Q3 2025 Colliers International Group Inc Earnings Call
Welcome to the callers International third quarter investors conference. Call, today's call is being recorded, legal council requires us to advise that the discussion scheduled to take place. Today, may contain 4 word looking statements. That involve known and unknown risk 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 40f as filed with the US Securities and Exchange Commission.
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. J Hank. Please go ahead sir.
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 colour and with me today is Christian mayor CFO.
This call is webcast and available in the investor relations section of our website along with the presentation, slide deck.
Call yours delivered. Excellent, third quarter results highlighting our momentum across all segments of our business.
In engineering which includes project management and program management. We 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 the significant, multi-disciplined Global platform.
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 set us apart and enable 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.
Tailwind to our business.
We're excited about unifying. Our operations under the Harrison Street Asset Management brand.
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.
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 multi 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 dollars in dry powder, across the organization, we are well positioned to deploy. Significant capital on behalf of our investors.
Callers 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 reports, and then we'll open things up for questions. Christian.
Thank you. Jay.
And good morning, everyone.
As a reminder.
All non-gaap measures reference today. Are defined in the materials accompanying. This call.
Revenue growth figures represented in local currency terms.
Our third quarter revenues were $1.46 billion, up 23% year-over-year.
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 IBA. That 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 multi, family 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 their 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 and 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.
Our investment management net revenues increased 5% due to the favorable impact of the Round Shield acquisition and higher CP paying assets under management.
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.
We expect these costs will continue for the next 2 to 3 quarters and will modestly impact our margins as a result.
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 1, significant new Vantage, launching in the coming weeks.
For the full year, we expect to come in near the midpoint of our 5 to 8 billion dollar fundraising Target.
Assets under management total 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.
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.
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.
Well an investment management. We expect to be off slightly given the timing of fundraising and costs associated with unifying. Our operations under the hsam brand
Putting it all together on a consolidated basis, we remain confident we will need to fulfill your outlook.
Concludes my prepared remarks operator, can you please open the line for questions?
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 1 on your touchtone phone, you will hear a 1 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, please ensure, you'll lift your handset, if you're using a speaker phone before pressing any keys.
1 moment for your first question.
Your first question comes from the line of Stephen McCloud from BMO. Your line is open.
Uh, thank you. Good morning, guys.
Um, just wanted to, uh, Circle. Hi, Jake. Just wanted to Circle in on a, on a couple of things just with respect to the, uh, the engineering margins in the quarter. Um, you noted some, some service mix headwind and I'm just, I just curious if you give a little bit of color around, um, sort of what you saw on the quarter and and and how that weighed on your numbers or weighed on the margin I suppose.
Uh, well, Steve, you got to look at this on a, uh, net revenue basis. Um, you know, we have a lot of pass through costs in engineering and those are at low or very, very um, low margins.
So, on a net basis, our margin was down very slightly. We're talking 20 to 30 basis points. And and it really just is uh, some service mixed across our Geographic markets.
Okay, that's helpful. Thanks Christian. Um and then just on the investment management business, you know, obviously strong fundraising on the year to date basis. And um um and and you guided sort of being in the midpoint for your target for 2025, which is great. Um, just as we think about the additional costs, again, sort of Weighing on that that margin this quarter. Um, can you talk a little bit about, uh, 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.
Well well look Steve. Uh we don't want to talk about 2026 until uh you know, year end we'll we have a full outlook for 2026 at that point.
But as it relates to Investment Management. Um, and we prepared remarks, I did reference that we will have 2 or 3 quarters of headwinds uh from uh cost to unify um, the the segment. Um, so uh, that will be a modest impact uh, on the margin.
Um, uh, and it will definitely translate into shareholder value over time. Um, and uh, you know, other people just leave things alone, you've seen us do this before. Um, and so, you know, we're we're doing, we're doing some pretty uh, interesting things to really solidify that business for the long term and uh you'll see fundraising growth which is 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. So um you know if if we were a private company you would never see this but in a public company situation which we've done before. Um 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 call years, it's about creating long-term value for shareholders.
