Q4 2023 Colliers International Group Inc Earnings Call
Operator: Welcome to the Colliers International Fourth Quarter Year-End Investor Conference. 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 that involve known and unknown risks and uncertainties. actual results may differ materially from any future results or Achievements Contemplated in the Forward-Looking Study.
Welcome to the Colliers International fourth quarter year end 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 that involve known and unknown risks and uncertainties actual results may differ materially from any future results.
Performance or achievements contemplated in the forward looking statements.
Operator: Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is February 8th, 2021.
Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the company's annual information form as filed in the Canadian Securities administrators and in the company's annual report on form 40 F as filed with the U S Securities.
And Exchange Commission.
As a reminder, today's call is being recorded today February eight 2024.
And at this time for opening remarks, and introductions I would like to turn the call over to the global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead Sir.
Jay Hennig: And at this time, for opening remarks and introductions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Mr. Jay Hennig. Please go ahead. Thank you, operator. Good morning, and welcome to the fourth order of conference call. I'm Jay Hennig, Chairman and Chief Executive Officer of the company. Joining me today is Chris McLernan, Chief Executive Officer of our Real Estate Services business, and, of course, Christian Mayer, our Chief Financial Officer. This call is being webcast and can be accessed in the investor relations section of our website, where you can also find the presentation slide deck.
Thank you operator, good morning, and welcome to the fourth quarter Conference call I'm, Jay Hennick, Chairman and Chief Executive Officer of the company. Joining me today is Chris Mclaren and Chief Executive Officer of our real estate services business.
And of course, Christian Mayer, our Chief Financial Officer.
This call is being webcast and can be accessed.
The Investor Relations section of our website, where you can also find the presentation slide deck.
In the fourth quarter, Colliers experienced robust revenue growth and its high value recurring service lines.
Jay Hennig: In the fourth quarter, Colliers experienced robust revenue growth in its high-value recurring service. Over the past five years, Colliers has strategically transformed into a more diversified professional services company by adding significant recurring revenue platforms such as investment management and engineering and project management. Today, more than 70% of our earnings come from these recurring services, providing our company with more balance, more resilience, and more predictability than ever, and similar in many ways to other highly diversified global professional service companies. Throughout the year, we observed industry-wide declines in one segment of our business, our transaction segment, and our capital markets business. However, we expect a return to higher transaction velocity in the latter part of this year as interest rates and credit conditions, hopefully, stabilize. In the interim, pricing for most real estate assets continues to adjust as buyers and sellers try to find the equilibrium that they need to transact business.
Over the past five years Colliers has strategically transformed into a more diversified professional services company by adding significant recurring revenue platforms, such as investment management and engineering and project management.
Today more than 70% of our earnings comes from recurring services, providing our company with more balance more resilience and more predictability than ever and similar in many ways other highly diversified global professional service companies.
Throughout the year, we observed industry wide declines in one segment of our business our transaction.
Segment, our capital markets business. However, we expect a return to higher transaction velocity in the latter part of this year as interest rates and credit conditions hopefully stabilize.
In the interim pricing for most real estate assets continue to adjust as buyers and sellers trying to find equilibrium that they need to transact business.
With our nearly 30 year track record of creating substantial shareholder value Colliers is poised for continued success.
Jay Hennig: With our nearly 30-year track record of creating substantial shareholder value, Colliers is poised for continued success. Anticipating a rise in transaction revenue later this year and supported by a very strong pipeline for new growth prospects, we are more excited than ever about the future. And with that, I'll turn things over to Chris McLernan to discuss some highlights on the services side. Following that, Christian will provide his financial report, and then we'll open things up for questions. Thank you, Jay, and good morning.
Anticipating a rise in transaction revenue later this year and supported by a very strong pipeline for new growth prospects, we are more excited than ever about the future.
And with that let me turn things over to Chris Mclaren to discuss some highlights on the services side following that Christian will provide his financial report and then we'll open things up for questions Chris.
Thank you Jay and good morning, I'm proud of the results that Colliers real estate services delivered in the fourth quarter and the full year.
Chris McLernan: I'm proud of the results that Colliers Real Estate Services delivered in the fourth quarter and for the full year. Despite industry-wide headwinds, we have become more resilient than ever, demonstrating the strengths of our highly diversified professional services platform by both service line and by geography. Our outsourcing and advisory business saw 10% revenue growth in the fourth quarter and for the full year, 11% led by engineering, project management, and property management. Our engineering and project management pipelines are filled with a balanced mix of public and private sector clients that want to work with us because of our expertise and ability to provide integrated solutions.
Despite industry wide headwinds, we have become more resilient than ever demonstrating the strengths of our highly diversified professional services platform by both service line and by geography.
Our outsourcing and advisory business saw 10% revenue growth in the fourth quarter and for the full year has grown 11% led by engineering project management and property management.
Our engineering and project management pipelines are filled with a balanced mix of public and private sector clients that want to work with us because of our expertise and ability to provide integrated solutions.
Chris McLernan: Additionally, the growth of our property management business has been driven by strong portfolio retention and expansion within our existing client base, as well as the addition of new clients due to receiverships in key markets. We expect the growth rate for these high-value services to remain resilient over the long term. However, as mentioned, transaction volumes remain subdued during the quarter because of interest rate volatility, tighter lending standards, and a pricing mismatch between real estate buyers and sellers.
Additionally, the growth of our property management.
Business has been driven by strong portfolio retention and expansion within our existing client base as well as the addition of new clients due to receiver ships in key markets.
We expect the growth rate for these high value services to remain resilient over the long term.
As mentioned transaction volumes remained subdued during the quarter because of interest rate volatility tighter lending standards and pricing mismatch between real estate buyers and sellers.
Chris McLernan: However, with expectations of interest rates stabilizing, we have greater confidence that transaction velocity will improve in the second half of this year. Importantly, during the slowdown, we have continued to invest in our business, filling gaps. Taking Market Share and Top Grading Leadership. Having been with Colliers for 35 years, I'm especially proud of our enterprising professionals and our culture, the bedrock of our success. I'm pleased to share that we have been named among the world's top companies for women by Forbes in addition to our inclusion on Forbes World's Best Employers List. I'll now turn the call over to Christian to provide more details on our future. Thank you, Chris, and good morning.
However, with expectations of interest rates stabilizing we have greater confidence that transaction velocity will improve in the second half of this year.
Importantly, during this slowdown we have continued to invest in our business filling gaps taking market share and top grading leadership.
Having been with Colliers for 35 years, I'm, especially proud of our enterprising professionals and our culture the bedrock of our success.
I'm pleased to share that we have been named among the world's top companies for women by Forbes. In addition to our inclusion on Forbes' world's best employers list.
I'll now turn it over the call to Christian to provide more details on our financials.
Thank you, Chris and good morning.
