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What changed in CBRE Group's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CBRE Group'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.

+337 added−425 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-27)

Top changes in CBRE Group's 2023 10-K

337 paragraphs added · 425 removed · 210 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition, we also have a Corporate and other segment. 1 Table of Contents Advisory Services Advisory Services provides a comprehensive range of services globally, including property leasing, capital markets (property sales and mortgage origination), mortgage sales and servicing, property management and valuation.
Biggest changeAdvisory Services Advisory Services provides a comprehensive range of services globally, including property leasing; capital markets, which includes property sales and mortgage origination; mortgage servicing; property management and valuation. With a global network of experts that have a deep understanding of their local markets, we offer comprehensive insights and solutions across a wide range of real estate assets.
Securities and Exchange Commission (the SEC). We also make available through our website other reports filed with or furnished to the SEC under the Exchange Act, including reports filed by our officers and directors under Section 16(a) of the Exchange Act. All of the information on our Investor Relations website is available to be viewed free of charge.
Securities and Exchange Commission (SEC). We also make available through our website other reports filed with or furnished to the SEC under the Exchange Act, including reports filed by our officers and directors under Section 16(a) of the Exchange Act. All of the information on our Investor Relations website is available to be viewed free of charge.
The following factors are among those, but are not only those, that may cause actual results to differ materially from the forward-looking statements: • disruptions in general economic, political and regulatory conditions and significant public health events, particularly in geographies or industry sectors where our business may be concentrated; • volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the U.S.; • poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate; • foreign currency fluctuations and changes in currency restrictions, trade sanctions and import/export and transfer pricing rules; • our ability to compete globally, or in specific geographic markets or business segments that are material to us; • our ability to identify, acquire and integrate accretive businesses; • costs and potential future capital requirements relating to businesses we may acquire; • integration challenges arising out of companies we may acquire; • increases in unemployment and general slowdowns in commercial activity; • trends in pricing and risk assumption for commercial real estate services; • the effect of significant changes in capitalization rates across different property types; • a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; • client actions to restrain project spending and reduce outsourced staffing levels; • our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; • our ability to attract new user and investor clients; • our ability to retain major clients and renew related contracts; • our ability to leverage our global services platform to maximize and sustain long-term cash flow; • our ability to continue investing in our platform and client service offerings; • our ability to maintain expense discipline; • the emergence of disruptive business models and technologies; • negative publicity or harm to our brand and reputation; 9 Table of Contents • the failure by third parties to comply with service level agreements or regulatory or legal requirements; • the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; • our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; • the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; • declines in lending activity of U.S.
The following factors are among those, but are not only those, that may cause actual results to differ materially from the forward-looking statements: • disruptions in general economic, political and regulatory conditions and significant public health events, particularly in geographies or industry sectors where our business may be concentrated; • volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the U.S.; • poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate; • foreign currency fluctuations and changes in currency restrictions, trade sanctions and import/export and transfer pricing rules; • our ability to compete globally, or in specific geographic markets or business segments that are material to us; • our ability to identify, acquire and integrate accretive businesses; • costs and potential future capital requirements relating to businesses we may acquire; • integration challenges arising out of companies we may acquire; • increases in unemployment and general slowdowns in commercial activity; • trends in pricing and risk assumption for commercial real estate services; • the effect of significant changes in capitalization rates across different property types; • a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; • client actions to restrain project spending and reduce outsourced staffing levels; • our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; • our ability to attract new user and investor clients; • our ability to retain major clients and renew related contracts; • our ability to leverage our global services platform to maximize and sustain long-term cash flow; • our ability to continue investing in our platform and client service offerings; • our ability to maintain expense discipline; • the emergence of disruptive business models and technologies; • negative publicity or harm to our brand and reputation; 5 Table of Contents • the failure by third parties to comply with service level agreements or regulatory or legal requirements; • the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; • our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; • the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; • declines in lending activity of U.S.
Available Information Our Annual Report on Form 10-K (Annual Report), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available on the Investor Relations section of our website ( https://ir.cbre.com ) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.
Our Annual Report on Form 10-K (Annual Report), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available on the Investor Relations section of our website (https://ir.cbre.com/) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.
If contamination occurs or is present during our role as a property or facility manager or developer, we could be held liable for such costs as a current “operator” of a property, regardless of the legality of the acts or omissions that caused the contamination and without regard to whether we knew of, or were responsible for, the presence of such hazardous or toxic substances.
If contamination is present during our role as a property or facility manager or developer, we could be held liable for such costs as a current “operator” of a property, regardless of the legality of the acts or omissions that caused the contamination and without regard to whether we knew of, or were responsible for, the presence of such hazardous or toxic substances.
GSEs, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market; • changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; • litigation and its financial and reputational risks to us; • our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; • our ability to retain, attract and incentivize key personnel; • our ability to manage organizational challenges associated with our size; • liabilities under guarantees, or for construction defects, that we incur in our development services business; • variations in historically customary seasonal patterns that cause our business not to perform as expected; • our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade; • our and our employees’ ability to execute on, and adapt to, information technology strategies and trends; • cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; • our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, fire and safety building requirements and regulations, as well as data privacy and protection regulations, ESG matters, and the anti-corruption laws and trade sanctions of the U.S. and other countries; • changes in applicable tax or accounting requirements; • any inability for us to implement and maintain effective internal controls over financial reporting; • the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; • the performance of our equity investments in companies we do not control; and • the other factors described elsewhere in this Annual Report, included under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies,” “Quantitative and Qualitative Disclosures About Market Risk” or as described in the other documents and reports we file with the SEC.
GSEs, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market; • changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; • litigation and its financial and reputational risks to us; • our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; • our ability to retain, attract and incentivize key personnel; • our ability to manage organizational challenges associated with our size; • liabilities under guarantees, or for construction defects, that we incur in our development services business; • our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade; • our and our employees’ ability to execute on, and adapt to, information technology strategies and trends; • cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; • our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, fire and safety building requirements and regulations, as well as data privacy and protection regulations, ESG matters, and the anti-corruption laws and trade sanctions of the U.S. and other countries; • changes in applicable tax or accounting requirements; • any inability for us to implement and maintain effective internal controls over financial reporting; • the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; • the performance of our equity investments in companies we do not control; and • the other factors described elsewhere in this Annual Report, included under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates,” “Quantitative and Qualitative Disclosures About Market Risk” or as described in the other documents and reports we file with the SEC.
Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC. 10 Table of Contents Investors and others should note that we routinely announce financial and other material information using our Investor Relations website (https://ir.cbre.com), SEC filings, press releases, public conference calls and webcasts.
Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC. 6 Table of Contents Investors and others should note that we routinely announce financial and other material information using our Investor Relations website (https://ir.cbre.com), SEC filings, press releases, public conference calls and webcasts.
Except as specifically incorporated by reference into this document, information on these websites is not part of this document. 8 Table of Contents Cautionary Note on Forward-Looking Statements This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Exchange Act.
Except as specifically incorporated by reference into this document, information on these websites is not part of this document. 4 Table of Contents Cautionary Note on Forward-Looking Statements This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Exchange Act.
We use these channels of distribution to communicate with our investors and members of the public about our company, our services and other items of interest. Information contained on our website is not part of this Annual Report or our other filings with the SEC. 11 Table of Contents
We use these channels of distribution to communicate with our investors and members of the public about our company, our services and other items of interest. Information contained on our website is not part of this Annual Report or our other filings with the SEC. 7 Table of Contents
Further, federal, state and local governments in the countries in which we do business have enacted various laws, regulations and treaties governing climate change, particularly for “greenhouse gas emissions” which seek to tax, penalize or limit their release. Such regulations could lead to increased operational or compliance costs over time.
Further, federal, state and local governments in various countries have enacted various laws, regulations and treaties governing climate change, particularly for “greenhouse gas emissions” which seek to tax, penalize or limit their release. Such regulations could lead to increased operational or compliance costs over time.
The words “anticipate,” “believe,” “could,” “should,” “propose,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases are used in this Annual Report to identify forward-looking statements. Except for historical information contained herein, the matters addressed in this Annual Report are forward-looking statements.
The words “anticipate,” “believe,” “could,” “should,” “propose,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “forecast,” “target” and similar terms and phrases are used in this Annual Report to identify forward-looking statements. Except for historical information contained herein, the matters addressed in this Annual Report are forward-looking statements.
These include goals to reduce Scope 1 and 2 greenhouse gas emissions 68% from the 2019 base year. Additional information about our approach to corporate social responsibility and to environmental, social and governance (ESG) issues is available on our Corporate Responsibility website (https://www.cbre.com/about-us/corporate-responsibility#overview), including the CBRE Corporate Responsibility Report.
These include a goal to reduce absolute Scope 1 and 2 greenhouse gas emissions 68% from the 2019 base year. Additional information about our approach to corporate social responsibility and to environmental, social and governance (ESG) issues is available in the CBRE Corporate Responsibility Report.
Certain of these laws and regulations may impose liability on current or previous real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at a property, including contamination resulting from above-ground or underground storage tanks or the presence of asbestos or lead at a property.
Material Governmental Matters Environment Certain federal, state and local laws and regulations may impose liability on current or previous real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at a property.
We are committed to increasing the diversity of our workforce, strengthening an inclusive culture where everyone is valued and supported in achieving their full potential, and investing in the communities where we live and work. These efforts are led by our Chief Responsibility Officer, a senior executive level position reporting directly to our Chief Executive Officer.
Diversity, Equity & Inclusion (DE&I) We are committed to increasing the diversity of our workforce, strengthening an inclusive culture where everyone is valued and supported in achieving their full potential, and investing in the communities where we live and work.
Environmental contamination or other environmental liabilities may also negatively affect the value of commercial real estate assets held by entities that are managed by our investment management and development services businesses, which could adversely affect the results of operations of these business lines.
However, these laws and regulations may discourage sales and leasing activities and mortgage lending with respect to some properties, which may adversely affect us. Environmental contamination or other environmental liabilities may also negatively affect the value of commercial real estate assets held by entities that are managed by our investment management and development services businesses.
While we are aware of the presence or the potential presence of regulated substances in the soil or groundwater at or near several properties owned, operated or managed by us that may have resulted from historical or ongoing activities on those properties, we are not aware of any material noncompliance with the environmental laws or regulations currently applicable to us, and we are not the subject of any material claim for liability with respect to contamination at any location.
We are not aware of any material noncompliance with the environmental laws or regulations currently applicable to us, and we are not the subject of any material claim for liability with respect to contamination at any location.
Item 1. Business. Company Overview CBRE Group, Inc. is a Delaware corporation. References to “CBRE,” “the company,” “we,” “us” and “our” refer to CBRE Group, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.
Available Information In this Annual Report on Form 10-K, we use the terms “CBRE,” “we,” the “company,” “our,” and “us” to refer to CBRE Group, Inc. and all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.
At December 31, 2022, we had approximately 115,000 employees (excluding Turner & Townsend employees) worldwide, approximately 46% of whose costs are fully reimbursed by clients and are mainly in our Global Workplace Solutions segment and our property management line of business within our Advisory Services segment.
The costs associated with approximately 62% of our people are fully reimbursed by clients and are mainly in our Global Workplace Solutions and property management businesses. At December 31, 2023, approximately 14% of our employees worldwide were subject to collective bargaining agreements.
In addition to trademarks and trade names, we have acquired and developed proprietary technologies for the provision of complex services and analysis. We have a number of issued and pending patent applications relating to these proprietary technologies. We will continue to file additional patent applications on new inventions, as appropriate, demonstrating our commitment to technology and innovation.
We also hold a number of issued and pending patent applications relating to proprietary technologies, and intend to file additional patent applications reflecting our commitment to technology and innovation.
Our majority-owned subsidiary, Turner & Townsend, which was acquired in November 2021, plays a key role in providing cost, project, program management and project controls for a broad range of clients across the infrastructure, real estate and natural resources sectors.
Our project management business, which encompasses CBRE’s wholly-owned services and those delivered by our majority-owned subsidiary Turner & Townsend, delivers program management, project management, and cost consultancy services across commercial real estate, infrastructure and natural resources sectors.
We are committed to driving economic impact in the marketplace through our supplier diversity initiatives and spent more than $1.5 billion with diverse suppliers in 2022, with a goal to lift that annual spend to $3 billion by the end of 2025.
We spent nearly $2 billion with diverse suppliers in 2023, with a goal to lift that annual spend to $3 billion by the end of 2025. Also, we made significant financial contributions to nonprofit organizations that are helping to improve education and career development opportunities for people in diverse and underrepresented communities.
Our human capital programs are designed to help prepare our professionals to succeed in their current and future roles, develop our leaders of tomorrow, reward our people with competitive pay and benefits, foster an engaging and inclusive workplace, and improve productivity through investments in technology, tools and resources.
We also reward our people with competitive pay and benefits, foster an engaging and inclusive workplace, and improve productivity through investments in technology, tools and resources. At December 31, 2023, we had more than 130,000 employees (including Turner & Townsend employees) worldwide, of which 34.5% are female and 65.5% are male.
Development Services Development services are conducted through our indirect wholly owned subsidiary Trammell Crow Company, LLC, which provides commercial real estate development services in the U.S., U.K., and Continental Europe, and Telford Homes Plc (Telford), a developer of residential multi-family properties in the U.K.
Our primary investment categories include private direct real estate, private indirect real estate through third-party operators, listed real assets and private infrastructure. Our real estate development business – Trammell Crow Company (TCC) in the U.S., U.K., and Continental Europe, and Telford Homes in the U.K. multifamily residential market – provides leading-edge development services to real estate investors, owners and occupiers.
Intellectual Property We regard our intellectual property as an important part of our business. We hold various trademarks and trade names worldwide, which include the “CBRE,” “Turner & Townsend” and “Telford” marks.
We publicly report demographics, including diversity data, for our U.S. workforce annually in our Corporate Responsibility Report, in accordance with reporting requirements by the U.S. Equal Employment Opportunity Commission. 3 Table of Contents Intellectual Property We hold various trademarks and trade names worldwide, including the “CBRE,” “Turner & Townsend” and “Telford” marks.
CBRE Investment Management provides investment management services to pension funds, insurance companies, sovereign wealth funds, foundations, endowments and other institutional investors seeking to generate returns and diversification through investment in real assets such as real estate, infrastructure, master limited partnerships and other assets. We sponsor investment programs that span the risk/return spectrum in North America, Europe, Asia and Australia.
IM invests capital on behalf of pension funds, insurance companies, sovereign wealth funds, and other institutional investors in real estate, infrastructure, master limited partnerships and other assets. We often hold a co-investment in many of our investment funds and programs.
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We are the world’s largest commercial real estate services and investment firm, based on 2022 revenue, with leading global market positions in our leasing, property sales, occupier outsourcing and valuation businesses. As of December 31, 2022, the company had approximately 115,000 employees (excluding Turner & Townsend Holdings Limited employees) serving clients in more than 100 countries.
