Colliers International Group Inc

TSX:CIGI

Earnings Call Transcript 2020-Q3

[Operator]

Hello, and welcome to 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. 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 use 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. As a reminder, today's call is being recorded. Today is October 27, 2020. And at this time, for opening remarks and introductions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Jay Hennick. Sir, you may begin.

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

Thank you. Operator, good morning, everyone, and thanks for joining us for our third quarter conference call. As the operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer of the company. With me today is John Friedrichsen, Chief Operation Officer; and Christian Mayer, our Chief Financial Officer. This conference call is being webcast and is available on the Investor Relations section of our website. A presentation slide deck is also available to accompany today's call. Despite the impact of the pandemic, Colliers reported better-than-expected results for the third quarter, with continued growth from recurring services. These results are a testament to the resilience of our business model, a business that is also diversified by geography, by service and by asset class. Revenues came in at $692 million, down 6%. Adjusted EBITDA was $92 million, up 9%, and adjusted earnings per share came in at $1.08 up 4% relative to the prior year. While uncertainties persist, we expect our full year results to come in stronger than anticipated. As a result, we have increased our operating assumptions for the balance of the year, as you will hear. In a few minutes, I'll turn things over to Christian and John for comment. But before I do, I'd like to make 4 points today. The first is, culture counts. Our unique entrepreneurial culture at Colliers has always been a differentiator for us. Culture takes years to create and discipline to sustain, and that's why it's so difficult to copy. I'm extremely proud of our leadership teams around the world who continue to execute the Colliers way. Our bias for action and propensity to make informed decisions quickly has always allowed us to respond better than most to contain costs, to align resources while always continuing to provide essential advice to our clients. I'm also confident that coming out of this pandemic we will adapt to the new normal faster and better than the others with our unique entrepreneurial and enterprising culture leading the way. Second, like we've done in the past, Colliers is programmed to capitalize on opportunities. We always maintain a strong balance sheet to capitalize on opportunities to strengthen our business especially in times of change when others are either hitting the pause button or running for cover. This year was no exception. So far, we've invested $240 million in acquisitions, up from $45 million last year. During the quarter, we continued to integrate recently acquired Colliers Mortgage and Maser Consulting and also completed the acquisition of Colliers Nashville, a leader in one of the fastest-growing markets in the United States. Though still in the early days, I'm very excited about the potential for all of these additions this year and look forward to helping them accelerate their growth as part of our global platform. We continue to see great opportunities out there to add talent, to expand our services and to streamline our businesses, while also looking for incremental acquisition targets to strengthen and further diversify our business. Number 3, almost 60% of our earnings now come from high-quality recurring services. Having such a high percentage of our earnings coming from recurring revenues gives Colliers more resilience than ever and clearly sets us apart not only in terms of the percentage of recurring revenues, but also in terms of the quality of the recurring revenues. Today, the Investment Management, Property Management, Project Management, Engineering and Design and Mortgage Services represent a growing majority of our business, and we fully expect this growth to continue in the years to come. Make no mistake. There's nothing wrong with traditional capital markets and leasing. Transaction volumes may be down, but they will be back, and they'll be back strongly as the economy stabilizes because they are essential services that are needed and required by real estate owners and occupiers everywhere. In fact, we're already seeing some signs of recovery in most of our markets, as John will talk about. Finally, it's time to better appreciate the value of what we're creating at Colliers. The Colliers leadership team has been creating value for shareholders for a long time. Over the past 25 years, we've delivered about 20% compound annual growth rate in share value. This record of achievement is enviable, to say the least, but it also suggests that we know a thing or 2 about how to value and build high-quality service businesses. The way I see it, Colliers remains materially undervalued. From an investment perspective, whether you value us on a stand-alone basis or on the basis of the sum of the parts, Colliers trades at a significant discount to other property or professional service companies with similar characteristics. Where can you find a global, highly diversified company with an institutional brand, compelling growth prospects on a global basis, with almost 60% of its earnings coming from resilient revenue streams, trading at the value that we trade at. Especially one with an impressive track record of creating value for shareholders where management has so much skin in the game, almost 40% of the equity of our company. With that said, I'd like to now pass things over to Christian. Christian?

