Q2 2025 CBRE Group Inc Earnings Call

Operator: This is the second quarter, 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded.

Greetings and welcome to the CBR E Group second quarter 2025 earnings call. At this time. All participants are in a listen-only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Chandni Luthra: I would now like to turn the call over to your host, Chandni Luthra, Global Head of FP&A and Investor Relations for CBRE Group. Good morning, everyone, and welcome to CBRE's second quarter 2025 Earnings Conference Call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an Excel file that contains additional supplemental material. Today's presentation contains forward-looking statements, including, without limitation, statements concerning our business outlook, business plans, and capital allocation strategy, as well as our earnings and cash flow outlook. These statements involve risks and uncertainties that may cause actual results and trends to differ materially.

As a reminder, this conference is being recorded.

I would now like to turn the call over to your host chani luthra, Global head of fpna and investor relations for CBRE group. Thank you. You may begin.

Good morning everyone and welcome to cbr's second quarter 2025 earnings conference call earlier. Today we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an Excel file that contains additional supplemental materials.

Chandni Luthra: For a full discussion of the risks and other factors that may impact these statements, please refer to this morning's earnings release and our SEC filings. We have 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. Throughout our remarks, when we cite financial performance relative to expectations, we are referring to actual results against the outlook we provided on our first quarter 2025 earnings call in April, unless otherwise noted.

Today's presentation contains forward-looking statements, including without limitation statements concerning our business Outlook business plans and capital allocation strategy as well as our earnings and cash flow Outlook. These statements involve risk and uncertainty that may cause actual results and Trends to differ materially for a full discussion of the rest and other factors that may impact these statements, please refer to this morning's earnings release and our SEC filings

We have provided, reconciliations of, the non-gaap financial measures this discussed on our call, to the most directly comparable, gaap measures together with explanations of these measures in our presentation deck. Appendix

Chandni Luthra: Also, as a reminder, our resilient businesses include facilities management, project management, property management, loan servicing, valuations, other portfolio services, and recurring investment management fees. Our transactional businesses comprise property sales, leasing, mortgage origination, carried interest and incentive fee in the investment management business, and development fee.

Expectations. We are referring to actual results against the Outlook we provided on our first quarter 2025 earnings call in April, unless otherwise noted

Robert Sulentic: I am joined on today's call by Bob Sulentic, our Chair and CEO, and Emma Giamartino, our Chief Financial Officer. Thank you, Chandni. And good morning, everyone. The strong momentum we exhibited to start the year continued in the second quarter. Despite uncertainty in the macro environment, occupier and investor clients largely proceeded with executing their plan. Both our resilient and transactional businesses achieve strong double-digit revenue growth. Resilient revenues rose 17% surpassing the 15% growth rate for transactional business. Resilient revenue growing faster than transactional revenue during a market recovery attests to the progress we've made with our resilient business.

Also as a reminder our resilient businesses include Facilities Management project management Property Management Loan Servicing, valuations other portfolio services and recurring Investment Management fees, our transactional businesses comprise property sales, leasing mortgage, origination carried interest and incentive fee in the investment management business and development fee.

I am joined on today's call by Bob santic our chair and CEO and mrgr Martino our Chief Financial Officer.

Thank you, Charlie and good morning, everyone.

The strong momentum. We exhibited to start the year continued in the second quarter.

Despite uncertainty in the macro environment occupier and investor clients largely proceeded with executing their plans.

Both our resilient and transactional businesses achieved, strong double-digit, Revenue growth.

Resilient revenues Rose 17% surpassing, the 15% growth rate for transactional businesses.

Robert Sulentic: We are especially focused on our two new segments, Building Operations and Experience and Project Management, and are pleased with the progress they are making. In BOE, we continued to grow revenue at a mid-teens rate and delivered significant operating leverage. As the year unfolds, we expect to identify more opportunities to benefit from synergies available across our nearly 8 billion square foot management portfolio. Project management achieves strong top-line and SOP growth. This performance reflects the benefits we've been realizing in the six months since we joined our legacy business with Turner & Townsend. Although we saw some impact from large corporate clients slowing their capital spending, this was more than offset by continued strong gains across the rest of the project management business, underscoring the resilience Turner and Townsend's legacy business has contributed to the combined platform.

Resilient Revenue growing faster than transactional Revenue during a market recovery. A test to the progress we've made with our resilient businesses.

We are especially focused on our 2, new segments, building operations, and experience and project management and are pleased with the progress. They are making

In Boe, we continue to grow Revenue at a mid teens rate and delivered significant operating Leverage.

As the year unfolds, we expect to identify more opportunities to benefit from synergies available across our nearly 8 billion square foot management portfolio.

Project management achieved strong, Topline and sop growth.

This performance reflects the benefits we've been realizing in the six months since we joined our Legacy business with Turner and Towns.

Although we saw some impact from large corporate clients slowing their capital spending.

This was more than offset by continued strong gains across the rest of the project management business underscoring, the resilience Turner and Townson Legacy. Business has contributed to the combined platform.

Robert Sulentic: Our advisory segment had an excellent quarter as sales and leasing transaction activity was strong around the world. Global leasing revenue was the highest for any second quarter in company history, led by the continued strong recovery of demand for office space. In light of our outperformance in the year's first half and the pipelines across our business, we're raising our core EPS expectations for the year to a range of $6.10 to $6.20. Achieving the midpoint of our guidance would represent better than 20% growth for the year. We expect to set a new earnings peak this year, just two years after the 2023 trough and the commercial real estate downturn, even though capital markets activity remains well below prior peak level.

Our advisory segment had an excellent quarter as sales and leasing transaction activity was strong around the world.

Global leasing revenue was the highest for any second quarter in company history, led by the continued strong recovery of demand for office space.

In light of our outperformance, in the year's first half.

And the pipeline's across our business, we're raising our core EPS expectations for the year to a range of $6.10 to $6.20.

Achieving the midpoint of our guidance would represent better than 20% growth for the year.

Emma Giamartino: Now I'll turn the call over to Emma, who will discuss the quarter and our outlook in more detail. Thank you, Bob. Good morning, everyone. Our second quarter results exceeded our expectations, with core EBITDA and core EPS growing 30% and 47% respectively. I'll detail our results for each segment.

We expect to set a new earnings Peak this year, just 2 years after the 2023 trough in the commercial real estate downturn. Even though Capital markets activity remains well below. Prior Peak levels,

Now, I'll turn the call over to Emma who will discuss the quarter and our Outlook in more detail.

