CBRE Group, Inc. (CBRE) Cash Flow Statement

The persistent gap between net income and FFO, averaging roughly 45% over the last ten quarters, indicates that depreciation is a major non-cash drag on GAAP earnings. This distortion is typical for asset-heavy service businesses, but CBRE's FFO conversion from net income has been volatile, swinging from -3.73x in 2024Q1 to 2.94x in 2025Q4, suggesting that GAAP earnings are not a reliable proxy for cash generation. Investors should focus on FFO and AFFO as the primary performance metrics.

With zero dividends paid, the payout ratio is effectively nil, meaning AFFO is fully available for organic growth, acquisitions, or debt reduction. This conservative capital allocation policy contrasts with typical REITs that distribute most of their AFFO. The retained AFFO, averaging around $350M per quarter, suggests management is prioritizing balance sheet flexibility and growth investments over shareholder income, which may appeal to growth-oriented investors but could disappoint income-focused ones.

The capex-to-revenue ratio hovers around 1%, which is typical for a real estate services firm that does not own significant property. This low maintenance capex requirement means that FFO and AFFO are closely aligned, with AFFO conversion from FFO averaging 80%. The stability of capex, ranging from $64M to $144M, suggests predictable cash flow needs, allowing more of the operating cash flow to be retained for strategic initiatives.

The negative OCF in Q1 of each year (2024Q1: -$470M, 2025Q1: -$546M, 2026Q1: -$825M) suggests a seasonal pattern where cash outflows for bonuses and payables exceed collections. This is common in advisory businesses, but the magnitude of the 2026Q1 swing is notable and may indicate a build-up in tenant receivables or delayed closings. Investors should monitor whether these swings are purely seasonal or signal a deterioration in collections, especially given the rising revenue.

The absence of dividend payments and the occasional negative FCF (e.g., -$906M in 2026Q1) are covered by existing cash reserves and credit facilities, not by external equity or debt. This financial flexibility is a strength, but the negative FCF quarters highlight the cyclicality of the business. The company's ability to maintain a healthy balance sheet without external funding suggests a strong credit profile, though investors should watch for any shift toward debt-funded growth.