cbg-ex991

CBRE GROUP, INC. REPORTS DOUBLE-DIGIT SECOND-QUARTER 2018 REVENUE AND EARNINGS GROWTH AND INCREASES FULL-YEAR OUTLOOK

Los Angeles, CA – August 2, 2018 — CBRE Group, Inc. (NYSE:CBRE) today reported strong financial results for the second quarter ended June 30, 2018.

“We were pleased to have produced another strong quarter of double-digit growth in revenue, fee revenue and adjusted earnings per share,” said Bob Sulentic, CBRE’s president and chief executive officer. “We benefited significantly from the diversity and strength of our business mix – as leasing, occupier outsourcing and development services drove revenue growth in the quarter – and from our people’s focus on delivering differentiated outcomes for our clients – the key pillar of our strategy.”

“We begin the second half of the year with positive momentum across our business,” he continued. “The macro environment remains favorable with solid economic growth. While we are mindful of potential risks on the horizon, particularly from heightened trade tensions, we have thus far seen no discernible impact on our business.”

CBRE has raised its guidance for full-year 2018 adjusted earnings per share to a range of $3.10 to $3.20, up from $3.00 to $3.15. This implies growth of 15% for the full year at the mid-point of the guidance range, which would be CBRE’s 9^th consecutive year of double-digit adjusted earnings per share growth.

The following tables present highlights of CBRE segment performance during the second quarter of 2018 (dollars in thousands):

	Americas				EMEA				APAC
			% Change from Q2 2017				% Change from Q2 2017				% Change from Q2 2017
	Q2 2018		USD	LC	Q2 2018		USD	LC	Q2 2018		USD	LC
Revenue	$	3,140,427	11%	11%	$	1,315,452	29%	20%	$	538,200	11%	8%
Fee revenue		1,432,833	13%	13%		684,620	24%	15%		300,792	10%	7%
EBITDA		258,353	14%	14%		66,519	6%	-1%		42,861	-3%	-5%
Adjusted EBITDA		258,353	11%	10%		66,519	-5%	-12%		42,861	-4%	-6%


	Global Investment Management				Development Services ⁽⁶⁾
			% Change from Q2 2017				% Change from Q2 2017
	Q2 2018		USD	LC	Q2 2018		USD	LC
Revenue	$	98,947	7%	2%	$	18,408	8%	8%
EBITDA		14,375	-46%	-50%		55,673	20%	20%
Adjusted EBITDA		15,901	-33%	-37%		55,673	20%	20%

CBRE experienced particularly strong revenue growth in its combined regional services business in the second quarter. For 2018, as indicated at the beginning of the year, the company is making incremental investments to support future growth, streamline operations, and share some of the benefits of tax reform with its employees. These investments, coupled with strong revenue growth in global occupier outsourcing and a decline in high-margin property sales in EMEA and APAC from an exceptionally strong prior-year quarter, weighed on EBITDA margins in the second quarter. The company does not expect to increase the current level of run-rate investment for the foreseeable future, and therefore does not expect these incremental investments to put negative pressure on operating leverage in its combined regional services business in 2019.

In EMEA, revenue rose 29% (20% local currency), driven by France, Italy, the Netherlands and the United Kingdom. Americas revenue was up 11% (same local currency), supported by strong gains in Brazil, Canada and the United States. APAC (Asia Pacific) revenue increased 11% (8% local currency), fueled by Greater China and India.

Among global business lines, leasing revenue growth was particularly strong, rising 20% (18% local currency). The Americas paced this performance with a 19% (same local currency) revenue gain, driven primarily by the United States. EMEA achieved 21% (12% local currency) growth, with especially strong contributions from France, Germany and the United Kingdom. APAC leasing revenue rose 23% (20% local currency), led by Australia, Greater China and Japan.

Global occupier outsourcing once again produced strong growth, as the combination of the on-going secular outsourcing trend and CBRE’s advancing capabilities continue to catalyze revenue gains. Revenue increased 18% (15% local currency) and fee revenue rose 24% (20% local currency). Growth was strong around the world, particularly in EMEA and APAC. Acquisitions contributed 2% (same local currency) to the revenue growth rate and 5% (same local currency) to the fee revenue growth rate in the second quarter of 2018.

