Colliers International Group Inc

TSX:CIGI

Earnings Call Transcript 2020-Q1

[Operator]

Welcome to the Colliers International First Quarter Investor's 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 materially differ from any future results, performance or achievements contemplated in 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 the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Tuesday, April 28, 2020. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Thank you, operator. Good morning and thanks for joining us. I'm Jay Hennick, Chairman and Chief Executive Officer of the company. With me today is John Friedrichsen, Chief Operating Officer; and Christian Mayer, Chief Financial Officer. This conference call is being webcast and is available in the Investor Relations section of our website. A presentation slide deck is also available there to accompany today's call.Colliers began 2020 with solid first quarter results, despite the initial impact of COVID-19 in Asia early in the quarter, with the rest of our operations being affected in March. Given the uncertainty, we expect the balance of the year to be challenging, particularly for our brokerage operations. In a few minutes, Christian will talk about our financial results, provide you with our working assumptions for the balance of the year and discuss our liquidity and conservative balance sheet. John will then offer some operational thoughts, after which we will open the call for questions.For the quarter, revenues were $631 million, up 1% in local currency. Adjusted EBITDA was $55 million, up 28%. And adjusted earnings per share came in at $0.54, up 6% versus the prior year.Throughout the quarter, our leadership teams at all levels motivated -- mobilized swiftly and responsibly to protect our people and align our costs while ensuring business continuity for our clients. I'm extremely proud of them and inspired by the work they are doing as we navigate through this unfortunate crisis. Let me take this opportunity to recognize and thank them all for the work they have done and continue to do for our stakeholders. Thank you all. It goes without saying that businesses everywhere have been hit by the crisis. For Colliers, about 45% of our revenues and now more than 50% of our EBITDA comes from Outsourcing, Advisory and Investment Management, services that are typically more essential, recurring and contractual, giving us a much more stable business than ever. We have worked diligently over the years to change the nature and composition of our company by increasing revenues that come from more resilient real estate services so that Colliers would have a much more balanced business model, and I'm sure glad we did. The rest of our revenues and EBITDA come from our highly variable brokerage operations, which we expect will decline sharply, as I mentioned. Across the board, we're making tough but necessary decisions to adapt. We have already taken steps to adjust our costs, including eliminating nonessential spending, cutting CapEx and reducing nonrevenue-producing support, administrative and legal staff. Furthermore, I have opted to not take compensation, and other members of our leadership have made similar decisions notwithstanding the additional volume of work required during these difficult times. And our directors, without being asked, also waived directors' fees to show their support. These are just some of the examples of our unique Colliers culture in action. Fortunately, Colliers also benefits from having globally diverse revenue streams with about 55% of our revenues coming from the Americas and the balance split almost equally between Europe and Asia Pacific.As markets return to normal, those that recover first will generate increasing revenues sooner as we are seeing to some extent in China right now, and we'll also be able to share best methods to return to work among many other things. Without question, we will continue to be tested in the coming months in ways we can't anticipate. However, I'm confident that we're up for the challenge and we'll weather this storm better than most.Everyone knows that Colliers' professionals are more enterprising and collaborative in this business. We continue to see countless examples of our enterprising spirit in action every single day, and we deliver important insights to our clients and keep our company moving forward as always. Perhaps most importantly, our entrepreneurial culture and way of doing business is reinforced by the fact that our leadership owns about 40% of the equity in our company, substantially more than any of our competitors. Not only is our leadership perfectly aligned with shareholders, we also have serious skin in the game, which is the ultimate motivation when it comes to making the right decisions expeditiously. I believe in our diversified business model. I believe in our experienced leadership, decentralized operating structure and enterprising culture. And I'm confident that when this crisis passes, our economy and Colliers will come out better and more unified than ever. Now let me turn things over to Christian. Christian?

