Q3 2023 Colliers International Group Inc Earnings Call

Welcome to the Colliers International third quarter Investor Conference call. Today's call is being recorded legal counsel requires us to advise that the discussion scheduled to take place today may contain.

Forward looking statements and 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. Additionally, information concerning factors that could cause a pause.

Cause actual results to materially differ from those in the forward looking statements is contained in the company's annual information form asphalt with the Canadian Securities administrators and in the company's annual report on form 40 F as filed with the U S Securities.

He's an exchange Commission as a reminder, today's call is being recorded it is nice to have but the second twenty-twenty free and at this time for opening remarks, and instructions I would like to turn the call over to the global Chairman and Chief Executive Officer, Mr. Jay Hennick.

Please go ahead Sir.

Thank you operator, good morning, and welcome to our third quarter third quarter conference call as the operator mentioned I'm, Jay Hennick and joining me today is Chris Mclaren and Chief Executive Officer of our real estate services business and Christian Mayer, our Chief Financial Officer. This call is being wet.

Cash and can be accessed on our Investor Relations section of our website, where you can find a presentation slide deck.

During the third quarter Colliers achieved significant growth in our high value recurring service lines with a 12% increase in outsourcing and advisory outsourcing and advisory fees and a robust 23% increase in investment management.

Our proven business model Mark by a diverse array of high value recurring services has continued to demonstrate our resilience today about 70% of our earnings come from recurring revenues, which bolsters our ability to navigate through various market fluctuations, including the current.

Options affecting our transactional business.

Since the release of our second quarter report back in August we've seen further industry wide declines in transaction volumes due to ongoing factors such as rising interest rates stricter credit conditions and continued uncertainty around return to work dynamic.

Mix.

As a result, we've adjusted our outlook for the traditionally strongest fourth quarter to be more conservative in our stances Kristian will outline in just a few minutes.

As I've said in the past capital markets and leasing are essential services for all real estate investors owners and occupiers are tenants.

They may be impacted from time to time as they are now, but they will rebound once things stabilize which could be as early as the second half of 2024.

Several years ago, Colliers and backed embarked on our strategic journey to rebalance and reposition our company by integrating more recurring revenue streams.

We introduced two important new growth engines engineering, and design and investment management, both of which have seen substantial growth and success since inception, and we expect that success to continue well into the future.

Our nearly 30 year track record of performance demonstrates our success and dedication to continuing to create substantial shareholder value and we will do that by continuing to grow our businesses one step at a time expanding into new high value recurring services and continue.

Police seeking out strategic growth opportunities, especially in times like these now let me turn things over to Chris Mclaren into discuss some highlights following that Christian will provide with provide us with his customary financial report and then we'll open things up to questions Chris.

Thank you Jay and good morning, our mission at Colliers is to maximize the potential of the property and real assets to accelerate the success of our clients and our people, while creating value for our shareholders.

Today, Colliers remains resilient benefiting from our years of strengthening our core business, while adding fast growing recurring service lines.

In outsourcing and advisory we achieved an impressive 12% year over year growth.

50% of which came internally through new contract wins.

We expect this growth to continue in the engineering design project management and property management.

As mentioned, we have seen further declines in capital markets in Q3 due to interest rate volatility limited access to debt and the continued price gap between buyers and sellers of real estate assets.

We are confident that capital markets will rebound, perhaps in the second half of 2024, and we are poised to take advantage once market conditions stabilize.

Over the past few years, we've accelerated our investments in capital markets platform to grow our business fill gaps and take market share.

For example in the U S. We have delta significant debt advisory business at Colliers mortgage.

<unk> our platform spans the entire U S with more than 150 experienced debt professionals to assist our clients originate in place real estate debt at just the right time.

Once again, our expertise and ability to deliver exceptional results for property occupiers owners and investors as recognized by Euromoney.

Colliers was named Global agency of the year across the Americas, EMEA, and APAC, which is a testament to our strong and growing position in the industry.

Our professionals around the world continue to be enterprising, especially in the current market environment. Our latest global employee engagement survey saw our strongest scores ever.