Combined revenue from CBRE’s capital markets businesses – property sales and commercial mortgage origination – was up 3% (2% local currency). This was driven by commercial mortgage origination revenue growth of 15% (same local currency), reflecting solid activity with banks and government agencies.

Global property sales revenue was up 1% (down 2% local currency). Americas sales revenue was up 3% (same local currency), with double-digit growth in Brazil, Canada and Mexico. APAC sales revenue declined 12% (14% local currency) while EMEA sales revenue edged up 4% (down 3% local currency). This performance reflects very difficult comparisons with the second quarter of 2017, when EMEA and APAC both had exceptional growth of more than 40% (local currency).

Recurring revenue from the loan servicing portfolio increased 10% (same local currency).

Property management services produced revenue and fee revenue growth of 9% (6% local currency) and 13% (9% local currency), respectively, supported by growth in the fund administration business.

Adjusted EBITDA for CBRE’s real estate investment services businesses (CBRE Global Investors and Development Services) rose 2% (1% local currency) on a combined basis. Growth was driven by several large asset sales in Development Services (which were reported in equity income from unconsolidated subsidiaries and gain on disposition of real estate), where adjusted EBITDA grew by 20% (same local currency).

CBRE made three acquisitions in the second quarter, highlighted by FacilitySource, a leader in technology-based procurement and facility management solutions in the United States.

The company’s second quarter earnings conference call will be held today (Thursday, August 2, 2018) at 8:30 a.m. Eastern Time. A webcast, along with an associated slide presentation, will be accessible through the Investor Relations section of the company’s website at www.cbre.com/investorrelations.

The direct dial-in number for the conference call is 877-407-8037 for U.S. callers and 201-689-8037 for international callers. A replay of the call will be available starting at 1:00 p.m. Eastern Time on August 2, 2018, and will be available for one week following the event. The dial-in number for the replay is 877‑660‑6853 for U.S. callers and 201-612-7415 for international callers. The access code for the replay is 13681165. A transcript of the call will be available on the company’s Investor Relations website at www.cbre.com/investorrelations.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated 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.

The information contained in, or accessible through, the company’s website is not incorporated into this press release.

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 our future growth momentum, operations, financial performance (including adjusted earnings per share), market share, investment levels 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 and business conditions, particularly in geographies where our business may be concentrated; volatility and disruption of the securities, capital and credit markets, interest rate increases, the cost and availability of capital for investment in real estate, clients’ willingness to make real estate or long-term contractual commitments and other factors affecting the value of real estate assets, inside and outside the United States; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in average cap 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; declines in lending activity of U.S. Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market; our ability to diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; our ability to leverage our global services platform to maximize and sustain long-term cash flow; our ability to maintain EBITDA and adjusted EBITDA margins that enable us to continue investing in our platform and client service offerings; our ability to control costs relative to revenue growth; economic volatility and market uncertainty globally related to uncertainty surrounding the implementation and effect of the United Kingdom’s referendum to leave the European Union, including uncertainty in relation to the legal and regulatory framework that would apply to the United Kingdom and its relationship with the remaining members of the European Union; foreign currency fluctuations; our ability to retain and incentivize key personnel; 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 synergistic and accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of companies we may acquire; the ability of our Global 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; 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; the ability of our wholly-owned subsidiary, CBRE Capital Markets, Inc., to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; variations in historically customary seasonal patterns that cause our business not to perform as expected; 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; liabilities under guarantees, or for construction defects, that we incur in our Development Services business; our and our employees’ ability to execute on, and adapt to, information technology strategies and trends; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; changes in domestic 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 Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries; our ability to maintain our effective tax rate, including during 2018 as we continue to assess the provisional amount recorded based upon our best estimate of the tax impact of the Tax Cuts and Jobs Act (Tax

Act) enacted into law on December 22, 2017 in accordance with our understanding of the Tax Act and the related guidance available; changes in applicable tax or accounting requirements, including the impact of any subsequent additional regulation or guidance associated with the Tax Act; and the effect of implementation of new accounting rules and standards (including new lease accounting guidance which will be effective in the first quarter of 2019).

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, 2017 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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 investorrelations@cbre.com.

The terms “fee revenue,” “organic fee revenue,” “adjusted net income,” “adjusted earnings per share” (or adjusted EPS), “EBITDA” and “adjusted EBITDA,” 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.

Note – CBRE has not reconciled the (non-GAAP) adjusted earnings per share forward-looking guidance included in this press 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 We adopted new revenue recognition guidance in the first quarter of 2018. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.

