Colliers International Group Inc.

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 differ materially from any future results. Performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed in 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 February 8, 2024. 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.

Thank you, operator. Good morning and welcome to the fourth quarter conference call. I'm Jay Hennick, Chairman and Chief Executive Officer of the company. Joining me today is Chris McLaren, Chief Executive Officer of our real estate services business, and of course, Christian Mayer, our Chief Financial Officer. This call is being webcast and can be accessed in the investor relations section of our website, where you can also find the presentation slide deck. In the fourth quarter, Colliers experienced robust revenue growth in its high-value recurring service lines. Over the past five years, Colliers has strategically transformed into a more diversified professional services company by adding significant recurring revenue platforms such as investment management and engineering and project management. Today, more than 70% of our earnings comes from these recurring services, providing our company with more balance, more resilience, and more predictability than ever and similar in many ways to other highly diversified global professional service companies. Throughout the year, we observed industry-wide declines in one segment of our business, our transaction segment, our capital markets business. However, we expect a return to higher transaction velocity in the latter part of this year as interest rates and credit conditions hopefully stabilize. In the interim, pricing for most real estate assets continue to adjust as buyers and sellers try to find equilibrium that they need to transact business. With our nearly 30-year track record of creating substantial shareholder value, Colliers is poised for continued success. Anticipating a rise in transaction revenue later this year, and supported by a very strong pipeline for new growth prospects, we are more excited than ever about the future. And with that, let me turn things over to Chris McLaren to discuss some highlights on the services side. Following that, Christian will provide his financial report, and then we'll open things up for questions.

Chris? Thank you, Jay, and good morning. I'm proud of the results that Collier's Real Estate Services delivered in the fourth quarter and the full year. Despite industry-wide headwinds, we have become more resilient than ever, demonstrating the strengths of our highly diversified professional services platform by both service line and by geography. Our outsourcing and advisory business saw 10% revenue growth in the fourth quarter and for the full year has grown 11%. led by engineering, project management, and property management. Our engineering and project management pipelines are filled with a balanced mix of public and private sector clients that want to work with us because of our expertise and ability to provide integrated solutions. Additionally, the growth of our property management business has been driven by strong portfolio retention and expansion within our existing client base. as well as the addition of new clients due to receiverships and key markets. We expect the growth rate for these high-value services to remain resilient over the long term. As mentioned, transaction volumes remain subdued during the quarter because of interest rate volatility, tighter lending standards, and pricing mismatch between real estate buyers and sellers. However, with expectations of interest rates stabilizing, we have greater confidence that transaction velocity will improve in the second half of this year. Importantly, during the slowdown, we would continue to invest in our business, filling gaps, taking market share and top grading leadership. Having been with Colliers for 35 years, I'm especially proud of our enterprising professionals and our culture, the bedrock of our success. I'm pleased to share that we have been named among the world's top companies for women by Forbes, in addition to our inclusion on Forbes' World's Best Employers list. I'll now turn it over the call to Christian to provide more details on our financials.

Thank you, Chris, and good morning. I'll provide some additional commentary on our consolidated results, our financial outlook for 2024, and our balance sheet. Please note that all references to revenue growth made on this call are expressed in local currency and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call. In the fourth quarter, revenues were $1.2 billion, flat when compared to the same quarter last year and in line with our expectations for the quarter. Our recurring outsourcing and advisory and investment management service lines each reported robust revenue growth predominantly internally generated. Leasing revenue declined modestly across all asset classes. Capital markets revenue declined 16% in its seasonally strongest quarter, on top of a 43% decline reported in Q4 of last year, with transaction sentiment continuing to be impacted by interest rate volatility and availability of credit. On an overall basis, our internal revenues declined 2%. Consolidated adjusted EBITDA for the fourth quarter was $198 million, down 2% relative to the prior year with margins at 16.1% versus 16.6% in the prior year quarter. The margin reduction was attributable primarily to service mix, which was a decline in higher margin capital markets revenues not fully offset by our ongoing cost control efforts. We achieved cost savings of $28 million during the fourth quarter and $94 million for the full year. We have extended our cost control efforts into 2024 to match the duration of the expected transactional revenue downturn, but the beneficial year-over-year impact of this has been largely realized. Our initial financial outlook for 2024 reflects our best information given the ongoing challenges in transaction market conditions. For the first half of the year, we expect capital markets and leasing transaction volumes to be roughly flat to 2023. In the second half, we anticipate year-over-year increases in activity, particularly in capital markets coinciding with our expectations of stabilization in interest rates and an improvement in credit conditions. In our recurring service lines, we are expecting mid to high single-digit revenue growth. Investment management fundraising for 2023 totaled $3 billion, given the difficult market backdrop. We continue to see strong interest in our alternative investing strategies, which we expect will accelerate fundraising for 2024 to between $5 and $8 billion. Our adjusted EBITDA growth is expected to outpace revenue growth as we gain operating leverage from the capital markets recovery as well as the benefit of additional assets under management in our higher margin investment management operations. Adjusted earnings per share is expected to exceed EBITDA growth as interest expense starts to moderate from both debt pay down and lower floating rates, as well as a reduction in the non-patrolling interest share of earnings as our wholly owned transactional operations rebound. Turning to our balance sheet, our financial leverage ratio defined as net debt to perform an adjusted EBITDA was 2.2 times at the end of 2023. For 2024, we expect leverage to rise modestly in the first half due to seasonal working capital usage, then to decline to between 1.5 and 2 times by the end of the year, assuming no significant acquisitions. That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your touch-tone phone. you will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, simply press star followed by two. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you do have a question. And your first question will be from Stephen McLeod at BMO Capital Markets. Please go ahead.

