Q3 2025 Colliers International Group Inc Earnings Call

Speaker #3: Welcome to the Colliers International third Quarter investors conference call . Today's call is being recorded . Legal counsel requires us to advise that the discussion scheduled to take place today , may contain forward looking statements that involve known and unknown risks and uncertainties .

Operator: Welcome to the Colliers International Q3 Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance, or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. Today is Tuesday, 4 November 2025.

Speaker #3: Actual results may be materially different from any future results , performance or achievements contemplated in the forward looking statements . Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the company's annual Information Form , as filed with the Canadian Securities Administrators and in the company's annual Report on Form 40 F , as filed with the US Securities and Exchange Commission .

Speaker #3: As a reminder , today's call is being recorded . Today is Tuesday , November 4th of 2025 . And at this time , for opening remarks and introduction , I would like to turn the call over to the Global Chairman and Chief Executive Officer , Mr. Jay Hennick , please go ahead , sir .

Operator: At this time, for opening remarks and introduction, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Speaker #4: Thank you . Operator . Good morning , and thank you for joining us for the third quarter conference call . As the operator mentioned , I'm Jay Hennick , chairman and CEO of Colliers .

Jay Hennick: Thank you, operator. Good morning, thank you for joining us for the Q3 conference call. As the operator mentioned, I'm Jay Hennick, Chairman and CEO of Colliers, and with me today is Christian Mayer, CFO. This call is webcast and available in the investor relations section of our website, along with the presentation slide deck. Colliers delivered excellent Q3 results, highlighting our momentum across all segments of our business. In engineering, which includes project management and program management, we achieved impressive growth this quarter. This was driven by both strategic acquisitions, 7 completed so far this year, as well as robust organic performance. With a strong pipeline ahead, we are well-positioned for continued expansion. In just 5 years since entering the engineering sector, we have established a significant multi-disciplined global platform.

Speaker #4: And with me today is Christian Mayer CFO . This call is webcast and available in the Investor Relations section of our website , along with the presentation slide deck .

Speaker #4: Colliers delivered excellent third quarter results highlighting our momentum across all segments of our business in engineering , which includes project management and program management .

Speaker #4: We we achieved impressive growth this quarter . This was driven by both strategic acquisitions , seven completed so far this year , as well as robust organic performance with a strong pipeline ahead .

Speaker #4: We are well positioned for continued expansion in just five years since entering the engineering sector . We have established a significant multi-disciplined global platform .

Speaker #4: This business now generates over $1.7 billion in annualized revenue and employs more than 10,000 professionals . Our unique partnership philosophy and decentralized operating model sets us apart and enables us to continue to capitalize on compelling growth opportunities in this rapidly expanding industry .

Jay Hennick: This business now generates over $1.7 billion in annualized revenue and employs more than 10,000 professionals. Our unique partnership philosophy and decentralized operating model sets us apart and enables us to continue to capitalize on compelling growth opportunities in this rapidly expanding industry. Real estate services also delivered excellent results, marked by a surge in leasing and capital markets transactions. While capital markets recovery has been gradual, we anticipate an increase in business activity as interest rates stabilize and investor confidence builds. This brings positive tailwinds to our business. We're excited about unifying our operations under the Harrison Street Asset Management brand. While meaningful change takes time, our plan will strengthen our business and deliver meaningful value to our shareholders. Operationally, our investment management business is highly resilient.

Speaker #4: Real estate services also delivered excellent results , marked by a surge in leasing and capital markets transactions , while capital markets recovery has been gradual .

Speaker #4: We anticipate an increase in business activity as interest rates stabilize and investor confidence builds . This brings positive tailwinds to our business . We're excited about unifying our operations under the Harrison Street Asset Management brand .

Speaker #4: And while meaningful change takes time , our plan will strengthen our business and deliver meaningful value to our shareholders . Operationally , our investment management business is highly resilient .

Speaker #4: Over 85% of our funds are held in long dated or perpetual investment vehicles , generating long term and predictable earnings for our shareholders and top tier investment returns for our investors .

Jay Hennick: Over 85% of our funds are held in long-dated or perpetual investment vehicles, generating long-term and predictable earnings for our shareholders and top-tier investment returns for our investors. Assets under management finished the quarter at $108 billion, a 10% increase from last year, reflecting the success of our acquisition strategy and solid fundraising momentum to date. Harrison Street has multiple products in the market, with new vintages of our flagship funds launching later this quarter and into 2026. These initiatives are expected to drive ongoing revenue growth through next year and beyond. With $9 billion in dry powder across the organization, we are well-positioned to deploy significant capital on behalf of our investors.

Speaker #4: Assets under management finished the quarter at 108 billion , a 10% increase from last year , reflecting the success of our acquisition strategy and solid fundraising momentum to date .

Speaker #4: Harrison Street has multiple products in the market with new vintages of our flagship funds later this quarter and into 2026 . These initiatives are expected to drive ongoing revenue growth through next year , and beyond , with $9 billion in dry powder across the organization .

Speaker #4: We are well positioned to deploy significant capital on behalf of our investors , Colliers , with 30 years of visionary leadership and three powerful growth engines , has become a resilient launching and highly differentiated professional services and asset management company , a company that is well positioned to continue to seize opportunities and deliver lasting value for our shareholders .

Jay Hennick: Colliers, with 30 years of visionary leadership and 3 powerful growth engines, has become a resilient and highly differentiated professional services and asset management company, a company that is well-positioned to continue to seize opportunities and deliver lasting value for our shareholders. Now, let me turn things over to Christian for his financial report, and then we'll open things up to questions. Christian?

Speaker #4: Now , let me turn things over to Christian for his financial report . And then we'll open things up to questions . Christian .

Speaker #4: Thank you , J . And good morning , everyone . As a reminder , all non-GAAP measures referenced today are defined in the .

Christian Mayer: Thank you, Jay, good morning, everyone. As a reminder, all non-GAAP measures referenced today are defined in the materials accompanying this call. Revenue growth figures are presented in local currency terms. Our Q3 revenues were $1.46 billion, up 23% year-over-year. Our Engineering and Real Estate Services segments led the increase from a combination of internal growth and recent acquisitions. Overall internal growth for the quarter was 13%. Adjusted EBITDA was $191 million for the quarter, a 24% increase from last year. Real Estate Services segment revenues increased 13% overall. Capital Markets were up 21%, reflecting sales growth in all geographies and in all asset classes, with particular strength in the UK, Japan, and Canada. Debt finance activity was also strong, particularly US multifamily originations.

Speaker #5: Materials accompanying this call . Revenue growth figures are presented in local currency terms . Our third quarter revenues were 1.46 billion , up 23% year over year .

Speaker #5: Our engineering and real estate services segments led the increase from a combination of internal growth and recent acquisitions . Overall , internal growth for the quarter was 13% .

Speaker #5: Adjusted EBITDA was $191 million for the quarter, a 24% increase from last year. Real estate services segment revenues increased 13% overall.

Speaker #5: Capital markets were up 21% , reflecting sales growth in all geographies and in all asset classes , with particular strength in the UK , Japan and Canada .

Speaker #5: Debt finance activity was also strong , particularly US multifamily originations leasing revenues were up 14% , also led by the US and driven by industrial and office , as well as data centers , outsourcing revenues increased 8% for the quarter , with our valuation and advisory practice leading the growth segment .

Christian Mayer: Leasing revenues were up 14%, also led by the US and driven by industrial and office as well as data centers. Outsourcing revenues increased 8% for the quarter, with our valuation and advisory practice leading the growth. Segment net margin was 11.3%, up 180 basis points year over year on solid operating leverage from higher transactional revenues, partly offset by continued investments to strengthen our geographic and asset class capabilities. Engineering net revenue was up 36%, fueled by acquisitions and internal growth of 6%. The infrastructure and transportation end markets delivered notable revenue gains in the quarter. The net margin was 15.2%, slightly lower than last year, mainly due to service mix. Our backlogs continue to be solid across our geographic markets, giving us visibility and confidence as we look ahead to 2026.

Speaker #5: Net margin was 11.3% , up 180 basis points year over year . On solid operating leverage from higher transactional revenues , partly offset by continued investments to strengthen our geographic and asset class capabilities .

Speaker #5: Engineering net revenue was up 36% , fueled by acquisitions and internal growth of 6% . The infrastructure and transportation end markets delivered notable revenue gains in the quarter .

Speaker #5: The net margin was 15.2% , slightly lower than last year , mainly due to service mix . Our backlogs continue to be solid across our geographic markets , giving us visibility and confidence as we look ahead to 2026 .

Speaker #5: Our investment management net revenues increased 5% due to the favorable impact of the Round Shield acquisition and higher fee paying assets under management .

Christian Mayer: Our investment management net revenues increased 5% due to the favorable impact of the RoundShield acquisition and higher fee-paying assets under management. The net margin declined slightly to 42.3%, primarily due to additional costs incurred as we integrate operations under the Harrison Street Asset Management brand. We expect these costs will continue for the next 2 to 3 quarters and will modestly impact our margins as a result. In Q3, we raised $1 billion in new capital commitments. Since quarter end, we have raised an additional $1.2 billion, bringing total year-to-date fundraising to $4.4 billion. As Jay mentioned, we have several funds currently in the market, including one significant new vintage launching in the coming weeks. For the full year, we expect to come in near the midpoint of our $5 to 8 billion fundraising target.

