CBRE 10-K & 10-Q changes, risk factors and insider trading

Periods of economic weakness or recession, fiscal or political uncertainty, market volatility, declining employment levels, declining demand for commercial real estate, falling real estate values, disruption to the global capital or credit markets, disputes with U.S. trading partners, unpredictable changes in U.S. trading policy, increased tariffs, inflationary pressures, significant rises in interest rates or the public perception that any of these events may occur, may materially and negatively affect the performance of some or all of our business lines.

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. It may also lead to a decrease in funds invested in commercial real estate assets and development projects. Such developments in turn may reduce our revenue from property management fees and commissions derived from property sales, leasing, valuation and financing, as well as revenues associated with development or investment management activities. For example, in 2023 and early 2024, commercial real estate capital markets were under significant pressure. As a result, we experienced a sustained slowdown in property sales and debt financing activity. Our businesses could also suffer from geopolitical or economic disruptions (or the perception that such disruptions may occur) or interest rate or currency fluctuations that affect interest rates,fluctuations, capital availability and cost,changes in cost of capital, or heightenheightened financial, market or regulatory uncertainty.

Our investment management, development services, capital markets (including property sales and mortgage origination) and mortgageloan servicing businesses are sensitive to credit cost and availability as well as financial liquidity. 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.

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. During the year ended December 31, 2024,2025, approximately 43.6% of our revenue was transacted in foreign currencies. We also report our results in U.S. dollars. As a result, the strengthening or weakening of the U.S. dollar will positivelynegatively or negativelypositively 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. 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.

OurThe global nature of our operations aresubject subjectus to international social, politicalpolitical, legal and economic risks inacross foreigna countries.number of jurisdictions.

International economic trends,trends foreignand governmental policy actions and the following factors may have a material adverse effect on the performance of our business:

•adverse changes in regulatory, tax or trade policies (including tariffs) or uncertainty about potential changes in such regulatory, tax or trade policies;

•the impact of regional or country-specific business cycles and economic instability, including those related to geopolitical, weather, public health or safety events;

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 servicing,, real estate investment management, valuation, loan servicing, development services and proprietary research. Although we are the largest commercial real estate services firm in the world in terms of 20242025 revenue, our relative competitive position varies across geographies, property types and services and business lines.

Depending on the geography, property type or service or business line, we face competition from other commercial real estate services providers and investment firms, including outsourcing companies that traditionally competed in limited portions of our facilities management business and have expanded their offerings from time to time, in-house corporate real estate departments, developers, flexible space providers, institutional lenders, insurance companies, investment banking firms, investment managers and accounting and consulting firms. Some of these firms may have greater financial resources allocated to a particular geography, property type or service or business line than we have allocated to that geography, property type, service or business line. In addition, future changes in laws could lead to the entry of other new competitors, such as financial institutions.competitors.

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. As of December 31, 2024,2025, we had a net investment of approximately $361$375 million and had committed $205$216 million to fund future co-investments in our investment funds, approximatelyup $74to $70 million of which is expected to be funded during 2025.2026. In addition to required future capital contributions, some of the co-investment entities may request additional capital from us and our subsidiaries holding investments in those assets. The failure to provide these contributions could have adverse consequences to our interests in these investments, including damage to our reputation with our co-investment partners and clients, as well as the necessity of obtaining alternative funding from other sources that may result in dilution of our interest in the investment, or be on disadvantageous terms for us and the other co-investors. Participating as a co-investor is an important part of our investment management line of business, which might suffer if we were unable to make these investments.

Selective investment in real estate projects is critical to our development services business strategy within our Real Estate Investments segment, and there is an inherent risk of loss of our investments. As of December 31, 2024,2025, we were involved as a principal in 4447 real estate projects that were consolidated in our financial statements with invested equity of $649$1.0 millionbillion and co-invested with our clients in approximately 125128 unconsolidated real estate projects with a net investment of $340$397 million. We had committed, but not funded, additional capital of $330$226 million and $67$56 million to consolidated and unconsolidated projects, respectively, as of December 31, 2024.2025.

The success of our GWSBOE business depends on our ability to enter into mutually beneficial contracts, deliver high quality levels of service, manage our contractual obligations and accurately assess working capital requirements.

