Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

8. Goodwill and Other Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 (dollars in thousands):


	Americas			EMEA			Asia Pacific			Global Investment Management			Development Services			Total
Balance as of December 31, 2014
Goodwill	$	1,828,135		$	836,054		$	151,682		$	499,793		$	86,663		$	3,402,327
Accumulated impairment losses		(798,290	)		(138,631	)		—			(44,922	)		(86,663	)		(1,068,506	)

		1,029,845			697,423			151,682			454,871			—			2,333,821
Purchase accounting entries related to acquisitions		434,452			408,491			16,733			—			—			859,676
Foreign exchange movement		(2,511	)		(72,395	)		(12,540	)		(20,054	)		—			(107,500	)

Balance as of December 31, 2015
Goodwill		2,260,076			1,172,150			155,875			479,739			86,663			4,154,503
Accumulated impairment losses		(798,290	)		(138,631	)		—			(44,922	)		(86,663	)		(1,068,506	)

		1,461,786			1,033,519			155,875			434,817			—			3,085,997
Purchase accounting entries related to acquisitions		42,080			36,929			(3,922	)		350			—			75,437
Foreign exchange movement		773			(161,784	)		(1,247	)		(17,784	)		—			(180,042	)

Balance as of December 31, 2016
Goodwill		2,302,929			1,047,295			150,706			462,305			86,663			4,049,898
Accumulated impairment losses		(798,290	)		(138,631	)		—			(44,922	)		(86,663	)		(1,068,506	)

	$	1,504,639		$	908,664		$	150,706		$	417,383		$	—		$	2,981,392

During 2016, we acquired our independent affiliate in Norway, a London-based retail property advisor specializing in the luxury goods retail sector and a leading provider of retail project management, shopping center development and tenant coordination services in the U.S. During 2015, we completed eight in-fill acquisitions, including a Seattle-based leader in capital markets services for affordable housing, a Texas-based commercial real estate firm specializing in retail services, an energy management specialist based in Brookfield, Wisconsin, a Chicago-based location data analytics firm, one of the leading retail real estate services firms in the Midwestern U.S., an advisory, consulting and research firm specializing in the Canadian hospitality and tourism industries and our former independent affiliate companies in Columbia, South Carolina, and Memphis, Tennessee.

Our annual assessment of goodwill and other intangible assets deemed to have indefinite lives has historically been completed as of the beginning of the fourth quarter of each year. We performed the 2016, 2015 and 2014 assessments as of October 1. When we performed our required annual goodwill impairment review as of October 1, 2016, 2015 and 2014, we determined that no impairment existed as the estimated fair value of our reporting units was in excess of their carrying value.

Other intangible assets totaled $1.4 billion and $1.5 billion, net of accumulated amortization of $771.7 million and $589.2 million, as of December 31, 2016 and 2015, respectively, and are comprised of the following (dollars in thousands):


	December 31,
	2016					2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Unamortizable intangible assets
Management contracts	$	101,355				$	103,143
Trademarks		56,800					56,800
Trade names		18,100					20,400

	$	176,255				$	180,343

Amortizable intangible assets
Customer relationships	$	761,290	$	(270,447	)	$	746,814	$	(195,056	)
Mortgage servicing rights		501,087		(180,563	)		377,995		(133,272	)
Trademarks/Trade name		306,559		(46,837	)		320,306		(38,581	)
Management contracts		177,014		(99,733	)		180,099		(87,687	)
Covenant not to compete		73,750		(32,777	)		73,750		(8,194	)
Backlog and incentive fees		48,445		(48,445	)		49,667		(49,667	)
Other		138,312		(92,871	)		110,731		(76,779	)

	$	2,006,457	$	(771,673	)	$	1,859,362	$	(589,236	)

Total intangible assets	$	2,182,712	$	(771,673	)	$	2,039,705	$	(589,236	)

Unamortizable intangible assets include management contracts identified as a result of the REIM Acquisitions relating to relationships with open-end funds, a trademark separately identified as a result of the 2001 Acquisition and a trade name separately identified in connection with the REIM Acquisitions, which represents the Clarion Partners trade name in the U.S. These intangible assets have indefinite useful lives and accordingly are not being amortized.

Customer relationships relate to existing relationships mainly in the brokerage, occupier outsourcing and property management lines of business that were primarily identified in the Trammell Crow Company Acquisition, the Norland Acquisition and the GWS Acquisition. These intangible assets are being amortized over useful lives of up to 20 years.

Mortgage servicing rights represent the carrying value of servicing assets in our mortgage brokerage line of business in the U.S. The mortgage servicing rights are being amortized over the estimated period that net servicing income is expected to be received, which is typically up to ten years.

In connection with the GWS Acquisition, trademarks of approximately $280 million were separately identified and are being amortized over 20 years. A trade name of approximately $35 million was separately identified as a result of the Norland Acquisition and was fully amortized as of December 31, 2015.

Management contracts consist primarily of asset management contracts relating to relationships with closed-end funds and separate accounts in the U.S., Europe and Asia that were separately identified as a result of the REIM Acquisitions. These management contracts are being amortized over useful lives of up to 13 years.

A covenant not to compete of approximately $74 million was separately identified in connection with the GWS Acquisition and is being amortized over three years.

Other amortizable intangible assets mainly represent transition costs and are being amortized over useful lives of up to 20 years.

Amortization expense related to intangible assets was $211.7 million, $175.3 million and $138.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. The estimated annual amortization expense for each of the years ending December 31, 2017 through December 31, 2021 approximates $206.7 million, $186.0 million, $132.9 million, $111.8 million and $97.4 million, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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