Q4 GAAP EPS rose to $1.55
Q4 Core EPS rose to $1.38

FY GAAP EPS declined to $3.15
FY Core EPS declined to $3.84

DALLAS–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the fourth quarter and year ended December 31, 2023.

Consolidated Financial Results Overview

The following table presents highlights of CBRE performance (dollars in millions, except per share data; totals may not add due to rounding):

					% Change								% Change
	Q4 2023		Q4 2022		USD		LC⁽¹⁾		FY 2023		FY 2022		USD		LC⁽¹⁾
Operating Results
Revenue	$	8,950	$	8,194	9.2	%	7.7	%	$	31,949	$	30,828	3.6	%	4.1	%
Net revenue ⁽²⁾		5,187		4,975	4.3	%	2.9	%		18,276		18,777	(2.7	)%	(2.2	)%
GAAP net income		477		81	487.9	%	503.9	%		986		1,407	(30.0	)%	(28.0	)%
GAAP EPS		1.55		0.25	508.3	%	524.8	%		3.15		4.29	(26.6	)%	(24.6	)%
Core adjusted net income ⁽³⁾		426		424	0.3	%	3.2	%		1,199		1,863	(35.6	)%	(33.9	)%
Core EBITDA ⁽⁴⁾		737		668	10.4	%	9.8	%		2,209		2,924	(24.5	)%	(23.7	)%
Core EPS ⁽³⁾		1.38		1.33	3.8	%	6.8	%		3.84		5.69	(32.5	)%	(30.7	)%

Cash Flow Results
Cash flow provided by operations	$	853	$	814	4.8	%			$	480	$	1,629	(70.5	)%
Less: Capital expenditures		94		99	(5.4	)%				305		260	17.3	%
Free cash flow ⁽⁵⁾	$	759	$	715	6.2	%			$	175	$	1,369	(87.2	)%

“We ended 2023 on a high note with fourth quarter year-over-year operating profit growth across all three of our business segments,” said Bob Sulentic, CBRE’s chair and chief executive officer.

“Even though 2023 was a difficult year for commercial real estate, we delivered the third-highest full-year earnings in CBRE’s history, as our resilient businesses⁽⁶⁾ continued their strong growth. This partly offset market-driven revenue declines in businesses that are sensitive to interest rates and debt availability,” he continued.

For 2024, CBRE expects to achieve core earnings-per-share of $4.25 to $4.65, implying mid-teens percentage growth at the midpoint of the range.

Advisory Services Segment

The following table presents highlights of the Advisory Services segment performance (dollars in millions; totals may not add due to rounding):

							% Change
	Q4 2023			Q4 2022			USD		LC
Revenue	$	2,591		$	2,613		(0.9	)%	(1.9	)%
Net revenue		2,567			2,595		(1.0	)%	(2.0	)%
Segment operating profit ⁽⁷⁾		502			500		0.4	%	0.3	%
Segment operating profit on revenue margin ⁽⁸⁾		19.4	%		19.1	%	0.3	pts	0.4	pts
Segment operating profit on net revenue margin ⁽⁸⁾		19.5	%		19.3	%	0.3	pts	0.5	pts

Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.

Property Leasing

Global leasing revenue edged up 1% (flat local currency), slightly above expectations, driven by growth overseas.
Leasing revenue grew 7% (1% local currency) in Europe, Middle East & Africa (EMEA), paced by a handful of Continental European countries.
Asia-Pacific (APAC) leasing revenue growth of 2% (4% local currency) was led by robust increases in Japan and India.
Americas leasing revenue was flat, as large office deals in Canada offset modestly lower U.S. activity.
Globally, higher office leasing revenue offset a slight decline in industrial activity.

Capital Markets

Global sales revenue declined 19% (20% local currency), in line with expectations amid a challenging real estate capital markets environment.
In the Americas, sales revenue fell 22% (same local currency), while EMEA declined 16% (20% local currency) and APAC fell 12% (10% local currency).
Sales revenue declines were less pronounced in industrial and retail than in multifamily and office, supported by healthier fundamentals.
Mortgage origination revenue rose 23% (same local currency), attributable to interest earnings on escrow balances.

Other Advisory Business Lines

Loan servicing revenue rose 6% (same local currency). The servicing portfolio increased to $410 billion, up 4% for the quarter and 8% for the prior year.
Property management net revenue increased 9% (7% local currency), reflecting fourth-quarter new account wins and expansions.
Valuations revenue slipped 1% (3% local currency).

