CBRE Group is the largest global commercial real estate broker with leading positions in its three business units: market advisory, global workplace solutions, and real estate investments. Its most recent quarter exceeded expectations, driven by continued strength in its resilient businesses, including facilities management and project management, alongside improving leasing and property sales activity. We continue to believe CBRE is well positioned to benefit from outsourcing trends, while its growing exposure to data center and broader infrastructure projects provides an additional long-term growth opportunity.

CBRE Group shares declined on higher financing costs for the commercial real estate sector and fears that AI could disrupt the company’s traditional commercial real estate brokerage business model. However, we believe AI will be net additive to CBRE’s moat given its vast data advantage. This positions CBRE favorably as it navigates the evolving landscape of commercial real estate, leveraging its data capabilities to maintain a competitive edge.

CBRE Group Inc. was an excellent investment for us. As the world’s largest commercial real estate services company, CBRE has a market-leading position in leasing and property sales brokerage. It also has a large and growing recurring business, which includes facilities management, project management, and investment management. These businesses provide earnings stability during cyclical downturns in commercial real estate transactions. While property sales remain below pre-COVID levels, CBRE expects its core EPS to achieve a new record in 2025. However, its share price rose faster than its value, prompting us to reallocate capital to more discounted businesses.

We believe CBRE Group, Inc. is well-positioned to benefit from structural and secular tailwinds in the commercial real estate sector. The outsourcing of commercial real estate and the institutionalization of the market present significant growth opportunities. We anticipate that CBRE may generate annual earnings per share growth of more than 20% in the next few years, as we are in the early days of a rebound in commercial real estate sales and leasing activity.