Christian Mayer: I'll provide some additional commentary on our consolidated results, our financial outlook for 2024, 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 fourth quarter, revenues were $1.2 billion, flat when compared to the same quarter last year and in line with their expectations for the quarter. Our recurring outsourcing and advisory, and investment management service lines each reported robust revenue growth predominantly internally generated. Leasing revenue declined modestly across all asset classes.
I'll provide some additional commentary on our consolidated results our financial outlook for 2024, 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 fourth quarter revenues were $1 2 billion.
When compared to the same quarter of last year and in line with our expectations for the quarter.
Our recurring outsourcing and advisory and investment management service lines, each reported robust revenue growth predominantly internally generated.
Leasing revenue declined modestly across all asset classes.
Christian Mayer: Capital markets revenue declined 16% in its seasonally strongest quarter on top of a 43% decline reported in Q4 of last year, with transaction sentiment continuing to be impacted by interest rate volatility and availability of credit. On an overall basis, our internal revenues declined two percent; consolidated adjusted EBITDA for the fourth quarter was $198 million, down 2% relative to the prior year, with margins at 16.1% versus 16.6% in the prior year quarter. The margin reduction was attributable primarily to service mix with a decline in higher-margin capital markets revenues, not fully offset by our ongoing cost control efforts. We achieved cost savings of $28 million during the fourth quarter and $94 million for the full year.
Capital markets revenue declined 16% in its seasonally strongest quarter on top of a 43% decline reported in Q4 of last year.
With transaction sentiment continuing to be impacted by interest rate volatility.
Availability of credit.
On an overall basis, our internal revenues declined 2%.
Consolidated adjusted EBITDA for the fourth quarter was 198 million.
Down 2% relative to the prior year with margins at 16, 1% versus 16, 6% in the prior year quarter.
The margin reduction was attributable primarily to service mix, which was a decline in higher margin capital markets revenues not fully offset by our ongoing cost control efforts.
We achieved cost savings of $28 million during the fourth quarter and $94 million for the full year.
Christian Mayer: We have extended our cost control efforts into 2024 to match the duration of the expected transactional revenue downturn, but the beneficial year-over-year impact of this has been largely realized. Our initial financial outlook for 2024 reflects our best information given the ongoing challenges in transaction market conditions. For the first half of the year, we expect capital markets and leasing transaction volumes to be roughly flat to 2023.
We have extended our cost control efforts into 2024 to match the duration of the expected transactional revenue downturn, but.
But the beneficial year over year impact of this has been largely realized.
Our our initial financial outlook for 2024 reflects our best information given the ongoing challenges in transaction market conditions.
For the first half of the year, we expect capital markets and leasing transaction volumes to be roughly flat to 2023.
Christian Mayer: In the second half, we anticipate year-over-year increases in activity, particularly in capital markets, coinciding with our expectations of stabilization in interest rates and an improvement in credit conditions. In our recurring service lines, we are expecting mid to high single-digit revenue growth. Investment Management Fundraising for 2023 totaled $3 billion, given the difficult market backdrop.
In the second half, we anticipate year over year increases in activity, particularly in capital markets, coinciding with our expectations a stabilization in interest rates and an improvement in credit conditions.
And our recurring service lines, we are expecting mid to high single digit revenue growth.
Investment management fund rating for 2023 totaled 3 billion given the difficult market backdrop, we continue to see strong interest in our alternative investing strategies, which we expect will accelerate fundraising for 2024 to between five and $8 billion.
Christian Mayer: We continue to see strong interest in our alternative investing strategies, which we expect will accelerate fundraising for 2024 to between $5 and $8 billion. Our adjusted EBITDA growth is expected to outpace revenue growth as we gain operating leverage from the capital markets recovery as well as the benefit of additional assets under management in our higher-margin investment management operation. Adjusted earnings per share is expected to exceed EBITDA growth as interest expense starts to moderate from both debt paydown and lower floating rates, as well as a reduction in the non-patrolling interest share of earnings as our fully owned transactional operations rebound. Turning to our balance sheet, Our financial leverage ratio, defined as net debt to perform adjusted EBITDA, was 2.2 times at the end of 2023.
Our adjusted EBITDA growth is expected to outpace revenue growth as we gain operating leverage from the capital market's recovery as well as the benefit of additional assets under management in our higher margin investment management operations.
Adjusted earnings per share is expected to exceed EBITDA growth as interest expense starts to moderate from both debt pay down and lower floating rates as well as a reduction in the non controlling interest share of earnings as our fully owned transactional operations rebound.
Turning to our balance sheet.
Our financial leverage ratio defined as net debt to pro forma adjusted EBITDA was two two times at the end of 2023.
For 2024, we expect leverage to rise modestly in the first half due to seasonal working capital usage, then to decline to between one five and two times by the end of the year, assuming no significant acquisitions.
Christian Mayer: For 2024, we expect leverage to rise modestly in the first half due to seasonal working capital usage, then to decline to between 1.5 and 2 times by the end of the year, assuming no significant acquisition. That concludes my prepared remarks. Operator, can you please open the line?
That concludes my prepared remarks, I would now like to open the call for questions. Operator can you. Please open the line. Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone you will then hear a tweet on prompt acknowledging your request and if you would like to withdraw from the <unk>.
Operator: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone. You will then hear a three-tone prompt acknowledging your... And if you would like to withdraw from the question queue, simply press star followed by one.
Question queue simply press star followed by two and if you're using a speaker phone. We do ask that you. Please lift the handset before pressing any keys. Please go ahead and press Star one now if you do have a question.
And your first question will be from Stephen Macleod at BMO capital markets. Please go ahead.
Great. Thank you good morning, good morning, guys.
Just good morning, just wanted to circle around on a couple of things.
Operator: If you're using a speakerphone, we do ask that you please lift it before pressing any. Go ahead and press star 1 now if you do have a question. The first question will be from Stephen MacLeod at BMO Capital Markets. Great. Thank you. Good morning, guys.
Just with respect to the outlook.
You reiterated.
<unk> seen a return to a transaction velocity in H, two and I'm. Just wondering if you could give a little bit of color about sort of what your what your clients and customers are telling you about that to.
To give you a strong visibility into that outlook.
Stephen Macleod: Just wanted to circle around on a couple of things. Just with respect to the outlook, you reiterated confidence in a return to transaction velocity in H2, and I'm just wondering if you could give a little bit of color about sort of what your clients and customers are telling you about that, giving you strong visibility into that outlook. Sure, Steve, it's Chris here.
Yes, sure Steve It's Chris here.
So I think the first thing is we've had 18 months of a really challenging period for capital markets.
We're starting to see some optimism and sentiment rising real estate investment.
And clients are shifting from having discussions to making decisions as theres, a clearer outlook to interest rates.
Mid year.
So we're seeing assets come to market with more realistic valuations as well so.
What we're seeing I think going forward is a gradual return.