Thank you, Bob. Good morning, everyone.

Our second quarter results, exceeded our expectations.

For ibida and core EPS growing 30% and 47% respectively.

Emma Giamartino: Note that all segment-level growth rates are in local currency and do not reflect the benefit of an approximately 1% FX tailwind during the quarter. In advisory services, revenue rose 14% and SOP grew 31%, driven by 250 basis points of margin expansion. Global leasing revenue rose 13%, with double-digit growth across all major regions.

All detail our results. For each segment note that all segments, level growth rates are in local currency and do not reflect the benefit of an approximately 1% FX Tailwind during the quarter.

In advisory Services Revenue, Rose 14% And sop group 31% driven by 250 basis points of margin expansion.

Emma Giamartino: U.S. leasing was led by a 15% increase in the office sector, driven by larger leases and broad-based growth across the country. Growth in non-gateway markets outpaced gateway markets, pointing to increased momentum in regions outside of the largest cities.

Global leasing Revenue, Rose 13% with double digit, growth across all major regions.

Emma Giamartino: U.S. industrial leasing growth was better than expected, with revenue up 15%, as third-party logistics providers once again drove activity. Like leasing, our capital markets businesses performed well. global property sales rose 19%, accelerating from the first quarter. In the U.S., property sales increased 25% with notable strength in data centers, office, and retail. Outside the U.S., sales are particularly strong in India and Japan. Mortgage origination fees increased by more than 40% with strong volume from the GSEs, debt funds, and CMBS lenders.

U.S. leasing was led by a 15% increase in the office sector, driven by larger leases and broad-based growth across the country. Growth in non-Gateway markets outpaced Gateway markets, pointing to increased momentum in regions outside of the largest cities.

Us industrial. Leasing growth was better than expected with Revenue up. 15% as third-party Logistics providers. Once again drove activity.

Likely things are capital markets businesses performed. Well,

Order.

In the US, property sales, increased 25% with notable strengths in data centers office and Retail.

Outside, the US sales were particularly strong in India and Japan.

Mortgage origination fees increased by more than 40%, with strong volume from the GSEs, debt funds, and CMBS lenders.

Emma Giamartino: Turning to our BOE segment, we saw 18% top line growth and 21% SOP growth. Our enterprise business's performance was supported by a balanced mix of new client wins and expansions in the technology, healthcare, and industrial sectors, and continued strong growth with hyperscale data centers. Our local business once again delivered double-digit revenue growth, led by ongoing success in the UK and the US. In property management, we secured another major portfolio mandate from a large institutional investor. In the project management segment, we achieved 13% revenue growth and 18% SOP growth. The Turner & Townsend-CBRE project management integration is progressing well.

Turning to our Boe segment, we saw 18% Top Line growth and 21% sop growth.

Our enterprise business's performance was supported by a balanced mix of new client wins and expansions in the technology, healthcare, and industrial sectors, as well as continued strong growth with hyperscale data centers.

Our local business once again delivered double-digit revenue growth.

Led by ongoing success in the UK and the US.

In Property Management. We secured another major portfolio mandate from a large Institutional Investor.

In the project management. Segment, we achieved 13% Revenue growth and 18% sop growth.

Emma Giamartino: Turner and Townsend's legacy business delivered mid-teens revenue increases across most regions with notable growth in its largest geography, the UK. The legacy CBRE project management business saw low double-digit revenue growth led by the financial services and energy sectors.

The Turner and towns in CBRE project management integration is progressing. Well,

Turner and towns in his legacy business delivered mid-, teens Revenue increases across most regions with notable growth, in its largest geography, the UK.

Emma Giamartino: This is notable given a slowdown in capital projects from some clients who are most impacted by the uncertain economic environment. In real estate investments, segment operating profit was up, in line with expectations for the quarter, although against a light comparison with the prior year. In investment management, we saw growth in recurring revenue and recurring SOP, and AUM ended the quarter at $155 billion, an increase of $6 billion from the end of Q1, mainly driven by favorable currency movement. Although certain investors remain cautious on making capital commitments, we anticipate capital raising will continue its upward trajectory, building on the positive momentum of the past two years.

the Legacy cber project management business saw low double digit Revenue growth led by the financial services and energy sectors,

This is notable given a Slowdown in capital projects from some clients who are most impacted by the uncertain economic environment.

In the real estate investments segment, operating profit was up in line with expectations for the quarter, although it was against a light comparison with the prior year.

In Investment Management. We saw growth in recurring, revenue and recurring sop and AUM. End of the quarter at 155 billion. An increase of 6 billion dollars from the end of q1. Mainly driven by favorable currency movement.

Although certain investors remain cautious on making Capital commitments, we anticipate Capital raising will continue its upward trajectory building on the positive momentum of the past 2 years.

Emma Giamartino: In development, operating profit was in line with our expectations as we anticipate most of our asset sales to occur in the fourth quarter, including a few data center development sites. The estimated profits embedded in our in-process and pipeline portfolio remain consistent with last quarter at approximately $900 million.

In development, operating profit was in line with our expectations as we anticipate most of our asset sales to occur in the fourth quarter, including a few data center development sites.

Emma Giamartino: Now I'll turn to our balance sheet and capital allocation. On a trailing 12-month basis, we generated $1.3 billion of free cash flow, in line with expectations. We continue to expect over $1.5 billion of free cash flow for the full year, with full-year free cash flow conversion toward the high end of our long-term target range of 75% to 85%.

The estimated profits embedded in our in-process and pipeline portfolio remain consistent with last quarter at approximately $900 million.

Now, I'll turn to our balance sheet and capital allocation.

On a trailing 12-month basis, we generated $1.3 billion of free cash flow, in line with expectations.

We continue to expect over 1.5 billion dollars of free cash flow for the full year with full year free cash flow conversion toward the high end of our long-term target range of 75 to 85%.

Emma Giamartino: During the quarter, we completed a $1.1 billion bond offering and expanded our revolving credit facility, increasing our liquidity to $4.7 billion. We repurchased a modest amount of shares as we continue to balance M&A opportunities with buybacks in line with our long-term capital allocation strategy. Net leverage stood at just under 1.5 turns at quarter end and we continue to expect to end the year with about one turn of net leverage absent any large M&A.

During the quarter, we completed a $1.1 billion bond offering, expanding our revolving credit facility and increasing our liquidity to $4.7 billion.

We were purchased a modest amount of shares as we continue to balance m&a opportunities with Buybacks in line with our long-term capital allocation strategy.