Contracts for our Global Workplace SolutionsBOE clients often include complex terms regarding payment of fees, risk transfer, liability limitations, termination, due diligence and transition timeframes. Further, our Global Workplace SolutionsBOE business is often impacted by transition activities in the first year of a contract as well as the timing of starting operations on these large client contracts. If we are unable to negotiate contracts with our clients in a timely manner and on mutually beneficial terms, or there is a delay in becoming fully operational, our business and results of operation may be negatively impacted. Further,Additionally, if we do not have adequate governance, processes, technology, quality assurance or expertise available to appropriately manage contracts with our clients and our obligations under such contracts, or if we fail to deliver the high-quality levels of service expected by our clients, it may result in reputational and financial damage, and could impact our ability to retain existing clients and attract new clients. Our BOE clients also include the U.S. federal government. Contracting with government entities carries additional risks, including uncapped liability and the absence of client indemnification. These engagements also require compliance with public disclosure obligations, government labor standards, and heightened ethical requirements associated with taxpayer‑funded work. Noncompliance may result in significant penalties, including potential debarment from future government contracts. Extended shutdowns of the U.S. federal government may result in payment delays, contract cancellation or postponement and other disruptions from these clients, which may adversely affect the performance of our BOE business.

Our Global Workplace SolutionsBOE business also requires us to accurately model the working capital needs of this business. Should we fail to accurately assess working capital requirements, or if we are unable to enforce timely payment from clients in accordance with our contractual terms, 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.

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 strategystrategy, such as no longer outsourcing its real estate operations; (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. 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 terms, or in connection with disputes or potential litigation. 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.

Our continued success is highly dependent upon the efforts of our executive officers and other key employees. 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. We also are highly dependent upon the retention of our property sales and leasing professionals, who generate a significant amount of our revenues, as well as other revenue producing professionals. The departure of any of our key employees, or the loss of a significant number of key revenue producers, if we are unable to quickly hire and integrate qualified replacements, could cause our business, financial condition and results of operations to materially suffer. An inability to maintain a strong pipeline of successors for key management roles could also have a negative impact on our ability to achieve our strategic goals. Competition for employee talent can be intense and we may not be able to successfully recruit, integrate or retain sufficiently qualified personnel. If we were to experience significant employee attrition or turnover, it could lead to increased recruitment and training costs as well as operating inefficiencies that could adversely impact our results of operation. We and our competitors use equity incentives and sign-on and retention bonuses to help attract, retain and incentivize key personnel. However, if our compensation incentives are misaligned with the company’s organizational and strategic priorities, such misalignment could lead to poor business decisions, operational inefficiencies, excessive risk taking, and talent retention challenges. Any such misaligned incentives could have a material negative impact on our business and operating results.

We have approximately 140,000155,000 employees (including 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,employees (including members of our executive leadership team who may be subject to heightened security risks by virtue of their roles), independent contractors, clients and others at our worksites. However, if these policies, procedures and programs are not adequate, or employees do not receive related adequate training or follow them for any reason, the consequences may be severe to us, including serious injury or loss of life, which could impair our operations and cause us to incur significant legal liability or fines as well as reputational damage. Our insurance may not cover, or may be insufficient to cover, any legal liability or fines that we incur for health, safety or security incidents.

Our credit agreements require us to maintain a minimum interest coverage ratio of consolidated EBITDA (as defined in the applicable credit agreement) to consolidated interest expense (as defined in the applicable credit agreement) and a maximum leverage ratio of total debt (as defined in the applicable credit agreement) less available cash (as defined in the applicable credit agreement) to consolidated EBITDA as of the end of each fiscal quarter. Our ability to meet these financial ratios may be affected by events beyond our control, and we cannot give assurance that we will be able to meet those ratios when required. We continue to monitor our projected compliance with these financial ratios and other terms of our credit agreements.

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. In addition, Moody’s Investors Service, Inc. andRatings, Standard & Poor’s Ratings Services,Services and Fitch Ratings, rate our significant outstanding debt. These ratings, and any downgrades of them, may affect our ability to borrow as well as the costs of our current and future borrowings.

Our business relies heavily on information technology, including solutions provided by third parties, to deliver services that meet the needs of our clients. If we are unable to effectively execute or maintain our information technology strategies or adopt new technologies and processes relevant to our service platform, our ability to deliver high-quality services may be materially impaired. In addition, we make significant investments in new systems and tools to achieve competitive advantages and efficiencies, including the adoption and integration of artificial intelligence (AI) and machine learning technologies. Implementation of such investments in information technology, including generative and agentic AI tools, could be complicated, heavily dependent on the quality, accuracy and relevance of data inputs and methodologies, require sophisticated infrastructure and skilled talent, have ethical and societal implications, and could exceed estimated budgets. We may experience challenges that prevent new strategies or technologies from being realized according to anticipated schedules. With respect to AI capabilities in particular, leveraging such AI capabilities for our internal functions and operations may present new risks, costs and challenges. The development, adoption and use of AI technologies is still in the early stages and involves significant uncertainties, which may expose us to legal, reputational and financial harm. Moreover, the use of AI may give rise to risks related to harmful content, accuracy, bias, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity and health and safety, among others, and also brings the possibility of new or enhanced governmental or regulatory scrutiny, litigation or other legal liability, or ethical concerns and could adversely affect our business. If we are unable to maintain current information technology and processes or encounter delays, or fail to exploitleverage new technologies,technologies or address concerns relating to the responsible use of new technology, including AI, in our services, 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. 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.