Speaker #5: However , the net margin declined slightly to 42.3% , primarily due to additional costs incurred as we integrate operations under the Harrison Street Asset Management brand .

Speaker #5: We expect these costs will continue for the next 2 to 3 quarters , and will modestly impact our margins as a result . In the third quarter , we raised $1 billion in new capital commitments since quarter end .

Speaker #5: We have raised an additional 1.2 billion , bringing total year to date fundraising to 4.4 billion . As Jay mentioned , we have several funds currently in the market , including one significant new vintage launching in the coming weeks .

Speaker #5: For the full year , we expect to come in near the midpoint of our 5 to $8 billion fundraising target . Assets under management totaled 108.3 billion as of September 30th , up 5% from June 30th , driven by the recent acquisition and new capital raised partially offset by asset sales in older vintage funds .

Christian Mayer: Assets under management totaled $108.3 billion as of 30 September, up 5% from 30 June, driven by the recent acquisition and new capital raised, partially offset by asset sales in older vintage funds. Turning to our balance sheet, our leverage ratio was 2.3 times as of 30 September and includes the impact of several acquisitions completed during Q3. We continue to expect our leverage to decline to just under 2 times by year-end. This assumes no significant additional acquisitions. We are maintaining our full-year consolidated outlook. In our Real Estate Services and Engineering segments, we may exceed our previous full-year guidance, while in Investment Management we expect to be off slightly given the timing of fundraising and costs associated with unifying our operations under the HSAM brand.

Speaker #5: Turning to our balance sheet . Our leverage ratio was 2.3 times as of September 30th and includes the impact of several acquisitions completed during the third quarter .

Speaker #5: We continue to expect our leverage to decline to just under two times by year end . This assumes no significant additional acquisitions . We are maintaining our full year consolidated outlook in our real estate services and engineering segments .

Speaker #5: We may exceed our previous full year guidance . While an investment management , we expect to be off slightly given the timing of fundraising and costs associated with unifying our operations under the Sam brand .

Speaker #5: Putting it all together on a consolidated basis , we remain confident we will meet our full year outlook . That concludes my prepared remarks .

Christian Mayer: Putting it all together on a consolidated basis, we remain confident we will meet our full-year outlook. That concludes my prepared remarks. Operator, can you please open the line for questions?

Speaker #5: Operator , can you please open the line for questions ?

Speaker #3: Thank you . Ladies and gentlemen , we will now conduct the question and answer session . If you have a question , please press Star Key followed by one on your touchtone phone .

Operator: Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you have a question, please press star key followed by 1 on your touchtone phone. You will hear a 1-tone prompt acknowledging your request. Your question will be pulled in the order they are received. If you would like to decline from the polling process, please press the pound key. Please ensure you lift your handset if you're using a speakerphone before pressing any keys. One moment for your first question. Your first question comes from the line of Stephen MacLeod from BMO. Your line is open.

Speaker #3: You will hear a one top prompt acknowledging your request . Your question will be pulled in the order they are received . If you would like to decline from the polling process , please press the pound key .

Speaker #3: Please ensure you lift your handset . If you are using a speakerphone before pressing any keys . One moment for your first question .

Speaker #3: Your first question comes from the line of Steven McLeod from BMO . Your line is open .

Speaker #6: Thank you . Good morning guys . Just wanted to circle . Hi , Jay . Just wanted to circle in on on a couple of things just with respect to the the engineering margins in the quarter .

Stephen MacLeod: Thank you. Good morning, guys.

Christian Mayer: Hey, Steve.

Stephen MacLeod: Hi, Jay. Just wanted to circle in on a couple of things just with respect to the engineering margins in the quarter. You noted some service mix had one, and I'm just curious if you could give a little color around sort of what you saw in the quarter and how that weighed on your numbers or weighed on the margin, I suppose.

Speaker #6: You noted some some service mix headwind . And I'm just curious if you give a little bit of color around sort of what you saw in the quarter and how that weighed on your numbers or weighed on the margin .

Speaker #6: I suppose .

Speaker #5: Well , Steve , you got to look at this on a net revenue basis . You know , we have a lot of pass through costs in engineering and those are at low or very , very low margins .

Christian Mayer: Well, Stephen, you got to look at this on a net revenue basis. You know, we have a lot of pass-through costs in engineering, and those are at very low margins. On a net basis, our margin was down very slightly. We're talking 20 to 30 basis points. It really just is some service mix across our geographic markets.

Speaker #5: So on a net basis , our margin was down very slightly . We're talking 20 to 30 basis points . And it really just is some service mix across our geographic markets .

Speaker #6: Okay . That's helpful . Thanks , Christian . And then just on the investment management business , you know obviously strong fundraising on a year to date basis .

Stephen MacLeod: Okay. That's helpful. Thanks, Christian. Just on the investment management business, you know, obviously strong fundraising on a year-to-date basis, and you guided sort of being in the midpoint for your target for 2025, which is great. Just as we think about the additional costs, again, sort of weighing on that net margin this quarter, can you talk a little bit about sort of how you see that evolving as you get into 2026? Or is it maybe too soon to talk about 2026 margins at this point?

Speaker #6: And and you guided sort of being in the midpoint for your target for 2025 , which is great . Just as we think about the additional costs .

Speaker #6: Again , sort of weighing on that net margin this quarter . Can you talk a little bit about sort of how you see that evolving as you as you get into 2026 , or is it maybe too soon to talk about 2026 margins at this point ?

Speaker #5: Well , look , Steve , we don't want to talk about 2026 until you know , year end . We'll give a full outlook for 2026 at that point .

Christian Mayer: Well, well look, Steve, we don't wanna talk about 2026 until, you know, year-end. We'll give a full outlook for 2026 at that point. As it relates to investment management, in my prepared remarks, I did reference that we will have 2 or 3 quarters of headwinds from cost to unify the segment. That will be a modest impact on the margin.

Speaker #5: But as it relates to investment management , in my prepared remarks , I did reference that we will have 2 or 3 quarters of headwinds from cost to unify the segment .

Speaker #5: So that will be a modest impact on the margin .

Speaker #4: And let me add , you know , let me add something to that . Steve . You know , we are a public company .

Jay Hennick: Let me add, you know, let me add something to that, Stephen. You know, we are a public company. We have over the years brought together some pretty exceptional investment management platforms. Now we're taking steps to bring some of them together to really create a powerhouse under the Harrison Street brand. That takes costs, that takes time, that takes effort. It will definitely translate into shareholder value over time. You know, other people just leave things alone. You've seen us do this before. You know, we're doing some pretty interesting things to really solidify that business for the long term.

Speaker #4: We have we have over the years brought together some pretty exceptional investment management platforms . And now we're taking steps to bring some of them together to really create a powerhouse under the Harrison Street brand that takes costs , that takes time , that takes effort .

Speaker #4: And it will definitely translate into shareholder value over time . And , you know , other people just leave things alone . You've seen us do this before .

Speaker #4: And so , you know , we're doing we're doing some pretty interesting things to really solidify that business for the long term . And you'll see fundraising growth , which is which is wonderful .

Jay Hennick: You'll see fundraising growth, which is wonderful, but that comes on new programs, new strategies, and a lot of that has to do with unifying the teams and sharing the best of the best across the board. You know, if we were a private company, you would never see this. In a public company situation, which we've done before, you know, there's some modest impact on margin here or there as we invest in our business. We're gonna continue to do that because for Colliers it's about creating long-term value for shareholders.

Speaker #4: But that comes on new programs , new strategies , and a lot of that has to do with unifying the teams . And sharing the best of the best across the board .

Speaker #4: So , you know , if we were a private company , you would never see this . But in a public company situation , which we've done before , you know , there's some modest impact on margin here or there as we invest in our in our business , and we're going to continue to do that because for Collier's , it's about creating long term value for shareholders .

Speaker #6: Okay . That's that's a great incremental color . Jay . Thank you . I'll turn it back to the line .

Stephen MacLeod: Okay. That's great incremental color, Jay. Thank you. I'll turn it back to the line.

Speaker #3: Our next question is from Tony Pallone from JP Morgan . Your line is open .

Operator: Our next question is from Anthony Paolone from JPMorgan. Your line is open.

Speaker #7: Yeah . Thank you . Just on engineering . Can you talk about what you think organic growth has looked like ? It's a little hard to see , just given all the acquisitions and such in there .

Anthony Paolone: Yeah. Thank you. Just on engineering, can you talk about what you think organic growth has looked like? It's a little hard to see just given all the acquisitions and such in there. Along the same lines, like when you do underwrite on these acquisitions, how do you think about, you know, what you expect from, say, the producers that you're bringing on in terms of growth and the top line there?

Speaker #7: And then along the same lines , like when you do underwrite on these these acquisitions , how do you think about , you know , what you expect from , say , the producers that you're bringing on in terms of growth and the top line there ?

Speaker #5: So , Tony , year to date , organic growth in engineering is around 8% . And I think for the year we guided to sort of mid high single digit area .

