Colliers also announced its new "Enterprise '25 Growth Strategy" which looks to more than double EBITDA by 2025. See here.
Impact: NEUTRAL
We forecast Q3/21 revenue of $844.9mm, up 22% y/y, reflecting a 24% increase in brokerage revenues and ~20% revenue growth from each of the O&A segment and IM. We forecast EBITDA of $110.7mm (13.1% margin), ~10% above consensus of $100.8mm.
We anticipate that capital markets/leasing activity will be a highlight again this quarter, with REAL Capital Analytics reporting U.S. commercial property sales hitting a new high in Q3/21, led by the Industrial and Apartment sectors (both strong sectors for CIGI). We anticipate that the robust Apartment/multi-family transaction activity should also benefit Collier's Mortgage (>20% EBITDA margins). On the office front, sales, and leasing data has been improving recently, with CBRE/ JLL/CWK reporting office tours at 80-90% of pre-COVID-19 levels (tours are a precursor to leasing/sales transaction). Interestingly, U.S. suburban office prices climbed 20.2% y/y in September (versus a 1.2% decline for CBD properties), which we anticipate will benefit CIGI given its over indexing to these markets versus the core gateway cities. Recall, in Q2/21, CIGI's office leasing remained ~29% below pre-pandemic levels with tenants still prioritizing flexibility. However, we believe that we may finally be reaching the inflection point for companies to begin committing to new longer-term office plans.
Capital raising robust: We anticipate another strong AUM update from Harrison Street this quarter, with the close of its eighth opportunistic fund (its largest closed- end fund to date with $2bn raised) and also launching its first Canadian fund.
2021 guidance: We had previously indicated that we viewed H2/21 guidance as conservative and based on recent industry trends, we anticipate that Colliers will increase its full-year 2021 outlook for the third time alongside Q3/21 results.
TD Investment Conclusion
We are maintaining our BUY recommendation and increasing our target to $170.00, reflecting the introduction of our 2023 estimates. We are attracted to Colliers' large and highly fragmented markets, demonstrated ability to add value through M&A, and improving mix of recurring revenues.