Q3 2019 Earnings Call
Welcome to be Colliers International third quarter investors conference call.
Today's call is being recorded.
Legal counsel requires us to advise the discussion scheduled to take place today may contain forward looking statements that involve known and unknown risks and uncertainties.
Actual results may be materially different from any future results performance or achievements contemplated in the forward looking statements.
Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the Companys annual information form as filed with the Canadian Securities administrators and in the Companys Annual report on form 40 F as filed.
But the U.S. Securities and Exchange Commission.
As a reminder, today's call is being recorded today is Tuesday October 29 2019.
And at this time for opening remarks and introductions.
We'd like to turn the call over to the global Chief Executive Officer, and Chairman Mr. Jay Hennick. Please go ahead Sir.
Thank you operator, good morning, everyone and thanks for joining us for our third quarter conference call.
Jay Hennick, Chairman and Chief Executive Officer.
And as some of you have heard Unfortunately, John Fredrickson, our Chief Financial Officer is not available for our call today.
Dealing with a medical issue, we hope to have them back very quickly, but in the interim Christian Mer Senior Vice President Treasurer.
Standing in for John I'll turn things over to Christian and just a few minutes.
This morning's conference call is being webcast and is available in the information and the infrared Investor Relations section of our website as usual the presentation deck is also available to accompany todays call.
Colliers delivered slop solid operating results with higher margins for the third quarter.
Revenues grew 5% over a very strong third quarter last year.
Adjusted EBITDA was up 18% and adjusted earnings per share increased 13%.
Year to date revenues were up 12% adjusted EBITDA up 23% well earnings per share came in at 14%.
Year to date internal growth was 4%, which is in line with our full year expectations.
We also continue to grow our recurring revenue streams EBITDA from our outsourcing and advisory and investment management.
Moments of our business represented about 50% of our total EBITDA for the corner.
Having a high percentage of earnings coming from recurring revenues, especially those that are well diversified gives us a resilient platform to capitalize on opportunities in the future.
Regardless of market conditions.
Given our performance for the first nine months in our current business outlook, we fully expect to finish the year strongly.
Just after year end, we completed the strategic acquisition of synergy property developments, the leading project management firm in India with more than a thousand professionals operating out of eight offices across the country.
Synergy will merge with our existing operations in India under the Colliers International brand and we'll take its place as one of the top players and one of the worlds fastest growing economies.
So far this year, we've completed a total of four acquisitions tool in the Americas and one in each of Europe , and Asia, adding about 120 million in annualized revenue.
This together with our growth over the past four years puts us firmly on track to meet or exceed our five year growth target to double the size of our business by the year 2020.
As you know our leadership team holds more than 40% of the equity in our company, making us truly unique in our industry and representing a tremendous growth.
Tremendous vote of confidence in our company's future.
As we look forward to next year and beyond where very enthusiastic about our prospects.
Every way Colliers is better today than it's ever been before.
In addition to building a world class internationally and institutionally recognized global brand.
It is the fastest growing platform in our industry.
Last year, we established a new investment management SEC as segment that provides us with another important engine for growth.
All of this to say our platform is strong and colliers is in a very enviable position to continue to capitalize on opportunities for the benefit our of our shareholders for many years to come.
With that said I'd now like to turn things over to Christian first financial report Christian.
Thank you Jay.
As announced earlier today.
International Group reported solid third quarter financial results with higher margins My comments will focus on our Q3 results by segment investing activities financial position and our outlook for the remainder of 2019 my comments will follow the flow of the presentation deck posted on the Investor Relations.
Section of Colliers Dot com to accompany this call.
Please. Please note that my comments reference non-GAAP measures such as adjusted EBITDA and adjusted EPS, both of which are outlined in our press release issued today as well as the accompanying deck.
Segments are composed primarily of noncash charges that we view it largely unrelated to our operating results.
It's important to note that in Q3 currency continued to have an impact on our reported results.
Please note that references to revenue growth, including internal growth are calculated based on local currency.
