Q3 2024 CBRE Group Inc Earnings Call

Statements concerning our business outlook, our business plans and capital allocation strategy, the timing of expected asset sales and our earnings and cash flow outlook.

Looking statements are predictions projections or other statements about future events. These statements involve risks and uncertainties that may cause actual results and trends to differ materially from those projected.

For a full discussion of the risks and other factors that may impact. These forward looking statements. Please refer to this morning's earnings release and our SEC filings.

<unk> provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures together with explanations of these measures in our presentation deck appendix.

Speaker Change: Im joined on todays call by Bob Atlantic, Our chair and CEO and MLG Martino.

<unk> financial officer.

Speaker Change: Throughout their remarks, when Bob and MSI financial performance relative to expectations. They are referring to actual results against the outlook. We provided on our Q2 2024 earnings call in July unless otherwise noted also as a reminder, our resilient businesses include.

Speaker Change: These management project management property management loan servicing valuations and asset management fees in our investment management business, our transactional businesses comprise sales leasing mortgage origination carried interest and incentive fee in the investment management business and development fee fine.

Speaker Change: Lee.

Speaker Change: Otherwise noted whenever besides growth rates, we are referring to the percentage change versus the 2023 per quarter in U S dollars with that please turn to slide five as I turn the call over to Bob.

Bob Atlantic: Thank you John and good morning, everyone.

Bob Atlantic: <unk> performance in the third quarter was marked by strong financial results.

Bob Atlantic: Operational gains across key parts of our business and.

Bob Atlantic: And continued advancements in our strategic positioning.

Bob Atlantic: I'll comment briefly on all three areas, starting with our financial performance.

Bob Atlantic: We posted our second highest third quarter core earnings on record with core earnings per share up 67%.

Bob Atlantic: Project management combination.

Opens up opportunities in infrastructure.

Bob Atlantic: Energy and data center projects.

Bob Atlantic: Geographically, our Japan, and India businesses have grown to the point, where they are the second and fifth largest contributors.

Bob Atlantic: Two advisory SLP.

Bob Atlantic: Our success and scale have positioned us for continued outside outsized growth in these huge economies.

Bob Atlantic: And we expect them to be disproportionate contributors to <unk> future growth.

Bob Atlantic: For full year 2024, our strong year to date performance and momentum entering Q4 have prompted us to raise our outlook for full year core EPS to a range of $4 95.

Bob Atlantic: $5 five.

Bob Atlantic: Up from $4 70.

Bob Atlantic: The $4 90 previously.

Speaker Change: Now Emma will discuss our third quarter results and outlook in greater detail Emma.

Speaker Change: Bob.

Emma: I'll start by providing context on how our business has greater earnings growth potential than any point in our history.

Emma: We focused on expanding our resilient earnings stream and as a result, our sop from resilient businesses has increased from approximately 32% coming out of the global financial crisis to around 60% today.

Emma: These resilient earnings are significantly less volatile than our transactional businesses and most importantly, we expect them to achieve enduring double digit organic growth, which we believe can be boosted even further by M&A.

Emma: Our investments and resilient businesses have changed the complexion of our company.

Emma: For context core EPS fell 30% peak to trough during the downturn, we just experienced versus 80% during the GSD.

Emma: And we are poised to surpassed prior peak core earnings next year less than two years from the trough of the downturn.

Emma: Coming out of the GSE. It took six years to return to peak earnings.

Emma: 10% once again exceeding expectations.

Emma: Turner and Townsend sustained outperformance reinforces our level of conviction and merging CBRE is project management business under Turner and Townsend leadership.

Emma: Gws's net S op margin improved by more than 70 basis points in line with our expectations, reflecting our cost efficiency initiatives.

Emma: Please turn to slide eight as I discuss the <unk> results.

Emma: Rei segment operating profit was better than expected and meaningfully above the prior year.

