Colliers International Group Inc T.CIGI

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Colliers International Group Inc.

(CIGI-N, CIGI-T) US$140.88 | C$179.57

CBRE Reports Strong Q4/21 and Robust 2022 Outlook Event

Net revenue: $5,566mm, +35% y/y; adjusted EBITDA: $1,124mm, +49% y/y (20% above cons: $937.1mm) reflecting 4.8% higher-than-expected revenues and strong margins (13.1% vs. cons: 11.5%).

Impact: NEUTRAL

Q4 results were strong, led by robust transaction activity with CBRE's global property sales revenue and leasing revenue ~45% and ~14% above the 2019 peaks, respectively. Looking forward, management noted continued momentum in U.S. sales/leasing with revenues trending significantly above prior Q1 peaks. CBRE expects 2022 sales revenue to increase in the low-to-mid teens and leasing revenue to increase at a high-teen to low-twenty percent rate (assuming acceleration of office but deceleration of industrial given shortage of available properties) and high- single digit to low-double digit growth rates across the other advisory businesses (i.e. property management, valuation and loan servicing). Management also highlighted a particularly robust M&A environment.

We view CBRE's outlook as highly encouraging and consistent with the robust market outlook provided by CIGI. Granted, we acknowledge the current geopolitical tensions could temper results versus current guidance.

• Office recovery: CBRE's global office leasing revenue continued to recover and was nearly flat versus 2019 levels. EMEA and APAC office leasing increased ~7% and 11%, respectively, compared to Q4/19 while U.S. leasing remained ~4% below pre-pandemic levels. Q4/21 U.S. office sales improved sequentially but remain down ~14% versus pre-pandemic levels (Q3/21 was down ~16% vs pre- pandemic).

• Capital markets: Sales transaction revenue increased 73% y/y, including an 89% increase in the U.S. (Australia, Japan, and the U.K. also notably strong). CBRE's U.S. market share improved 100bps y/y to ~17.5%. Commercial mortgage originations declined 3% y/y reflecting a strong comparable period and lower GSE origination activity.

• Leasing: Revenue increased 60% y/y and up 14% vs. 2019 (up from ~7% above 2019 levels during Q3/21). All three regions generated leasing revenue above 2019 peak levels: +13% in the Americas; +25% in EMEA; +7% in APAC. Leasing activity was once again led by industrial (up 60% vs Q4/19).

• IM: Excluding carried interest, IM revenue increased 19% y/y. Asset management fees increased 21% y/y; AUM up 7% q/q to ~$141.9bn (>80% of AUM invested in assets other than office).