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Item 1. Business. Company Overview CBRE is the world’s largest commercial real estate services and investments firm. Our competitive advantage comes from our considerable scale and ability to offer integrated solutions to real estate investors and occupiers in more than 100 countries.
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We provide services to real estate investors and occupiers. For investors, our services include capital markets (property sales and mortgage origination), mortgage sales and servicing, property leasing, investment management, property management, valuation and development services, among others. For occupiers, our services include facilities management, project management, transaction (property sales and leasing) and consulting services, among others.
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We are global market leaders in most lines of business we serve and drive significant growth from bundling these services, while helping our clients optimize real estate costs, value, investment returns and workplace experiences.
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We provide services under the following brand names: “CBRE” (real estate advisory and outsourcing services); “CBRE Investment Management” (investment management); “Trammell Crow Company” (primarily U.S. development); “Telford Homes” (U.K. development); and “Turner & Townsend Holdings Limited” (Turner & Townsend).
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These capabilities, combined with our extensive research and data platform, allow us to generate superior outcomes for our clients, which include nearly 90% of Fortune 100 companies in 2023, and many of the world’s largest institutional real estate investors. The future growth opportunity across our company is enhanced by the large and expanding base of commercial real estate assets globally.
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We generate revenue from stable, recurring sources (large multi-year portfolio and per project contracts) and from cyclical, non-recurring sources, including commissions on transactions. Our revenue mix has become heavily weighted towards stable revenue sources, particularly occupier outsourcing, and our dependence on highly cyclical property sales and lease transaction revenue has declined.
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We are focused on cementing our leadership position in each of our businesses with a strategy that achieves diversification and growth across four dimensions: geographies, clients, property types and services. We are committed to deploying our resources and capital across these four dimensions in parts of our business that have secular tailwinds and/or provide cyclical resilience.
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We believe we are well-positioned to capture a substantial and growing share of market opportunities at a time when investors and occupiers increasingly prefer to purchase integrated, account-based services on a national and global basis. In 2022, we generated revenue from a highly diversified base of clients, including more than 95 of the Fortune 100 companies.
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Examples of this include our recent investments in the global project management firm, Turner & Townsend, and the flexible office platform, Industrious, as well as increased focus on geographies that are well positioned for growth, such as Japan and asset classes such as industrial and multi-family. As a result, we have built a large and more resilient services offering.
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We have been an S&P 500 company since 2006 and in 2022 we were ranked #126 on the Fortune 500. We have been voted the most recognized commercial real estate brand in the Lipsey Company survey for 22 years in a row (including 2022).
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Our platform – the resources and infrastructure that support our professionals and underpin our growth, such as research, marketing, data and technology – combined with our balance sheet strength, provide us access to top talent and compelling growth opportunities.
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We have also been rated a World’s Most Ethical Company by the Ethisphere Institute for nine consecutive years (including 2022, the most recent year the award has been announced) and have been included in the Dow Jones World Sustainability Index for four years in a row and the Bloomberg Gender-Equality Index for four years in a row (including 2023).
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Business Segments We serve clients through three business segments: Advisory Services, Global Workplace Solutions and Real Estate Investments, and a fourth segment, called Corporate and other, which encompasses our platform and non-core investments.
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CBRE History We will mark our 117th year of continuous operations in 2023, tracing our origins to a company founded in San Francisco in the aftermath of the 1906 earthquake.
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Our client base is comprised of large occupiers and investors who contract for our services across multi-market portfolios as well as local market clients that we serve on a one-off basis.
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Since then, we have grown into the largest global commercial real estate services and investment firm (in terms of 2022 revenue) through organic growth and strategic acquisitions, including our acquisition of a majority interest in Turner & Townsend in November 2021.
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We are leaders in each of our five primary business lines globally (property leasing, capital markets, mortgage servicing, property management and valuation) and in most key local markets across the world.
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Our Business Segments and Primary Services CBRE Group, Inc. is a holding company that conducts all of its operations through its indirect subsidiaries. CBRE Group, Inc. does not have any independent operations or employees.
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We leverage our platform to attract and retain top talent as well as provide differentiated insights to our clients through our at-scale investments in research, data, technology tools and property marketing. We also focus on serving clients end-to-end through the intentional bundling of our various services.
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CBRE Services, Inc., our direct wholly owned subsidiary, is also a holding company and is the primary obligor or issuer with respect to most of our long-term indebtedness. We report our operations through the following reportable segments: (1) Advisory Services, (2) Global Workplace Solutions, and (3) Real Estate Investments.
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For example, as our investor clients seek to optimize the value and performance of their assets across the real estate lifecycle, we often bring together expertise from property sales, mortgage originations, leasing, valuations and property management.
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Most of our Advisory Services operations are conducted through our indirect wholly owned subsidiary CBRE, Inc. and its subsidiaries around the world. Our mortgage services, the vast majority of which are in the United States (U.S.), are conducted exclusively through our indirect wholly-owned subsidiary operating under the name CBRE Capital Markets, Inc. (CBRE Capital Markets) and its affiliates.
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While many of our business lines in this segment are sensitive to changes in macro-economic conditions, their cyclicality is partly offset by the value investors and occupiers place on our insights and consulting services through cycles as they adjust their real estate portfolios and strategies in response to changing market circumstances.
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The primary services within Advisory Services are further described below. Leasing Services We provide strategic advice and execution for owners/investors, and occupiers/tenants of real estate, primarily in connection with the leasing of office, industrial and retail space. In 2022, we negotiated leases valued at more than $165.0 billion globally.
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In contrast, our loan servicing, property management and valuations businesses, while a smaller part of our revenue mix, have proven to be more resilient than property sales, mortgage originations and leasing through periods of economic slowdown.
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We generate significant business from account-based occupier clients, where we are retained to negotiate leases for all or a portion of their portfolio. This results in recurring revenue over time. We believe we are the market leader for leasing services to both occupiers and owners in most leading U.S. metropolitan statistical areas (as defined by the U.S.
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For example, in the last five years, we have organically grown our loan servicing revenue at a low double digit compound annual growth rate (CAGR) and revenue in both property management and valuations at a mid-single digit CAGR, despite challenging macroeconomic conditions.
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Census Bureau), including Atlanta, Austin, Boston, Denver, Kansas City, Los Angeles, Minneapolis, New York, Phoenix, San Francisco, Seattle and St. Louis. Capital Markets and Mortgage Services We provide property sales and mortgage services, which are closely integrated to meet marketplace demand for comprehensive capital markets solutions. During 2022, we closed approximately $290.2 billion of property sales transactions globally.
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We remain committed to growing these resilient business lines further, particularly where there are clear and sustained demand tailwinds. 1 Table of Contents Global Workplace Solutions Global Workplace Solutions (GWS) is the leading global provider of integrated facilities management and project management solutions for major occupiers of commercial real estate.
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We are the leading property sales advisor globally. In the U.S., we accounted for approximately 15.6% of investment sales transactions greater than $2.5 million across all property types in 2022, according to Real Capital Analytics.
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This segment benefits from multiple tailwinds, most notably multi-national corporations’ increased desire to outsource and consolidate real estate services to optimize costs, operational efficiencies and workplace experiences. We serve, typically through multi-year contracts, large global corporations including many Fortune 500 firms through our GWS Enterprise business as well as smaller occupiers with more localized portfolios through our GWS Local business.
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Our mortgage brokerage professionals arrange, originate and service commercial mortgage loans through relationships established with investment banking firms, national and regional banks, credit companies, insurance companies, U.S. Government-Sponsored Enterprises (GSEs), and pension funds. In the U.S., our loan origination and sales volume in 2022 was $62.7 billion, including approximately $13.6 billion for U.S. GSEs.
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With facilities management experts in more than 100 countries, we perform mission-critical technical services and maintenance in more locations worldwide than any other provider. This allows us to deliver tailored property solutions at both a local and global level, while increasing quality and experience, reducing cost and mitigating risk.
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Most of the GSE loans were financed through revolving warehouse credit lines through a CBRE subsidiary that is dedicated exclusively for this purpose and were substantially risk mitigated by either obtaining a contractual purchase commitment from the GSE or confirming a forward-trade commitment for the issuance and purchase of a mortgage-backed security to be secured by the loan.
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We provide these services across virtually all asset types including offices, retail outlets, laboratories, data centers, manufacturing environments, warehouses and mission-critical facilities.
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We also oversee a loan servicing portfolio, which totaled approximately $381.2 billion globally at year-end 2022. In many countries that we operate in (including the U.S.), our real estate services professionals (both leasing and capital markets) are compensated primarily through commissions, which are payable upon completion of an assignment.
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We achieve growth by investing in (a) superior talent and processes that deliver account excellence; (b) capabilities to perform a wide range of technical services in-house that increase our clients’ real estate operational efficiency and reliability while reducing carbon emissions and lowering costs; (c) proprietary technology and data solutions that allow us to amass data at scale and deliver actionable insights to clients for managing complex challenges; and (d) ongoing acquisition activity, including larger companies such as Norland Managed Services, which marked our entry into the local facilities management space, and the Johnson Controls Global Workplace Solutions business, which substantially scaled our core enterprise facilities management business, as well as numerous in-fill transactions.
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This mitigates the effect of compensation, our largest expense, on our operating margins during difficult market conditions. We strive to retain top professionals through an attractive compensation program tied to productivity as well as investments in support resources, including professional development and training, market research and data/information, technology, branding and marketing.
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With our combined capabilities, we are a leading global, full-service building consulting, program, project and cost management provider, completing nearly 65,000 projects/programs and managing nearly $2.9 trillion in capital spend annually. We manage a wide range of programs and projects from small repairs/refurbishments in corporate facilities to massive infrastructure projects such as airports and power stations.
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Property Management Services We provide property management services on a contractual basis, primarily for owners of and investors in office, industrial and retail properties. These services include marketing, building engineering, lease administration, accounting and financial services. As of December 31, 2022, we managed 2.9 billion square feet of properties globally for property owners/investors.
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We also increasingly serve clients for net-zero program management and energy and sustainability solutions. Our scale, highly diverse capabilities and technology investments in this business allow us to solve our clients’ and industry’s biggest challenges in managing capital projects around the world. Real Estate Investments Real Estate Investments (REI) is a large real assets developer, investor and operator.
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We are compensated for our services through a monthly management fee earned based on either a specified percentage of the monthly rental income, rental receipts generated from the property under management or a fixed fee. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management.
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This segment is comprised of two businesses: investment management and real estate development. With more than $145 billion (as of December 31, 2023) in assets under management, CBRE Investment Management (IM) is one of the leading investment platforms in global real assets.
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Our management agreements with our property management services clients may be terminated by either party with notice generally ranging between 30 to 90 days; however, we have developed long-term relationships with many of these clients and the typical 2 Table of Contents contract continues for multiple years.
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The growth opportunity in this business is enhanced by investors’ growing appetite for investment alternatives, including real estate, that diversify their holdings and offer the potential for higher returns compared to traditional investment strategies. Much like other parts of our company, IM is diversified across many dimensions – investment strategies, sectors, geographies, risk profiles and execution formats.
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We believe our contractual relationships with these clients put us in an advantageous position to provide other services to them, including leasing, refinancing, disposition and appraisal. Valuation Services We provide valuation services that include market-value appraisals, litigation support, discounted cash flow analyses, feasibility studies as well as consulting services such as property condition reports, hotel advisory and environmental consulting.
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TCC has been the largest commercial developer in the U.S. for the last ten years and has a track record of developing best-in-class buildings across multiple property sectors in top-tier markets across the U.S. and Europe.
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Our valuation business has developed proprietary systems for data management, analysis and valuation report preparation, which we believe provide us with an advantage over our competitors. We believe that our valuation business is one of the largest in the commercial real estate industry.
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Our portfolio represents a diversified mix of projects that we either own 100% or participate economically via co-investment with strategic capital partners as well as fee-based developments, such as built-to-suit projects. Our in-process portfolio and pipeline totaled nearly $30 billion (as of December 31, 2023) and spanned industrial, office, multifamily residential, retail, life sciences and healthcare properties.
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During 2022, we completed over 667,249 valuation, appraisal and advisory assignments globally, including residential valuations in Asia Pacific. Global Workplace Solutions Global Workplace Solutions provides a broad suite of integrated, contractually based outsourcing services to occupiers of real estate, including facilities management and project management.
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We have a track record of generating high investment returns for the company and our capital partners and our conservative, risk-mitigated capital structures enable us to time asset dispositions when market circumstances are most favorable. 2 Table of Contents We drive growth in this segment by: (a) enabling REI’s real-time access to the broader CBRE global brand, boots-on-the-ground market intelligence, and IM’s and TCC’s own investments in research/data that enable them to identify early and invest in secularly favored markets/products with tailwinds; (b) leveraging CBRE’s balance sheet to create opportunities for co-investment alongside our investor clients in our fund vehicles and developments; and (c) benefiting from the strong and continued partnership between IM and TCC.
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We also offer account-based Advisory services, particularly leasing, property sales and portfolio administration, for Global Workplace Solutions clients.
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Corporate and Other Segment The Corporate and other segment houses most costs associated with our platform – the resources and infrastructure that support our professionals and support our growth – that are not allocated to the client-facing business segments, including corporate leadership costs.
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We believe the outsourcing of corporate real estate services is a long-term trend, with multi-national corporations, and other large occupiers of space utilizing global, full-service real estate firms to achieve better workplaces for their people, while endeavoring to lower their cost of occupancy.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFailure to comply with these requirements could result in the imposition of significant fines by governmental authorities, awards of damages to private litigants and significant amounts paid in legal fees or settlements of these matters. 22 Table of Contents Telford Homes, our residential development subsidiary in the U.K., is subject to certain recently promulgated U.K. laws and requirements that will obligate U.K. homebuilders to remediate or fund the remediation work relating to certain fire-safety issues on their constructed buildings.
Biggest changeFailure to comply with these requirements could result in the imposition of significant fines by governmental authorities, awards of damages to private litigants and significant amounts paid in legal fees or settlements of these matters.
If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans may be disrupted. Similarly, our employees require effective tools and techniques to perform functions integral to our business.
If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans may be disrupted. Similarly, our employees require effective tools, technologies and techniques to perform functions integral to our business.
In addition, international economic trends, foreign governmental policy actions and the following factors may have a material adverse effect on the performance of our business: • 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; • responsibility for complying with numerous, potentially conflicting and frequently complex and changing laws in multiple jurisdictions ( e.g. , with respect to data privacy and protection, corrupt practices, embargoes, trade sanctions, employment and licensing); • the impact of regional or country-specific business cycles and economic instability, including those related to public health or safety events; • greater difficulty in collecting accounts receivable or delays in client payments in some geographic regions; • rising interest rates and less available and more expensive debt capital resulting from efforts by central banks outside the U.S. to rein in inflation; • foreign ownership restrictions 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 towards multinational companies as a result of any such changes to laws or policies as well as other geopolitical risks.