Okay, that's that's great increment to college. I thank you all. I'll turn it back to the line.
Our next question is from Tony pallone from JB Morgan. Your line is open.
Yeah, thank you. Um, just on engineering, can you talk about what you think organic growth has looked like um it it's a little hard to see just given uh, all the Acquisitions and such in there and 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, and the Top Line there?
The Tony, uh, are here to date organic growth. In engineering is around 8%. And I think, for the year, we got it to sort of mid High single digit area. So we're we're fully on track, uh, with our organic growth Ambitions, uh, for the year and we expect that to continue. Uh, we play in, um, rapidly growing, uh markets, um, you know, infrastructure oriented, uh, markets, uh, Transportation, uh, energy, uh, Communications, uh, public sector, uh, Investments that are being made by, by governments, uh, frankly around the world. So, uh, when we look for Acquisitions, we look for businesses that are playing, um, in these in these sectors. And, uh, where there are long-term Tailwinds, uh, for growth, um, in this, you know, highly fragmented, uh,
Industry. So, uh, that’s the way we think about it.
Okay, and then 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? And is it still skewed towards engineering, or are there other areas that you're seeing activity in?
Well, so far this year, we've made Acquisitions and each 1 of our segments. But um, engineering by far, is has been in terms of number of transactions, not necessarily size, but in terms of number of transactions, and, um, you know, a, a Christian made a point. This is a massive, massive industry that's highly fragmented, um, multiple, uh, areas of specialty in even our most mature businesses. We have white space. Uh, we might have white space in 1 particular, um, and, uh, strong expertise in that same area and a different part of the country, all of those create opportunity for acquisition. So for a company like Colour that has been in the internal growth and acquisition or consolidation business for 30 years successfully, this is exactly what we look.
Look for, in terms of a, a segment that we can grow. And so
Over the next few years that we can double this business again in terms of both revenue and profitability and, and, and our and our, uh, and I'm going on too long, but um, you know, our unique way of operating with our partnership philosophy, um, and decentralized operations, uh, which which we apply across the board and have forever, is really A Difference Maker for the targets. So we're excited about this space. Um,
And uh we think it'll it'll provide us with a huge growth opportunity in the years to come.
Okay, thank you.
Our next question is.
Gupta from Scotia Bank. Your line is open.
Thank you and good morning.
Uh so just on. I am fundraising uh I mean you have done almost 4.4 billion dollar uh this year what is a mix of that like open-ended versus close-ended and is that also impacting the margins apart from the integration cost?
Hey, may, I ask you that a good question. Um, and and you're talking about um fundraising in the mix of open-ended funds versus uh, closed-end funds. And then we also have now credit, which is a much bigger part of our business. And when you raise closed down Capital, um, the fees turn on, uh, immediately uh, and typically at, um, a higher fee rate than an open-ended fund, or a credit uh, vehicle would. So that type of fundraising has more immediate impact on our revenues. And we are seeing that a little bit in 2025 as we have inverse successful, raising open and fund Capital this year. We've also raised um some pretty significant uh credit uh capital and uh that open-ended and credit Capital. Uh does not start generating fees until such time as we deploy, that Capital which can take 3 to 6 months, uh, day reference. We have 9 billion of dry powder. Um and that is capital. That's you know, ready and waiting.
To be deployed. So our teams are are focused on that and and once that capital is deployed, it will start to earn these
All right. Uh thank you question. Their. Uh and the next question is uh you know, you're working on the integration of IM under this house and Street platform. Uh have you received any initial client feedback so far? I mean as you integrate Rockford and versus the street and I know it's early.
But still wondering if any client feedback on this process.
Yeah, the client feedback has been terrific. In fact, um, that's been a major part of the efforts in, bringing these, these operations together. You know, what it really means is, uh, 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. So there's a lot of opportunity to do more with the same with the same. Um,
Uh, Investments. So, uh, client reaction has been great. Um, also, uh, what 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 and then we can bring in the expertise to help uh to help you know satisfy their investment. Uh desires. So feedback has been has been very good to date and uh and our investors um are are responding by increasing the amount of uh Capital. They're allocating to us. It's never enough as a as as as always. But uh it's a lot better than it has been in past years.
