CBRE Group, Inc. Reports Strong Financial Results for First-Quarter 2018

GAAP EPS of $0.44, up 10%
Adjusted EPS of $0.54, up 20%
Revenue and Fee Revenue up 15% and 18%, respectively

LOS ANGELES--(BUSINESS WIRE)--CBRE Group, Inc. (NYSE:CBRE) today reported strong financial results for the first quarter ended March 31, 2018.

“CBRE had an excellent start to 2018 with double-digit growth in revenue and a 20% increase in adjusted earnings per share,” said Bob Sulentic, CBRE’s president and chief executive officer. “Our performance for the quarter – paced by growth in global occupier outsourcing, capital markets and our Asia Pacific business – results from the execution of our strategy, which is centered on delivering differentiated client outcomes around the world, as well as the attractiveness of our sector.”

“While we caution against extrapolating first quarter results, we are tracking slightly ahead of our full-year 2018 guidance. First quarter results were ahead of our expectations across revenue, margins, and earnings and we continue to see solid momentum in our business. The first quarter is seasonally our slowest of the year and we will provide further commentary next quarter,” he continued.

Mr. Sulentic concluded: “CBRE continues to benefit from the strong secular trends that support our industry. These trends include growing occupier appetite for outsourced real estate services, increasing institutional capital allocation to the commercial real estate asset class, and the continued consolidation in our sector around the leading globally capable service providers.”

“Our strategy is aimed squarely at making the most of these macro trends, and we are sustaining progress on many fronts – from digital technology investments to Client Care initiatives to enhancing our talent base and better connecting our people around the world. The successful execution of our strategy will ensure that we continue to produce outcomes for our clients that others find difficult to replicate.”

First-Quarter 2018 Results¹

• Revenue for the first quarter totaled $4.7 billion, an increase of 15% (11% local currency²). Fee revenue³ rose 18% (13% local currency) to $2.3 billion. Organic fee revenue³ growth was 16% (11% local currency).
• On a GAAP basis, net income and earnings per diluted share increased 10% to $150.3 million and $0.44 per share, respectively. Adjusted net income⁴ for the first quarter of 2018 rose 22% to $186.2 million, while adjusted earnings per share improved 20% to $0.54 per share.
• The adjustments to GAAP net income for the first quarter of 2018 included $29.0 million (pre-tax) of non-cash acquisition-related amortization and $28.0 million (pre-tax) write-off of financing costs related to the redemption in March 2018 of $800 million principal amount of the company’s 5% bonds due 2023. These costs were partially offset by $10.0 million (pre-tax) reversal of net carried interest incentive compensation and a net tax benefit of $11.5 million associated with the aforementioned pre-tax adjustments. The adjustments also include a $0.5 million net charge⁵ attributable to an update to the provisional estimated tax impact of the 2017 Tax Cuts and Jobs Act initially recorded in the fourth quarter of 2017.
• EBITDA⁶ increased 13% (11% local currency) to $357.8 million and adjusted EBITDA increased 11% (8% local currency) to $347.8 million. Adjusted EBITDA margin on fee revenue was 15.3% for the three months ended March 31, 2018.

First-Quarter 2018 Segment and Business Line Review¹

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

	Americas						EMEA						APAC
			% Change from Q1 2017						% Change from Q1 2017						% Change from Q1 2017
	Q1 2018		USD		LC		Q1 2018		USD		LC		Q1 2018		USD		LC
Revenue	$	2,850,224	8	%	8	%	$	1,181,254	31	%	16	%	$	495,459	23	%	17	%
Fee revenue		1,268,734	12	%	12	%		609,367	27	%	13	%		251,783	15	%	10	%
EBITDA		225,843	5	%	4	%		36,946	11	%	-2	%		33,880	46	%	41	%
Adjusted EBITDA		225,843	0	%	0	%		36,946	4	%	-8	%		33,880	46	%	40	%
	Global Investment Management						Development Services ^(7)
			% Change from Q1 2017						% Change from Q1 2017
	Q1 2018		USD		LC		Q1 2018		USD		LC
Revenue	$	123,690	38	%	30	%	$	23,325	64	%	64	%
EBITDA		39,721	-3	%	-8	%		21,446	538	%	538	%
Adjusted EBITDA		29,692	15	%	8	%		21,446	538	%	538	%

CBRE produced strong revenue growth in its three global regions in the first quarter. APAC (Asia Pacific) saw revenue increase 23% (17% local currency) with outsized growth in India and Japan. EMEA (Europe, the Middle East & Africa) revenue also increased strongly, rising 31% (16% local currency), driven by France, Italy, the Netherlands and the United Kingdom. Americas revenue was up 8% (same local currency), supported by growth in Canada, Mexico and the United States.