[Christian Mayer, Chief Financial Officer]

Thank you, Jay. As announced earlier today, Colliers reported better-than-expected financial results for the third quarter. My comments follow the flow of the slides posted on the Investor Relations section of colliers.com to accompany this call. Please note that the non-GAAP measures referenced on this call are defined in the press release issued today. All references to revenue growth are calculated based on local currency. Third quarter revenues were $692 million, down 7% relative to the prior year. Internal revenues were down 19% primarily due to the impact of the COVID-19 pandemic on a return [indiscernible] and capital markets operations globally. Our internal revenue variance showed significant improvement sequentially that is relative to Q2 2020 as economies began to reopen after the initial phase of the pandemic. Third quarter consolidated adjusted EBITDA was $92 million, up 8% from $84 million last year, with margins at 13.3% versus 11.4% in the prior year quarter. Margins in each region were impacted by reduced revenues but mitigated by continuing aggressive measures to manage expenses, including discretionary support and admin costs as well as compensation. In the case of the Americas, margins were favorably impacted by acquisitions. Americas' Q3 revenues totaled $423 million, essentially flat versus the prior year period overall. Americas Outsourcing & Advisory revenues were up 25% as a result of engineering and loan servicing revenues from recent acquisitions. Capital Markets revenues were down 6%, but included the benefit of debt origination revenues from a recent acquisition. Leasing revenues were down 18%, a significant improvement from the 45% reduction experienced during Q2. Adjusted EBITDA was $55 million up 40 -- up 41% from last year, with significant contribution from acquisitions as well as continuing cost savings implemented early due to the pandemic. In the EMEA region, Q3 revenues were $117 million, down 19% overall. Capital Markets was down 37%. Leasing was down 25% and Outsourcing & Advisory was down 4%, all impacted by the ongoing pandemic. Adjusted EBITDA for the region was $8 million compared to $13 million last year. In the Asia Pacific region, Q3 revenues were $110 million, down 23%. Leasing and Capital Markets were down 45% and 35%, respectively, with all markets and asset classes impacted. Outsourcing & Advisory revenues were down 5%. Adjusted EBITDA was $13 million compared to $19 million last year. Q3 investment management revenues were $42 million, up 4%. Assets under management were $36.2 billion as at September 30, 2020, up modestly from June 30. The Harrison Street's demographic investment strategy focuses on lower volatility, alternative asset classes, including student and senior housing, medical office, storage and social infrastructure and for the most part...

[Operator]

Your conference will continue momentarily. Please stand by. Once again, ladies and gentlemen, please continue to stand by, your conference will resume momentarily. Thank you for your patience. You are connected.

[Christian Mayer, Chief Financial Officer]

