CBRE raises 2025 core EPS outlook to $6.25–$6.35 amid robust data center and global growth

Earnings Call Insights: CBRE Group, Inc. (CBRE) Q3 2025

MANAGEMENT VIEW

* CEO Robert Sulentic stated that "CBRE continued to produce excellent results in the third quarter. All 4 segments delivered strong growth and operating leverage, and we exceeded expectations we had going into the quarter." He highlighted the scale and breadth of the company, with specific mention of the data center asset type, which generated nearly $700 million of revenue in Q3, marking a 40% year-over-year increase, and accounting for about 10% of overall EBITDA.
* Sulentic noted geographic expansion, citing Japan and India as "particularly well positioned for sustained secular growth in commercial real estate services," with combined revenue surpassing $400 million in Q3, up more than 30%.
* Sulentic announced a raised full year core EPS outlook to $6.25 to $6.35, up from the prior $6.10 to $6.20 guidance.
* CFO Emma Giamartino said, "Our third quarter results exceeded expectations across the board, highlighted by 34% growth in core EPS and 19% in core EBITDA. We delivered double-digit revenue gains in both our resilient and transactional businesses, underscoring the balanced strength of our business."
* Giamartino detailed Advisory Services revenue growth of 16%, with global leasing revenue rising 17% and U.S. leasing reaching its highest-ever third quarter, up 18%. U.S. industrial leasing increased 27%, and data center leasing revenue more than doubled year-over-year.
* In property sales, Giamartino reported 28% revenue growth, with strong contributions from U.S. office, industrial, and data centers, as well as notable growth in Germany, the Netherlands, and Japan.

OUTLOOK

* Management raised its full year core EPS guidance to $6.25 to $6.35, citing strong year-to-date results and confidence in the fourth quarter pipeline. Giamartino said, "As Bob mentioned, we've raised our full year core EPS guidance to $6.25 to $6.35, reflecting our outperformance to date and confidence in our fourth quarter pipeline. Our outlook includes contributions from the data center site dispositions in our development business. The midpoint of our new guidance range reflects 24% growth and would be more than 10% above our prior peak EPS."
* Giamartino explained the guidance range depends on the timing of development monetizations, particularly data center site dispositions.
* Management expects strong free cash flow of approximately $1.8 billion for the full year and further deleveraging by year-end.

FINANCIAL RESULTS

* Giamartino reported 34% growth in core EPS and 19% in core EBITDA for the quarter. Advisory SOP grew 23%, and BOE SOP increased 15%. Project Management revenue rose 19%, and Real Estate Investments segment operating profit increased 8%.
* Global leasing revenue rose 17%, with U.S. industrial leasing up 27% and data center leasing more than doubling.
* Project Management's legacy Turner & Townsend business in North America more than doubled revenue since 2022.
* Giamartino noted $2.4 billion of new capital raised in Investment Management, with AUM ending at approximately $156 billion. Free cash flow guidance was raised to approximately $1.8 billion for the year, with net leverage at 1.2 turns at quarter-end.

Q&A

* Anthony Paolone, JPMorgan, asked if strength in Q3 might have pulled forward results from Q4 and about business line comps. Giamartino responded that no significant pull forward was seen, but "we are starting to come up against some tough comps," especially in Advisory and Project Management.
* Paolone followed up on M&A pipeline and share buybacks. Giamartino said priorities remain on M&A and co-investment, with buybacks used for remaining free cash flow. "We do continue to believe that our share price is undervalued, and we'll buy back shares in the absence of M&A."
* Julien Blouin, Goldman Sachs, questioned the CRE transaction market recovery. Sulentic explained, "We expect a longer, slower recovery in the sales part of our business than we've seen historically. And we're early into that recovery."
* Blouin asked about Q4 deal activity and margins. Giamartino said, "Pipelines are strong. We're continuing to see strong activity in the beginning of the fourth quarter through October, both on the leasing and sales side." She also attributed lower incremental margins to increased incentive compensation.
* Ronald Kamdem, Morgan Stanley, inquired about staffing and talent. Sulentic noted, "We are appropriately staffed, but we're also adding where we find the right talent... We've made some significant recruits on the investment sales, and especially on the mortgage origination side of the business also."
* Kamdem asked about Project Management integration. Sulentic said, "The operating model we're using is the Turner & Townsend model, which we think is the industry's best," and expects cost synergies from further integration next year.
* Stephen Sheldon, William Blair, questioned data center growth. Sulentic stated, "We expect data centers to be around 10% of our earnings this year, and more next year."
* Alex Kramm, UBS, asked about BOE outlook. Giamartino said, "Within our BOE segment, especially within enterprise, our pipelines are very strong, and we're expecting to have a volume of sales that is at a significantly elevated level."
* Steve Sakwa, Evercore ISI, probed on facilities management TAM. Sulentic stated, "We've consistently expanded our TAM. So the work we do with data centers definitively has expanded the TAM."
* Seth Bergey, Citi, asked if access to power is a constraint in data center development. Sulentic confirmed, "That is without a doubt the constraint, and it's become more of a constraint."
* Jade Rahmani, KBW, asked if U.S. office recovery is broad-based. Sulentic replied, "It is broad-based, but it hasn't been the same every quarter... the resurgence on a relative basis of the gateway markets. They were really strong. New York, in particular; San Francisco, in particular."

SENTIMENT ANALYSIS

* Analysts posed mostly constructive but probing questions, frequently focusing on the sustainability of growth, business segment strength, and capital allocation, with some skepticism about comps and margin sustainability.
* Management's tone was confident, emphasizing strong pipelines, robust growth, and expanded guidance. Statements like "we are starting to come up against some tough comps" and "we are very confident that we will find the right targets over time" indicate both awareness of challenges and optimism.
* Compared to Q2, management maintained a confident and positive tone, with analysts continuing to press for clarity on sustainability and future drivers.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full year core EPS increased from $6.10–$6.20 in Q2 to $6.25–$6.35 in Q3, reflecting stronger-than-expected results and heightened confidence in the business pipeline.
* Data center revenue growth accelerated, with its contribution to EBITDA called out more specifically as 10%.
* The company noted a shift from strength in secondary markets to a resurgence in gateway markets for office leasing.
* Management's confidence in future data center monetizations and BOE pipeline elevated compared to Q2.
* Analyst focus shifted further to data center growth, margin sustainability, and the impact of tough comps in Q4.

RISKS AND CONCERNS

* Management cited tougher year-over-year comps, particularly in Advisory and Project Management, which could decelerate growth rates in Q4.
* The timing and realization of data center site monetizations remain uncertain, impacting the guidance range.
* Sulentic acknowledged that access to power is a constraint in data center development projects.
* Analyst questions highlighted potential risks in sustaining margin expansion and navigating competitive pressures for talent and M&A.

FINAL TAKEAWAY

CBRE raised its full year core EPS guidance to $6.25–$6.35, driven by strong double-digit gains across all segments, exceptional growth in data centers, and expanding opportunities in key global markets. Management highlighted robust pipelines and elevated confidence in further growth, particularly in data centers and BOE, while acknowledging tougher year-over-year comparisons and external constraints such as power access for new developments. The company remains committed to disciplined capital allocation, with a focus on M&A, co-investment, and opportunistic share repurchases, supported by strong free cash flow generation and a healthy balance sheet.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cbre/earnings/transcripts]

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