Our third quarter revenues were 737 million up 5% over the prior year.
Turning advisory revenues of 278 million were up 10%.
Revenues from sales brokerage totaled 201 million up 4%.
These brokerage revenues of $219 million were down 3% relative to a strong prior year imperative.
Finally in investment management, which was established in mid 2018, we generated 40 minor revenue in the quarter up 26% all internally generated.
Consolidated adjusted EBITDA was 84 million for Q3 compared to 73 million with our margin at 11.4% versus 10.2% in the prior year quarter. In fact margins were up in every segment of our company except for EMEA that will explain in a moment.
The geographic split of both our revenues and adjusted EBITDA continued to be well diversified investment management represented 18% of adjusted EBITDA for the quarter up significantly relative to the comparative period due to the outsized growth segment over the past year.
On an ongoing basis, we expect investment management to represent 15% to 20% of our EBITDA assuming no further acquisitions.
Quarterly revenues in the Americas totaled 424 million up 5% America that sourcing advisory revenues were up 16% with continuing robust growth in each of project management property management and valuations.
Sales brokerage revenues were up 2% for the quarter up broadly across the region offset in part by decline in Western Canada due to softer market conditions.
Lease brokerage revenue of 160 million was down 1% against a strong prior year quarter.
Adjusted EBITDA was 30.8 million up 17% versus last year at a 9.1% margin.
Up 90 basis points compared to last year, primarily due to service mix and lower discretionary expenses.
In the EMEA region, Q3 revenues were 139 million down 1% with a 3% internal decline.
Outsourcing and advisory revenues were 67 million down 1% impacted by lower project management revenues in our French workplace solutions business.
Sales brokerage revenues, however were up 16% across several countries.
Lease brokerage revenues were down 17%, primarily due to timing of transactions in some markets.
As a result, we expect a significant number of transactions we reported in the fourth quarter.
Adjusted EBITDA margin for the region was 12, sorry, adjusted EBITDA for the region was 12.6 million compared to 17.3 million last year at a 9.1% margin down from 11.8% last year, primarily impacted by lower revenues service mix and ongoing investments in talent acquisition to Phil.
Service line guess.
Asia Pacific region revenues were 134 million up, 5%, but 4% internal growth and 1% from acquisitions.
I would sourcing advisory revenues were up 9% led by property management.
Sales brokerage revenues were up 1%.
Lease brokerage revenues were up 2% adjusted EBITDA was 18.6 million compared to 17.8 million last year, but margins at 13.9% up from 13.4% last year.
And our investment management operations revenues were 40 million in Q3 up 26% at all from internal sources Harrison Street, which was acquired in July 2018 is included in both the current and comparative quarters revenue growth reflected incremental management fees from new capital.
Yes, and both open ended and closed end fund products.
It's under management or Thirtys point 30.6 billion as of September Thirtyth, 2019 up 18% from one year ago.
Adjusted EBITDA for the quarter was 15.9 million up from 9.6 million in the comparative period.
In terms of investing activities for Q3, 2019 capital expenditures totaled 7.2 million down slightly from comparative quarter.
For the full year 2019, we expect to invest between 40, 550 mine and total capex across our operations.
We did not fleet any business acquisitions during the quarter.
Our net debt position was 509 million as of September Thirtyth 2019, compared to 706 million one year ago, our financial leverage expressed in terms of net debt to EBITDA was 1.5 times for the quarter down substantially from 2.2 times reported one year ago.
The reduction and leverage is attributable to debt repayment from operating cash flow as well as proceeds from our accounts receivable facility implemented earlier this year.
In terms of financial capacity with cash on hand committed availability under our revolving credit facility, we had more than 700 million of liquidity at quarter end, a level sufficient to fund operations and other capital investments, including acquisitions under our growth strategy.
Looking ahead to the fourth quarter, which is our seasonally most significant quarter. Our revenue pipeline continues to reflect solid activity in both sales brokerage and leasing.
