Q4 2019 Earnings Call
<unk> earnings Conference call.
This time all participants are in listen only mode. After the speakers presentation. There will be a question answer session feels like to ask a question. During my section you'll need to press star one on your telephone.
Please note today's conference is being recorded thank you.
During the call over to Jason Harbes VP of Investor Relations Sir.
[music], Thank you and good morning.
We issued a fourth quarter 2019 financial results press release and a presentation summarizing these results this morning.
The body's documents and I are empty care dot com.
Unless otherwise stated the results provided on todays call, they're only the fourth quarter for your point I'd seen what the your earlier period.
Referring Paul results on this call me on an adjusted earnings basis, unless otherwise stated.
They also refer to adjusted EBITDA.
Please see todays press release for results under generally accepted accounting principles will go.
We see the sections in the back of today's press release for the complete definitions of any such non-GAAP terms reconciliations of these items the corresponding GAAP results on how when and why management uses though.
Additional information with respect for GAAP and non-GAAP results mentioned on today's call is available on our website and in our investor presentation.
Any outlook to discussed on todays call assumes no material acquisitions share repurchases are meaningful changes in the companys stock price.
I also remind me the information on this call regarding our business that are not historical facts are forward looking statements within the meaning of section 27, I have the Securities Act Demonty 33 as amended its actually 21 of those Securities Exchange Act it might be 34 as.
Such statements involve risks and uncertainties, except as required by law Newmark undertakes no obligation to update any forward looking statements for discussion of additional risks and uncertainties, which could cause actual results to differ from most contained in the forward looking statements CE Mark Securities and Exchange Commission filings, including but not limited to the risk factors set forth in our most recent form 10-K.
Form 10-Q or form 8-K filings now happy to turn the call over to our hosts very Dawson CEO of Newmark Group, Inc.
Thank you Jason Good morning, and thank you for joining us for New March 4th quarter 2019 Conference call.
With me today, our new Merck's, Chief Financial Officer, Mike Rispoli, and our Chief strategy Officer, Jeff Day.
Newmark generated record revenues of over $2.2 billion in 2019.
All of our major business lines improve.
With particular strength, that's been sales in debt with record volume that the $81 billion, an increase of 16 billion or 25% from 2018.
Based on the strong productivity of the teams we have added over the past 18 months, we're comping in achieving our near term target of $100 billion is that an investment sales.
I'm happy to report that the company's board of directors declared a qualified dividend of 10 cents per common share.
Over the past few years, we've hired over 100 top producers with average annual production in excess of $2 million an hour experience broker tepid brokers temple typically take 12 to 18 months to ramp up to their full potential.
We continue to grow the businesses with more recurring revenues, such as gcs valuation and advisory and property management.
And expect to grow Alex I'll growth to accelerate in 2020.
We have never been more excited about the strength of our brand and ability to add onto our platform.
Comparing our results to the industry for the fourth quarter.
New March investment sales volumes were up 10%, while RC a U.S. investment sales volumes were down 7% year over year.
Our debt volume increased 20%, while the M.B.A. commercial mortgage originations index was up 7%.
The combination of our top tier talent, leading edge technology, and our demonstrated ability to cross sell and collaborate effectively well continue to drive growth across all business lines that I'm happy to turn the call over to Mike.
Thank you Barry and good morning, everyone.
In the fourth quarter revenues were $632.4 million.
Full year revenues were up 8.3% to $2.218 billion.
Our leasing revenues decreased by 9% in the fourth quarter, but were up 5% for the year.
Our fourth quarter leasing results came in lower than what we had originally expected due to the timing of certain leasing transactions.
Many of which have now closed in the first quarter 2020.
In comparison or leasing revenues grew by 48% year over here in the fourth quarter 2018.
A compensation expenses increased 2.1% in the fourth quarter and were up 9.4% for the here.
As a percentage of revenue a compensation rate increased by 56 basis points in 29 team due to the continued hiring of leading industry professionals.
Excluding these new hires compensation ratio would have been virtually unchanged.
Non compensation expenses were down 7.1% in the fourth quarter, but all 7.6% for the year.
As a percentage of revenues are noncompensation expenses were down 60 basis points in 29 team.
On the last earnings call, we announced the restructuring plan to eliminate $15 million with annualized cost by the end of 20 Twond.
I'm pleased to report that we have achieved their target and around and are now raising it by an additional $5 million of expected savings by the end of 2020.
Turning to earnings.