² Local currency percentage change is calculated by comparing current-period results at prior-period exchange rates versus prior-period results.

³ Fee revenue is gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. Organic fee revenue for the three months ended June 30, 2018 further excludes contributions from all acquisitions completed after second-quarter 2017. Organic fee revenue for the six months ended June 30, 2018 further excludes contributions from: (i) all acquisitions completed after first-quarter 2017 for the three months ended March 31, 2018 and (ii) all acquisitions completed after the second-quarter of 2017 for the three months ended June 30, 2018.

⁴ Adjusted net income and adjusted earnings per share (or adjusted EPS) exclude the effect of select charges from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes for such charges. Adjustments during the periods presented included non-cash depreciation and amortization expense related to certain assets attributable to acquisitions, write-off of financing costs on extinguished debt, and certain carried interest incentive compensation expense (reversals) to align with the timing of associated revenue. Adjustments for the six months ended June 30, 2018 also included an update to the provisional estimated tax impact of U.S. tax reform initially recorded in the fourth quarter of 2017.

⁵ EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of certain carried interest incentive compensation reversals to align with the timing of associated revenue and cash and non-cash charges related to acquisitions.

⁶ Revenue in the Development Services segment does not include equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interest. EBITDA includes equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense.

⁷ In December 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118 (SAB 118), Income Tax Accounting Implications of the Tax Cuts and Jobs Act (Tax Act), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The net charge in the first quarter of 2018 related to an update of the net provision associated with the Tax Act based upon our reasonable estimates and interpretation of the Tax Act. We consider certain aspects of this charge to be provisional and the impact may change due to additional guidance that may be issued by the U.S. Government as well as ongoing analysis of our data and assumptions we have made. Our accounting for the effects of the Tax Act is expected to be completed within the measurement period provided by SAB 118.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018			2017
			(As Adjusted) ⁽¹⁾					(As Adjusted) ⁽¹⁾
Revenue:
Fee revenue	$	2,535,600	$	2,200,949	$	4,812,499		$	4,134,803
Pass through costs also recognized as revenue		2,575,834		2,238,622		4,972,887			4,355,734
Total revenue		5,111,434		4,439,571		9,785,386			8,490,537

Costs and expenses:
Cost of services		3,958,748		3,409,540		7,578,709			6,556,017
Operating, administrative and other		826,282		712,615		1,558,517			1,319,241
Depreciation and amortization		113,399		100,386		221,564			194,423
Total costs and expenses		4,898,429		4,222,541		9,358,790			8,069,681

Gain on disposition of real estate ⁽²⁾		12,311		11,298		12,329			12,683

Operating income		225,316		228,328		438,925			433,539

Equity income from unconsolidated subsidiaries ⁽²⁾		96,021		75,384		136,200			90,402
Other income (loss)		4,009		3,186		(271	)		7,301
Interest income		1,489		1,427		5,110			3,838
Interest expense		26,885		35,430		55,743			69,440
Write-off of financing costs on extinguished debt		—		—		27,982			—
Income before provision for income taxes		299,950		272,895		496,239			465,640
Provision for income taxes		70,319		69,887		116,483			123,706
Net income		229,631		203,008		379,756			341,934
Less: Net income attributable to non-controlling interests ⁽²⁾		964		1,231		801			3,137
Net income attributable to CBRE Group, Inc.	$	228,667	$	201,777	$	378,955		$	338,797


Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.67	$	0.60	$	1.12		$	1.01
Weighted average shares outstanding for basic income per share		339,081,556		336,975,149		338,986,354			336,941,681

Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.67	$	0.59	$	1.10		$	1.00
Weighted average shares outstanding for diluted income per share		343,471,513		340,882,603		343,031,189			340,214,246


EBITDA	$	437,781	$	406,053	$	795,617		$	722,528
Adjusted EBITDA	$	439,307	$	418,686	$	787,114		$	731,863

	Three Months Ended June 30, 2018
								Global
								Investment		Development
	Americas		EMEA			Asia Pacific		Management		Services			Consolidated
Revenue:
Fee revenue	$	1,432,833	$	684,620		$	300,792	$	98,947	$	18,408		$	2,535,600
Pass through costs also recognized as revenue		1,707,594		630,832			237,408		—		—			2,575,834
Total revenue		3,140,427		1,315,452			538,200		98,947		18,408			5,111,434