In addition, we continue to see solid demand for occurring outsourcing and advisory services and investment management fees are secured based on.
Place.
As a result, our 2019 outlook remains unchanged and putting our expectation for low single digit percentage internal revenue growth in local currency combined with growth from acquisitions, which we expect will result in high single digit percentage growth in revenue.
We anticipate a full year adjusted EBITDA margin improvement of 100 to 120 basis points compared to 2018.
We also estimate low double digit growth in full year adjusted EPS compared to 2018, all excluding the impact of any further acquisitions completed between now and the ended the year.
That concludes my prepared remarks.
Operator, please open the lines for questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound Husky, please standby well, we compiled acuity roster.
Our first question comes on line of George Do you May have Scotia Bank. Please go ahead. Your line is open.
Yes, good morning, and thanks for taking my questions.
Gerard.
Mike to start off by focusing on the Americas.
Your organic growth. There was was flat I think it's been two years since we've seen organic growth there.
Just wondering if you'd you'd expect to see an improvement in brokerage activity in the near term.
You can share with us I guess as it relates in navigating that big Q4 quarter.
Well, we've historically had some very strong internal growth in the US I think last quarter, a year ago quarter was about 9% internal growth and as you can appreciate.
Hey in a business that four quarters, some quarters, you'll have stronger growth versus less growth. So it's really not a great indicator to look at growth quarter over quarter, you really need to look at it on a on an annualized basis and and as I mentioned that Mike.
My comments.
We're averaging a bit more than 4% internal growth.
Year to date, we hope to pick up a little ground with some luck in the fourth quarter, our five year forecast.
Has always been sort of 4% to 5% internal growth. So we see ourselves in line. This quarter was a little bit of an outlier but.
We don't read anything into that at all.
Alright, thanks for that and this thing in the Americas, maybe moving over the margins some pretty good margin expansion I guess in the face of flattering to internal growth.
Can you maybe give us some color on on what happened there exactly.
Sure, Georgia, if you.
Points.
Our lower margin lease brokerage operations were down in the quarter and.
Hey, with up to a very healthy clip in the quarter and we saw some higher margins and some of our own eight.
Advisory.
Service line.
So so that a mix change there.
Also we.
Had some lower discretionary spending in several areas.
Right around the Americas with some more disciplined cost management. So we're pleased to 90 basis point margin improvement and.
We hope that that will continue.
That's helpful. Just one last one if I may shifting gears the investment management business Jay would be a win for you. If you look a year from nowadays.
Mining and would you expect to see I guess, a material amount of growth from coming from M&A.
Well, it's a great question and I'm going to break it down to two pieces. One of them is you know how what a success for Harrison Street as a standalone and not just Harrison Street, our European investment management business. That's that's part of that division and so.
We've enjoyed tremendous growth both in Harrison Street into a lesser degree our European business.
Over the past, while again in investment management theirs.
And Harrison Street in particular about half of the business is they are open end funds. The other are there more opportunistic funds. There is fund raising seasons, effectively which do create fluctuations.
In in the reported revenue that we generate but if I look out 12 months.
If our combined business is up.
By 10 or 15% in terms of assets under management will be thrilled because that translates into significant incremental recurring revenue. The second part of that is and one of the reasons. We entered this space a year and a half ago, which feels like.
Three four years ago, given the amount of time it took us to two actually complete the transaction, we see several other opportunities in the investment management space and believe that over the course of the next couple of years, we can add significant incremental.
Assets under management in that segment of our business and different disciplines.
It's a business we understand it's a business that we can leverage globally.
Through our Rob operations around the world and our ability to raise capital from institutions.
Now for smaller operators that have.
I mean relatively smaller operators that have distribution strengths and weaknesses. So.
We believe that we can use our partnership philosophy to continue to grow our investment.
Management business and so in 12 months from now or 18 months from now I'd like to see US added another significant player in that segment of our business and move the EBITDA.
