CBRE Group Inc (CBRE) 2022 President and CEO Robert E. Sulentic's Shareholder Letter: Navigating Through Divergent Market Conditions

Key Highlights from the 2022 Shareholder Letter

  • CBRE reported record first-half performance in 2022, with several annual metrics reaching new highs.
  • The company made significant investments in share repurchases, M&A, and strategic investments while maintaining low net leverage.
  • CBRE's focus on sustainability and diversity is central to its continued success, with ambitious goals set for the future.
  • Despite expecting a moderate global recession in 2023, CBRE anticipates strong performance relative to previous downturns.
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Dear Fellow Shareholders:

2022 was a year of divergent performance for the commercial real estate sector. The year started with bright promise as CBRE logged a record first-half performance, but transaction activity slowed significantly in the second half of the year as long-term interest rates more than doubled and credit availability contracted dramatically.

Nevertheless, several annual performance metrics touched new highs with revenue rising 11% to $30.8 billion and core earnings per share(1) up 7% to $5.69.

We benefited from solid growth in the more cyclically resilient and secularly favored parts of our business. We have done much to bolster our position in these areas and they now account for about 45% of our annual business segment operating profit. These include such business lines as facilities management, project management, loan servicing, property management and others.

During the year CBRE invested approximately $2.1B in share repurchases, infill M&A and other strategic investments. Due to CBRE’s strong free cash flow, we were able to make these investments while still ending the year with virtually no net leverage.

There were many highlights in 2022. A few notable ones include record new account wins in our Global Workplace Solutions Enterprise business, resilient growth in our Advisory businesses in Europe and Asia Pacific and record profitability in our U.S. development business, where we are well positioned with a portfolio of industrial and multifamily assets. Heightened market uncertainty last year also helped to boost our broker recruitment as more top producers see great value in our industry-leading global platform during these times.

Another highlight was the performance of Turner & Townsend, which has been a majority-owned subsidiary of CBRE since November 2021 and exceeded our expectations – both operationally and financially – in its first year under our ownership.

Turner & Townsend is an excellent example of how we use our financial strength to increase the company’s participation in growth areas – notably, in this case, project management, infrastructure and green energy. In 2022, we also increased our investment interest in Industrious, a leading flexible-office provider, and in the Proptech company VTS, whose technology improves how space is leased and managed.


Looking ahead, we expect a moderate global recession in 2023 and tough trading conditions for our transactional businesses for much of the year. As a result, we expect core earnings per share to decline by low- to mid-double digits while still being the third-highest in CBRE’s history. We also expect our performance to be meaningfully better than in prior recessions, such as the Global Financial Crisis, when core earnings per share decreased more than 60%.

Looking further ahead, we expect to deliver double-digit compound growth in core earnings per share from 2019 through 2027, despite needing to manage through two significant downturns.

Advancing a More Sustainable and Equitable Future

Environmental sustainability is an area where we look forward to making further strides. As the world’s largest manager of commercial property, we believe we have an outsized opportunity to help combat climate change while assisting our clients in meeting their decarbonization and other sustainability commitments.

Last year, our Global Workplace Solutions team eliminated 300,000 metric tons of carbon emissions at facilities we manage for large occupiers. That’s the equivalent of the electricity use at 58,000 homes and 330 million pounds of coal burned.

Building on this, earlier this year, we hired a Chief Sustainability Officer who is charged with organizing and enhancing the client-facing sustainability activities across our global enterprise while ensuring we are staying on track to meet our net zero by 2040 goal – 10 years ahead of the target date in the Paris Agreement.

Key initiatives include a goal of purchasing 100% renewable energy for our offices and electrifying our vehicle fleet.

We are equally focused on living up to our social and community responsibilities. We prioritize a diverse and inclusive culture where people of all backgrounds feel valued and can build thriving careers. We are also working hard to expand opportunities for businesses owned by women, minorities and other disadvantaged groups to furnish goods and services to CBRE and our clients. Our more than $1.5 billion of spending with diverse suppliers in 2022 puts us on course to reach our $3 billion goal by the end of 2025.

Beyond CBRE’s walls, we are partnering with several community organizations to improve education and career development opportunities for young people of color and from underrepresented communities. This will help us build a rich pipeline of future talent and increase the ranks of next-generation diverse leaders.

We see further progress on both sustainability and diversity, equity and inclusion as central to our continued success and share more detail about what we are doing in both our 2023 proxy statement and the 2022 Corporate Responsibility Report we will publish later this year.

Notable Recognition

Third-party recognition is a strong, independent barometer of our progress in building a responsible, world-class organization. We are the only commercial real estate services company in the prestigious Dow Jones Sustainability World Index – a feat we’ve accomplished in each of the past four years. We were also deemed the 4th most sustainable U.S. company by Barron’s and have been included in the Bloomberg Gender-Equality Index for four consecutive years and the Corporate Equality Index (perfect score) for nine years running.

We are also proud to be recognized as Fortune’s most admired real estate company in four of the past five years (including this year) and to be named one of Fortune’s most innovative companies, across all industries, for 2023.

Appreciation for Your Support

Since Covid-19 first emerged on the scene three years ago, we’ve confronted a macro environment that has swung sharply between downturn and recovery. Our shareholders’ support has been critical to helping us navigate this volatile market backdrop. Through it all, we’ve focused on balancing near-term financial performance with long-term strategic investments and the return of capital to shareholders.

We greatly appreciate your confidence in CBRE and look forward to engaging with you at our annual Stockholder Meeting, which will be held virtually on May 17.


Robert E. Sulentic

President and Chief Executive Officer

CBRE Group, Inc.

Read the original letter here.