Marcus & Millichap, Inc.

Greetings and welcome to the Marcus and Millichap's first quarter 2022 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Tom Shearer. Thank you. You may begin.

Thank you. Good morning and welcome to Marcus and Millichap's first quarter 2022 earnings conference call. With us today are President and Chief Executive Officer, Hassam Najee, and Chief Financial Officer, Steve DiGennaro. Before I turn the call over to management, please remember that our prepared remarks and the responses to questions may contain forward-looking statements. Words such as may, will, expect, believe, estimate, anticipate, goal, and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results can differ materially from those implied by the forward-looking statements due to a variety of factors, including but not limited to general economic conditions, and commercial real estate market conditions, the company's ability to retain and attract transactional professionals, the company's ability to retain its business philosophy and partnership culture amid competitive pressures, the company's ability to integrate new agents and sustain its growth, and other factors discussed in the company's public filings, including its annual report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can make no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release, which was issued this morning, is available on the company's website, represents a reconciliation to the appropriate gap measures, and explains why the company believes such non-gap measures are useful to investors. This conference is being webcast. The webcast link is available on the investor relations section of our website at www.marcusmillichap.com, along with the slide presentation you may reference during the prepared remarks. With that, it is my pleasure to turn the call over to CEO Hassam Najee.

Thank you, Tom. On behalf of the entire Marcus Milchap team, good morning and welcome to our first quarter 2022 earnings call. We're proud to report a record first quarter and the third best overall quarter in our 51-year history. Our team delivered revenue of $319 million, adjusted EBITDA of $52 million, and net income of $33 million in the first three months of the year. Revenue increased 74%, while net income grew 118% over our previous record first quarter in 2021. We registered healthy year-over-year revenue growth in all market segments, including our private client business, which increased 53%, middle market and larger transactions, which were up a combined 134%, And in our financing business, MMCC, which showed an increase of 48%. These strong cross-the-board results once again demonstrate contributions from elevated client outreach initiatives, investments in proprietary technology, retention and productivity of our tenured professionals, and the addition of many experienced producers and teams. Our nine acquisitions since 2018 have also integrated into the company very well and have a healthy growth trajectory. At the same time, favorable market conditions and the urgency to transact continue to foster strong trading volumes. Improving or already high occupancy levels above average rent growth in most property types and the anticipation of rising interest rates are key drivers behind the market momentum. Our extensive geographic and product-type coverage enabled us to help a record number of investors execute through the full spectrum of risk-reward and investment options within commercial real estate. We achieved strong sales increases among the best-performing, lowest-risk assets, namely multifamily, single-tenant, and necessity retail, as well as industrial assets. On the other end, recovery segments including self-storage, shopping centers, hospitality, and even office sales set new first quarter records for the company. We're clearly demonstrating our ability to help investors move capital across product types and markets and bridging private capital with institutional quality assets through our IPA division. These factors enabled MMI to outpace the overall market in the first quarter. Brokerage transactions grew 35% for us year over year, compared to an estimated market improvement of 20% over the first quarter of 2021, based on preliminary data provided by RCA. Our brokerage sales volume grew 94% to a first quarter record of $17 billion, thanks to the significant increase in our larger transactions. The company's financing division, MMCC, saw strong results as our tenured originators registered another quarter of growth, while recently added teams and firms also made significant contributions. We are starting to see the benefits of bolt-on financing for our major multifamily sales. This is a result of our strategic alliance with M&T Bank, announced last year, and the addition of Eisendrath Financial Group, a leading major multifamily capital markets team, which we announced in January. Investments in the productivity of our financing team are on track, including technology, underwriting and analytical support personnel, and integration with our investment sales force. On the headcount front, as expected and messaged over the past 18 months, the residual effects of the pandemic, including limited in-person interactions, are resulting in a higher than average fallout of newer professionals. The competitive employment market has added another layer of complexity for hiring new talent in the current environment. We're starting to see the benefits of a return to in-person recruiting, in-person training, and development sessions and have launched several initiatives to attract new candidates. Let me also point to our continued success in attracting complementary, experienced individuals and teams strategically pursued to avoid overlap with our existing producers. This strategy is augmenting our traditional organic growth, creating client synergies, and contributing to incremental revenue growth. I'm also happy to report healthy readings on key internal metrics going into the second quarter, including steady marketing timelines, low ratio of DAI transactions, and pipeline growth over the same period last year. We're also seeing more inventory come to market as many sellers look to redeploy capital and take advantage of strong buyer demand. As we look forward from a market perspective, despite recent increases in interest rates and the current inflationary environment, underlying real estate fundamentals continue to look favorable. We're seeing sustainable above-trend rent growth in many sectors and recovery rent growth in others, as well as a record level of capital seeking higher relative returns. To illustrate my point about rent growth trends, apartment rents on a national basis were up 17.3% year-over-year, and absorption came in at 110,000 units in the first quarter, compared to a long-term first-quarter average of 89,000 units. The overall shortage of housing and record home prices, which will become even less affordable as interest rates increase, will continue to support well above average apartment occupancies and rents in most markets. Of course, dynamics differ by property type, but virtually every segment has key drivers that are attracting capital. Major factors in the near-term outlook will be the pace of additional interest rate increases, recession concerns and the degree to which a broad bid-ask spread may emerge in the marketplace. While these may be risks for the coming quarters, rising replacement costs, still compelling commercial real estate yields and tax advantages bode well for an active trading environment. Let's not forget that commercial real estate is widely viewed as an inflation hedge, which is another key advantage for our sector. We closely monitor all economic factors in the changing market environment as we advise our clients on pricing expectations, underwriting assumptions, and the lending environment on a real-time basis. Internally, we're messaging to our sales force the need to be proactive and vigilant on the work needed to bring buyers, sellers, and lenders together. Our focus on strategies that foster long-term growth is unwavering. This includes the ongoing emphasis on hiring experienced complementary producers, acquisition of synergistic firms, and platform investments to make MMI ever more competitive for our clients and our sales force. To this point, we recently announced the addition of an industry-leading team of specialists in the commercial property auction segment. We view this as another marketing channel for select assets and situations, And the strategy is already adding value for our sales force and clients through some closed transactions. We're also encouraged by our ongoing dialogue with a number of target firms and groups, which we hope to add to the Marcus Millichap platform. Our balance sheet continues to be a point of strength as we pursue these key growth strategies as our top capital allocation priorities. We're also pleased with our recent initiation of a dividend program and remain focused on creating long-term shareholder value. With that, I will turn the call over to Steve for more details on the quarter. Steve?