Coming out of our investment management business from sort of 15 to 20, where it is today to closer to 25 or even more if we're successful.
Okay, great thanks or answers.
Our next question comes from the line of Stephen Macleod of BMO Capital markets. Please go ahead. Your line is open.
Thank you good morning.
Okay.
Good morning, I, just wanted to talk a little bit about the EMEA business and what kind of impact you saw if any from from Brexit and then I guess.
So on to that you talked a little bit about Q4, being having sort of.
Significant loaded in lease brokerage transactions can you talk a bit about why those were pushed into the quarter and and.
And where they are if there's any geographic concentration.
Yes, so for sure Brexit is an issue.
Uncertainty in the rest of Europe is an issue frankly, we were tired of talking about it. So we didnt even raise that in our material I think gets socal layering really obvious with all the geo geopolitical changes in Europe .
And so we just sort of take that as table Stakes.
In terms in terms of.
In terms of a me of this quarter and again.
Want to emphasize.
It's always difficult to look at quarter per quarter, and we saw the rest of our businesses were our segments were fine, but when we looked at me and we saw the shortfall and and and drilled into our pipelines. It was very clear.
Thats several larger transactions in three or four different countries were delayed in part because of the geo geopolitical uncertainty many of those transactions, we expected to close in the third quarter, which would have mad men AMEA would've been in line slightly below.
But not not as different not as not not 5% below the prior year as we reported.
And I'm pleased to say that many of those delayed transactions have already close you won't see that of course until we report the fourth quarter numbers, but that's just the reality of the Beast.
Okay that makes sense.
When you look at broker productivity.
You talked about having some some of those incremental costs weighing on the EMEA business, which again I understand that the quarterly fluctuations.
What would you expect that you would begin to sort of.
Cover or generate returns on those broker investments into Q4, and then similarly, I guess you had some some some some incremental costs weighing on the first half margin in the Americas is your view still that you would begin to generate returns on these brokers late 2019 into 2020.
Well, let me start the Americas Steven.
Through the first half of this year, we did have.
Incremental cost of talent acquisition and recruitment and retention are weighing on our numbers.
That was not a factor in Q3, we've essentially lab.
And.
That's a good news story for Us and I think we're through it.
As it relates to EMEA, we made.
Several strategic hires in various markets and service lines.
Late in 2018, and the first quarter 2019.
Those producers art.
Productive just yet.
And.
Beginning to see that.
Impact our results for Q3.
His role into Q3, and or sorry ended Q4 and into next year, we expect the productivity those.
Teams to to accelerate.
And we should not.
You seeing that impact any further.
Okay.
That's great that's it for me thank you.
Our next question comes from the line of Mt. Logan of RBC capital markets. Please go ahead. Your line is open.
Thank you and good morning.
Hey, Matt.
Jay You mentioned your offer your enthusiastic about your prospects for 2020 and beyond can you talk a little bit about how we should bounce the positive fund flows in the sector against other factors, such as potentially slowing leasing velocity or geopolitical risk.
Yeah.
The reality is.
We've always taken the position that we really can't control extra exterior.
Impacts on our business other than to manage and away that gives us strong balance sheet and the ability to capitalize on opportunities when they present themselves and and we have over many years capitalized on some very interesting opportunities when market conditions.
Were slower than expected so.
I have to tell you that.
We don't really manage our business quarter per quarter year to year don't really care, where interest rates are yes, they impact our business don't really care about a recession in the U.S., but not in Australia and Canada.
Because we're highly diversified in our history has shown and I think the global history has shown around recessions that.
We all here about the great American recessions in 2006 to 2008 or nine win.
Canada was bullish in Australia was bullish in Asia was pretty good as the U.S. was coming out of that all of a sudden or Europe , which was fine started to go into its meltdown. So we've sort of try to.
Keep a very close eye on all of these exterior factors, but manage our business day to day at a conservative manner and.
You know jump on opportunities that are available because others.
You know our managing their business.