[Christian Mayer, Chief Financial Officer]

Thank you, Jay. As announced earlier today, Colliers reported solid financial results for the seasonally slow first quarter, despite the initial impact of a global COVID-19 pandemic. My comments follow the flow of the slides posted on the Investor Relations section of colliers.com to accompany this call.Please note that my comments reference non-GAAP measures, such as adjusted EBITDA and adjusted EPS, both of which are defined in our press release issued today as well as the accompanying slide presentation. The adjustments are composed primarily of noncash charges that we view as largely unrelated to our operating results. All references to revenue growth are calculated based on local currency. First quarter revenues were $631 million, up 1% over the prior year. Internal revenues declined 1%, primarily due to the initial impact of the pandemic on brokerage operations in the Asia Pacific region throughout the quarter and in other regions toward the end of the quarter. First quarter consolidated adjusted EBITDA was $54 million compared to $44 million, with our margin at 8.6% versus 6.9% in the prior year quarter. The margin improvement was led by Investment Management in the Americas region, as I will discuss in a moment. Q1 revenues in the Americas totaled $370 million, up 4%. Americas Outsourcing & Advisory revenues were up 12%, with strong growth in each of project management, property management and valuations. Sales and lease brokerage revenues were down 3%, impacted by a noticeable slowdown in the month of March attributable to the pandemic. Adjusted EBITDA was $31 million, up 19% versus last year, with an 8.4% margin, up 110 basis points, primarily due to lower costs and operating leverage in Outsourcing & Advisory. EMEA region Q1 revenues were $117 million, flat relative to the prior comparative period, and we're also roughly flat in each service line. Brokerage revenues were adversely impacted by the pandemic late in the quarter. Adjusted EBITDA for the region was a loss of $4 million compared to a loss of $3 million last year. Asia Pacific region revenues were $97 million, down 9%, impacted by a sharply reduced brokerage activity in China and other countries in Asia, attributable to the pandemic beginning early in the quarter, partially offset by incremental revenues from the recent acquisition of Synergy Project Management in India, which contributed significantly to the increase in Outsourcing & Advisory revenues, which were up 16%. Adjusted EBITDA was $5 million compared to $11 million last year on lower revenues and service mix. Investment Management revenues for Q1 were $46 million, up 7%. Revenue growth was positively impacted by management fee growth across open- and closed-end products as well as the timing of certain European transaction fees, offset by a reduction in pass-through carried interest. Assets under management were $35.1 billion as of March 31, 2020, up 31% from a year ago. Adjusted EBITDA for the quarter was $18 million versus $10 million in the comparative period, with the decrease (sic) [ increase ] attributable to base management fee growth as well as the timing of transaction fees. Our consolidated income tax expense for the first quarter included a charge to reverse a $2 million benefit reported in 2019 due to a change in tax law applied retroactively. Absent this charge, our adjusted EPS would have been $0.59, up 16% versus the prior year period. Colliers maintains a conservative financial profile with a net debt-to-adjusted EBITDA leverage ratio of 1.8x as of March 31, 2020. Our leverage includes $91 million of debt drawn under our revolving credit facility attributable to an investment in real estate assets to seed a new investment management fund in Europe. We expect to transfer these assets off our balance sheet without gain or loss during the second quarter of 2020, favorably impacting our leverage ratio. As of March 31, 2020, we had $478 million available under our $1 billion revolving credit facility maturing in April 2024. And together with cash on hand, we have $580 million of liquidity to fund operations, working capital, capital expenditures and acquisitions. We recently renewed our $125 million structured accounts receivable facility for another 1-year term extending to April 2021. We also have outstanding EUR 210 million of 2.23% senior notes, maturing in May 2028. The COVID pandemic is having an unprecedented impact on global health and economic output. In light of this uncertainty, we have developed a working assumption for our company that is based on the best available information at this time but is subject to changes based on numerous ongoing macroeconomic, health, social, political and related factors. Our working assumption for the full year 2020 is a 15% to 25% decline in consolidated revenues and a 25% to 35% decline in consolidated adjusted EBITDA relative to 2019, excluding the impact of acquisitions not yet completed. Brokerage revenues, which have a highly variable cost structure, are expected to decline sharply in the second quarter and then gradually improve sequentially in the third and fourth quarters. Outsourcing & Advisory and Investment Management revenues are expected to remain relatively stable through the remainder of the year with some local variability depending on market conditions. The working assumption includes steps to adjust our cost structure, which John will discuss in a moment. Based on our working assumption, we expect to remain on-site all financial covenants in our debt agreements.With a weighted average debt maturity of 4.7 years and significant available liquidity, we believe we are well positioned to weather the economic and financial effects of the pandemic. That concludes my prepared remarks. And I would now like to turn the call over to John.