Our business requires the continued operation of information technology and communication systems and network infrastructure. Our ability to conduct our global business may be materially adversely affected by disruptions to these systems or our infrastructure. Our information technology and communications systems are vulnerable to damage or disruption from fire, power loss, telecommunications failure, system malfunctions, computer viruses, cyberattacks, natural disasters such as hurricanes, earthquakes and floods, acts of war or terrorism, employee errors or malfeasance, or other events which are beyond our control. 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. In addition, the timely operation and maintenance of these systems and networks is in some cases dependent on third-party technologies, systems and service providers for which there is no certainty of uninterrupted availability. 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. Furthermore, while we have certain business interruption and cyber insurance coverage and various contractual 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. We have crisis management, business continuity and disaster recovery plans and backup systems to reduce the potentially adverse effect of such events, but our crisis management, business continuity and 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.

Failure to protect and maintain the security of our information and technology networks, including personal information and other client information, intellectual property and proprietary business information could materially adversely affect us.

Security breaches and other disruptions of our information and technology networks, as well as that of third-party vendors, could compromise our information and intellectual property and expose us to liability, reputational harm and significant remediation costs, which could cause material harm to our business and financial results. 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. The secure collection, use, storage, retention, maintenance, sharing, processing, transfer, transmission, disclosure, and protection (collectively, “Processing”) of this information is critical to our operations. Although we and our vendors continue to implement new security measures and regularly conduct employee training, our information technology and infrastructure may nevertheless be vulnerable to cyberattacks by third parties or breached due to employee error, malfeasance or other disruptions. These risks have been heightened in connection with the ongoing conflict between Russia and UkraineUkraine, andinstability in the Middle East.East, and rising tensions in East Asia, including China. When geopolitical conflicts develop, critical infrastructures may be targeted by state-sponsored cyberattacks even if they are not directly involved in the conflict. An increasing number of companies that rely on information and technology networks have disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their websites or infrastructure. 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. The rapid evolution and increased adoption of AI technologies may intensify these security risks.risks, and the emergence and maturation of AI capabilities may also lead to new and/or more sophisticated methods of attack. This includes fraud that relies upon “deep fake” impersonation technology or other forms of generative automation that enhance the effectiveness of cyber threats. To date, we have not experienced any cybersecurity breaches that have been material, either individually or in the aggregate. However, there can be no assurance that we will be able to prevent any material events from occurring in the future.

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. At least nineteen U.S. states have also passed consumer privacy laws, and several states, most notably Illinois,Illinois and Texas, have passed laws regulating the processing of biometric information. Without any overarching federal privacy law, the patchwork of privacy legislation formed by individual state laws heightens the costs of compliance, the risks of noncompliance, and the potential for enforcement actions by individual state attorneys general.

In recent years, there has been heightened interest from regulators, customers, investors, employees and other stakeholders on sustainability matters and related disclosures. Such attention to sustainability matters, including expanding mandatory and voluntary reporting, diligence, and disclosuremanagement practices on topics such as climate change, human capital, labor and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report on. At the same time, regulators and other stakeholders have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of “anti-ESG” legislation or policies. Further, rising client expectations for sustainability performance may be at odds with simultaneous pressure for low-cost delivery. Relatedly, our clients use sustainability performance data managed by us (including, but not limited to, data used in the calculation of GHG emissions) in their own regulatory filings, and such data is subject to financial grade assurance. At the same time, regulators and other stakeholders have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of “anti-ESG” legislation or policies. If our sustainability practices do not meet evolving stakeholders’ expectations and assurance standards, or if we are unable to satisfynavigate allconflicting stakeholders,stakeholder expectations, our reputation, ability to attract or retain employees, financial condition, results of operations and cash flows could be negatively impacted.

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, the New York Stock Exchange (NYSE) and the Financial Accounting Standards Board. Further, new and emerging regulatory initiatives, particularly in the EU, U.K.U.K., Australia and California, related to climate change and sustainability matters, could adversely affect our business, including, for example, the EU Corporate Sustainability Reporting Directive, the EU Corporate Sustainability Due Diligence Directive, and Taskforce on Climate-related Financial Disclosures (TCFD)-aligned disclosurereporting requirements in the U.K. and othersome jurisdictions. These and other legal and regulatory requirements continue to evolve in scope and complexity, making compliance more difficult and uncertain. These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations. We also expect to incur additional costs as we seek to engage in due diligence, verification and reporting in connection with our sustainability initiatives.

