CBRECBRE Group

We note your adjustment for Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions to arrive at Core net income attributable to CBRE Group, Inc., as adjusted. Please tell us and revise your filing to clarify the nature of this adjustment, including how it was derived.

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Further, please tell us and revise your filing to clarify why the exclusion of this expense provides useful information to investors. Please refer to Item 10(e) of Regulation S-K. This comment also applies to your presentation of this non-GAAP measure in your earnings release. We note that you deduct certain passed through costs to derive net revenue, a non- GAAP financial measure that you use to evaluate the operating performance of the Company and its segments. We note your disclosure that these costs are largely associated with subcontracted vendor work performed for clients and is passed 2. through to the client generally with no margin. As such, it appears that some of the passed through costs may have a profit margin. Please provide us with more information regarding the nature and terms of contracts with passed through costs that have a profit margin and contracts with passed through costs that do not have a profit margin, including the terms of any fees earned by you under the contracts. In your response, please tell us whether the terms of your contracts specifically require the customer to reimburse you for amounts paid to subcontractors and include an example of the contract terms in your response. In addition, please include an explanation of how you considered Question 100.04 of the Compliance & Disclosure Interpretation on Non-GAAP Financial Measures in determining the appropriateness of this adjustment. This comment applies to your presentation of net revenue throughout your Form 10-K and in your earnings release.

The Company respectfully acknowledges the Staff’s comment regarding the adjustment for Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions to arrive at Core net income attributable to CBRE Group, Inc., as adjusted (“Core adjusted net income”). In response to the Staff’s comment, the Company notes that Core adjusted net income excludes the impact of amortization expense related to intangible assets, including customer relationships, trademarks, and depreciation expense related to technology (developed software), acquired as part of business

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combinations. The adjustment consists primarily of amortization of acquired intangible assets with an immaterial amount of depreciation related to acquired technology (i.e., 0.6% of the adjustment in 2024).

The Company excludes the amortization and depreciation expense related to acquired intangible assets from its calculation of Core adjusted net income as these items are not indicative of the Company’s current and future performance and are not necessary to analyze underlying business trends. The related amortization and depreciation expense varies significantly based on the timing and size of the acquisitions. In addition, the valuation of these assets is subjective and impacted by management’s judgments and estimates.

The Company believes that presentation of Core adjusted net income, excluding amortization and depreciation of assets acquired in business combinations, is useful to investors as a supplemental measure to evaluate the Company’s ongoing operating performance. In addition, the Company respectfully notes that many acquisitive companies exclude amortization and depreciation expenses related to acquisitions from comparable Non-GAAP measures for similar reasons. Management considers Core adjusted net income to be meaningful to investors as supplemental financial information when evaluating the Company’s performance against other market participants and when comparing the Company’s results with prior periods.

In consideration of the Staff’s comment and in order to provide more robust disclosure to investors, the Company will add the following disclosure in its future SEC filings and earnings presentations (added disclosure is in bold and underlined):

“We use core EBITDA, core adjusted net income and core earnings per share (or core EPS) as indicators of the company’s ongoing operating financial performance. Core EBITDA represents earnings before depreciation and amortization, net interest expense and income taxes, further adjusted for the following items:

• adjustments related to carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, integration and other costs related to acquisitions, costs incurred related to legal entity restructuring, efficiency and cost-reduction initiatives, provision associated with Telford’s fire safety remediation efforts, the portion attributable to non-controlling interests, write-off of financing costs on extinguished debt, asset impairments, charges related to indirect tax audits and settlements, 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, and the impact of fair value adjustments related to unconsolidated equity investments.

Core adjusted net income represents earnings before the adjustments above and excluding the impact of the following:

non-cash amortization expense related to intangible assets and impairment charges of goodwill attributable to acquisitions, and restructuring activities and related impact on income taxes and non-controlling interest.