Christian Mayer: Anthony Paolone, our year to date organic growth in engineering is around 8%. I think for the year we guided to sort of mid-high single-digit area. We're fully on track with our organic growth ambitions for the year and we expect that to continue. We play in rapidly growing markets, you know, infrastructure-oriented markets, transportation, energy, communications, public sector investments that are being made by governments, frankly, around the world. When we look for acquisitions, we look for businesses that are playing in these sectors and where there are long-term tailwinds for growth in this, you know, highly fragmented industry. That's the way we think about it.

Speaker #5: So, we're fully on track with our organic growth ambitions for the year, and we expect that to continue. We play in.

Speaker #5: Rapidly growing markets . You know infrastructure oriented markets , transportation , energy , communications , public sector investments that are being made by by governments , frankly , around the world .

Speaker #5: So when we look for acquisitions , we look for businesses that are playing in these , in these sectors and we're there are long term tailwinds for growth in this , you know , highly fragmented industry .

Speaker #5: So that's the way we think about it .

Speaker #7: Okay . And then just the follow up on that as it relates to the investment pipeline . Can you talk about just how that looks sizes of the deals , like any larger type of transactions .

Anthony Paolone: Okay. Just to follow up on that as it relates to the investment pipeline, can you talk about just how that looks, sizes of the deals, like any larger type of transactions? Is it still skewed toward engineering or are there other areas that you're seeing activity in?

Speaker #7: And is it still skewed toward engineering or are there other areas that you're seeing activity in ?

Speaker #4: Well , so far this year we've made acquisitions in each one of our segments . But engineering by far is has been in terms of number of transactions , not necessarily size , but in terms of number of transactions .

Jay Hennick: Well, so far this year, we've made acquisitions in each one of our segments. Engineering by far has been in terms of number of transactions, not necessarily size, but in terms of number of transactions. You know, Christian made a point. This is a massive industry that's highly fragmented. Multiple areas of specialty. In even our most mature businesses, we have white space. We might have white space in one part of the country, and strong expertise in that same area in a different part of the country. All of those create opportunity for acquisition. For a company like Colliers that has been in the internal growth and acquisition or consolidation business for 30 years successfully, this is exactly what we look for in terms of a segment that we can grow.

Speaker #4: And , you know , a Christian made a point . This is a massive , massive industry that's highly fragmented , multiple areas of specialty .

Speaker #4: And even our most mature businesses , we have white space . We might have white space in one part of the country . And strong expertise in that same area .

Speaker #4: In a different part of the country . All of those create opportunity for acquisitions . So for a company like Colliers , that has been in the internal growth and acquisition or consolidation business for 30 years , successfully , this is exactly what we look for in terms of a segment that we can grow .

Speaker #4: And so our our philosophy is , as you've seen and others have seen over the the past five years , has been to enter a market in a dominant way as one of the top players and then to fill out and strengthen that platform as we've done in Canada , as we've done in the US and as we've done and continuing to do in Australia .

Jay Hennick: Our philosophy as you've seen and others have seen over the past 5 years has been to enter a market in a dominant way as one of the top players. Then to fill out and strengthen that platform as we've done in Canada, as we've done in the US, and as we've done or are continuing to do in Australia. There's a whole big world out there in the engineering space that creates just staggering amounts of opportunity in that area. You know, I'm hopeful over the next few years that we can double this business again in terms of both revenue and profitability. I'm going on-Too long.

Speaker #4: So there's a whole big world out there in the engineering space that creates just , just staggering amounts of opportunity . And that that area .

Speaker #4: And , you know , I'm hopeful over the next few years that we can double this business again in terms of both revenue and profitability and , and our and our and I'm going on too long .

Speaker #4: But , you know , our unique way of operating with our partnership philosophy and decentralized operations , which which we apply across the board and have forever is really a difference maker for the targets .

Jay Hennick: You know, our unique way of operating with our partnership philosophy, and decentralized operations, which we apply across the board and have forever, is really a difference maker for the targets. We're excited about this space. We think it'll provide us with a huge growth opportunity in the years to come.

Speaker #4: So we're excited about this space . And we think it'll it'll provide us with a huge growth opportunity in the years to come .

Speaker #7: Okay . Thank you .

Anthony Paolone: Okay. Thank you.

Speaker #3: Our next question is from Himanshu Gupta from Scotiabank . Your line is open .

Operator: Our next question is from Himanshu Gupta from Scotiabank. Your line is open.

Speaker #8: Thank you and good morning . So just on , Im fundraising . I mean , you've done almost $4.4 billion this year . What is the mix of that ?

Himanshu Gupta [Director, Equity Research Analyst: Thank you, and good morning. Just on IM fundraising, you have done almost $4.4 billion this year. What is the mix of that, like open-ended versus close-ended? Is that also impacting the margins apart from the integration cost?

Speaker #8: Like open ended versus closed ended ? And is that also impacting the margins apart from the integration cost ?

Speaker #5: Hey man , that's a good question . And you're talking about fundraising and the mix of open ended funds versus closed end funds .

Christian Mayer: Hey, Himanshu, that's a good question. You're talking about fundraising in the mix of open-ended funds versus closed-end funds. We also have now credit, which is a much bigger part of our business. When you raise closed-end capital, the fees turn on immediately and typically at a higher fee rate than an open-ended fund or a credit vehicle would. That type of fundraising has more immediate impact on our revenues, and we are seeing that a little bit in 2025 as we have been very successful raising open-ended fund capital this year. We've also raised some pretty significant credit capital, and that open-ended and credit capital does not start generating fees until such time as we deploy that capital, which can take 3 to 6 months.

Speaker #5: And then we also have now credit , which is a much bigger part of our business . And when you raise closed end capital , the fees turn on immediately .

Speaker #5: And typically at a higher fee rate than an open ended fund or a credit vehicle would . So that type of fundraising has more immediate impact on our revenues .

Speaker #5: And we are seeing that a little bit in 2025 , as we have been very successful raising open ended fund capital this year .

Speaker #5: We've also raised some pretty significant credit capital and that open ended and credit capital does not start generating fees until such time as we deploy that capital , which can take 3 to 6 months .

Speaker #5: Jay referenced , we have 9 billion of dry powder and that is capital . That's , you know , ready and waiting to be deployed .

Christian Mayer: Jay referenced we have $9 billion of dry powder, and that is capital that's, you know, ready and waiting to be deployed. Our teams are focused on that. Once that capital is deployed, it will start to earn fees.

Speaker #5: So our teams are focused on that . And once that capital is deployed , it will start to earn fees .

Speaker #8: All right . Thank you . Christian Mayer . And the next question is you know , you're working on the integration of Im under this platform .

Himanshu Gupta [Director, Equity Research Analyst: Got it. Thank you, Christian Mayer. The next question is, you know, you're working on the integration of IM under this Harrison Street platform. Have you received any initial client feedback so far? I mean, as you integrate Rockwood and versus the Harrison Street. I know it's early days, but still wondering if any client feedback on this process.

Speaker #8: Have you received any initial client feedback so far ? I mean , as you integrate Rockford and Versus with the street , and I know it's early days , but still wondering if any client feedback on this process .

Speaker #4: Yeah , the client feedback has been terrific . In fact , that's been a major part of the efforts in bringing these these operations together .

Jay Hennick: Yeah, the client feedback has been terrific. In fact, that's been a major part of the efforts in bringing these operations together. You know, what it really means is, we can now use our debt capacity in areas that we have expertise in seniors and students and so on. There's a lot of opportunity to do more with the same investments. Client reaction has been great. Also, what the clients like is a more streamlined fundraising capability. They wanna understand what are the investment opportunities for them. They'll choose which ones they have interest in, and then we can bring in the expertise to help, you know, satisfy their investment desires.

Speaker #4: You know what it really means is we can we can now use our debt capacity in areas that we have expertise in , and seniors and students and so on to , to .

Speaker #4: So there's a lot of opportunity to do more with the same with the same . Investments . So client reaction has been great .

Speaker #4: Also with the clients like is a more streamlined fundraising capability . They want to understand what are the investment opportunities for them . They'll choose which ones they have interest in .

Speaker #4: And then we can bring in the expertise to help , to help , you know , satisfy their investment desires . So feedback has been has been very good to date .

Jay Hennick: Feedback has been very good to date, and our investors are responding by increasing the amount of capital they're allocating to us. It's never enough as always, but it's a lot better than it has been in past years.

Speaker #4: And and our investors are responding by increasing the amount of capital they're allocating to us . It's never enough as as as as always .

Speaker #4: But it's a lot better than it has been in past years .

Speaker #8: Thanks , G . A very helpful and clearly it's in the right direction . And then just switching gears on the leasing side .

Himanshu Gupta [Director, Equity Research Analyst: Thanks, Jay. Very helpful and clearly it's in the right direction. Then just switching gears on the leasing side, I mean, looks like industrial leasing was strong. Any particular geography which is impacting that? How much is tariff a discussion now compared to H1 of the year?

Speaker #8: I mean , it looks like industrial leasing was strong . Any particular geography , which is impacting that . And how much is tariff a discussion now compared to first half of the year ?

Speaker #5: Well , Himanshu Leasing was led by the US in the in the third quarter industrial and office particularly strong and if you recall , in the first half of the year , you know leasing was was challenged .