International economic trends, foreign governmental policy actions and the following factors may have a material adverse effect on the performance of our business: • 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; • responsibility for complying with numerous, potentially conflicting and frequently complex and changing laws in multiple jurisdictions ( e.g. , with respect to data privacy and protection, sustainability, corrupt practices, embargoes, trade sanctions, employment and licensing); • the impact of regional or country-specific business cycles and economic instability, including those related to public health or safety events; • greater difficulty in collecting accounts receivable or delays in client payments in some geographic regions; • rising interest rates and less available and more expensive debt capital resulting from efforts by central banks outside the U.S. to rein in inflation; • foreign ownership restrictions 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 towards multinational companies as a result of any such changes to laws or policies as well as other geopolitical risks.
The techniques used to obtain unauthorized access, disable, or degrade service, or sabotage systems, change frequently, may be difficult to detect, and often are not recognized until launched against a target. To date, we have not yet experienced any cybersecurity breaches that have been material, either individually or in the aggregate.
The techniques used to obtain unauthorized access, disable, or degrade service, or sabotage systems, change frequently, may be difficult to detect, and often are not recognized until launched against a target. To date, we have not experienced any cybersecurity breaches that have been material, either individually or in the aggregate.
These investments are subject to risks related to the businesses in which we invest, which may be different than the risks inherent in our own business. Factors beyond our control can significantly influence the value of these investments and may cause their fair value to decrease or adversely impact our ability to recognize a gain on such investments.
These investments are subject to risks related to the businesses in which we invest, which may be different than the risks inherent in our own business. Factors beyond our control may significantly influence the value of these investments and may cause their fair value to decrease or adversely impact our ability to recognize a gain on such investments.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and potentially limit our ability to effectively refinance our indebtedness as it matures. Borrowings under certain of our indebtedness bear interest at variable rates and expose us to interest rate risk.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and potentially limit our ability to effectively refinance our indebtedness as it matures. Borrowings under certain of our debt instruments bear interest at variable rates and expose us to interest rate risk.
We have crises management, business continuity and disaster recovery plans and backup systems to reduce the potentially adverse effect of such events, but our disaster recovery planning may not be sufficient and cannot account for all eventualities, and a catastrophic event that results in the destruction or disruption of any of our data centers and third-party cloud hosting providers or our critical business or information technology systems could severely affect our ability to conduct normal business operations, and as a result, our future operating results could be materially adversely affected.
We have crisis management, business continuity and disaster recovery plans and backup systems to reduce the potentially adverse effect of such events, but our disaster recovery planning may not be sufficient and cannot account for all eventualities, and a catastrophic event that results in the destruction or disruption of any of our data centers and third-party cloud hosting providers or our critical business or information technology systems could severely affect our ability to conduct normal business operations, and as a result, our future operating results could be materially adversely affected.
Bribery Act and other antibribery, anti-money laundering and corruption laws, the use and protection of client and other sensitive information and from actions taken by regulators or others in response to such conduct.
Bribery Act and other anti-bribery, anti-money laundering and corruption laws, the use and protection of client and other sensitive information and from actions taken by regulators or others in response to such conduct.
Investors and potential investors in our programs continually assess our performance, and our ability to raise capital for existing and future programs and maintaining our current fee structure will depend on our continued satisfactory performance. 15 Table of Contents An important part of the strategy for our Real Estate Investments segment involves co-investing our capital in certain real estate investments with our clients, and there is an inherent risk of loss of our investments.
Investors and potential investors in our programs continually assess our performance, and our ability to raise capital for existing and future programs and maintaining our current fee structure will depend on our continued satisfactory performance. 11 Table of Contents An important part of the strategy for our Real Estate Investments segment involves co-investing our capital in certain real estate investments with our clients, and there is an inherent risk of loss of our investments.
Additionally, the revenues in all of our businesses are dependent to some extent on the overall volume of activity (and pricing) in the commercial real estate markets. 12 Table of Contents Disruptions in the credit markets may have a material adverse effect on our business of providing advisory services to owners, investors and occupiers of real estate in connection with the leasing, disposition and acquisition of property.
Additionally, the revenues in all of our businesses are dependent to some extent on the overall volume of activity (and pricing) in the commercial real estate markets. 8 Table of Contents Disruptions in the credit markets may have a material adverse effect on our business of providing advisory services to owners, investors and occupiers of real estate in connection with the leasing, disposition and acquisition of property.
In addition, a default under our credit agreements or senior notes could trigger a cross default or cross acceleration under our other debt instruments. 19 Table of Contents We have limited restrictions on the amount of additional recourse debt we are able to incur, which may intensify the risks associated with our leverage, including our ability to service our indebtedness.
In addition, a default under our credit agreements or senior notes could trigger a cross default or cross acceleration under our other debt instruments. 15 Table of Contents We have limited restrictions on the amount of additional recourse debt we are able to incur, which may intensify the risks associated with our leverage, including our ability to service our indebtedness.
Future acquisitions and any necessary related financings also may involve significant transaction-related expenses, which could include severance, lease termination, transaction and deferred financing costs, among others. 14 Table of Contents We have had, and may continue to experience, challenges in integrating operations and information technology systems acquired from other companies.
Future acquisitions and any necessary related financings also may involve significant transaction-related expenses, which could include severance, lease termination, transaction and deferred financing costs, among others. 10 Table of Contents We have had, and may continue to experience, challenges in integrating operations and information technology systems acquired from other companies.
A number of our services, including the services provided by our indirect wholly-owned subsidiaries, CBRE Capital Markets and CBRE Investment Management, are subject to regulation by the SEC, Financial Industry Regulatory Authority (FINRA), or other self-regulatory organizations and state securities regulators and compliance failures or regulatory action could adversely affect our business.
A number of our services, including the services provided by our indirect wholly-owned subsidiaries, CBRE Capital Markets and CBRE Investment Management, are subject to regulation by the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), or other self-regulatory organizations and state securities regulators and compliance failures or regulatory action could adversely affect our business.
Should we fail to accurately assess working capital requirements, the cash flow generated by this business may be adversely impacted. In addition, if we do not accurately assess the creditworthiness of a client or if a client’s creditworthiness changes during the term of the contract, we could potentially be unable to collect on any outstanding payments.
Should we fail to accurately assess working capital requirements, the cash flows generated by this business may be adversely impacted. In addition, if we do not accurately assess the creditworthiness of a client or if a client’s creditworthiness changes during the term of the contract, we could potentially be unable to collect on any outstanding payments.
Failure to successfully provide such tools and systems, or ensure that employees have properly adopted them, could materially and adversely impact our ability to achieve positive business outcomes. Interruption or failure of our information technology, communications systems or data services could impair our ability to provide our services effectively, which could damage our reputation and materially harm our operating results.
Failure to successfully provide such items, or ensure that employees have properly adopted them, could materially and adversely impact our ability to achieve positive business outcomes. Interruption or failure of our information technology, communications systems or data services could impair our ability to provide our services effectively, which could damage our reputation and materially harm our operating results.
Furthermore, while we have certain business interruption and cyber insurance coverage and various contractual 20 Table of Contents arrangements that can serve to mitigate costs, damages and liabilities, any such event could result in substantial recovery and remediation costs and liability to customers, business partners and other third parties.
Furthermore, while we have certain business interruption and cyber insurance coverage and various contractual arrangements 16 Table of Contents that can serve to mitigate costs, damages and liabilities, any such event could result in substantial recovery and remediation costs and liability to customers, business partners and other third parties.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and intellectual property, and that of our clients and personal information (also referred to as “personal data” or “personally identifiable information”) of our employees, contractors and vendors, in our data centers, networks and third-party cloud hosting providers.
In the ordinary course of our business, we collect and store confidential data, including our proprietary business information and intellectual property, and that of our clients and personal information (also referred to as “personal data” or “personally identifiable information”) of our employees, contractors and vendors, in our data centers, networks and third-party cloud hosting providers.
We compete across a variety of business disciplines within the commercial real estate services and investment industry, including property management, facilities management, project and transaction management, tenant and landlord leasing, capital markets solutions (property sales and commercial mortgage origination) and mortgage services, flexible space solutions, real estate investment management, valuation, loan servicing, development services and proprietary research.
We compete across a variety of business disciplines within the commercial real estate services and investment industry, including property management, facilities management, project and transaction management, tenant and landlord leasing, capital markets solutions (property sales and commercial mortgage origination) and mortgage services, real estate investment management, valuation, loan servicing, development services and proprietary research.
Additionally, liabilities incurred to comply with more stringent future environmental requirements could adversely affect any or all of our lines of business. 24 Table of Contents Risks Related to our Internal Controls and Accounting Policies If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and our results of operations and stock price could be materially adversely affected.
Additionally, liabilities incurred to comply with more stringent future environmental requirements could adversely affect any or all of our lines of business. 20 Table of Contents Risks Related to our Internal Controls and Accounting Policies If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and our results of operations and stock price could be materially adversely affected.
Our business is significantly affected by generally prevailing economic conditions in the markets where we operate. Adverse economic conditions, political or regulatory uncertainty and significant public health events can result in declines in real estate sale and leasing volumes and the value of commercial real estate.
Our business is significantly affected by generally prevailing economic conditions in the markets where we operate. Adverse economic conditions, political or regulatory uncertainty and significant public health events may result in declines in real estate sale and leasing volumes and the value of commercial real estate.
Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity would materially and adversely affect our revenues and profitability. Social media channels can also cause rapid, widespread reputational harm to our brand.
Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity would materially and adversely affect our revenues and profitability. Social media channels may also cause rapid, widespread reputational harm to our brand.
While certain of our executive officers and key employees are subject to long-term compensatory arrangements, there can be no assurance that we will be able to retain all key members of our senior management.
While certain of our executive officers and key employees are subject to long-term compensatory arrangements, there is no assurance that we will be able to retain all key members of our senior management.
In addition, the other participants and operators may become bankrupt or have economic or other business interests or goals that are inconsistent with 18 Table of Contents ours. If a joint venture participant or affiliate acts contrary to our interest, it could harm our brand, business, results of operations and financial condition.
In addition, the other participants and operators may become bankrupt or have economic or other business interests or goals that are inconsistent with ours. If a joint venture participant or affiliate acts contrary to our interest, it could harm our brand, business, results of operations and financial condition.
Under GDPR, fines of up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater, can be imposed for violations.
Under GDPR, fines of up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater, may be imposed for violations.
Failure to comply with these requirements may result in termination or withdrawal of our approval to sell and service the GSE loans. 16 Table of Contents A failure by third parties to comply with service level agreements or regulatory or legal requirements could result in economic and reputational harm to us.
Failure to comply with these requirements may result in termination or withdrawal of our approval to sell and service the GSE loans. A failure by third parties to comply with service level agreements or regulatory or legal requirements could result in economic and reputational harm to us.
Brokerage of real estate sales and leasing transactions and the provision of property management and valuation services require us and our employees to maintain applicable licenses in each U.S. state and certain non-U.S. jurisdictions in which we perform these services.
Brokerage of real estate sales and leasing transactions and the provision of property management and valuation services require us and our employees to maintain applicable licenses in each U.S. state and certain non-U.S. jurisdictions in 18 Table of Contents which we perform these services.
As a result, fires, earthquakes, floods, hurricanes, other natural disasters, building defects, acts of war, terrorist attacks, mass shootings or infrastructure disruptions can result in significant loss of life or injury, and, to the extent we are held to have been negligent in connection with our management of the affected properties, we could incur significant financial liabilities and reputational harm.
As a result, fires, earthquakes, floods, hurricanes, other 14 Table of Contents natural disasters, building defects, acts of war, terrorist attacks, mass shootings or infrastructure disruptions may result in significant loss of life or injury, and, to the extent we are held to have been negligent in connection with our management of the affected properties, we could incur significant financial liabilities and reputational harm.
Although we are the largest commercial real estate services firm in the world in terms of 2022 revenue, our relative competitive position varies significantly across geographies, property types and services and business lines.
Although we are the largest commercial real estate services firm in the world in terms of 2023 revenue, our relative competitive position varies across geographies, property types and services and business lines.
Because the disposition of a single significant investment can affect our financial performance in any period, our real estate investment activities could cause fluctuations in our net earnings and cash flow. In many cases, we have limited control over the timing of the disposition of these investments and the recognition of any related gain or loss, or incentive participation fee.
Because the disposition of a single significant investment may affect our financial performance in any period, our real estate investment activities could cause fluctuations in our earnings and cash flows. In many cases, we have limited control over the timing of the disposition of these investments and the recognition of any related gain or loss, or incentive participation fee.
The revenue, net income and cash flow generated by our investment management business line within our Real Estate Investments segment can be volatile primarily because the management, transaction and incentive fees can vary as a result of market movements.
The revenue, net income and cash flows generated by our investment management business line within our Real Estate Investments segment may be volatile primarily because the management, transaction and incentive fees may vary as a result of market movements.
Subject to the maximum amounts of indebtedness permitted by our credit agreement covenants, we are not restricted in the amount of additional recourse debt we are able to incur, and so we may in the future incur such indebtedness in order to finance our operations and investments.
Subject to the maximum amounts of indebtedness permitted by the covenants under our debt instruments, we are not restricted in the amount of additional recourse debt we are able to incur, and so we may in the future incur such indebtedness in order to finance our operations and investments.
These initiatives and goals within the scope of ESG could be difficult and expensive to implement and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
These initiatives and goals within the scope of ESG could be difficult and expensive to implement and we 19 Table of Contents could be criticized for the accuracy, adequacy or completeness of the disclosure.
The lenders under our credit agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings.
The lenders under our credit agreements also have the right in these circumstances to terminate any commitments they have to provide further borrowings thereunder.
Any of these events could cause system interruption, delays and loss, corruption or exposure of critical data or intellectual property and may also disrupt our ability to provide services to or interact with our clients, contractors and vendors, and we may not be able to successfully implement contingency plans that depend on communication or travel.
Any of these events could cause system interruption, delays and loss, corruption or exposure of data or intellectual property and may also disrupt our ability to provide services to or interact with our clients, contractors and vendors, and we may not be able to successfully implement contingency plans.
We are further subject to competition from large national and multi-national firms that have similar service and investment competencies to ours, and it is possible that further industry consolidation could lead to much larger and more formidable competitors globally or in the particular geographies, property types, service or business lines that we serve.
We also compete with large national and multi-national firms that have similar service and investment competencies to ours, and it is possible that further industry consolidation could lead to much larger and more formidable competitors globally or in the particular geographies, property types, service or business lines that we serve.
In the event that any of the investment programs that our investment management business manages were to perform poorly, our revenue, net income and cash flow could decline because the value of the assets we manage would decrease, which would result in a reduction in some of our management fees, and our investment returns would decrease, resulting in a reduction in the incentive compensation we earn.