Great. Thank you. Good morning, guys. Just wanted to circle around a couple of things. Just with respect to the outlook, you reiterated confidence in a return to transaction velocity in H2. And I'm just wondering if you can give a little bit of color about sort of what your clients and customers are telling you about that to give you strong visibility into that outlook.

Yes, sure. Steve, it's Chris here. So I think the first thing is we've had 18 months of a really challenging period for capital markets. We're starting to see some optimism and sentiment rising in real estate investment. And clients are shifting from having discussions to making decisions as there's a clear outlook to interest rates mid-year. So we're seeing assets come to market with more realistic valuations as well. So What we're seeing, I think, going forward is a gradual return and then picking up velocity in the second half of the year.

Okay, that's great. And are there any specific regional areas or asset classes that are more robust in terms of activity than others at this point?

Yeah, I'd say, you know, investors are looking at the industrial logistics. You still have some strong fundamentals behind that with e-commerce and onshoring. There is a low vacancy. However, it has crept up from, say, 2% to 4% to 5% in most markets. But there's still a thesis there behind industrial logistics. So there is Demand around the world for that product. I'd also say in the living sector, student housing, built to rent, senior housing, because of the demographics and shortage of housing. And then thirdly, I'd say primary office, you know, where tenants are looking to flight quality. You know, they're looking for central business district locations, great transit, great amenities, EST credentials. So those are the things that are in demand. in the marketplace today.

Great. Thanks, Chris. And then just turning to the high value O&A business and outlook, just wondering, I mean, Chris, you have a little bit of color on the prepared remarks around like project management, portfolio management, or sorry, project management, engineering, and property management. You know, just curious if you can give maybe by each subsector within outsourcing and advisory sort of what you're seeing and how you expect that to evolve through the year and where you're seeing notable pockets of strength.

Sure. So let's talk about project management first. You know, we're seeing some strength in a very strong business in Canada. India, we're the market leader there. And, you know, India's got GDP of about six and a half percent. So we're taking advantage of that and doing a lot of new corporate campuses there. We're seeing strength in our Dutch business and our Polish business from a project management standpoint. Property management across the board, we're picking up, extending the portfolio from our existing clients, winning new clients. So I think that that's universal around the world that property management is going well. And then on the engineering side of things, we've got some long-term contracts and there's a great book of business going forward and it's balanced between private and public sectors.

Great. Thanks for that color, Chris. I'll turn it back to the line. Thank you.

Thank you. Next question will be from Daryl Young at Stifel. Please go ahead.

Hey, good morning, everyone. Jay, just in your opening remarks, you made reference to a robust pipeline of new opportunities. And I'm just wondering if you can give a bit more color around this. And I think in the past, around the 2025 plan, you've mentioned there might be additional verticals needed later in the plan to achieve it. So I'm just kind of trying to bridge the robust pipeline of new opportunities with this outlook and the 2025 plan.