Chris McLernan: So I think the first thing is we've had 18 months of a really challenging period for capital markets. We're starting to see some optimism and sentiment rising for real estate investment, and clients are shifting from, you know, having discussions to making decisions as there's a clearer outlook on interest rates mid-year. So we're seeing assets come to market with more realistic valuations as well. So what we're seeing, I think, going forward is a gradual return and then picking up velocity in the second half of the year. Okay, that's great.
And then picking up velocity in the second half of the year.
Okay. That's that's great and are there any.
Specific regional areas or asset classes that are.
More robust in terms of activity than others at this point.
Yes, I would say investors are looking at the industrial <unk> logistics, you still have some strong fundamentals behind that with E Commerce and onshoring.
There is a low vacancy however, it has crept up from say, 2% to 4% to 5% in most markets.
Theres still a thesis there behind our industrial and logistics. So there is.
Chris McLernan: And are there any specific regional areas or asset classes that are, you know, more robust in terms of activity than others at this point? Yeah, I'd say investors are looking at industrial logistics. You still have some strong fundamentals behind that with e-commerce and onshoring, and there is a low vacancy.
Demand around the world for that product I'd also say in the living sector student housing built to rent senior housing.
Because of the demographics and shortage of housing and then thirdly, I'd say prime a office.
Where tenants are looking to flight to quality.
Chris McLernan: However, it has crept up from say 2% to 4 to 5% in most markets. But there's still a thesis there behind industrial logistics. So there's demand around the world for that product. I'd also say in the living sector, student housing, built to rent, senior housing, because of the demographics and shortage of housing.
They're looking for a central business district locations, Great transit great amenities ESG credentials. So those are the things that are in demand.
In the marketplace today.
Great. Thanks.
Thanks, Chris and then just turning to the <unk>.
The high high value <unk>.
Business and outlook just wondering I mean of course, you have a little bit of color on the prepared remarks around project.
Chris McLernan: And then thirdly, I'd say prime office space, you know, where tenants are looking for flight quality, you know, they're looking for central business district locations, great transit, great amenities, ESG credentials. So those are the things that are in demand in the marketplace today. Great. Thanks, Chris.
Project management portfolio management or sort of project management engineering and property management. Just curious if you can if you can give up.
Maybe by each sub sector within outsourcing and advisory sort of.
What you're seeing and how you expect that to evolve through the year and where you're seeing notable pockets of strength.
Sure so.
Let's talk about our project management first.
Chris McLernan: And then just turning to the high value O&A business and outlook, just wondering, Chris, you have a little bit of color on the prepared remarks around project management, portfolio management, or sorry, project management, engineering, and property management. You know, just curious if you could give, maybe by each subsector within outsourcing and advisory, sort of what you're seeing and how you expect that to evolve through the year and where you're seeing notable pockets of strength. Sure.
We're seeing some strength in a very strong business in Canada.
India, we're the market leader, there and Indias GDP.
GDP is about six 5%. So we're taking advantage of that and doing a lot of new corporate campuses there.
We're seeing strength in our Dutch business and our Polish business.
From a project management standpoint.
Property management across the board.
We're picking up.
Extending the portfolio from our existing clients.
Winning new clients. So I think that that's universal around the world that property management is going well.
Chris McLernan: So let's talk about project management first. You know, we're seeing some strength in a very strong business in Canada. India, we're the market leader there, and you know India has a GDP of about six and a half percent, so we're taking advantage of that and building a lot of new corporate campuses there. We're seeing strength in our Dutch business and our Polish business from a project management standpoint. Property management across the board, you know, we're picking up, you know, extending the portfolio from our existing clients, winning new clients. So I think that it's, you know, universal around the world that property management is going well. And then on the engineering side of things, you know, we've got some long-term contracts, and there's a great book of business going forward, and it's balanced between the private and public sectors. Thanks for that color crystal.
And then on the engineering side of things.
We've got some long term contracts and there is a great book of business going forward.
And it's balanced between private and public sectors.
Great. Thanks for that color, Chris I'll turn it back to the line. Thank you.
Thank you next question will be from Daryl Young of Stifel. Please go ahead.
Hey, good morning, everyone.
Alright.
Jay just in your opening remarks, you made reference to a robust pipeline of new opportunities.
I was just wondering can you give us a bit more color around this and I think in the past around the 2025 pledge you've mentioned there might be additional verticals.
Needed later in the plan to achieve it so I'm just kind of try to bridge the robust pipeline of new opportunities with this.
As I look in the 25 plan.
Yeah. So.
It's a great question and for those long term shareholders.
<unk> of our company they'll know that.
Acquisition growth is a key part of our overall growth strategy.
We have a full pipeline of opportunities right now probably fuller than we've had in a long time.
They are however in line with our existing.
Chris McLernan: I'll turn it back on the line. Thank you. Thank you. The next question will be from Daryl Young at Stiefel. Please go ahead. Hey, good morning, everyone.
Our platforms.
But there are bigger.
There are more diverse geographically.
They fill some significant gaps theres lots of leverage to be generated from them. We don't you know theyre not at a point, where we've tied anything down.
Jay Hennig: Jay, just in your opening remarks, you made reference to a robust pipeline of new opportunities, and I'm just wondering if you can give a bit more color around this. And I think in the past, around the 2025 plan, you've mentioned there might be additional verticals needed later in the plan to achieve it. So I'm just kind of trying to bridge the robust pipeline of new opportunities with this outlook and the 2025 plan. Yeah, so it's a great question, and for those long-term shareholders of our company, they'll know that acquisition growth is a key part of our overall growth strategy. We have a full pipeline of opportunities right now, probably fuller than we've had in a long time. They are, however, in line with our existing platforms. But they're bigger, they're more diverse geographically, they fill some significant gaps, there's lots of leverage to be generated from them. But we don't, you know; they're not at a point where we've tied anything down. But, as you know, it takes a long time to build relationships.
But as you would know Daryl it takes a long time to build relationships, we look for specific tar.
<unk> targets that we can partner with the operating management team, particularly.
In markets, where we see huge growth opportunities. So we're very excited about many things that we've got on our plate right now and you know.
We're hoping we're hoping to be able to convert.
Those over the next 12 or 18 months.
But for the most part would all be in existing areas.
Mostly recurring.
As I think about it most of them are recurring.
You know the lion's share's recurring theres lots of blocking and tackling existing business units filling gaps across the world in an based parts of our business and brokerage and in.
In capital markets in a variety of other things, but for the Lions the lion's share of our opportunities as I think through the pipeline.
Jay Hennig: We look for specific targets that we can partner with the operating management team, particularly in markets where we see huge growth opportunities. So we're very excited about the many things that we've got on our plate right now. And, you know, we're hoping to be able to convert those over the next 12 or 18 months. But they, for the most part, would all be in existing areas, mostly recurring. As I think about it, most of them are recurring. You know, the lion's share is recurring.
It's at its recurring revenue segments.