In the event that any of the investment programs that our investment management business manages were to perform poorly, our revenue, net income and cash flows could decline, because the value of the assets we manage would decrease and thereby reduce our management fees and our investment returns, resulting in a reduction in the incentive compensation we earn.
It might become increasingly difficult to maintain effective standards across a large enterprise and effectively institutionalize our knowledge. It might also become more difficult to maintain our culture, effectively manage and monitor our personnel and operations and effectively communicate our core values, policies and procedures, strategies and goals.
Our global operations present significant management and organizational challenges. It might become increasingly difficult to maintain effective standards across a large enterprise and effectively institutionalize our knowledge. It might also become more difficult to maintain our culture, effectively manage and monitor our personnel and operations and effectively communicate our core values, policies and procedures, strategies and goals.
As of December 31, 2022, we had over $1.3 billion invested in certain companies and projects that we do not control that were accounted for under the cost method of accounting, equity method or fair value.
As of December 31, 2023, we had over $1.5 billion invested in certain companies and projects that we do not control that were accounted for under the cost/measurement alternative method of accounting, equity method or fair value.
As of December 31, 2022, our total debt, excluding notes payable on real estate (which are generally non-recourse to us) and warehouse lines of credit (which are recourse only to our wholly-owned subsidiary, CBRE Capital Markets, and are secured by our related warehouse receivables), was $1.7 billion. For the year ended December 31, 2022, our interest expense was $97.5 million.
As of December 31, 2023, our total debt, excluding notes payable on real estate (which are generally non-recourse to us) and warehouse lines of credit (which are recourse only to our wholly-owned subsidiary, CBRE Capital Markets, and are secured by our related warehouse receivables), was $2.8 billion. For the year ended December 31, 2023, our interest expense was $243.2 million.
If we are unable to attract and retain these qualified personnel, our growth may be limited, and our business and operating results could materially suffer. If we are unable to manage the organizational challenges associated with our global operations, we might be unable to achieve our business objectives . Our global operations present significant management and organizational challenges.
If we are unable to attract and retain these qualified personnel, our growth may be limited, and our business and operating results could materially suffer. 13 Table of Contents If we are unable to manage the organizational challenges associated with our global operations, we might be unable to achieve our business objectives .
Cyberattacks and viruses pose growing threats to many companies, and we have been a target and may continue to be a target of such threats, which could expose us to liability, reputational harm and significant remediation costs and cause material harm to our business and financial results.
Cyberattacks and malware pose growing threats to many companies, and we, as well as our third-party service providers, have been a target and may continue to be a target of such threats, which could expose us to liability, reputational harm and significant remediation costs and cause material harm to our business and financial results.
If our clients are unable to obtain credit on favorable terms, there may be fewer property leasing, disposition and acquisition transactions. For example, in the second half of 2022, central banks around the world sharply raised interest rates in efforts to rein in inflation, reducing credit availability.
If our clients are unable to obtain credit on favorable terms, there may be fewer property leasing, disposition and acquisition transactions. For example, in 2023, central banks around the world continued to raise interest rates in efforts to rein in inflation, reducing credit availability.
If we are unable to adequately address such ESG matters or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, or if we or our borrowers fail or are perceived to fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results. 23 Table of Contents Exposure to additional tax liabilities and changes in tax laws and regulations could adversely affect our financial results.
If we are unable to adequately address such ESG matters or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, or if we or our borrowers fail or are perceived to fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results.
We may not be successful in complying with regulations in all situations and violations may result in criminal or material civil sanctions and other costs against us or our employees, and may have a material adverse effect on our reputation and business. Furthermore, our efforts to comply with developments in these laws may adversely impact our business.
We may not be successful in complying with regulations in all situations and violations may result in criminal or material civil sanctions and other costs against us or our employees, and may have a material adverse effect on our reputation and business.
For example, developing and acting on new or ongoing initiatives within the scope of ESG, and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming and subject to evolving reporting standards, including the SEC’s recently proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
For example, developing and acting on new or ongoing initiatives within the scope of ESG, and collecting, measuring and reporting ESG related information and metrics may be costly, difficult and time consuming and subject to evolving reporting standards, including the SEC’s proposed climate-related reporting requirements, California’s Climate Corporate Data Accountability Act and Greenhouse Gases: Climate-related Financial Risk Act, and similar proposals by other international regulatory bodies.
The aggregate costs and liabilities related to these remediations are uncertain and may be material. In the event Telford Homes is unable to satisfy its obligations and liabilities under such government requirements and U.K. laws, Telford Homes and potentially its affiliates could face material business interruption, litigation, liabilities and reputational damage.
In the event Telford Homes is unable to satisfy its obligations and liabilities under such government requirements and U.K. laws, Telford Homes and potentially its affiliates could face material business interruption, litigation, liabilities and reputational damage.
In the future, we may acquire more equity investments that are not consolidated and may sponsor additional special purpose acquisition companies (SPACs), which could increase our exposure to the risks described above. 25 Table of Contents Item 1B. Unresolved Staff Comments. None.
In the future, we may acquire more equity investments that are not consolidated, which could increase our exposure to the risks described above. Item 1B. Unresolved Staff Comments. None. 21 Table of Contents
For example, the European Union General Data Protection Regulation (GDPR) became effective on May 25, 2018, and has resulted and will continue to result in significantly greater compliance burdens and costs for businesses with users and operations in the European Union (EU) and European Economic Area (EEA), including with respect to cross-border transfers of personal information.
For example, the European Union General Data Protection Regulation (GDPR) became effective on May 25, 2018, and has resulted and will continue to result in significantly greater compliance burdens and costs for businesses established in the European Union (EU) or European Economic Area (EEA) or who are established outside the EU or EEA and offer goods or services, or monitor the behavior of individuals located in the EU or EEA, including with respect to cross-border transfers of personal information.
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.
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.
Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results.
Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results. Our operations are subject to international social, political and economic risks in foreign countries.
As of December 31, 2022, we were involved as a principal in 29 real estate projects that were consolidated in our financial statements with invested equity of $471.8 million and co-invested with our clients in approximately 135 unconsolidated real estate projects with a net investment of $283.0 million.
As of December 31, 2023, we were involved as a principal in 36 real estate projects that were consolidated in our financial statements with invested equity of $526.7 million and co-invested with our clients in approximately 132 unconsolidated real estate projects with a net investment of $358.8 million.
In addition, changes in tax laws or regulations, including developments arising from proposed U.S. tax legislation, the final form of which is uncertain and multi-jurisdictional changes enacted in response to the action items provided by the Organization for Economic Co-operation and Development (OECD), increase tax uncertainty and could impact the company’s effective tax rate and provision for income taxes.
In addition, changes in tax laws or regulations and multi-jurisdictional changes enacted in response to the action items provided by the Organization for Economic Co-operation and Development (OECD) increase tax uncertainty and could impact the company’s effective tax rate and provision for income taxes.
As of December 31, 2022, we had a net investment of approximately $339.8 million and had committed $106.9 million to fund future co-investments in our investment funds, approximately $47.3 million of which is expected to be funded during 2023.
As of December 31, 2023, we had a net investment of approximately $337.0 million and had committed $180.4 million to fund future co-investments in our investment funds, approximately $128.0 million of which is expected to be funded during 2024.
Risks Related to Our Operations We have numerous local, regional and global competitors across all of our business lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition.
The political and cultural risks present in emerging countries could also harm our ability to successfully execute our operations or manage our businesses there. We have numerous local, regional and global competitors across all of our business lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition.
We had committed additional capital of $81.0 million and $85.9 million to consolidated and unconsolidated projects, respectively, as of December 31, 2022.
We had committed additional capital of $230.1 million and $73.9 million to consolidated and unconsolidated projects, respectively, as of December 31, 2023.
In addition, from time to time, we have made, and may continue to make, changes to our operating model, including how we are organized, as the needs and size of our business change.
In addition, from time to time, we have made, and may continue to make, changes to our operating model, including how we are organized, as the needs and size of our business change. If we do not successfully implement any such changes, our business and results of operation may be negatively and materially impacted.
Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of these inherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud.
The accuracy of our financial reporting is dependent on the effectiveness of our internal controls. Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud.
We have approximately 115,000 employees (excluding Turner & Townsend employees) as well as independent contractors working in over 100 countries. We have undertaken to implement what we believe to be best practices to safeguard the health, safety and security of our employees, independent contractors, clients and others at our worksites.
We have undertaken to implement what we believe to be best practices to safeguard the health, safety and security of our employees, independent contractors, clients and others at our worksites.
These laws and regulations are increasing in severity, complexity and number, change frequently, and increasingly conflict among the various jurisdictions in which we operate, which has resulted in greater 21 Table of Contents compliance risk and cost for us.
These laws and regulations are increasing in severity, complexity and number, change frequently, and increasingly conflict among the various jurisdictions in which we operate, which has resulted in greater compliance risk and cost for us. In addition, we are also subject to the possibility of security breaches and other incidents, which themselves may result in a violation of these laws.
Infrastructure disruptions may disrupt our ability to manage real estate for clients or may adversely affect the value of real estate investments we make on behalf of clients. Our ability to conduct a global business may be adversely impacted by disruptions to the infrastructure that supports our businesses and the communities in which they are located.
Our ability to conduct a global business may be adversely impacted by disruptions to the infrastructure that supports our businesses and the communities in which they are located.
Our operations are subject to social, political and economic risks in foreign 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 U.S. and, as a result, we are subject to risks associated with doing business globally.
Risks Related to Our Operations Currency fluctuations could have a material adverse effect on our business, financial condition and operating results. We conduct a significant portion of our business and employ a substantial number of people outside of the U.S. and, as a result, we are subject to risks associated with doing business globally.
We operate in many jurisdictions with complex and varied tax regimes and are subject to different forms of taxation resulting in a variable effective tax rate. Due to the different tax laws in the many jurisdictions where we operate, we are often required to make subjective determinations.
Exposure to additional tax liabilities and changes in tax laws and regulations could adversely affect our financial results. We operate in many jurisdictions with complex and varied tax regimes and are subject to different forms of taxation resulting in a variable effective tax rate.
For example, in 2022, we exited most of our business in Russia in light of newly adopted U.S. sanctions. 13 Table of Contents We have committed additional resources to expand our worldwide sales and marketing activities, to globalize our service offerings and products in select markets and to develop local sales and support channels.
Furthermore, our efforts to comply with developments in these laws may adversely impact our business. 9 Table of Contents We have committed additional resources to expand our worldwide sales and marketing activities, to globalize our service offerings and products in select markets and to develop local sales and support channels.
Although many of our existing competitors are local or regional firms that are smaller than we are, some of these competitors are larger on a local or regional basis.
Some of our competitors are larger than us on a local or regional basis despite having a smaller global footprint.
In addition, the California Consumer Privacy Act of 2018 (CCPA) took effect on January 1, 2020, which broadly defines personal information, gives California residents expanded privacy rights and protections, and provides for civil penalties for certain violations.
In the U.S., the California Consumer Privacy Act of 2018 (as amended by the California Privacy Rights Act of 2020) broadly defines personal information, gives California residents expanded privacy rights and protections, and provides for civil penalties for certain violations, and established a regulatory agency dedicated to enforcing those requirements.
For example, during the onset of the Covid-19 pandemic, commercial real estate markets globally were severely impacted by a sharp decline in economic activity due to the spread of Covid-19, which put downward pressure on certain parts of our business, and has likely engendered structural changes to the utilization of many types of commercial real estate, which will have ongoing repercussions for our business.
For example, in 2023, commercial real estate capital markets remained under significant pressure. As a result, we experienced a sustained slowdown in property sales and debt financing activity. Furthermore, the Covid-19 pandemic engendered structural changes to the utilization of many types of commercial real estate, which will likely have ongoing repercussions for our business.
During the year ended December 31, 2022, approximately 43% of our revenue was transacted in foreign currencies. Fluctuations in foreign currency exchange rates may result in corresponding fluctuations in revenue and earnings as well as the assets under management for our investment management business, which could have a material adverse effect on our business, financial condition and operating results.
As a result, the strengthening or weakening of the U.S. dollar will positively or negatively impact our reported results, including revenue and earnings as well as the assets under management for our investment management business, which could have a material adverse effect on our business, financial condition and operating results.
A significant portion of our loan origination and servicing business depends upon our relationships with U.S. Government Sponsored Enterprises.
Where competitive pressures result in higher levels of potential liability under our contracts, the cost of operational errors and other activities for which we have indemnified our clients will be greater and may not be fully insured. A significant portion of our loan origination and servicing business depends upon our relationships with U.S. Government Sponsored Enterprises.
If we do not successfully implement any such changes, our business and results of operation may be negatively and materially impacted. 17 Table of Contents Our policies, procedures and programs to safeguard the health, safety and security of our employees and others may not be adequate.
Our policies, procedures and programs to safeguard the health, safety and security of our employees and others may not be adequate. We have approximately 130,000 employees (including Turner & Townsend employees) as well as independent contractors working in over 100 countries.
Removed
We maintain anti-corruption and anti-money-laundering compliance programs throughout the company as well as programs designed to enable us to comply with any potential government economic sanctions, embargoes or other import/export controls. However, coordinating our activities to deal with the broad range of complex legal and regulatory environments in which we operate presents significant challenges.
Added
During the year ended December 31, 2023, approximately 45% of our revenue was transacted in foreign currencies. We also report our results in U.S. dollars.
Removed
The political and cultural risks present in emerging countries could also harm our ability to successfully execute our operations or manage our businesses there.
Added
Our international operations require us to comply with a broad range of complex legal and regulatory environments in which we operate.
Removed
A significant portion of our revenue is seasonal, which could cause our financial results to fluctuate significantly. A significant portion of our revenue is seasonal. Historically, our revenue, operating income, net income and cash flow from operating activities tend to be lowest in the first calendar quarter, and highest in the fourth calendar quarter of each year.
Added
We have concentrations of business with large clients, which may cause increased credit risk and greater impact from the loss of certain clients and increased risks from higher limitations of liability in contracts.
Removed
Earnings and cash flow have generally been concentrated in the fourth calendar quarter due to the focus on completing sales, financing and leasing transactions prior to calendar year-end. This variance among periods makes it difficult to compare our financial condition and results of operations on a quarter-by-quarter basis.
Added
Having large and concentrated clients may lead to greater or more concentrated risks of loss if, among other possibilities, such a client (i) experiences its own financial problems, which may lead to larger individual credit risks; (ii) becomes bankrupt or insolvent, which may lead to our failure to be paid for services we have previously provided or funds we have previously advanced; (iii) decides to reduce its real estate operations; (iv) makes a change in its real estate strategy; (v) decides to change its providers of real estate services; or (vi) 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.
Removed
In addition, as a result of the seasonal nature of our business, political, economic or other unforeseen disruptions occurring in the fourth quarter, particularly those that impact our ability to close large transactions, may have a proportionally larger effect on our financial condition and results of operations.