We believe that investors may find these measures useful in evaluating our operating performance compared to that of other companies because their calculations generally eliminate the effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income taxes and the accounting effects of capital spending. The presentation of Core adjusted net income, excluding amortization of intangible assets acquired in business combinations, is useful to investors as a supplemental measure to evaluate the Company’s ongoing operating performance. While amortization expense of acquisition-related intangible assets is excluded from Core adjusted net income, the revenue generated from the acquired intangible assets is not excluded.”

In future SEC filings and earnings presentations, the Company will not include any adjustments related to the depreciation of acquired technology in Core adjusted net income.

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We note your response to prior comment 2. Please clarify for us if any contracts are based on a fixed fee or similar (e.g., based on square footage managed or occupied), such that pass through costs have implied profit margins.

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To the extent you determine that there is an implied profit margin, please explain to us how you considered Question 100.04 of the Compliance & Disclosure Interpretation on Non-GAAP Financial Measures in determining the appropriateness of this adjustment throughout your Form 10-K and in your earnings release.

In the Company’s response to the Staff’s comment regarding the presentation of pass-through costs also recognized as revenue to arrive at Non-GAAP net revenue on May 27, 2025, the Company noted that a portion of the Company’s Facilities Management (“FM”) and Project Management contracts include a margin on pass-through costs.

However, the margin earned on these contracts in 2024 was immaterial, representing 0.2% of gross revenue and 0.5% of pass-through costs also recognized as revenue, respectively. The estimated margin was based on explicit fees contractually earned on pass-through costs.

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Although the explicit margin on pass-through costs is not material to the Company’s gross revenue or pass-through costs, the Company considered if there is an implicit margin on any of its pass-through costs given the various contract structures for the fees earned. For example, the Company in the ordinary course of business enters into contracts whereby the contracts are quoted with a fixed price or management fees that are charged to clients and may be derived as a percentage of total budgeted costs, which may be inclusive of third-party vendor/subcontractor pass-through costs.

To estimate an implicit margin on these contracts, the Company attributed a portion of the overall contract margin earned to the third-party pass-through costs incurred on the contract by allocating the margin based on the percentage of third-party pass-through costs to total direct contract costs. The Company believes this is a conservative methodology for estimating an implicit margin on pass-through costs due to the following:

◾

We would expect to earn a lower margin on pass-through costs compared to our internal labor as the amounts charged by third-party vendors/subcontractors already include a margin earned by the vendors/subcontractors.

Most of our contracts explicitly state that we are required to pass through the amounts charged to clients in relation to third-party vendor/subcontractor spend, inclusive of any rebates or discounts.

Of the suite of services offered under our FM and Project Management arrangements, the work performed by CBRE employees typically requires employees with a higher skill set and therefore demands a higher margin than the services provided by third-party vendors/subcontractors (e.g., janitorial services, landscaping maintenance).

Using the conservative assumption that overall contract margin is allocated evenly over all costs incurred under the contract, the implicit margin earned on pass-through costs in 2024 is not material to gross revenue, the Company’s closest GAAP measure. When coupled with the explicit margin noted above, the total estimated margin earned on pass-through costs was not material to our gross revenue in

2024. This estimate excludes overhead expenses within the business segment incurred to manage the third-party pass-through costs for our clients, which is comprised of costs such as back-office vendor invoice management and other overhead required to be incurred in our role as FM or Project Management services provider. Additionally, this estimate excludes any allocation of CBRE corporate overhead costs, included within our Corporate segment. Any margin earned on these costs is intended to cover our costs of coordinating and managing the third-party service providers, inclusive of customer-related operations captured in segment overhead as well as corporate overhead. As such, we believe applying an allocation of segment and corporate overhead costs related to managing the third parties, to the estimated explicit and implicit margin earned on pass-through costs in 2024 results in a negligible percentage of our gross revenue, which management considers to be immaterial to the Company’s GAAP results.