Virtually across the board.
Okay, Great that's great color. Thanks.
And then flipping to the capital market side.
Results were I'd say impressive in my mind, particularly against some of the industry data that we were looking at could.
Could you, maybe just give us a bit of color on where those market share wins are coming from and is it a function of the people adds you've done across the last few years of the downturn or or is it asset classes or anything there.
Jay Hennig: There's lots of blocking and tackling, existing business units filling gaps across the world in the base parts of our business and brokerage and in capital markets and a variety of other things. But for the lion's share of our opportunities, as I think through the pipeline, it's recurring revenue segments virtually across the board. Okay, great. That's great, Colliers. Thanks.
Yes, I can give you one example.
<unk> had a record year in terms of recruiting in the in the U S.
The Colliers brand is really resonating in the marketplace and if you look at the RCA volumes.
As an example, they are down 41% in the U S and our sales is only down 25% that would show that we are having market share there.
Got you okay.
Jay Hennig: And then flipping to the capital market side, the results were, I'd say, impressive in my mind, particularly against some of the industry data that we were looking at. Could you maybe just give us a bit of color on where those market share wins are coming from, and is it a function of the people ads you've done across the last few years of the downturn, or is it asset classes or anything there? Yeah, I can give you one example.
And then one last one just around EMEA and the margin trends there nice recovery here in Q4.
The first nine months of the year.
Is that something you expect to hold across the year and is that sort of.
Structural costs that have come out of that platform.
Yes, they are.
I mean as you know.
From history Q4 is a very strong quarter in EMEA.
And a lot of transactional activity happened in Q4.
Chris McLernan: You know, we've had a record year in terms of recruiting in the US. The Colliers brand is really responding in the marketplace. And if you look at the RCA volumes, as an example, they're down 41% in the US, and our sales are only down 25%. That would show that we have market share there. Gotcha. Okay.
And historically, the lion's share of EBITDA generated in Q4.
That was again the trend this year I do expect going forward, we will have a.
A stronger EBITDA performance throughout the year, given the expected rebound in activity levels as well as cost actions that have been taken.
Christian Mayer: And then one last one just around EMEA and the margin trends there. Nice recovery here in Q4 versus the first nine months of the year. Is that something you expect to hold across the year and the sort of structural costs that have come out of that platform? Yeah, Darryl, as you know, from history, Q4 is a very strong quarter in EMEA, and a lot of transactional activity happens in Q4. And historically, the lion's share of EBITDA is generated in Q4. That was, again, the trend this year.
That region to adjust to those lower activity levels.
The other thing I can add is that our.
Germany, and the Nordics, where specifically are challenging year last year in terms of capital markets. It's highly transactional for us and it's something we're working on in terms of balancing the business.
Some of those markets and in the cities in Germany were down to 80% so.
We expect some activity to come back and it won't be as extreme as last year, so definitely improving in Europe and 24.
Yes, with the geopolitical circumstances, particularly around Germany, and some of the other markets.
Christian Mayer: I do expect going forward, we will have a stronger EBITDA performance throughout the year, given the expected rebound in activity levels, as well as cost actions that have been taken in that region to adjust to those lower activity levels. The other thing I can add is that Germany and the Nordics specifically had a challenging year last year in terms of capital markets. It's highly transactional for us, and, you know, it's something we're working on in terms of balancing the business. Some of those markets in the cities in Germany were down 80%, so, you know, we expect some activity to come back, and it won't be as extreme as last year. So, definitely improving in Europe in 2024. Well, that has to do, I guess, with the geopolitical circumstances, particularly around Germany and some of the other European markets, but we are seeing some white shoots in those markets right now. Green shoots, yes. Green shoots.
In Europe.
But we are seeing we are seeing some some shoots in those markets right now and green shoots yes, great yes.
Yeah.
Okay terrific I'll I'll get back in the queue.
Very much guys.
Thanks Darryl.
Next question will be from Jamie Shen at RBC capital markets. Please go ahead.
Thanks, So first maybe just a couple of clarification on the guidance.
$5 billion to $8 billion of additional AUN in 'twenty, four and assuming that's that's fee paying AUM.
And then that's one and second one would be would there be any yes.
Baked into your guidance.
Okay. So so Jimmy that first question the fee paying AUM the foundry.
Fundraising that we will do.
Predominantly.
<unk>.
Closed end funds and that will generate fees on that capital is committed.
So it will be predominantly fee paying capital.
And secondly.
Christian Mayer: Yes. Okay, terrific. I'll get back in the queue.
There are no new acquisitions baked into our guidance.
Christian Mayer: Thanks very much, guys. Thanks, Gerald. Gerald's next question will be from Jimmy Shen at RBC Capital Markets. Please go ahead.
Our outlook for 2024.
Theres, a small amount of lap over from acquisitions completed in 'twenty three.
Jimmy Shen: Yeah, so... Okay, so Jimmy, the first question, the fee-paying AUM, the fundraising that we will do is predominantly in closed-end funds, and that will generate fees on that capital that's committed. So it will be predominantly fee-paying capital. And secondly, there are no new acquisitions baked into our guidance, our outlook for 2024. There's a small amount of lab equipment from acquisitions completed in 2023 that's in the outlook, but nothing new....
But nothing new.
Okay, Great and then just on the investment management business.
Structure and credit seem to be where.
He's willing to allocate dollars and when I look at your Pie chart, you do have 25% exposure to those two space I'm just kind of curious as to how you're looking to grow. These two strategies. If you are looking to grow with them at all and whether you're looking to grow organically or or maybe add a new platform.
In the pipeline to healthy public pipeline that you've made reference to it.
Well.
As we have historically.
Jay Hennig: , allocate dollars, and when I look at your AUM pie chart, looking to grow it all. Well, you know, as we have historically, we've shown strong internal growth, particularly in investment management, and infrastructure alternatives have been key parts of our growth. We have a small credit business that we inherited as part of one of the platform acquisitions, and so that has grown very nicely for that platform. But we'd like to add credit to our overall family.
We've shown strong internal growth, particularly in the investment management.
<unk>.
And infrastructure.
Alternatives have been.
Key parts of our growth, we have a small credit business that that.
That we inherited as part of one of the platform acquisitions.
And so.
That has grown very nicely for that platform.
But we'd like to add credit to our overall family.
It's a it's a key a key component of our longer term strategy number one there's tremendous synergies between our existing business and having a credit platform. So.
Jay Hennig: It's a key component of our longer-term strategy. Number one, there are tremendous synergies between our existing business and having a credit platform. So, you know, we're actively looking to add credit in a more significant way, primarily through acquisition. But if no acquisition comes through, we'll continue to grow our existing credit business, which is operated by an exceptional group of professionals and has some very interesting opportunities to accelerate its growth on its own. But when you look at the pie chart, it is still a small piece of our overall AUM. And then, sorry, just to follow up, the pipeline. How are the multiples, or like, what is the value?