Emma Giamartino: As Bob mentioned, we are increasing our full-year core EPS guidance to a range of $6.10 to $6.20. This forecast is based on constant currency and would increase by at least $0.10 based on today's Forward FX curve. Our increased earnings outlook is driven by outperformance in advisory and BOE and is underpinned by the assumption that the economy remains resilient with limited risk of a recession later this year.

Net leveraged stood at just under 1.5 turns at quarter end and we continue to expect to end the year with about 1 turn of net, leverage absent, any large m&a.

As Bob mentioned, we are increasing our full year core EPS guidance to a range of $6.10 to $6.20.

This forecast is based on constant currency and would increase by at least 10 cents based on today's forward FX curve.

Operator: With that, I'll turn the call back to the operator for questions. Thank you.

Our increased earnings outlook is driven by outperformance in Advisory and BPO, and is underpinned by the assumptions that the economy remains resilient, with limited risk of a recession later this year.

With that, I'll turn the call back to the operator for questions.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone. Your confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. Our confirmation tone will indicate your line is in the question queue.

Operator: To allow for as many questions as possible, we ask that you each keep to one question and one follow-up.

You may press star 2. If you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Anthony Paolone: Our first question comes from the line of Anthony Paolone with J.P. Morgan. Please proceed. Great. Thanks. Good morning.

To allow for as many questions as possible. We ask that you each keep to 1 question and 1 follow-up. Thank you.

Our first question comes from the line of Anthony Pelon with JP Morgan. Please proceed with your question.

Robert Sulentic: My first question relates to the leasing business and more particularly in office. If we go back to, I think, the last couple quarters of last year and the first quarter of this year, office had kind of been up, you know, I think closer to maybe 30 percent perhaps, or at least in the U.S., and I think that was up about 15 in the quarter. And so just trying to understand if the comps get a lot harder as we go into the back half of the year, or if any demand you think was maybe pulled forward, or what needs to happen to see office continue to show a strong leasing recovery.

Half of the year or if any demand you think was maybe pulled forward um or what needs to happen to see office continue to to to show a strong leasing recovery.

Robert Sulentic: Tony, the comps do get tougher. The leasing business is going quite well now for office buildings. It's expanding, the momentum is expanding from Park Avenue type locations in the gateway cities to a broader swath of the gateway cities, and now in a very big way in the second tier markets and smaller markets below that. And we're seeing several things contribute to that. One is there's just no doubt that there's some element of a return to the mean with COVID so far in the rearview mirror. Secondly, we know from the work we do with our corporate clients here in the U.S.

Tony, um, the comps do get tougher, uh, leasing business is going quite well now, for Office Buildings. It's expanding, uh, the, the momentum is expanding from

Park Avenue-type locations in the Gateway cities to, uh, broader swath of the Gateway City and now in a very big way in the second-tier markets and smaller markets below that.

and we're seeing several things contribute to that 1 is there just no doubt that there's some some element of a return to the mean with um, Co so far in the rear view mirror,

Robert Sulentic: and around the world that they really are serious about using office space to get their employees connected, more productive, more excited about the companies they work for. And that's been a big plus for us in that business. So you have all those things going on. We expect office building leasing to continue to be strong. One of the things that's going to create some challenges is lack of supply in certain areas.

Secondly, we know from the work, we do with our corporate clients here in the US and around the world that they really are serious about using office space to get their employees connected more, uh, more productive, more excited about the companies they work for, uh, and that's been a, a big plus, uh, for for us in that business.

Anthony Paolone: But the compares do get tougher as 2025 rolls on. Okay, thanks.

So you have all those things going on, we expect office building leasing to continue to be strong. 1 of the things that's going to create. Some challenges is lack of Supply in certain areas.

uh, but the comparison do get tougher as, as 2025 uh, rules on

Robert Sulentic: And then just my second question is, Rob, you mentioned, I think in your prepared comments, just potential synergies that you're working on in BOE, and just curious if you can give us any additional context on order of magnitude and what that can mean for, say, 2026, I'm guessing, by the time it takes effect. We're not ready to quantify that yet. We have, we actually haven't quantified it yet in-house because we're still working on it. But what's going on there, Tony, and the whole motivation, or not the whole motivation, but a significant motivation for bringing all those building management businesses together, enterprise facility management, local facility management, property management, is that there are big common elements to managing almost all types of business and all types of service offerings for these various clients.

Okay. Thanks. And then just my second question is, Bob, you mentioned. I think in your prepared comments uh just potential synergies that you're working on in Boe and just curious if you can give us any additional uh context on order magnitude and what that could mean for say 2026, I'm guessing by the time it takes effect.

We're not ready to quantify that yet. Um we have we actually haven't Quantified it yet in-house because we're still working on it. But what's going on there?

Tony and the the whole motivation or not the whole motivation, but a significant motivation for bringing all those building management businesses together, um, Enterprise facility management, local facility management property management, is that there are there are big common elements to managing almost all types of business and all types of service offerings for these various clients.

Robert Sulentic: Building engineering, procurement of various types, information used to run the buildings that would lead to efficiency, and we are aggressively working on that now in that business to try to extract those synergies, and we declared that we expect them to be significant, but we haven't quantified them yet. We're excited about the way it's going so far.

Um, building engineering, uh, procurement of various types. Information used to run the buildings that would lead to efficiency, and we are aggressively working on that. Now, in that business, to try to extract those synergies, we declared that we expect them to be significant, but we haven't quantified them yet.

We're excited about the way it's going so far.

Anthony Paolone: Okay, thank you.

Okay, thank you.

Operator: Thank you.

Julien Blouin: Our next question comes from the line of Julien Blouin with Goldman Sachs. Please proceed with your question. Great. Thank you for taking my question. I guess on the integration of Turner & Townsend with the legacy project management business, can you give us a sense of the benefits you've seen to date? And how long could it take before we start to see real improvements on the legacy CBRE project management business? Or conversely, are you seeing any challenges in achieving those expected integration benefits?

Our next question.

With Goldman Sachs, please proceed with your question.

Great. Thank you for taking my question. Um I guess on the integration of Turner and Townson with the Legacy project management business. Can you give us a sense of the benefits you've seen to date? Uh and how long could it take before we start to see real improvements on the Legacy uh CBR project management business or conversely. Are you seeing any challenges uh in achieving those those expected integration benefits?