Christian Mayer: Well, Himanshu, leasing was led by the US in Q3. Industrial and office particularly strong. If you recall, in H1 of the year, you know, leasing was challenged. We had some, you know, tariff and trade impacts in Q2, which caused clients to pause, particularly on the industrial side of things. Feeling good about our leasing trajectory, and we expect leasing to be up nicely year over year as we finish the year in Q4 here.

Speaker #5: We had some , you know , tariff and trade impacts in the second quarter , which caused clients to to pause , particularly on the industrial side of things .

Speaker #5: So we're feeling good about our leasing trajectory , and we expect leasing to be up nicely year over year as we finish the year in Q4 .

Speaker #5: Here .

Speaker #8: Got it . Thank you guys . And I'll turn it back . Thank you .

Himanshu Gupta [Director, Equity Research Analyst: Got it. Thank you, guys, and I'll turn it back. Thank you.

Speaker #3: Our next question is from Julian Bloom from Goldman Sachs . Your line is open .

Operator: Our next question is from Julien Blouin from Goldman Sachs. Your line is open.

Speaker #9: Thank you for taking my question . I just wanted to go back to investment management . I mean , you touched on all the work you're doing to integrate the back office and the market facing brands within investment management .

Julien Blouin: Thank you for taking my question. I just wanted to go back to Investment Management. I mean, you touched on all the work you're doing to integrate the back office and the market-facing brands within Investment Management. I guess beyond the 2 to 3 quarters of margin pressure ahead from the integration costs, do you still feel like you can get to that 45% to 50% margin that we've talked about in the past? Will you wait until you get to those margin levels before considering any of the strategic options you've talked about in the past for realizing the value of that segment?

Speaker #9: I guess beyond the 2 to 3 quarters of margin pressure ahead from the integration costs , do you still feel like you can get to that 45 to 50% margin that we've talked about in the past ?

Speaker #9: And will you wait until you get to those margin levels before considering any of the strategic options you've talked about in the past for realizing the value of that segment ?

Speaker #4: Well , you know , for for to be honest , for us , what's more important is growing out this platform and making it as strong as possible .

Jay Hennick: Well, you know, to be honest, for us, what's more important is growing out this platform and making it as strong as possible. We, over the next couple of quarters, we sort of, have a clear view of where our margin may go to. We're gonna continue to invest in our platform to make it as strong as possible. We are open, we continue to be open for acquisition opportunities in this segment. There's tons of white space, and there's lots of opportunity right now, as you probably know, with lots of players in this particular segment talking to each other about potential hookups in one form or another. We're active all over the place.

Speaker #4: So we we over the next couple of quarters , we sort of have a a clear view of where our margin may go to , but we're going to continue to invest in our platform to make it a strong as possible .

Speaker #4: We are open . We continue to be open for acquisition opportunities in this segment . There's tons of white space and there's tons of opportunity right now , as you probably know , with lots of lots of players in this particular segment segment , talking to each other about potential hookups in one form or another .

Speaker #4: So we're active all over the place , and we'll have to see how the next few quarters roll out . But from my perspective , we're we're we're building this business for the long term .

Jay Hennick: We'll have to see how the next few quarters roll out. From my perspective, we're building this business for the long term. If we have to give up a few points of margin to continue to build our business and, you know, and generate 20% plus growth internally, we're gonna do it. It's just that simple. I don't know if that answers your question, but that's sort of the way in which, you know, we would be looking at that business going forward.

Speaker #4: And if we have to give up a few points of margin to continue to build our business and , you know , and generate 20% plus growth internally , we're going to do it .

Speaker #4: It's just that simple . So I don't know if that answers your question , but that's sort of the way in which , you know , we would be looking at that business going forward .

Speaker #9: Okay . Thank you Jay . That's helpful . And then maybe digging into capital markets , can you give us a sense of how October and the fourth quarter is shaping up .

Julien Blouin: Okay. Thank you, Jay. That's helpful. Maybe digging into capital markets, can you give us a sense of how October and the Q4 is shaping up and maybe where pipelines of activity stand versus this time last year?

Speaker #9: And maybe where pipelines of activity stand versus this time last year ?

Speaker #5: Yeah , good question . Julian . We had last year a very strong quarter in capital markets . And this year , you know , pipelines are .

Christian Mayer: Yeah. good question, Julien. We had last year a very strong quarter in capital markets. This year, you know, the pipelines are looking solid and we feel, you know, confident at this point in our prospects for Q4. We should, you know, be able to exceed our performance of last year, which, as I said, will be a relatively tough comp, you know, compared to the comps we've seen so far year to date.

Speaker #5: Looking solid . And we feel , you know , confident at this point in our prospects for the fourth quarter . And we should , you know , be able to exceed our performance of last year , which as I said , will be a relatively tough comp , you know , compared to the comps we've seen so far year to date .

Speaker #9: Okay , great . And when you say exceed your performance from last year , you mean just the the it should grow year over year ?

Julien Blouin: Okay, great. When you say exceed your performance from last year, you mean just that it should grow year over year?

Speaker #5: Absolutely .

Christian Mayer: Absolutely.

Speaker #9: Okay. Great. Thank you.

Julien Blouin: Okay, great. Thank you.

Speaker #3: Our next question is from Erin Kyle from CIBC. Your line is open.

Operator: Our next question is from Erin Kyle from CIBC. Your line is open.

Speaker #10: Hi . Good morning and thanks . Thanks for taking my questions . I just wanted to tag on to that last question there and see if you can maybe elaborate a bit more on the pace and breadth of the capital markets recovery .

Erin Kyle: Hi. Good morning, and thanks for taking my questions. I just wanted to tag on to that last question there and see if you can maybe elaborate a bit more on the pace and breadth of the capital markets recovery and if there's any particular regions, I know you called out the US, or asset classes that are leading the improvements.

Speaker #10: And if there's any particular regions . I know you called out the US or asset classes that are leading the improvement .

Speaker #5: Yeah , I think the capital markets recovery is is broad based and we highlighted a few , a few asset classes where sales brokerage has been strong or sorry , a few geographic markets were capital markets growth has been strong .

Christian Mayer: I think the capital markets recovery is broad-based. We highlighted a few asset classes where sales brokerage has been strong. Sorry, a few geographic markets where capital markets growth has been strong. Erin Kyle, I really would make the comment that this is a multi-year recovery. It is really a global recovery. If you recall, 2023 was a very challenging year in Europe in particular. Our European business is really well-positioned to capture the rebound in activity. That's been evident in the numbers year to date, and that's gonna continue as we look ahead to Q4 and into 2026. I think it's really as I said, broad-based across all geographies.

Speaker #5: But Aaron , I really would make the comment that this is a multi-year recovery . It is really a global recovery . If you recall , 2023 was a very challenging year in Europe .

Speaker #5: In particular , our European business is really well positioned to capture the rebound in activity . And that's that's been evident in the numbers year to date .

Speaker #5: And that's going to continue as we look ahead , you know , to Q4 and into 2026 . So I think it's really as I , I said , broad based across all geographies .

Speaker #4: But I would also say , Christian , if I could add something there , capital markets isn't back yet . Anywhere . You know , their strength as Christian said in the US .

Jay Hennick: I would also say, Christian, if I could add something there, capital markets isn't back yet anywhere. You know, there's strength, as Christian said, in the US, but I would say in Europe and Asia, and even to some degree in Canada, there's more transactions happening, but it's taking time. I don't think there's the stability yet, around interest rates, debt costs, et cetera, and investor confidence is not where it needs to be. All of that is to my way of thinking, tailwinds. Even in our own fund business, Christian made a point of saying that we've sold a whole bunch of assets, which is a normal course in the fund business.

Speaker #4: But I would say in in Europe and Asia and even to some degree in Canada , there's more transactions happening . But it's taking it's taking time .

Speaker #4: I don't think there's the stability yet around interest rates , debt costs , etc. and investor confidence is not where it needs to be .

Speaker #4: All of that is to to my way of thinking tailwinds , because even in our own fund business , Christian made made a point of of saying that we've we've sold a whole bunch of assets , which is a normal it's normal course in the fund business .

Speaker #4: You redeploy assets and to investors on an ongoing basis when it's opportune to do it . So there's a lot of pent up demand around capital markets .

Jay Hennick: You redeploy assets to investors on an ongoing basis when it's opportune to do it. There's a lot of pent-up demand around capital markets, but we haven't seen it yet. We've seen some of it. It has not come back to where it used to be, and that to us is just upside for the future.

Speaker #4: But we haven't seen it yet . We've seen some of it . It has not come back to where it used to be .

Speaker #4: And that to us is just upside for for our for the future .

Speaker #10: Okay . Thank you . That's that's very helpful . And then you started answering my second question there . But I just in investment management , could you remind us how many funds are going through the disposition phase .

Erin Kyle: Okay. Thank you. That's very helpful. You started answering my second question there in investment management, could you remind us how many funds are going through the disposition phase, and then what percentage of those funds are typically recycled?

Speaker #10: And then what percentage of those funds are typically recycled , recycled ?

Speaker #4: Well , most funds are always looking at disposing of assets at opportune times . Usually you'll see the older funds , the older closed end vehicles selling out .

