CBRE Group Inc.

The positive outlook reflects our view that CBRE will operate with net debt to EBITDA of 1.0x-1.5x over the next 12-24 months while maintaining its market-leading position in CRE services. We could revise our outlook to stable over the next 12-24 months if the company embarks on a large debt-financed acquisition or repurchases shares at a more aggressive pace than we expect, or if operating performance materially weakens such that leverage rises above 1.5x. We could raise the ratings over the next 12-24 months if CBRE continues to operate with leverage well below 1.5x. An upgrade would also be predicated on the firm maintaining its market-leading position, stable operating performance through an economic downturn, and no new large-scale acquisitions. U.S.

...We expect CBRE Group Inc. to maintain its No. 1 global market position in commercial real estate (CRE) services. Benefiting from its leading market position in CRE services and its growing project, property, and facilities management revenue stream, we expect CBRE to continue to generate steady cash flow, despite the slowdown in the company's high-margin capital markets and advisory leasing segments. While CBRE's capital markets and advisory leasing is likely to be pressured in 2023, leading to lower margins, we may see a rebound in those business lines in 2024 if interest rates and inflation stabilize. We believe management is committed to maintaining a relatively conservative balance sheet, despite share buybacks and mergers and acquisitions (M&A). CBRE has demonstrated good operating performance and strong cash flow generation over the past few years. While CBRE invests significant cash flow into share buybacks ($2.3 billion over the last two years), we believe the company would scale...

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