Nicely exceeding external benchmarks are strong culture was also recently recognized by our inclusion in Forbes world's best employers 2023 list.

Now let me pass this over to Christian.

Thank you, Chris and good morning, everyone.

I will provide some additional commentary on our consolidated results our financial outlook for the full year and our balance sheet.

Please note that all references to revenue growth made on this call are expressed in local currency and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call.

In the third quarter revenues were $1 1 billion down 6% relative to the comparative prior year quarter.

Our capital markets and leasing service lines reported revenue declines of 42% and 9% respectively. Continuing the trends that started during the third quarter of last year.

Having said that our recurring service lines investment management and <unk>.

We're seeing an advisory each reported robust growth from a combination of acquisitions and strong internal growth.

On an overall basis internal revenues declined 10%.

Consolidated adjusted EBITDA for the second quarter was $145 million.

Relative to the prior year with margins of 13, 7% versus 13, 1% in the prior year quarter.

The margin uptick was driven by growth in our higher margin investment management operations with margin compression in our transaction business, partially offset by ongoing aggressive cost control actions across the company.

We achieved cost savings of $25 million during the third quarter and $53 million year to date, we expect an additional roughly $30 million of cost savings in the fourth quarter.

We are preparing to extend our cost control efforts into 2024 to match the duration of the expected transactional revenue downturn.

We have revised our financial outlook for 2023 to reflect the declines in transaction velocity that occurred in the third quarter.

And the more challenging current market environment.

We expect capital markets and leasing transaction volumes to be down 5% to 15% in the seasonally strongest fourth quarter relative to the prior year period with.

But the impacts partly offset by ongoing cost control efforts.

And our recurring service lines, we are expecting to see continued growth both internally as well as from recent smaller tuck in acquisitions.

In investment management fund.

Fund raising year to date has been softer than expected and that trend continued in the third quarter.

For the full year, we now expect fundraising to be approximately $3 billion compared to $8 billion raised in 2022.

We do however continue to see strong interest in our alternative investing strategies, which should translate into accelerated fundraising in 2024.

Implied in our full year outlook is the expectation that fourth quarter, EBITDA will be roughly flat versus the prior year quarter.

Although we had previously expected EBITDA to increase in the fourth quarter. A flat result will demonstrate the resilience of our recurring revenue streams and the highly variable nature of the cost structure and our transactional operations given current market conditions.

Our adjusted earnings per share is expected to continue being impacted by higher interest expense as well as the larger proportion of earnings coming from non wholly owned operations.

As such we now expect full year adjusted earnings per share to be down from last year to the range of $5 10.

$2 $5 50.

In terms of our balance sheet.

Our financial leverage ratio defined as net debt to pro forma adjusted EBITDA was two four times at September 30.

Consistent with the level reported at June 30, and.

And driven by capital deployed on acquisitions over the past two years.

These acquisitions are predominantly in recurring service lines and are performing well.

We now expect our leverage to decline to two to two two times by year end.

That concludes my prepared remarks, I would now like to open the call for questions.

Operator can you please open the line.

Thank you if you wish to ask a question. Please dial star one on your telephone keypad snout and stickier once Youll names announced you can ask your question. If you find your question as I have said before it shows speak you can dial star Sue to counsel said once again Thats Star one Oscar.

<unk> will start to if you need to cancel.

Our first question comes from the line of Michael <unk> of Scotiabank. Please go ahead. Your line is open.

Hey, good morning, guys.

Okay.

The first question I had was really just as it relates to the.

The slowing leasing activity just wondering if you can break that down.

In terms of end markets and how thats evolved and velocity months, just wondering if you're seeing incremental weakness in industrial and if so what that means for the cadence in 2024.

Yes, Michael it's Chris here, just some commentary there are some bright spots throughout the global platform. If you look at leasing in our Asia Pacific.

Region, we were up 995% year over year.

And that relates across the board, we had some strong leasing in Australia, and New Zealand, Singapore, Hong Kong, and India and that would predominantly be in <unk>.

Office and industrial.

Another bright spot would've been Canada, we had 52% increase in leasing.

So there is some leasing taking place on.

On the negative side you'd see.

We've always been quite strong in industrial leasing around the world.