Costs and expenses:
Cost of services		2,506,171		1,048,971			403,606		—		—			3,958,748
Operating, administrative and other		384,626		200,728			91,768		88,891		60,269			826,282
Depreciation and amortization		80,693		20,277			4,989		7,257		183			113,399
Total costs and expenses		2,971,490		1,269,976			500,363		96,148		60,452			4,898,429

Gain on disposition of real estate		—		—			—		—		12,311			12,311

Operating income (loss)		168,937		45,476			37,837		2,799		(29,733	)		225,316

Equity income from unconsolidated subsidiaries		7,534		238			35		2,461		85,753			96,021
Other income (loss)		1,189		(27	)		—		2,847		—			4,009
Less: Net (loss) income attributable to non-controlling interests		—		(555	)		—		989		530			964
Add-back: Depreciation and amortization		80,693		20,277			4,989		7,257		183			113,399

EBITDA		258,353		66,519			42,861		14,375		55,673			437,781

Adjustments:
Carried interest incentive compensation expense to align with the timing of associated revenue		—		—			—		1,526		—			1,526

Adjusted EBITDA	$	258,353	$	66,519		$	42,861	$	15,901	$	55,673		$	439,307

	Three Months Ended June 30, 2017 (As Adjusted) ⁽¹⁾
									Global
									Investment			Development
	Americas		EMEA			Asia Pacific			Management			Services			Consolidated
Revenue:
Fee revenue	$	1,266,039	$	551,466		$	273,715		$	92,763		$	16,966		$	2,200,949
Pass through costs also recognized as revenue		1,560,884		464,554			213,184			—			—			2,238,622
Total revenue		2,826,923		1,016,020			486,899			92,763			16,966			4,439,571

Costs and expenses:
Cost of services		2,255,569		789,693			364,278			—			—			3,409,540
Operating, administrative and other		350,937		164,540			78,332			71,309			47,497			712,615
Depreciation and amortization		71,724		18,845			4,389			4,885			543			100,386
Total costs and expenses		2,678,230		973,078			446,999			76,194			48,040			4,222,541

Gain on disposition of real estate		—		—			—			—			11,298			11,298

Operating income (loss)		148,693		42,942			39,900			16,569			(19,776	)		228,328

Equity income (loss) from unconsolidated subsidiaries		5,222		318			(19	)		4,419			65,444			75,384
Other income		612		24			—			2,550			—			3,186
Less: Net income (loss) attributable to non-controlling interests		1		(503	)		—			1,738			(5	)		1,231
Add-back: Depreciation and amortization		71,724		18,845			4,389			4,885			543			100,386

EBITDA		226,250		62,632			44,270			26,685			46,216			406,053

Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		—		—			—			(2,775	)		—			(2,775	)
Integration and other costs related to acquisitions		7,461		7,661			286			—			—			15,408

Adjusted EBITDA	$	233,711	$	70,293		$	44,556		$	23,910		$	46,216		$	418,686

	Six Months Ended June 30, 2018
								Global
								Investment			Development
	Americas		EMEA			Asia Pacific		Management			Services			Consolidated
Revenue:
Fee revenue	$	2,701,567	$	1,293,987		$	552,575	$	222,637		$	41,733		$	4,812,499
Pass through costs also recognized as revenue		3,289,084		1,202,719			481,084		—			—			4,972,887
Total revenue		5,990,651		2,496,706			1,033,659		222,637			41,733			9,785,386

Costs and expenses:
Cost of services		4,781,022		2,009,618			788,069		—			—			7,578,709
Operating, administrative and other		739,897		384,975			169,078		167,206			97,361			1,558,517
Depreciation and amortization		158,674		39,123			9,670		13,484			613			221,564
Total costs and expenses		5,679,593		2,433,716			966,817		180,690			97,974			9,358,790

Gain on disposition of real estate		—		—			—		—			12,329			12,329

Operating income (loss)		311,058		62,990			66,842		41,947			(43,912	)		438,925

Equity income from unconsolidated subsidiaries		11,533		476			229		3,336			120,626			136,200
Other income (loss)		2,931		62			—		(3,264	)		—			(271	)
Less: Net (loss) income attributable to non-controlling interests		—		(814	)		—		1,407			208			801
Add-back: Depreciation and amortization		158,674		39,123			9,670		13,484			613			221,564