Thanks g, o, very helpful and, uh, clearly, it's in the right direction, uh, and then just switching is on the leasing side. Uh, it looks like industrial leasing was strong, uh, any particular geography, uh, which is impacting that and how much is better for discussion. Now, compared to first half of the year,
We had some, you know, tariff and and trade, um, impacts and and the second quarter, which caused clients to, uh, to pause, particularly on, on the industrial, uh, side of things. So, uh, we're feeling good about our leasing trajectory and we expect, uh, leasing to be up, um, nicely uh year-over-year as we finish uh, the year in Q4 here.
Okay, thank you guys and I'll turn it back. Thank you.
Our next question is from Julian bling from Goldman Sachs, your line is open.
Thank you for taking my question. Um 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 uh 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? Um, that we've talked about in the past and will you wait until you get to those margin levels before considering any of the Strategic options, you've you've talked about in the past for realizing the value of that segment.
well, um,
you know, for, for, to be honest for us. Um, what's more important is growing out this platform and making it as strong as possible. So, um, we, we, uh, over the next couple of quarters, we sort of, uh, have a, uh, a clear view of where our margin may go to. Um,
but, uh, we're going to continue to invest in our platform to make it as strong as possible. We are open. Um, uh, we continue to be open for acquisition opportunities, uh, in this segment, uh, there's tons of white space and there's tons of, uh, opportunity. Right now, as you probably know, with lots of lots of players in this particular seg segment, talking to each other, about potential, uh, hookups in 1 form or another. Uh, so we're active all over the place, um, and, uh, we'll have to see how the next few quarters roll out. But, uh, from my perspective, um, it we're, we're, we're building this business for the long term and if we have to give up a, a few points emerge and to continue to build our business and um, you know, and and generate 20% plus growth,
Both internally. We're going to do it. It's just that simple. So um, I don't know if that answers your question, but that's sort of a the way in which, you know, we would be uh looking at that business going forward.
Okay, thank you, Jay. That's helpful. Um, and then maybe digging into capital markets, can you give us a sense of how October and the fourth quarter are shaping up, maybe where pipelines of activity are compared to this time last year?
Yeah, uh, good question, Julian. Uh, we had, uh, last year, a very strong quarter, uh, in capital markets and this year, um, you know, the pipelines are looking solid and, uh, we feel, uh, you know, confident at this point, um, and our prospects for the fourth quarter and uh, we should um, you know, be able to exceed our performance of last year, which as I said uh will be a relatively tough comp. Um, you know compared to the comps we've seen uh so far year to date.
Okay, great. And when you say exceed your performance from last year, you you mean just uh the the it should grow year-over-year.
Absolutely.
Okay, great. Thank you.
Our next question is from Aryan.
Your line is open.
Hi, good morning, and thanks. Thanks for taking my questions. Uh, I just wanted to tag on to that last question there and see if you can, maybe elaborate a bit more on the 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.
Recovery. Uh, if you recall, um, 2023 was a very challenging year in, in Europe, in particular, uh, our European business is really well positioned, uh, to capture, uh, the rebound inactivity. Um, and that's, that's been evident in the numbers here to date and that's going to continue, um, as we look ahead, um, you know, to Q4 and into 2026. So, um, I think it's really, uh, as as I said broad-based across all geographies, but I would also say Christian if I could add something there. Um, Capital markets isn't back yet anywhere, you know, their strengths as Christians said in the US, but I would say in in Europe and Asia and even to some degree in Canada, uh, there's more transactions happening.
But it's taking its taking time. I don't think there's the stability yet. Um, around interest, rates debt costs, Etc, and investor confidence is not where it needs to be. All of that is um, to to my way of thinking Tailwind, because even in our own fund business. Um, Christian made made a point of, uh, of saying that we, we've sold a whole bunch of assets, which is a normal. It's normal course in the fund business, you you redeploy assets and, uh, uh, to investors, um, on an ongoing basis when it's opportunity.