We considered the guidance within Question 100.04 of the Compliance & Disclosure Interpretation on Non-GAAP Measures. As discussed in our previous response to the Staff, these pass-through costs exclude any costs related to work performed by CBRE employees. Our adjusted net revenue measure reflects the portion of revenue generated by the Company’s own employees, which we believe is useful to investors as a supplemental measure. We also believe the presentation of adjusted net revenue provides additional transparency for our investors in the way that the FM and Project Management businesses are managed and contracts are negotiated with customers. As such, the measure is not intended to change the recognition and measurement principles of our GAAP revenue by adjusting gross revenue for pass-through costs also recognized as revenue to arrive at adjusted net revenue. We believe our disclosures related to the non-GAAP measure, including labeling it as non-GAAP and the description of the measure also ensure investors are not mislead by the measure.

In consideration of the Staff’s comments, we advise the Staff that we have changed the title of this non-GAAP measure from “net revenue” to “adjusted net revenue” in our most recent SEC filings and earnings presentations to further eliminate any confusion that the existing measure may represent GAAP revenue. We will also monitor the margin on pass-through costs to ensure that it continues to be immaterial to gross revenue and will adjust our presentation were it ever to become material.

The following table provides a summary of example contract terms illustrating the various contract structures the Company enters into with clients related to facility management services:

Rule 83 Confidential Treatment Requested by CBRE Group, Inc.

CBRE_01:

Client

Contract Type

Contract Excerpt

Pass-Through with implicit Pass-Through Net Revenue – Fixed Price

[*]

Fixed price contract for facilities management which includes a mark-up for additional services

Pass-Through with implicit Pass-Through Net Revenue

- Cost-Plus

Cost plus and management fee is a % mark-up on total costs

- Cost-Plus with GMP

GMP contract for facilities management

Explicit Pass-Through Net Revenue

Fixed price contract which has a % mark-up on the fixed costs and % mark-up on variable costs both of which include third party costs

Zero Pass-Through Net Revenue – Cost Plus

Management fee is based on documented square footage as well as % mark-up on labor. Third party costs are charged at actual cost.

The following table summarizes the various types of pass-through costs incurred, along with the estimated explicit and implicit margins earned by cost type:

Rule 83 Confidential Treatment Requested by CBRE Group, Inc. CBRE_02:

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In your response to our prior comment 1, you explain that to estimate an implicit margin on contracts quoted with a fixed price or management fees that are charged to clients and may be derived as a percentage of total budgeted costs, you attributed a portion of the overall contract margin earned to the third-party pass-through costs incurred on the contract by allocating the margin based on the percentage of

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thirdparty pass-through costs to total direct contract costs. Please address the following: • Please tell us how you define overall contract margin earned and total direct contract costs. • Please provide us with the company’s overall contract margin earned and total direct contract costs (if it differs from the cost of revenue line item on your consolidated statements of operations) for the year ended December 31, 2024. • Please show us how the overall contract margin was allocated to calculate estimated margin by contract structure.

The

Company acknowledges receipt of the Staff’s comments and informs the Staff that the Company will remove net revenue from its list of non-GAAP financial measures. This change will be reflected in the

Company’s earnings materials and future filings with the Securities and Exchange Commission, beginning with the Company’s third quarter 2025 reporting. Read in the reply ↗

Considering that you have consolidated revenues in excess of $13B for the year ended December 31, 2016 and that; based on the information disclosed throughout your filing, you have revenues from multiple lines of business, please tell us why you do not provide disaggregated information of your revenues for each line of business.

The

Company is currently amidst adoption efforts relative to the new revenue recognition guidance that is effective on January 1, 2018, including providing disaggregated information on its revenue. Under the existing guidance, the Company has historically taken the position that all revenue is from real estate services and provided some information on line of business performance within its MD&A discussion.

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Given the comment above, the Company will add disaggregated information on its revenue to its consolidated and segment MD&A tabular disclosures, beginning with its Form 10-Q for the quarter ended June 30, 2017.

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With respect to your investment in MSRs, please address the following:  Please explain to us what you mean by the disclosure that gains from MSR’s are initially recorded at fair value within revenue, clarifying what the gains recognized on the origination and sale of mortgage loans represent.