Thank you. Q3 investment management revenues were $42 million, up 4%. Assets under management were $36.2 million at September 30, 2020, up modestly from June 30, 2020. Harrison Street's demographic investment strategy focuses on lower volatility, alternative asset classes, including student and senior housing, medical office, storage and social infrastructure. And for the most part, the underlying value of these assets remained stable. Adjusted EBITDA for the quarter was $15 million versus $16 million in the comparative period impacted by catch up fees on a new fund earned in the prior year quarter. Our net debt to adjusted EBITDA leverage ratio was 1.5x as of September 30, 2020, which was the same as the prior quarter and well within our target range. The full impact of the pandemic remains far-reaching and uncertain. However, as Jay mentioned, we have updated our working assumption for the balance of the year to reflect better-than-expected operating results for the third quarter as well as to narrow the range for the balance of the year. The updated revenue range for 2020 full year is a 10% to 15% decline relative to 2019. The updated adjusted EBITDA range is a 10% to 15% decline relative to 2019. Looking forward, we expect transactional leasing and capital markets revenues both of which have a highly variable cost structure to remain below 2019 levels for the fourth quarter. Investment Management and Outsourcing & Advisory revenues are expected to remain on track for the fourth quarter. 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 reflected in our Q3 results and updated working assumption for the balance of the year, the level of uncertainty related to the COVID-19 pandemic that negatively impacted our operations and most of our clients abated somewhat during the last few months, although we are not out of the woods yet. We saw a positive change in sentiment and momentum during the last few months, and we expect this trend to continue for the balance of the year and beyond, supporting modest improvement in business activity. As a global business and leading provider of professional services and investment management to property, occupiers, owners and investors, Colliers continued to put clients first providing our diverse and relevant experience during this unprecedented period. Based on our experience since the outset of the pandemic, we are confident that the time, attention and value delivered today will be rewarded by our clients in the future when the current level of uncertainty reduces and longer-term decision-making resumes. In fact, we're already seeing tangible examples of our advice leading to significant client engagements, most notably in our workplace advisory practices, which we anticipate will lead to future transaction advisory work. Across our global business, our business leaders, professionals and support staff remain highly engaged despite the challenging operating conditions and the cost-containment measures in place. With just about 6% of our employee base still furloughed, primarily in transactional services, we continue to manage our business carefully and expect to bring back additional support and capacity as activity levels warrant. Despite the pandemic, Colliers continues to strategically invest in talent across our global platform and take advantage of opportunities to close gaps and build capabilities by attracting leaders and professionals looking to be part of a global business where the entrepreneurial spirit is alive and well. We expect this to continue and accelerate going forward. And to complement this investment in people, we continue to invest in technology that helps improve our productivity and service to clients. Over the next couple of weeks, you will hear about our latest innovation workplace expert. A mobile-enabled app designed to serve as a user-friendly diagnostic tool to visualize the future of workplace using a variety of inputs based on client preferences. This technology was the first development at Colliers globally under our new updated IT platform and strategy development that focuses on our clients' most pressing needs. The beta version of this technology with the input and involvement of our global workplace practices team has been responsible for winning workplace advisory engagements with several hallmark clients in Europe and the U.S. recently. While accounts management remains an operational priority across our business, other areas of focus include the integration of Colliers mortgage into our U.S. brokerage operations as well as more recently acquired Maser Consulting. In both cases, we have accelerated the process of cross-selling by leveraging our relationships across relevant advisory practices that drive value to our clients and brokerage professionals across our U.S. platform. Looking beyond the current crisis, we expect to see a significant uptick in Leasing and Capital Markets transactions across our global markets, largely related to deferred decision-making by occupiers and investors to reverse, driving a recovery in activity, which from an operational perspective, we intend to maximize by leveraging our recent investments in acquisitions, talent and technology and emerging from the current crisis 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]

Congrats on yet another strong quarter.

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

Thanks, George.

[George Doumet, Analyst]

You guys have raised your 2020 working assumptions. Q4 is our big quarter. You must have some visibility there. Can you maybe share what you're seeing in terms of pent-up demand? And second part to that question, do you guys feel comfortable that you've baked in enough wiggle room there given the pretty meaningful second wave that we're seeing in Europe and the Americas.

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

Well, George, I mean, when you look at the working assumption, it is a working assumption, and there's a number of factors at play there. And certainly, we can't predict the future. But we can take a look at our pipelines of activity. And as you're aware, for sure, Q4 is a very strong transactional activity quarter in particular, in our EMEA business. And our EMEA business, typically, in a normal year, generates close to half of EBITDA in Q4 because it has that high transactional activity weighting. So we take a look at our pipelines, talk to our teams, and we feel at this stage, based on what we know today, quite confident in our working assumption for Q4. That being said, if there's new factors that come to play, we'll have to -- those are ones we can't anticipate.

[George Doumet, Analyst]

Okay. And maybe a question to John, as to where we're trending on that $150 million in cost savings. I think we're at $60 million last quarter. And second part to that is, how much do you guys plan on investing back into the business over the next -- maybe next few quarters?