To do it. So 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 for our uh for the future.
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, the disposition phase? And then what percentage of those funds are typically received recycled
Well, most funds are always looking at disposing of assets that opportune times. Uh, usually, uh, you'll see the older funds. The older uh, closed in vehicles, selling out their assets, uh, uh, uh, 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 least. Um, upside still to be, uh, to be gained you won't see our our, um, our uh, our asset managers wanting to sell those assets because they know there's inherent value in them. So it, it there, it's really, uh, 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 you want to put together 2 or 3 assets? So that you're actually selling a portfolio. Uh so that a larger player can buy it and get a an hopefully pay uh ah ah ah higher price, of course, netting our funds and investors more in uh in in return. So it's it's really the the art of the uh of of the asset managers and we have, you know, 1 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. So not only are they uh incentivized to um to to uh deliver great returns for their investors. They also are incentivized to uh to deliver great returns for shareholders. So um, that's how I would answer your question.
Okay, thank you. That's that's a couple of color. I will pass the line.
My next question is from Michelle Jermaine from Citizens Bank, your line is open.
Uh, thank you very much, guys. Um, Jay, I'm curious, you've done some M&A across the services platform. I think Greystone and Triovest for a couple of deals you've announced in the last couple of months.
Um, 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.
Or is it really just more on the M&A side of your investing?
In our numbers. Um, and and you, you probably know this and I'm sure you've discussed it with, with Christian over the years, um, you know, we have significant expenditures around recruiting top talent to fill white space in different. Geographic regions, which has an impact, a negative impact on our margins.
And, um, and so, I would say, and we have specific goals. Uh, we have a large group of, uh, a large Department within each of our regions that are we, we think very good at what they do. And, um, and so, uh, recruiting and retention, especially in areas of white spaces. A key part of, of what we do and gets lost somewhat in the discussion around, um, you know, internal growth. So, internal growth, for example, in the, in the residential business, this this quarter was 8%. I think, uh, 13% how much 13% 13%, uh, I so, it was actually much higher than that, but, you know, we would have, we would have, um, we would have borne some of the costs of recruiting in that 13%.
Appreciate that. That's the, that's the
yeah.
Sorry no that was the revenue number but but so but I would add that in terms of our margin, it does impact our margin. Um Mitch on a on an ongoing basis.
And we've seen that year to date. Um, in the in the third quarter we had tremendous operating leverage from higher revenues. Um, but uh, not notwithstanding that, you know, we still have a a margin pressure from from recruiting and that's a cost we're prepared to Bear because we're recruiting top professionals. Uh, you know, uh and and adding new capabilities, uh, in asset classes and in, uh, in geographies and that's something we're, we're going to continue to do. Yeah, I was thinking margin. I'm sorry Mitch. I was thinking about margin and the impact on the margin. So, uh, thanks Christian for clarifying. That. Yeah, I, I, I and J. I understood where you were headed there. Um, a lot of your peers J talking about, you know, capturing this enormous data center opportunity, you cited it in your earnings release. I'm curious if
I'm curious how your positioning color should potentially benefit, you know, down the road from this growing sector.
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. Uh uh space who've been very vocal about data centers, portraying them as some sort of new major growth engine. And for most of these players data centers is just another asset class. They help clients Buy sell lease, uh, Finance uh, data centers. Uh, when they're able to do that and call yours, we do much more than that, in addition to those Services, which are significant for us. Also, call yours also designs. We entitle land for development, we do project management and program management on both construction and maintenance through our engineering, uh, group and through our investment management segment. We also invest in data centers creating really
A full cycle capability.
And so will data, centers are getting a lot of attention to these days.
And they're strategically important to us at Colour because for us, it's not just the Real Estate Services piece of it.