Pre tax adjusted earnings were up 8.6% in the fourth quarter and 11.5% for the year.
Adjusted EBITDA improved 6% for the quarter and 7.9% for the here.
Our full year tax rate for adjusted earnings was 14.8% in 2019 and 2018.
Fully diluted post tax adjusted earnings per share increased by 15.6% to 52 cents in the quarter and by 8% for the year to $1.62 cents.
Our fourth quarter weighted average fully diluted share count was 264.5 million down 1.2% year over year.
We repurchased 4.5 million shares for $42.1 million at an average price of $9.32 in 29 team.
We believe that Newmark stock is very attractive at its current price.
However in order to preserve the tax free nature of the spinoff from BG see our ability to repurchase shares through the end of November 2020 remains constrained.
Moving onto the balance sheet.
Our total liquidity was $163.6 million at December 31, 2019.
Unsecured long term debt was $589.3 million.
Our net debt to trailing 12 month adjusted EBITDA was 0.8 times.
The strength of our balance sheet and cash flow generation provides a solid foundation for future growth.
Turning to our guidance for 2020.
We expect industry leasing and investment sales activity to be flat to down in the U.S. for the year.
The M.B.A. expects origination volumes to be up 9% to 20 point.
For new Mark we currently expect or we seem to be consistent with industry volumes, but our capital markets to increase by high single digits.
We expect the remainder of our businesses to grow mid to high teens.
Our 2020 guidance is as follows.
Revenues in the range of 2.4 to 2.5 billion up from 2.218 billion in 2019.
Adjusted EBITDA in the range of 590 $615 million, that's compared to 565.5 million in 2019.
Adjusted earnings tax rate between 14, and 16% compared with 14.8% in 2019.
Adjusted earnings per share between $1.70 and $1.76 versus $1.62 in 2019.
Fully diluted weighted average share count is expected to be relatively unchanged.
As Barry discussed in the past few years, you markets hired more than 100 producers, who on average are expected to generate more than $2 million annually.
Our earnings outlook incorporates the initial costs prior to the full delivery of their expected revenues.
Once these new producers are fully up to speed.
We expect them to contribute an incremental $100 million in revenues and 10 to 15 cents, an adjusted EPS on top of our 2020 guidance.
As we detail in today's press release certain items, such as the impact of the NASDAQ forwards Mark to market movement on real estate services investments the noncash MSR amortization impacted our GAAP results for the quarter.
And the year in 2019.
While we do not provide guidance for gap, we expect the difference between our GAAP and adjusted earnings results to narrow in 2020.
Assuming those certain items did not recur.
Operator, we would now like to open the call for questions.
As a reminder, if he would like to ask a question. Please press star followed by the number one on your telephone keypad, we'll pause for just a moment to compile the Q and a roster.
Your first question comes from Jason Weaver from Compass point Your line is open.
Hi, good morning, Thanks for taking my questions I, just wanted to dig into the a the timing of the large lease transactions that you mentioned during the call.
Can you give us any idea of the scale of that and door.
Any particular other detail.
Sure I think if you look at.
You know the midpoint of our guidance for the fourth quarter in the year relative to where we finished the movement within that range.
So what I think we'll see is.
Some leasing improvement leasing up year over year in the first quarter.
Appeared to the first quarter 2019.
Although the year as we said we will be.
In line with the rest of the market.
Got it. Thank you and can you dig into the forward revenue guidance, a little bit more does this imply any any mix shift in your mind among the different.
Line items between leasing sales mortgage banking and man surplus.
Sure I think as we said the ER.
The leasing will be in line with the markets are that's flat to down a bit.
Our capital markets is growing faster than the market.
We said high single digits and the rest of our businesses are growing mid to high teen so.
You will see those businesses with recurring revenues continue to grow over time.
Within new Mark.
Thank you and we also heard from Jones Lang Lasalle that most of the attrition activity from the HF that murderer merger has subsided as of now can you talk about recruiting momentum going forward.
We are incredibly busy I mean, we've we hired a.
A big capital markets team and.
In DC in Atlanta, we just hired the number one cap investment sales team in Texas.
We hired a capital markets invest in sales team and.
The Midwest Chicago area.
We continue to be the company of choice.
For the best people.
All of the foundational building that we've created for the brand to be an acceptable brand for the high them. The best best people in that business to calm hark are choosing us.
And and were.
Couldn't be more excited about those prospects and the pipeline has accelerated.
And in many of these markets, we have a choice of several.