Jay Hennick: Well, most funds are always looking at disposing of assets at opportune times. Usually, you'll see the older funds, the older closed-end vehicles selling out their assets faster, but it's a function of what they can generate in terms of returns. If a particular asset is not yet fully developed, not yet fully leased, upside still to be gained, you won't see our asset managers wanting to sell those assets because they know there's inherent value in them. It's really part of the art of managing and delivering top-tier returns to investors. When is the opportune time to sell? Which assets within the portfolio do you wanna sell?

Speaker #4: Their assets faster . But it's a function of what they can generate in terms of returns . If if a particular asset is not yet fully developed , not yet fully leased , upside still to be to be gained , you won't see our our our our asset managers wanting to sell those assets because they know there's inherent value in them .

Speaker #4: So it it's really it's really part of the art of of of managing and delivering top tier returns to investors . When is the opportune time to sell which assets within the portfolio do you want to sell ?

Speaker #4: Do you want to put together two or three assets so that you're actually selling a portfolio, so that a larger player can buy it and hopefully pay a higher price?

Jay Hennick: Do you wanna put together 2 or 3 assets so that you're actually selling a portfolio, so that a larger player can buy it and get and hopefully pay a higher price, of course, netting our funds and investors more in returns? It's really the art of the asset managers. We have, you know, one of the unique advantages we have, and it really applies across our business, is that our key players own an equity stake in the business. Not only are they incentivized to deliver great returns for their investors, they also are incentivized to deliver great returns for shareholders. That's how I would answer your question.

Speaker #4: Of course , netting our funds and investors more in , in , in returns . So it's it's really the , the art of the of the asset managers .

Speaker #4: And we have you know , one of the unique advantages we have and it's really applies across our business is that our key players own an equity stake in the business .

Speaker #4: So not only are they incentivized to to to deliver great returns for their investors , they also are incentivized to to deliver great returns for shareholders .

Speaker #4: So that's how I would answer your question .

Speaker #10: Okay . Thank you . That's that's helpful color I will pass the line .

Erin Kyle: Okay. Thank you. That's helpful color. I will pass the line.

Speaker #3: My next question is from Michelle Germain from citizens Bank . Your line is open .

Operator: Our next question is from Mitchell Germain from Citizens Bank. Your line is open.

Speaker #11: Thank you very much guys . Jay , I'm curious , you've done some M&A across the services platform . I think Graystone , triumphs over a couple of deals that you've announced the last couple of months .

Mitchell Germain: Thank you very much, guys. Jay, I'm curious, you've done some M&A across the services platform. I think Greystone, Triovest were a couple deals that you've announced the last couple months. How does that fit in the puzzle when you consider hiring as well? I'm curious about the pace of hiring that you're doing. Is it really just more on the M&A side that you're investing there?

Speaker #11: How do how do you kind of how does that fit in the puzzle when you consider hiring as well ? I'm curious about the pace of hiring that you're doing .

Speaker #11: Or is it really just more on the M&A side of your investing there ?

Speaker #4: Well , each of our businesses are active recruiters of top talent and , you know , I know on these calls , we talk about M&A .

Jay Hennick: Well, each of our businesses are active recruiters of top talent. You know, I know on these calls we talk about M&A, but in our numbers, you probably know this, and I am sure you have discussed it with Christian over the years. You know, we have significant expenditures around recruiting top talent to fill white space in different geographic regions, which has a negative impact on our margins. We have specific goals. We have a large group of a large department within each of our regions that are, we think, very good at what they do.

Speaker #4: But in our numbers . And you you probably know this . And I'm sure you've discussed it with with Christian over the years .

Speaker #4: You know we have significant expenditures around recruiting top talent to fill white space and different geographic regions , which has an impact , a negative impact on our margins .

Speaker #4: And and so I would say , and we have specific goals , we have a large group of large department within each of our regions that are we we think , very good at what they do .

Speaker #4: And and so recruiting and retention , especially in areas of white space , is a key part of of what we do and gets lost somewhat in the discussion around , you know , internal growth .

Jay Hennick: Recruiting and retention, especially in areas of white space, is a key part of what we do and gets lost somewhat in the discussion around, you know, internal growth. Internal growth, for example, in the residential business this quarter was 8%, I think.

Speaker #4: So internal growth , for example , in the residential business , this this quarter was 8% , I think .

Speaker #5: 13% .

Christian Mayer: 13%.

Speaker #4: How much ? 13% . 13% . So it was actually much higher than that . But you know , we would have we would have we would have borne some of the costs of recruiting in that 13% .

Jay Hennick: How much?

Christian Mayer: 13%.

Jay Hennick: 13%. It was actually much higher than that, but, you know, we would've borne some of the costs of recruiting in that 13%.

Speaker #5: Appreciate that's the the rep . Yeah . Sorry . No , that was the revenue number . But but but so but I would add that in terms of our margin it does impact our margin .

Mitchell Germain: Appreciate that.

Christian Mayer: Yeah. Jay, that's the Yeah.

Jay Hennick: Sorry?

Christian Mayer: No, that was the revenue number.

Jay Hennick: Okay.

Christian Mayer: But I would add that in terms of our margin-

Jay Hennick: Oh, sorry.

Christian Mayer: It does impact our margin, Mitch.

Speaker #5: Mich on a on an ongoing basis . And we've seen that year to date in the in the third quarter , we had tremendous operating leverage from higher revenues , but not notwithstanding that , you know , we still have a margin pressure from from recruiting .

Christian Mayer: on an ongoing basis. We've seen that year to date. In Q3, we had tremendous operating leverage from higher revenues. Notwithstanding that, you know, we still have a margin pressure from recruiting. That's a cost we're prepared to bear because we're recruiting top professionals, you know, and adding new capabilities in asset classes and in geographies, and that's something we're gonna continue to do.

Speaker #5: And that's a cost we're prepared to bear because we're recruiting top professionals . You know , and and adding new capabilities in asset classes and in geographies .

Speaker #5: And that's something we're going to continue to do .

Speaker #4: Yeah , I was thinking margin I'm sorry Mitch . I was thinking about margin . And the impact on the margin . So thanks , Christian for clarifying that .

Jay Hennick: Yeah, I was thinking margin. I'm sorry, Mitch. I was thinking about margin and the impact on the margin. Thanks, Christian, for clarifying that.

Speaker #11: Yeah , I and J I understood where you were headed . There a lot of your peers J talking about , you know , capturing this enormous data center opportunity .

Mitchell Germain: Yeah. I, Jay, I understood where you were headed there. A lot of your peers, Jay, talking about, you know, capturing this enormous data center opportunity. You cited it in your earnings release. Let me say it differently. I'm curious how you're positioning Colliers to potentially benefit, you know, down the road from this growing sector.

Speaker #11: You cited it in your earnings release . I'm curious if differently I'm curious how your positioning Colliers to potentially benefit , you know , down the road from this growing sector .

Speaker #4: Well , that's a great question . And I'm glad you asked it , because I've been listening to some of the other players in the real estate services space who've been very vocal about data centers , portraying them as some sort of new major growth engine .

Jay Hennick: Well, and that's a great question, and I'm glad you asked it because I've been listening to some of the other players in the real estate services space who've been very vocal about data centers, portraying them as some sort of new major growth engine. For most of these players, data centers is just another asset class. They help clients buy, sell, lease, finance data centers when they're able to do that. At Colliers, we do much more than that. In addition to those services, which are significant for us, Colliers also designs. We entitle land for development. We do project management and program management on both construction and maintenance through our engineering group. Through our investment management segment, we also invest in data centers, creating really a full cycle capability.

Speaker #4: And for most of these players , data centers is just another asset class . They help clients buy , sell , lease , finance , data centers when they're able to do that at Colliers , we do much more than that .

Speaker #4: In addition to those services which are significant for us, Colliers also designs and entitles land for development. We do project management and program management on both construction and maintenance through our engineering group and through our investment management segment.

Speaker #4: We also invest in data centers , creating really a full cycle capability . And so will data centers are getting a lot of attention .

Jay Hennick: While data centers are getting a lot of attention these days, and they're strategically important to us at Colliers because for us, it's not just the real estate services piece of it includes so much more. You know, as I listen to some of our other peers, I smile because they're really just providing traditional real estate services around another asset class that happens to be hot right now. There are only a few, Colliers included, that are actively involved in the entire life cycle of data centers, and so much more than just data centers. A big part of our business, it's strategically important. It will continue to grow.

Speaker #4: These days . And they're strategically important to us at Colliers because for us , it's not just the real estate services piece of it .

Speaker #4: It includes so much more and you know , as I listen to the some of our some of our other peers , I smile because they're really just providing traditional real estate services around another asset class that happens to be hot right now .

Speaker #4: There are only a few Colliers included that that are actively involved in the entire life cycle of data centers and so much more than just data centers .

Speaker #4: So a big part of our business , it's strategically important . It will continue to grow . It's probably our rapidly growing , our our , our fastest growing segment across the board , although still not material to us .

Jay Hennick: It's probably our fastest growing segment across the board, although still not material to us, you know, from a percentage of revenue point of view. I hope that sort of puts it into perspective for you, but that's how we see it.

