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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2017
Fair Value Disclosures [Abstract] |
Fair Value Measurements |
6. | Fair Value Measurements
The “Fair Value Measurements and Disclosures” topic (Topic 820) of the FASB ASC defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| • | Level 1 – Quoted prices in active markets for identical assets or liabilities.
| • | Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
| • | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
There were no significant transfers in or out of Level 1 and Level 2 during the years ended December 31, 2017 and 2016. The following tables present the fair value of assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016 (dollars in thousands):
|  | As of December 31, 2017 |
|  | Fair Value Measured and Recorded Using |  |  |  |  |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities |  | $ | 3,820 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,820 |
Debt securities issued by U.S. federal agencies |  |  | — |  |  |  | 4,901 |  |  |  | — |  |  |  | 4,901 |
Corporate debt securities |  |  | — |  |  |  | 20,023 |  |  |  | — |  |  |  | 20,023 |
Asset-backed securities |  |  | — |  |  |  | 3,577 |  |  |  | — |  |  |  | 3,577 |
Collateralized mortgage obligations |  |  | — |  |  |  | 2,366 |  |  |  | — |  |  |  | 2,366 |
Total debt securities |  |  | 3,820 |  |  |  | 30,867 |  |  |  | — |  |  |  | 34,687 |
Equity securities |  |  | 29,758 |  |  |  | — |  |  |  | — |  |  |  | 29,758 |
Total available for sale securities |  |  | 33,578 |  |  |  | 30,867 |  |  |  | — |  |  |  | 64,445 |
Trading securities |  |  | 103,837 |  |  |  | — |  |  |  | — |  |  |  | 103,837 |
Warehouse receivables |  |  | — |  |  |  | 928,038 |  |  |  | — |  |  |  | 928,038 |
Total assets at fair value |  | $ | 137,415 |  |  | $ | 958,905 |  |  | $ | — |  |  | $ | 1,096,320 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | 4,766 |  |  | $ | — |  |  | $ | 4,766 |
Securities sold, not yet purchased |  |  | 3,431 |  |  |  | — |  |  |  | — |  |  |  | 3,431 |
Foreign currency exchange forward contracts |  |  | — |  |  |  | 55 |  |  |  | — |  |  |  | 55 |
Total liabilities at fair value |  | $ | 3,431 |  |  | $ | 4,821 |  |  | $ | — |  |  | $ | 8,252 |
|  | As of December 31, 2016 |
|  | Fair Value Measured and Recorded Using |  |  |  |  |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities |  | $ | 8,485 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,485 |
Debt securities issued by U.S. federal agencies |  |  | — |  |  |  | 5,046 |  |  |  | — |  |  |  | 5,046 |
Corporate debt securities |  |  | — |  |  |  | 17,094 |  |  |  | — |  |  |  | 17,094 |
Asset-backed securities |  |  | — |  |  |  | 2,695 |  |  |  | — |  |  |  | 2,695 |
Collateralized mortgage obligations |  |  | — |  |  |  | 1,010 |  |  |  | — |  |  |  | 1,010 |
Total debt securities |  |  | 8,485 |  |  |  | 25,845 |  |  |  | — |  |  |  | 34,330 |
Equity securities |  |  | 22,744 |  |  |  | — |  |  |  | — |  |  |  | 22,744 |
Total available for sale securities |  |  | 31,229 |  |  |  | 25,845 |  |  |  | — |  |  |  | 57,074 |
Trading securities |  |  | 52,629 |  |  |  | — |  |  |  | — |  |  |  | 52,629 |
Warehouse receivables |  |  | — |  |  |  | 1,276,047 |  |  |  | — |  |  |  | 1,276,047 |
Foreign currency exchange forward contracts |  |  | — |  |  |  | 1,471 |  |  |  | — |  |  |  | 1,471 |
Total assets at fair value |  | $ | 83,858 |  |  | $ | 1,303,363 |  |  | $ | − |  |  | $ | 1,387,221 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | 13,162 |  |  | $ | — |  |  | $ | 13,162 |
Securities sold, not yet purchased |  |  | 3,591 |  |  |  | — |  |  |  | — |  |  |  | 3,591 |
Total liabilities at fair value |  | $ | 3,591 |  |  | $ | 13,162 |  |  | $ | — |  |  | $ | 16,753 |
The fair values of the warehouse receivables are calculated based on already locked in security buy prices. At December 31, 2017 and 2016, all of the warehouse receivables included in the accompanying consolidated balance sheets were either under commitment to be purchased by Freddie Mac or had confirmed forward trade commitments for the issuance and purchase of Fannie Mae or Ginnie Mae mortgage backed securities that will be secured by the underlying loans (See Notes 2 and 4). These assets are classified as Level 2 in the fair value hierarchy as all inputs are readily observable. The valuation of interest rate swaps and foreign currency exchange forward contracts is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate and foreign currency exchange forward curves. The fair values of interest rate swaps and foreign currency exchange forward contracts are determined