And it's the lack of supply youre looking at 3% to 4% vacancy. So it is hard to get some transactions there.

So I think we're seeing looking forward.

Continued growth in leasing in Asia Pacific and the recovery in Americas, and EMEA may be a little bit slower.

That's great. Thank you.

Just going back to the Q4 expectation for flat flattish EBITDA.

Christian I just wondering if you can maybe break that down a little bit again, so youre expecting capital markets leasing to be down between five and 15%.

Presumably <unk> is rising theyre just not sure on the quantum if you can talk about that and then lastly on investment management for Q4.

Yeah. Thanks, Michael.

For in terms of <unk>, we do expect organic growth in.

In Q4, that's going to continue and we've been running.

In the mid to high single digit organic growth there this year and that's going to continue.

And in terms of investment management, we have a nice cadence management fee revenue.

And the EBITDA in Q3, that's going to continue and we do expect a little bit of fundraising in the fourth quarter as well that'll be additive to EBITDA and the investment management segment.

Perfect that was my two thank you.

Thank you. Our next question comes from the line of Stephen Sheldon with William Blair. Please go ahead to one line item.

Hey, good morning, Thanks for taking my questions first one here just on if you think about 2020 for adjusted EBITDA.

Can you help us think about how much of a benefit you might have in terms of incremental flow through from cost actions taken so far.

With the planned reduction in <unk>, which I think was $30 million, if I heard that correctly how.

How much of an incremental boost could could drop you can think about bridging 2024, adjusted EBITDA back to 2023.

Yes, Steven Thanks for that question, we certainly.

Expect to be able to continue.

And sustain the level of cost actions, we've taken to date.

So that was that's kind of our operating assumption into 2024.

It may be difficult to increase the level of cost action, but that's something we will.

Consider it.

As we go through our budgeting process here over the course of the next step.

The next month and have detailed.

Reviews, with our operators I believe locally and regionally.

Okay. I guess, just if we think about that $52 million year to date cost cutting number.

That kind of.

Are you, reaching that full run rate in 2023.

I would assume there'll be some flow through actions.

I guess, that's baked into 2023, and how much of that would flow through into 2024.

Exactly so we have reached our run rate at this point.

And 25% to $30 million a quarter is the run rate.

And those actions took effect in Q2 of this year. So they are now fully in effect and they will continue.

Until we see a meaningful recovery in the transaction business.

Okay.

And then just on the <unk>.

Syed.

And then just kind of want to ask on how we how we should think about modeling AUM in the fourth quarter.

I think we've kind of mentioned maybe that there would be a step up given the fundraising activity, but just and then so kind of how should we think about for Q1.

What are you seeing that gives you confidence about fund raising activity.

Picking back up next year.

Well, let me let me talk let me, let Christian talk about the fourth quarter and how are you seeing.

The fourth quarter, but fundraising across the board with absolutely every publicly traded firm that reports their fund raising has been.

It's been tough.

Regardless of asset class, which has been interesting of course traditional real estate has been hit the most but alternative asset classes and infrastructure like we have has done much better but still soft.

It's been interesting is there is a lot of.

Interest in our funds and I believe other other funds that are in the market that are similar to our types of funds, but there has been just it just been a delay that's that's that's that's impacted us. So if we look at our pipelines relative to last year they are up.

Materially whether we can convert them towards.

We ended the year or most probably mostly into the first part of 2024 is still a question to be answered but.

You know the results of our.

Investment management professionals have been stellar rare.

Relative to others in their industry.

They are in the market actively with several different strategies, so that puts us in the game.

And we're cautiously optimistic.

2024 will be a very strong year for fundraising.

My guess is it will do better than we did last year and overall fund raising but we still have to wait and see.

And Steve in terms of the <unk>.

Fourth quarter.

We do expect some fundraising it will be modest as I outlined in my comments.

The fundraising this year is significantly less than it was in 2022.

And so I would expect our AUR will be roughly flat to perhaps up a little bit in the fourth quarter.

It's been a positive benefit from fund raising and also some ongoing.

Activity in terms of mark to market, which we've been experiencing now over the last year and a modest mark to market on our traditional real estate assets primarily.