Emma: This was led by investment management, which benefited from incentive fees and significant co investment returns, reflecting improving market conditions.

Emma: AUM increased to more than $148 billion during the quarter and $5 billion of capital has been raised this year.

Emma: At the same time, we are fully cleared our redemption in Q in our core funds and are seeing increased interest in fundraising activity across enhanced return strategies.

Emma: We expect the market backdrop for AUM growth to improve considerably in 2025.

Emma: As expected, we did not monetize any significant development assets during the quarter.

Emma: We remain on track to realize large development profit by the end of the year and continue to steadily increase the embedded profits in our development portfolio over the long term.

Emma: We added $500 million toward in process and pipeline portfolio in the quarter, which now exceeds 32 billion.

Speaker Change: Now I'll discuss cash flow and leverage on slide nine.

Speaker Change: Free cash flow for the quarter improved meaningfully to <unk> $494 million.

Speaker Change: Up more than 60% and trailing 12 month free cash flow conversion improved to 71%.

Speaker Change: The delta between our GAAP and non-GAAP earnings in Q3 was primarily driven by noncash item.

Speaker Change: Our free cash flow forecast for the full year remains unchanged at slightly over $1 billion.

Speaker Change: The increase in EPS guidance does not expected to convert to free cash flow, primarily because of the large development gains slated for Q4 will be reported in cash flow from investing.

Speaker Change: Since these businesses are interest rate sensitive the feds start of a new monetary easing cycle has recently heightened investor enthusiasm for the real estate services sector.

Speaker Change: We share the market's enthusiasm and expect to benefit from our capital market's recovery over the next several years.

Speaker Change: But it's important to stress that <unk> strong short and long term growth prospects are excellent regardless of the real estate capital markets impacts.

Speaker Change: This owes to the progress we've made in building our resilient businesses.

Speaker Change: Our leadership in the global leasing markets and the large and growing total addressable market for our business that I commented on earlier.

Speaker Change: Our resilient businesses are expected to generate about $1 $8 billion of Sop this year, reflecting double digit growth.

Speaker Change: We expect these businesses to continue this pace of growth for the foreseeable future.

Speaker Change: In addition, leasing our largest line of business by profits is close to surpassing prior peak revenue and earnings this year with considerable room for further growth.

Speaker Change: As a result, we don't need a capital market's recovery to surpassed prior peak earnings in 2025 or to sustain strong growth beyond next year.

Speaker Change: Real estate capital markets are important to our business, but theyre lower relative contribution to our performance underscores the extent to which we've evolved and diversified cbre's business and underpins our confidence in our strong long term outlook.

Speaker Change: With that operator, we'll take questions.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue.

Speaker Change: for a week, but we started to focus on it. Our total addressable market is growing. It was already a huge

Speaker Change: A Dressable Market, Total Dressable Market for Outsourcing that has been only...

Speaker Change: Porturally tapped, but with Turner and Townsend with the acquisitions we've done the total addressable market now for organic growth from where we sit as very strong. We've got these two businesses in India and Japan that have become quite prominent for us.

Speaker Change: An awful lot that we barely gotten started with in those two markets who got great leadership teams. There we expect them to be able to grow significantly on a double digit basis for years to come.

Speaker Change: But we do have a lot of capital, we do have an M&A strategy and we think we can supplement that through M&A. So I'm going to let Emma talk about that a little bit.

Speaker Change: And so I would add on our resilience also piece and we talked about it before, but this is a big learning stream for us. And for the year we expected to deliver 1.8 billion of SOP and so that's grown at a double digit rate over the past number of years. And we expect that to continue that has been both organic and MNA, but to stop point of that organic growth has been the low double digit range.

Speaker Change: That's a continue. I think what is um

Speaker Change: Not always appreciated, it is that we'll end this year at about 60% of our SOP from resilient lives of business.

Speaker Change: and because of the growth in these businesses, even through a transaction recovery, we expect to remain around that 60% range over time.