Robert Sulentic: Julien, I'll start with the last part of your question and then go back to the first. We're not seeing any challenges we didn't expect. When you bring two businesses like that together, it is challenging. And it's in those challenges that create opportunities. So just, just as an example. Between project managers, program managers, and cost consultants in that business today, we have 15,000 professionals. There was some inefficiency in the use of CBRE professionals who were assigned to specific clients or doing tenant rep type work in our advisory business and weren't fully utilized all the time, while Turner & Townsend was essentially sold out in parts of their business around the world.

Julie and I'll start with the last part of your question and then go back to the first, we're not seeing any

Challenges, we didn't expect. Um,

When you bring 2 businesses like that together, it it is challenging and it's in those challenges that create opportunities. So just just as an example,

between project managers program managers and cost consultants in that business today we have 15,000 professionals

Robert Sulentic: We can move those professionals into areas of need now in a way that we couldn't move them before. One of the things you have to do to do that, though, is you have to have We were operating the legacy CBRE business in a very different way than the biggest program managers and engineering firms around the world operate their businesses. Turner & Townsend was operating in that way with timesheets, with technical systems that underpinned those people with training, et cetera, that we didn't have. They're moving those professionals onto those systems now, getting greater efficiencies. That's one of the reasons you're seeing some margin advantage there.

There were some inefficiencies in the use of CBRE professionals, who were, uh, assigned to specific clients or doing tenant rep type work in our advisory business and weren't fully utilized all the time, while Turner and Townsend was essentially sold out, um, in parts of their business around the world. We can move those, um, professionals into the areas of need now, in a way that we couldn't move them before. One of the things you have to do to do that, though, is you have to have systems in place. We are operating the legacy CBRE business in a very different way than the biggest program managers in engineering firms around the world operate their businesses. Turner and Townsend was operating in that way, with timesheets, with technical systems that underpin those people, with, uh, training, etc., that we didn't have. They are moving those professionals onto those systems now, getting greater efficiencies.

Robert Sulentic: Secondly, we have seen significant, very specific incidents where our ability to bring Turner & Townsend into legacy CBRE clients has resulted in a large new business for the company, both bringing them into our enterprise facilities management clients and also the Trammell Crowe development clients. We're seeing both cost and revenue synergies, and we expect that to continue, those synergies to build over the next couple of years and have a very, very different, more compelling business. I've said this before, nothing like what we had before, nothing like what anybody in our segment had before, and we're starting to see that benefit now, but there'll be a lot more unfold over the next couple of years.

You're seeing, um, some margin Advantage there. Secondly, uh, we have seen significant, very specific incidents, where our ability to bring Turner in towns and into Legacy. CBR clients has resulted in, uh, large new business for the company. Both, uh, bringing them into our, um, Enterprise Facilities Management clients and also the travel Crow development clients. So we're seeing both cost and revenue synergies. And we expect that to continue, uh, those synergies to build over the next couple years and have a very, very different more compelling business. I've said this before, nothing like, what we had before, nothing like what anybody in our segment had before and and we're starting to see that benefit now, but they'll be a lot more unfold over the next couple years.

Julien Blouin: Thank you, Bhavna, that's really helpful.

Julien Blouin: You mentioned in your opening remarks that the raise is driven by the year-to-date results and also the activity pipelines that you're seeing so far into the third quarter.

Emma Giamartino: I guess maybe digging into those sort of activity pipelines, what specifically are you seeing that sort of encourages you as we head into the back half of the year? Julien. So you're right, about half of the increase in our guide is coming from the outperformance that we saw in Q2 across BOE and advisory, and then the other half is primarily related to leasing. So we are seeing continued strength in leasing greater than what we were seeing 90 days ago, and that's both on the office front and the industrial front. So, if you, if you look at our guidance for leasing, it implies that in the back half of the year against those tougher comps that Bob talked about, we're at a.

Thank you, Bob. Now. That's that's really helpful. Um, you mentioned in your opening remarks that the Rays was driven by the year to date results. And also, uh, the activity pipelines that you're seeing so far into into the third quarter. I guess. Maybe digging into sort of activity pipelines. What specifically are you seeing that sort of encourages you, uh, as we head into the back half of the year?

Julien Blouin: mid to high single-digit growth rate and leasing in the back half of the year, which is above what we were looking at 90 days ago. Got it. Thank you. That's helpful. Thank you.

Julian. Um, so you're right about half of the increase in our guide is coming from the outperformance that we saw in Q2 across Boe and advisory. And then the other half is primarily related to leasing. So we are seeing continued strength and leasing, um, greater than what we were seeing 90 days ago and that's both on the office front and the industrial front. So if you if you look at our guidance, releasing it implies that in the back half of the year, against those tougher comps of options about we're at a

mid to high single-digit growth rate in leasing in the back half of the year um which is above what we were. We were looking at 90 days ago.

Got it. Thank you. That's helpful.

Steve Sakwa: Our next question comes from the line of Steve Sakwa with Evercore ISI.

Emma Giamartino: Please proceed with your question. Yeah, thanks. Good morning. Maybe just touch on the capital markets sales activity. You know, that business came in, I think, far stronger than we had expected. And I'm just curious, given where rates are, the Fed's, you know, been a bit more, you know, steadfast and holding rates to short end. Just kind of what are your expectations for that? You didn't really change the language, I guess, in the outlook of a steady but muted recovery. Well, we expect the sales activity and the refinancing activity to both continue strong in the back half of the year.

Thank you. Our next question comes from the line of Steve sakoa with evercore. Isi, please proceed with your question.

Yeah, thanks. Good morning. Uh, maybe just touch on the capital markets, uh, sales activity. You know, that business came in. I think far stronger than we had expected and I'm just curious given where rates are the feds, you know, been a bit more. Uh, you know, steadfast and holding rates uh, to short end, just kind of what are your expectations for that. You didn't really change the language, I guess in the Outlook of a steady but muted recovery

Robert Sulentic: We're not expecting interest rates to move in a way that alter that materially. If they were to rise considerably, obviously, that would slow things down. We're not expecting that. We're not expecting big drops in interest rates either. So our outlook for the contemplates what we believe. Within brackets, the interest rates will do, but a lot of what you're seeing is that the spread between bid and ask has gotten very narrow or gone away. There is a lot of capital out there. We have it and other people have it that wants to buy real estate. And there is a huge amount of.

Well, we expect um, the sales activity, and the refinancing activity to both cons continued strong in the back, half of the Year, we're not expecting interest rates to move in a way that, um, alter that materially. If they were to rise considerably, obviously, that would slow things down. We're not expecting that. We're not expecting, big big drops in interest rates either. So, our outlook for the year, uh, contemplates, what we believe,

within brackets, the interest rates will do, but a lot of what you're seeing is

Emma Giamartino: sell side interest on the part of owners of real estate that haven't been able to sell it for the last few years. And as Emma said, we ended the quarter with a strong result, but we also ended the quarter with strong pipelines going into the back half of the year.