using the market standard methodology of netting the discounted future estimated cash payments/receipts. The estimated cash flows are based on an expectation of future interest rates or foreign currency exchange rates using forward curves derived from observable market interest rate and foreign currency exchange forward curves. Fair value measurements for our available for sale securities are obtained from independent pricing services which utilize observable market data that may include quoted market prices, dealer quotes, market spreads, cash flows, the U.S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument's terms and conditions. The trading securities and securities sold, not yet purchased are primarily in the U.S. and are generally valued at the last reported sales price on the day of valuation or, if no sales occurred on the valuation date, at the mean of the bid and asked prices on such date. There were no significant non-recurring fair value measurements recorded during the years ended December 31, 2017, 2016 and 2015. FASB ASC Topic 825, “Financial Instruments” requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets. Our financial instruments are as follows:
| • | Cash and Cash Equivalents and Restricted Cash – These balances include cash and cash equivalents as well as restricted cash with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.
| • | Receivables, less Allowance for Doubtful Accounts – Due to their short-term nature, fair value approximates carrying value.
| • | Warehouse Receivables – These balances are carried at fair value based on market prices at the balance sheet date.
| • | Trading and Available for Sale Securities – These investments are carried at their fair value.
| • | Foreign Currency Exchange Forward Contracts – These assets and liabilities are carried at their fair value as calculated by using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative.
| • | Securities Sold, not yet Purchased – These liabilities are carried at their fair value.
| • | Short-Term Borrowings – The majority of this balance represents outstanding amounts under our warehouse lines of credit of our wholly-owned subsidiary, CBRE Capital Markets. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value (see Notes 4 and 11).
| • | Senior Term Loans – Based upon information from third-party banks (which falls within Level 2 of the fair value hierarchy), the estimated fair value of our senior term loans was approximately $199.9 million and $751.4 million at December 31, 2017 and 2016, respectively. Their actual carrying value, net of unamortized debt issuance costs, totaled $193.5 million and $744.3 million at December 31, 2017 and 2016, respectively (see Note 11).
| • | Interest Rate Swaps – These liabilities are carried at their fair value as calculated by using widely-accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative (see Note 7).
| • | Senior Notes – Based on dealers’ quotes (which falls within Level 2 of the fair value hierarchy), the estimated fair values of our 5.00% senior notes, 4.875% senior notes and 5.25% senior notes were $823.8 million, $645.7 million and $468.0 million, respectively, at December 31, 2017 and $827.6 million, $607.0 million and $439.3 million, respectively, at December 31, 2016. The actual carrying value of our 5.00% senior notes, 4.875% senior notes and 5.25% senior notes, net of unamortized debt issuance costs as well as unamortized discount or premium, if applicable, totaled $791.7 million, $592.0 million and $422.4 million, respectively, at December 31, 2017 and $790.4 million, $591.2 million and $422.2 million, respectively, at December 31, 2016 (see Note 11).
| • | Notes Payable on Real Estate: As of December 31, 2017 and 2016, the carrying value of our notes payable on real estate, net of unamortized debt issuance costs, was $17.9 million and $26.0 million, respectively. These notes payable were not recourse to CBRE Group, Inc., except for being recourse to the single-purpose entities that held the real estate assets and were the primary obligors on the notes payable. These borrowings have either fixed interest rates or floating interest rates at spreads added to a market index. Although it is possible that certain portions of our notes payable on real estate may have fair values that differ from their carrying values, based on the terms of such loans as compared to current market conditions, or other factors specific to the borrower entity, we do not believe that the fair value of our notes payable is significantly different than their carrying value.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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