EBITDA		484,196		103,465			76,741		54,096			77,119			795,617

Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		—		—			—		(8,503	)		—			(8,503	)

Adjusted EBITDA	$	484,196	$	103,465		$	76,741	$	45,593		$	77,119		$	787,114

	Six Months Ended June 30, 2017 (As Adjusted) ⁽¹⁾
									Global
									Investment			Development
	Americas		EMEA			Asia Pacific			Management			Services			Consolidated
Revenue:
Fee revenue	$	2,399,250	$	1,029,898		$	492,143		$	182,329		$	31,183		$	4,134,803
Pass through costs also recognized as revenue		3,066,879		890,753			398,102			—			—			4,355,734
Total revenue		5,466,129		1,920,651			890,245			182,329			31,183			8,490,537

Costs and expenses:
Cost of services		4,361,928		1,518,217			675,872			—			—			6,556,017
Operating, administrative and other		673,305		307,482			147,009			122,831			68,614			1,319,241
Depreciation and amortization		140,293		34,415			8,703			9,924			1,088			194,423
Total costs and expenses		5,175,526		1,860,114			831,584			132,755			69,702			8,069,681

Gain on disposition of real estate		—		—			—			—			12,683			12,683

Operating income (loss)		290,603		60,537			58,661			49,574			(25,836	)		433,539

Equity income from unconsolidated subsidiaries		9,862		819			50			5,292			74,379			90,402
Other income		1,039		23			—			6,239			—			7,301
Less: Net (loss) income attributable to non-controlling interests		—		(160	)		—	—		3,244			53			3,137
Add-back: Depreciation and amortization		140,293		34,415			8,703			9,924			1,088			194,423

EBITDA		441,797		95,954			67,414			67,785			49,578			722,528

Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		—		—			—			(18,016	)		—			(18,016	)
Integration and other costs related to acquisitions		17,139		9,794			418			—			—			27,351

Adjusted EBITDA	$	458,936	$	105,748		$	67,832		$	49,769		$	49,578		$	731,863

The following measures are considered “non-GAAP financial measures” under SEC guidelines:

These measures are not recognized measurements under United States generally accepted accounting principles, or “GAAP.” When analyzing our operating performance, investors should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. The company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.

With respect to fee revenue and organic fee revenue: the company believes that investors may find these measures useful to analyze the financial performance of our Occupier Outsourcing and Property Management business lines and our business generally. Fee revenue excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business. Organic fee revenue for the three months ended June 30, 2018 further excludes contributions from all acquisitions completed after second-quarter 2017. Organic fee revenue for the six months ended June 30, 2018 further excludes contributions from: (i) all acquisitions completed after first-quarter 2017 for the three months ended March 31, 2018 and (ii) all acquisitions completed after the second-quarter of 2017 for the three months ended June 30, 2018.

With respect to adjusted net income, adjusted EPS, EBITDA and adjusted EBITDA: the company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions—and in the case of EBITDA and adjusted EBITDA—the effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of EBITDA and adjusted EBITDA, these measures are not intended to be measures of free cash flow for our management’s discretionary use because they do not consider cash requirements such as tax and debt service payments. The EBITDA and adjusted EBITDA measures calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. The company also uses adjusted EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

Net income attributable to CBRE Group, Inc., as adjusted (or adjusted net income), and diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (or adjusted EPS), are calculated as follows (dollars in thousands, except share data):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
				(As Adjusted) ⁽¹⁾						(As Adjusted) ⁽¹⁾

Net income attributable to CBRE Group, Inc.	$	228,667		$	201,777		$	378,955		$	338,797

Plus / minus:
Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions		29,437			27,324			58,409			54,315
Write-off of financing costs on extinguished debt		—			—			27,982			—
Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue		1,526			(2,775	)		(8,503	)		(18,016	)
Integration and other costs related to acquisitions		-			15,408			-			27,351
Tax impact of adjusted items		(7,068	)		(14,797	)		(18,605	)		(23,245	)
Impact of U.S. tax reform		—			—			548			—

Net income attributable to CBRE Group, Inc. shareholders, as adjusted	$	252,562		$	226,937		$	438,786		$	379,202

Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted	$	0.74		$	0.67		$	1.28		$	1.11

Weighted average shares outstanding for diluted income per share		343,471,513			340,882,603			343,031,189			340,214,246