Global occupier outsourcing once again achieved robust revenue growth, as the secular outsourcing trend continued to be a powerful growth catalyst. Revenue increased 16% (12% local currency) and fee revenue rose 26% (18% local currency). Growth was strong across geographies, notably in India, the United States and several continental European countries. Acquisitions contributed 2% (same local currency) to the revenue growth rate and 5% (same local currency) to the fee revenue growth rate in the current quarter.

CBRE’s capital markets businesses – property sales and commercial mortgage origination – achieved combined revenue growth of 17% (14% local currency).

Global property sales revenue rose 15% (11% local currency), as CBRE continued to gain market share. Americas sales revenue rose 14% (same local currency), with double-digit growth in Canada and the United States. APAC sales revenue increased 14% (8% local currency), driven largely by Japan, and EMEA sales revenue rose 16% (3% local currency), led by Germany. This growth followed a 16% (local currency) increase in EMEA sales revenue in the first quarter of 2017.

For the first quarter, CBRE’s U.S. investment sales market share rose more than 100 basis points to 14.9%, according to Real Capital Analytics (RCA).

Commercial mortgage origination revenue increased 27% (26% local currency), reflecting brisk growth with both government agencies and private sector lenders.

Strong mortgage origination activity supported the continued growth of the $184 billion loan servicing portfolio, which increased 23% from the first quarter of 2017. Recurring revenue from loan servicing increased 15% (14% local currency).

Leasing revenue rose 8% (5% local currency), with notable strength in international markets. EMEA and APAC achieved growth of 34% (19% local currency) and 18% (13% local currency), respectively. France, India and the United Kingdom were standouts during the quarter. Americas leasing revenue edged up 2% (1% local currency).

Property management services produced revenue and fee revenue growth of 11% (7% local currency) and 18% (13% local currency), respectively. Fee revenue rose by double digits in all three global regions and was supported in part by the continued strong growth in the investment fund administration business.

Valuation revenue rose 8% (3% local currency), paced by EMEA.

Adjusted EBITDA for CBRE’s real estate investment businesses rose significantly, increasing $21.9 million on a combined basis. Growth was driven by large asset sales in Development Services (which were reported in equity income from unconsolidated subsidiaries) and higher carried interest in Global Investment Management.

• The in-process Development Services portfolio increased to a record $7.7 billion, up almost $900 million from year-end 2017, reflecting the significant conversion of pipeline deals. The pipeline increased $300 million during the first quarter.
• Global Investment Management assets under management (AUM) totaled $104.2 billion, up $1.0 billion from year-end 2017. Currency movement increased AUM by approximately $1.7 billion during the quarter.

Conference Call Details

The company’s first quarter earnings conference call will be held today (Wednesday, May 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 May 2, 2018, and ending at midnight Eastern Time on May 9, 2018. 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 13678077. A transcript of the call will be available on the company’s Investor Relations website at www.cbre.com/investorrelations.

About CBRE Group, Inc.

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, market share, 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, 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, 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 [e-mail].

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.

¹ In the first quarter of 2018, we adopted new revenue recognition guidance. 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 further excludes contributions from all acquisitions completed after first-quarter 2017.

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 amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions, write-off of financing costs on extinguished debt and certain carried interest incentive compensation reversals to align with the timing of associated revenue. Adjustments also included an update to the provisional estimated tax impact of U.S. tax reform initially recorded in the fourth quarter of 2017.

⁵ 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.

⁶ 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.

⁷ 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.

CBRE GROUP, INC. OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (Dollars in thousands, except share data) (Unaudited)
	Three Months Ended
	March 31,
	2018			2017
				(As Adjusted) ^(1)
Revenue:
Fee revenue	$	2,276,899		$	1,933,854
Pass through costs also recognized as revenue		2,397,053			2,117,112
Total revenue		4,673,952			4,050,966
Costs and expenses:
Cost of services		3,619,961			3,146,477
Operating, administrative and other		732,235			606,626
Depreciation and amortization		108,165			94,037
Total costs and expenses		4,460,361			3,847,140
Gain on disposition of real estate ^(2)		18			1,385
Operating income		213,609			205,211
Equity income from unconsolidated subsidiaries ^(2)		40,179			15,018
Other (loss) income		(4,280	)		4,115
Interest income		3,621			2,411
Interest expense		28,858			34,010
Write-off of financing costs on extinguished debt		27,982			—
Income before provision for income taxes		196,289			192,745
Provision for income taxes		46,164			53,819
Net income		150,125			138,926
Less: Net (loss) income attributable to non-controlling interests ^(2)		(163	)		1,906
Net income attributable to CBRE Group, Inc.	$	150,288		$	137,020
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.44		$	0.41
Weighted average shares outstanding for basic income per share		338,890,098			336,907,836
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.44		$	0.40
Weighted average shares outstanding for diluted income per share		342,589,810			339,690,579
EBITDA	$	357,836		$	316,475
Adjusted EBITDA	$	347,807		$	313,177

^(1)

In the first quarter of 2018, we adopted new revenue recognition guidance. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.