That the spread between bid and ask has gotten very narrow. We're going away. There is a lot of capital out there; we have it, and other people have it, that wants to buy real estate. And there is a huge amount of sell-side interest.

Emma Giamartino: And I think I'm going to turn it over to Emma and let her comment on how July has started to unfold. The other thing is there are a lot of refinancings that need to be done. And so that's happened, that's helping the mortgage origination side of our business.

On the part of owners of real estate that haven't been able to sell it for the last few years. And and as Emma said, we ended, we ended the quarter with a strong result, but we also ended the quarter with strong pipelines, going into the back half of the year. And I think I'm going to turn it over to them and let her come in on, on how, um,

Emma Giamartino: Emma, you might want to comment on July. Yeah. So, Steve, in July, in the U.S., our sales activity has been very strong. And so we are seeing a bit of a pickup. I think one thing to note about the second half of the year is we are expecting continued strength and likely more strength in U.S. sales in the back half of the year, but that we are seeing some slowdown in sales in Europe. And so that is offsetting it slightly. Great, thanks.

July has started to unfold. The other thing is, there are a lot of refinancing that need to be done and so that's happened. That's helping the mortgage origination side of our business. I mean you want you might want to come in on July. Yeah. So Steve in July. Um, in the US our sales activity has been very strong um and so we are seeing a bit of a pickup. Um I think 1 thing to note about the second half of the year is we are expecting continued, strength and legally.

More strength in Us sales in the back half of the year. Um, but that we are seeing some, some some slow down um, in sales in Europe and so that is offsetting it slightly.

Steve Sakwa: And then maybe just on, I guess, capital deployment. You know, maybe just talk about the share buyback, the pace did slow. I know it was a very heavy pace in the first quarter.

Uh, great thanks and then maybe just on I guess Capital deployment. Um,

Emma Giamartino: You know, I guess maybe what's embedded in guidance for the back half of the year and I guess how price sensitive are you kind of on the buyback or is it at this point a bit more programmatic, assuming that M&A does not take place? Yeah. So, Steve, I'll step back and reiterate our overall capital allocation strategy, which I know you know well. We are, we always prioritize M&A and we fill in with buybacks if we're not deploying the same amount of capital that we generate in free cash flow in a year. So, if you look at our numbers, you know, we have, like you said, we've deployed a lot through buybacks.

You know, maybe just talk about the share buyback. The pace did slow. I know it was a very heavy Pace in the first quarter.

Emma Giamartino: Turning to M&A, you know, we don't, we can't disclose a tremendous amount, but we're, as always, we're looking at a number of deals. We're focused on our resilient and sectorally favored lines of business. We're focused on very well-operated businesses that can bring new capabilities to CBRE and that once that target is within our platform, we drive greater value across CBRE or they drive greater value across CBRE than they would on a standalone basis. So, that pipeline's strong and that's where we're focused. In terms of your question on where there's, what capital allocation is in our guide, there's nothing in there.

A bit more programmatic. Uh, assuming that m&a does not take place. Yeah, so Steve, I'll, I'll step back and, and reiterate our, our overall Capital allocation strategy, which I know, you know. Well, we are, um, we always prioritize m&a and we we fill in, um, with BuyBacks if we're not deploying the same amount of capital that we generate in free cash flow in a year. Um, so if you look at our numbers, you know, we have like you said, we we've deployed a lot through BuyBacks, um, turning to m&a, you know, we don't, we can't disclose a tremendous amount, but we're, as always, we're looking at a number of deals. Um, we're focused on our resilient and secularly favored lines of business. Um, we're focused on very well operated businesses that can, um, bring new capabilities to C. And that once that Target is within our platform, we drive greater value across the berry, or they drive greater value across UB and they want in a standalone basis. Um so that pipeline strong and that's where we're focused.

Emma Giamartino: There's neither M&A nor buybacks. And so, if we pick up on either, that would change that look for the year.

Steve Sakwa: Given that I'm talking about M&A, I do want to comment on what we're not looking at. There are a number of rumors out there that we're looking at M&A in advisory capital markets. As you know, we've said consistently, this is not an area where we're looking to do M&A and we're not currently pursuing anything in the advisory capital market. Great, thank you. Thank you.

Um, in terms of your question on where there's what cap allocation is in our guide, there's nothing in there. There's neither m&a, um, nor a BuyBacks. And so if we pick up on either, um, that would change that outlook for the year, um, given that I'm talking about m&a, I do want to comment on what we're not looking at. There are a number of rumors out there that we're looking at m&a in advisory Capital markets. Um, as you know we've said consistently, this is not an area where we're

Are looking to do m&a, um, and we're not currently pursuing anything in the advisory Capital Market space.

Great. Thank you.

Ronald Kamden: Our next question comes from the line of Ronald Kamden with Morgan Stanley. Hey, just two quick ones for me. Just going back to the BOE, you know, the presentation mentioned some of the benefits from the combined platform.

Thank you. Our next question comes from the line of Ronald Camden with Morgan Stanley. Please proceed with your question.

Robert Sulentic: Appreciate we're not in a position to quantify, but just sort of thinking through high level, is this something that is a 2025 sort of benefit that normalizes in the out years? Or are we still sort of in potential mid to early innings of sort of harvesting those benefits, just trying to get a sense of, you know, what's the runway Ronald, I'll take that. So what you're seeing in our guide, and you saw significant margin improvement in BOE in the first half, and that is a result of the, primarily of the cost work that we did in the back half of 2024.

Hey, just two quick ones for me. Uh, just going back to the Boe. Uh, you know, the presentation mentioned some of the benefits from the combined platform. I appreciate, uh, we're not in a position to quantify, but just sort of thinking through high level. Is this something that is a 2025 sort of benefit that normalizes in the out years, or are we still sort of in potentially mid to early innings of sort of harvesting those benefits? Just trying to get a sense of, uh, you know, what's the runway here?

Robert Sulentic: We are working on some additional opportunities for operating leverage now. I don't expect that to show up materially in 2025, but it could, but what's in our guidance is really no additional operating leverage in BOE in the back half of the year.

Robert Sulentic: So, everything that we work, we're working on now, I would expect to show up in 2025.