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018		2017			2018			2017
			(As Adjusted) ⁽¹⁾						(As Adjusted) ⁽¹⁾

Net income attributable to CBRE Group, Inc.	$	228,667	$	201,777		$	378,955		$	338,797

Add:
Depreciation and amortization		113,399		100,386			221,564			194,423
Interest expense		26,885		35,430			55,743			69,440
Write-off of financing costs on extinguished debt		—		—			27,982			—
Provision for income taxes		70,319		69,887			116,483			123,706
Less:
Interest income		1,489		1,427			5,110			3,838

EBITDA		437,781		406,053			795,617			722,528

Adjustments:
Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue		1,526		(2,775	)		(8,503	)		(18,016	)
Integration and other costs related to acquisitions		—		15,408			—			27,351

Adjusted EBITDA	$	439,307	$	418,686		$	787,114		$	731,863

Revenue includes client reimbursed pass through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients, both of which are excluded from fee revenue. Organic fee revenue for the three months ended June 30, 2018 further excludes contributions from all acquisitions completed after second-quarter 2017. Organic fee revenue for the six months ended June 30, 2018 further excludes contributions from: (i) all acquisitions completed after first-quarter 2017 for the three months ended March 31, 2018 and (ii) all acquisitions completed after the second-quarter of 2017 for the three months ended June 30, 2018. Reconciliations are shown below (dollars in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018			2017		2018			2017
				(As Adjusted) ⁽¹⁾					(As Adjusted) ⁽¹⁾
Organic Fee Revenue
Consolidated fee revenue ⁽¹⁾	$	2,535,600		$	2,200,949	$	4,812,499		$	4,134,803
Less: Acquisitions		(51,250	)				(94,328	)

Organic fee revenue	$	2,484,350				$	4,718,171


Occupier Outsourcing
Fee revenue ⁽²⁾	$	762,173		$	613,372	$	1,474,694		$	1,180,712
Plus: Pass through costs also recognized as revenue		2,421,394			2,091,914		4,662,952			4,062,047

Revenue ⁽²⁾	$	3,183,567		$	2,705,286	$	6,137,646		$	5,242,759


Property Management
Fee revenue ⁽²⁾	$	150,181		$	133,315	$	298,310		$	259,062
Plus: Pass through costs also recognized as revenue		154,440			146,708		309,935			293,687

Revenue ⁽²⁾	$	304,621		$	280,023	$	608,245		$	552,749

	June 30,		December 31,
	2018		2017
			(As Adjusted) ⁽¹⁾
Assets:
Cash and cash equivalents ⁽²⁾	$	531,481	$	751,774
Restricted cash		71,865		73,045
Receivables, net		3,324,522		3,112,289
Warehouse receivables⁽³⁾		1,488,324		928,038
Property and equipment, net		705,469		617,739
Goodwill and other intangibles, net		4,855,453		4,653,852
Investments in and advances to unconsolidated subsidiaries		233,889		238,001
Other assets, net		1,324,454		1,343,658

Total assets	$	12,535,457	$	11,718,396

Liabilities:
Current liabilities, excluding debt	$	3,310,062	$	3,802,154
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) ⁽³⁾		1,471,591		910,766
Revolving credit facility		598,000		—
Senior term loans, net		743,715		193,475
4.875% senior notes, net		592,372		591,972
5.25% senior notes, net		422,553		422,423
5.00% senior notes, net		—		791,733
Other debt		5,727		24
Other long-term liabilities		874,566		831,235

Total liabilities		8,018,586		7,543,782

Equity:
CBRE Group, Inc. stockholders' equity		4,453,577		4,114,496
Non-controlling interests		63,294		60,118

Total equity		4,516,871		4,174,614

Total liabilities and equity	$	12,535,457	$	11,718,396


PRESS RELEASE	Corporate Headquarters
	400 South Hope Street
	25^th Floor
	Los Angeles, CA 90071
	www.cbre.com


For further information:
Brad Burke	Steve Iaco
Investor Relations	Media Relations
215.921.7436	212.984.6535

	(i)	Fee revenue
	(ii)	Organic fee revenue
	(iii)	Net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as “adjusted net income”)
	(iv)	Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (which we also refer to as “adjusted earnings per share” or “adjusted EPS”)
	(v)	EBITDA and adjusted EBITDA