^(2)

Equity income from unconsolidated subsidiaries and gain on disposition of real estate, less net income attributable to non-controlling interests, includes income of $35.2 million and $10.3 million for the three months ended March 31, 2018 and 2017, respectively, attributable to Development Services but does not include significant related compensation expense (which is included in operating, administrative and other expenses). In the Development Services segment, related equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense, are all included in EBITDA.

CBRE GROUP, INC. SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 (Dollars in thousands) (Unaudited)
	Three Months Ended March 31, 2018
								Global
								Investment			Development
	Americas		EMEA			Asia Pacific		Management			Services			Consolidated
Revenue:
Fee revenue	$	1,268,734	$	609,367		$	251,783	$	123,690		$	23,325		$	2,276,899
Pass through costs also recognized as revenue		1,581,490		571,887			243,676		—			—			2,397,053
Total revenue		2,850,224		1,181,254			495,459		123,690			23,325			4,673,952
Costs and expenses:
Cost of services		2,274,851		960,647			384,463		—			—			3,619,961
Operating, administrative and other		355,271		184,247			77,310		78,315			37,092			732,235
Depreciation and amortization		77,981		18,846			4,681		6,227			430			108,165
Total costs and expenses		2,708,103		1,163,740			466,454		84,542			37,522			4,460,361
Gain on disposition of real estate		—		—			—		—			18			18
Operating income (loss)		142,121		17,514			29,005		39,148			(14,179	)		213,609
Equity income from unconsolidated subsidiaries		3,999		238			194		875			34,873			40,179
Other income (loss)		1,742		89			—		(6,111	)		—			(4,280	)
Less: Net (loss) income attributable to non-controlling interests		—		(259	)		—		418			(322	)		(163	)
Add-back: Depreciation and amortization		77,981		18,846			4,681		6,227			430			108,165
EBITDA		225,843		36,946			33,880		39,721			21,446			357,836
Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		—		—			—		(10,029	)		—			(10,029	)
Adjusted EBITDA	$	225,843	$	36,946		$	33,880	$	29,692		$	21,446		$	347,807

CBRE GROUP, INC. SEGMENT RESULTS—(CONTINUED) FOR THE THREE MONTHS ENDED MARCH 31, 2017 (Dollars in thousands) (Unaudited)
	Three Months Ended March 31, 2017 (As Adjusted) ^(1)
									Global
									Investment			Development
	Americas			EMEA			Asia Pacific		Management			Services			Consolidated
Revenue:
Fee revenue ^(1)	$	1,133,211		$	478,432		$	218,428	$	89,566		$	14,217		$	1,933,854
Pass through costs also recognized as revenue		1,505,995			426,199			184,918		—			—			2,117,112
Total revenue		2,639,206			904,631			403,346		89,566			14,217			4,050,966
Costs and expenses:
Cost of services		2,106,359			728,524			311,594		—			—			3,146,477
Operating, administrative and other		322,368			142,942			68,677		51,522			21,117			606,626
Depreciation and amortization		68,569			15,570			4,314		5,039			545			94,037
Total costs and expenses		2,497,296			887,036			384,585		56,561			21,662			3,847,140
Gain on disposition of real estate		—			—			—		—			1,385			1,385
Operating income (loss)		141,910			17,595			18,761		33,005			(6,060	)		205,211
Equity income from unconsolidated subsidiaries		4,640			501			69		873			8,935			15,018
Other income (loss)		427			(1	)		—		3,689			—			4,115
Less: Net (loss) income attributable to non-controlling interests		(1	)		343			-		1,506			58			1,906
Add-back: Depreciation and amortization		68,569			15,570			4,314		5,039			545			94,037
EBITDA		215,547			33,322			23,144		41,100			3,362			316,475
Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		—			—			—		(15,241	)		—			(15,241	)
Integration and other costs related to acquisitions		9,678			2,133			132		—			—			11,943
Adjusted EBITDA	$	225,225		$	35,455		$	23,276	$	25,859		$	3,362		$	313,177

^(1)	In the first quarter of 2018, we adopted new revenue recognition guidance. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.