So.

Hopefully that's helpful.

Very helpful. Thank you.

Thank you. Our next question comes from the line of Stephen Macleod BMO Capital. Please go ahead. Your line is open.

Great. Thank you good morning, guys I appreciate the color.

Just a couple of a couple of follow up questions just relating to your.

The commentary around that.

Essentially transaction activity picking up in the back half of next year.

I'm, just curious sort of how.

You could characterize your visibility into that I mean is that something that.

That youre hearing from your clients because they have demand pent up or is it more just a reflection of the macro backdrop and the rates backdrop. Just curious if you give a little bit of color there.

It's a great question Steven because.

Just just 90 days ago.

We gave you our best guess of.

Probably not it's not a best guess, it's best information.

Across the world on how we would be doing had.

Market conditions remained as they were 90 days ago and since then.

We've seen substantial increases in interest rates everybody in the world is reading about lack of availability of credit and tougher credit conditions across the board. There is a lot of money in the private marketplace is being raised in private debt collection right now not.

Yet implemented and all of those things are having an impact on.

Transactions and so.

To me this is.

Colin This is just common to anybody that follows the industry.

When you have substantially rising interest rates when it is very difficult to get that when youre looking at your existing portfolio and you are saying.

Got existing debt coming due in 12 months or 18 months and the interest rates are going to go up materially by covenants are going to be offside everybody in the industry is pausing.

Everybody now there is there is transactions that are happening.

On some trophy assets here or there.

Banks are supporting their better customers, but there was supporting them at a substantially higher interest rates at low loan to value.

Ratios so.

When we think back to 90 days ago and see the drastic change.

You've got a absolutely reflect on where is this going to go for the fourth quarter, which which we're taking a much more conservative stance as I said.

But the reality is my my view and you're asking me for my view My view is unless there is stability in the marketplace around interest rates one.

Unless we see lenders in the marketplace.

Providing that.

At the same types of <unk>.

Ratios as they did historically.

And finally.

Sellers.

Being more risk realistic about.

There are there price expectations.

This is going to delay and that's why we say it's likely to be beyond the.

The first half and earlier in the year, we were expecting the fourth quarter to be quite strong actually because we were expecting there to be some stability in interest rates I don't think anybody anywhere in the industry anticipated.

<unk>.

The strict lending conditions and how they've evolved during the course of the year. So all of this to say we remain unclear as to when that's going to change.

But when it does.

It's going to be a massive change and it's going to happen I think relatively.

It's going to be slow at first but then it will take on a velocity because there's lots of dry powder in the marketplace banks have to land in order to make money.

And there is a lot of people in the real estate sector. It's the biggest sector out there so as Chris Mclaren said earlier, we have for the past couple of years in our core business alone forget all the work we've done around recurring revenue and how thats transformed colliers into a different type.

We have diversified our services business and asset management business, we've invested heavily in our core business and we're ready willing and able to help clients not only by itself, but most importantly finance.

Most importantly, but as importantly, finance those transactions.

We just need a normalization to happen.

So it's.

As operators in.

This business, it's our job to keep our heads.

Our focused.

And what's important in that is to have strong financial wherewithal to capitalize on transactions to continue to invest in your platform.

To call out costs in times like these that you can call out without having an impact necessarily on on.

The strength of the business going forward. So we're doing all of those things.

And we believe that it's going to translate into significant shareholder value at some point in the future just don't know when it is the end of the end of the.

At the middle of <unk>.

Middle of next year towards the end of next year don't know.

That's great color Jay. Thank you. Thank you for that.

And then I just wanted to follow up because I think it's important you mentioned.

Obviously, the recurring revenue business continues to hold in quite well which is.

Significant piece of your.

Evolution.

Could you just talk a little bit about if you have any incremental color around the areas of relative strength and weakness within the <unk> business.

And how you see that potentially evolving going forward as well.

The beauty of our OLED business is that it is very stable.

<unk> been very and Chris might want to talk to this a little bit property management for us has grown materially around the world and it's been it's been.

Frankly, a surprise I think to us in some respects.