It includes so much more and, um, you know, as I listened to, um, uh, the the, some of our, uh, some of our other peers. I, I smile because they're really just, uh, providing traditional real estate services around another asset class. That happens to be hot right now. There are only a few who call yours included that uh, that are actively involved in the entire uh life cycle of data centers and so much more uh than just data centers. So uh, big part of our business, it's strategically important, it will continue to grow. It's probably our rapidly growing our our our, our fastest growing
segment.
I hope that sort of puts it into perspective, uh, for you but that's how we see it.
Perfect, thank you. Best of luck on the rest of the year.
Our next question is from Dariel young, the fill, your mind is open.
Hey, good morning everyone. Uh, just 1 question for me. Uh, related to Commercial Real Estate Services. Um, wanted to get a sense of whether you're seeing any green shoots on construction activity, or if we're we're still early in in, in the cycle. And, and I guess just the magnitude of what you you would see is upside from that for the next couple of years.
Well, it depends on what construction activity you're talking about and in what markets? So
I would say that the construction, um, the construction of of Condominiums, uh, in Canada, and the US is soft.
You're seeing some construction in multi-family or build-to-rent.
Um, there's obviously uh, lots of activity around data centers and related. Um, and related infrastructure, uh assets. Um,
Uh and and it's a little bit the same in Europe, although it's smaller numbers. So new construction is really a a a pause from our perspective.
right now, which is, which is creating a lot of pressure, uh, for uh, companies that were traditionally focused on, um, this type of construction from the ground up,
Got it. Okay. Thanks very much.
Hey, next question is from
RBC Capital markets, your line is open.
Uh, thank you. Uh, just a couple questions on the, uh, operating leverage within Real Estate Services. Um, so so this quarter we did see roughly a 100 million of year of your Revenue growth and then and then we saw ibida grow by 23 million. So I think that's the, 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 26? I guess number 1. And then secondly, maybe if you could speak generally about sort of the excess capacity that you see within the organization, I get volume continues to come back. The way it has been
How well staffed are you today?
Well Jimmy the uh the operating leverage math that you quoted, there is absolutely correct. So we had about 22% operating leverage on an incremental uh Revenue dollar and Q3. And that's in line with what we've telegraphed over the last, um, several quarters in terms of what what our expectations are. And uh, you know, as revenues continue to um, you know, uh, grind higher here. And this is a gradual recovery in capital markets and, and, and leasing. Um, you know, is also on a, on a growth trajectory, uh, as those revenues increase, uh, we should hopefully continue to see that, uh, 20 plus percent, um, operating leverage, um, through the, uh, you know, through 2026.
Okay. So and in general would you say there's a lot of excess capacity, still
Yeah. I mean we we have a a tremendous uh amount of uh um you know, productive Workforce, um on the ground. Um you know, 4 and a half thousand um productive Brokers around the world. And we continue to invest and add, uh, new Brokers and new geographies and new asset classes. So these folks are uh, are primed and, and ready and highly.
Highly motivated to generate, uh, additional, um, you know, commissions, uh, for, for, for themselves and, for the firm. So, we, we expect, um, you know, that, uh, the the, um, these folks will, um, contribute more, uh, and become more productive as the market, uh, improves
um, I work force that's
A larger today than it was at the High.
Right. And then I'm just on that, uh, topic in terms of kind of future tailwinds with respect to office leasing and capital markets. The recovery so far seems to have been a little bit more weighted towards the major markets in the U.S. Um, and I could be wrong here, but I think your footprint in the U.S. tends to be a little bit more in secondary markets. Um, 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, um, a little bit better upside, uh, in the future?
So first of all, let me put our business in the US into perspective. We are 1, 2, or 3.
In virtually every market large small with 1 or 2 exceptions in the in the US. So we're 1 of the top players everywhere and um and so you know uh from the standpoint of of um of where the revenue will come from and where we can translate it. Um yes major markets generally uh generate higher revenues in part because the lease rates within those markets are significantly higher than they might be in a secondary Market.