Speaker #4: You know , from a percentage of revenue point of view , I hope that sort of puts it into perspective for you . But that's how we see it .

Speaker #11: Perfect. Thank you. Best of luck on the rest of the year.

Mitchell Germain: Perfect. Thank you. Best of luck on the rest of the year.

Speaker #3: Our next question is from Darrel Young from Stifel. Your line is open.

Operator: Our next question is from Daryl Young from Stifel. Your line is open.

Speaker #12: Hey , good morning everyone . Just one question for me . Related to commercial real estate services . I wanted to get a sense of whether you're seeing any green shoots on construction activity or if we're still early in the cycle .

Daryl Young: Hey, good morning, everyone. Just one question from me, related to commercial real estate services. Wanted to get a sense of whether you're seeing any green shoots on construction activity or if we're still, you know, early in the cycle and I guess just the magnitude of what you would see as upside from that over the next couple of years.

Speaker #12: And I guess just the magnitude of what you would see as upside from that over the next couple of years.

Speaker #4: Well , it depends on what construction activity you're talking about and in what markets . So I would say that the construction , the construction of condominiums in Canada and the US is soft .

Jay Hennick: Well, it depends on what construction activity you're talking about and in what markets. I would say that the construction of condominiums, in Canada and US is soft. You're seeing some construction in multifamily or build to rent. There's obviously lots of activity around data centers and related infrastructure assets. It's a little bit the same in Europe, although it's smaller numbers. New construction is really at a pause from our perspective right now, which is creating a lot of pressure for companies that were traditionally focused on this type of construction from the ground up.

Speaker #4: You're seeing some construction in multi-family or build to rent . There's obviously lots of activity around data centers and related and related infrastructure assets .

Speaker #4: And it's a little bit the same in Europe , although it's smaller numbers . So new construction is really at a pause from our perspective right now , which is which is creating a lot of pressure for companies that were traditionally focused on this type of construction from the ground up .

Speaker #12: Got it . Okay . Thanks very much .

Daryl Young: Got it. Okay. Thanks very much.

Speaker #3: Our next question is from Jimmy Chan from RBC Capital Markets. Your line is open.

Operator: Our next question is from Jimmy Shan from RBC Capital Markets. Your line is open.

Speaker #13: Thank you . Just a couple questions on the operating leverage within real estate services . So so this quarter we did see roughly 100 million of year over year revenue growth .

Jimmy Shan: Thank you. Just a couple questions on the operating leverage within real estate services. This quarter, we did see roughly $100 million of year-over-year revenue growth, and then we saw EBITDA grow by $23 million. I think that's the leverage math that you've spoken about before. Is that how we should be thinking about the leverage, you know, as we look out to 2026? I guess number one. Secondly, maybe if you could speak generally about sort of the excess capacity that you see within the organization. Like, if volume continues to come back the way it has been, how well staffed are you today?

Speaker #13: And then and then we saw EBITDA grow by 23 million . So I think that's the that's the leverage math that you've spoken about before .

Speaker #13: Is that how we should be thinking about the leverage as we look out to 26 ? It's number one . And then secondly , maybe if you could speak generally about sort of the excess capacity that you see within the organization , like a volume continues to come back the way it has been , how well staffed are you today ?

Speaker #5: Well , Jimmy , the the operating leverage math that you quoted there is absolutely correct . So we had about 22% operating leverage on an incremental revenue dollar in Q3 .

Jay Hennick: Well, Jimmy, the operating leverage math that you quoted there is absolutely correct. We had about 22% operating leverage on an incremental revenue dollar in Q3, and that's in line with what we've telegraphed over the last several quarters in terms of what our expectations are. You know, as revenues continue to, you know, grind higher here, and this is a gradual recovery in capital markets and leasing, you know, is also on a growth trajectory. As those revenues increase, we should hopefully continue to see that 20-plus percent operating leverage through the, you know, through 2026.

Speaker #5: And that's in line with what we've telegraphed over the last several quarters in terms of what our expectations are . And , you know , as revenues continue to , you know , grind higher here .

Speaker #5: And this is a gradual recovery in capital markets and leasing , you know , is also on a on a growth trajectory as those revenues increase , we should hopefully continue to see that 20 plus percent operating leverage through the , you know , through 2026 .

Speaker #13: Okay. And so, in general, would you say there's a lot of excess capacity still?

Jimmy Shan: Okay. In general, would you say there's a lot of excess capacity still?

Jay Hennick: Yeah. I mean, we have a tremendous amount of, you know, productive workforce on the ground. You know, 4,500 productive brokers around the world. We continue to invest and add new brokers and new geographies and new asset classes. These folks are primed and ready and highly motivated to generate additional, you know, commissions for themselves and for the firm. We expect, you know, that these folks will contribute more and become more productive as the market improves.

Speaker #5: Yeah . I mean , we have a tremendous amount of , you know , productive workforce on the ground , you know , 4500 productive brokers around the world .

Speaker #5: And we continue to invest and add new brokers and new geographies and new asset classes . So these folks are are primed and ready and highly , highly motivated to generate additional , you know , commissions for , for , for themselves and for the firm .

Speaker #5: So we expect , you know , that the , the these folks will contribute more than become more productive as the market improves .

Speaker #4: And as I said earlier, I mean, the market hasn't even returned to where it used to be. And the number of brokers that we have in the organization is up probably 15% from our high capital markets production number globally.

Jay Hennick: As I said earlier, I mean, the market hasn't even returned to where it used to be, and the number of brokers that we have in the organization is up probably 15% from our high capital markets production number globally, I'm talking about. You know, I think as capital markets continues to gain strength. We'll be able to do substantially more revenue at high margins with a workforce that's larger today than it was at the high.

Speaker #4: I'm talking about . So , you know , I think as capital markets continues to gain strength , we'll will be able to do substantially more revenue at at high margins with a workforce that's larger today than it was at the high .

Speaker #13: Right . And then just on that topic , in terms of kind of future tailwind with respect to office leasing and capital markets , the recovery so far , it seems to have been a little bit more weighted towards the major markets in the US .

Jimmy Shan: Right. Just on that topic in terms of kind of future tailwind, with respect to office leasing and capital markets, the recovery so far, it seems to have been a little bit more weighted towards the major markets in the US. I could be wrong here, but I think your footprint in the US tends to be a little bit more secondary markets. Is it fair to assume that, you know, to the extent we see the same sort of recovery in those non-coastal, non-major markets, we should expect a little bit better upside in the future?

Speaker #13: And I could be wrong here, but I think your footprint in the US tends to be a little bit more in secondary markets.

Speaker #13: So is it fair to assume that , you know , to the extent we see the same sort of recovery in those non-coastal non-major markets , we should expect a little bit better upside in the future .

Speaker #4: So first of all , let me put our business in the US into perspective . We are one , 2 or 3 in virtually every market , large or small , with 1 or 2 exceptions in the in the US .

Jay Hennick: First of all, let me put our business in the US into perspective. We are one, two or three in virtually every market, large, small, with one or two exceptions in the US. We're one of the top players everywhere. You know, from the standpoint of where the revenue will come from and where we can translate it, yes, major markets generally generate higher revenues, in part because the lease rates within those markets are significantly higher than they might be in a secondary market. It's really all over the map.

Speaker #4: So we're one of the top players everywhere . And and so , you know , from the standpoint of us of where the revenue will come from and where we can translate it .

Speaker #4: Yes, major markets generally generate higher revenues, in part because the lease rates within those markets are significantly higher than they might be in a secondary market.

Speaker #4: So it's really all over the map for those . If , if for for those of our competitors , that might have a much bigger business in , say , New York City than we do in terms of number of brokers , they would obviously generate more revenue on leasing in New York .

Jay Hennick: For those of our competitors that might have a much bigger business in, say, New York City than we do in terms of number of brokers, they would obviously generate more revenue on leasing in New York, you know, when leasing revenues are up versus, you know, versus us relative to size. I think Colliers is one, I would say one of two, well-balanced, globally, real estate services firms with strong market positions everywhere. We would like to be bigger in certain markets, of course. We're a well-balanced business.

Speaker #4: You know , when the when , when leasing revenues are up versus , you know , versus us relative to size . But I think we're we're Colliers is one I would say one of two well balanced globally .

Speaker #4: Real estate services firms with strong market positions everywhere . We would like to be bigger in in certain markets . Of course , but we're a well , business .

Speaker #4: And as if you as if you look back over the past couple of years at a time when real estate , real estate services has gone through , has gone through some , you know , very soft times , Colliers continue to perform quarter after quarter after quarter , which has just shown the resilience of our business .

Jay Hennick: As if you look back over the past couple of years at a time when real estate, real estate services has gone through, has gone through some, you know, very soft times, Colliers continued to perform quarter after quarter after quarter, which has just shown the resilience of our business. We're waiting for, and we're continuing to strengthen making our business better. As markets continue to get stronger, we expect our results to follow.

Speaker #4: And we're waiting for and we're continuing to strengthen , making our , our , our our business better . And as markets continue to get stronger , we expect our results to follow .

Speaker #13: Okay . Helpful . Thank you .

Jimmy Shan: Okay. Helpful. Thank you.

Speaker #3: Her next question is from Stephen Sheldon from William Blair . Your line is open .