We're actively looking to add credit in a more significant way primarily through acquisition.
But if no acquisition comes comes or it comes through.
Continue to grow our credit our existing credit business, which which is which is operated by an exceptional group of professionals and has some very interesting opportunities to accelerate its growth on its own but when you look at the Pie chart. It is still a small piece of our.
Overall.
Yeah.
Okay, Great and then sorry, just a follow up then in the pipeline of the different recurring businesses that youre looking at.
How are the multiples are like Hey, How's validation, we've seen fairly big healthy multiples in the private market for it.
Jay Hennig: project. Well, that's a great question. The multiples have gone up significantly, especially for the quality assets that we're looking at. And it's not just in the IM space; I think it's in professional services as well. One of the things that I think people overlook with Colliers is that we are very much a highly diversified global professional services business with an engineering business that is circa a billion dollars. And if you look at the peer set in that space, our margins are as good or better. We do have a global growth platform. There are multiple opportunities to grow that business. And those companies trade at much higher valuations, obviously, than Colliers.
For investment management platforms, how would those multiples looking today.
Well, that's a great question the multiples have gone up significantly.
Especially for the quality assets that we're looking at.
And it's not just in the I am space I think it's in professional services as well one of the things that I think people overlook with Colliers is that we are very much a.
Highly diversified global professional services business with <unk>.
Engineering business that is circa $1 billion and if you look at the at the peer set in that space, our margins are as good or better.
Do have a global growth platform.
Both opportunities to grow that business and those those companies trade at much higher valuations. Obviously, then then colliers does and so.
Jay Hennig: And so, you know, we have an environment where valuations have gone up. But the reverse is that the types of deals that we are looking for are partnership deals, and they bring with them strong leadership teams that have stronger internal growth characteristics. And there are many, and they are global.
You know we.
We are.
We have.
In an environment, where.
Valuations have gone up.
But the reverse is that the types of deals that we are looking for our partnership deals and they bring with them strong leadership teams that have stronger internal growth characteristics.
And.
And there are many and they are global.
Jay Hennig: And so, you know, as many people know that have followed our story for many years, we've created value one step at a time. And we continue to think that there are exceptional opportunities for us to continue to add value to our business and probably reposition our company in some way to one that is much more highly diversified, high value, more recurring revenue, and global in nature. And it's nice to see some of the peers in the traditional business start to add engineering to their mix of business as well. So there are lots of those kinds of factors that are swirling around, which we consider to be very positive for our longer-term strategy, which we've outlined in our five-year plan, among others. Thank you. The next question will be from Himanshu Gupta at Scotiabank. Please go ahead.
So.
No.
As many people know that have followed our story for many years.
We've created value one step at a time and.
And we continue to think that there is exceptional opportunities for us to continue to add value to our business.
And probably reposition our company in some way to one that is much more a pilot.
Highly diversified.
High value more recurring revenue global in nature.
It's nice to see some of the peers in the traditional business.
And start to add engineering engineering to their mix of business as well. So theres lots of those kinds of factors that are swirling around which are we consider to be very positive to our longer term strategy.
Which we've outlined in our five year plan among others.
Okay. Thank you.
Thank you next question will be from <unk> Gupta with Scotiabank. Please go ahead.
Christian Mayer: Thank you and good morning, and thanks for taking my question. So my question is on leasing revenue. How has your outlook for leasing revenue changed? compared to the last three months. I mean, is leasing turning out to be much weaker or slower compared to what you thought, you know, say, three months ago? So I'm not sure I'll try to answer that in a charismatic conjunction, but our leasing was down five or six percent in the fourth quarter of 2023. And looking ahead, we expect leasing to be roughly flat in the beginning of 2024 and maybe up slightly for the full year. So it's going to be steady. It has been relatively steady, but we're not expecting any strong rebound in that particular service line in the near future. In having a global business, there are going to be bright spots. If you look at Canada, we're up 5%, UK 11%, India 11%, and LATAM 27%.
Thank you and good morning.
Thanks for taking my question.
So my question is on the leasing revenue how has your outlook for leasing revenue changed.
So big over the last three months.
And then is leading to be much weaker while slower compared to what you thought three months ago.
So he mentioned I will try to answer that Chris made conjuncture, but.
Our leasing was down 5% to 6% in the fourth quarter of.
2023.
And looking ahead, we expect leasing to be roughly flat in the beginning.
<unk> of 'twenty, 'twenty, four and maybe up slightly.
For the full year so it's good.
To be steady.
Has it been relatively steady, but we're not expecting any strong rebound.
And that particular service line and the.
In the near future.
And having a global business theyre going to be bright spots.
Look at Canada, we were up 5%, UK, 11%, 11% and Latam 20, 27%.
Chris McLernan: You know, leases come up every three, five, seven years; it's a regular business. You know, people want to transact business, and there is, you know, the desire to upgrade and move into top quality buildings to make sure that employees want to move back into the office. So, you know, as Christian said, we're looking at middle single-digit growth. Thank you. And maybe a follow up, you know, your European leasing was positive in Q4, what led to that, like, positive? Can you repeat that question you mentioned?
Leases come up every 357 years Thats a regular business.
People want to transact there is.
The desire to upgrade and move into top quality buildings to make sure that employees wanted to go back to coming into the office. So.
As Christian said, we're looking at.
Middle single digit growth.
Got it thank you and maybe a follow up.
The European leasing.
It was positive in Q4.
What led to that.
Positive growth there.
Can you repeat that question you mentioned.
Operator: Yeah, so if I look at, you know, the leasing revenue by region. So, I see your Americas and Asia were down, but Europe was actually up on a year-over-year basis. So, just wondering, is there anything which is driving European leasing revenues higher? Yeah, I can't think of anything in particular in Europe, Chris, unless you know.
Yeah. So if I look at the leasing revenue by region.
So if I E.
America, He gave a down but Europe was actually up on year over year basis. So just wondering is there anything which is driving European leasing revenues to be higher.
Yeah, I can't think of anything, particularly in particular in Europe, Chris unless you know not particularly in Europe.
Chris McLernan: Not particularly in Europe. You know, the one thing that over the last couple of years has been stronger for us, pre-pandemic, it was probably at around 20 to 25 percent. And now it's up to 40 percent of the leasing revenue. So, you know, you're seeing higher rents in industrial and logistics, so that's translating into higher fees. And then also, there's been such a great demand for, you know, retailers and e-commerce and the onshoring that it's been quite a successful service line for us. Thank you. And maybe just one last question on investment management. I am. Was there any fundraising done this quarter? Or, you know, was there any?
One thing that over the last couple of years is that industrial leasing has become stronger for us pre pandemic. It was probably at around 20% to 25% to now it's up to 40% of the leasing revenue so youre seeing higher rents in industrial and logistics. So that's traded is translating into higher fees.