And so that's been a very that's been a very positive sign project management continues to be very strong.

And our project management is representing.

Owners.

In major construction projects.

And that piece of our business continues to be very strong they are long dated retainers.

Sometimes five and seven years between a project beginning from estimate to completion. So we're seeing those businesses grow considerably Chris.

Any other areas that have been a surprise to you as you as you look across the board. So I think I think what's great is that in each region, the Americas, EMEA and Asia Pacific <unk> is up.

Year over year growth, so it's balanced across the world.

Some of the bright spots Jay mentioned property management.

We've grown in.

In the U S. And this is new clients are expanding clients portfolios and are starting to see the growth in L. A Chicago, New York Atlanta, some of those bigger centers in the U S. But also that you were looking at the UK, Netherlands, Finland, Poland and expanding property management so quite.

Theyre the.

The second pillar of project management.

Got a fantastic business in India that is going all guns, obviously, theres strong GDP growth in India, and we're taking advantage of that we invest at the right time. So we're seeing some real significant growth there.

The acquisitions in Australia, and New Zealand and the Engineering and project management are now fully integrated into the colors business and we're seeing synergies on the revenue side and the cost side. So.

This quite exciting in the M&A space on a global basis.

Great. Thank you so much for that color.

Thank you. Our next question comes from the line all Frederic Bastien of Raymond James. Please go ahead. Your line is.

Hey, good morning.

Question is for J J or Chris.

Obviously, it's a tough slog on the capital market side, but if you take a step back and do a bit of a health check on your.

Brokerage business what are the things that excite you. Most you did cite great employee engagement scores earlier, but are there other things that you'd like to highlight.

I'll jump in Chris you can jump in if you want I mean, what are the things that Chris mentioned in his prepared remarks.

As the entire colliers mortgage business.

Last several years, we have created a national platform, which colliers ever had before.

Where we were.

We are ready willing enable and busy providing.

Providing debt advisory advice said restructuring advice to our clients everywhere. This is particularly needed in times like this it doesn't necessarily translate into transactions immediately but clients.

This this team of professionals and I think it's up to 150 or 75 $1 50, now they are busier than ever working with clients on existing portfolios and.

And loans that are coming due.

And.

And they need help in not only re re envisioning their portfolios, but finding new financing sources.

No.

And we do this in other parts of the world, but I think colliers mortgage has really set the standard and we're excited about what that could mean for the U S business or the North American business going forward.

I think if I look at the overall brokerage business.

Key highlights to our success is our strong culture that people really enjoy working at colliers and we have a lot of long tenure within the business.

We've also worked a lot on retention. So we have a high retention rate of our key producers throughout the world.

And we're positioned.

No quite strongly for when that recovery comes.

One of the exciting things in the U S.

We continue our recruiting and we're ahead of plan.

In 2023, and that's exceeding our recruiting targets.

The year before so.

Lots of excitement in the brokerage business.

Strengthening our team keeping our team in place and getting ready for that recovery.

That's helpful. Thank you.

Next one is for Christian.

And I think you partly answered this.

Saying that fund raising you expected roughly $3 billion in fund raising for the full year.

Is that all backend loaded at some of this already get it kind of recorded in year to date results.

Yes, Fredric, we've got about $2 billion year to date fundraising already completed so we're expecting here $900 million and in the.

Fourth quarter. So so some activity, but like I said modest and and we have pretty high visibility on that at this point.

And we're obviously gearing up for a return to more normal fundraising activity in 2024 with the products we have in the market.

Come from a mix of.

The alternative assets and infrastructure.

The fund raise that exactly.

Yes.

And then obviously you might explain the modest sequential increase we saw on AUM. This quarter is that I think you had an increase of.

What is it eight.

8 billion.

Are you guys pretty flat this quarter.

Okay.

Alright, thanks, Thank you.

Thank you. Our next question comes from the line of Jimmy shutdown at RBC Capital markets. Please go ahead to monetize them.

Thank you so just a follow up on the capital markets business.

Yes timing of the recovery is hard to predict but how should we think about the level at which the revenue when it does recover.

The level at which it normalizes that because on the one hand, it sounds like there's a lot of operating leverage in the business.