[John B. Friedrichsen, Chief Operating Officer]

Look, in terms of that number, we're pretty much right on where we were going to be. So there has been no change to that number. That's been a consistent factor since we initially identified what we expected those savings to be, so we're running right at that level. And in terms of investment, I'm not going to quantify that, George. It is very selective. And somewhat opportunistic around talent. It depends on the availability and whether or not we can connect and make arrangements, which work for those that we're hopeful of joining Colliers and for the company itself. And then ongoing spend around particular technology, we've already indicated our expected amount for CapEx this year, which is down but roughly half of the CapEx relates to technology in some way. And while we have deferred certain expenditures in that area, we are still focusing on those that will drive the greatest return to Colliers during the current period and beyond. So we're still investing there, definitely.

[George Doumet, Analyst]

Okay. Just one last one, if I may, maybe to Jay. I'm just wondering if the pandemic has at all kind of made you rethink the Investment Management segment, maybe more particular, what types of asset costs that you'd be interested in acquiring?

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

It's a good question, but I think the best way to answer it is to go back to the very strategic decision we made at the time we entered Investment Management. We didn't want to go into the Investment Management business as a same as and we wanted to have a unique differentiated product or service offering. We spent a lot of time looking at virtually every type of platform in investment management around the world. And concluded that alternative asset classes where institutions were significantly expanding their allocations was the place for us to be. They also have a moat in that business because it's a more complicated -- it's a more complicated way of managing assets, which creates a differentiator, keeps most of the people out of the space. And so we concluded that Harrison Street was the ideal platform and on top of that, they had an incredible management team with a great desire to grow really on all fours with what we look for in a partnership relationship. So the pandemic has not changed that at all. In fact, we're in lots of scale, call it what you want, but we're very happy where we are. We continue to look in alternative asset classes as a way to grow that segment of our business. But also assets or strategies that have clear differentiation. They're not the same as same as, they're clearly differentiated strategies. So I think we have a tremendous platform here and tremendous leadership team. It's obviously been growing, as you can see, despite the pandemic. Most others have seen asset values fall. We're essentially flat. And I would say we're flat because some of the investors have pressed pause on making further allocations, had nothing to do with the quality of the assets that we administer. So we're very happy with Harrison Street. I think it has a bright future, looking at some interesting opportunities to continue to grow it. We have an amazing management team that we've got great confidence in and I think the future in that segment of our business is very bright.

[Operator]

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

[Frederic Bastien, MD & Equity Research Analyst]

I was wondering if you're able -- I was wondering if you're able to quantify the contribution of both Maser and Dougherty made to the Outsourcing & Advisory and the Capital Markets service lines, respectively.

[Christian Mayer, Chief Financial Officer]

Yes, Fred, we get the internal growth rates on a consolidated basis, not by region. But as you're aware, the -- those businesses are concentrated in the Americas segment. And I'll tell you that the EBITDA growth internally in Americas was positive. And the contribution from the acquisitions was significant, as I outlined in my comments.

[Frederic Bastien, MD & Equity Research Analyst]

Okay. Cool. On a related topic, our engineering and mortgage banking services that you plan on growing aggressively in the EMEA and Asia Pac regions? Or is there something unique about these markets that would keep you from doing that?

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

I think our goal in both segments is they were additional engines for growth that were very closely tied to our core business. So we are looking at opportunities in both segments globally. We are obviously taking advantage of our existing platforms and spending most of our time trying to leverage what we own into bigger businesses, bigger opportunities. But having these additional recurring earnings service lines within our family provides great growth opportunities, not just in the Americas but virtually around the world.

[Frederic Bastien, MD & Equity Research Analyst]

And are there service lines if you'd like to add that you're not currently offering that some of your peers may be offering, but that you're not?

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

Well, it's interesting question. I'm not sure our peers are our peers as much as people think. We have really evolved our business, as you would know, Fred, you've followed us for a lot of years. If you compare us to some of the names that you mentioned, I think we are closer to property service and professional service lines and less so those other businesses. Yes, a portion of our business overlaps with the others. But we are increasingly evolving differently. So that's what I would say to that comment. And the second thing I would say is that we have -- we've been fortunate to add 2 great new engines for growth; 3, if you include Investment Management, which we completed in early '18 and in fact, it's been on the books for even longer than that. So we've got so many opportunities to grow in our existing service lines. We have an incredible culture, which I've talked about. You've seen in action for so many years, means we can execute on transactions globally, despite what's going on with travel and a variety of other things. So we feel like we are in a very unique position and have a unique culture that is used to growing internally and through acquisition. And we'll continue to pursue that over the next number of years.