People, where where we have some white space and some holes to fill so so that part of our business is really.
On its way and working on its own bullish and then we're really excited.
Okay, and just one final one turning to the NASDAQ as asset is there any way to minimize the earnings distortions coming from that I'm, just thinking out loud via moving it maybe into an SPD and you hedge accounting.
It's not something we've contemplated but we can certainly think about that make the good news is oh, there is a lot of noise as you mentioned in the GAAP numbers.
Related to the put transaction that we did.
But the good news is while those transactions because we maintain the upside and protect it all of our downside from 2019 to 2022.
Value to US has gone up I think somewhere in the neighborhood of $175 million.
As NASDAQ continues to appreciate so it's been a great.
Cash generation tool for us.
Great asset for the company, even though you don't see it on the balance sheet.
Okay. Thank you for taking my question.
Your next question comes from Jade Rahmani from KBW. Your line is open.
Thank you very much.
Looking at your commission rate as a percentage of volumes, which.
I'm glad that you disclose it does show a decline in the commission rate and I was wondering if that was attributable to the size and mix of transactions or if there's any fee pressure in the market, which anecdotally I've actually heard about and certain office markets.
No I think we've talked about our overall comp rate being up a little bit year over here that really for US is just the effect of adding the teams.
That have come on that the revenue comes 12 18 months later and of course those teams come with Oh, the people that have compensation.
So what does the near term effect on increasing our calibrate, but we think overtime that will normalize itself.
And our comp rate should stay pretty.
Pretty good overtime.
But if I take the investment sales in debt placement commissions of 165 million divided by investment sales and brokerage volumes of 24 billion, it's 69 basis points and historically its been closer to 80 basis points. So I'm wondering if there's any pressure on fees.
In the market.
I'll, let Barry answer belt fees in the market I would say for us what we're seeing is lot bigger transactions and of course is the transactions get bigger.
The fees as a percentage of the total.
Volume to go down Thats, just market for us and for everybody else, but are you seeing and we're doing we're doing much bigger deals we have a bigger share of those.
Those large powers and large financings.
So the larger deal there is a little bit of the pressure.
Okay.
In terms of the leasing business and the overall fundamentals.
Yeah, leaving aside.
We work.
Could you comment on the health of the tech sector away from say the Big five Tech companies has there been any change in terms of VC funded entities facing more pressure from their boards to be scrupulous in their capital spend plan that could affect office demand in gateway cities, So just San Francisco or New York, where.
Tech has been such as such a huge driver of growth.
Yeah, we're not seeing a we're not seeing that.
Yes in the core fee space, maybe somewhat but in that in the tech space. It's the biggest growth area.
Is the biggest issue for some of the.
Hi, the Big Tech markets is availability of space.
The demand is greater than some of the availabilities.
So what's happening is that'll be good for other markets like Austin in Nashville, and in Texas, where companies are looking for availability and labor. So.
It will all even out at the end of the day, if they need they need labor they need talent.
They are growing.
Is there seems to be I'm, no shortage of startups, they continue to proliferate and be a big part of the market.
On the JC multifamily side I was wondering if you.
Anticipate any issues with respect to the GNC is being able to hit the 37.5% affordability requirement and if that could be at all a headwind in terms of new marks business I believe that.
Newmark spin trying to focus on growing multifamily in some of the top major cities, where a has a large presence.
Correct, but what we found actually Jade is that the growth that we've experienced has actually been complimentary to the 37, and 8% and well those aren't numbers that we disclose the trends than positive then it's not a concern.
It's obviously a concern in the sense that we want to make sure we meet or exceed but it's not something that we think is gonna be an issue for us or for the gsvs.
Thanks for that and then lastly wanted to see if you could provide an update on both the no tell and see theory investments that Nu Mark has on its balance sheet, how are those companies individually performing.
And if you could also clarify how much capital Newmark has invested to know tell that'd be helpful.
C series doing pretty well being run by Paul Vanderslice, and that is going going very well the no tell investment in for US has been.
A big.
A good investment.
They had a little bit of a down around as part of the the noise in our gap, but a small amount.
In that industry.
In the discussion the than the previous question raising money in that industry has slowed a bit so.
The good the good news for that its.
It's in seven aiding those businesses with much more discipline and and the business structurally is sound the industry is a good industry and.
I think that that is a you know they're doing they're doing okay.
Okay. Thanks for taking the questions.
As far as much as a reminder to ask a question. Please press Star. One. Your next question comes from Patrick O'shaughnessy from Raymond James Your line is open.