And then also there has been such a great demand for.
Retailers and e-commerce and the onshoring.
It's been quite a successful service line for us.
Okay. Thank you.
And maybe just last question on investment management I am.
Was there any fund raising them this quarter.
Was there any.
Christian Mayer: And was that offset by any redemptions? Yeah, Himanshu, we did raise capital in the fourth quarter, as we expected to do, around $750 million in the fourth quarter. And we also had some modest redemption activity in the fourth quarter as well.
And was that offset by any redemptions this quarter.
Yeah, Hey, Matthew we did raise capital in the fourth quarter as we expected.
To do around $750 million.
In the fourth quarter and we also had some modest redemption activity in the fourth quarter as well.
Got it okay, and maybe just last month.
Christian Mayer: Okay. And maybe just last month, the AUM expected growth of $5 to $8 billion. Is it going to be first half driven or second half driven?
Expected growth of 528 billion.
Is it going to be first half driven or second half event.
The ability there.
Christian Mayer: Any visibility there? should be across the full year. And just to clarify, the five to eight billion is the fundraising we expect for the year. So AUM growth will be similar to or higher than that number because AUM includes leverage on Capital Deployed. Thank you, guys, and I'll turn.
It should be it should be.
Across the full year and just to clarify the $5 8 billion as the fundraising we expect for the year.
So AUR growth will be.
Similar to or higher than that number.
AUM includes leverage.
On capital deployed.
Yes.
Alright, Thank you guys and then I'll come back.
Christian Mayer: Thank you. The next question will be from Stephen Sheldon at the William Blair Foundation; please go ahead. Thank you.
Thank you.
Next question will be from Stephen Sheldon with William Blair. Please go ahead.
Hey, everyone.
First Steven Sheldon.
Stephen Hardy Sheldon: What can you share about your overall producer headcount in both capital markets and leasing? And how do you feel about your positioning when volumes start to improve? Yeah, I don't think we're going to share the exact numbers on headcount, but I can tell you that, and Chris mentioned this, that we have a stronger headcount than ever, particularly in our U.S. business, where we've had significant recruiting success over the past 18 months. I think those trends are strongest in the U.S., but they are also true across our operations around the world. We have a global initiative to increase market share in capital markets around the world, so we are out strategically looking at top talent in all regions, but I would say that there has been a stronger emphasis on the U.S., which is the biggest market and the biggest market share opportunity for us to grow.
What can you share about your overall producer head count in both capital markets and leasing and how do you feel about your positioning when volumes start to improve.
Okay.
Yeah.
I don't think we're going to share the exact numbers on head count, but I can tell you that.
Chris mentioned this that we have.
Stronger head count.
Than ever, particularly in our U S business, where you've had significant recruiting success over the past eight.
18 months I think.
Those trends are our strongest in the us but are also true.
Across our operations.
Around around the world.
We have a global initiative to increase the.
Market share in capital markets around the world. So.
We are strategically looking at top talent in all regions, but I would say that there has been stronger than we've seen in the U S, which is the biggest market and the biggest market market share opportunity for us to grow.
Got it that's helpful. And then how does the current lending environment compare to what you were seeing towards the end of last year, just curious how things have trended with respect to the lending environment over the near term.
Jay Hennig: And then, how does the current lending environment compare to what you were seeing toward the end of last year? Just curious how things have trended with respect to the lending environment in the near term. Um, the lending environment is not really clear because you've got different lenders now and new lenders entering the marketplace. For example, there is a lot of private capital entering the marketplace. You've got smaller banks that are under pressure from regulators.
The lending environment.
As.
Is took.
There is not really clear.
Cuz, you've got different lenders now and new lenders entering the marketplace. For example, there is a lot of private capital and rig.
The marketplace, you've got smaller banks that are under under pressure.
From regulators.
Jay Hennig: But I would say, generally speaking, the fact that interest rates have, you know, going into 2023, there was no clarity on where the rates might go. I think there's a general view now that the rates have topped out and might start coming down, which creates more certainty in the lending market. The other factor in the lending market generally is that those that are under pressure are going to start to take action, whereas in the past, they were delaying their action. So that creates more transaction activity, obviously for us, because people are encouraged to transact. And so I think with clarity or more clarity around rates and the hope that rates might come down a bit. We're in an election year; we'll see what happens. But with that happening, with more clarity that rates might come down more than they would go up, with banks being more active about dealing with loans that are under some duress, all of that should lend to more capital markets activity towards the middle to the end of this year, number one.
But I would say generally speaking the fact that interest rates have.
Going into 2023.
There was no clarity on where the rates might go.
Think there's a general view now that the rates have topped out and might start coming down which creates more certainty in the lending market throughout.
The other the other factor around the lending market generally is that those that are under pressure are going to.
Start to take action, whereas in the past they were.
They were delaying their.
Their action.
So that creates a more transaction activity, obviously for us because people are.
<unk> to transact and so I think with with clarity or more clarity around rates and the hope that rates might come down a bit.
We're in an election year, we will see what happens.
But with that happening with more clarity that rates might come down more than would go up with banks.
And being more active about dealing with loans that are.
Under some duress.
All of that should land to more capital markets activity towards the middle to the end of this year number one and Fortunately for colliers.
Jay Hennig: Fortunately for Colliers, we invested very heavily in building a very significant debt capital practice where we have some 150 to 175 debt placement professionals across the U.S., in particular, and they are very busy meeting with clients and discussing various financing options that we hope will translate into transactions, whether they are capital transactions on the sale of a business, of a property, or the refinancing of a property, or both. So we're quite excited about how quickly things can turn once there's certainty around debt. But at this point, there are positive signs, but we're not seeing significant momentum just yet. I got it. Very helpful color J.
We invested very heavily in building a very significant dead capital practice, where we have some 150 to 175.
Debt placement professionals across the U S in particular.
And.
They are very busy meeting with clients are discussing various financing options.
We hope will translate into transactions.
Transactions, whether they are capital transactions on the sale of a business.
Of a property or the refinancing of a property or both.
So we're quite excited about how quickly things can turn once there's certainty around that.
But at this point there.
There is positive signs, but we're not seeing.
Not seeing significant.
Momentum just yet.
Got it very helpful color, Jay and then lastly, just wanted to circle back on leasing what are you seeing in terms of lease duration for office and then more broadly just.
Chris McLernan: And then lastly, just wanted to circle back on leasing. What are you seeing in terms of lease duration for office space and then more broadly? Just curious if there are any signs that tenants are becoming more comfortable signing longer-term lease commitments? I think most, most occupiers, and tenants are looking for flexibility, but it is market driven. If you've got a market that has a low vacancy of 1-2%, it's really the landlord that's going to determine the lease length. But I think we're still looking at traditional 3-5, 7-10 year leases, but it's really going to be market-dependent and asset class-dependent. I got it.