Speaker Change: and then in terms of M&A, we are continuing to look at opportunities to expand mainly in the technical services space and facilities management, but also elsewhere, look at deals like Jane J that we did earlier this year, which expanded into the federal government space and we believe that's the $20 billion market and then to recline in the data centers space, which we believe is a $30 billion market. So we expect to look at more of the same, but of course, as we always say, I'm going to take the long time, we want to do deals that are right for us, with really strong operating leaders.

Speaker Change: and Arizona, where we think we can deliver a really strong return.

Speaker Change: Thank you. Our next question is coming from the line of Anthony Pau Lone with the J.P. Morgan Chase. Please proceed with your questions.

Speaker Change: Thanks for the morning and good work.

Speaker Change: My first question relates to leasing. I mean, how should we think about the potential to grow office leasing from here, because you mentioned it being like I think it was the best?

Speaker Change: Third Quarter in the company's history. So just trying to understand if there was some clearing of the backlog or pulling forward of demand there to kind of see where it goes from here and what normalized my day.

Speaker Change: So Tony, we don't pretend to have a great...

Speaker Change: View as to exactly where our office leasing is going to go. It's been a little bit of an unknown...

Speaker Change: For all of us, since we came through COVID, here's what we do believe.

Speaker Change: There's a lot of news around prime space being leased up in a number of markets at the highest rates ever.

Speaker Change: and because of our participation in those markets we've done well. However, we don't believe that this leasing success we've seen recently is driven by prime space. We believe it's being driven by occupiers who want space.

Speaker Change: and our targeting primed space first and when that primed space is least up, they will move on to the next best thing, which will give landlords, owners of office buildings, the incentive to invest in B&B plus buildings to move them toward A. So we think we're going to see some sustained strength.

Speaker Change: In office leasing we think we're going to see a continued slow return to the office. We do not believe we're going to go back to pre-COVID levels.

Speaker Change: But I'll say what I've said on the last two or three calls. We spend a lot of time with occupier customers. We've got a big conference. We've got 900 people in Dallas this week.

Speaker Change: with our GWS Enterprise Business, and everybody is talking about office space as being important to their future. So we expect there to be a sustainable move toward office space that is...

Speaker Change: Creating good experiences to get people back in the office, and we think the leasing success we've seen is going to continue into next year and beyond.

Speaker Change: Okay, thanks for that. My second question is if we look back earlier in the year, you guys had some cost pressures that emerged and you took some actions, it seems like, and we saw the margin expansion in the quarter. How should we think about whether you...

Speaker Change: Whether that's all dialed in at this point or how should we think about margin expansion as we look into next years or still room for that or any thoughts there.

Speaker Change: So the majority of those transactions were done across Q2 and Q3. So when you're seeing this year is not the full run rate impact. So of course you'll see it continued impact to our margins, really strong benefits to our margin and GWS in the fourth quarter.

Speaker Change: and for the full year we're expecting our GWS margins to improve over last year and then that should continue into next year. Again, this is a business that you're not going to see a step change in our margins, but we should see a continued improvement through next year.

Speaker Change: Thank you. Our next question is coming from the line of Steve Sachlow with Evercore ISI. Please perceive your questions.

Steve Sachlow: Yeah, thanks. Good morning. Bob, I can understand why you know you don't want to forecast a sharp recovery in the in the transaction business. It's you know, it's only not your best interest to predict that. But to the extent that one occurred.

Steve Sachlow: I guess what I'm just trying to figure out is, is it really predicated on just kind of the said easing cycle sort of unfolding as they've kind of laid out.

Steve Sachlow: is it really having the long end of the vine yield curve coming back down, is it more stability in the vine yield? Like what would get a sharper coverage in your mind versus a more modest recovery?

Speaker Change: Stephen, I think all of that contributes to it, but I believe, and I come in on this last quarter, what would create a sharp recovery is.