Operator: Our next question is from Stephen Sheldon from William Blair. Your line is open.

Speaker #14: Hi , Jane . Christian , you've got Pat on for Stephen today . Thank you for taking my questions . My first one with the relative strength you're seeing in leasing and capital markets .

Pat: Hi, Jay and Christian. You've got Pat on for Stephen today. Thank you for taking my questions. My first one, with the relative strength you're seeing in leasing and capital markets, can you just touch on the puts and takes in terms of maintaining your real estate services revenue guide for the year? You know, were there any overly significant deals that came through this quarter or any dynamics we should be thinking about across those 3 services subsegments heading into the Q4?

Speaker #14: Can you just touch on the puts and takes in terms of maintaining your real estate services revenue guide for the year ? You know , were there any overly significant deals that came through this quarter or any dynamics we should be thinking about across those three services subsegments heading into the fourth quarter ?

Christian Mayer: No, there's nothing, you know, no lumpy transactions in Q3 of note. To achieve our full year guidance, you know, we do want to see an increase in capital markets activity year over year. As I mentioned, capital markets had a very strong Q4 in 2024, so it is a tougher compare. We do see the pipeline there for continued growth. Leasing should trend positively for Q4 as well. You know, that's a really a global thing across all of our, of our services. In our outsourcing business, that's the recurring part of our real estate services business.

Speaker #5: No , there's nothing , you know , no , no lumpy transactions in the third quarter . Note . And to achieve our full year guidance , you know , we do want to see an increase in capital markets activity year over year .

Speaker #5: And as I mentioned, capital markets had a very strong fourth quarter in 2024. So it is a tougher compare. But we do see the pipeline there for continued growth.

Speaker #5: Leasing should trend positively for the fourth quarter as well . You know that's really a global thing across across all of our of our services and in our outsourcing business .

Speaker #5: That's the recurring part of our real estate services business. We've got a very strong trajectory in our valuation and advisory business, and we expect that to continue, as well as increasing property management and loan servicing revenues.

Christian Mayer: We've got a very strong trajectory in our valuation and advisory business and we expect that to continue as well as increasing property management and loan servicing revenues. No, we feel pretty good about all of these services and there's nothing, you know, nothing lumpy or unusual to note.

Speaker #5: So no , we feel pretty good about all of these services . And there's nothing , you know , nothing lumpy or unusual to note .

Speaker #14: Okay . Thanks , Christian and Jay , just to piggyback off of prior question and your prior commentary on data centers , understand you all have significant capabilities across the portfolio .

Pat: Okay. Thanks, Christian. Jay, just to piggyback off of a prior question and your prior commentary on data centers, understand you all have significant capabilities across the portfolio there, including in the investment management business. Wanted to ask, as you expand your platform through continued M&A, is it of interest to build out more technical capabilities on the services side? As you think about that, what are you seeing in terms of the valuations for that type of asset?

Speaker #14: There, including in the investment management business. But I wanted to ask, as you expand your platform through continued M&A, is it of interest to build out more technical capabilities on the services side?

Speaker #14: And as you think about that , what are you seeing in terms of the valuations for that type of asset ?

Speaker #4: Well , first of all , across the engineering segment , which is , you know , as I mentioned , it's a it's about 1,000,000,007 now on a global basis .

Jay Hennick: Well, first of all, across the engineering segment, which is, you know, as I mentioned, it's about $1.7 billion now on a global basis. We do a lot of technical services today, as do most engineering firms. You know, I don't know how many data centers we're doing globally now in some form or another, but it's a substantial number. Having said that, the acquisition costs of any firm that is around data centers right now, whether they're constructing them, whether they're project managing them, et cetera, servicing them or managing after the fact, are very high.

Speaker #4: We do a lot of technical services today , as do most engineering firms . So , you know , I don't know how many data centers we're doing globally now in some form or another .

Speaker #4: But it's a substantial number . The having said that , the acquisition costs of any of any firm that is around data centers right now , whether they're constructing them , whether they're whether they're project managing them , etc.

Speaker #4: , servicing them or managing after the fact , are very high . And from our perspective , we are , you know , we can't see a return in , in , in , in , in investing at at those kinds of valuations .

Jay Hennick: From our perspective, you know, we can't see a return in investing at those kinds of valuations. We're very happy continuing to build out our engineering segment that serves it and continuing to look for more opportunities to finance and own data centers because that creates opportunities for us to potentially do more in the future. Valuations are high in that space, as you would expect.

Speaker #4: We're very happy continuing to build out our engineering segment that serves it. We are continuing to look for more opportunities to finance and own data centers, because that creates opportunities for us to.

Speaker #4: Potentially do more in the future. But valuations are high in that space, as you would expect.

Pat: Mm-hmm. Okay. That's helpful context. Thank you. If I could just ask one more quick clarification, Christian. Unless I'm looking at this incorrectly, I think the guidance for engineering implies that the Q4 growth takes a step down organically, unless there's some sort of volatility in the pass-through cost there. Am I looking at that correctly, or is there anything we should be thinking about there?

Speaker #14: Okay . That's helpful context . Thank you . And if I could just ask one more quick clarification , Christian , unless I'm looking about looking at this incorrectly , I think the guidance for engineering implies that the for Q growth takes a step down organically , unless there's some sort of volatility in the pass through cost .

Speaker #14: There . Am I looking at that correctly or is there anything we should be thinking about there .

Speaker #5: Yeah . You're looking at that correctly . There could be a small step down in organic growth in the fourth quarter . I'll remind you that we did indicate on a full year basis that organic growth would be in the mid to high single digit range and will be firmly in that range for the full year .

Christian Mayer: Yeah, you're looking at that correctly. There could be a small step down in organic growth in Q4. I'll remind you that we did indicate on a full year basis that organic growth would be in the mid to high single digit range, and it will be firmly in that range for the full year. You know, we've been outperforming to that for the first 3 quarters.

Speaker #5: And , you know , we've been outperforming to that on for the first three quarters .

Speaker #14: Okay . Helpful . Thank you both .

Pat: Okay. It's helpful. Thank you both.

Speaker #3: Our next question is from Maksim Sychev from National Bank Capital Markets . Your line is open .

Operator: Our next question is from Maxim Sytchev from National Bank Capital Markets. Your line is open.

Speaker #15: Hi . Good morning gentlemen . J . I wanted to to go back to your prepared remarks , and I think you made a comment .

Maxim Sytchev: Hi, good morning, gentlemen.

Jay Hennick: Hey.

Maxim Sytchev: Jay, I wanted to go back to your prepared remarks. I think you made a comment. Unless I misunderstood, the $9 billion of dry powder across the organization. Do you mind maybe expanding a little bit on that figure unless I, again, misinterpreted it? Thanks.

Speaker #15: And unless I misunderstood . But the 9 billion of dry powder across the organization . Do you mind maybe expanding a little bit on that figure ?

Speaker #15: Unless I again misinterpreted it . Thanks .

Jay Hennick: I didn't really hear that. I didn't hear.

Speaker #4: Really ? Hear that ? I didn't hear it .

Speaker #5: He's asking about the 9 billion of dry powder . We have across the organization . And if we have any more details on what that is .

Christian Mayer: He's asking about the $9 billion of dry powder.

Jay Hennick: Yeah

Christian Mayer: we have across the organization, and if we have any more details on what that is?

Jay Hennick: We do. We have all the details. You know, I think it's an aggregate number that, you know, we feel comfortable giving you. It's made up of all of the available capital across the funds, including alternatives, including debt, et cetera, et cetera. You know, it's an amalgam of all the capital available. Even if I gave you the breakdown, it wouldn't add much value because it's when you deploy that capital that it translates into returns. As Christian said, in the debt space, our fee structure is lower than it is in our open-ended and closed-ended funds.

Speaker #4: I , we do we we have all the details , but , you know , I think it's an aggregate number that , you know , we feel comfortable giving you .

Speaker #4: It's made up of all of the available capital across the funds , including alternatives , including debt . ET cetera . ET cetera .

Speaker #4: So you know , it's it's an amalgam of of all the capital available . And even if I gave you the breakdown , it's it wouldn't add much value because it's it's when you deploy that capital that it translates into returns .

Speaker #4: So as Christian said in the debt space , our fee structure is lower than it is in our open ended and closed ended funds .

Speaker #4: So it really depends upon putting that money to work . And in what area . And and what kind of revenue will generate once that money is put to work .

Jay Hennick: it really depends upon putting that money to work and in what area and what kind of revenue we'll generate once that money is put to work. I think CAD 9 billion is a good number, way back, way more than it was last year. we're just looking for the right opportunities to deploy that capital virtually across the board.

Speaker #4: So I think 9 billion is a is a good number . Way back , way , way more than it was last year .

Speaker #4: And we're just looking for the right opportunities to deploy that capital virtually across the board .

Speaker #15: Okay . Thank you for clarifying that . And apologize for my connection . And another question I had in relation to the Australian foray on the engineering side .

Maxim Sytchev: Okay. No, thank you for clarifying. Apologize for my connection. Another question I had in relation to the Australian foray on the engineering side. Do you mind maybe talking a little bit about the reason why you went into that geography? I mean, it has been a bit sluggish. Is this a process that right now you're kind of picking it up at a trough? Maybe any color would be very helpful there. Thank you.