Yeah, so it's a great question. And for those long-term shareholders of our company, they'll know that acquisition growth is a key part of our overall growth strategy. We have a full pipeline of opportunities right now, probably fuller than we've had in a long time. They are, however, in line with our existing platforms. but they're bigger. They're more diverse geographically. They fill some significant gaps. There's lots of leverage to be generated from them. They're not at a point where we've tied anything down, but as you would know, Daryl, it takes a long time to build relationships. We look for specific targets that we can partner with the operating management team, particularly in markets where we see huge growth opportunities. So we're very excited about many things that we've got on our plate right now. And we're hoping to be able to convert those over the next 12 or 18 months. But they, for the most part, would all be in existing areas. um mostly recurring um as i think about it most of them are recurring um you know the lion shares recurring there's lots of blocking and tackling existing business units filling gaps across the world in in in base parts of our business and brokerage in in in capital markets and a variety of other things but For the lion's share of our opportunities, as I think through the pipeline, it's recurring revenue segments virtually across the board.

Okay, great. That's great, Colin. Thanks. And then flipping to the capital market side, the results were, I'd say, impressive in my mind, particularly against some of the industry data that we were looking at. Could you maybe just give us a bit of color on where those market share wins are coming from and is it a function of the people ads you've done across the last few years of the downturn or is it asset classes or anything there?

I can give you one example. We've had a record year in terms of recruiting in the US. The Collier's brand is really resonating in the marketplace. And if you look at the RCA volumes as an example, they're down 41% in the U.S. and our sales is only down 25%. So that would show that we're having market share there.

Gotcha. Okay. And then one last one just around EMEA and the margin trends there. Nice recovery here in Q4 versus the first nine months of the year. Is that something you expect to hold across the year, and is that sort of structural costs that have come out of that platform?

Yeah, Darryl, I mean, as you know from history, Q4 is a very strong quarter in EMEA, and a lot of transactional activity happened in Q4. And historically, the lion's share of EBITDA is generated in Q4. That was, again, the trend this year. I do expect going forward we will have a stronger EBITDA performance throughout the year given the expected rebound in activity levels as well as cost actions that have been taken in that region to adjust to those lower activity levels.

The other thing I can add is that Germany and the Nordics were specifically a challenging year last year in terms of capital markets. Highly transactional for us, and it's something we're working on in terms of balancing the business. Some of those markets in the cities in Germany were down 80%. So we expect some activity to come back, and it won't be as extreme as last year. So definitely improving in Europe in 2024.

A lot of that has to do, I guess, with the geopolitical circumstances particularly around germany and and some of the other markets in uh in europe um but um but we are seeing we are seeing some uh some white shoots in those markets right now some green shoots yes yes okay terrific i'll get back in the queue and uh thanks very much guys thanks daryl

Next question will be from Jimmy Shen at RBC Capital Markets. Please go ahead.

Thanks. So first, maybe just a couple of clarification on the guidance. The $5 to $8 billion of additional AUM in 2024, I'm assuming that's fee-paying AUM? And then that's one. And the second one would be, would there be any M&A baked into your guidance?

Okay, so Jimmy, the first question, the fee-paying AUM, the fundraising that we will do is predominantly in closed-end funds, and that will generate fees on that capital that's committed. So we'll be predominantly fee-paying capital. And secondly, there are no new acquisitions baked into our guidance or outlook for 2024. There's a small amount of lab over from acquisitions completed in 23 that's in the outlook, but nothing new.

Okay, great. And then just on the investment management business, infrastructure and credit seem to be where LPs want to allocate dollars. And when I look at your AUM pie chart, you do have 25% exposure to those two space. I'm just kind of curious as to how you're looking to grow these two strategies, if you are looking to grow them at all, and whether you're looking to grow organically or or maybe add a new platform in the pipeline, the healthy pipeline that you made reference to earlier?

Well, you know, as we have historically, we've shown strong internal growth, particularly in investment management and infrastructure alternatives have been key parts of our growth. We have a small credit business that we inherited as part of one of the platform acquisitions. And so that has grown very nicely for that platform. But we'd like to add credit to our overall family. It's a key component of our longer term strategy, number one. There's tremendous synergies between our existing business and having a credit platform. So we're actively looking to add credit in a more significant way, primarily through acquisition. But if no acquisition comes through, we'll continue to grow our existing credit business which is operated by an exceptional group of professionals and has some very interesting opportunities to accelerate its growth on its own. But when you look at the pie chart, it is still a small piece of our overall AUM.