Speaker Change: Moore's ability in interest rates, maybe they're coming down a little bit.

Speaker Change: Some thought leaders among the investor communities stepping into the market, doing some transactions, and causing others to believe they had to get in and move quickly because in the absence of doing that, they would end up being buyers downstream at higher prices.

Speaker Change: and we have seen a little bit of compression for cap rates for the best multi-family and industrial assets already.

Speaker Change: So I don't think it's totally about interest rates coming down or interest rates stability. I think it's also partially about buyer-seller psychology, which it always isn't cycles, of course.

Speaker Change: Okay, thanks. Maybe Emma just on sort of the share by back as we think about, kind of, you guys using free cash flow next year.

Speaker Change: Assuming it's at least a billion dollars again. How should we just think about the benefits, acquisitions versus buybacks?

Speaker Change: You know, given that the stock is at a much higher price and a higher valuation today, does that sort of temper your enthusiasm for share bybacks and if you don't do that, kind of word is the free cash logo.

Speaker Change: So I'll absolutely start by saying it does not temper our interest in Cherbaibax.

Speaker Change: We are continuing to evaluate M&A and balancing that with Bivax when it makes sense. I will say, let's be look at where our share breaks is today and where our evaluation is today. It remains at this place.

Speaker Change: We will definitely consider more by-back than we've done in the past. We believe that we're treating it as significant discount to our intrinsic value.

Speaker Change: Thank you, our next questions come from the line of Stephen Sheldon with William Blair. Please proceed with your questions.

Stephen Sheldon: Hey, thanks and congrats on the result here. First of all, I wanted to ask about incremental margins in capital markets.

Stephen Sheldon: We are at the early stages of recovery, and specifically, will you need to do much rehiring within Capital Market, especially in terms of support in Headcount, to be able to capitalize on higher volumes. What are you seeing there?

Speaker Change: We've got considerable capacity in our mortgage origination team. Although we're adding talent to that team, we've got a great leader in that area of our business who's doing a great job of recruiting. And we've got capacity in our investment sales team. So we don't need to add talent.

Speaker Change: to grow those businesses materially, but it is important and maybe I should make a clarifying comment. We talk so much about the growth of our resilient businesses because that's an important part of our strategy, but we are doing nothing.

Speaker Change: to risk during the growth of our transactional businesses, where the market leader in capital markets and leasing and we're investing in growing those businesses. So you should expect to see this ad talent.

Speaker Change: to both the leasing side of the business and the capital market side of the business, but we don't need to do that to grow significantly from where we are now.

Speaker Change: understood that felt for um.

Speaker Change: And one of the, maybe second, one of the, to Joel's down into the margin of the, in the GWS take my great trends there this quarter.

Speaker Change: I think you talked about this maybe still to float through impact that we should think about. It's when the actions you took in prior quarters, but just as we think about the next two to three four years, what levers do you have to keep pushing margin higher there over time?

Speaker Change: So there's a number of lovers. This piece is really resetting. This first stage is really resetting our cost-based mainly primarily focused on.

Speaker Change: and our operating expenses overall across the business.

Speaker Change: The second piece that we're extremely focused on and we've seen some progress and is focusing on contracts and these are very large contracts, especially in our enterprise business.

Speaker Change: at Incrementaly Higher Mergin. So we should continue to see a benefit from that over time as we do have an A and these highly technical services.

Speaker Change: All those businesses operated at a higher margin than our traditional business, so that will continue to improve margins over time.

Speaker Change: and then there's other things that we can do within our contracts even our existing contracts to improve that margin. So it will be a steady increase over time, but know that we're very focused on delivering that steady increase over the next few years.

Speaker Change: Thank you, our next questions come from the line of Ronald Camden with Morgan Stanley. Please proceed with your questions.