So it's really all over the map for those if 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. Um, 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 calling yours is 1, I would say 1 of 2 uh well-balanced globally, a real estate services. Firms with strong Market positions everywhere. We would like to be bigger in in, in certain markets, of course. But uh, we're a well-balanced business and as if you as if you look back
over the past couple of years at a time, when Real Estate, uh, Real Estate Services has gone through, um, has gone through some
You know, very soft times call years continued to perform quarter after quarter after quarter, which is just shown the resilience of our business. And we're waiting for uh and we're continuing to strengthen making our bid, our our, our business better. And as markets continue to get stronger, we expect our results to follow.
Follow.
Okay, helpful. Thank you.
Our next question is from Stephen Sheldon.
Mine is open.
Hi Jane Christian, you've got Pat on for Stephen today. Uh thank you for taking my questions.
Uh, my first one is with the relative strength you're seeing and leasing in capital markets. Can you just touch on the puts and takes in terms of maintaining your Real Estate Services revenue guide for the year? Um, 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 sub-segments heading into the fourth quarter?
Uh, no, no. There's nothing. Uh, you know, no. No. Lumpy transactions. Um, in in the third quarter, uh, of note and uh, to achieve our full year guidance, you know what we do, uh, want to see, uh, an increase in capital markets activity, uh, year-over-year. And as I mentioned, uh, Capital markets had a very strong fourth quarter in 2024. Uh, so it is a tougher compared, um, but we do see the pipeline, uh, there for continued growth. Uh, leasing uh, should Trend, uh, possibly uh, for the fourth quarter, uh, as well. Um, you know, that's a really a global um thing across across all um, of our of our services.
All of these uh, services and there's nothing, um, you know, nothing lumpy or unusual to note.
Thanks, Christian, and 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. But wanted to ask is you expand your platform through continued m&a, is it of interest to build out more technical capabilities on the services side. And as you think about that, what what are you seeing in terms of the valuations for that type of asset?
well, um,
first of all across the engineering, uh, segment, which is, you know, as I mentioned, it's a, it's about a billion 7 now on a global basis. Um, we do a lot of Technical Services today as do most engineering firms.
so, um, 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.
um, the uh, having said that
Uh, the acquisition costs of any, um, uh, of any firm, uh, that is around data centers, right now, whether they're constructing them, whether they're, uh, whether they're, um, uh, project managing them, Etc, servicing them or managing after the fact are very high. And from our perspective, um, we are, um, you know, we can't see a return.
Um, in uh, in in, uh, in uh, in investing at, 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, uh, uh, uh opportunities to uh, uh uh, finance and own data centers because that creates opportunities for us to potentially do more in the future, but, uh, valuations are high in that space, as you would expect.
Okay, that's helpful context, thank you. And if I could just ask 1 more quick clarification Christian, uh, unless I'm looking about uh, looking at this incorrectly, I think the guidance for engineering implies that the 4q growth takes a a step down.
organically unless there's some sort of volatility in the pass through costs there am I looking at that correctly or is there anything we should be thinking about their
Yeah, you're looking at that correctly. Um, there. There could be a small step down in our organic growth in the fourth quarter. Uh, I'll remind you that we did um 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, but full year. And uh, you know, we've been outperforming uh, to that uh, on for the first 3 quarters.
Okay.
Thank you, both.
Our next question is from maximum size, chef from National Bank Capital markets, your line is open.
Hi, good morning, gentlemen.
I got um Jake I wanted to to go back to your prepared remarks and and I think you made a comment and unless I'm misunderstood but 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.
Really hear that I didn't hear he's asking about the 9 million of dry powder. We have across the organization and if we have any more details on what that is
um,
Closed-ended funds. So, uh, it really depends upon putting that money to work and in in what area and, um, and what kind of Revenue will generate, uh, once that money is put to work. So I think 9 billion is a, is a good number way, back way, way more than it was last year. And, uh, we're just looking for the right opportunities to deploy that Capital virtually across the board.
Okay, no, thank you for clarifying and apologize for for my connection. And another question I had in relation to the, um, uh, Australian for a, uh, on the engineering side. Do you mind me? Um, do you mind maybe, uh, talking a little bit about the reason why you went into that geography? I mean, it has been a bit sluggish. So is the thought process that right now? You're kind of picking it up at a trough, maybe any call would be very helpful there. Thank you.