Further, we have announced, and may from time to time announce, certain initiatives, including goals, targets and objectives, related to greenhouse gasGHG emissions targets and other sustainability matters, in our SEC filings or in other public disclosures. These initiatives and goals could be difficult and expensive to implement and we could be criticized for the scope or nature of such initiatives, or for any revisions thereto, or the accuracy, adequacy or completeness of related disclosures. Statements about our sustainability initiatives and goals, and progress against those goals, reflect our current plans, which are based on evolving standards for measuring progress that are still developing,progress, internal controls and processes that continue to evolve,mature, and assumptions regarding key dependencies that are beyond our control and subject to change in the future. There is no guarantee that we will be able to successfully achieve our initiatives or commitments related to sustainability matters, on the desired timeframes or at all. Nevertheless, if we fail or are perceived to fail to achieve progress with respect to our sustainability-related goals 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, this could negatively impact our reputation and our business results, as well as expose us to government enforcement actions, fines and private litigation. Achievement of our sustainability goals may also require us to incur additional costs or to make changes to our operations which could adversely affect our business and results of operations.

The following discussion provides an analysis of the company’s financial condition and results of operations from management’s perspective and should be read in conjunction with the consolidated financial statements and related notes included in this Annual Report. Discussion regarding our financial condition and results of operations for the year ended December 31, 20232024 and comparisons between the years ended December 31, 20232024 and 20222023 are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s 20232024 Annual Report was filed with the SEC on February 20,14, 2024.2025.

CBRE is the world’s largest commercial real estate services and investment firm (based on 20242025 revenue). In 2024,2025, we served clients through threefour business segments – Advisory Services, GlobalBuilding WorkplaceOperations Solutions& Experience (GWSBOE), Project Management and Real Estate Investments (REI) – which are described in “Item 1. Business” in this Annual Report. We generate revenue from both resilient sources (large multi-year portfolio and per-project contracts) and non-recurring sources, including commissions generated by transactions. Our revenue mix has become more weighted towards resilient revenue sources, particularly occupier outsourcing,outsourcing and ourproject dependencemanagement, and we are less dependent on cyclical property sales and lease transaction revenue has declined.revenue. Non-recurring transactional revenue and earnings within our Advisory Services segment (notably property sales and leasing) have historically been highest in the year’s fourth quarter due to a focus on completing transactions prior to year-end, but such seasonality has decreased as transactions have comprised a smaller proportion of our total revenue.

The operating environment for commercial real estate improved considerably in 2024,2025. particularlyThis is evident in markedly increased property leasing and sales activity compared with 2024 levels. Occupier demand for office, industrial and data center space in the secondU.S. halfwas ofnotably strong throughout the year. This was most prominently evident in real estate leasing markets. A healthy economic outlook and improved return-to-office momentum made companies increasingly confident to move forward with office leasing plans. Demand was particularly strong for the highest-quality space and expanded from primary to secondary markets as the year progressed. ImprovedBroader capital availability andavailability, lower borrowing costs –and alongimproved withoccupancy themarket perception that interest rates would fall further –fundamentals buoyed investor sentiment and led to increased real estate sales and financing activity in the2025. secondLarge halfoccupiers’ ofgrowing 2024. These factors also improved the operating backdropappetite for development and investment asset sales late in the year. Meanwhile, outsourcing services continued to gain favor with major corporations and other large occupiers of space, boostingunderpin demand for facilities management and project management services.activities.

An improved operating environment supported strong growth for CBRE in 2024.2025. Overall, net revenue increased 14.2%.13.4%. This included 14.1% net13.4% revenue growth in our resilient businesses(1) (including facilities management, project management, property management, loan servicing, valuations, other portfolio services, and recurring investment management fees and valuations), and 14.3% net13.6% revenue growth in our transactional businesses(1) (property sales, leasing, mortgage origination, carried interest and incentive fees in our investment management business, and development fees).

________________________________________________________________________________________________________________________________________ (1)See “Non-GAAP Financial Measures section in Item 7 of this Annual Report.Measures.”

We reported consolidated net income of $968$1.2 millionbillion for the year ended December 31, 20242025 on revenue of $35.8$40.6 billion as compared to consolidated net income of $986$968 million on revenue of $31.9$35.8 billion for the year ended December 31, 2023.2024.

Foreign currency translation had minimala net0.7% positive impact on total revenue during the year ended December 31, 2024.2025, Foreignprimarily currencydriven translationby strength in the British pound sterling wasand euro, partially offset by weakness in the JapaneseIndian yen.rupee, Canadian dollar and Australian dollar.