Ronald Camden: Yeah, it's a quick one for me. Just go back to the GWS, doesn't it? What's wondering if you could talk a little bit more about the pipeline, break out between sort of first generation versus contact. I guess I'm wondering, are enterprises just overall engaging more, or are you guys just gaining share?

Speaker Change: We are seeing an increase in first generation out-dressing contracts.

Speaker Change: We've talked about it over the last number of quarters and even years.

Speaker Change: Those contracts typically take or those clients typically take as you'd expect longer to convert sometimes they can take over a year. But we're seeing significant progress there. We're also seeing significant progress in expansions and new ones within our existing client base.

Speaker Change: Anything that you want to ask about? No, I think we're seeing...

Speaker Change: As we've always said in that business, we get a lot of growth out of expansions because we get in the door with these enormous occupiers that have.

Speaker Change: I'll give you an example. I was having lunch with one of our clients here today who runs a real estate for a prominent US manufacturer.

Speaker Change: They have 2100 leases and facilities around the world. And we do a lot for them that there's a huge amount we don't do for them.

Speaker Change: and...

Speaker Change: He was telling me how happy they are with what we do in various areas and how they want to expand the relationship.

Speaker Change: and if you're sitting in the seat, he's sitting in the demands on you to make that portfolio properties perform cost effectively to create great experiences on the manufacturing side. We're able to do more and more to be more efficient on the from inside the yellow lines perspective.

Speaker Change: All of that creates opportunity for us and all of that would come in the expansion area and then there are continues to be a good number of

Speaker Change: Corporation's Hospital of University's others who government entities who are considering outsourcing and haven't done it yet.

Speaker Change: My second question was just going to be, you guys are leaders in multiple different business lines, and you sort of talked about the ability for sort of clients to engage in.

Speaker Change: and the business line. I guess I'm just wondering from sort of the last two quarters where you've seen sort of acceleration in capital markets. Are you seeing that thesis sort of prove that?

Speaker Change: Yeah, unfortunately, you're almost totally cutting out and we didn't hear the question.

Speaker Change: Sorry about that. Client being able to engage in multiple business lines. Are you seeing that playing out at Capital Market or covering? And any sort of anecdotal to the chair? Thank you.

Speaker Change: Well, though.

Speaker Change: We are seeing that playout.

Speaker Change: Especially on the occupied, but on the capital market side, we, on the occupied side, we see it more, but on the capital market side, we do do a lot of work for those clients, we do valuations work.

Speaker Change: We do proper management work, obviously we do building sales work.

Speaker Change: We do debt financing work for them so there is a lot we do for the investor clients there in the capital market site of the business as well.

Speaker Change: Those solutions don't tend to be as integrated as the operative occupiers solutions are, but there's plenty we do, and we have some enormous clients on that side that we.

Speaker Change: and we interface with on an account basis as opposed to a one by one transactional basis.

Speaker Change: Thank you, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: Our next questions come from the line of Jade Romani with KVW. Please proceed with your questions.

Speaker Change: Thank you very much, quite different to be talking about, upside at this point in the cycle. I wanted to ask about tram or crow.

Speaker Change: First question would be if you've identified significant parts of the land entitled currently for industrial that could be repurposed for data center use and our devising strategies either through sales or joint venture to monetize such investments.

Speaker Change: J.D. is a fact that the path to data center land.

Speaker Change: Does...

Speaker Change: Fairly regularly run through logistics landsites that happen to have adequate power. And because we have a...

Speaker Change: Big Position and Logistics Landsites.

Speaker Change: That's one of the core competencies of the Kremlin Crow Company to identify and acquire logistics land sites. We are seeing some opportunity there that we're quite confident will.

Speaker Change: Result in Strong Financial Returns Force, and we not surprisingly given that.

Speaker Change: have a proactive effort underway to identify more of that land. We alluded to it a little bit over the last few quarters. This amount of pent-up profits in our end process.

Speaker Change: Fort Folio, the fact that we've put incremental balance sheet capital into the development business, one others were on the sideline. That's a significant strategic initiative for us that's probably more prominent than

Speaker Change: appears on the surface.