[John B. Friedrichsen, Chief Operating Officer]

Thank you, Christian. As the COVID-19 pandemic began to impact our operations around the world, first in Asia Pacific, then Europe and finally, the Americas, our executive teams moved from a growth mindset to a focus on sustainability, taking decisive action to protect our employees, observe government-mandated closures, implement business continuity measures to support our operations and service our clients and reduce our costs to offset the impact of declining revenues due to the pandemic. True to Colliers' enterprising approach, this was done swiftly and thoughtfully as conditions warranted. And we will continue to monitor the situation closely, taking further action as necessary.In Q1, we made the difficult decision to reduce the number of employees, our most significant expense. Although, some of this began midway through the quarter, in Asia, most of the reductions took place just after quarter end. To date, approximately 10% of our workforce has been furloughed for a period of 2 to 3 months with health benefits maintained, while another 5% were separated from service. These cost adjustments reflect predominantly nonrevenue-producing staff in support, administrative and certain leadership roles. Not included in these workforce reduction percentages is a much broader based reduction in salaries and bonuses across our global workforce from the global executive team to our regional and local leaders. In addition to reducing our people costs, we have also reduced all nonessential spending for the balance of the year. In the aggregate, we expect these measures to result in annual savings of approximately $150 million in 2020. If required, we may take further cost reduction measures in the future. Consistent with most other professional services firms, Colliers continues to service its clients across its global platform, though mainly and where possible, this is being done remotely. While our offices have reopened in many parts of Asia or plan to open imminently. Offices in all other regions are either closed or remain open but operating with minimal staff. Prior investments in IT systems and applications have served us and our clients well as we are leveraging this investment more than ever before and expect that much of this elevated use of technology will continue in the future. Whether it's communicating internally or connecting with clients, our use of technology has never been more important. Colliers has delivered valuable insights through surveys, thought leadership and interactive webinars at local, regional and global levels developed and delivered through the untiring efforts of our professionals and subject matter experts. Webinars that addressed a world view of dynamics impacting both occupiers and landlords earlier in the month. The more recent presentations focused on surveying remote working and transitioning back to the workplace attracted thousands of registered participants, representing a tenfold increase in the typical size of audiences for these types of presentations precrisis. For those interested, this COVID-19-related content is located on our website at colliers.com and available by major market using the drop-down menu located in the upper right-hand corner of our homepage or the hyperlinks on the operational priorities page of the slide deck accompanying this call.Obvious -- though there are countless silver linings to this crisis that Colliers will benefit from in the years to come, this does not in any way negate the significant human and economic cost of the pandemic and the uncertainty it has created. However, with a near-term focus on business continuity, combined with a longer-term focus on strategically investing for the future, we believe that we will emerge from this period stronger than ever before.That concludes our prepared remarks, and I would now like to turn the call back to our operator to facilitate questions.

[Operator]

[Operator Instructions] Our first question comes from the line of George Doumet with Scotiabank.

[George Doumet, Analyst]

Maybe looking at the more stable Outsourcing & Advisory part of the business, just wondering if you've seen any pockets there that's been more vulnerable to COVID-19. I mean, just to clarify, do you guys expect that part of the business to be flat? Or would you expect that part of the business to be down?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

It varies by service. Investment Management has been very resilient. In fact, as you can see from the results up for the quarter, property management is absolutely booming, although they are having trouble staffing some of the buildings because some of their support staff, particular -- in particular on-site building personnel, which we administer, we're having trouble getting people, obviously, to attend, so that's been taxing on them. It modestly impacts revenue streams. But one of the silver linings, as John talks about, is our phones have been ringing off the hook from others that maybe potentially were doing their own property management and now want to outsource that to credible service providers like Colliers. And we're responding to those requests for proposals, and so we're seeing business pick up. But I think for the quarter and even through the first month of this quarter, we're seeing substantial increases in our property management business so far. Other areas, project management, as an example, have also been very resilient. We're seeing some pickups in business depending upon different geographic regions. There is some variability because in some countries, governments have closed down construction sites, including infrastructure, which is the lion's share of what we're -- we do in project management. So we're seeing a little bit of that happening. But generally, a pretty much as resilient as we were hoping it would be going into a crisis like this. I hope that answers your question.