Hey, Good morning, guys can you speak to your UK in European aspirations in light of your acquisition of Harper Dennis Hot.
Well HD age is really the gold standard on tenant rep for retail the rep. Many of the brands that come into the U.S.
Come in bio London in Europe.
The designers come here with the purchase of.
Our chaos.
Being the number one tenant rep in New York being very active in la.
And being having a London beachhead for that business will give us a dominance in those luxury high Street.
Clients that needs representation in their rollouts and growth throughout the United States. So for US It was a very strategic move.
Recognizing that.
Lot of people have written off retail there will always be retail it'll be.
I'm more focused and hgh has a great acquisition for us.
Do you look at H.T.H. is a beachhead from which to do more acquisitions in Europe or was it more about complementing what you already doing U.S.
It's a little boat.
Okay.
Question on the margin guide for next year.
Is the expected business mix faster growth in the non transaction areas slower growth in the transaction or is is that expected to have negative margin implications for newmark in 2020.
I think what's driving the.
You know the slight decline in the margins year over year as more due to the timing of the ramp up of the producers.
You know the recurring businesses have a mix of margins so.
The servicing businesses in there that continues to grow pretty rapidly, which is a high margin business and then things like property management, which are a little bit lower margin, but for us, it's really the comp rate relative to the hiring and the ramp up of those of this new hires.
Got it.
Then just last one was there any deal slippage on the capital market side or was that pretty much confined to the leasing side of things.
I don't I don't believe that was on the capital markets.
There was some slippage on the leasing side as far as we can see.
Okay, great. Thank you.
Your next question comes from Alexander Goldfarb from Piper Sandler Your line is open.
Oh, Hey, good morning, good morning, I've, just a few questions here.
First just clarifying on the NASDAQ obviously, you guys made a lot of money with those with the contracts that you bought but the the share count or that started to show like NASDAQ now it was like 114.
Year ago is somewhere in the I think ninetys type range. So does the increase in the in the in the stock price factor into the 2020 guidance or everything is backed out and the guidance is based on the original contract price. When it was I think around 90 or so.
Sure. Good morning, Alex So our guidance is just based on the current NASDAQ price and at the current NASDAQ price.
We received a certain amount of cash when we did the RBC transaction in 2018.
And we maintain the appreciation above $94. So our guidance is really the cash we received plus whatever cash we expect to receive.
Above 94, 21, so our guidance is just the cash will get from the transaction.
Okay, so to be clear, Mike it's that it's the 94 21, plus whatever they call. It an extra 20 Bucks a share some to go to less than 18 Bucks a share that's in your 2020 adjusted EPS guidance, that's roughly correct yes.
Okay. Okay.
And then the second question I have three questions. Second question is are there was an S. Eight filing last fall hundred 83 million.
You guys were very clear Hey, it's just registering Rs used for sale, but just thinking about how that stock is sold in the market is that something that you guys control or that's like stock that goes the brokers and you know pick a day on an ex date. They are suddenly $183 million worth of I've have been newmark stock that is for sale can you.
Help us understand the mechanics of that and how that will impact the the a the trading volume.
Yeah, I don't I don't see that as having any material impact on the trading volumes, that's a routine falling.
So that.
Partners and our acquisition partners and anybody we issue shares to over time those shares or register. So all those shares are in are fully diluted share count.
And.
Don't think you should read anything more into than that.
Okay and then just just finally you guys have done a good job you've been hiring people you've gotten yeah.
The share count you know is now flat with last year versus previous year was up 4%, you're cutting costs 15 million, but what's what's still yeah. I'm looking at is in 2018 to 2019 do you guys grew adjusted EPS, 8% and that included a 4% increase in the share count this year the guidance implies seven.
Percent.
Growth despite flat share count despite the cost savings and despite you know the nice mark that you've made off of the NASDAQ So you're growing revenues sort of around 10% or so but there's a there's an offset somewhere else can you just help because very everything you said sounds good sounds great, but where we.
There is this offset because it seems like you're getting a lot of benefits, but it's not showing up in a faster, earning EPS growth. So I'm just I just I'm just looking for a little bit of perspective on that.
Sure I'll start Alex and then Barry could weigh in but it really is the the timing of the hires if you look at our hiring.
Hundred.
Producers over a two year period with 2 million annual production.
And that really accelerated through the back half of 29 team and into the first quarter 2020, frankly.
Hiring.