[Operator]

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

[Stephen MacLeod, Analyst]

Congratulations on another great quarter.

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

Thanks, Steve.

[Stephen MacLeod, Analyst]

The Outsourcing & Advisory business really led the way this quarter in terms of the revenue contribution and the revenue resiliency. Can you just notwithstanding, obviously, that the mortgage and engineering services businesses were positive contributors. Can you just give a breakdown of how each segment within Outsourcing & Advisory trended in the quarter?

[Christian Mayer, Chief Financial Officer]

Well, I would say that Property Management was very stable, Steve, like flat to perhaps even up in a couple of markets. And then the project management business was down slightly particularly in India. And India has had some very challenging situations with its control of the coronavirus. And we're watching that closely, and that business has seen some delays in its productivity in the project management space. So valuation and advisory continues to be resilient and business there, particularly in the U.S. is very strong, but also solid elsewhere around the world.

[Stephen MacLeod, Analyst]

Okay. And would -- well, the engineering, Maser and Colliers Mortgage would be new platforms within Outsourcing and Advisory, but will you be segmenting those revenues separately in different segments and different sort of verticals?

[Christian Mayer, Chief Financial Officer]

They are a component of Outsourcing & Advisory for sure, so loan servicing and engineering, and we will not be explicitly segmenting those. So they will be part of the -- of that Outsourcing & Advisory group just like the other components.

[Stephen MacLeod, Analyst]

Right. Okay. Okay. No, that's great. And then when you think about Q4, you talked a little bit about the pipelines that you have and the visibility that you have. How would you characterize your visibility beyond Q4 into 2021? Is that something that is beginning to evolve or emerge in terms of your straight lines?

[John B. Friedrichsen, Chief Operating Officer]

Steve, it's John. Look, this is all about uncertainty. And I think at this point, it's a little bit too early to tell what '21 will show for us. But one thing we do know is that there has been an incredible deferral of activity, particularly in leasing, where companies have opted to make short-term decisions and ultimately that's not really where they want to be. There just need a bit more clarity. And then we expect there to be a resumption of longer term. That might adjust a little bit relative to the way it was in the past. But most occupiers are going to want certainty, and certainly, landlords do as well beyond just sort of a 1-year roll forward. So that is coming. And whether that is in 2021 or later, we don't know at this point, but it's significant, and it will occur either next year or the year after. So we certainly have that as sort of anecdotal evidence is what we expect.

[Stephen MacLeod, Analyst]

Okay. That's helpful. And then maybe just finally, you mentioned the entrepreneur culture and you've made quick decisions around the cost adjustments that you needed in the early days of the pandemic and clearly, that's benefited EBITDA over the last couple of quarters. I'm just curious, as you see revenues recover, do you have to bring more costs back into the platform to support those revenues? Or you now in a position where you can pursue other revenue growth opportunities without adding back -- without adding the cost that you've taken out back in?

[Christian Mayer, Chief Financial Officer]

So Stephen, we expect to take out $150 million this year of costs. And as we look forward, we think we can become more efficient in a number of areas. I mean this has been a real -- a bit of challenging but yet rewarding experience in some ways with silver linings appearing through some of the things we've seen and learned and certainly. Our hope is that when we start to reinstitute some of these costs in 2021 and going forward, that we will not have to reinstitute all of these costs. And we will be able to make some pretty significant transformation in the way we do business, the way we approach travel and discretionary expenses, the way we approach some of our support staffing in our transaction business in particular, but also in the other businesses. So our intention would be that our cost structure will be different going forward as we turn to more normal conditions.

[Stephen MacLeod, Analyst]

Okay. That's helpful. And then maybe just one final one. Just maybe for Jay, I was wondering if you could talk a little bit about the Colliers mortgage and Maser and how those businesses have trended relative to your expectations in the somewhat short period that you've owned them. But obviously, very strategically important is I was just wondering how your experience has been so far.