[George Doumet, Analyst]

That's helpful. And maybe a tougher question. How would you see the eventual recovery in brokerage activity by region? I mean, obviously, Asia, it seems like it's recovering, but the other parts of the world, like how do you kind of see that in terms of the recovery?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Well, we're not seeing it in Asia just yet, and that's something we're watching daily. We're seeing activity happen. And we're seeing activity virtually in every other market. Our real estate professionals are being asked by clients to help them with lease extensions, lease deferrals, all kinds of potential adjustments to existing lease relationships, those generally are provided as an adviser. Sometimes, we get paid. It's modest when we get paid. In China, we're seeing a lot of that happening right now. There's very little new leasing taking place because, obviously, in many buildings, it's difficult to get access. So I think that if one were to ask me are our people busy, I would say, in many ways, they're busier now than they've ever been. But the question is, is that translating into revenue streams near-term? And we haven't yet seen it and suspect that, as Christian said, the Q2 will be difficult. And hopefully, we'll consistently get better over the balance of the year. So that will give you a sense. Buildings themselves, buying, selling buildings, there's a lot of bottom feeders out there looking for building looking for buying opportunities. There isn't necessarily debt in the marketplace, although most lenders say they're open for business. Our insight is that they're open for business, only for the right business at the right terms, including higher interest rates on existing indebtedness. So it might be there for their most prominent clients, but it's not as readily available. All of these things, and the interesting thing about commercial real estate is, we are active in these times. In times of change, it is generally very good for real estate service providers. Whether that translates into revenue streams and when it translates into revenue streams is another question.

[George Doumet, Analyst]

Yes, that's helpful. And just one more, if I may, just off of Christian's remarks around being on-site for the covenants. I'm just wondering if you guys may be looking to extend those. Just maybe to give us a little bit of wiggle room for M&A. And just wondering how opportunistic we'll be on that front.

[Christian Mayer, Chief Financial Officer]

George, we're always looking to be opportunistic as it relates to acquisition opportunities. Those may come later in this year or next year, and we will consider those at that time.

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Remember also that we are in the process of 2 very significant transactions, 2 companies that we think are first class, and we'd like to complete them when they -- when conditions are met. And both of those are further -- are our game plan of extending more resilient services for Colliers, while opening up huge new growth opportunities for us going forward.So we are already out there in terms of our next phase of growth and believe that once those transactions are completed, we will again accelerate our growth plan, as we have in the past.

[Operator]

Our next question comes from the line of Matt Logan with RBC Capital Markets.

[Matt Logan, Analyst]

John, could you give us a little bit of color from an operational perspective, maybe just on how your professionals are adapting to a work-from-home environment? And how this differs by your various service lines?

[John B. Friedrichsen, Chief Operating Officer]

Sure. I think that I referenced silver linings, and there are many actually in this difficult time. And one has been around how incredibly enterprising our professionals have been and their ability to quickly transition to working remotely using technology to communicate and to collaborate both internally and with our clients.Certainly, there are certain things that are more challenging to do during this time like walking space on a new office layout that you might be considering, things like that, but those kind of things have been postponed. But I think the greater opportunity of looking how to work through this period and transition to what will be a gradual opening has been top of mind for our professionals.They've adapted extremely well and are now dispensing advice, some of which I have indicated already has been publicly made available and has been attended by literally thousands of people. So I would say across the board, certainly, the professionals who are typically in our workplace offices have done extremely well. Many of those are quite used to working remotely as it is. Certainly, our number of our fee earners and advisers are routinely out of the office. So perhaps a little bit less of a change for some of them. And then as Jay spoke earlier, we do have certain people that are on-site and have to be on-site at client buildings to the extent that those remain operating and hosting people. So we've adapted there as well. I'd say, all in all, it's been a very pleasant surprise to see how well our professionals across our business. And support staff have also adapted to the new way of working, which is temporary, but some of which remain may be with us down the road.

[Matt Logan, Analyst]

Great color. And maybe just changing gears a little bit. Given your expectations for stable results in Outsourcing & Advisory and Investment Management, can you give us any thoughts on your outlook for potential revenue declines on sales and lease brokerage? And just maybe what you're seeing to date? Or if you think those 2 business lines may be different in any way in terms of the magnitude of the declines?

[Christian Mayer, Chief Financial Officer]

Matt, we looked at our pipelines and our developer expectations for the rest of the year from a bottoms-up approach really through -- with each of our regions, with each of our management teams around the world.The revenue declines in brokerage, as I said, are going to be very significant in Q2. But really, in terms of the overall outlook, we're focused on the year, and it's difficult to predict what Q3 and Q4 are going to look like exactly. And it's difficult for us to predict what the full year will look like, but we've made our best assumptions at our best guess with the information we have today to provide the working assumptions that we developed.But certainly, brokerage will be down, sales and lease brokerage, both, to be maybe clear, will be down. And we'll develop it more as the year progresses.