Added
In addition, competitive conditions, particularly in connection with increasingly large clients, may require us to compromise on certain contract terms with respect to the payment of fees, the extent of risk transfer, or acting as principal rather than agent in connection with supplier relationships, liability limitations, credit terms and other contractual 12 Table of Contents terms, or in connection with disputes or potential litigation.
Removed
Furthermore, in November 2020, California voters passed the California Privacy Rights and Enforcement Act of 2020 (CPRA), which amends and expands CCPA with additional data privacy compliance requirements and establishes a regulatory agency dedicated to enforcing those requirements.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed3 unchanged
Biggest changeAs of December 31, 2022, we occupied offices, excluding affiliates, in the following geographical regions: Sales Offices (1) Corporate Offices Total Americas 255 1 256 Europe, Middle East and Africa (EMEA) 250 1 251 Asia Pacific 149 1 150 Total 654 3 657 _______________ (1) Includes 122 offices of Turner & Townsend, including 33 in the Americas, 58, in EMEA, and 31 offices in APAC regions.
Biggest changeAs of December 31, 2023, we occupied offices, excluding affiliates, in the following geographical regions: Sales Offices (1) Corporate Offices Total Americas 258 1 259 Europe, Middle East and Africa (EMEA) 257 1 258 Asia Pacific 160 1 161 Total 675 3 678 ________________________________________________________________________________________________________________________________________ (1) Includes 124 offices of Turner & Townsend, including 36 in the Americas, 58 in EMEA, and 30 offices in APAC regions.
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 may negatively affect our profits in those markets when we enter into new leases. 23 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 4. Mine Safety Disclosures. Not applicable. 26 Table of Contents PART II
Biggest changeItem 4. Mine Safety Disclosures. Not applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−1 removed5 unchanged
Biggest change(EXHO.PA) from our peer group given that facilities management is a relatively small portion of Sodexo’s overall service offerings. The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2017 and tracks it through December 31, 2022.
Biggest changeThe graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2018 and tracks it through December 31, 2023. Our stock price performance shown in the graph below is not necessarily indicative of future stock price performance.
The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors. 27 Table of Contents Stock Performance Graph The graph below matches the 5 Year Cumulative Total Return of holders of CBRE Group, Inc.’s common stock with the cumulative total returns of the S&P 500 Index and a customized peer group of eight companies that includes: JLL, a global commercial real estate services company publicly traded in the U.S., as well as the following companies that have significant commercial real estate or real estate capital markets businesses within the U.S. or globally, that in each case are publicly traded in the U.S. or abroad: Colliers International Group Inc.
The timing of any future repurchases and the actual amounts repurchased will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and other factors. 25 Table of Contents Stock Performance Graph The graph below matches the 5 Year Cumulative Total Return of holders of CBRE Group, Inc.’s common stock with the cumulative total returns of the S&P 500 Index and a customized peer group of eight companies that includes: JLL, a global commercial real estate services company publicly traded in the U.S., as well as the following companies that have significant commercial real estate or real estate capital markets businesses within the U.S. or globally, that in each case are publicly traded in the U.S. or abroad: Colliers International Group Inc.
All rights reserved. 28 Table of Contents 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 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 the Exchange Act.
All rights reserved. 26 Table of Contents 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 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 the Exchange Act.
Fiscal year ending December 31. (2) Copyright© 2023 Standard & Poor’s, a division of S&P Global.
Fiscal year ending December 31. (2) Copyright© 2024 Standard & Poor’s, a division of S&P Global.
(CIGI), Cushman & Wakefield plc (CWK), ISS A/S (ISS), Marcus & Millichap, Inc. (MMI), Newmark Group Inc. (NMRK), Savills plc (SVS.L), and Walker & Dunlop, Inc. (WD). These companies are or include divisions with business lines reasonably comparable to some or all of ours, and which represent our current primary competitors. In 2022, we elected to remove Sodexo S.A.
(CIGI), Cushman & Wakefield plc (CWK), ISS A/S (ISS), Marcus & Millichap, Inc. (MMI), Newmark Group Inc. (NMRK), Savills plc (SVS.L), and Walker & Dunlop, Inc. (WD). These companies are or include divisions with business lines reasonably comparable to some or all of ours, and which represent our current primary competitors.
The remaining $2.1 billion in the table represents the amount available to repurchase shares under the 2021 program as of December 31, 2022. Our stock repurchase program does not obligate us to acquire any specific number of shares.
The remaining $1.5 billion in the table represents the amount available to repurchase shares under the 2021 program as of December 31, 2023. Our stock repurchase program does not obligate us to acquire any specific number of shares.
Prior to that, from June 10, 2004 to March 18, 2018, our Class A common stock traded on the NYSE under the symbol “CBG.” As of February 16, 2023, there were 47 stockholders of record of our Class A common stock. This figure does not include beneficial owners who hold shares in nominee name.
Prior to that, from June 10, 2004 to March 18, 2018, our Class A common stock traded on the NYSE under the symbol “CBG.” As of February 15, 2024, there were 44 stockholders of record of our Class A common stock. This figure does not include beneficial owners who hold shares in nominee name.
In August 2022, our board of directors authorized an additional $2.0 billion under this program, bringing the total authorized amount under the 2021 program to a total of $4.0 billion. During the fourth quarter of 2022, we repurchased $451.0 million of our common stock under the 2021 program.
In August 2022, our board of directors authorized an additional $2.0 billion under this program, bringing the total authorized amount under the 2021 program to a total of $4.0 billion. During the fourth quarter of 2023, we repurchased an aggregate of $19.6 million of our common stock under the 2021 program.
Issuer Purchases of Equity Securities Open market share repurchase activity during the three months ended December 31, 2022 was as follows (dollars in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2022 - October 31, 2022 1,710,392 $ 70.10 1,710,392 November 1, 2022 - November 30, 2022 2,103,417 73.53 2,103,417 December 1, 2022 - December 31, 2022 2,293,711 76.90 2,293,711 6,107,520 $ 73.84 6,107,520 $ 2,115,795 _______________ (1) In November 2021, our board of directors authorized a program for the company to repurchase up to $2.0 billion of our Class A common stock over five years, effective November 19, 2021 (the “2021 program”).
Issuer Purchases of Equity Securities Open market share repurchase activity during the three months ended December 31, 2023 was as follows (dollars in millions, except per share amounts): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 - October 31, 2023 204,786 $ 68.36 204,786 November 1, 2023 - November 30, 2023 80,468 69.51 80,468 December 1, 2023 - December 31, 2023 — — — 285,254 $ 68.69 285,254 $ 1,466 ________________________________________________________________________________________________________________________________________ (1) In November 2021, our board of directors authorized a program for the company to repurchase up to $2.0 billion of our Class A common stock over five years, effective November 19, 2021 (the 2021 program).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (1) AMONG CBRE GROUP, INC., THE S&P 500 INDEX (2) , A 2021 PEER GROUP AND A 2022 PEER GROUP 12/31/17 12/18 12/19 12/20 12/21 12/22 CBRE Group, Inc. $ 100.00 $ 92.45 $ 141.51 $ 144.82 $ 250.54 $ 177.70 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 2021 Peer Group 100.00 74.55 105.11 85.40 124.37 83.72 2022 Peer Group 100.00 73.92 105.47 86.74 127.84 83.14 _______________ (1) $100 invested on December 31, 2017 in stock or index-including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (1) AMONG CBRE GROUP, INC., THE S&P 500 INDEX (2) , AND PEER GROUP 12/31/18 12/19 12/20 12/21 12/22 12/23 CBRE Group, Inc. $ 100.00 $ 153.07 $ 156.64 $ 271.00 $ 192.21 $ 232.49 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 Peer Group 100.00 142.68 117.35 172.95 112.48 127.72 ________________________________________________________________________________________________________________________________________ (1) $100 invested on December 31, 2018 in stock or index-including reinvestment of dividends.
Removed
Our stock price performance shown in the graph below is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

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

99 edited+65 added−129 removed25 unchanged
Biggest changeWe also use core EBITDA as a significant component when measuring our operating performance under our employee incentive compensation programs. 37 Table of Contents Consolidated adjusted EBITDA and core EBITDA are calculated as follows (dollars in thousands): Year Ended December 31, 2022 2021 Net income attributable to CBRE Group, Inc. $ 1,407,370 $ 1,836,574 Net income attributable to non-controlling interests 16,590 5,341 Net income 1,423,960 1,841,915 Add: Depreciation and amortization 613,088 525,871 Asset impairments 58,713 — Interest expense, net of interest income 68,999 50,352 Write-off of financing costs on extinguished debt 1,860 — Provision for income taxes 234,230 567,506 Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue (4,228) 49,941 Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period (5,115) (5,725) Costs incurred related to legal entity restructuring 13,447 — Integration and other costs related to acquisitions 40,702 44,552 Costs associated with efficiency and cost-reduction initiatives 117,534 — Provision associated with Telford’s fire safety remediation efforts 185,921 — Consolidated Adjusted EBITDA $ 2,749,111 $ 3,074,412 Adjustments: Net fair value adjustments on strategic non-core investments 175,153 (54,354) Net gain on deconsolidation upon merger of the SPAC with and into Altus Power, net of associated costs — (156,405) Core EBITDA $ 2,924,264 $ 2,863,653 38 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 We reported consolidated net income of $1.4 billion for the year ended December 31, 2022 on revenue of $30.8 billion as compared to consolidated net income of $1.8 billion on revenue of $27.7 billion for the year ended December 31, 2021.
Biggest changeWe also use core EBITDA and core EPS as significant components when measuring our operating performance under our employee incentive compensation programs. 45 Table of Contents Core EBITDA is calculated as follows (dollars in millions): Year Ended December 31, 2023 2022 Net income attributable to CBRE Group, Inc. $ 986 $ 1,407 Net income attributable to non-controlling interests 41 17 Net income 1,027 1,424 Adjustments: Depreciation and amortization 622 613 Asset impairments — 59 Interest expense, net of interest income 149 69 Write-off of financing costs on extinguished debt — 2 Provision for income taxes 250 234 Carried interest incentive compensation reversal to align with the timing of associated revenue (7) (4) Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period — (5) Costs incurred related to legal entity restructuring 13 13 Integration and other costs related to acquisitions 62 40 Costs associated with efficiency and cost-reduction initiatives 159 118 Provision associated with Telford’s fire safety remediation efforts — 186 One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired (34) — Net fair value adjustments on strategic non-core investments (32) 175 Core EBITDA $ 2,209 $ 2,924 Core net income attributable to CBRE Group, Inc. stockholders, as adjusted (or core adjusted net income), and core EPS, are calculated as follows (in millions, except share and per share data): Year Ended December 31, 2023 2022 Net income attributable to CBRE Group, Inc. $ 986 $ 1,407 Plus / minus: Carried interest incentive compensation reversal to align with the timing of associated revenue (7) (4) Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period — (5) Costs incurred related to legal entity restructuring 13 13 Integration and other costs related to acquisitions 62 40 Costs associated with efficiency and cost-reduction initiatives 159 118 Provision associated with Telford’s fire safety remediation efforts — 186 One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired (34) — Net fair value adjustments on strategic non-core investments (32) 175 Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions 167 166 Asset impairments — 59 Write-off of financing costs on extinguished debt — 2 Tax impact of adjusted items, tax benefit attributable to legal entity restructuring, and strategic non-core investments (82) (254) Impact of adjustments on non-controlling interest (33) (40) Core net income attributable to CBRE Group, Inc., as adjusted $ 1,199 $ 1,863 Core diluted income per share attributable to CBRE Group, Inc., as adjusted $ 3.84 $ 5.69 Weighted average shares outstanding for diluted income per share 312,550,942 327,696,115 46 Table of Contents Net revenue and gross revenue from resilient business lines is calculated as follows (dollars in millions): Year Ended December 31, 2023 2022 Net revenue from resilient business lines Facilities management $ 5,806 $ 5,137 Property management 1,840 1,777 Project management 3,124 2,735 Valuation 716 765 Loan servicing 317 311 Asset management fees (1) 539 536 Total net revenue from resilient business lines 12,342 11,261 Pass through costs also recognized as revenue 13,673 12,051 Total revenue from resilient business lines $ 26,015 $ 23,312 ________________________________________________________________________________________________________________________________________ (1) Asset management fees is included in Investment management revenue. 47 Table of Contents
(2) The majority of this balance represents our warehouse lines of credit, which are recourse only to our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) and are secured by our related warehouse receivables. See Notes 5 and 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.
(2) The majority of this balance represents our warehouse lines of credit, which are recourse only to our wholly-owned subsidiary CBRE Capital Markets, Inc. (CBRE Capital Markets) and are secured by our related warehouse receivables. See Notes 5 and 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
We have historically relied on our internally generated cash flow and our revolving credit facilities to fund our working capital, capital expenditure and general investment requirements (including strategic in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements.
We have historically relied on our internally generated cash flow and our revolving credit facilities to fund our working capital, capital expenditure and general investment requirements (including in-fill acquisitions) and have not sought other external sources of financing to help fund these requirements.
For information about our future estimated payment obligations for these plans, see Note 14 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report. _______________ (1) Reflects gross outstanding long-term debt balances as of December 31, 2022, assumed to be paid at maturity, excluding unamortized discount, premium and deferred financing costs.
For information about our future estimated payment obligations for these plans, see Note 14 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. ________________________________________________________________________________________________________________________________________ (1) Reflects gross outstanding long-term debt balances as of December 31, 2023, assumed to be paid at maturity, excluding unamortized discount, premium and deferred financing costs.
These measures may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt.
This measures may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt.
(6) Represents outstanding reserves for claims under certain insurance programs, which are included in other current and other long-term liabilities in the consolidated balance sheets at December 31, 2022 set forth in Item 8 of this Annual Report. Due to the nature of this item, payments could be due at any time upon the occurrence of certain events.
(6) Represents outstanding reserves for claims under certain insurance programs, which are included in other current and other long-term liabilities in the consolidated balance sheets at December 31, 2023 set forth in Item 8 of this Annual Report. Due to the nature of this item, payments could be due at any time upon the occurrence of certain events.
These significant judgements include: (i) determining what point in time or what measure of progress depicts the transfer of control to the customer; (ii) applying the series guidance to certain performance obligations satisfied over 30 Table of Contents time; (iii) estimating how and when contingencies, or other forms of variable consideration, will impact the timing and amount of recognition of revenue and (iv) determining whether we control third party services before they are transferred to the customer in order to appropriately recognize the associated fees on either a gross or net basis.
These significant judgements include: (i) determining what point in time or what measure of progress depicts the transfer of control to the customer; (ii) applying the series guidance to certain performance obligations satisfied over time; (iii) estimating how and when contingencies, or other forms of variable consideration, will impact the timing and amount of recognition of revenue and (iv) determining whether we control third party services before they are transferred to the customer in order to appropriately recognize the associated fees on either a gross or net basis.
The estimated costs for in-scope buildings are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control.