Global Workplace Solutions (GWS) Segment

The following table presents highlights of the GWS segment performance (dollars in millions; totals may not add due to rounding):

							% Change
	Q4 2023			Q4 2022			USD		LC
Revenue	$	6,103		$	5,294		15.3	%	13.6	%
Net revenue		2,363			2,093		12.9	%	11.2	%
Segment operating profit		292			259		12.9	%	11.2	%
Segment operating profit on revenue margin		4.8	%		4.9	%	(0.1	pts)	(0.1	pts)
Segment operating profit on net revenue margin		12.4	%		12.4	%	—	pts	—	pts

Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.

Facilities management net revenue increased 14% (13% local currency). This growth was driven by increased activity in the technology and financial services sectors within the Enterprise business and the continued robust growth of the Local business, notably in the U.S.
Project management net revenue rose 11% (9% local currency), led by the continued expansion of Turner & Townsend’s large-scale program management work globally.
The pipeline going into 2024 remains elevated and significantly above year-earlier levels, notably driven by industrial & logistics and financial & professional services.

Real Estate Investments (REI) Segment

The following table presents highlights of the REI segment performance (dollars in millions):

					% Change
	Q4 2023		Q4 2022		USD		LC
Revenue	$	262	$	291	(9.9	)%	(12.7	)%
Segment operating profit		68		17	295.9	%	294.5	%

Note: all percent changes cited are vs. fourth-quarter 2022, except where noted.

Real Estate Development

Global development operating profit ⁽⁹⁾ totaled $27.0 million, compared with a U.K.-driven loss in last year’s fourth quarter. The current quarter result exceeded expectations, due to the earlier-than-anticipated monetization of several U.S. assets.
The in-process portfolio ended 2023 at $15.8 billion, up $0.4 billion from third-quarter 2023.

Investment Management

Total revenue increased 11% (8% local currency), driven by higher incentive fees. Asset management fees rose 4% (1% local currency).
Operating profit surged 76% (72% local currency) to $41.7 million, reflecting the higher incentive fees and recurring asset management fees.
Assets Under Management (AUM) totaled $147.5 billion, an increase of $3.3 billion from third-quarter 2023. The increase was primarily driven by favorable foreign currency movement, along with modest net capital inflows, which offset lower private asset values.

Corporate and Other Segment

Non-core profit totaled $76 million, primarily due to an improvement in the value of CBRE’s investment in Altus Power, Inc. (NYSE:AMPS), whose share price increased during the quarter.
Core corporate operating loss increased by roughly $16 million (15%), with lower incentive compensation expense being outweighed by a change in the timing of certain expense recognition and cost transfers from the business segments.

Capital Allocation Overview

Free Cash Flow – During the fourth quarter, free cash flow was $759 million. This reflected cash provided by operating activities of $853 million, less total capital expenditures of $94 million.⁽¹⁰⁾
Stock Repurchase Program – The company repurchased approximately 0.3 million shares for $19.6 million ($68.69 average price per share) during the fourth quarter. There was approximately $1.5 billion of capacity remaining under the company’s authorized stock repurchase program as of year-end 2023.
Acquisitions and Investments – During the fourth quarter, CBRE completed five in-fill acquisitions, four in Advisory Services and one in REI, totaling $111 million in cash and non-cash consideration. The company’s planned acquisition of J&J Worldwide Services, announced on February 5, 2024, is expected to close in the coming months. CBRE will acquire J&J, a leading provider of engineering services, base support operations and facilities maintenance for the U.S. federal government, for $800 million in cash, plus a potential earn-out of up to $250 million, payable in 2027, subject to the acquired business meeting certain performance thresholds.

Leverage and Financing Overview

Leverage – CBRE’s net leverage ratio (net debt ⁽¹¹⁾ to trailing twelve-month Core EBITDA) was 0.71x as of December 31, 2023, which is substantially below the company’s primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):

	As of
	December 31, 2023
Total debt	$	2,830
Less: Cash ⁽¹²⁾		1,265
Net debt ⁽¹¹⁾	$	1,565

Divided by: Trailing twelve-month Core EBITDA	$	2,209

Net leverage ratio	0.71x

Liquidity – As of year-end 2023, the company had approximately $4.9 billion of total liquidity, consisting of approximately $1.3 billion in cash, plus the ability to borrow an aggregate of approximately $3.7 billion under its revolving credit facilities, net of any outstanding letters of credit.