Their business differently, taking on excess leverage.
Or just losing the battle so.
I don't know if I've answered your question, but I think in terms of philosophy, and our business and in most other businesses in my view you can't really.
Can't really manage your business based on outside outside influences you just have to be aware of though and you have to do downside projections at every turn and get ready in case God forbid something happens or at worst a black Swan impacts you.
But I guess in short barring a globally synchronize downturn, you don't see any issues with hitting that 4% to 5% organic growth target in 2020.
No we don't add I haven't seen a global melt and.
When was the last time, we all saw low meltdown.
I'm not even sure at 1929, we saw global meltdown.
But suffice it to say you guys are seeing opportunity and maybe just changing gears towards your Indian acquisition.
Do you mind, giving us a little bit of color on the opportunity in India.
Yes, we're very excited about that that opportunity I don't have to talk about the opportunities for the country. It's not without its issues. It has a a leader that was recently re reelected eads very pro business and growth.
This particular target is one that.
That we sought after probably four years. It was owns 75 ish percent by Blackstone and 25% by the founder managers, we bought out Blackstone every one of the managers rolled their equity and in fact some of them.
Actually that's not true some some did monetize a modest piece of their equity and others have ponied up to become shareholders in that business together Colliers now has a significant presence across the country in a more hy.
Value add service line and that is to build major projects as a landlord representative.
For companies like Oracle and other major us companies that happened to want to grow their business in India. So.
In addition to hospitals and an academic institutions and so on very similar to our businesses in Canada, and the us and our growing business in Australia. So we see project management as a natural add onto what we do the average job size is three year.
There's you build long term relationships with the owner of a building and you know we're all the bodies are buried in the building and it leads to additional service areas acquiring the property managing the property leasing the property. So we're very excited about the offer.
To the at it happens to be in a.
As a country that has massive grows up grow growth opportunities and still very very.
Very very.
Immature from a business standpoint.
So would you expect to do tuck under acquisitions in India over the next few years.
You know.
Our experience with acquisitions in Asia is that Theyre very difficult.
For a whole variety of reasons part of which is disciplines around controlling the business.
Back to the that this target was owned by Blackstone control by Blackstone for.
Many years gave them a the disciplines of reporting to a sophisticated buyer, but yes, I think theres big opportunities for us to add more.
More agency business, we have a nice business in India, but it is well under scaled now that we're able to be a dominant player in building a building these buildings and potentially manage though managing them. It gives us the opportunity to add capital markets.
Leasing in a much bigger way.
So if we could find the right acquisitions or pull loads in that region to augment our business.
I think I think.
Looking out 12 to 18 months, you should use you'd probably see that and this is a strategy that we used and I am going on probably too long of this probably not interesting to some of you, but it's the same strategy, we used in Spain, and Denmark over the past couple of years, where we had a good.
Business, but we weren't one of the top players and there was an opportunity to integrate with another market leader and have the become our partners in the business. So so in India, we own 75% of the equity the balance are owned by the people that run the day to day.
If they're roughly the same structures in Spain and in Denmark.
Two phenomenal highly value add advisory businesses, where we can build strong a deep relationships with our clients. So we're going to continue to look for those opportunities preset specifically in areas, where we have.
Where we are under scale.
That's great color certainly appreciate that and last one for me maybe just a few thoughts on the broader acquisition.
Potential outside of the invest management segment.
Well.
You know I would say that the acquisition our targets as you know our to add 10% of the prior years EBITDA on acquisitions annually, whether its investment management or it is.
It's in their services space.
We continue to see.
Lots of low our acquisitions are.
Our more specialty I would say we have dominated in many markets now or have a significant position in many markets now so the opportunity is to leverage our boots on the ground our management teams on the ground to build scale in our base business to add service lines, where.
They are appropriate and in a business that is as massive as commercial real estate. There really is countless opportunities to grow. So we have to apply our same disciplines that we've hired that we've employed.
Historically.
But we see lots of opportunity to continue to grow.