Curious if there are any signs that tenants are becoming more comfortable signing longer term lease commitments.
I think most are most occupiers tenants are looking for flexibility, but it is market driven if you've got a market that has a low vacancy of one 2% its really landlord thats going to determine the lease length, but I think we're still looking at traditional three five.
710 year leases, but it's really going to be market dependent.
And in asset class dependent.
Got it thank you everyone.
Chris McLernan: Thank you, everyone. Thank you. The next question will be from Dev Cowell at Wolf Research. Please go ahead.
Thank you next question will be from Dave Kang at Wolfe Research. Please go ahead.
Hi, Good morning, just on the investment management side.
Dev Cowell: Hi, good morning. Just on the investment management side, FPAUM declined slightly in Q4. You said there were some redemptions in the quarter, but was the AUM decline driven by outflows or valuation marks? And there were some modest valuation marks taken as well, Div, as well as some redemption activity. But very much, I mean... Just a quick follow-up, what were the outflows from the traditional real estate funds or alternative? It's a traditional fund. Got it. Thanks. That's helpful. I'll get back into it. The next question will be from Frederic Bastien at Raymond James, please go ahead. Hi, good morning.
AUM declined slightly in Q4, you said there were some redemptions in the quarter what was the AUM declined driven by outflows our valuation marks.
Yeah.
There were some modest valuation marks taken as well.
As well as some some redemption activity.
But very much that's all I mean.
Okay.
Just a quick follow up.
The outflows from the traditional real estate funds or alternatives.
The traditional traditional funds.
Got it.
Thanks, that's helpful I'll get back into queue.
Thank you next question will be from <unk> at Raymond James. Please go ahead.
Okay.
Hi, good morning.
Hi, guys.
Christian Mayer: All right, guys. Guys, your margins in the Americas region held up quite nicely in the back half of the year, which really speaks to the solid work you did, right-sizing your cost structure. How should we think about the margin profile evolving over the course of 2024 as you turn your focus on growth again and really start loosening the belt? Hi, Frederic. That's a good question.
Hey, guys your margins in the Americas region held up quite nicely in the back half of the year, which really speaks to the solid work you did.
All right sizing our cost structure, how should we think about the margin profile evolving over.
Over the course of 2024 as you turn your focus on growth again, and really start loosening the belt.
Yes.
Yeah, that's a good question.
Christian Mayer: You know, we've taken, particularly in the Americas, very aggressive cost control actions through 2023. And as we look ahead, we've also taken action on recruiting, which has been a cost that we've borne through this period. But as we look ahead, you know, we expect, obviously, revenues to grow in the Americas, both in the outsourcing business, as well as in capital markets, to a lesser extent, leasing. Margin will improve somewhat, but we do have some variable costs coming back into the business, and also some incentive compensation that will come back into the business. So we are expecting, you know, a modest margin improvement in 2024 across the Americas. And the only other thing I'd add to that is, you know, any acquisition group, particularly in the recurring segments of our business, would have higher margins naturally, so the mix might change. Right, no, no, correct.
We've taken particularly in the Americas, a very aggressive.
Cost control actions through 2023.
And as we look ahead, we've also taken action to on recruiting which has been.
Cost that we borne through this period.
But as we look ahead, we expect obviously revenue to grow in the Americas, both on the outsourcing business.
As well as in capital markets, which are lesser extent leasing.
Margins will improve somewhat but we do have some variable costs coming back into the business and also some incentive compensation all that will come back into the business.
So expecting.
A modest margin improvement in 2024 across the Americas.
And the only other thing I'd add to that is.
Any acquisition growth, particularly in the recurring.
Segments of our business would have higher margins naturally so the mix might change mix might change.
Non all correct I was just more.
Christian Mayer: I was just more curious about capital markets and leasing than that type of brokerage business, but you provided some great color here. Thanks. That's all I have.
Curious about capital markets and leasing that that type of the brokerage business, but you provided some great color here.
Thanks, that's all I have looks like.
Frederic Bastien: Looks like. Obviously, a positive outlook going forward, it's nice to see and good luck for the year. Thanks, Brett. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your touchtone. The next question will be from Maxim Sychev at National Bank. Hi, good morning, gentlemen.
Yeah, obviously positive outlook going forward and it's nice to see and good luck on that on the year.
Thanks, Greg Thanks, Robert.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
And your next question will be from Maxim said, Jeff.
At the National Bank. Please go ahead.
Hi, good morning, gentlemen.
Hi.
Jay question, if you don't mind, maybe talking a little bit about some cross selling.
Maxim Sychev: Jake, Christian, if you don't mind maybe talking a little bit about some cross-selling traction slash successes now that you have obviously a bigger portion coming from engineering and outsourcing services and they are a bigger part of the overall portfolio. Just maybe any KPIs you can share with us. Uh, there's cross-selling all over the place, you know.
<unk> slash successes now that you have obviously, a big portion coming from engineering and outsourcing services and they want to take a part of the overall portfolio.
Just maybe any kpis you can share with us what would be helpful. Thanks.
There is cross selling all over the place.
You know.
As we get bigger.
Jay Hennig: As we get bigger, the actual examples are, you know, smaller in dollar value but still very significant cross-selling between our engineering segments and our real estate segments because we're really, in most of our engineering, particularly around property level, we're helping developers set the land up for zoning, putting in the necessary support services so that our developer clients can build houses, build high-rises, and so on. And so it gives us a great opportunity to stay with the existing client for longer. That's just one example.
The actual examples are smaller in dollar value but.
Very significant.
Cross selling between our engineering segments, and our real estate segments because.
We're really in most of our engineering, particularly around property level.
We're helping developers.
Set the land up for zoning.
Putting in the necessary support services, so that our developer clients can build houses can build a high rises and so on and so it gives us a great opportunity to stay longer with the existing.
With the existing client that's one that's just one example.
Jay Hennig: The other example that just keeps continuing to bear fruit is from a project management standpoint when our developer clients want to build a multifamily building or an office building, not happening as much, particularly in North America, but there's lots of medical offices, there's lots of seniors, there's lots of other infrastructure assets. They need third-party property project management firms to manage the construction project on behalf of the owner to ensure that the costs are in accordance with the budget, and if not, there's immediate action taken. We've enjoyed some great cross-selling opportunities between our project management clients and our developer clients in areas such as these, and we think it's going to continue to accelerate because construction is becoming much more costly and much more sophisticated.
The other example that just just keeps keeps continuing to.
To bear fruit.
As.
From a project management standpoint, when our <unk>.
Developer clients want to be.
Build a multifamily building or an office building not happening as much particularly in North America, but theres lots of medical office Theres lots of seniors theres lots of other infrastructure assets they need a third party property.
Project management firms to manage the construction project on behalf of the owner to insure that.
That the costs are in the <unk>.
Gordon with the budget and if not.
There is immediate action taken we've enjoyed some great.