Max. Yeah, the the acquisition we announced last night, um, you know, as a as a well uh well established, um, Urban Development, uh consultancy, uh, and Engineering, uh, firm operating in Adelaide. Um, this is a market that is, uh, significant of significant size in the Australian, um, sort of geography, and a place you want to expand to. Um, it's a relatively small firm with 65, uh, staff. Um, so we were able to um, do this transaction, you know, add these folks, uh, to our established
Platform. Which I think I believe we've got well, north of 500 people now in our Australian engineering business. And these folks will tuck in, uh, to that business. And um, they will be, uh, nicely accretive, uh, for for us and we're able to do these tuck in Acquisitions as, you know, at very attractive valuations. So that makes this, uh, you know, all the more
Compelling for us.
Okay, that's a great call. Thank you so much.
It's from Frederick B.
Line is.
On, um, Max's question on on engineering, really excited to see the segments perform strongly and, and you continue to partner with industry leaders. Both, uh, saw that in Canada and Australia, but it really feels like it's the real deal here. Um, 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 in the US? Australia, and, uh, Europe Europe. Seems like there's massive opportunity there that you're still waiting to tap.
Um, if you've sort of summed, it up beautifully, um, the us we'd like to be uh, we'd like to be growing faster. We're growing nicely there, but we'd like to be growing faster. Um, 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. 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 we're putting together our platform 1 Step at a Time, Europe is a big opportunity. We're spending a lot of time there. Um and uh there's some very interesting uh, platforms that um
That, uh, we’ve been considering, um, and, uh, again, um, you know, our partnership philosophy and our decentralized operation are attractive.
To, um, 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 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 an investment.
Management. Um, so we, um, you know, um, 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, and the white space keeps expanding.
$0.7 billion in 5 years. Hopefully, we can follow the same format and double the size of it over the next couple of 3 years.
Great, that's exciting. Thanks. Um, last question for me the um,
Uh, regarding the asterisk and triovest deals that you completed on the, uh, ra side. Um, they've only been contributing for a few months, but I was wondering if you could provide an update on how uh these businesses are performing under your the co to call yours on umbrella.
Um, you know, still early still too early to say uh Trio. Best is uh has been an asset that we've sought after for a lot of years. Um it's a highly it's it's almost you know, entirely recurring revenue and um, and uh, we're in the process of uh, integrating that into our Canadian Property Management operations. Interestingly there's some clients, uh, Canadian clients that have assets in the US that have asked us to take over some of those assets. So that's in process. So, we're quite excited about triovest and and, uh, we're also in the process of rebranding it and just to make the point 1 more time. Um, whenever you do these things, it takes cost it takes time. It takes effort. When you make Acquisitions, you have to integrate those acquisitions.
And, you know, somebody commented on, uh, on our engineering margin, uh, down 20 basis points in a quarter, like it's 20 basis points. Give me a break, you know. So, um,
Um, Trio best. Um, as I said is, uh, is going well and we're excited about what that can do for us. And, um, there's a, there was a there was another acquisition in real estate, a company called asterisk, which is so far been over performing. Um, uh, we, we had a bit of an advantage with that acquisition because, uh, they had already, uh, had relationships with our investment management platforms and a couple of different areas. So we, uh, we had a good, uh, sense for the quality of the professionals and um, and uh, we're seeing increased uh, potential opportunity around uh, financing infrastructure, mid-market infrastructure, uh, businesses through the asterisk professional. So, um, we're we're cautiously optimistic that that will be
Um, another successful business, um, and service offering that we can, um, that we can build over the next few years.
Thanks, that's great. I'll pass it back.
There are no further questions at this time. I would now like to turn the conference back to Mr. Henik, please continue.
Well, thank you, operator for passing it back, and thank you to everyone for participating and we look forward to uh to speaking again uh in our at a fourth quarter results in February. So thank you.
Have a great day.
Ladies and gentlemen, this concludes the conference call, thank you for participating and have a nice day.