The estimated remediation costs for in-scope buildings are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control.
(4) Reflects gross outstanding notes payable on real estate as of December 31, 2022 (none of which is recourse to us, beyond being recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable), assumed to be paid at maturity, excluding unamortized deferred financing costs.
(4) Reflects gross outstanding notes payable on real estate as of December 31, 2023 (none of which is recourse to us, beyond being recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable), assumed to be paid at maturity, excluding unamortized deferred financing costs.
For additional information on all of our long-term debt, see Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. Short-Term Borrowings On August 5, 2022, we entered into a new 5-year senior unsecured Revolving Credit Agreement (the “Revolving Credit Agreement”).
For additional information on all of our long-term debt, see Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. Short-Term Borrowings On August 5, 2022, we entered into a new 5-year senior unsecured Revolving Credit Agreement (the Revolving Credit Agreement).
While we believe the resulting tax balances as of December 31, 2022 and 2021 are appropriately accounted for in accordance with Topic 740, as applicable, the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material.
While we believe the resulting tax balances as of December 31, 2023 and 2022 are appropriately accounted for in accordance with Topic 740, as applicable, the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material.
Accordingly, the entire balance has been reflected as expiring in less than one year. (7) As of December 31, 2022, we have a remaining federal tax liability of $54.8 million associated with the Transition Tax on mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.
Accordingly, the entire balance has been reflected as expiring in less than one year. (7) As of December 31, 2023, we have a remaining federal tax liability of $54.8 million associated with the Transition Tax on mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.
(3) See Note 12 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.
(3) See Note 12 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
Our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. 46 Table of Contents Corporate and Other Our Corporate segment primarily consists of corporate overhead costs.
Our calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. 36 Table of Contents Corporate and Other Our Corporate segment primarily consists of corporate overhead costs.
For additional information on business combinations, goodwill and intangible asset impairment testing, see Notes 2 and 9 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
For additional information on goodwill and intangible asset impairment testing, see Notes 2 and 9 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
Because not all companies use identical calculations, our presentation of net revenue, core EBITDA and consolidated adjusted EBITDA may not be comparable to similarly titled measures of other companies. Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients and generally has no margin.
Because not all companies use identical calculations, our presentation of net revenue, core EBITDA, core adjusted net income and core EPS may not be comparable to similarly titled measures of other companies. Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients and generally has no margin.
Letters of credit are issued in the ordinary course of business and would reduce the amount we may borrow under the Revolving Credit Agreement. 53 Table of Contents In addition, Turner & Townsend maintains a £120.0 million revolving credit facility pursuant to a credit agreement dated March 31, 2022, with an additional accordion option of £20.0 million.
Letters of credit are issued in the ordinary course of business and would reduce the amount we may borrow under the Revolving Credit Agreement. In addition, Turner & Townsend maintains a £120.0 million revolving credit facility pursuant to a credit agreement dated March 31, 2022, with an additional accordion option of £20.0 million.
Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. 31 Table of Contents Accounting for tax positions requires judgments, including estimating reserves for potential uncertainties.
Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Accounting for tax positions requires judgments, including estimating reserves for potential uncertainties.
Business Combinations, Goodwill and Other Intangible Assets Our acquisitions require the application of purchase accounting, which results in tangible and identifiable intangible assets and liabilities of the acquired entity being recorded at fair value. The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill.
Our acquisitions require the application of purchase accounting, which results in tangible and identifiable intangible assets and liabilities of the acquired entity being recorded at fair value. The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill.
Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1. The amount of the 4.875% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheet was $596.4 million and $595.5 million at December 31, 2022 and 2021, respectively.
Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1 of each year. The amount of the 4.875% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheet was $597.5 million and $596.4 million at December 31, 2023 and 2022, respectively.
In the absence of extraordinary events or a large strategic acquisition, we anticipate that our cash flow from operations and our revolving credit facilities would be sufficient to meet our anticipated cash requirements for the foreseeable future, and at a minimum for the next 12 months.
In the absence of extraordinary events, large strategic acquisitions or large returns of capital to shareholders, we anticipate that our cash flow from operations and our revolving credit facilities would be sufficient to meet our anticipated cash requirements for the foreseeable future, and at a minimum for the next 12 months.
(5) Represents deferred obligations related to previous acquisitions, which are included in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets at December 31, 2022 set forth in Item 8 of this Annual Report.
(5) Represents deferred obligations, excluding contingent considerations, related to previous acquisitions, which are included in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets at December 31, 2023 set forth in Item 8 of this Annual Report.
As of December 31, 2022, we had $3.5 billion of borrowings available under our revolving credit facilities (under both the Revolving Credit Agreement, as described below, and the Turner & Townsend revolving credit facility) and $1.3 billion of cash and cash equivalents.
As of December 31, 2023, we had $3.7 billion of borrowings available under our revolving credit facilities (under both the Revolving Credit Agreement, as described below, and the Turner & Townsend revolving credit facility) and $1.3 billion of cash and cash equivalents.
We generate revenue from stable, recurring sources (large multi-year portfolio and per project contracts) and from cyclical, non-recurring sources, including commissions on transactions. Our revenue mix has become heavily weighted towards stable revenue sources, particularly occupier outsourcing, and our dependence on cyclical property sales and lease transaction revenue has declined.
Business.” We generate revenue from both stable, resilient sources (large multi-year portfolio and per-project contracts) and non-recurring sources, including commissions on transactions. Our revenue mix has become more weighted towards resilient revenue sources, particularly occupier outsourcing, and our dependence on cyclical property sales and lease transaction revenue has declined.
A roll forward of our AUM by product type for the year ended December 31, 2022 is as follows (dollars in billions): Funds Separate Accounts Securities Total Balance at December 31, 2021 $ 56.6 $ 73.6 $ 11.7 $ 141.9 Inflows 15.6 10.8 2.7 29.1 Outflows (5.1) (8.0) (1.9) (15.0) Market depreciation (0.9) (3.2) (2.6) (6.7) Balance at December 31, 2022 $ 66.2 $ 73.2 $ 9.9 $ 149.3 AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, securities portfolios and investments in operating companies and joint ventures.
A roll forward of our assets under management (AUM) by product type for the year ended December 31, 2023 is as follows (dollars in billions): Funds Separate Accounts Securities Total Balance at December 31, 2022 $ 66.2 $ 73.2 $ 9.9 $ 149.3 Inflows 4.2 6.4 1.2 11.8 Outflows (3.1) (4.2) (2.1) (9.4) Market (depreciation) appreciation (2.0) (2.6) 0.4 (4.2) Balance at December 31, 2023 $ 65.3 $ 72.8 $ 9.4 $ 147.5 AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, securities portfolios and investments in operating companies and joint ventures.
We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act. The next installment is due in 2024 for the 2023 fiscal year. In addition, as of December 31, 2022, our gross unrecognized tax benefits, totaled $391.4 million.
We are paying the federal tax liability for the Transition Tax in annual interest-free installments over a period of eight years through 2025 as allowed by the Tax Act. The next installment is due in 2024 for the 2023 fiscal year. In addition, as of December 31, 2023, the total amount of gross unrecognized tax benefits totaled $413.5 million.
These include, but are not limited to, the time required for the remediation to be completed, the size and number of buildings that may require remediation, cost of construction or remediation materials, availability of construction materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, availability of qualified fire safety engineers, potential business disruption costs, potential changes to or new regulations and regulatory approval.
These include, but are not limited to, individual remediation requirements for each building, the time required for the remediation to be completed, cost of construction or remediation materials, availability of construction materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, availability of qualified fire safety engineers, potential business disruption costs, potential changes to or new regulations and regulatory approval.
See Note 11 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report. Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make $205.1 million of interest payments, $51.1 million of which will be made in 2023.
See Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make $965.6 million of interest payments, $144.8 million of which will be made in 2024.
We have the option to perform a qualitative assessment with respect to any of our reporting units to determine whether a quantitative impairment test is needed.
We have the option to perform a qualitative assessment with respect to any of our reporting units and indefinite-lived intangible assets to determine whether a quantitative impairment test is needed.
As of December 31, 2022 and 2021, we had accrued deferred purchase consideration totaling $574.3 million ($117.3 million of which was a current liability) and $630.1 million ($32.0 million of which was a current liability), respectively, which was included in “Accounts payable and accrued expenses” and in “Other liabilities” in the accompanying consolidated balance sheets set forth in Item 8 of this Annual Report.
As of December 31, 2023 and 2022, we had accrued deferred purchase consideration totaling $530.2 million ($264.1 million of which was a current liability) and $574.3 million ($117.3 million of which was a current liability), respectively, which was included in “Accounts payable and accrued expenses” and in “Other long-term liabilities” in the accompanying consolidated balance sheets set forth in Item 8 of this Annual Report.
Consolidated adjusted EBITDA and core EBITDA are not intended to be a measure of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments.
Core EBITDA, core adjusted net income and core EPS are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments.
For the year ended December 31, 2021, MSRs contributed $185.1 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $172.3 million of amortization of related intangible assets. The decline was associated with lower origination activity given the higher cost of debt.
For the year ended December 31, 2022, MSRs contributed $134.1 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $163.7 million of amortization of related intangible assets. The decrease in gains was associated with lower origination activity given the higher cost of debt.
We are permitted to assess based on qualitative factors whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the quantitative goodwill impairment test.
We are permitted to assess based on qualitative factors whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount before applying the quantitative impairment test.
Since these values impact the amount of annual depreciation and amortization expense, different assumptions could also impact our statement of operations and could impact the results of future asset impairment reviews.
Different assumptions could result in different values being attributed to assets and liabilities. Since these values impact the amount of annual depreciation and amortization expense, different assumptions could also impact our statement of operations and could impact the results of future asset impairment reviews.
(9) Includes $106.9 million to fund future co-investments in our Real Estate Investments segment, $47.3 million of which is expected to be funded in 2023, and $85.9 million committed to invest in unconsolidated real estate subsidiaries, which is callable at any time. This amount does not include capital committed to consolidated projects of $81.0 million as of December 31, 2022.
(9) Includes $180.4 million to fund future co-investments in our Real Estate Investments segment, $128.0 million of which is expected to be funded in 2024, and $73.9 million committed to invest in unconsolidated real estate subsidiaries, which is callable at any time. This amount does not include capital committed to consolidated projects of $230.1 million as of December 31, 2023.
Additionally, as of December 31, 2022, we are committed to fund additional capital of $81.0 million and $85.9 million to consolidated and unconsolidated projects, respectively, within our Real Estate Investments segment.
Additionally, as of December 31, 2023, we are committed to fund additional capital of $230.1 million and $73.9 million to consolidated and unconsolidated projects, respectively, within our Real Estate Investments segment.
Segment operating profit on net revenue margin is computed by dividing segment operating profit by net revenue and is a better indicator of the segment’s margin since it does not include the diluting effect of pass through revenue which generally has no margin. We use core EBITDA and consolidated adjusted EBITDA as indicators of consolidated financial performance.
Segment operating profit on net revenue margin is computed by dividing segment operating profit by net revenue and is a better indicator of the segment’s margin since it does not include the diluting effect of pass through revenue which generally has no margin.
It also includes eliminations related to inter-segment revenue. For additional information on our segments, see Note 19 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
For additional information on our segments, see Note 19 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
Lastly, as described in Note 16 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, in 2019, our board of directors authorized a program for the repurchase of up to $500.0 million of our Class A common stock over three years (the 2019 program).
Lastly, as described in Note 16 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report, in November 2021, our board of directors authorized a program for the company to repurchase up to $2.0 billion of our Class A common stock over five years, effective November 19, 2021 (the 2021 program).
For the year ended December 31, 2022, MSRs contributed to operating income $134.1 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $163.7 million of amortization of related intangible assets.
For the year ended December 31, 2023, MSRs contributed to operating income $83.8 million of gains recognized in conjunction with the origination and sale of mortgage loans, offset by $144.0 million of amortization of related intangible assets.
In addition, the Revolving Credit Agreement also includes capacity for letters of credit of an outstanding aggregate amount of $300.0 million. As of December 31, 2022, $178.0 million was outstanding under the Revolving Credit Agreement. No letters of credit were outstanding as of December 31, 2022. As of February 16, 2023, $438.0 million was outstanding under the Revolving Credit Agreement.
In addition, the Revolving Credit Agreement also includes capacity for letters of credit not to exceed $300.0 million in the aggregate. As of December 31, 2023, no amount was outstanding under the Revolving Credit Agreement. No letters of credit were outstanding as of December 31, 2023.
Foreign currency translation had a 4.1% positive impact on total cost of revenue during the year ended December 31, 2022.
Foreign currency translation had a negligible impact on total cost of revenue during the year ended December 31, 2023.
As of December 31, 2022 and February 16, 2023, respectively, $31.9 million (£26.3 million) and $31.6 million (£26.3 million) was outstanding under this revolving credit facility and bears interest at SONIA plus 0.75%. We also maintain warehouse lines of credit with certain third-party lenders.
As of December 31, 2023, $10.2 million (£8.0 million) was outstanding under this revolving credit facility and bears interest at SONIA plus 0.75%. We also maintain warehouse lines of credit with certain third-party lenders.
Our acquisition structures often include deferred and/or contingent purchase consideration in future periods that are subject to the passage of time or achievement of certain performance metrics and other conditions.
The second long-term liquidity need is the payment of obligations related to acquisitions. Our acquisition structures often include deferred and/or contingent purchase consideration in future periods that are subject to the passage of time or achievement of certain performance metrics and other conditions.
In addition, rising price levels across the economy required us to increase compensation expense to retain top talent and our development businesses incurred higher input costs for construction materials. On the other hand, we believe that parts of our business have protections against inflation.
Persistent inflation across the economy also required us to increase compensation expense to retain top talent and our development businesses incurred higher input costs for construction materials. On the other hand, we believe that contractual provisions in some parts of our business provide some protection against inflation.
As of December 31, 2022, we had aggregate future commitments of $106.9 million related to co-investments funds in our Real Estate Investments segment, $47.3 million of which is expected to be funded in 2023.
As of December 31, 2023, we had aggregate future commitments of $180.4 million related to co-investments funds in our Real Estate Investments segment, $128.0 million of which is expected to be funded in 2024.
Our 2022 Credit Agreement, Revolving Credit Agreement, 4.875% senior notes and 2.500% senior notes remain fully and unconditionally guaranteed by CBRE Group, Inc. Combined summarized financial information for CBRE Group, Inc.
Our Revolving Credit Agreement, 5.950% senior notes, 4.875% senior notes and 2.500% senior notes are fully and unconditionally guaranteed by CBRE Group, Inc. 41 Table of Contents Combined summarized financial information for CBRE Group, Inc.
Amounts do not include scheduled interest payments. The notes have either fixed or variable interest rates, ranging from 2.25% to 7.50% at December 31, 2022.
Amounts do not include scheduled interest payments. The notes have either fixed or variable interest rates, ranging from 3.00% to 9.00% at December 31, 2023.