[Christian Mayer, Chief Financial Officer]

So in terms of those businesses, we're very pleased with their performance to date. We've owned them for a very short period of time. But we spent, obviously, a lot of time in diligence with them. So we know them well and the period we've owned them has been very successful so far with integration proceeding well as Jay has outlined, and John also outlined I think in his comments. The Colliers' mortgage business is benefiting from some strong refinancing activity at the moment, and that will continue for the next few quarters. Interest rates, as you know, are at historic lows and is an attractive time for multifamily property owners to refinance properties. So it is benefiting from that. And it's also taking market share in a Fannie Mae origination, which is what we expected would happen. And so those factors are combining to bringing some very solid operating results. The engineering business is performing well in all the sectors that it plays in. And the margin performance there as well has been strong with strong staff utilization and productivity from the client -- from the employee base.

[Operator]

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

[Stephen Hardy Sheldon, Analyst]

And congrats on the continued strong execution. Wanted to ask a little more directly about the visibility you have, especially as you look into 2021 into how your clients are thinking about their office footprints at this point and the adoption of remote working policies. Could it take an extended period for companies to think through work from home adoption, which could continue to weigh on lease durations for a period?

[John B. Friedrichsen, Chief Operating Officer]

Stephen, absolutely. I think you hit the nail on the head. I think it's going to take a time -- a bit of time here to sort out. I mean it's a perplexing issue. When you think about it, I mean -- and it's dynamic because it's changing. And every company has got a different perspective on how important the workplace is and how it impacts our culture and all those kinds of things. I mean the short answer is that in the immediate term, it's difficult to change the dynamics, and that's partly why there's been a deferral, I think of so many decisions around leasing. But as I said in my remarks, our workplace advisory businesses really run off their feet. Counseling with the who's who of companies that are all going through a discovery process currently to evaluate what they think best works for them going forward. And that's going to, I think, unfold over the next several months and well into next year. And then beyond that decision will get made, and there'll be a little bit more certainty. But it certainly is a great time to be in the workplace advisory business as long as you've got 24 hours of the day to dispense your advice.

[Stephen Hardy Sheldon, Analyst]

Got it. Makes sense. I think the thought out there has been that leasing activity would likely come back and recover before investment sales, in particular, in office, especially just given the impact that leasing dynamics within a property can have on a property's value. How do you think about that dynamic, especially as it seems like investment sales activity is holding up as well, arguably, maybe a touch better than leasing so far?

[John B. Friedrichsen, Chief Operating Officer]

Yes. I mean the leasing -- the impact on leasing is really around deferrals, which many companies have opted to sort of roll forward in consultation with the landlords who obviously want to retain their tenants roll forward a year forward. So the additional obligation and based on the way most of the industry is paid on fees, the fees are adjusted accordingly. So this becomes a bit of a short-term situation right now that depresses overall leasing revenues but certainly, the activity will resume and revenues will again come back to where they were before once companies are more engaged to commit to longer periods of time around the time when they have more certainty as to what their future occupancy requirements are likely to be. So I think we'll start seeing a lot more of that once we get into, say, mid-2021. If the pandemic, again, kind of goes through the second wave here and then ultimately resolves and things come back to whatever the new normal is in 2021 or beyond.

[Stephen Hardy Sheldon, Analyst]

Got it. And then last one for me, just curious what the M&A pipeline looks like right now? And have you seen anything notable in terms of valuation expectations out there, especially for smaller players that may have less flexibility to ride out the volatility?