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Describe to us the accounting process you follow in recognizing an MSR when it is separated from a loan upon the sale of the loan. In your response, explain to us how you applied the guidance in ASC Topic 860-20-25-4 with respect to your accounting for MSRs.  To the extent the “gain from mortgage servicing rights” represents a gain on the sale of loans, please explain to us how you determined the gain should be classified as a component of revenue.

Mortgage servicing right (“MSR”) assets and liabilities are initially recorded at fair value with the related net gains reflected in revenue. The revenue recognized on the origination of mortgage loans held for sale includes:

Origination fee revenue;

Premiums due upon the sale of the loan or settlement of the mortgage-backed securities (“MBS”); and

Fair value of the mortgage servicing rights.

Initially, the fair value of the MSRs is reflected in the fair value of the mortgage loan held for sale receivable (“warehouse receivable”).

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Upon sale of mortgage loans, we derecognize the assets sold and recognize the retained mortgage servicing right asset at fair value, as required by ASC Topic 860-20-25-4.

Statement of Financial Accounting Concepts No. 6, “Elements of Financial Statements” paragraph 78 states that,

“Revenues are inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations”. Given the commercial mortgage brokerage business is part of the Company’s central operations, the activity described above has been included in revenue within the Company’s consolidated statement of operations.

The “gain from mortgage servicing rights” does not represent a gain on the sale of loans. Rather, the recognition of the MSR asset at fair value results in a gain. To enhance the clarity of its disclosure, the Company intends to modify its future filings as follows:

Existing disclosure: Gains from mortgage servicing rights are initially recorded at fair value within revenue.

New disclosure: Mortgage servicing right assets and liabilities are initially recorded at fair value with the related net gains reflected in revenue.

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We understand that you originate loans held for sale and that, based on your disclosures; you have either a firm commitment to sell specific loans or a confirmed forward trade commitment for the issuance and purchase of MBS that will be secured by the loans.

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For each period presented in your financial statements, please tell us the amount of loans originated for sale, the amount of the proceeds received on the loans sold within the periods and the net gain or loss on the sale of loans within the periods. In addition, please clarify for us how your warehouse receivable activity is reflected in your consolidated statements of cash flows and provide us with a reconciliation of that activity to line items in your consolidated statements of cash flows. To the extent this activity is shown on a net basis in your consolidated statements of cash flows, please explain to us how you determined that presentation is appropriate.

information requested is provided in the table below. The Company accounts for all activity associated with its warehouse receivables and warehouse lines of credit on a net basis in its consolidated statement of cash flows applying ASC Topic 230-45-8. This accounting literature states that for certain items, where the turnover is quick, the amounts are large and the maturities are short, only the net changes during the period in assets and liabilities with those characteristics need be reported.

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This is because knowledge of the gross cash receipts and payments related to them may not be necessary to understand the entity’s operating, investing, and financing activities. Given that our warehouse receivables are large, classified as “held-for-sale” with an intent to resell and are generally held for 30-45 days on average (so turnover is quick), the Company believes gross reporting is not meaningful to a user. Accordingly, the Company’s view is that its warehouse activity falls under this literature and therefore net treatment is appropriate.

Warehouse Receivable

Rollforward

In thousands

2016

2015

2014

Beginning Balance

$

1,767,107

506,294

381,545

Origination of mortgage loans

15,297,471

12,488,511

8,642,345

Gains reflected within revenue in statement of operations (premiums on loan sales)

42,344

27,847

20,082

Sales of mortgage loans

(15,791,289

)

(11,238,377

(8,515,447

Cash collections of premiums on loan sales

(42,344

(27,847

(20,082

Proceeds from sale of mortgage loans

(15,833,633

(11,266,224

(8,535,529

Net increase (decrease) in mortgage servicing rights included in warehouse receivables

2,758

10,679

(2,149

Ending Balance

1,276,047

Balance Sheet

2013

Warehouse receivables

Warehouse lines of credit (which fund loans that U.S. Government Sponsored Entities have committed to purchase)

