CBRE Group Inc

And welcome to the CBRE's Q4 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero 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 at CBRE. Thank you. You may begin.

Good morning, everyone, and welcome to CBRE's fourth quarter 2022 earnings conference call. Earlier today, we posted a presentation deck on our website 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 today's presentation contains forward-looking statements, including without limitation, the statements concerning our earnings outlook. Forward-looking statements are predictions, projections, or other statements about future events. These statements involve risks and uncertainties that may cause actual results and trends to differ materially from those projected. 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 SEC filings. 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'm joined on today's call by Bob Slentik, our president and CEO, and Emma Giammartino, our chief financial officer. Now, please turn to slide five as I turn the call over to Bob.

Thank you, Brad, and good morning, everyone. As you've seen, we reported core EPS of $1.33 for the fourth quarter. While down significantly from a year ago, core earnings were slightly above the estimate we provided at the end of the third quarter. This outcome was driven by several of the more cyclically resilient elements of our business, like outsourcing, and others that are secularly favored, like project management and the logistics asset class. These businesses, which together comprise about 45% of our core EBITDA, grew revenue more than we expected, offset by a slightly larger than expected decline in transactional revenue. Full year core EPS rose 7% to $5.69. This is a solid growth rate considering the more than doubling of long-term interest rates, sharp equity market decline, and the credit crunch that constrained investment activity for most of the second half. Notably, we ended 2022 with virtually no leverage despite making share repurchases infill M&A and strategic investments that together totaled approximately $2.1 billion during the year. Looking at the macro environment, cap rates are up 100 to 150 basis points, perhaps a bit more for office. And we expect them to expand another 25 basis points or so before peaking likely in Q2. While capital largely remains on the sidelines, we are beginning to see signs of asset repricing helped along by the narrowing of spreads. Among property types, multifamily and industrial fundamentals should remain strong, albeit with occupancy declining slightly from peak levels and rent growth continuing at a more modest clip than the double-digit pace set in 2022. Office will remain the most challenged property type as we do not expect occupancy to come close to pre-pandemic levels in the short term. Globally, we expect significant sales and leasing weakness in the first half before adverse conditions begin to ease later in 2023. Relative to 2022, we expect both Europe and Asia Pacific to outperform the Americas this year. For 2023, we expect core EPS to decline by low to mid double digits, but still to be the third highest in CBRE's history. As we've pointed out before, this would be a meaningfully better performance than in prior recessions, such as the global financial crisis, when core EPS decreased more than 60%. In all, 2023 will be a transition year And we feel good about where we'll be when we get to the other side of the downturn. While the macro environment can certainly change, we expect core EPS to grow strongly in 2024, exceeding the 2022 peak and reaching a record level in just the first year after a recession. With that, I'll hand the call to Emma, who will discuss our quarter and our outlook in greater detail. Emma?