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

The short story is, yes. I think there's a lot of people, a lot of targets that feel they missed, the optimum time to potentially sell their business. I'm now talking about more traditional capital markets and leasing. We're being very, very careful there. We're excited about buying significant business like our affiliate in Nashville, which is something like 90 professionals, fully balanced business, property management, valuation, project management and expertise in health care, obviously, in that segment of the market. They happen to be the market leader also in Nashville. So from our perspective, that is a profile type opportunity. We're seeing some of those around the world, a couple in the U.S., several in Europe and a couple in Asia, more in Australia, New Zealand in particular. But generally speaking, I think the -- it's fragile for acquisitions right now, although valuations for acquisitions, particularly those that have high recurring earnings are up significantly. And that's because there's a lot of private equity firms chasing these types of assets in the hope of potentially consolidating and doing whatever they do. And ultimately, I think they're going to have more headwinds than normal given the maturity of the marketplace. It's very powerful for Colliers Mortgage to associate itself with Colliers because there's so many different points of leverage, both between Colliers and Harrison Street. And I'd say the same for Maser. And we're seeing that in a variety of different M&A opportunities. So we've got a nice pipeline, whether we'll be able to bring some of them home or not is a different question. But the beauty is when we make a deal, it's for the right reason, it's because the leadership teams align with our unique culture. They want to stay and continue to grow and leverage their business. And that's been a great differentiator for us over not just the last few years, but the last 25 years, as we've executed on our growth strategy.

[Operator]

Our next question comes from the line of Daryl Young with TD Securities.

[Daryl Young, Mining Research Associate]

First question is on the Colliers Mortgage business. And just a point of clarification. How much of the mortgage origination and loan portfolio would have been stemming from recommendations from Colliers originally? Or is it all going to be net new and therefore, revenue synergy upside?

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

It's early days. And that is the fact, it's early days. We have -- within the Colliers, a platform, a number of mortgage professionals that work hard to find a depth for our clients around the country. They never had the ability to leverage and access an entity like Colliers Mortgage that has the power of the pen and then particular group of asset class areas. So the early days have been how do we leverage that? How do we connect, create a flow of business, but it's still early days. The other thing that's very interesting is that Colliers Mortgage and Harrison Street have a lot of alignment as well because Colliers Mortgage has the power of the pen to provide lending capacity to the types of assets that Harrison Street acquires as well. So in this acquisition, we went in with 2 potential leverage opportunities. We've already been successful in both originating and funding Colliers deals, not a lot yet. And Harrison Street deal is one deal so far. But it's still early days. And the average period between signing a letter of intent and closing a transaction is several months. So we did start a few of them earlier than closing. But I think it will be interesting to see how we develop both over the course of the next 6 months and beyond.

[Daryl Young, Mining Research Associate]

Okay. Great. And then just a second question. In terms of the brokerage business, it seems pretty clear that you're taking significant market share through this environment, some of which is likely the enterprise culture. Is there also an element of -- in the Americas, specifically, the secondary markets are outperforming some of the gateway cities? Or is that maybe just a little color there?

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

So I would say 2 things. I would say, given our legacy, we are relative to the top 2 players in commercial real estate, we've been around the least. So I would say we have the momentum. I would say that the whole industry is watching every move. Just take a look at their press releases and the way they articulate their strategies when compared to ours. But I would say that Colliers has been consistently market leaders in secondary markets for a lot of years, places like Salt Lake City, Nashville, Kansas City, the list goes on Detroit. These are all -- Pittsburgh, these are markets that are evolving and changing as a result of COVID. And we're seeing new activity in these markets that we wouldn't have seen historically. So I think that has been a very positive for us. And the other area is that Colliers has really added lots of technology and a variety of differentiating -- differentiated services to clients in a way that's allowed us to win greater share of business, and that has translated, as you can see into additional revenue streams. We hope that it continues. And lastly, we're the place of choice for many of the top flight professionals, especially ones that are on platforms that are in distress right now. And there's 2 or 3 that are in distress. And so that's opening up opportunities for us, not just for professionals but also for leadership, which as those that have followed us for a long period of time know, we always try and start with leaders and have them operate the Colliers way. And we believe that, that is a differentiator for us as well.

[Operator]

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

[Matt Logan, Analyst]

Just following up on some of the questioning previously. In terms of your capital markets and lease brokerage businesses, those are both tracking well ahead of industry figures. Can you talk a little bit about what's driving the gains in market share? Is it simply the differentiation between secondary cities? Is it call it your entrepreneurial culture? Or are there other factors in terms of technology that's driving that gap?

