CBRE GROUP, INC. (CBRE)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 June 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.

In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities

Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects as well as

estimates of industry growth for the next quarter and beyond. For important information regarding these forward-looking

statements, please see the discussion below under the caption “Cautionary Note on Forward-Looking Statements.”

Beginning with first-quarter 2026 results, we reclassified amortization associated with MSRs (mortgage servicing

rights) to net against the related revenue (commercial mortgage origination). Historically, we have recognized the

corresponding MSR intangible asset as an amortization expense over the estimated mortgage service period. Prior year amounts

have been reclassified to conform with the 2026 presentation.

Business Environment

The strong recovery of the commercial real estate market continued in the first half of 2026. This is reflected in

increased property leasing and sales activity, particularly in the U.S. Leasing activity in the U.S. remained strong across all

property types, led by industrial and office, while global activity continued to strengthen in international markets as well.

During the second quarter, investment sales activity improved significantly in the U.S., while growth was more modest in

overseas markets. Investment activity has been supported by broad capital availability, improved occupancy market

fundamentals and narrower 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 has fueled continued strong demand for critical infrastructure services. Through the first

half of 2026, the ongoing Middle East conflict has had limited impact on CBRE’s business except for a slowdown in

fundraising from capital sources based in the region.

Capital Allocation

We deployed $988 million in 2026 to repurchase 6,984,186 shares as of July 27, 2026.

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Results of Operations

The following table sets forth items derived from our consolidated statements of operations for the three and six

months ended June 30, 2026 and 2025 (dollars in millions):

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(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

reimbursable by clients and the corresponding amounts owed are reflected within Revenue.

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Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

We reported consolidated net income of $204 million for the quarter, on revenue of $11.2 billion as compared to

consolidated net income of $215 million on revenue of $9.7 billion in the prior year.

Revenue increased 15.5% reflecting double-digit growth across the Advisory Services, Building Operations &

Experience (BOE) and Project Management segments, partially offset by a decrease in revenue in the Real Estate Investments

(REI) segment.

Foreign currency translation had a 1.2% positive impact on revenue, reflecting strength in the euro, Australian dollar

and British pound sterling partially offset by weakness in the Indian rupee.

Pass-through costs increased 13.1% during the quarter as compared to the same period in prior year primarily due to

revenue growth in the BOE and Project Management segments. Foreign currency translation had a 1.1% negative impact on

pass-through costs.

Cost of revenue, excluding pass-through costs increased 17.1% during the quarter as compared to the same period in

prior year primarily reflecting business growth and higher employee compensation and commission expenses. Foreign currency

translation had a 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 39.7% driven by higher costs to support growth in revenues.

Operating, administrative and other expenses increased 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 expense, driven by business

growth. Foreign currency translation had a 1.3% negative impact on total operating expenses during the quarter. Operating,

administrative and other expenses as a percentage of revenue increased to 13.7% in the second quarter 2026 from 13.1% in the

second quarter 2025, as operating expenses grew higher than revenue.

Depreciation and amortization expense increased by 31.0% during the quarter, as compared to the same period in prior

year, reflecting higher amortization expense related to intangible assets from recent acquisitions, such as Pearce.

Gain on disposition of real estate decreased by $14 million during the quarter, driven by lower sales of real estate

development assets in the REI segment, compared to the prior year.

We recorded equity income from unconsolidated subsidiaries of approximately $4 million, compared to equity loss of

$18 million in the second quarter 2025.

Interest expense, net of interest income, increased by 1.7%, compared with the second quarter 2025. This increase was

primarily attributable to increased commercial paper 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 $68 million for the three months ended June 30, 2026 as

compared to a provision for income taxes of $61 million for the three months ended June 30, 2025. The increase of $7 million

is primarily related to an increase in earnings. Our effective tax rate increased to 21.6% for the three months ended June 30,

2026 from 20.3% for the three months ended June 30, 2025. Our effective tax rate for the three months ended June 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.

Legislative Developments

The Organization for Economic Co-operation & Development (OECD) Pillar Two Model Rules established a

minimum global effective tax rate of 15% on country-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,

2024 or thereafter. In January 2026, the OECD issued a comprehensive Side by Side Package, which introduces additional

administrative guidance intended to enhance coordination and simplify aspects of the global minimum tax framework. The

package includes several new safe harbors including the new Side by Side and Ultimate Parent Entity safe harbors that may

deem certain top-up taxes to be zero in jurisdictions with qualifying minimum tax regimes, such as the United States. We will

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continue to monitor additional admin

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Item 7.    Management’s Discussion and Analysis of Financial Condition 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, 2024 and comparisons between the years ended December 31, 2024 and 2023 are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s 2024 Annual Report was filed with the SEC on February 14, 2025.