[Matt Logan, Analyst]

Appreciate that. And maybe just in terms of the differences between the 2, will you expect them to track very similarly directionally? Or would we expect to see lease brokerage perform better than sales brokerage in 2020?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

I think that's a common assumption, but it's difficult to answer the question because leasing is a bigger component of our business in some regions and less of a component in other regions of our business. And so it's very difficult to give you a breakdown of how they might be on a global basis or even on a regional basis. So I think the best guess we've given you is a combined brokerage activity set for the company across the board.

[Operator]

Our next question comes from the line of Stephen Sheldon with William Blair.

[Stephen Hardy Sheldon, Analyst]

First, good to hear about the inbound activity in the property management business. So I was curious what would need to happen for you to be able to close some of those deals?Would that likely only happen in a material way once restrictions on inputs and interactions are lifted? Or is that something that could happen to a certain degree before travel opens up? Would clients be comfortable closing deals like this remotely? Or do you need to see them in person for that to happen?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

We're seeing clients are closing deals on that primarily for 2 reasons. One, they're dissatisfied with existing service providers that have vacated in some cases or so many of their on-site staff have just not been there to protect the buildings that they have, number one.And number two, there really is a big push. And rightly, in our view, for those that are both an asset and property manager to outsource the property management component of their business, so the turnover is easier in a circumstance like that, they're turning over all of their on-site work and in some cases, the entire staff that comes with that to Colliers. And frankly, it's been a little bit of a pressure on our property management operations, who are now looking back at some of their existing smaller accounts and for the first time in years, looking to potentially cull some of the smaller retainers that we have to make availability for some of these larger opportunities that are coming to floor.

[Stephen Hardy Sheldon, Analyst]

Got it. Okay. And then I think you gave some details about the property and project management. Have you said anything about valuations and advisory? I missed it. So I guess, what trends are you seeing there in the current environment over the last few months?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

So valuations has been -- has gone through the roof. It had an amazing first quarter. It continues, although not as -- not with the same velocity, into this quarter. I suspect it will fall off a little bit going forward, not to the same degree as brokerage as an example. And part of that is because debt financing is not as readily available.But offsetting that, a lot of lenders on properties that we would have valued a year ago are asking us to go in and reevaluate the valuation we did a year ago in light of changing tenant profiles and their ability to pay rents.So I think the -- I think revenue evaluation will be less than it was in the first quarter, but should continue, by and large, for the balance of the year.

[Stephen Hardy Sheldon, Analyst]

Okay. And then last one from me. What do you think the current environment does for adoption of technology solutions for CRE professionals, for operators and users over the medium term?Has there been anything surprising about the way these different parties have used tech solutions over the last few months?

[John B. Friedrichsen, Chief Operating Officer]

Stephen, it's John. Yes, it has been a little bit surprising. I mean, there was already a trend towards more use of technology, but this has really forced many people to adopt very quickly.And there's nothing like a situation like this where the dynamics cause people to have to operate differently. And technology has been one of the main ways to stay connected with both clients and colleagues. And we are using it significantly through our business. And at the same time, we are continuing to carefully and modestly invest and evaluate those technologies which we believe are going to continue to facilitate our productivity, working remotely and thinking about the future, how we can use this more effectively to communicate and to collaborate with our people.So it has been very, very interesting to watch. And it's going to -- I think the trend will continue. It's just been accelerated during the last couple of months.

[Operator]

Our next question comes from the line of Stephen MacLeod with BMO Capital.

[Stephen MacLeod, Analyst]

I just was wondering -- just following up on previous line of questioning around the brokerage business. Can you talk a little bit about kind of what you saw in terms of brokerage trends through the quarter? And more specifically, kind of what you saw in terms of brokerage trends in March and potentially quarter-to-date as well?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Brokerage trends. As you could see, we had a very strong first quarter. So Brokerage did exceedingly well during the quarter.I would suggest that a lot of those transactions were transactions that started to culminate in November, December, January and then resulted in transactions being completed, either during the quarter or, in fact, during this current quarter, we're seeing transactions still get completed. And that's both in North America and Europe and Asia as well.So I think that we're seeing that. We're seeing tight lines not as buoyant in terms of new buildings for sale and primarily because the new reality yet has not set in with landowners and even buyers. What is the value of the building going to be worth in the future? I have a shopping mall. The shopping mall is a good shopping mall, except that 40% or less of the tenants paid. I've got high leverage on the shopping mall. Is now the time to sell? What am I going to do about it? So there's a lot of that, and it's happening in office, it's happening even in the better asset classes of industrial and some of the other areas. People are relooking at real estate. The pundits are relooking at the asset classes to determine whether there's actually a change in those asset classes that are more desirous than others.So I think there's a period of time here where people are going, unless they are financially strapped, unable to pay their debts, I think, for the most part, there's going to be a period of time when people will wait to see what the new value levels are of their different real estate assets.

