien Loan to January 31, 2030 and such portion will bear interest, at the Company’s option, equal to either: (a) the Term SOFR, plus 0.10% (which sum is subject to a minimum floor of 0.50%), plus an applicable margin of 3.25% per annum, or (b) the Base Rate (as defined in the 2018 Credit Agreement), plus an applicable margin of 2.25% per annum.
As of December 31, 2023, the Company elected to use an annual rate equal to (i) 1-month Term SOFR, plus 0.11% (which sum is subject to a minimum floor of 0.0%), plus 2.75% for the $192.9 million remaining aggregate principal amount of the term loan due August 2025 (the “2025 Tranche”), (ii) 1-month Term SOFR, plus 0.10% (which sum is subject to a minimum floor of 0.50%), plus 3.25% for the $1.0 billion term loan due January 2030 (the “2030 Tranche-1”) and (iii) 1-month Term SOFR (subject to a minimum floor of 0.50%), plus 4.00% for the $1.0 billion term loan due January 2030 (the “2030 Tranche-2”) (the 2025 Tranche, the 2030 Tranche-1, and the 2030 Tranche-2 together make up our current Term Loans).
Earnings from equity method investments Earnings from equity method investments of $85.0 million increased by $63.8 million compared to the year ended December 31, 2021, primarily due to the earnings recognized from our equity method investment with Greystone in the Americas, which was finalized in December 2021.
Earnings from equity method investments Earnings from equity method investments of $58.1 million decreased $26.9 million compared to the year ended December 31, 2022, primarily due to a decline of $29.2 million in earnings recognized from our equity method investment in Cushman Wakefield Greystone LLC (the “Greystone JV”) due to lower transaction volumes as a result of tighter lending conditions given the volatility in interest rates.
Removed
Our operations in Russia represented less than 0.5% of our total revenue in 2021. We have no direct operations in Ukraine. This disposal is not material to our financial statements or future operations.
Added
In 2023, these macroeconomic challenges, including elevated inflation and interest rates, led to ongoing volatility within global capital and credit markets, which contributed to recessionary conditions in the global commercial real estate market and negatively impacted demand for our services. We expect many of these macroeconomic challenges to persist through 2024.
Removed
In April 2022, we amended the 2018 Credit Agreement to (i) increase the aggregate commitments under the Revolver by $80.0 million, extending its borrowing capacity from $1.0 billion to $1.1 billion, (ii) extend the maturity date of borrowings under the Revolver from August 21, 2023 to April 28, 2027, (iii) replace the LIBOR rate applicable to borrowings under the Revolver with Term Secured Overnight Financing Rate (“SOFR”) plus an applicable rate, and (iv) add pricing terms linked to achievement of certain greenhouse gas emission targets.
Added
In particular, many of our clients have been unable to procure credit or financing on favorable terms or at all, as lending conditions have tightened and borrowers face higher capital costs. This resulted in lower transaction volumes, and declines in our Capital markets, Leasing and Valuation and other service lines.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−2 removed3 unchanged
Biggest changeWe manage this interest rate risk by entering into interest rate derivative agreements to attempt to hedge the variability of future interest payments driven by fluctuations in interest rates. Our 2018 First Lien Loan bears interest at an annual rate of 1-month LIBOR plus 2.75%, and our 2020 Notes bear interest at an annual fixed rate of 6.75%.
Biggest changeOur 2028 Notes and 2031 Notes bear interest at annual fixed rates of 6.75% and 8.88%, respectively. We manage this interest rate risk by entering into derivative financial instruments such as interest rate swap agreements to attempt to hedge the variability of future interest payments driven by fluctuations in interest rates.
We continually assess interest rate sensitivity to estimate the impact of rising short-term interest rates on our variable rate debt. Our interest rate risk management strategy is focused on limiting the impact of interest rate changes on earnings and cash flows to lower our overall borrowing cost.
We continually assess interest rate sensitivity to estimate the impact of rising short-term interest rates on our variable rate debt. Our interest rate risk management strategy is focused on limiting the impact of interest rate changes on earnings and cash flows to lower our overall borrowing costs.
Refer to Note 9: Derivative Financial Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for additional information about interest rate and foreign currency risks managed through derivative activities and notional amounts of underlying hedged items. 50 Table of Contents
Refer to Note 9: Derivative Financial Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for additional information about interest rate and foreign currency risks managed through derivative activities and notional amounts of underlying hedged items. 47 Table of Contents
Our foreign exchange risk management strategy is achieved by establishing local operations in the markets that we serve, invoicing customers in the same currency in which costs are incurred and the use of derivative financial instruments such as foreign currency forwards.
Our foreign exchange risk management strategy is achieved by establishing local operations in the markets that we serve, invoicing customers in the same currency in which costs are incurred and the use of derivative financial instruments such as foreign currency forward contracts.
These fluctuations may impact the value of our cash receipts and payments in terms of USD, our reporting currency. Refer to the discussion of international operations, included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further detail.
Foreign Exchange Risk Our foreign operations expose us to fluctuations in foreign exchange rates. These fluctuations may impact the value of our cash receipts and payments in terms of USD, our reporting currency. Refer to the discussion of international operations included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further detail.
These derivative instruments are strictly used for risk management purposes and, accordingly, are not used for trading or speculative purposes. Interest Rates We are exposed to interest rate volatility with regard to our 2018 First Lien Loan and revolving credit facility.
These derivative instruments are strictly used for risk management purposes and, accordingly, are not used for trading or speculative purposes.
Removed
As discussed above, in January 2023, we amended the 2018 Credit Agreement and $1.0 billion of the $2.6 billion aggregate principal amount outstanding under our 2018 First Lien Loan will bear interest, at the Company’s option, equal to either: (a) the Term SOFR, plus 0.10% (which sum is subject to a minimum floor of 0.50%), plus an applicable margin of 3.25% per annum, or (b) the Base Rate (as defined in the 2018 Credit Agreement), plus an applicable margin of 2.25% per annum.
Added
Interest Rate Risk We are exposed to interest rate volatility with regard to the Term Loans and any borrowings we draw under the Revolver. 46 Table of Contents The Term Loans bear interest at a variable rate that the Company may select per the terms of the 2018 Credit Agreement.
Removed
Historically, we have maintained the majority of our overall interest rate exposure on a fixed-rate basis. In order to achieve this, we have entered into derivative financial instruments such as interest rate swap agreements when appropriate and will continue to do so as appropriate. Foreign Exchange Our foreign operations expose us to fluctuations in foreign exchange rates.
Added
As of December 31, 2023, we elected to use an annual rate equal to (i) 1-month Term SOFR, plus 0.11% (which sum is subject to a minimum floor of 0.00%), plus 2.75% for the 2025 Tranche, (ii) 1-month Term SOFR, plus 0.10% (which sum is subject to a minimum floor of 0.50%), plus 3.25% for the 2030 Tranche-1 and (iii) 1-month Term SOFR (subject to a minimum floor of 0.50%), plus 4.00% for the 2030 Tranche-2.

Other CWK 10-K year-over-year comparisons