Well, I'll I'll take that. Um, so what you're seeing in our guide and for you saw significant margin Improvement in Boe in the first half. And that is a result of the primarily of the cost work that we did in the back half of 2024. Um, we are working on some additional opportunities for operating leverage. Now, I don't expect that to show up materially in 2025 but I could, but within our guidance is really no additional operating leverage in Boe, in the back half of the year so everything that we work we're working on now.

I would expect to show up in 2026.

Ronald Kamden: And then just to follow up on, just on the property sales, it would be great if you guys could just walk us through just sort of what happened post-liberation day up until sort of the recovery and the strong July that you talked about. Like did things pause? Did they not? And as you're thinking about sort of tariff negotiations back after the year, presumably there's not really baking in any more headwinds I suppose.

Ronald Kamden: But just what happened and how you're thinking about it would be great. On the sales front in the US, we had a very strong April, and that was as a result of deals continuing to get done, you know, that were in the works pre-liberation day. We did see a slight slowdown in May and June. And then in July, like I said, it's picked up pretty materially and is at this point, July is tracking above April. Great. Thanks so much. Thank you.

Helpful. And then just to follow up on just on the property sales would be would be great if you guys could just walk us through. Just sort of what happened post Liberation day up until sort of the recovery and the strong July that you talked about. Like the things paused, did they not? Um, and as you're thinking about sort of tariff, negotiations to back after the year, presumably there's not, you know, not really baking in any more headwinds I suppose. But uh, just what happened and and how you're thinking about it would be great.

On the Salesforce, in the US, we had a very strong April and that was as, as a result of deals continuing to get done, um, you know, that we're, we're, we're in the works. Pre-liberation day, we did see, um, a slight slowdown in May and June. Um, and then in July, like I said, it's picked up pretty materially. And, um, is at, at this point July is tracking above April.

Right. Thanks so much.

Stephen Sheldon: Our next question comes from a line of Stephen Sheldon with William Blair. Please proceed. Hey, thanks. Just one quick one for me. Can you just talk some about your expectations for project management revenue growth in the second half of the year? I think there were some reporting factors that made that look more like high single-digit growth this quarter versus low teens on an underlying basis. So would we be right to think that growth there is likely to remain at least in the double digits in the second half on both a reported and adjusted basis? Or is it just any detail on the outlook for project management growth?

Thank you. Our next question comes from the line of Steven Sheldon with William Blair please proceed with your question.

Hey thanks. Just 1 quick 1 for me. Can you just talk some about your expectations for project management Revenue growth in the second half of the year? I think there were some reporting factors that made that look more like high single digit growth. This quarter versus, uh, low, teens on an underlying basis. So, would be, we would we be right to think that growth. There is likely to remain at least in the double digits in the second half.

Emma Giamartino: Yes, Stephen. On a net revenue basis for the full year, we're looking at low double-digit revenue growth, and there is some noise between Q2 and Q3. So in Q2 2024, there was net revenue that was mischaracterized in PJM. It should have been in FM. So that net revenue growth at Q2 this year in project management is looking low. That's going to reverse in Q3, and the net revenue growth in project management is going to look slightly above trend, but it all will normalize for the full year. Great. Thank you.

On both a reported and adjusted basis, could you provide any detail on the outlook for profit project management growth?

There is net revenue that was mischaracterized in PJM that should have been an FM, so that net revenue growth Q2 this year in project management is looking low. That's going to reverse in Q3, and the net revenue growth in project management is going to look slightly above trend, but it all will normalize for the full year.

Great. Thank you.

Alexander Kramm: Our next question comes from the line of Alex Kramm with UBS. Yes, good morning, everyone. Just wanted to come back to leasing for a second. Some good color on the office side. Can you also unpack what you're seeing on the industrial side a little bit? Sounded like things have been getting better. I think there was a concern earlier this year. Do you feel like that's normalized now? Or what are you seeing out there, given that there's probably still some uncertainties in that market? You know, there is some uncertainty, Alex, but the year is going to be better than we thought it was going to be.

Thank you. Our next question comes from a line of Alex CRA with UBS. Please, proceed with your question.

Yes. Hey good morning everyone. Just uh, wanted to come back to leasing for a second. Uh some good color on the office sides. Can you also unpack what? You're seeing on the industrial side? A little bit sounded like things have been getting better. I think there was a concern earlier this year. Do you feel like that's normalized now or or or what are you seeing out there? Given that there's probably still some uncertainties in that market?

Yeah. Yeah. There is some

Robert Sulentic: Obviously, the first half was better. We don't expect the same kind of growth in the second half that we saw in the first half, because the comps are tougher. But we do see, we do now believe that the second half is going to be better and that for the full year, whereas we had At the outset, we thought it would be kind of flat for leasing. We now think industrial leasing for the year will be roughly double-digit.

Uncertainty Alex, but the year is going to be better than we thought it was going to be. Um, obviously the first half was better. We we don't expect the same kind of growth in the second half that we saw in the first half because the comps are tougher. But we do see we do now believe that the second half is going to be better and that for the full year, whereas we had

At the outset thought it would be kind of flat for leasing. We now think uh, industrial leasing for the year will be up roughly double digits.

Robert Sulentic: Okay, very good. And then maybe this is a little bit too specific and early, but obviously, New York City is a very important market for you guys. And everyone seems like more uncertainty in real estate, given some of the mayoral election uncertainty, I guess, if that's the right way to put it. Anything you can comment on in terms of the discussion you've been having with various constituents? Any sort of pause you're seeing already? Or anything we should be concerned about or you're thinking about here? We're not seeing anything in our pipelines that would suggest that the politics in the city are going to slow things down.

Okay, very good and then maybe this is a little bit of a specific and early but obviously New York City is a very important market for you guys. And everyone uh, seems like more uncertainty in real estate given some of the mayoral election uncertainty, I guess, if that's the right way to put it anything, um you can comment on in terms of the discussion you've been having with various constituents, any any sort of pause? Um you're seeing already any uh or or anything we should be concerned about or you you're thinking about here.

Robert Sulentic: You know, that is an enormous business community, companies there, financials and others, techs actually coming back into the city more. There's a lot of strength there, but more importantly, there's a lot of focus on office space by users. And using office space, as I said earlier, to help with recruiting and retention and culture in their companies. And this has become a very front and center thing for companies, kind of unlike I've ever seen it, even pre-COVID, in terms of the interest in using office space in those ways. So we're, what we're seeing is the spread of.