Speaker Change: Thank you and to take the question one step further.

Speaker Change: relates to some of your initial comments around M&A and infrastructure. Would you contemplate combining aspects of the Triangle Crow or REI with something in the infrastructure management or data center space?

Speaker Change: You know across real estate coverage.

Speaker Change: Conglomerate type businesses tend to have a discount associated with the development arm because investors struggle to find predictability to earnings.

Speaker Change: Perhaps that relates to Emma's comments that C.B.R.E. might be trading at an intrinsic value as count. But one way to unlock this could be through a strategic transaction in the alternative asset manager space as real estate asset managers tend to trade at very high multiples.

Speaker Change: Just curious as to your thoughts about potentially spinning off-travel crow or combining with something and really building out this data center capability.

Speaker Change: Well, there's some good insights in that question, Jay. I want to start by saying, we are not contemplating trading off-term or crow company, because it does so, not only is it really, really well-run business in generates high returns and creates opportunities for them to invest our capital.

Speaker Change: But it does interface really productively with other parts of our business. I'm going to give you an example during the...

Speaker Change: Middle of the COVID state home era.

Speaker Change: We started a fund called USLP. It's a fund that exists in our investment management business. We've pulled parts of this story before.

Speaker Change: But it was seeded by a portfolio of trample crow company industrial development projects, plus also using our own balance sheet to secure a couple of portfolios.

Speaker Change: In anybody that watches the investment management business, knows how hard it is to scale a poor plus fund early on. We started that funding code, but the whole thing together by Zoom, none of the meetings, none of the interface was done in person.

Speaker Change: started during COVID from a standing start that fund today is $5 billion. That fund would not exist in all probability without tram or crow company.

Speaker Change: and Traumel Crow Company gives us opportunities to do that in other areas. We've got all kinds of things we're looking at with Traumel Crow Company and our investment management business together.

Speaker Change: Another example, and we've alluded to this too, there we got two.

Speaker Change: Billion Dollar Plus manufacturing plants that were handling the land acquisition land development and project management on in a venture between Turner and Townsend and Tramel Crow Company. If you talked to it.

Speaker Change: Vince Clancy at Turner and Townsend, Danny Queen in the travel crew company. They would tell you neither one of them would have done those.

Speaker Change: Deals along, we think that positions them well to do more of that. That's the kind of thing that gives us confidence about.

Speaker Change: where this business is going to go so.

Speaker Change: Not only is on a kind of freestanding basis, his tram will grow company, a really good business for us to have. It does a lot with our other businesses.

Speaker Change: The other thing I'll say is it generates a lot of cash with immediate cash conversion that we can use to invest all over sea berries.

Speaker Change: Light, they can be done without business.

Speaker Change: Thank you. Our next questions come from the line of Peter or Bromowitz with Jeffries. Please proceed with your questions.

Speaker Change: Yes, thank you and King Grapple, I'm a very strong quarter. I just wanted to dig into the leasing a little bit. You called out office globally, with up to 26% which was very impressive.

Speaker Change: This curious if we could go sort of broad-based. What are you seeing on the industrial side, how did that compare to the Ups 26th in office and any sort of general comments on how things are trending for industrial leasing?

Speaker Change: Industrial leasing is trending out not at the rate that office leasing is.

Speaker Change: One of the reasons for that is there's some huge, huge users of industrial space that everybody is aware of. And they took down a lot of space over the last few years and they've got vacancy in their portfolios that they're burning through. We think.

Speaker Change: the Thatskana kind of.

Speaker Change: Come through the pipeline over the next year or two years and that demand will then pick back up on the leasing side after that. But we do expect leasing for industrial to be better next year, although not dramatically better than it was this year.

Speaker Change: Alright, that's helpful. And then maybe to go back to, I think it was Steve's question, just about race sensitivity and the capital markets recovery.