Great. And then, Serge, to follow up in the pipeline of the different recurring businesses that you're looking at, how are the multiples or like how is valuation? We've seen fairly big, healthy multiples in the private market for investment management platforms. How are those multiples looking today?

Well, that's a great question. The multiples have gone up significantly, especially for the quality assets that we're looking at. And it's not just in the IM space. I think it's... in professional services as well one of the things that i think people overlook with colliers is that we are very much a highly diversified global professional services business with an engineering business that is circa a billion dollars and if you look at the uh at the peer set in that space our margins are as good or better uh we do have a global growth platform There's multiple opportunities to grow that business, and those companies trade at much higher valuations, obviously, than Collier's does. And so we have an environment where valuations have gone up, but the reverse is that the types of deals that we are looking for are partnership deals and they bring with them strong leadership teams that have stronger internal growth characteristics um and um there and there are many and they are global and so um you know as as as many people know that have followed our story for many years um we've created value one step at a time And we continue to think that there's exceptional opportunities for us to continue to add value to our business and probably reposition our company in some way to one that is much more highly diversified, high value, more recurring revenue, global in nature. And it's nice to see some of the peers in the traditional business start to add engineering to their mix of business as well. So there's lots of those kinds of factors that are swirling around, which we consider to be very positive to our longer-term strategy, which we've outlined in our five-year plan, among others.

Thank you.

Thank you. Next question will be from Hirmanshu Gupta at Scotiabank. Please go ahead.

Thank you and good morning. And thanks for taking my question. So my question is on the leasing revenue. How has your outlook for leasing revenue changed compared to the last three months? I mean, is leasing turning out to be much weaker or slower compared to what you thought, you know, say three months ago?

so the manager i'll try to answer that and chris may be conjuncture but uh our leasing was down uh five or six percent in the fourth quarter of 2023 and you know looking ahead we expect leasing to be roughly flat in the beginning um of uh of 2024 and maybe up slightly uh for the for the full year so you know it's going to be steady um it has been rough relatively steady but we're not expecting any strong rebound in that particular service line in the near future.

In having a global business, there are going to be bright spots. If you look at Canada, we're up 5%, UK 11%, India 11%, and LATAM 27%. Leases come up every three, five, seven years. It's a regular business. you know, people want to transact. There is, you know, the desire to upgrade and move into top quality buildings to make sure that employees want to be impacted to coming into the office. So, you know, as Christian said, you know, we're looking at middle single digit growth.

Thank you. And maybe a follow up, you know, your European leasing was positive in Q4. what led to that positive growth there?

Can you repeat that question you mentioned?

Yeah, so if I look at the leasing revenue by region, so if I see your Americas and Asia were down, but Europe was actually up on year-over-year basis. So just wondering, is there anything which is driving European leasing revenues to be higher?

Yeah, I can't think of anything in particular in Europe, Chris. No, not particularly in Europe. You know, the one thing that over the last couple of years that industrial leasing has become stronger for us, you know, pre-pandemic, it was probably at around 20 to 25 percent. And now it's up to 40 percent of the leasing revenue. So, you know, you're seeing higher rents in industrial and logistics. So that's translating into higher fees. And then also there's been such a great demand for you know, retailers and the e-commerce and the on-shoring that it's been quite a successful service line for us.

Okay. Thank you. And maybe just last question on investment management, IM. Was there any fundraising done this quarter or, you know, was there any, and was that offset by any redemptions this quarter?

Yeah, Himanshu, we did raise capital in the fourth quarter, as we expected to do, around $750 million in the fourth quarter. And we also had some modest redemption activity in the fourth quarter as well.

Got it. Okay. And maybe just last one, the AUM expected growth of $5 to $8 billion. Is it going to be first half driven or second half driven? Any visibility there?

It should be across the full year. And just to clarify, the $5 to $8 billion is the fundraising we expect for the year. So AUM growth will be similar to or higher than that number because AUM includes leverage on capital deployed.

Thank you, guys, and I'll turn it back.

Thank you. Next question will be from Steven Sheldon. at William Blair. Please go ahead.

Hey, everyone. Steven Sheldon. What can you share about your overall producer headcount in both capital markets and leasing? And how do you feel about your positioning when volumes start to improve?