Speaker #15: Do you maybe do you mind maybe talking a little bit about the reason why you went into that geography ? I mean , it has been a bit sluggish .

Speaker #15: So is the thought process that right now you're kind of picking it up at a trough , maybe any color would be very helpful there .

Speaker #15: Thank you .

Speaker #5: Max . Yeah . The acquisition we announced last night , you know , as a as a well , well established urban development consultancy and engineering firm operating in Adelaide , some market that is significant , of significant size in the Australian sort of geography and a place we want to expand to .

Christian Mayer: Max, the acquisition we announced last night, you know, is a well, well-established urban development consultancy, an engineering firm, operating in Adelaide. It's a market that is of significant size in the Australian sort of geography and a place we want to expand to. It's a relatively small firm with 65 staff. We were able to do this transaction, you know, add these folks to our established platform, which I think I believe we've got well north of 500 people now in our Australian engineering business. These folks will tuck in to that business, and they will be nicely accretive for us.

Speaker #5: It's a relatively small firm with 65 staff . So we were able to do this transaction , you know , add these folks to our established platform , which I think I believe we've got .

Speaker #5: Well , north of 500 people now in our Australian engineering business . And these folks will tuck in to that business and they will be nicely accretive for , for us .

Speaker #5: And we're able to do these tuck in acquisitions , as you know , at very attractive valuations . So that makes this , you know , all the more compelling for us .

Christian Mayer: We're able to do these tuck-in acquisitions, as you know, at very attractive valuations. That makes this, you know, all the more compelling for us.

Speaker #15: Okay. That's great. Thank you so much.

Maxim Sytchev: Okay. That's a great call. Thank you so much.

Speaker #3: Question is from Frederick Bastien from Raymond James . Your line is open .

Operator: Question is from Frederic Bastien from Raymond James. Your line is open.

Frederic Bastien: On Max's question on engineering. Really excited to see this segment perform strongly, and you continue to partner with industry leaders, both saw that in Canada and Australia, but it really feels like it's the real deal here. It feels like you're only scratching the surface. You've got good scale right now in Canada with Englobe, but can you comment on the potential for additional growth in US, Australia, and Europe? Europe seems like there's massive opportunity there that you're still waiting to tap.

Speaker #11: Max question on on engineering . Really excited .

Speaker #16: To see the segment perform strongly. And you continue to partner with industry leaders; we saw that in Canada and Australia. But it really feels like it's the real deal here.

Speaker #16: And it feels like you're only scratching the surface. You've got good scale right now in Canada with Anglo, but can you comment on the potential for additional growth in the U.S., Australia, and Europe?

Speaker #16: Europe seems like there's massive opportunity there that you're still waiting to tap .

Jay Hennick: You've sort of summed it up beautifully. The US we'd like to be growing faster. We're growing nicely there, but we'd like to be growing faster. That's a big opportunity for us. Canada, we're doing phenomenally well there, and we're excited about that. Australia. Australia is doing nicely. As you can see, a lot of these smaller deals. There's not a lot of big players in Australia, so we're putting together our platform one step at a time. Europe is a big opportunity. We're spending a lot of time there, and there's some very interesting platforms that we've been considering.

Speaker #4: You've you've sort of summed it up beautifully . The US we'd like to be we'd like to be growing faster . We're growing nicely there .

Speaker #4: But we'd like to be growing faster . So that's a that's a big opportunity for us . Canada . We're we're doing phenomenally well there and we're excited about that .

Speaker #4: Australia is doing nicely, as you can see. A lot of these smaller deals are happening. There's not a lot of big players in Australia.

Speaker #4: So we're we're putting together our platform one step at a time . Europe is a big opportunity . We're spending a lot of time there and there's some very interesting platforms that that , that we've we've been considering and again , you know , our , our partnership philosophy and our decentralized operation is attractive to us .

Jay Hennick: Again, you know, our partnership philosophy and our decentralized operation is attractive to large partnerships that don't really wanna be acquired 100% by somebody else. They wanna continue to own an equity stake in the business and participate in the future growth in the segment and take advantage of relationships that we might have across the platform, whether it's in real estate or it's in investment management. We, you know, as you've seen so many times, Fred, over the years as you've followed other engineering firms, the segment is so massive. It's bigger than I even thought initially. The white space keeps expanding. We think that this is a great growth engine for us for many years to come, and we're just gonna continue to build.

Speaker #4: Large partnerships that don't really want to be acquired 100% by somebody else . They want to continue to own an equity stake in the business and be part participate in the future growth in the segment and and , and take advantage of relationships that we might have across the platform , whether it's in real estate or it's in investment management .

Speaker #4: So we , you know , as as you've seen so many times spread over the years as you've followed other engineering firms , the segment is so massive , it's bigger than I even thought initially .

Speaker #4: And the white space keeps expanding . So we think that this is a great growth engine for us for many years to come .

Speaker #4: And we're just going to continue to build. We don't have to be the biggest; we just have to be one of the best.

Jay Hennick: We don't have to be the biggest. We just have to be one of the best, and we have to have a unique, differentiated strategy. We believe we have that. You know, one step at a time got us to $1.7 billion in 5 years. Hopefully, we can follow the same format and double the size of it over the next 2, 3 years.

Speaker #4: And we have to have a unique , differentiated strategy . And we believe we have that . So , you know , one step at a time .

Speaker #4: Got us to 1.7 billion and five years . Hopefully we can follow the same format and double the size of it over the next couple three years .

Speaker #16: Great . That's exciting . Thanks . Last question . For me , the regarding the asterisk and trio deals that you completed on the raise side , they've only been contributing for a few months , but was wondering if you could provide an update on how these businesses are performing under your the the Colliers umbrella .

Frederic Bastien: Great. That's exciting. Thanks. Last question for me. Regarding the Astris and Triovest deals that you completed on the RES side. They've only been contributing for a few months, but I was wondering if you could provide an update on how these businesses are performing under your Colliers umbrella.

Jay Hennick: You know, still too early to say. Triovest is has been an asset that we've sought after for a lot of years. It's almost, you know, entirely recurring revenue. We're in the process of integrating that into our Canadian property management operations. Interestingly, there's some clients, Canadian clients that have assets in the US that have asked us to take over some of those assets, so that's in process. We're quite excited about Triovest, we're also in the process of rebranding it. Just to make the point one more time, whenever you do these things, it takes cost, it takes time, it takes effort. When you make acquisitions, you have to integrate those acquisitions.

Speaker #4: You know, it's still early—still too early to say. The Trio Best has been an asset that we've sought after for a lot of years.

Speaker #4: It's a highly it's almost , you know , entirely recurring revenue and and we're in the process of integrating that into our Canadian property management operations .

Speaker #4: Interestingly , there's some clients , Canadian clients that have assets in the US that have asked us to take over some of those assets .

Speaker #4: So that's in process . So we're quite excited about trio and and we're also in the process of rebranding it . And just to make the point , one more time , whenever you do these things , it takes cost .

Speaker #4: It takes time . It takes effort . When you make acquisitions , you have to integrate those acquisitions and , you know , somebody commented on on our engineering margin down 20 basis points in the quarter , like it's 20 basis points .

Jay Hennick: You know, somebody commented on our engineering margin, down 20 basis points in a quarter, like it's 20 basis points. Give me a break, you know? Triovest, as I said, is going well, and we're excited about what that can do for us. There was another acquisition in real estate, a company called Astris, which has so far been overperforming. We had a bit of an advantage with that acquisition because they had already had relationships with our investment management platforms in a couple of different areas. We had a good sense for the quality of the professionals. We're seeing increased potential opportunity around financing infrastructure, mid-market infrastructure businesses through the Astris professionals.

Speaker #4: Give me a break . You know , so . Trio best as I said is is going well . And we're excited about what that can do for us .

Speaker #4: And there's there's a there was another acquisition in real estate a company called asterisk which has so far been Overperforming . We we had a bit of an advantage with that acquisition because they had already had relationships with our investment management platforms and a couple of different areas .

Speaker #4: So we we had a good sense for the quality of the professionals and , and we're seeing increased potential opportunity around financing infrastructure , mid-market infrastructure , businesses through the asterisk professionals .

Speaker #4: So we're we're cautiously optimistic that that will be another successful business and service offering that we can that we can build over the next few years .

Jay Hennick: We're cautiously optimistic that that will be another successful business and service offering that we can build over the next few years.

Speaker #16: Thanks . That's great . I'll pass it back .

Frederic Bastien: Thanks. That's great. I'll pass it back.

Speaker #3: There are no further questions at this time . I would now like to turn the conference back to Mr. Hennick , please continue .

Operator: There are no further questions at this time. I would now like to turn the conference back to Mr. Hennick. Please continue.

Speaker #4: Well , thank you . Operator , for passing it back . And thank you to everyone for participating . And we look forward to to speaking again in our fourth quarter results in February .

Jay Hennick: Well, thank you, operator, for passing it back. Thank you to everyone for participating, and we look forward to speaking again at our Q4 results in February. Thank you. Have a great day.

Speaker #4: So thank you . Have a great day .

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