Telford Acquisition

12 Months Ended

Dec. 31, 2020

On October 1, 2019, we acquired Telford Homes Plc (Telford) to expand our real estate development business outside of the U.S. (Telford acquisition). A leading developer of multifamily residential properties in the London area, Telford is reported in our Real Estate Investments segment. Telford shareholders received £3.50 per share in cash, valuing Telford at £267.1 million, or $328.5 million as of the acquisition date. The Telford Acquisition was funded with borrowings under our revolving credit facility.

The following represents the summary of the excess purchase price over the fair value of net assets acquired (dollars in thousands):


Purchase price	$	328,502
Less: Final fair value of net assets acquired (see table below)	297,669
Excess purchase price over fair value of net assets acquired	$	30,833

The excess purchase price over the fair value of net assets acquired has been recorded to goodwill. No significant changes were made during the year ended December 31, 2020 to the preliminary purchase accounting recorded during 2019. The goodwill arising from the Telford Acquisition consists largely of the synergies and economies of scale expected from combining the operations acquired from Telford with ours. The goodwill recorded in connection with the Telford Acquisition that is deductible for tax purposes was not significant. The following table summarizes the final fair values assigned to the identified assets acquired and liabilities assumed (dollars in thousands):


Assets Acquired:
Cash and cash equivalents	$	7,896
Receivables	6,993
Contract assets, current	31,850
Prepaid expenses	2,704
Property and equipment	2,637
Other intangible assets	26,749
Operating lease assets	6,488
Investments in unconsolidated subsidiaries	79,667
Non-current contract assets	8,015
Real estate under development	208,402
Deferred tax assets, net	2,857
Other assets (current and non-current)	99,429
Total assets acquired	483,687
Liabilities Assumed:
Accounts payable and accrued expenses	47,552
Compensation and employee benefits payable	1,580
Accrued bonus	3,274
Operating lease liabilities	941
Contract liabilities, current	1,949
Income taxes payable	1,813
Line of credit	110,687
Non-current operating lease liabilities	5,547
Other liabilities (current and non-current)	12,675
Total liabilities assumed	186,018
Fair Value of Net Assets Acquired	$	297,669

In connection with the Telford Acquisition, below is a summary of the value allocated to the trademark acquired (dollars in thousands):


				December 31, 2019
Asset Class	Amortization Period	Amount Assigned at Acquisition Date		Accumulated Amortization and Foreign Currency Translation		Net Carrying Value
Trademark	20 Years	$	26,749	$	1,725	$	28,474

The accompanying consolidated statement of operations for the year ended December 31, 2019 includes revenue, operating income and operational net income of $97.5 million, $1.0 million and $1.4 million, respectively, attributable to the Telford Acquisition. This does not include direct transaction and integration costs of $15.0 million and amortization expense of $0.4 million related to the trademark acquired, all of which were incurred during the year ended December 31, 2019 in connection with the Telford Acquisition.

Unaudited pro forma results, assuming the Telford Acquisition had occurred as of January 1, 2018 for purposes of the pro forma disclosures for the years ended December 31, 2019 and 2018 are presented below. They include certain adjustments for increased amortization expense related to the trademark acquired (approximately $1.0 million and $1.5 million in 2019 and 2018, respectively) as well as increased interest expense (approximately $4.1 million in 2018) associated with borrowings under our revolving credit facility used to fund the acquisition.

Pro forma adjustments also include the removal of $15.0 million of direct costs incurred by us during the year ended December 31, 2019 as well as the tax impact of all pro forma adjustments for all periods presented. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the Telford Acquisition occurred on January 1, 2018 and may not be indicative of future operating results (dollars in thousands, except share data):


	Year Ended December 31,
	2019		2018
Revenue	$	24,158,427	$	21,803,506
Operating income	1,294,480		1,157,051
Net income attributable to CBRE Group, Inc.	1,321,097		1,121,469
Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	3.93	$	3.31
Weighted average shares outstanding for basic income per share	335,795,654		339,321,056
Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	3.88	$	3.27
Weighted average shares outstanding for diluted income per share	340,522,871		343,122,741