Speaker Change: I guess the Fed has put out this playbook, but the longer the curve is kind of remains stubbornly high here. So just curious to hear your thoughts on, if that continues to be the case, how that would impact sort of your thinking around the magnitude of the capital markets recovery.

Speaker Change: and Peter, we're really focused on the next few months what we're seeing through the end of the year.

Speaker Change: in the guidance that we gave with the mid-point of $5 BPS.

Speaker Change: That, and that's a high level confidence in what we believe is going to happen in the capital markets.

Speaker Change: We're expecting our investment sales revenue to grow in Q4 by 30%. So that's not a low number. I realize it's not so low-based.

Speaker Change: and we have high visibility into that number. I know there's been lots of questions around racism gone. The ten years gone above for recently. We don't expect that to have a huge impact over the next couple of months. We've had a record number of rate locks through August and September and we're seeing the transactive sales activity come off of that.

Speaker Change: and so there shouldn't be a lot of volatility through the end of the year.

Speaker Change: and our Sille activity.

Speaker Change: Thank you. Our next question is coming from a lot of Anthony Palalone with JP Morgan Chase. Please proceed with your questions.

Speaker Change: Yeah thanks, I just have one follow up, you know, I understand the data center, deem, and the attractiveness there. I was wondering if you could spend a minute on just kind of where you see CBRE's biggest revenue opportunity in that.

Speaker Change: Ecosystem, like what you see yourselves really doing most there and how do you make money at it?

Speaker Change: We've got a bunch of exposure to data centers, Tony. We already talked about the land plays that trample crow companies making that give us opportunities to profit there. Turner and towns in his...

Speaker Change: In excess of 110 hyper-scale data centers that their project managing.

Speaker Change: We have a data center services business where we manage.

Speaker Change: Data Center is on behalf of Octopires. We manage between 7 and 800 data centers in that business.

Speaker Change: We just did the direct line acquisition that the early returns on that are really encouraging. And we synergize that with that data center services business.

Speaker Change: and that does small projects inside the white lines and data centers. So that's very strong. We have a data centers sales business in our advisory business that's...

Speaker Change: Very, very capable. And with all those things going on in data centers where we have prominent positions, we are doing a decent amount of strategy work as to how we could extract more from that and where we can go from here. We're not ready to...

Speaker Change: Describiti's specific strategic initiatives yet, but we got a lot of exposure, a lot of expertise and we're exploring opportunities. Okay, thank you.

Speaker Change: Thank you. Our next question comes from the line of Steve Saka with Evercore ISI. Please proceed with your questions.

Steve Saka: Yeah, thanks, just one quick follow up. And I just on the loan servicing business, I realized it's not a terribly large, but you know, it was basically flat-ish in the quarter. I know you sort of referenced it here in the press release, but just anything that kind of pushed that down that was abnormal this quarter.

Speaker Change: The underlying growth is 5% and in which you see is basically 1% growth, but the actual growth is 5% We've moved from some escrow income, had to be moved from limiting to the commercial mortgage origination line.

Speaker Change: Okay, great, thank you.

Speaker Change: Thank you. Our next question comes from the line of Jade and Remani with KVW. Please proceed with your questions.

Speaker Change: Thank you very much. What the 60% contribution from resilient businesses, which is expected to remain near that level, what are your thoughts around instituting a regular quarterly bid that?

Speaker Change: Jade is something that we evaluate over time. Right now we think that we love the flexibility of BiBACs and we've been able to execute on our MyBACs over the past number of years. So as long as we expect to continue to do that, we don't think that a dividend is necessary, but it's something that we evaluate.

Speaker Change: Thank you. We have reached the end of our question on answer session. I would now like to hand the call back over to Bob Sulentic for closing comments.

Bob Sulentic: Thanks to everybody and we look forward to talking to you again when we report our year-end results.

Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker Change: [music].