CostPass-through of revenuecosts increased 12.2%,12.4% during the year ended December 31, 20242025 as compared to the same period in 20232024 primarily due to revenue growth,growth consistingin ofthe higher pass-through costs, higher compensation,BOE and higherProject indirectManagement reimbursed costs.segments. Foreign currency translation had a 0.1%0.7% positivenegative impact on totalpass-through cost of revenue. Cost of revenue increased slightly to 80.6% of total revenue from 80.4% driven by higher costs to support growth in revenues.costs.

Operating, administrative and other expenses increased 9.8%10.6% during the year ended December 31, 2025 as compared to the same period last year.year Theprimarily increasedue was driven byto an increase in restructuringemployee compensation driven by revenue growth, third-party fees related to acquisitions and indirectintegration taxactivities, expensesalong thiswith yearan compared to 2023 as the cost savings initiativesincrease in theTelford’s GWSfire segmentsafety were largely completed.provision. Foreign currency translation had a 0.1%0.7% positivenegative impact on total operating expenses during the year ended December 31, 2024.2025. OperatingOperating, administrative and other expenses as a percentage of revenue decreased to 14.0%13.7% from 14.3%,14.0%, as operating expenses grew slower than revenue.

Depreciation and amortization expense increased by 8.4%8.2% during the year ended December 31, 2024,2025 as compared to the same period in 2023,2024, reflecting higher depreciation and amortization expense related to assets acquired from recent acquisitionsacquisitions, such as J&JPearce Worldwideand Services.Industrious.

Gain on disposition of real estate increased by $115$317 million induring 2024,the year ended December 31, 2025, driven by the monetization of real estate development assetsprojects and land sites in the REI segment.

We incurredreported anequity income of $40 million during the year ended December 31, 2025 compared to equity loss of $19 million in 2024 compared to equity income of $248 million in the same period in 2023.2024. This was mainlyprimarily duedriven toby anpositive unusuallyco-investment largereturns developmentand asset dispositionsales in the first-quartercurrent 2023period, thatcompared did not recur in 2024. In addition, we recordedto higher unrealized netequity losses in the prior period, driven by a fair value adjustment related to our non-core strategic equity investments,investment includingin Altus Power, Inc. (Altus), during the year ended December 31, 2024. These losses were partially offset by equity income recognized in relation to investments in TCC real estate development projects..

Our provision for income taxes on a consolidated basis was $182$317 million for the year ended December 31, 20242025 as compared to $250$182 million in 2023.2024. Our effective tax rate decreasedincreased to 19.9% in 2025 from 15.0% in 2024 from 19.5% in 2023.2024. The decreaseincrease iswas primarily related to the benefit recognized in 2024 for the reversal of unrecognized tax positions.

The Organization for Economic Co-operation & Development (OECD) Pillar Two Model Rules established a minimum global effective tax rate of 15% on country-by-countrycountry-by country profits of large multinational companies. European Union member states along with many other countries adopted or expect to adopt the OECD Pillar Two Model effective January 1, 20242024, or thereafter. TheIn January 2026, the OECD andissued othera countriescomprehensive continueSide by Side Package, which introduces additional administrative guidance intended to publishenhance guidelinescoordination and legislationsimplify whichaspects includeof transitionthe global minimum tax framework. The package includes several new safe harbors including the new Side by Side and Ultimate Parent Entity safe harborharbors rules.that may deem certain top-up taxes to be zero in jurisdictions with qualifying minimum tax regimes, such as the United States. We will continue to monitor newadditional administrative guidance and legislative changesaction andto incorporate the guidance into local law to assess the global impact of the Pillar Two Model Rules. The impact of Pillar Two top-up taxes was insignificant for 2024.2025.

In early January 2025, we combined our project management business with our Turner & Townsend majority-owned subsidiary and will publicly report financial results forcreated a fourth businessreportable segment, Project Management, beginning in the first quarter of 2025.Management. In addition, on January 16, 2025, we acquired full ownership of Industrious, a provider of premium flexible workplace solutions in January 2025,solutions, and will establishestablished a new business segment, Building Operations & Experience,Experience in 2025,(BOE), comprised of enterprise and local facilities management, property management and flexible workplace solutions. Our four business segments beginning in 2025 will be (1) Advisory Services; (2) Building Operations & Experience; (3) Project Management; and (4) Real Estate Investments.