[Stephen MacLeod, Analyst]

Okay. That's pretty good color. And maybe just along those lines, you talked a little bit about this new reality has not yet set in. Do you view any long-term changes in how people view real estate? If you think about just the propensity for people to potentially work from home, does that, in your view, lead to higher occupancy rates or vacancy rates in the office sector, for example? Is there -- are there any long-term trends that have begun to emerge? Or is it still too soon?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Well, John may have his own views on this. But everything you're reading, you've got 3 people that say, we're going to have smaller office footprints in the future. Another 3 people will say they're not going to change for this reason. So I think that it's, again, still too early to make any pronouncements there. I think there's a lot of people dissecting different asset classes to determine different pricing levels.But in general terms, real estate will continue to be a proven and desirous asset. Real estate borrowing rates are at historical lows, will continue to be at historical lows. When you compare privately-owned real estate to the volatility of the marketplace, it is still a very good asset to own.And I believe that institutions will continue to add to allocate their capital to real estate in increasing numbers as they have over the past couple of years.

[John B. Friedrichsen, Chief Operating Officer]

The only thing...

[Jay Steward Hennick, Founder, Global Chairman & CEO]

John, do you want -- anything to add?

[John B. Friedrichsen, Chief Operating Officer]

I'll just add briefly to that. I mean, at the end of the day, as Jay said, I think it's probably too early to make any conclusions about what's likely going to happen here.But based on what we've seen now and the talk and the discussion. Of course, this can all change, but based on that, there seems to be perhaps some interest in more flexibility around the workplace. Conceivably, there could be some migration to working from home in a limited way. One would think that, that might reduce the amount of -- in the case of office, the amount of space required. But in the current configurations of many offices, they don't lend themselves to social distancing very well.So it may end up being sort of a net 0, where if it wasn't for allowing certain people to work from home from time to time, companies would have to expand their footprint or reconfigure it significantly. And if they can simply work with the existing footprint and then also allow a small part of their workforce to work remotely, they can sort of stay at the same level in terms of workplace and office occupancy. I don't think it's had much of an impact on the industrial market. In fact, there are secular trends around industrial and logistics, which in some way may continue and have actually accelerated around e-commerce and other things that we've seen a lot of, of course, during the crisis, and a lot of that will probably continue. Those are the 2 biggest areas for Colliers. There's a whole other subset around retail, which has its own challenges, and which have been more exposed now. It's a small part of the business. But I think there are challenges there around retail and redevelopment and other things that is going to need to get done in that particular asset class. Jay has already spoken about some of the other areas that we're involved in on the Investment Management side, so I won't repeat any of that. But anyway, there's change here. But in terms of how exactly it's going to end up after we get through all of this nobody really knows.

[Stephen MacLeod, Analyst]

Right. Okay. That's really helpful. And then maybe just finally, when you talk about the Outsourcing & Advisory business, and maybe excluding Investment Management, is there a way to quantify sort of how recurring the different components are when you think of property management, project management and workplace solutions and valuation and advisory?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Well, it's easy to quantify. Property management is completely recurring revenue. There are components of it that may not be as recurring.So if I -- if during the crisis, an owner decides that they want to cut the number of on-site staff down from previous levels because buildings aren't open, that would reduce the revenue and associated margin with that. But generally speaking, it's a business that we do, I'd say, $600 million, $700 million a year worldwide, build on a monthly basis essentially. Project management is another business we probably do $300 million, $400 million a year in that business on a global basis. It's built on a monthly basis. It's based on, in large part, staffing of jobs that are -- have an average job period of 18 months or so. Typically, therefore, from a large institutions or governmental agencies' infrastructure, so they're long-term relationships. Just using a Canadian example, we've been working on the revitalization of the Parliament buildings in Ottawa now for 12 years. And I understand the job will be completed in 2032. So there's just an example of long-term project management. Valuations is a little bit less recurring except that once you value a building, and in many cases, owners need to have those buildings or lenders need to have those buildings reevaluated either quarterly or annually. You build a relationship and you're renewing it on an ongoing basis and earning fees on an ongoing basis and that's Investment Management aside. So those business units, and we've worked hard, as you know, Stephen, over the years, to change the nature of our company to focus on real estate services that are much more resilient. Those are resilient, and we believe our new foray into the mortgage servicing and debt placement area as well as engineering. When those transactions get completed will just take us to an entirely new level of the composition of Colliers, which is, in our view, significantly different than the other companies in our sector.So hopefully, that gives you some color.