But on the other hand asset values are down so presumably lower fees on a proportionate basis. So.

If 2022 was $1 billion of revenue do you think you get back to that level at some point.

So I'll start on that one Jimmy and maybe Chris can add to it.

We have been adding productive capacity to our brokerage business over the last few years. So we have a strong team of professionals on the ground that is positioned to participate in the recovery.

And we talked about when that happens on exactly sure when that happened, but it will happen.

So we're well positioned on that front now even if you go point about asset values.

And it's really impacting office only wishes.

But a third of our of our sales activity.

So that will have a modest impact perhaps on our commission levels.

That being said.

As assets are more difficult to sell the commission rates tend to increase so thats a bit of an offset.

To that.

So I think the recovery.

<unk> be strong our position in the market has gotten stronger or number of producers and our productivity has increased so I think we're well positioned for the recovery.

And just to add some color.

Three years ago, we as a senior management team identified capital markets is an area of significant growth.

And we looked at where our gaps were so we have been doing recruiting a senior.

Professionals and also do an acquisition so.

We're poised to really get.

Get back to where we were in terms of revenues and exceed that as.

As we take market share going forward.

And the last thing I would add just judge so for additional color.

Yeah.

My take on on.

On asset values is maybe different than most.

Industrial continues to be very strong in.

Chris already mentioned that there is a.

A shortage of industrial space around the world. So not only are our rates going up but the valuations of those properties are going up multifamily continues to be good retail as Rebecca has rebounded.

Very nicely.

So the only category that I think there is price adjustment coming.

As in office and not all office, it's only probably tier two b B plus office suburban office.

Where where valuations will fall and.

The beauty of our business is we're a service business, we don't own those assets, we just trade those assets and that's one of the great things about having a.

A.

A high cash flow generating low cap ex type business. So.

And as Christian said, the tougher the asset to sell the higher the fee. We typically get so I don't think valuations of real estate will have any impact on us.

At the end of the day, we will see what happens and.

Just to just to circle again, what Chris said.

Our numbers are numbers of real estate professionals are up.

The number of debt professionals, we have is up materially over the past three years. So that creates additional revenue streams. So all of that together with.

On overall relative stabilization in real estate values.

Will and should continue to translate into a very solid rebound for colliers until the point, where we will do better in the future than we have in the past in our view.

Okay. No I appreciate the color and then my second question is on the investment management side.

Can you give us a sense of how big that pipeline is in terms of the fund that you have in the market today.

Okay.

You never know you never know if you can show you. The pipeline you tell me, who is going to boost going to who's going to subscribe who isn't good as groups subscribe win it's always that we weighed it we have a very detailed process around assessing.

Our potential for fund raising.

And.

But our overall pie.

Pipeline.

In every category of certainty of close is up materially. So we think it's up across the board and should translate into substantial additional fund raising as we go forward.

Okay.

Thank you.

Thank you. Our next question comes from the line of Andrew <unk> at Wolfe Research. Please go ahead. Your line is open.

Good morning team. Thanks for taking my question.

I was going to go again with one more asset management question, you guys have kind of hit it a lot in different pieces.

If I put some numbers around it your AUM September 30.

It was down 1% sequentially up 14 year over year, if we were kind of kind of decompose that between.

Redemptions in March.

Even funds that you purchased is there any way, we can kind of break down what's driving that.

Yes, Andrew Great question.

Year over year numbers in front of me, but I do have a year to date numbers, which I think are illustrate the point.

So as I mentioned, we've raised.

Just around $2 billion of new capital this year.

We've had modest redemptions that are a small fraction of that like I'm talking in the $500 million or less and our mark to market activity has been around 2%, which is about $2 billion as well in the portfolio. So those are the really the drivers of it and as I mentioned, the mark to market is.

As on the traditional assets.

Primarily.

So and that has been happening to last year and May continue modestly here in the fourth quarter.

So my assuming that you continue to see increases in the valuation.

<unk>.

Despite the challenges that we're seeing it.

Yes, I mean look we can't predict.

Predicted.

The future of the valuations, but certainly.

Possible, but.