This is primarily comprised of net unfavorable activity related to unrealized and realized gain/loss on equity and available for sale debt securities owned by our wholly-owned captive insurance company. These mark to market adjustments were in a net unfavorable position this year compared to the prior year.
Other income was approximately $7.6 million in 2023 versus a loss of $12.2 million in 2022. This is primarily comprised of net activity related to unrealized and realized gain/loss on equity and available for sale debt securities owned by our wholly-owned captive insurance company. These mark-to-market adjustments were in a net unfavorable position in 2022.
Our expected capital requirements for 2023 include up to approximately $326.8 million of anticipated capital expenditures, net of tenant concessions. During the year ended December 31, 2022, we incurred $248.5 million of capital expenditures, net of tenant concessions received.
Our expected capital requirements for 2024 include up to $319.9 million of anticipated capital expenditures, net of tenant concessions. During the year ended December 31, 2023, we incurred $293.2 million of capital expenditures, net of tenant concessions received.
(8) See Note 13 of our Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report.
New Accounting Pronouncements See New Accounting Pronouncements discussion within Note 3 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
The Revolving Credit Agreement provides for a senior unsecured revolving credit facility available to CBRE Services with a capacity of $3.5 billion and a maturity date of August 5, 2027.
The Revolving Credit Agreement provides for a senior unsecured revolving credit facility available to CBRE Services with a capacity of $3.5 billion and a maturity date of August 5, 2027. The Revolving Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused).
Consolidated adjusted EBITDA represents earnings before the portion attributable to non-controlling interests, net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, costs associated with efficiency and cost-reduction initiatives, and a provision associated with Telford’s fire safety remediation efforts.
Core EBITDA and core adjusted net income exclude carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, efficiency and cost-reduction initiatives, integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, a one-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired, fair value changes on certain non-core non-controlling equity investments, non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities and related impact on income taxes and non-controlling interest.
For a detailed discussion of our revenue recognition policies, see the Revenue Recognition section within Note 2 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
For a detailed discussion of our revenue recognition policies, see the Revenue Recognition section within Note 2 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. Goodwill and Other Intangible Assets As of December 31, 2023, our consolidated balance sheet included goodwill of $5.1 billion and other intangible assets of $2.1 billion.
(10) Due to the nature of guarantees, payments could be due at any time upon the occurrence of certain triggering events, including default.
(10) Due to the nature of guarantees, payments could be due at any time upon the occurrence of certain triggering events, including default. Accordingly, all guarantees are reflected as expiring in less than one year.
The charges are attributable to the effect of elevated inflation on construction, materials and labor costs, which will reduce Telford Homes’ profitability because the sales prices for the build-to-rent developments are fixed at the time the developments are sold to a long-term investor.
The Telford Homes charges were attributable to the effect of elevated inflation on construction, materials and labor costs, which reduced profitability because sales prices for the build-to-rent developments were fixed at the time the developments were sold to a long-term investor. Gain on disposition of real estate decreased by $216.9 million in 2023.
In connection with the origination and sale of mortgage loans for which the company retains servicing rights, we record servicing assets or liabilities based on the fair value of the retained mortgage servicing rights (MSRs) on the date the loans are sold.
Foreign currency translation had a 0.3% benefit on total operating expenses during the year ended December 31, 2023. In connection with the origination and sale of mortgage loans for which the company retains servicing rights, we record servicing assets or liabilities based on the fair value of the retained mortgage servicing rights (MSRs) on the date the loans are sold.
During the year ended December 31, 2022, we repurchased 22,275,498 shares of our Class A common stock with an average price of $80.74 per share using cash on hand for $1.8 billion under the 2021 program. As of December 31, 2022 and February 16, 2023, respectively, we had $2.1 billion and $2.0 billion of capacity remaining under the 2021 program.
During the year ended December 31, 2023, we repurchased 7,867,348 shares of our Class A common stock with an average price of $82.59 per share using cash on hand for an aggregate of $649.8 million. As of December 31, 2023, we had $1.5 billion of capacity remaining under the 2021 program.
The first is the repayment of the outstanding and anticipated principal amounts of our long-term indebtedness. If our cash flow is insufficient to repay our long-term debt when it comes due, then we expect that we would need to refinance such indebtedness or otherwise amend its terms to extend the maturity dates.
If our cash flow is insufficient to repay our long-term debt when it comes due, then we expect that we would need to refinance such indebtedness or otherwise amend its terms to extend the maturity dates. We cannot make any assurances that such refinancing or amendments would be available on attractive terms, if at all.
We believe that the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements.
The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We believe that the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements.
The amount of the 2.500% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheet was $489.3 million and $488.1 million at December 31, 2022 and 2021, respectively.
Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year. The amount of the 2.500% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheet was $490.4 million and $489.3 million at December 31, 2023 and 2022, respectively.
We recorded $10.4 million in asset impairment related to our exit of the Advisory Services business in Russia; $26.4 million and $21.9 million of non-cash goodwill impairment and trade name impairment charges, respectively, in our Real Estate Investment segment related to Telford Homes.
We did not record any asset impairments in 2023 versus $58.7 million in 2022, including $10.4 million related to our exit of the Advisory Services business in Russia; $26.4 million for non-cash goodwill impairment and $21.9 million for non-cash trade name impairment both related to Telford Homes in our REI segment.
We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise.
We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise. As noted above, we believe that any future significant acquisitions we may make could require us to obtain additional debt or equity financing.
We are responsible for determining the valuation of assets and liabilities and for the allocation of purchase price to assets acquired and liabilities assumed. Assumptions must often be made in determining fair values, particularly where observable market values do not exist. Assumptions may include discount rates, growth rates, cost of capital, royalty rates, tax rates and remaining useful lives.
Assumptions must often be made in determining fair values, particularly where observable market values do not exist. Assumptions may include discount rates, growth rates, cost of capital, royalty rates, tax rates and remaining useful lives. These assumptions can have a significant impact on the value of identifiable assets and accordingly can impact the value of goodwill recorded.
The indentures governing our 4.875% senior notes and 2.500% senior notes contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. 52 Table of Contents On May 21, 2021, all existing subsidiary guarantors were released from their guarantees of our 2022 Credit Agreement, 4.875% senior notes and 2.500% senior notes.
The indentures governing our 5.950% senior notes, 4.875% senior notes and 2.500% senior notes contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. Our 2023 Credit Agreement is fully and unconditionally guaranteed by CBRE Group, Inc. and CBRE Services.
Of this amount, we can reasonably estimate that none will require cash settlement in less than one year. We are unable to reasonably estimate the timing of the effective settlement of tax positions for the gross amount. See Note 15 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
Of this amount, we expect an insignificant amount of cash settlement in less than one year. See Note 15 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report. (8) See Note 13 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
The following table summarizes our results of operations for our Corporate and other segment for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, (1) 2022 2021 Elimination of inter-segment revenue $ (16,090) $ (20,356) Costs and expenses: Cost of revenue (2) (10,458) (13,264) Operating, administrative and other 431,242 452,384 Depreciation and amortization 33,002 28,606 Operating loss (469,876) (488,082) Equity (loss) income from unconsolidated subsidiaries (167,348) 36,858 Other (loss) income (18,836) 205,763 Add-back: Depreciation and amortization 33,002 28,606 Adjustments: Costs incurred related to legal entity restructuring 13,447 — Costs associated with efficiency and cost-reduction initiatives 31,383 — Segment operating loss $ (578,228) $ (216,855) _______________ (1) Percentage of revenue calculations are not meaningful and therefore not included.
The following table summarizes our results of operations for our Corporate and other segment for the years ended December 31, 2023 and 2022 (dollars in millions): Year Ended December 31, (1) 2023 2022 Elimination of inter-segment revenue $ (17) $ (16) Costs and expenses: Cost of revenue (2) (3) (11) Operating, administrative and other 460 432 Depreciation and amortization 56 33 Total costs and expenses 513 454 Operating loss (530) (470) Equity income (loss) from unconsolidated subsidiaries 27 (167) Other income (loss) 13 (19) Add-back: Depreciation and amortization 56 33 Adjustments: Integration and other costs related to acquisitions 39 — Costs incurred related to legal entity restructuring 13 13 Costs associated with efficiency and cost-reduction initiatives 14 32 Segment operating loss $ (368) $ (578) ________________________________________________________________________________________________________________________________________ (1) Percentage of revenue calculations are not meaningful and therefore not included.
(2) Primarily relates to inter-segment eliminations. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Core corporate Operating, administrative and other expenses for our core corporate function remained relatively flat at approximately $430.0 million during the year ended December 31, 2022, as compared to $427.6 million for the prior year.
(2) Primarily relates to inter-segment eliminations. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Core corporate Operating, administrative and other expenses for our core corporate function were approximately $458.7 million in 2023, an increase of $28.6 million, or 6.7%.
This increase was primarily attributable to amortization of backlog and customer relationship intangibles from the acquisition of Turner & Townsend, with minimal comparable activity in the prior period. 44 Table of Contents Real Estate Investments The following table summarizes our results of operations for our Real Estate Investments (REI) operating segment for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 2021 Revenue: Investment management $ 594,867 53.6 % $ 556,154 50.9 % Development services 514,742 46.4 % 535,562 49.1 % Total segment revenue 1,109,609 100.0 % 1,091,716 100.0 % Costs and expenses: Cost of revenue 322,152 29.0 % 349,432 32.0 % Operating, administrative and other 1,082,231 97.5 % 896,375 82.1 % Depreciation and amortization 16,250 1.5 % 27,111 2.5 % Asset impairments 48,362 4.4 % — 0.0 % Total costs and expenses 1,468,995 132.4 % 1,272,918 116.6 % Gain on disposition of real estate 244,391 22.0 % 70,993 6.5 % Operating loss (114,995) (10.4) % (110,209) (10.1) % Equity income from unconsolidated subsidiaries 380,566 34.3 % 555,341 50.9 % Other (loss) income (1,066) (0.1) % 3,542 0.3 % Add-back: Depreciation and amortization 16,250 1.5 % 27,111 2.5 % Add-back: Asset impairments 48,362 4.4 % — 0.0 % Adjustments: Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue (4,228) (0.4) % 49,941 4.6 % Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period (5,115) (0.5) % (5,725) (0.5) % Costs associate with efficiency and cost-reduction initiatives 12,499 1.1 % — 0.0 % Provision associated with Telford’s fire safety remediation efforts 185,921 16.8 % — 0.0 % Segment operating profit and segment operating profit on revenue margin $ 518,194 46.7 % $ 520,001 47.6 % Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue increased by $17.9 million, or 1.6%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by an increase in investment management fees supported by net growth in assets under management, offset by lower carried interest revenue, and lower real estate sales, development and construction management fees, in our development business, primarily in the U.K.
Depreciation and amortization expense increased by $9.2 million, or 3.6%, in 2023 due to continued investment in technology. 34 Table of Contents Real Estate Investments The following table summarizes our results of operations for our Real Estate Investments (REI) operating segment for the years ended December 31, 2023 and 2022 (dollars in millions): Year Ended December 31, 2023 2022 Revenue: Investment management $ 592 62.1 % $ 595 53.6 % Development services 360 37.9 % 515 46.4 % Total segment revenue 952 100.0 % 1,110 100.0 % Costs and expenses: Cost of revenue 186 19.5 % 322 29.0 % Operating, administrative and other 784 82.4 % 1,082 97.5 % Depreciation and amortization 15 1.6 % 16 1.5 % Asset impairments — 0.0 % 49 4.4 % Total costs and expenses 985 103.5 % 1,469 132.4 % Gain on disposition of real estate 27 2.9 % 244 22.0 % Operating loss (6) (0.6) % (115) (10.4) % Equity income from unconsolidated subsidiaries 216 22.6 % 380 34.3 % Other income (loss) — 0.0 % (1) (0.1) % Add-back: Depreciation and amortization 15 1.6 % 16 1.5 % Add-back: Asset impairments — 0.0 % 49 4.4 % Adjustments: Carried interest incentive compensation reversal to align with the timing of associated revenue (7) (0.8) % (4) (0.4) % Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period — 0.0 % (5) (0.5) % Costs associated with efficiency and cost-reduction initiatives 21 2.3 % 12 1.1 % Provision associated with Telford’s fire safety remediation efforts — 0.0 % 186 16.8 % Segment operating profit and segment operating profit on revenue margin $ 239 25.1 % $ 518 46.7 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Macroeconomic conditions had a significant impact on the REI segment.
Management’s judgment is required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margin percentages, discount rates, etc.
When performing a quantitative test, we use a discounted cash flow approach to estimate the fair value of our reporting units and indefinite-lived intangible assets. Management’s judgment is required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margin percentages, discount rates, etc.
This MD&A should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. Discussion regarding our financial condition and results of operations for the year ended December 31, 2021 and comparisons between the years ended December 31, 2021 and 2020 is included in Part II, Item 7.
Discussion regarding our financial condition and results of operations for the year ended December 31, 2022 and comparisons between the years ended December 31, 2022 and 2021 are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s 2022 Annual Report filed with the SEC on February 27, 2023.
We estimate the fair market value on a recurring basis using significant unobservable inputs which requires judgment due to the absence of market prices or similar assets in active markets. In determining the estimated fair value of these investments, we utilize appropriate valuation techniques including discounted cash flow analyses and Monte Carlo simulations.
Such investments without readily determinable fair values are classified as Level 3 in the fair value hierarchy. We estimate the fair market value on a recurring basis using significant unobservable inputs which requires judgment due to the absence of market prices or similar assets in active markets.
We continue to evaluate the impact of the legislation and forthcoming administrative guidance and regulations to our financial statements and results of operations. 40 Table of Contents Segment Operations We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions; and (3) Real Estate Investments.
Based on our initial assessment we anticipate Pillar Two top-up taxes to be immaterial. 31 Table of Contents Segment Operations We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions; and (3) Real Estate Investments. We also have a Corporate and other segment.