[Operator]

Our next question comes from the line of Frederic Bastien with Raymond James.

[Frederic Bastien, MD & Equity Research Analyst]

Jay, you sound pretty committed to the Dougherty and Maser acquisitions, but I was hoping to get an update on both. Just curious how long you can push -- potentially push the close of these transactions forward?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Well, we're not pushing the extension of either of the transactions. Both of them are subject to regulatory approval. Both of them are subject to closing adjustments. In the case of Dougherty, obviously, there's been something called a pandemic out there and that has an impact on closing adjustments. So we're looking at that very closely to make sure that we get what we pay for and we have the appropriate coverages we need.Maser is just early days in the regulatory approval process. Both of these transactions are of high quality. Both of these transactions are with people that we are looking forward to working closely with, both of these transactions are areas in which we think 1 and 1 could make 6. So we are -- we are committed. Having said that, we'll only move forward if we have appropriate adjustments where necessary.

[Frederic Bastien, MD & Equity Research Analyst]

Okay. That's helpful. On the -- and just curious of the $100 million -- $150 million or so in expected cost savings that you highlighted earlier, how much of that would relate to your brokerage business? Most of it?

[John B. Friedrichsen, Chief Operating Officer]

Yes. I mean, the vast majority would be the brokerage business. I mean, certain support staff may cover multiple areas. But we really did try and become laser-focused on the areas that we felt were most susceptible to the impact of the measures taken to contain the pandemic, and that's where we went at. So yes, the vast majority would be transaction related.

[Operator]

Our next question comes from the line of Sumayya Syed. She is With CIBC.

[Sumayya Syed Hussain, Associate]

Just one question from me here. Just on Investment Management, it's seen pretty good growth in AUM since you guys bought the platform. Any early indications of where AUM is headed today? And in your revised outlook, I guess, does that imply AUM staying flat? Or is there any growth sort of baked in there?

[Christian Mayer, Chief Financial Officer]

Well, Sumayya, we had AUM growth of about 6% sequentially in Q1. And we would expect that we would have sort of similar AUM growth through the remainder of the year based on our pipeline of commitments and for investment, which remained strong, and our deployment of capital that's been previously committed.So modest growth through the remainder of the year would be our view.

[Jay Steward Hennick, Founder, Global Chairman & CEO]

The only thing I'd add to that is our Investment Management business now in the mid-30s in terms of AUM with significant operations in the U.S. and in Europe is one of the largest, if not the largest alternate asset investment management firm, first class. They won this year the [Peery Best Investor] in alternate assets.And people forget the fact that Colliers owns one of the best in this very important segment of the real estate investment management industry. It continues to grow by leaps and bounds. It has an amazing management team. We're very proud of them. They continue to grow their business beyond just the U.S. and Europe. They're looking at Canada as an example right now. So this is another big area of growth, we think, for Colliers in the years to come. And we have a great partnership and astute group of shareholders at Harrison Street that have really done an incredible job over many, many, many years.

[Sumayya Syed Hussain, Associate]

Okay. So they continue to stay active during the current shutdown, I guess?

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Yes.

[Operator]

I'm showing no further questions at this time. I would now like to turn the call back over to management for closing remarks.

[Jay Steward Hennick, Founder, Global Chairman & CEO]

Thank you very much, operator. We would normally say we look forward to having a -- our second quarter conference call. Whenever it takes place, it will be an interesting one as we'll see how brokerage rolls out for the balance of the year, but we're anticipating a difficult second quarter as it relates to brokerage. But all else is working well at Colliers, and we hope to be able to weather the storm, even in brokerage, better than most. So thanks for joining us today, and we look forward to speaking to you soon. Thanks.

[Operator]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.