Cost of revenuerevenue, excluding pass-through costs increased 13.8%,18.8%, primarilydriven reflectingby business growth, higher reimbursablecommission expensesexpense in property management,and higher professional compensationinsurance and higherbenefits, commissionprimarily expense.resulting from a non-cash settlement charge related to a pension buy-out in the United Kingdom (U.K.). Foreign currency translation had a 0.1%0.3% positivenegative impact on total cost of revenue.revenue, excluding pass-through costs. Cost of revenuerevenue, excluding pass-through costs slightly increased to 61.0%59.4% of total revenue from 60.6%57.1% of total revenue for the same period in 20232024 primarily due to higherescalating commissions,commission payouts driven by strong revenue growth.

Operating, administrative and other expenses slightly increased by 1.1%,4.1% infor 2024the year ended December 31, 2025 as compared to the same period in 2023,2024, primarily due to higher employee compensation and bonus, higher business promotion and advertising expense, driven by higher variable employee compensation costs. The increase was partially offset by lower restructuring expenses as the Advisory Services segment recorded significant restructuring expensesgrowth in the first half of 2023, as the segment went through cost reduction initiatives that did not recur this year.business. Foreign currency translation had a 0.2%0.4% positivenegative impact on total operating expenses.

For the year ended December 31, 2025, mortgage servicing rights (MSR) contributed $151 million to operating income, offset by $146 million of amortization of related intangible assets. For the year ended December 31, 2024, MSRs contributed $123 million to operating income, offset by $138 million of amortization of related intangible assets. For the year ended December 31, 2023, MSRs contributed $84 million to operating income, offset by $144 million of amortization of related intangible assets. The increase was associated with higher origination activity given an increase in financing activities in the second half of 2024.activities.

Depreciation and amortization expense decreasedincreased 5.9%5.8% primarily due to lowerhigher amortization of mortgage servicing rights as described above and due to accelerated depreciation expense recorded in the first half of 2023, as part of cost savings initiatives that did not recur this year.above.

The following table summarizes our results of operations for our Global Workplace Solutions (GWS)BOE operating segment for the years ended December 31, 20242025 and 20232024 (dollars in millions):

Revenue increased 11.7%14.9% in 2024 as compared to 2023, reflecting a double-digit increase in facilities management, led by the Enterprise and Local business, and growth in project management due to continued strong growth from Turner & Townsend. Foreign currency translation had minimal net impact on total revenue duringfor the year ended December 31, 2024.2025 as compared to the same period in 2024, reflecting double-digit growth in facilities management and property management, primarily driven by new client wins, contract expansions, and the strategic impact of recent acquisitions. Foreign currency translation weaknesshad ina the0.7% Japanesepositive yenimpact wason partiallytotal offsetrevenue, primarily driven by strength in the British pound sterling.sterling and euro, and partially offset by weakness in the Indian rupee.

Cost of revenuerevenue, excluding pass-through costs increased 11.6%,18.5%, driven by higher pass-through costs, higher indirect reimbursed costs, and increased professional compensation and indirect managed spend, due to supportrevenue thegrowth, growthas inwell theas business.an increase driven by acquisitions. Foreign currency translation had a 0.1%0.7% positivenegative impact on total cost of revenue.revenue, excluding pass-through costs. Cost of revenuerevenue, excluding pass-through costs was 90.3%36.0% of total revenue, aan slight decreaseincrease from 90.4%35.0% infor 2023.the year ended December 31, 2024.

Operating, administrative and other expenses increased 6.8%,13.3%, primarily due to restructuringhigher chargesemployee incurred related to cost savings initiativescompensation and thebenefit inclusion of J&J Worldwide Services’ operating results since acquisition at the end of February 2024.expenses. Foreign currency translation had minimala net0.8% negative impact on total operating expenses induring 2024.the year ended December 31, 2025.

Depreciation and amortization expense increased 26.7%,15.0%, primarilyreflecting duehigher to increased amortization expense on intangiblesexpenses related to theintangibles J&Jfrom Worldwiderecent Servicesacquisitions andsuch certainas other in-fill acquisitions.Industrious.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) provides the reader with management’s perspective on our financial condition, results of operations, liquidity and certain other factors that may affect future results. The MD&A in this Quarterly Report on Form 10-Q (Quarterly Report) for CBRE Group, Inc. for the three and six months ended MarchJune 31,30, 2026 should be read in conjunction with our consolidated financial statements and related notes included in our 2025 Annual Report on Form 10-K (2025 Annual Report) as well as the unaudited financial statements included elsewhere in this Quarterly Report.

DuringBeginning thewith firstfirst-quarter quarter2026 of 2026,results, we began reclassifyingreclassified amortization associated with MSRs (mortgage servicing rights) to net against the related revenue (Commercialcommercial mortgage origination). Historically, we have recognized the corresponding MSR intangible assetsasset wereas amortized throughan amortization expense over the estimated mortgage service period. Prior year amounts have been reclassified to conform towith the fiscal 2026 presentation.