Non-GAAP Financial Measures

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

(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

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 further excludes contributions from all acquisitions completed after first-quarter 2017.

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
	March 31,
	2018			2017
				(As Adjusted) ^(1)
Net income attributable to CBRE Group, Inc.	$	150,288		$	137,020
Plus / minus:
Non-cash amortization expense related to certain intangible assets attributable to acquisitions		28,972			26,991
Write-off of financing costs on extinguished debt		27,982			—
Carried interest incentive compensation reversal to align with the timing of associated revenue		(10,029	)		(15,241	)
Integration and other costs related to acquisitions		—			11,943
Tax impact of adjusted items		(11,537	)		(8,448	)
Impact of U.S. tax reform		548			—
Net income attributable to CBRE Group, Inc. shareholders, as adjusted	$	186,224		$	152,265
Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted	$	0.54		$	0.45
Weighted average shares outstanding for diluted income per share		342,589,810			339,690,579

EBITDA and adjusted EBITDA, are calculated as follows (dollars in thousands):

	Three Months Ended
	March 31,
	2018			2017
				(As Adjusted) ^(1)
Net income attributable to CBRE Group, Inc.	$	150,288		$	137,020
Add:
Depreciation and amortization		108,165			94,037
Interest expense		28,858			34,010
Write-off of financing costs on extinguished debt		27,982			—
Provision for income taxes		46,164			53,819
Less:
Interest income		3,621			2,411
EBITDA		357,836			316,475
Adjustments:
Carried interest incentive compensation reversal to align with the timing of associated revenue		(10,029	)		(15,241	)
Integration and other costs related to acquisitions		—			11,943
Adjusted EBITDA	$	347,807		$	313,177

^(1)	In the first quarter of 2018, we adopted new revenue recognition guidance. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.

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 further excludes contributions from all acquisitions completed after first-quarter 2017. Reconciliations are shown below (dollars in thousands):

	Three Months Ended
	March 31,
	2018			2017
				(As Adjusted) ^(1)
Organic Fee Revenue
Consolidated fee revenue	$	2,276,899		$	1,933,854
Less: Acquisitions		(43,078	)
Organic fee revenue	$	2,233,821
Occupier Outsourcing
Fee revenue ^(2)	$	712,522		$	567,340
Plus: Pass through costs also recognized as revenue		2,241,557			1,970,133
Revenue ^(2)	$	2,954,079		$	2,537,473
Property Management
Fee revenue ^(2)	$	148,129		$	125,747
Plus: Pass through costs also recognized as revenue		155,496			146,979
Revenue ^(2)	$	303,625		$	272,726

^(1)	In the first quarter of 2018, we adopted new revenue recognition guidance. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.
^(2)	Excludes associated leasing and sales revenue.

CBRE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
	March 31,		December 31,
	2018		2017
			(As Adjusted) ^(1)
Assets:
Cash and cash equivalents ^(2)	$	642,854	$	751,774
Restricted cash		78,959		73,045
Receivables, net		3,121,520		3,112,289
Warehouse receivables^(3)		1,161,668		928,038
Property and equipment, net		633,666		617,739
Goodwill and other intangibles, net		4,677,134		4,653,852
Investments in and advances to unconsolidated subsidiaries		228,950		238,001
Other assets, net		1,362,691		1,343,658
Total assets	$	11,907,442	$	11,718,396
Liabilities:
Current liabilities, excluding debt	$	3,258,583	$	3,802,154
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) ^(3)		1,148,005		910,766
Revolving credit facility		463,000		—
Senior term loans, net		743,530		193,475
4.875% senior notes, net		592,171		591,972
5.25% senior notes, net		422,487		422,423
5.00% senior notes, net		—		791,733
Other debt		67		24
Other long-term liabilities		860,925		831,235
Total liabilities		7,488,768		7,543,782
Equity:
CBRE Group, Inc. stockholders' equity		4,357,631		4,114,496
Non-controlling interests		61,043		60,118
Total equity		4,418,674		4,174,614
Total liabilities and equity	$	11,907,442	$	11,718,396

^(1)	In the first quarter of 2018, we adopted new revenue recognition guidance. Certain restatements have been made to the 2017 financial statements to conform with the 2018 presentation.
^(2)	Includes $88.7 million and $123.8 million of cash in consolidated funds and other entities not available for company use as of March 31, 2018 and December 31, 2017, respectively.
^(3)	Represents loan receivables, the majority of which are offset by borrowings under related warehouse line of credit facilities.