We're not, we're not seeing anything in our pipelines that would suggest that the politics in the city are going to slow things down. You know, that is an enormous business community: companies, their financials, and others are actually coming back into the city more. There's a lot of strength there, but...

More importantly, there's a lot of focus on Office Space by users and using office space, as I said earlier, to help with recruiting and retention and culture in their companies. And this has become a very front and center thing for companies, kind of unlike I've ever seen it, uh, even pre-cooked in using office space in those ways. So, we're what we're seeing is, um,

the spread of, um,

Robert Sulentic: office leasing opportunities beyond the most desirable locations and most desirable buildings to a broader part of the city.

Office leasing opportunities beyond the most desirable locations of the most desirable buildings to a broader part of the city.

Robert Sulentic: All right. Very good.

Operator: Thank you.

Right, very good. Thank you.

Jade Rahmani: Our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question. Thank you very much. In terms of potential areas of value creation, looking at where CBRE trades, and of course, it's a real estate conglomerate, so there's different businesses could trade at different multiples. Are you focused on growing infrastructure services and asset management or investment management, since some comps in that space trade, you know, quite a bit higher than CBRE? Are those the two areas of focus?

Thank you. Our next question, comes from the line of Jade Romani with KBW. Please proceed with your question.

Thank you very much. Um in terms of potential areas of value creation, looking at where CBRE trades and of course it's a real estate conglomerate. So there's uh different businesses could trade at different multiples. Uh are you focused on growing infrastructure services and asset management or Investment Management since uh some comps in that space Trade, you know, quite a bit higher than seiri are those the 2 uh areas of focus.

Robert Sulentic: Jade, we have, you know, forever, we've said we're this broad-based real estate services and investment firm, and we focused on that. And over the years, we've around the periphery of our business moved into infrastructure-related things. I would tell you now we have quite a bit of that in our business. So obviously Turner and Townsend does a lot of it. For instance, they're doing the project management on an atomic or a nuclear energy plant. They're doing a bunch of big airports. They're doing a bunch of big data centers. They're doing a bunch of energy projects. So that's infrastructure.

Jade, we have, um, you know, forever, we've said we're this broad-based real estate services and investment firm, and we've focused on that.

Uh, and over the years, we've

around the periphery of our business, moved into infrastructure related things. Um, I would tell you now we have quite a bit of that in our business. So obviously Turner in towns and does a lot of it, for instance, uh, they're doing a they're, they're they're um, doing the project management on a um, Atomic uh, or a nuclear energy plan.

They're doing a bunch of big airports. They're doing a bunch of Big Data Centers. They're doing a bunch of energy projects so that's infrastructure.

Robert Sulentic: We have a growing $10 billion AUM infrastructure fund or infrastructure investment management business. Trammell Crow Company is doing a considerable amount of data center land work right now. We have a data center management business and we do now work inside data centers on a project basis that's dramatically outperforming and we handle work in 700 or 800 data centers. We have considerable infrastructure work that we do across our brokerage business now.

um,

We have a growing uh 10 billion dollar AUM uh infrastructure Fund in or infrastructure Investment Management business.

travel Crow company is doing a considerable amount of data center land work, right now,

Robert Sulentic: And yes, we are focused on some areas of new investment, multiple areas of new investment to grow our infrastructure exposure and it's going well and we're excited about it and I think it'll be an added nice dimension to CBRE's total addressable market in the near term and even more significant in the longer term.

That we do across our brokerage business now. And yes, we are focused on some areas of new investment, multiple areas of new investment to grow our, um, infrastructure exposure, and we're it's going well, and we're excited about it. And I think it'll be an added nice Dimension to

Cbr's uh total addressable Market in the uh near-term and even more significant and the longer term.

Jade Rahmani: Do you have a target share of earnings or dollar amount of capital you're looking to allocate to infrastructure? We haven't... Said anything about that yet, Jade?

You have a Target share of earnings or dollar amount of capital, you're looking to allocate to infrastructure.

uh, we haven't, we haven't, um,

Said anything about that yet? Jade

Emma Giamartino: Okay, and then just lastly, if I could squeeze one in on free cash flow for the quarter, did it track with your expectations? I know, first of all, the second half is typically stronger. But secondly, there was some timing effects from the mortgage origination business. So, you know, adjusting for that, did the free cash flow performance track with your expectations? So it's Jade, and I do want to address the mortgage origination comment. If you look at all of the lines that flow in there, I think you might be missing the warehouse lines. The impact from the GSEs to our free cash flow is about equal to what it was last quarter, roughly in line.

Okay, and then just lastly, if I could squeeze 1 in on free cash flow, uh, for the quarter, did it track with your expectations? I know, first of all, uh, the second half is typically stronger. But secondly, there was some timing effects from the uh, mortgage origination business. Um, so you know adjusting for that did did the free cash flow performance track with your expectations.

Emma Giamartino: And the big impact is really timing between Q1 and Q2. So Q1 was slightly above our expectations and Q2 slightly below. And across Q1 and Q2, our trailing 12-month free cash flow conversion was right about 85% at the high end of our target range. So we expect that to continue for the full year.

So, it did Jaden and I do want to address the mortgage origination comment, if you look at all of the lines that flow in there, I think, I think you might be missing the warehouse lines, the impact from, uh, the gsc's to our free cash. Flow is about equal to what it was last quarter, um, roughly in line. And the big impact, um, is really timing between q1 and Q2.

So, q1 was slightly above, um, our expectations and Q2 slightly below. So you need to look at them together and across, q1, and Q2 are trailing 12 months, we cash free. Cash flow conversion was, um, right about 85% at the high end of our target range. So we expect that to continue for the full year.

Jade Rahmani: Okay. Thank you very much for the clarification. Thank you.

Okay.

Thank you very much for the clarification.

Seth Berge: Our next question comes from the line of Seth Berge with Citi. Please proceed. Thanks for taking my question. I just wanted to go back to your comments on expectations for the capital markets activity and maybe if you could just talk a little bit about client behavior. You know, it sounds like it's expected to improve, but are clients, you know, waiting for interest rate cuts or is it more, you know, where we have more clarity on tariffs? Just a little bit about how your conversations with clients are trending there. The things that stimulate or put downward pressure on that will stimulate or put downward pressure on it the way they always do.

Thank you. Our next question comes from the line of Staff Bergie with City. Please proceed with your question.