That's all for me. Thank you very much all the pullback.
Our next question comes from the line Stephen Sheldon of William Blair. Please go ahead. Your line is open.
Hey, good morning, and best wishes to John for a speedy return.
It first first in the EMEA business I think it was a bigger pull back in adjusted adjusted EBITDA margins than most were expecting.
If you've talked about the high pace, a hiring people still ramping productivity, but we're just curious to get a rough ballpark.
How much of the 300 basis point year over year decline would be due to.
The push out a leasing activity any I guess asked another way if those transactions had calm and is maybe expected during the third quarter or would the margin decline have looked a lot less severe.
Hi, Yes, Steve and I would have looked a lot less severe.
For sure.
And.
The service mix is also an issue and the but I talked about in terms of talent acquisition was definitely an issue and Wade.
On the.
On the margin also so.
Combination of factors, there, but certainly it hasn't leasing transactions in booked in Q3, but look much different.
I mean.
And then I guess you wanted to ask about your from your kind of a higher level question your opportunity in the occupier services area. I know you promoted Scott Nelson to run that globally. So curious where you see the opportunities in terms of both.
Expanding more geographically and potentially expanding the breadth of services that you offer to occupiers.
Well, that's a very good question any huge amount of white space for us to be honest.
Scott's a tremendous executives been with us for a lot of years spent a lot of time traveling the world around.
Primarily corporate solutions, but.
You know the number of multi market transactions that we undertake at colliers.
That is.
Transaction Thats originated in New York that might be completed in in a different city or in a different country.
Or services that are originated in one place and executed in another place is too low a percentage for colliers, having a global platform gives us a unique advantage over all of our peers that don't have this type of deep plan.
Form and when we looked and analyze the ability that we have to leverage our occupier services business to really drive incremental revenue streams and also differentiate ourselves through our boots on the ground in so many different regions we read.
Realized that we had to start getting much better at things like occupier services. So it's early days for us, we generate about 20% to 22% of our revenues.
On a multi market transaction basis.
Some of our peers might be as close to 30.
That is a big.
Big potential opportunity for not only our company, but also our professionals how do we encourage our professionals to leverage their relationships locally and bring the opportunities to their clients or serve their clients in.
Other markets that they choose to do business. It. So we see it is a big opportunity for us.
And one that we were dedicating more for focus too and it'll be a critical part of our 2025 plan when we when we come forward with that.
Got it very helpful. Thank you.
Our next question comes from the line of Mitch Germain of JMP Securities. Please go ahead. Your line is open.
Thank you Im curious Jay.
With regards to Harrison Street are you able to drive.
Cross sell.
In terms of what Theyre doing across the other business lines that you guys have.
You know a candidly not.
Not as much as I'm sure as the case and some of our peers Harrison Street is a very specialized.
Investment management firm seniors.
Healthcare social infrastructure storage.
And so there's opportunities around some of those things, but theres not as many leasing opportunities. There is there is opportunities to show Arison Street deferred product. So there's been some synergy there we've been very successful helping.
Harrison Street grow its business much more rapidly in the past our operations in Europe have been helping Harrison Street expand their investor base materially we provide that service in Europe . We also provide the same service in Asia and the fact.
Failure in New Zealand. So we have taken Harrison Street on a variety of road shows that have borne some fruit, but it's not as and we are going into this transaction. We did on the basis that we knew we.
Harrison Street funds were not traditional assets like buying or selling industrial buildings or buying and selling office buildings, which where it's very hard to differentiate but the amount of service level revenue that you could generate as a service provider are much more.
A significant in those areas, we focused on strategy first and the strategy was we have great platform with great growth opportunities and let's pick our spots in terms of leverage I'm, hoping over time.
We'll build our specialties in health care, which we have will build our specialties and senior care, which we have but we have work to do in those areas to maximize the potential. So again, it's back to its an opportunity.
But we're very excited about the growth of Harrison Street and.
And gaining.