The strong recovery ofDuring the commercial real estate market that began in 2025 continued in early 2026. This is evident in the continuation of markedly increased property leasing and sales activity during the first quarter. Occupier demand remained notably strong in the U.S. particularly for industrial, office and data center space in the U.S. During thesecond quarter, investment sales and financing activity improved sharplysignificantly in mostthe globalU.S., markets,while buoyedgrowth was more modest in overseas markets. Investment activity has been supported by broad capital availability, improved occupancy market fundamentals and tighternarrower bid-ask spreads. Large occupiers’ growing appetite for outsourcing services continued to underpin demand for facilities management and project management activities, while the outsized growth of Artificial Intelligence investments and data center buildouts fuelshas fueled continued strong demand for critical infrastructure services. ToThrough date,the first half of 2026, the ongoing Middle East conflict has had limited impact on CBRE’s business except for a notable slowdown in fundraising from capital sources based in the region.

We deployed $538$988 million in 2026 to repurchase 3,639,6826,984,186 shares as of AprilJuly 21,27, 2026.

The following table sets forth items derived from our consolidated statements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

(2)Pass-through costs represent certain costs incurred associated with subcontracted third-party vendor work performed for clients. These costs are We reported consolidated net income of $318$204 million for the quarter, on revenue of $10.5$11.2 billion as compared to consolidated net income of $163$215 million on revenue of $8.9$9.7 billion in the prior year.

Foreign currency translation had a 4.0%1.2% positive impact on revenue, reflecting strength in the euroeuro, Australian dollar and British pound sterling partially offset by weakness in the Indian rupee.

Cost of revenue, excluding pass-through costs increased 21.9%17.1% during the quarter as compared to the same period in prior year primarily reflecting business growth and higher commissionemployee expensescompensation and employeecommission compensation, as well as higher indirect reimbursed costs.expenses. Foreign currency translation had a 4.0%1.3% negative impact on total cost of revenue, excluding pass-through costs. Cost of revenue, excluding pass-through costs increased to 40.2% of total revenue from 39.1%39.7% driven by higher costs to support growth in revenues.

Operating, administrative and other expenses increased 22.5%20.5% during the quarter as compared to the same period in prior year. The increase was primarily due to an increase in the provision related to fire safety remediation efforts for buildings historically developed by our subsidiary, Telford Homes (see Note 17 – Telford Fire Safety Remediation). In addition, operating, administrative and other expenses increased due to higher employee compensation and business promotion and advertising expense, driven by business growth. Foreign currency translation had a 4.0%1.3% negative impact on total operating expenses during the quarter. Operating, administrative and other expenses as a percentage of revenue increased to 13.9%13.7% in the firstsecond quarter 2026 from 13.4%13.1% in the firstsecond quarter 2025, as operating expenses grew higher than revenue.

Gain on disposition of real estate increaseddecreased by $301$14 million during the quarter, driven by monetizationlower sales of real estate development assets in the REI segment.segment, compared to the prior year.

We recorded equity lossincome from unconsolidated subsidiaries of approximately $9$4 million, compared to equity incomeloss of $16$18 million in the first quarter 2025. In the first quarter 2025, we recorded equity income of $21 million, reflecting the higher value of our investment in Altus, which was sold in the second quarter 2025.

Interest expense, net of interest income, increased by 18.0%,1.7%, compared with the firstsecond quarter 2025. This increase was primarily attributable to increased commercial paper borrowings,borrowings and the issuance of $750 million in senior notes, offset by the impact of net investment hedging activity.

Our provision for income taxes on a consolidated basis was $112$68 million for the three months ended MarchJune 31,30, 2026 as compared to a provision for income taxes of $52$61 million for the three months ended MarchJune 31,30, 2025. The increase of $60$7 million is primarily related to an increase in earnings. Our effective tax rate increased to 24.7%21.6% for the three months ended MarchJune 31,30, 2026 from 21.4%20.3% for the three months ended MarchJune 31,30, 2025. Our effective tax rate for the three months ended MarchJune 31,30, 2026 is different than the U.S. federal statutory tax rate of 21.0% primarily due to the U.S. state taxes and permanent book tax differences.

Advisory Services provides a comprehensive range of services globally, including leasing, capital markets (property sales and loanmortgage origination), loan servicing, and valuation. BOE provides a broad suite of integrated, contractually based outsourcing services to occupiers and owners of real estate, including facilities management, property management and critical infrastructure. Our Project Management business delivers program management and cost consultancy services across commercial real estate, infrastructure and natural resources sectors. REI is a major real assets developer, investor and operator and is comprised of two businesses: investment management and development services.