Thanks for taking my question. I just wanted to go back to your comments on, um, expectations for the capital markets activity and maybe if you could just talk a little bit about client behavior. Um, you know, it's, it sounds like it's expected to improve, but our clients, you know, waiting for interest rate Cuts, or is it more? Um, you know where we have more clarity on tariffs, um, just a little bit about how your conversations with clients are turning their

Well clients would like interest rate cuts. Um I don't think they're waiting for them. Um I think uh what we're seeing is lots of financing activity and and um significantly escalated sales activity. We expect that to continue for the rest of the year. Um

and,

Robert Sulentic: So interest rates going up will be negative and interest rates coming down will be positive. And, you know, major uncertainty in the markets or a sense that we might be headed to a recession or the tariffs are a bigger problem than we thought would slow that down. But right now, the best way I'd say it is buyers and sellers are kind of powering through that and feeling that things are going to go relatively well. Obviously, here in the United States, there's a lot of enthusiasm about what's going on in the economy and in the real estate markets.

Robert Sulentic: And as Emma said, a little more choppiness in Europe.

Seth Berge: But I think expectations at the moment are... positive and more positive than they were 90 days ago when we Great, thanks.

There's things that stimulate or put downward pressure on that um will stimulate or put downward pressure on it, the way they always do. So interest rates going up. Will be negative and interest rates coming down, will be positive and, you know, major uncertainty in the markets, uh, or a sense that we might be headed to a recession, or the tariffs are a bigger problem than we thought would slow that down. But right now I the best way I'd say it is buyers and sellers are kind of powering through that and feeling that things are going to go relatively. Well, obviously here in the United States, there's a lot of enthusiasm about what's what's going on in the economy and and the real estate markets and and as Emma said a little a little more choppiness in Europe. But um

I think expectations at the moment are

Positive and more positive than they were 90 days ago when we talked.

Robert Sulentic: And then I guess just with the, you know, raised outlook, are there any changes to your hiring plans? No changes to our hiring plans. beyond what you would expect for a growing business, where we, and a business that uses technology to help itself. So we're not a company that makes the claims that we're gonna turn things upside down through technology, but there are a number of places we're legitimately using technology to be more efficient. So my guess is that what you will see from us over time is that we'll be able to grow and add less employees to support that growth than we have historically.

Great, thanks. And then I guess just with the, you know,

Raised Outlook. Are there any changes to your hiring plans?

to our hiring plans, uh,

beyond what you would expect for a growing business, where we in, we and a business that uses technology to help itself. So, we're not a company that

Robert Sulentic: And we've certainly got areas of our business that we're targeting for those kinds of gains. But in general, we expect this to be a growing business and we expect to add talent to support that growth. Thank you.

Makes the claims that we're going to turn things upside down through technology. But there are a number of places where legitimately using technology to be more efficient. So my guess is that what you will see from us over time? Is that uh we'll be able to grow by and and Adolescent employees to support that growth and we have historically and we've certainly got areas of our business that we're targeting for those kind of gains. But in general, we expect this to be a growing business and we expect to add, um,

talent to support that growth.

Peter Abramowitz: Our next question comes from the line of Peter Abramowitz with Jefferies. Yes, thank you. I think you call it out in the press release that capital markets activity, your outlook strong, even though capital markets activity is sort of well below the prior peak. I guess just, you know, the conversations you have internally and your sense of, I guess, what do you think it would take to kind of get back even close to that peak? And how long do you think that could take to transpire?

With Jeffrey's, please proceed with your question.

Yes, thank you. I think you called out in the press release that capital markets activity, um, your outlook is strong, even though capital markets activity is sort of well below the prior peak. Um, I guess just, you know, the conversations you have internally and your sense of, um, I guess, what do you think it would take to kind of, uh, get back even close to that peak, and how long do you think that could take to, uh, to transpire?

Robert Sulentic: Well, let me talk about that. So I think I think capital markets was down 14% from the pre COVID peak, and then even much more from the Crazy big year we had in 22, which was just an outlier bounce back from COVID. So we don't use that to benchmark anything. You know, my sense is that for So first of all, we don't have a model that tells us when it's going to get back. But my sense is what's gonna cause it to move back toward peak. First of all, just staying on the path we're on now, it's growing and we expect it to grow next year.

Well, let me talk about that. So I think I think Capital markets was down 14% from the preco peak and then even much more from the crazy big year. We had in 22, which was just an outlier bounce back from Co, so we don't use that to Benchmark anything.

you know, my sense is that for

So first of all, we we we don't have a model that tells us what it's going to get back to Pete.

Robert Sulentic: If the interest rates came down or interest rates being where they are and lack of new product being where it is causes rental rates to go up, You or the perception that rental rates will go up, you're going to see some trading that you're not seeing yet. I think a more stable or view that the economy in Europe is more stable than it's viewed to be now would be helpful in terms of trading volumes. But there's not one big thing that we're waiting for that's going to take us back to where we were at the peak.

But my sense is what's going to cause it to move back toward peak? First of all, just staying on the path we're on. Now it's growing, and we expect it to grow next year. But, um,

If if some if the interest rates came down or interest rates being where they are and lack of new uh, product being where they're uh where it is causes rental rates to grow up. Go up, um,

If you see the perception that rental rates will go up, you're going to see some trading that you're not seeing yet. I think a more stable view that the economy in Europe is more stable than it's widely viewed to be would be helpful in terms of trading volumes.

But there's not 1 big thing that we're waiting for. That's going to take us back to where we were at the peak.

Peter Abramowitz: Sure, that's helpful. Thank you.

Peter Abramowitz: And then to go back to the question, I think, earlier about New York City specifically, I don't think you disclosed it anywhere, but do you know specifically, can you quantify what your exposure to the New York City market is, whether it's, I guess, revenue or some other I think our earnings in New York when you when you add it all up are probably 5 or 6% of our company's overall earnings. Got it. That's helpful. Thanks for the time.

Sure, that's helpful. Thank you. Uh, and then to go back to the question I think earlier about New York City specifically, um, I don't think you disclose it anywhere, but do you know, specifically, can you quantify what your exposure to the New York City market is, whether it's revenue or some other metric?

I think our earnings in New York when you, when you add it all up or probably,

5 or 6% of our company's overall earnings.

Got it. That's helpful. Thanks for the time.

Operator: Thank you.

Robert Sulentic: Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Sulentic for any Thanks for joining us, everyone, and we'll talk to you at the end of the third quarter. Thank you.

Thank you, ladies and gentlemen. That concludes our time allowed for questions. I'll turn the floor back to Mr. Santic for any final comments.

Thanks for joining us, everyone. And we'll talk to you at the end of the third quarter.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your...

Thank you; this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.