Gaining some momentum through that.
So when I think about the growth that you're.
Planning for investment management.
Is it to remain specialized and stick with kind of the core that Harrison Street has been able to.
Create or is it may be in more traditional asset classes.
You know again a good question.
You know, we we use a partnership philosophy, which you've known about for many many years and I think thats a significant differentiator for colliers. So as it relates to Arison Street Harrison Street is going to continue to deploy their strategy that has been so successful over many years they might add.
Had a product line from time to time that they think that they could develop over time, but their focus will remain intact. We are at the same time looking at other opportunities in other asset classes.
Where we think that we can utilize.
Our partnership philosophy, our our institutional global brand feed on the street relationship value to help accelerate the growth of.
Another Harrison street potentially in another specialty area. So.
We have high hopes for that.
Matt.
Segment of our business.
But you know one step at a time.
Got you last one from me.
I recognize the leasing comps.
Fairly expanded this quarter, but they've been for the last several quarters and you've been able to.
Produce some pretty solid growth in that business line in the first part of the year.
Is it just really a function of maybe some timing.
Or.
Is there anything else that we should lead into in terms of that performance of that line in the third quarter.
Yes Mitch.
In the Americas, our prior year comp a 9% internal growth.
That was I think last year that we have in any one quarter. So the tough tough comparison in the Americas.
In EMEA, it really is timing and we've talked about a little bit on the call.
Earlier, so I think that the the main driver in EMEA.
Thank you.
Hi, Ken if you would like to ask a question press star one on your telephone.
Our next question comes from the line of Frederic question of Raymond James. Please go ahead. Your line is open.
Hey, good morning, I want to go back to the investment management discussion.
Jim is up 18% year over year, which is quite healthy.
James This roughly in line with the projections you had when you acquired Harrison Street.
It's actually in excess of our our underwriting criteria on Harrison street to be honest.
Okay, and that's good to hear but what sort of growth rate would you see is this sustainable for for that particular side of the business.
That's a hard one that's a hard one because.
That in terms of new money that is an area where.
It does get impacted by market conditions, and so on but.
Arison streams got a lot of.
A lot of.
New funds in the marketplace.
Im hoping that they will.
They will.
Continue to raise capital, but they have to raise capital and put it to work and a good way. So if we if we could be if we could raise internally are.
10% year, 5% to 10% a year.
I'd be very very comfortable with that especially if at least half or more of that.
Of that growth comes in our open end fund, which has been growing.
As as quickly as our opportunistic funds and of course, the beauty of the open ended fund is it's essentially permanent capital.
Right.
Any thoughts you'd like to share on the we work debacle and how that might impact the sector.
I would just referenced Sam Zell, and just say I agree with Sam Zell.
Alright. Thanks.
That's all I have our thoughts are with John as well.
Thanks Fred.
There are no further questions at this time I will turn the call back over to Mr., Jay Hennick for closing remarks.
Thank you everyone for joining us today, we see our results as very very positive.
And.
We've got a great foundation for growth and keeps getting stronger the opportunities for us continue.
Continue to to unfold and as long as we continue to.
Plus at the same discipline that we've applied over many many years.
Im hopeful that we will continue to generate outside outsized returns for shareholders and given the fact that we own 40% of the equity it means a hell of a lot to us. The other thing that I think you know I should mention to you is and I've been asked this several times offline, but lets make.
And at online we are starting to do some work on our enterprise planned 2025.
Of course, we have all next year to meet or exceed our 2020 plan.
When we first set out on our 2020 plan people thought at very ambitious I'm glad to see with hopefully with some luck and course the market not changing drastically we should we should finish next year in a nice position.
But focusing on 2025 as our is our current thoughts.
Around the company and we hope to be in a position.
Probably near the fall of next year to give you.
Sense of where we think we'll do over the next five years ending in 2025, so with that thanks for joining us and look forward to.
Our strong finish and our.
Our.
Fourth quarter conference call in February Thanks again.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.