The following table summarizes our results of operations for our Advisory Services operating segment for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

Foreign currency translation had a 2.8%0.9% positive impact on total revenue during the quarter, primarily driven by strength in the euroAustralian dollar and British pound sterlingeuro partially offset by weakness in the IndianJapanese rupeeyen and JapaneseIndian yen.rupee.

Operating, administrative and other expenses increased by 9.6%,10.8%, as compared to the same period in 2025, primarily due to higher employee compensation and bonus, and higher business promotion and advertising expensesexpense, driven by the growth in the business. Foreign currency translation had a 4.2%1.3% negative impact on total operating expenses.

For the three months ended MarchJune 31,30, 2026, gross income from mortgage servicing rights (MSR) was $26$27 million, offset by $38 million of amortization of related intangible assets, resulting in a net reduction to Commercialcommercial Mortgagemortgage Originationorigination revenue of $12$11 million. For the three months ended MarchJune 31,30, 2025, the comparable amounts were $22$33 million and $35$37 million, respectively, resulting in a net reduction of $13$4 million. The changeincreased wasnet associatedreduction reflects lower origination gains, as recent originations have shifted to shorter loan terms in a higher rate environment, with higheramortization originationremaining activityelevated givenon anthe increaseservicing inbook financingestablished activities.during the prior low-rate period.

In connection with the origination and sale of mortgage loans with servicing rights retained, we record servicing assets or liabilities based on the fair value of mortgage servicing rights (MSRs)MSR on the date the loans are sold. Upon origination of a mortgage loan held for sale, the fair value of the mortgage servicing rights to be retained is included in the forecasted proceeds from the anticipated loan sale and results in a net gain (which is reflected in revenue). Our MSRs are initially recorded at fair value. Subsequent to the initial recording, MSRs are amortized in proportion to and over the period that the servicing income is expected to be received based on projections and timing of estimated future net cash flows and assessed for impairment based on the fair value each reporting period. During the first quarter of 2026, we began reclassifying amortization associated with MSRs (mortgage servicing rights) to net against the related revenue (Commercialcommercial mortgage origination). Historically, the corresponding MSR intangible assets were amortized through amortization expense over the estimated mortgage service period. Prior year amounts have been reclassified to conform towith the fiscal 2026 presentation.

The following table summarizes our results of operations for our BOE operating segment for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

________________________________________________________________________________________________________________________________________ (12)CalculatedPass-through ascosts arepresent percentagecertain ofcosts Totalincurred Revenue.associated with subcontracted third-party vendor work performed for clients. These costs are (3)Management made the decision to wind down certain businesses within the BOE Segment.

Revenue increased 20.4%, reflecting double-digit increases in facilities management, criticalCritical infrastructure andreflected propertyexpansion management,of primarilyCBRE’s duework tofor growthdata in clients driving increased management fees and reimbursementscenters, as well as the impactcontribution from the recent acquisitions.Pearce acquisition. Facilities management was once again driven by strong growth in our local facilities management business, notably in the Americas. Enterprise facilities management revenue growth was led by strong activity across the technology, media and telecom sectors. Foreign currency translation had a 4.4%1.4% positive impact on total revenue during the quarter, primarily driven by strength in the euro and British pound sterling, partially offset by weakness in the Indian rupee.

Cost of revenue, excluding pass-through costs increased 23.4%,19.3%, driven primarily by higher professional compensation andcosts indirectassociated managed spend due towith revenue growth. Foreign currency translation had a 4.1%1.6% negative impact on total cost of revenue, excluding pass-through costs. Cost of revenue, excluding pass-through costs was 36.5%36.8% of total revenue, and increased compared to 35.6%35.4% in the firstsecond quarter 2025.

Operating, administrative and other expenses increased 25.7%,11.1%, primarily due to higher employee compensation and benefit expenses. Foreign currency translation had a 4.7% negative impact on total operating expenses during the quarter.compensation.

The following table summarizes our results of operations for our Project Management operating segment for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

________________________________________________________________________________________________________________________________________ (1)Calculated as a percentage of Total Revenue (2)Pass-through costs represent certain costs incurred associated with subcontracted third-party vendor work performed for clients. These costs are reimbursableRevenue byincreased clients19.1% due to strong infrastructure activity in the United Kingdom, Europe and the correspondingMiddle amountsEast, owedas arewell reflectedas withinstrong Revenue.gains in real estate projects in North America and Asia. Foreign currency translation had a 1.1% positive impact on total revenue during the quarter, primarily driven by strength in the euro, Australian dollar and British pound sterling partially offset by weakness in Indian rupee.