1,254,653

1,750,781

501,185

374,597

Statement of Cash Flows

Gain related to premiums on loan sales

Gain related to MSR fair value

(154,040

(110,428

(73,498

Total gain on sale of loans and servicing rights

(196,384

(138,275

(93,580

Gain on sale of other assets

(4,978

(2,553

(2,056

Gain on sale of loans, servicing rights and other assets per consolidated statement of cash flows

(201,362

(140,828

(95,636

Decrease (increase) in warehouse receivables

491,060

(1,260,813

(124,749

(Decrease) increase in warehouse lines of credit

(496,128

1,249,596

126,588

Net change (Not a separate line item, but reflected with movement in receivables in operating section of cash flow)

(5,068

(11,217

1,839

Proceeds from premiums on loan sales

Proceeds from sale of other assets

1,187

2,585

5,459

Proceeds from the sale of servicing rights and other assets per consolidated statement of cash

43,531

30,432

25,541

As requested by the Staff, the Company acknowledges that:

the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

In the event you have any additional questions, please contact me directly at (213)

613-3730.

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Please refer to the response to comment 2. We note your statement that the recognition of the MSR asset at fair value results in a gain. In accordance with ASC Topic 860-2025-4 separately recognized servicing assets are included in proceeds from the sale of financial assets. As such, it appears the “gain from mortgage servicing rights” represents a gain on the sale of loans.

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Please clarify for us how you have considered the guidance in ASC Topic 860-20-25-4 and revise your disclosure accordingly. In your response, please provide us a sample journal entry reflecting how you record sale of the underlying loan and the removal of the receivable from your balance sheet.

In accordance with ASC Topic 860-20-25-4, separately recognized servicing assets are included in proceeds from the sale of financial assets. The warehouse receivable, or loan held for sale, is recognized at fair value, which includes forecasted proceeds from the contractual loan sale and the fair value of the mortgage servicing rights (“MSR”).

As an example, upon origination and sale of a mortgage loan held for sale, the following journal entries are recorded:

Assumptions:

Face Value of

Loan:

$20,000,000

MSR Fair

Value:

$90,000

Journal Entry at Origination of Mortgage Loan Held For

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Sale:

Warehouse

Receivable

$20,090,000

Cash

Warehouse Line of

Credit

($20,000,000)

Gain associated with the sale of loans

($90,000)

Journal Entry at Sale of Loan:

MSR Asset

($20,090,000)

The Company will revise its disclosure in future filings by deleting the following sentence:

Gains from mortgage servicing rights are initially recorded at fair value within revenue.

In its place, the Company will add the following sentence:

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 within revenue).

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Please refer to the response to comment 3 and confirm to us, if true, that the gain on MSR’s presented in the response are gross and that you did not experience any losses (e.g., servicing liabilities).

The Company has historically experienced servicing liabilities on rare occasions when the cost to service a loan exceeds the related servicing fees. For the years ended December 31, 2016, 2015 and 2014, the losses experienced were de minimis, ranging from $11,000 to $176,000 in each of the three years. Accordingly, these losses were netted against gains and servicing assets. Read in the reply ↗

Please refer to the response to comment 3. It appears to us that ASC 230-10-45-21 applies to your fact pattern in that, while characterized as warehouse receivables, you are originating loans specifically for resale and, therefore, the related cash receipts and cash payments should be presented separately in the operating section of the statements of cash flow.

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Also, given the magnitude of the activity flowing through the warehouse receivable and payable accounts, we believe disaggregated information of this activity in the footnotes to the financial statements may provide an investor an enhanced understanding of your loan warehouse operations. Please revise future filings accordingly.

Given the comment above, the Company will reflect the cash receipts and payments associated with its origination and sale of mortgage loans within the operating section of its statement of cash flows. Additionally, as requested, the Company will provide disaggregated information on its warehouse receivable and payable accounts in the footnotes to its financial statements.

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The Company will make these additions to its disclosures beginning with its Form 10-Q for the quarter ended June 30, 2017.

As requested by the Staff, the Company acknowledges that:

• the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

In the event you have any additional questions, please contact me directly at (213) 613-3730.

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