Cross selling opportunities between our project management clients and our developer clients in areas such as that and we think it's going to continue to Hum.
To accelerate because construction is becoming much more costly are much more sophisticated and theres a lot of.
Jay Hennig: There's a lot of value engineering that's happening, so the partnership between an exceptional project manager and a developer becomes more important than ever. So, as Colliers continues to evolve as an organization, our philosophy is to move upmarket and to be a more valued partner to our clients who are either developing or or renovating or upgrading their buildings. You know, the same thing applies with ESG and the initiatives that we have around ESG, and somebody has to analyze the building and determine how to bring the building up to a better standard from an ESG standpoint or, as Chris McLernan mentioned earlier, to be more attractive as an office building, for example, to leasing clients. Well, once that determination has been made and capital has been allocated, somebody has to do the work. Somebody has to estimate what will happen. Somebody has to manage the construction project.
Value engineering, that's happening so the partnership between an exceptional.
<unk> project manager and a developer becomes more important than ever so.
As colliers continues to evolve as an organization.
Our philosophy is to move up market.
And to be a more valued.
Partner to our clients that are either developing and and or renovating and or upgrading.
Their buildings.
The same thing applies with ESG and the initiatives that we have around ESG and somebody has to analyze the building and determine how to bring the building up to a better standard from an ESG standpoint, or as Chris Mclaren had mentioned earlier.
To be more attractive as an office building for example to two leasing clients well once that determination has been made and capital has been allocated somebody has to do the work somebody has to estimate what that has what happens somebody has to manage the construction project.
Generally the there is a long 10 year to that it could be a five year construction project it could be a three and a half a year construction project or a renovation project of two years. So all of these services that colliers has entered over the past five years.
Jay Hennig: Generally, there's a long tenure for that. It could be a five-year construction project. It could be a three-and-a-half-year construction project or a renovation project for two years.
Jay Hennig: So, all of these services that Colliers has entered over the past five years have all been additive from the standpoint of recurring revenue, obviously, but I think your question is an excellent one because what we really haven't articulated, as I think about it, is the great synergies that happen between the various component parts of what we do for clients on the ground. So, that's bearing some exceptional fruit for us virtually around the world. Just to add, Colliers has a culture of collaboration. I can give you a benchmark. Within the US, 20% of revenues come from collaboration and cross-selling. Is there a figure that you think you'd like to, you know, target over time? Like, obviously, I understand you'll have to do work for kind of external clients, but can the 20% become 30% in 10 years?
Have all been additive.
From the standpoint of recurring revenue, obviously, but I think your question is an excellent one because what it doesn't.
What we really haven't articulated as I think about it is the great synergies that happened between the various component parts of what we do for clients.
On the field and so that's bearing some some.
Some exceptional fruit for us virtually around the world.
Just to add to add colors has.
<unk> has a culture of collaboration I can give you a benchmark within the U S.
20% of the revenues come from the collaboration and cross selling.
Okay.
Is there a secret that you think.
You'd like to.
Targets overtime like obviously I understand you'll have to do work, what kind of external clients, but given the 20% become 40% in 10 years or how should we think about this.
Chris McLernan: Or how should we think about that? Yeah, I think it's something that we're always... We're always working on, you know, taking a holistic approach with our clients. So selling multiple service lines and what we call a sticky client who can get four or five different service lines is constantly part of what we're trying to offer to our clients. 20% is a great benchmark, and if we can improve that, so be it. That's super helpful.
Yes.
We're always.
We're always we're always working on taking a holistic approach with our clients so selling multiple service lines and what we call is a sticky client you can get four or five different service lines. So it's constantly part of what we're trying to offer to our clients.
20% is a great benchmark and if we can improve that so be it.
Excellent that's super helpful. Thank you and then just one last question in terms of sort of the discount interest rates.
Jay Hennig: And then just one last question in terms of sort of discount interest rates. And I'm not trying to sort of belabor it, but when you kind of think about sort of the back half resumption on the transactional side of things, are you looking potentially? I don't like the dot plot and assuming, you know, five rate cuts that are necessary to restart the transaction velocity. You might maybe be providing a bit of a range of potential outcomes that you are imputing into the guidance, or maybe it's a little less mechanistic from that perspective. Just maybe some color there. Yeah, Max, we're not quite that scientific about it.
Im not trying to belabor it but when you kind of think about some of the back half resumption on the transactional side of things are you looking potentially I don't know like on the top floor and assuming.
Five rate constant unnecessarily to restart the transaction velocity do you mind, maybe providing a bit of a kind of a range of potential outcomes for Q1 or <unk> into the guidance or maybe it's a little.
Less mechanistic from that perspective, just maybe any color there would be super helpful. Thanks.
Yes Max.
We're not quite that scientific about it obviously, we can't control what the fed's going to do next month or three months from now.
Christian Mayer: Obviously, we can't control what the Fed's going to do next month or three months from now. But certainly, you know, we gauge market sentiment. We have operators around the world that are talking to clients every day, and as Chris mentioned in his comments, these conversations are becoming more positive. We're more engaged than ever with, you know, clients and looking at transactions that they want to complete, both on the buy side and on the sell side. So, it has been an 18 month period of quiet in the market. So there is pent-up demand, and we're seeing it. And that gives us, I think, a reasonable amount of visibility into the back half of the year and a resumption of some level of activity. I think, you know, it's a relatively modest resumption, and that will hopefully be the catalyst for a more significant rebound in activity in 2025.
But certainly we gauge market sentiment, we have operators around the world that are talking to clients every day and as Chris mentioned in his comments.
These conversations are turning more positive.
Were more engaged than ever with.
Clients are looking at transactions that they want to complete both on the buy side and on the sell side. So and it has been an 18 month period of quiet in the market. So there is pent up demand and we're seeing it and that gives us I think a reasonable amount of visibility here into the back half.
A year and a and a resumption of some level of activity.
I think.
It's a relatively modest resumption and that will.
Hopefully be the catalyst for our more significant rebound in activity in 2025.
Makes sense. Thank you so much.
Christian Mayer: Thank you so much. Thank you. And at this time, Mr. Hennig, we have no other questions registered.
Thank you and at this time Mr. <unk>, we have no other questions registered please proceed.
Jay Hennig: Please proceed. Well, thank you, everyone, for joining us on this fourth quarter conference call. We look forward to reporting, hopefully, positive results in the first quarter and convening another call like this. So thank you for participating and we'll speak to you soon. Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call. Thank you for your participation and have a nice day.
Well. Thank you everyone for joining us on this fourth quarter conference call.
We look forward to two reporting.
Positive results in the first quarter end and convening another call.
Like this so thank you for participating and.
We'll speak to you soon.
Thank you, Sir ladies and gentlemen, this does indeed conclude the conference call. Thank you for your participation and have a nice day.
Yeah.
Yeah.
Yeah.
Ooh Ooh.
Yeah.
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