CBRE Group Inc

Greetings, and welcome to the CBRE's Q2 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brad Buck. Please go ahead, sir.

Good morning, everyone, and welcome to CBRE's second quarter 2023 earnings conference call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an Excel file that contains additional supplemental materials. Before we kick off today's call, I'll remind you that today's presentation contains forward-looking statements, including without limitation, statements concerning our economic outlook, our business plans, and our financial outlook. Forward-looking statements are predictions, projections, or other statements about future events. These statements involve risks and uncertainties that may cause actual results and trends to differ materially from those projected. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this morning's earnings release in our SEC filings. We have provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures together with explanations of these measures in our presentation deck appendix. I am joined on today's call by Bob Slendik, our President and CEO, and Emma Giammartino, our Chief Financial Officer. Now, please turn to slide five as I turn the call over to Bob.

Thank you, Brad, and good morning, everyone. Like last quarter, CBRE's results slightly exceeded our expectations, driven largely by better than expected growth in global workplace solutions and aggregate growth in our resilient lines of business, which Emma will describe in detail, offset by weaker than expected property sales and advisory services. It is notable when considering our performance that the prior year comparison was especially difficult. We had our best quarter ever for core earnings per share in last year's second quarter, driven by exceptionally robust development earnings. To put this in perspective, our development earnings in last year's second quarter exceeded the level of development operating profit in any prior full year except 2021. With this in mind, my remarks this morning will largely focus on how both CBRE and the macro environment performed relative to our expectations coming into the quarter, followed by some high-level comments on our outlook. The economy performed better than we had anticipated going into the quarter in terms of both GDP and employment growth. However, the opposite was true with respect to interest rates, where increases in the last 90 days coupled with expectations that rates will in the year higher than anticipated last quarter, pressured the elements of our business that are sensitive to commercial real estate capital flows, particularly our sales and financing businesses. We expect this pressure to continue for the remainder of the year. At the same time, we are beginning to see signs in our own business that will eventually lead to improved performance likely starting next year. For example, we capitalized 10 new development projects during the second quarter versus only five projects in the prior two quarters combined. Our investment management team responsible for capital raising has noted a definitive change in investor sentiment in the last 90 days. Many of these investors remain cautious but are now exploring how they can take advantage of the reset in pricing as they develop their 2024 commitment plans. Looking ahead, we still anticipate a mild recession. However, we now expect the recession to occur at least one quarter later than we had previously thought, followed by a recovery beginning next year. We realize that our investors are closely watching the US office market and bank exposure to commercial real estate loans. Our views regarding both are consistent with those we expressed at the end of the first quarter. We now expect full year 2023 core EPS to decline by 20 to 25% against last year's record level with the majority of the decrease due to the delayed capital markets recovery. We continue to expect our resilient lines of business in aggregate to grow for the full year at a rate that is consistent with our expectations three months ago. Further, we believe there is a reasonable path to achieving a record level of core EPS in 2024, although reaching that goal now has become more difficult with the expected delay and the return of capital markets activity. Emma will now take you through a more detailed look at our performance for the quarter and provide additional insights on our outlook. Emma?