Just continues to accelerate and so our guidance is assuming all the costs related to that hiring when it takes 12 to 18 months to see the revenue like the one thing I did say in my prepared remarks, if those producers were fully ramped up our EPS would be 10 to 15 cents higher.
And I think thats pretty telling in terms of.
How it affects our numbers and how the timing effects of business. So Alex I mean, youre youre you've been in the industry a long time.
There there are lots of ways to grow you could you could you could buy companies and it's just from a simple the point of view its instantly accretive you get the receivable as you get the cash flow you have the goodwill when you hire talent.
It's really.
Laser focus on.
The bulk of the production and the most productive elements of the business.
And that required us to build a brand that was a good place for the best talent to want to come from where they might be comfortable and might be happy and so we have now we believe that we've done a good in a good job in building our brand so that we can now.
Hello, and aspire for the best people.
Difference in hiring brokers is and whatever we hire or acquire the brokers.
It takes them depending on the particular.
Business line their end.
A good amount of time to ramp up in leasing a little longer sales a little less and during that period of time, we have significant expenses and and so we've taken the expenses were amortizing the upfront.
And we're getting the revenues somewhere a year, two a year and a half or the second year to ramp up so that is a harder more arduous more grinding way to build the company, but we think at the end of the day. What we've created is an environment, that's incredibly attractive to the best people.
And the ultimate proof in the in the putting is you know three years ago, we will recruit our average underwriting for broker might have been 1.1 million. Our average underwriting has pushing up to two and a half million and to me that says says it all sums it up and and set and.
Courage is off to say you know we've arrived we're at a place where this is a place for brokers and professionals to calm because they know this is where we're on the move we have momentum.
The support the infrastructure the resources are here the clients are here and and it's and it's working.
Yes, very look that's great I mean to have better producers is great, but just a question, presumably every year, you're going to be hiring or every two years are going to be Harding, that's sort of 100 brokers or was this just at a growth spurt and then that is going to taper down so that will see the benefit of all these hires flowing through as we look at the out years.
Well, it's going be a combination of both so in in the capital markets side of the business. If you just it's more is not more.
And one and one being one and a half is good may be better for the house, but it's not always good for the broker. So many of the brokers are concerned about crowding where they are.
Certain businesses when you put all the players on the field.
He is to get them to work together collaborate communicate build bigger market share.
Hi are bigger business and higher revenue per capita when you get to the place where not only are you, bringing the hot the highest producer, but you're giving them producers the ability to earn more in place where the infrastructure with technology with resources and then market acceptance you've now.
You've now that is what's going to show up on the bottom line and that's what's going to show up in our earnings margin and and that is going to be sticky for the broker and that is going to what what is going to that's what's going to make this company.
The company, we expected to be and it continues to grow to be.
Okay. Thanks.
Yes, I would add to that that as we bring in these really talented professionals, what we've seen over the past few years is we're able to build around them.
In the businesses that may not exist or may not be a strong in those particular markets.
Capital markets leads to leasing leaves the property management.
And were able to cross sell our businesses in a way that will help our revenue growth.
Continue to accelerate into the future and that's that's a that is exactly right. So when you bring in capital markets. These the ability to do the financing to do the leasing to do the management.
Even to you know two to create a level of of.
In depth in our relationships with investors with private equity firms is all good for every aspect of our business and we'll have we'll be accretive in a way that is not going to be expensive for us. We're just going to increase our market share we've already seen that in the markets, where we we have investment sales were finance.
I think dominance.
Okay. Thank you. Thank you Barry Thank you Mike.
Your next question comes from Henry Coffey from Wedbush. Your line is open.
Yes, good morning, everyone. It it's a challenging process, our our former CEO at Sterne Agee used to say I can I can capitalize it or I can expense it and they get better people when they expenses.
The comment you made earlier when you gave your guidance was that you were expecting your brokerage income to be up I think you said sort of high single digits, which I'm going to read to be 8%.
The M.B.A. was talking about the origination loan market growing by knowing.
Does that mean you're growing.
I know you don't break out all the components of that it makes it sound like <unk> and that leasing would be flat and that that it makes it sound like you're growing a shade below the market rate right now.
Or am I misinterpreting that.
Yeah, Let me, let me just try and clarify that Henry so.
No capital markets as both investment sales.
And mortgage brokerage so the market for mortgage brokerage is.
He said about up 9%, but the market overall for investment sales is expected to be.
Flat to down.
The combination of our two businesses and.