Overview

CBRE is the world’s largest commercial real estate services and investment firm (based on 2025 revenue). In 2025, we served clients through four business segments – Advisory Services, Building Operations & Experience (BOE), 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 and non-recurring sources, including commissions generated by transactions. Our revenue mix has become more weighted towards resilient revenue sources, particularly occupier outsourcing and project management, and we are less dependent on cyclical property sales and lease transaction 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.

Business Environment

The operating environment for commercial real estate improved considerably in 2025. This 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 U.S. was notably strong throughout the year. Broader capital availability, lower borrowing costs and improved occupancy market fundamentals buoyed investor sentiment and led to increased real estate sales and financing activity in 2025. Large occupiers’ growing appetite for outsourcing services continued to underpin demand for facilities management and project management activities.

Capital Allocation

We deployed approximately $2.7 billion of capital in 2025. Our largest deployments for the year were approximately $1.2 billion for the acquisition of Pearce, a leading provider of advanced technical services for digital and power infrastructure, and approximately $468 million to acquire the remaining 60% equity interest in Industrious, a flexible-workplace solutions and workplace experience platform. In addition, we deployed $956 million in 2025 to repurchase 7,052,481 shares.

Results of Operations

The following presents highlights of CBRE’s performance for the year ended December 31, 2025 (percentages represent comparison to 2024 results):

An improved operating environment supported strong growth for CBRE in 2025. Overall, revenue increased 13.4%. This included 13.4% revenue growth in our resilient businesses (including facilities management, project management, property management, loan servicing, valuations, other portfolio services, and recurring investment management fees), and 13.6% revenue growth in our transactional businesses (property sales, leasing, mortgage origination, carried interest and incentive fees in our investment management business, and development fees).

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(1)See “Non-GAAP Financial Measures.”

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The following table sets forth items derived from our consolidated statements of operations for the years ended December 31, 2025 and 2024 (dollars in millions):

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(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 reimbursable by clients and the corresponding amounts owed are reflected within Revenue.

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Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

We reported consolidated net income of $1.2 billion for the year ended December 31, 2025 on revenue of $40.6 billion as compared to consolidated net income of $968 million on revenue of $35.8 billion for the year ended December 31, 2024.

Revenue increased 13.4%, reflecting double-digit growth across the Advisory Services, BOE and Project Management segments, partially offset by a decrease in revenue in the REI segment.

Foreign currency translation had a 0.7% positive impact on total revenue during the year ended December 31, 2025, primarily driven by strength in the British pound sterling and euro, partially offset by weakness in the Indian rupee, Canadian dollar and Australian dollar.

Pass-through costs increased 12.4% during the year ended December 31, 2025 as compared to the same period in 2024 primarily due to revenue growth in the BOE and Project Management segments. Foreign currency translation had a 0.7% negative impact on pass-through costs.

Cost of revenue, excluding pass-through costs increased 16.7% during the year ended December 31, 2025 as compared to the same period in 2024 primarily due to revenue growth consisting of higher commission expense and employee compensation, as well as higher indirect reimbursed costs. Foreign currency translation had a 0.6% negative impact on total cost of revenue, excluding pass-through costs. Cost of revenue, excluding pass-through costs increased slightly to 40.0% of total revenue from 38.9%.

Operating, administrative and other expenses increased 10.6% during the year ended December 31, 2025 as compared to the same period last year primarily due to an increase in employee compensation driven by revenue growth, third-party fees related to acquisitions and integration activities, along with an increase in Telford’s fire safety provision. Foreign currency translation had a 0.7% negative impact on total operating expenses during the year ended December 31, 2025. Operating, administrative and other expenses as a percentage of revenue decreased to 13.7% from 14.0%, as operating expenses grew slower than revenue.

Depreciation and amortization expense increased by 8.2% during the year ended December 31, 2025 as compared to the same period in 2024, reflecting higher depreciation and amortization expense related to assets acquired from recent acquisitions, such as Pearce and Industrious.

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

We reported equity income of $40 million during the year ended December 31, 2025 compared to equity loss of $19 million in the same period in 2024. This was primarily driven by positive co-investment returns and sales in the current period, compared to higher unrealized equity losses in the prior period, driven by a fair value adjustment related to our non-core strategic equity investment in Altus Power, Inc. (Altus).

Other income decreased by 51.3% during the year ended December 31, 2025 as compared to the same period in 2024, primarily due to prior year positive fair value adjustments on certain investments.

Interest expense, net of interest income, increased by 0.5% for the year ended December 31, 2025, compared to the same period in 2024. This increase from the impact of increased commercial paper borrowings and issuance of senior term loans and new senior unsecured notes was essentially offset by the impact of net investment hedging activity.

Our provision for income taxes on a consolidated basis was $317 million for the year ended December 31, 2025 as compared to $182 million in 2024. Our effective tax rate increased to 19.9% in 2025 from 15.0% in 2024. The increase was primarily related to the benefit recognized in 202

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