Yeah, I don't think we're going to share the exact numbers on headcount, but I can tell you that, and Chris mentioned this, that we have a stronger headcount than ever, particularly in our U.S. business where we've had significant recruiting success over the past 18 months. I think that those trends are strongest in the U.S., but are also true across our operations

around the world? We have a global initiative to increase the market share in capital markets around the world. So we are out strategically looking at top talent in all regions. But I would say that there has been stronger emphasis in the US, which is the biggest market and the biggest market share opportunity for us to grow.

Got it. That's helpful. And then how does the current lending environment compare to what you were seeing toward the end of last year? Just curious how things have trended with respect to the lending environment over the near term.

You know, the lending environment is not really clear because You've got different lenders now and new lenders entering the marketplace. For example, there's a lot of private capital entering the marketplace. You've got smaller banks that are under pressure from regulators. But I would say, generally speaking, the fact that interest rates have, going into 2023, there was no clarity on where the rates might go. I think there's a general view now that the rates have topped out and might start coming down, which creates more certainty in the lending market throughout. The other factor around the lending market generally is that those that are under pressure are going to start to take action, whereas in the past they were delaying their action. So that creates more transaction activity, obviously for us, because people are encouraged to transact. And so I think with clarity or more clarity around rates and the hope that rates might come down a bit, We're in an election year. We'll see what happens. But with that happening, with more clarity that rates might come down more than would go up, with banks being more active about dealing with loans that are under some duress, all of that should lend to more capital markets activity towards the middle to the end of this year, number one. Fortunately for Collier's, we invested very heavily in building a very significant debt capital practice where we have some 150 to 175 debt placement professionals across the US in particular and they are very busy meeting with clients and discussing various financing options that we hope will translate into transactions, whether they are capital transactions on the sale of a business, of a property, or the refinancing of a property, or both. So we're quite excited about how quickly things can turn once there's certainty around debt. But at this point, there's positive signs, but we're not seeing significant momentum just yet.

Got it. Very helpful color, Jay. And then lastly, just wanted to circle back On leasing, what are you seeing in terms of lease duration for office and then more broadly? Just curious if there are any signs that tenants are becoming more comfortable signing longer-term lease commitments.

I think most occupiers' tenants are looking for flexibility, but it is market-driven. If you've got a market that has a low vacancy of 1%, 2%, it's really the landlord that's going to determine the lease length. But I think we're still looking at traditional 3, 5, 7, 10-year leases, but it's really going to be market dependent and asset class dependent.

Got it. Thank you, everyone.

Thank you. Next question will be from Dev Kao at Wolf Research. Please go ahead.

Hi, good morning. Just on the investment management side, the FPAUM declined slightly in Q4. You said there were some redemptions in the quarter, but was the AUM decline driven by outflows or valuation marks?

There were some modest valuation marks taken as well, Div, as well as some redemption activity, but very modest.

Just a quick follow-up. What were the outflows from the traditional real estate funds or alternatives?

The traditional funds.

Got it. Thanks. That's helpful. I'll get back into it.

Thank you. Next question will be from Frédéric Bastien at Raymond James. Please go ahead.

Hi. Good morning. Hi, Guy. Hey guys, your margins in America's region held up quite nicely in the back half of the year, which really speaks to the solid work you did right-sizing your cost structure. How should we think about the margin profile evolving over the course of 2024 as you turn your focus on growth again and really start loosening the belt?

Thanks. Hi Frederick, that's a good question. We've taken, particularly in the Americas, very aggressive cost control actions through 2023. And as we look ahead, we've also taken action on recruiting, which has been a cost that we've borne through this period. But as we look ahead, we expect, obviously, revenues to grow in the Americas, both on the outsourcing business, as well as in capital markets, and to a lesser extent, leasing. Margins will improve somewhat, but we do have some variable costs coming back into the business and also some incentive compensation that will come back into the business. So expecting a modest margin improvement in 2024 across the Americas.

The only other thing I'd add to that is any acquisition growth, particularly in the recurring segments of our business would have higher margins naturally, so the mix might change.

Right, no, no, correct. I was just more curious about capital markets and leasing, that type of the brokerage business, but you provided some great color here. Thanks, that's all I have. Looks like, you know, obviously positive outlook going forward. It's nice to see and good luck on the year. Thanks, Fred.

Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your touch-tone phone. And your next question will be from Maxim Sitches at National Bank. Please go ahead.

Hi. Good morning, gentlemen. Hi. Jay, question. If you don't mind maybe talking a little bit about some cross-selling companies traction slash successes now that you have obviously a bigger portion coming from engineering and outsourcing services and they are a bigger part of the overall portfolio? Just maybe any KPIs you can share with us that would be helpful.