We'll have further mark to market negative adjustments in the coming one or two quarters.

As interest rate volatility continues.

I should point out though that.

Most of our portfolio is in closed end funds, which does not get impacted by mark to market activity in terms of the management fee revenue.

It's only a third of our portfolio that has a mark to market activity and then you bet on that part.

Only a small amount of traditional real estate assets. So it's not a big driver of our fee revenue.

In terms of.

Considering the mark to market activity, both most guy though Chris.

Most of it Christian is talking about is in is in infrastructure and <unk>.

And alternative asset classes, which.

The marks have been modest extremely extremely modest as lately.

Almost nonexistent because they are they are wonderful assets and their valued over a long period of time. So we don't really see much there.

And we Havent, we havent even felt it over the past 12 months the mark to market is not something thats driving our management fee revenue.

Driver as its fundraising and we've talked.

Quite a bit.

And one other thing just so we get this right <unk> 3 billion of fund raising this year would that all BCP.

Yes, because thats the equity component of.

That's right.

Got it alright, thanks, a lot guys.

Thank you and we currently have one further question in the queue. So just.

As a reminder to participants if you do wish to ask a question. Please dial star one on your telephone keypad now and the next question comes from the line of maximum Sanchez of National Bank Financial. Please go ahead to online.

Hi, good morning, gentlemen.

Okay.

Jack maybe Christian.

Wondering if maybe you can comment around.

The market share dynamics in capital markets and leasing because when we look at how you guys perform during the financial crisis I mean, it was much better versus Peterson, even right now in kind of the levels of declines on less so do you mind, maybe if you have some data points that you can you can point to on that pump up the helpful.

Helpful. Thank you.

I think the data we have from RCA has the market down 51%.

We're down 42%. So I think there is some market share gain.

That's the data point that I have handy.

And then if you look if you look at.

Sorry, if you look across the board at virtually all of the peers that have reported so far.

Where we're either at or better than every single one of those peers.

In virtually every category so.

I would say in each case, we're picking up market share all the way along in a lot of that has to do with what Chris said, our culture is very strong and our retention rates are are exceptionally.

Our strong we've been recruiting nicely over the past number of years, we built <unk>.

<unk> platforms within our core services business. In addition to engineering and design and in investment management. We continue one step at a time to invest in our core platform, which is getting stronger it's global so there's global growth opportunities. So we're feeling very good.

Good about our business and its future and we believe that we're picking up market share virtually everywhere.

Excellent. Thank you so much for that and just one follow up question.

Jay as you spend time with sort of capital allocators and everybody's trying to figure out what is kind of the trigger for certain things to start normalizing because when your expectation of sort of a rebound.

During Q2 commentary I think that the long term rate was around kind of three 5% do you think that's kind of the level, where the 10 year in the U S has to go to in order to see catalysts for activity.

Get going or what is it what is your sense from that perspective, and again I appreciate it's a super cool dynamic obviously thanks.

Frankly, I don't care.

They don't care like it can be pickier right anybody's got everybody's got an opinion.

We just need stability in our business, we just need stability.

And we need availability of debt and the market will look after itself the buyers and sellers will come together and they will make transactions because they either have to or they want to or they've got dry powder. So the problem that we all had in this industry.

And by the way.

It's leaked out into the entire marketplace.

The availability of capital has impacted the ability to make acquisitions.

It's impacted the earnings per share of every company out there that borrows money.

This is a this is a.

This is a market that is impacting everybody, but I think in real estate, it's it's such a massive market.

As soon as there is stability youll see youll see activity.

And that's all we really focus on.

Okay excellent that's very helpful. Thanks, so much.

Thank you and there are nice further questions in the queue at this time, so I'll hand, the floor back to Mr. <unk> for closing comments.

Thanks, very much operator, thanks, everyone for joining us on this.

Conference call, let's see how we do in the fourth quarter and we've given you our best.

Our best information at this point, hopefully, we will be able to do a little bit better than that but.

Well, we'll see how things transpire. So looking forward to speaking at the next conference call. Thanks for joining us today.

Okay.

Thank you ladies and gentlemen, this concludes the conference call. Thank you for your participation and have a nice day.