Conference Call Details

The company’s fourth quarter earnings webcast and conference call will be held today, Thursday, February 15, 2024 at 8:30 a.m. Eastern Time. Investors are encouraged to access the webcast via this link or they can click this link beginning at 8:15 a.m. Eastern Time for automated access to the conference call.

Alternatively, investors may dial into the conference call using these operator-assisted phone numbers: 877.407.8037 (U.S.) or 201.689.8037 (International). A replay of the call will be available starting at 1:00 p.m. Eastern Time on February 15, 2024. The replay is accessible by dialing 877.660.6853 (U.S.) or 201.612.7415 (International) and using the access code: 13743718#. A transcript of the call will be available on the company’s Investor Relations website at https://ir.cbre.com.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

Safe Harbor and Footnotes

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the economic outlook, the company’s future growth momentum, operations and business outlook. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this press release. Any forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable securities laws, the company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: 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 United States; poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate; 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 occupier 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; 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 our indirect subsidiary, CBRE Capital Markets, Inc., to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; declines in lending activity of U.S. 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 and 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; and the performance of our equity investments in companies that we do not control.

Additional information concerning factors that may influence the company’s financial information is discussed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Cautionary Note on Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2022, our quarterly report on Form 10-Q for the quarterly period ended September 30, 2023, as well as in the company’s press releases and other periodic filings with the Securities and Exchange Commission (SEC). Such filings are available publicly and may be obtained on the company’s website at www.cbre.com or upon written request from CBRE’s Investor Relations Department at [email protected].

The terms “net revenue,” “core adjusted net income,” “core EBITDA,” “core EPS,” “business line operating profit (loss),” “segment operating profit on revenue margin,” “segment operating profit on net revenue margin,” “net debt” and “free cash flow,” all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release for a further explanation of these measures. We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods.

Totals may not sum in tables in millions included in this release due to rounding.

Note: We have not reconciled the (non-GAAP) core earnings per share forward-looking guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, carried interest incentive compensation and financing costs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

⁽¹⁾		Local currency percentage change is calculated by comparing current-period results at prior-period exchange rates versus prior-period results.
⁽²⁾		Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients. These costs are reimbursable by clients and generally have no margin.
⁽³⁾		Core adjusted net income and core earnings per diluted share (or core EPS) exclude the effect of select items from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes and impact on non-controlling interest for such charges. Adjustments during the periods presented included non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, the impact of fair value adjustments to real estate assets acquired in the acquisition of Telford Homes plc in 2019 (the Telford acquisition) (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, write-off of financing costs on extinguished debt, integration and other costs related to acquisitions, asset impairments, provision associated with Telford’s fire safety remediation efforts, costs associated with efficiency and cost-reduction initiatives, and 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. It also removes the fair value changes and related tax impact of certain strategic non-core non-controlling equity investments that are not directly related to our business segments (including venture capital “VC” related investments).
⁽⁴⁾		Core EBITDA represents earnings, inclusive of non-controlling interest, before 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, provision associated with Telford’s fire safety remediation efforts, costs associated with efficiency and cost-reduction initiatives, and 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. It also removes the fair value changes, on a pre-tax basis, of certain strategic non-core non-controlling equity investments that are not directly related to our business segments (including venture capital “VC” related investments).
⁽⁵⁾		Free cash flow is calculated as cash flow provided by operations, less capital expenditures (reflected in the investing section of the consolidated statement of cash flows).
⁽⁶⁾		Resilient businesses include the entire Global Workplace Solutions segment, loan servicing, valuation, property management, and recurring asset management fees in the investment management business.
⁽⁷⁾		Segment operating profit is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. Segment operating profit represents earnings, inclusive of non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments, as well as adjustments related to the following: 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, provision associated with Telford’s fire safety remediation efforts, costs associated with efficiency and cost-reduction initiatives, and 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.
⁽⁸⁾		Segment operating profit on revenue and net revenue margins represent segment operating profit divided by revenue and net revenue, respectively.
⁽⁹⁾		Represents line of business profitability/losses, as adjusted.
⁽¹⁰⁾		For the three months ended December 31, 2023, the company incurred capital expenditures of $93.8 million (reflected in the investing section of the condensed consolidated statement of cash flows) and received tenant concessions from landlords of $4.0 million (reflected in the operating section of the condensed consolidated statement of cash flows).
⁽¹¹⁾		Net debt is calculated as total debt (excluding non-recourse debt) less cash and cash equivalents.
⁽¹²⁾		Cash represents cash and cash equivalents (excluding restricted cash).