Thanks. There's cross-selling all over the place. You know, as we get bigger the the uh actual examples are you know smaller in dollar value but uh very significant um cross-selling between our engineering segments and our real estate segments because uh we're really in in most of our engineering particularly around property level uh we're helping developers set the land up for zoning, putting in the necessary support services so that our developer clients can build houses, can build high rises, and so on. And so it gives us a great opportunity to stay longer with the existing client. That's just one example. The other example that just keeps continuing to bear fruit is from a project management standpoint when our developer clients want to build a multi-family building or an office building, not happening as much, particularly in North America, but there's lots of medical office, there's lots of seniors, there's lots of other infrastructure assets. They need third-party project management firms to manage the construction project on behalf of the owner to ensure that the costs are in accordance with the budget, and if not, there's immediate action taken. We've enjoyed some great cross-selling opportunities between our project management clients and our developer clients in areas such as that. And we think it's going to continue to accelerate because construction is becoming much more costly, much more sophisticated. There's a lot of... value engineering that's happening. So the partnership between an exceptional project manager and a developer becomes more important than ever. So as Colliers continues to evolve as an organization, our philosophy is to move up market and to be a more valued partner to our clients that are either developing and or renovating and or upgrading their buildings. You know, the same thing applies with ESG and the initiatives that we have around ESG. And somebody has to analyze the building and determine how to bring the building up to a better standard from an ESG standpoint or as Chris McLernan mentioned earlier, to be more attractive as an office building, for example, to leasing clients. Well, once that determination has been made and capital has been allocated, somebody has to do the work. Somebody has to estimate what happens. Somebody has to manage the construction project. Generally, there's a long tenure to that. It could be a five-year construction project. It could be a three-and-a-half-year construction project or a renovation project of two years. So all of these services that Collier's has entered over the past five years have all been additive from the standpoint of recurring revenue, obviously, but I think your question is an excellent one because what it doesn't What we really haven't articulated, as I think about it, is the great synergies that happen between the various component parts of what we do for clients on the field. And so that's bearing some exceptional fruit for us virtually around the world.

Just to add to that, you know, Colliers has a culture of collaboration. I can give you a benchmark. Within the U.S., 20% of the revenues come from collaboration and cross-selling.

Okay. Is there a figure that you think you'd like to target over time? Obviously, I understand you'll have to do work for external clients, but can the 20% become 30% in 10 years, or how should we think about this?

Yeah, I think it's something that we're always working on, you know, taking a holistic approach with our clients. So selling multiple service lines and what we call is a sticky client. It can get four or five different service lines. So it's constantly part of what we're trying to offer to our clients. And, you know, 20% is a great benchmark. And if we can improve that, so be it. Excellent. That's super helpful.

Thank you. And then just one last question in terms of sort of discount interest rates. And I'm not trying to sort of belabor it, but when you kind of think about sort of the back half resumption on the transactional side of things, are you looking potentially, I don't know, like at the dot plot and assuming, you know, five rate cuts that are necessary to restart the transaction velocity? Do you mind maybe providing a bit of kind of a range of potential outcomes that you are imputing into the guidance, or maybe it's a little less mechanistic from that perspective. Just maybe any color there could be super helpful. Thanks.

Yeah, Max, we're not quite that scientific about it. Obviously, we can't control what the Fed's going to do next month or three months from now. But certainly, we gauge market sentiment. We have operators around the world that are talking to clients every day. And as Chris mentioned in his comments, these conversations are turning more positive. We're more engaged than ever with clients in looking at transactions that they want to complete, both on the buy side and on the sell side. And it has been an 18-month period of quiet in the market. So there is pent-up demand, and we're seeing it. And that gives us, I think, a reasonable amount of visibility here into the back half of the year. and a resumption of some level of activity. I think it's a relatively modest resumption, and that will hopefully be the catalyst for a more significant rebound in activity in 2025. Makes sense. Thank you so much.

Thank you. And at this time, Mr. Hennig, we have no other questions registered. Please proceed.

Well, thank you, everyone, for joining us on this fourth quarter conference call. We look forward to reporting hopefully positive results in the first quarter and convening another call like this. So thank you for participating, and we'll speak to you soon.

Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call. Thank you for your participation, and have a nice day.