[John B. Friedrichsen, Chief Operating Officer]

Matt, there's a few things and I don't think there's one single thing, but there's a focus, obviously, on trying to improve our share. Jay already outlined kind of our set on a lot of the U.S. secondary cities, which I think has been a good factor during this current pandemic. We all know what's happened, unfortunately, to New York where we also have an operation, but not nearly as significant as some of our other competitors. We have also been a company that has been over time, focused very much, again, thinking about the U.S. primarily in suburban markets. And suburban markets have had gained a bit of a new life and a lot of interest as a result of the pandemic. So we're very, very well positioned. We've also always been a pretty significant player in industrial, which again, various parts of the industrial built environment has been actually growing during this period of time as a lot of that -- those properties are repositioned for supply chain uses and other things going forward. So that's a lot of it. In addition, we've been focused on building our corporate solutions business and our industry-leading Colliers 360 technology, which has actually allowed us to generate a lot of business, along with the competencies of our team. And that has led to additional transaction work that is a long term build, and we're getting incremental compounding impact of that, and it's actually generating a lot of additional activity. So when you put that all together, it's not surprising to see us make the gains that we have made.

[Matt Logan, Analyst]

That's great color. And maybe turning to the recurring piece of your business. Without putting a number on it, would it be fair to characterize it as stable to modest growth?

[Christian Mayer, Chief Financial Officer]

Yes. I'd say on an overall basis, that's true. Certainly with, obviously, a couple of pain points in -- as I described it earlier, in project management, with delays on some transactions. But generally, yes, it's flat to flat up.

[Matt Logan, Analyst]

And when we look out to 2021, you're approaching the 60% mark, in terms of your recurring EBITDA and obviously, with the view to grow some of your recent platform acquisitions, how could we see that trending? Will be rebound in brokerage largely offset continued growth in the recurring EBITDA? Or could we see that 60% figure trend towards, say, 65%?

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

It's -- you're making a couple of interesting observations based on the flow of our business. I would say that for the most part, we're nicely balanced here. Would recurring move to 65% of our EBITDA over time, maybe. Maybe 70% looking out 2 or 3 years. But our transactional services, capital markets and leasing are critical, important essential services and so they will always be part of our mix, and they're the front of Colliers. They call on clients every single day. One of the great benefits that I don't think gets enough airtime is we have 5,000 professionals calling on clients around the world every day offering a variety of Colliers services of any sort, whatever the client might need. And that army of professionals is very valuable and is a critical part of our long-term strategy. So I don't know how it balances out long term, but I would say that we're now getting to the point where we feel that the balance is, give or take, give or take the right balance for Colliers as we see it.

[Matt Logan, Analyst]

I appreciate that. Maybe taking that one step further, when you think about investments in talent and technology, how would you compare that to the opportunity for just traditional M&A or tuck-under acquisitions? Like how big or is there an uptick in the opportunity to invest in talent and technology in the current environment?

[John B. Friedrichsen, Chief Operating Officer]

Yes, absolutely. We're spending some very focused time with our business leaders who ultimately have responsibility for building our capabilities, our people capabilities, and as Jay has indicated earlier, I mean, there's lots of uncertainty generally in the market right now. On top of that, some of the other platforms for a variety of reasons, whether it's potentially perceived instability or maybe places that are maybe too crowded relative to the amount of business that's available and the complement of people pursuing that within those businesses. There's a lot of white space as we say at Colliers. And we're having success attracting this talent. We're focused on it. We're not going to do things that don't make sense for us, but we're going to continue to try and attract professionals who can be highly successful within the Colliers global platform. And that goes -- that's really across the world. So we're absolutely on that. Of course, during the time of uncertainty, there's lots of emotions that have to be processed by those that we're talking to. But we've already had some really good success. We're kind of a little bit behind where we wanted to be because of the pandemic, but we're all over this, and I think there's a tremendous opportunity for Colliers to build our bench over the coming months and into 2021.

[Operator]

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

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

Thank you very much, operator. Thanks, everyone, for participating in today's call. The fourth quarter is an important quarter for Colliers. Let's hope that we have a strong one. And look forward to speaking again in early February. Have a good day.

[Operator]

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