CBRE Group Inc

Greetings and welcome to the CBRE third quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brad Burke, Senior Vice President of Investor Relations and Strategic Finance. Thank you. Please go ahead.

Good morning, everyone, and welcome to CBRE's third quarter 2022 earnings conference call. Earlier today, we issued a press release announcing our financial results, which is posted on the investor relations page of our website, CBRE.com. There, you will also find a presentation deck that you can use to follow along with our prepared remarks in an Excel file that contains additional supplemental materials. Before we kick off today's call, I'll remind you that our presentation contains forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding CBRE's future growth prospects, including our 2022 outlook, operations, market share, capital deployment strategy, investments and share repurchases, financial performance, foreign exchange impacts, cost management, the business environment, and any other statements regarding matters that are not historical fact. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this morning's earnings release and our most recent annual and quarterly reports filed on Form 10-K and Form 10-Q, respectively. We have provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures, together with explanations of these measures in our presentation deck appendix. I am joined on today's call by Bob Cilentic, our President and CEO, and Emma Giammartino, our Chief Financial and Investment Officer. Now, please turn to slide five as I turn the call over to Bob.

Thank you, Brad, and good morning, everyone. Lower core EPS in the third quarter reflected a sharp deterioration in the macro environment, particularly with regard to capital availability for transactions. Nevertheless, core EPS was well above any third quarter in our history, except for last year's especially strong results. Even in light of a seven-cent drag in this year's quarter from foreign currency effects, this underscores the resiliency we've built into the business. In contrast with last year's strong third quarter, the capital markets environment weakened materially as the quarter progressed. Property sales performed in line with expectations in July and August. However, most debt and equity capital sources moved to the sidelines after Labor Day, causing both sales and loan originations to fall sharply. In addition, as expected and previously communicated, we completed far fewer development asset sales this year than in last year's strong third quarter, mostly driven by the front-end loading of asset sales this year. We also delayed selling some assets during the third quarter. As we noted last quarter, when market dislocations caused transaction activity to decline, Those transactions are typically paused and returned to the market when the uncertainty passes. We took advantage of the temporary market dislocation to continue repurchasing shares at an elevated clip. In contrast with sales and financing, leasing performed very well. Revenue was up across all property types led by office. In addition, As we discussed previously, many parts of our business are either cyclically resilient or benefit from secular tailwinds. These businesses, including occupier outsourcing, valuations, property management, loan servicing, investment management, and project management, posted solid results for the quarter. We plan to further capitalize on our balance sheet to invest in secularly favored parts of our business that add differentiated capabilities. Over the last two years, project management, flex office space, renewable energy, and industrial and multifamily assets have been at the forefront of those efforts. Going forward, in addition to those areas, we are particularly focused on both enterprise and local facilities management investment management, and the more cyclically resilient advisory business lines while also continuing our share repurchase program. As we prepare for a tougher operating environment, Emma will discuss how we have already been identifying cost savings while aiming to continue investments that will sustain long-term growth. Many economists, including our own, have cautioned that the market outlook is especially difficult to forecast right now because of an unusual confluence of high inflation coupled with strong consumer spending, resilient employment growth amid a tightening credit cycle, and residual pandemic and Ukraine war-related challenges. With this caveat in mind, we have updated our full-year core EPS growth expectations to be up mid-single digits compared with 2021. Absent the challenging foreign currency comparisons, we expect our 2022 core EPS growth would achieve low double-digit growth over 2021. While economic downturns are never welcome, they present opportunities to consolidate our position as global occupiers and investors gravitate to the industry leader. We fully intend to make the most of these opportunities. With that, I'll hand the call to Emma for deeper commentary on the quarter and our outlook.