Amortization expense during the year ended December 31, 2022 decreased by $6.2 million, as compared to the same period in 2021, primarily due to lower amortization on the MSRs. 42 Table of Contents Global Workplace Solutions The following table summarizes our results of operations for our Global Workplace Solutions operating segment for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 2021 Revenue: Net revenue: Facilities management $ 5,136,565 25.9 % $ 4,872,230 28.5 % Project management 2,735,113 13.8 % 1,537,215 9.0 % Total segment net revenue 7,871,678 39.7 % 6,409,445 37.5 % Pass through costs also recognized as revenue 11,979,543 60.3 % 10,689,472 62.5 % Total segment revenue 19,851,221 100.0 % 17,098,917 100.0 % Costs and expenses: Cost of revenue 17,947,859 90.4 % 15,601,137 91.2 % Operating, administrative and other 1,080,493 5.4 % 839,117 4.9 % Depreciation and amortization 253,013 1.3 % 158,757 0.9 % Total costs and expenses 19,281,365 97.1 % 16,599,011 97.1 % Operating income 569,856 2.9 % 499,906 3.0 % Equity income from unconsolidated subsidiaries 1,118 0.0 % 1,720 0.0 % Other income 6,615 0.0 % 3,104 0.1 % Add-back: Depreciation and amortization 253,013 1.3 % 158,757 0.9 % Adjustments: Integration and other costs related to acquisitions 40,702 0.2 % 44,552 0.3 % Costs associated with efficiency and cost-reduction initiatives 27,917 0.1 % — 0.0 % Segment operating profit and segment operating profit on revenue margin $ 899,221 4.5 % $ 708,039 4.1 % Segment operating profit on net revenue margin 11.4 % 11.0 % 43 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue increased by $2.8 billion, or 16.1%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Depreciation and amortization expense decreased mainly due to lower amortization expense compared with 2022, when loan payoffs in our Capital Markets loan servicing business increased amortization. 33 Table of Contents Global Workplace Solutions The following table summarizes our results of operations for our Global Workplace Solutions (GWS) operating segment for the years ended December 31, 2023 and 2022 (dollars in millions): Year Ended December 31, 2023 2022 Revenue: Net revenue: Facilities management $ 5,806 25.8 % $ 5,137 25.9 % Project management 3,124 13.9 % 2,735 13.8 % Total segment net revenue 8,930 39.7 % 7,872 39.7 % Pass through costs also recognized as revenue 13,585 60.3 % 11,979 60.3 % Total segment revenue 22,515 100.0 % 19,851 100.0 % Costs and expenses: Cost of revenue 20,345 90.4 % 17,948 90.4 % Operating, administrative and other 1,242 5.5 % 1,080 5.4 % Depreciation and amortization 262 1.2 % 253 1.3 % Total costs and expenses 21,849 97.1 % 19,281 97.1 % Operating income 666 2.9 % 570 2.9 % Equity income from unconsolidated subsidiaries 1 0.0 % 1 0.0 % Other income 2 0.0 % 7 0.0 % Add-back: Depreciation and amortization 262 1.2 % 253 1.3 % Adjustments: Integration and other costs related to acquisitions 23 0.1 % 40 0.2 % Costs associated with efficiency and cost-reduction initiatives 52 0.3 % 28 0.1 % Segment operating profit and segment operating profit on revenue margin $ 1,006 4.5 % $ 899 4.5 % Segment operating profit on net revenue margin 11.3 % 11.4 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue increased by $2.7 billion, or 13.4%, in 2023, driven by new clients and expansion of services to existing clients, augmented by in-fill acquisitions.
Foreign currency translation had a 6.7% negative impact on total revenue during the year ended December 31, 2022 primarily driven by weakness in the British pound sterling and euro. Cost of revenue decreased by $27.3 million, or 7.8%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Foreign currency translation had a negligible impact on total revenue during the year ended December 31, 2023. Cost of revenue decreased by $136.3 million, or 42.3%, in 2023.
However, it is possible that we may not be able to obtain acquisition financing on favorable terms, or at all, in the future. Our long-term liquidity needs, other than those related to ordinary course obligations and commitments such as operating leases, are generally comprised of three elements.
Our long-term liquidity needs, other than those related to ordinary course obligations and commitments such as operating leases, are generally comprised of three elements. The first is the repayment of the outstanding and anticipated principal amounts of our long-term indebtedness.
Key inputs to the discounted cash flow analyses include projected cash flows, terminal growth rate, and discount rate. Key inputs to Monte Carlo simulations include stock price, volatility, risk free rate, and dividend yield.
In determining the estimated fair value of these investments, we utilize appropriate valuation techniques including discounted cash flow analyses and Monte Carlo simulations. Key inputs to the discounted cash flow analyses include projected cash flows, terminal growth rate, and discount rate.
Financing Activities Net cash used in financing activities totaled $1.8 billion for the year ended December 31, 2022, an increase of $1.3 billion as compared to the year ended December 31, 2021.
Historical Cash Flows Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Operating Activities Net cash provided by operating activities totaled $479.9 million for the year ended December 31, 2023, a decrease of $1.1 billion as compared to the year ended December 31, 2022.
See Note 15 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for further information regarding income taxes.
See Note 22 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for further information. Investments in unconsolidated subsidiaries – fair value option We have elected the fair value option for certain of our investments in non-public entities to align with our strategy for these investments.
Advisory Services The following table summarizes our results of operations for our Advisory Services operating segment for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 2021 Revenue: Net revenue: Property management $ 1,777,477 18.0 % $ 1,691,948 17.7 % Valuation 764,453 7.7 % 733,523 7.7 % Loan servicing 311,492 3.2 % 305,736 3.2 % Advisory leasing 3,872,379 39.2 % 3,306,548 34.5 % Capital markets: Advisory sales 2,522,728 25.5 % 2,789,573 29.1 % Commercial mortgage origination 562,807 5.7 % 701,368 7.3 % Total segment net revenue 9,811,336 99.3 % 9,528,696 99.5 % Pass through costs also recognized as revenue 72,170 0.7 % 47,063 0.5 % Total segment revenue 9,883,506 100.0 % 9,575,759 100.0 % Costs and expenses: Cost of revenue 5,979,935 60.5 % 5,642,202 58.9 % Operating, administrative and other 2,055,494 20.8 % 1,886,308 19.7 % Depreciation and amortization 310,823 3.1 % 311,397 3.3 % Asset impairments 10,351 0.1 % — 0.0 % Total costs and expenses 8,356,603 84.5 % 7,839,907 81.9 % Gain on disposition of real estate 27 0.0 % — 0.0 % Operating income 1,526,930 15.5 % 1,735,852 18.1 % Equity income from unconsolidated subsidiaries 14,662 0.1 % 24,778 0.3 % Other income (loss) 1,423 0.0 % (8,800) (0.1) % Add-back: Depreciation and amortization 310,823 3.1 % 311,397 3.3 % Add-back: Asset impairments 10,351 0.1 % — 0.0 % Adjustments: Costs associated with efficiency and cost-reduction initiatives 45,735 0.5 % — 0.0 % Segment operating profit and segment operating profit on revenue margin $ 1,909,924 19.3 % $ 2,063,227 21.5 % Segment operating profit on net revenue margin 19.5 % 21.7 % 41 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue increased by $307.7 million, or 3.2%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021 driven by growth in leasing, valuation and property management, offset by a significant decline in capital markets (property sales and commercial mortgage origination) business.
Advisory Services The following table summarizes our results of operations for our Advisory Services operating segment for the years ended December 31, 2023 and 2022 (dollars in millions): Year Ended December 31, 2023 2022 Revenue: Net revenue: Property management $ 1,840 21.7 % $ 1,777 18.0 % Valuation 716 8.4 % 765 7.7 % Loan servicing 317 3.7 % 311 3.2 % Advisory leasing 3,503 41.2 % 3,872 39.2 % Capital markets: Advisory sales 1,611 19.0 % 2,523 25.5 % Commercial mortgage origination 424 5.0 % 563 5.7 % Total segment net revenue 8,411 99.0 % 9,811 99.3 % Pass through costs also recognized as revenue 88 1.0 % 72 0.7 % Total segment revenue 8,499 100.0 % 9,883 100.0 % Costs and expenses: Cost of revenue 5,147 60.6 % 5,980 60.5 % Operating, administrative and other 2,076 24.4 % 2,055 20.8 % Depreciation and amortization 289 3.4 % 311 3.1 % Asset impairments — 0.0 % 10 0.1 % Total costs and expenses 7,512 88.4 % 8,356 84.5 % Operating income 987 11.6 % 1,527 15.5 % Equity income from unconsolidated subsidiaries 4 0.0 % 15 0.1 % Other income 46 0.5 % 1 0.0 % Add-back: Depreciation and amortization 289 3.4 % 311 3.1 % Add-back: Asset impairments — 0.0 % 10 0.1 % Adjustments: One-time gain associated with remeasuring an investment in an unconsolidated subsidiary to fair value as of the date the remaining controlling interest was acquired (34) (0.4) % — 0.0 % Costs associated with efficiency and cost-reduction initiatives 72 0.9 % 46 0.5 % Segment operating profit and segment operating profit on revenue margin $ 1,364 16.0 % $ 1,910 19.3 % Segment operating profit on net revenue margin 16.2 % 19.5 % 32 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue decreased by $1.4 billion, or 14.0%, in 2023 with declines across most lines of business, except property management and loan servicing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+15 added−1 removed1 unchanged
Biggest changeWe apply FASB ASC (Topic 815), “ Derivatives and Hedging, ” when accounting for derivative financial instruments. In all cases, we view derivative financial instruments as a risk management tool and, accordingly, do not use derivatives for trading or speculative purposes. Exchange Rates Our foreign operations expose us to fluctuations in foreign exchange rates.
Biggest changeIn all cases, we view derivative financial instruments as a risk management tool and, accordingly, do not use derivatives for trading or speculative purposes. International Operations We conduct a significant portion of our business and employ a substantial number of people outside the U.S. As a result, we are subject to risks associated with doing business globally.
If interest rates were to increase 100 basis points on our outstanding variable rate debt at December 31, 2022, the net impact of the additional interest cost would be a decrease of $6.4 million on pre-tax income and a decrease of $6.4 million in cash provided by operating activities for the year ended December 31, 2022. 54 Table of Contents
If interest rates were to increase 100 basis points on our outstanding variable rate debt at December 31, 2023, the net impact of the additional interest cost would be a decrease of $7.6 million on pre-tax income and a decrease of $7.6 million in cash provided by operating activities for the year ended December 31, 2023. 49 Table of Contents
The estimated fair value of our senior term loans was approximately $424.6 million at December 31, 2022. Based on dealers’ quotes, the estimated fair value of our 4.875% and 2.500% senior notes was $595.2 million and $396.8 million, respectively, at December 31, 2022. We utilize sensitivity analyses to assess the potential effect on our variable rate debt.
Based on dealers’ quotes, the estimated fair values of our 5.950% senior notes, 4.875% senior notes and 2.500% senior notes were $1.0 billion, $600.2 million and $424.0 million, respectively, at December 31, 2023. We utilize sensitivity analyses to assess the potential effect on our variable rate debt.
Interest Rates We manage our interest expense by using a combination of fixed and variable rate debt. Historically, we have entered into interest rate swap agreements to attempt to hedge the variability of future interest payments due to changes in interest rates. As of December 31, 2022, we do not have any outstanding interest rate swap agreements.
Historically, we have entered into interest rate swap agreements to attempt to hedge the variability of future interest payments due to changes in interest rates. As of December 31, 2023, we did not have any outstanding interest rate swap agreements. The estimated fair value of our senior term loans was approximately $746.5 million at December 31, 2023.
Removed
These fluctuations may impact the value of our cash receipts and payments in terms of our functional (reporting) currency, which is the U.S. dollar. See the discussion of international operations, which is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “International Operations” and is incorporated by reference herein.
Added
In July 2023, we entered into a cross currency swap to effectively hedge the foreign currency exposure related to our new U.S. denominated term loan entered into by a euro functional entity.
Added
See Note 7 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report for additional information on fair value methodology used to value the swap at December 31, 2023. We apply FASB ASC (Topic 815), “ Derivatives and Hedging, ” when accounting for derivative financial instruments.
Added
Our Real Estate Investments business has significant euro and British pound denominated assets under management, as well as associated revenue and earnings in Europe. In addition, our Global Workplace Solutions business also derives significant revenue and earnings in foreign currencies, such as the euro and British pound sterling.
Added
Our business has been significantly impacted this year by the sharp appreciation of the U.S. dollar against these and other foreign currencies. Further fluctuations in foreign currency exchange rates may continue to produce corresponding changes in our AUM, revenue and earnings. Our foreign operations expose us to fluctuations in foreign exchange rates.
Added
These fluctuations may impact the value of our cash receipts and payments in terms of our functional (reporting) currency, which is the U.S. dollar. On July 10, 2023, we entered into a cross currency swap to effectively hedge the foreign currency exposure related to our new euro-denominated term loan that was executed on that date.
Added
Our businesses could suffer from the effects of rapid changes in and high levels of interest rates, reduced access to debt capital or liquidity constraints, downturns in general macroeconomic conditions, regulatory or financial market uncertainty, or unanticipated disruptions such as public health crises like Covid-19 and geopolitical events like the wars in Ukraine and in the Middle East (or the perception that such disruptions may occur).
Added
During the year ended December 31, 2023, approximately 45.3% of our revenue was transacted in foreign currencies.
Added
The following table sets forth our revenue derived from our most significant currencies (dollars in millions): Year Ended December 31, 2023 2022 United States dollar $ 17,470 54.7 % $ 17,470 56.7 % British pound sterling 4,393 13.8 % 4,084 13.2 % Euro 3,003 9.4 % 2,854 9.3 % Canadian dollar 1,195 3.7 % 1,232 4.0 % Australian dollar 867 2.7 % 769 2.5 % Indian rupee 663 2.1 % 534 1.7 % Chinese yuan 516 1.6 % 534 1.7 % Japanese yen 485 1.5 % 407 1.3 % Swiss franc 427 1.3 % 392 1.3 % Singapore dollar 413 1.3 % 354 1.1 % Other currencies (1) 2,517 7.9 % 2,198 7.2 % Total revenue $ 31,949 100.0 % $ 30,828 100.0 % ________________________________________________________________________________________________________________________________________ (1) Approximately 46 currencies comprise 7.9% of our revenue for the year ended December 31, 2023, and approximately 48 currencies comprise 7.2% of our revenue for the year ended December 31, 2022. 48 Table of Contents Although we operate globally, we report our results in U.S. dollars.
Added
As a result, the strengthening or weakening of the U.S. dollar may positively or negatively impact our reported results. A hypothetical 10% adverse change in the value of the U.S. dollar relative to the British pound sterling during the year ended December 31, 2023, would have decreased pre-tax income by $5.4 million.
Added
A hypothetical 10% adverse change in the value of the U.S. dollar relative to the euro would have increased pre-tax income by $6.3 million.
Added
These hypothetical calculations estimate the impact of translating results into U.S. dollars and do not include an estimate of the impact that a 10% change in the U.S. dollar against other currencies would have had on our foreign operations.
Added
Fluctuations in foreign currency exchange rates may result in corresponding fluctuations in revenue and earnings as well as the assets under management for our investment management business, which could have a material adverse effect on our business, financial condition and operating results.
Added
Due to the constantly changing currency exposures to which we are subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations.
Added
Our international operations also are subject to, among other things, political instability and changing regulatory environments, which affect the currency markets and which as a result may adversely affect our future financial condition and results of operations.
Added
We routinely monitor these risks and related costs and evaluate the appropriate amount of oversight to allocate towards business activities in foreign countries where such risks and costs are particularly significant. Interest Rates We manage our interest expense by using a combination of fixed and variable rate debt.

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