Sales businesses revenue perspective, much larger today, even though we did $30 billion a debt transactions last year, and that's a really growing business for us, but our our high single digits.
It's a combination of those too so we believe were outgrowing the market.
But you're you're.
So you're expecting your mortgage brokerage business per se to be.
Oh.
We'll call it more and and.
And then you're okay. So I think I have that I saw that works out.
I guess the other perspective as you Youve solved a series of just as Youve solved a series of problems.
And.
Oh, you you know we had the share count growing where you fix that you can't buy back stock essentially for another year or so little slightly less than a year because of the tax free access situation.
Your third lever for creating value.
As you did it so why not since you can't do return of capital on the share of share front.
If you confident that you're going to keep growing.
Yes number.
Well that you'll be able to buy back stock.
You know what a year from now.
Well that boosted.
Well, obviously, that's a cut support decision, but we've always felt why why did okay. So it's a board decision why didn't the board boost the dividend well, we've always said, we pay out around 25%.
Of our earnings on annual basis.
And in the first quarter of each year.
We set the dividend we try to stick to it for that particular here.
When we get into the first quarter of 2020, well, obviously have that discuss.
Earnings are growing.
And we'll talk about it.
Great. Thank you very much.
Well.
Your next question comes from Jade Rahmani from KBW. Your line is open.
Thank you.
Just a follow up on the revenue guidance, if I take a 10% growth rate for capital markets commissions.
I assume flat to down 5% for leasing.
Take mortgage banking and grow that by 15% and grow management services and other revenues by 15% I get to 2.35 billion.
So I'm wondering where.
Where our assumptions are too conservative.
Sure I think we said mid to high.
Percentage teen growth.
For the rest of the businesses so.
It is obviously around 15 high is.
Higher than that.
Even if I do that still got to let's say it take 20% growth and.
Mortgage banking and management services I still still won't get there.
So I don't know if.
I got to 2395.
And so to get to 2.5 billion, we would need to assume.
[music].
Much stronger growth and.
The mess.
So I guess.
I don't know if you could give any clarification and then what is driving the management services and other revenues to be growing at close to 20% Cliff.
Sure we.
We've talked about the impact that capital markets teams have on property management.
So we're starting to see that come to fruition.
Focus on technology in our global corporate services business and that leads to transactions that leads to project management.
So those businesses continue to grow.
As we continue to accelerate our our debt, particularly on the GRC side.
That leads to growth in our.
Both in our mortgage banking and our servicing which is in the management fee line and so all those businesses.
Grew and valuation and appraisal.
It was up I think about 30% in 2019, we still believe we can build $150 million business.
After two or two and half years worth 90 million.
So there's a big growth trajectory on that business as well so what's the good news is all of our businesses continue to grow we're really focused on the cross selling.
Corporate clients as well as institutional owners and we're just gaining market share in each one of our business and we've also hired.
Senior.
More senior leadership on the management services side that has been performing very well.
And we are.
Focused on rounding out.
Our business, we are paying attention to the the leasing and gcs and management business and.
I will like hiring great talent and professionals on the brokerage side are in great talent on the management side, considering where our platform is today, considering where capital markets businesses today.
Is working.
Okay.
Any M&A opportunities or areas of a strong interest right now that you would rank as the top priority.
Aside from recruiting for example would you be interested in.
The asset management business.
We have not.
We have not focused on the asset management business that is not.
In our and our view at the moment.
We like being where we are we represent large owners and institutions.
Up and down the capital stack.
We like being one of the three that doesn't in any way shape or form compete with our clients.
And.
We provide them services on the debt side on the you know if there were a an asset advisory or separate account business, maybe we think about it but our strategy right now is to do everything we can to help owners and institutions run lease.
Managed by sell their property.
First and foremost.
Okay.
Thanks, very much for taking my questions.
Thank you.
Your next question comes from Jason Weaver from Compass point Your line is open.
Hey, Thanks, just one follow up in the past you included a slide.
Update on the cross selling opportunity between Air Reagan Berkeley point.
Just looking for what progress you've achieved thus far and what your where you're targeting going forward.
Sure.
We've progressed as hoped this year our cross sell last year was 23% are in 2018 in 2019, it was 33% and we continue to strive for 40%.
And with the growth that we've had we would hope that we would see that in the relatively near future.
Alright, thanks for that.
We have no further questions to turn the call back over to Bury Boston for closing remarks.
Thank you all for joining this call.
And.
I look forward to seeing you and speak speaking to you in the next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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