CBRE Group, Inc. (CBRE) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for attending the final Capstone Meeting for the KBW Annual CBRE Day Conference. With us today from CBRE Group, we have Emma Giamartino, who is the company's Chief Financial Officer and Chief Investment Officer. To start off with, Emma, I was wondering if you could perhaps share some information about your background and your overall experience at CBRE.

Absolutely. Thanks, Jade. I'm really excited to be here. So I've spent my entire career in some aspect of financial services. I started in investment banking, focused on the TMT sector, so technology, media and telecom. A little bit different from CBRE, but I think broadly still in the business services arena. And from there, I joined Verizon on their corporate development team. So still focused on M&A, equity investments. And I left Verizon to join CBRE about 4 years ago, beginning in 2018, and I joined our corporate development team running our Americas business. So I worked on deals both in the Americas, but also large global deals that were going to have a big impact on the company. And I took over the global leadership role for corporate development about a little over 1.5 years ago, and also became our Chief Investment Officer. And in that role, I took over more responsibilities beyond M&A, also thinking about our principal investments, co-investments in our Development business as well as in our Investment Management business. And at the same time, I became a member of our Global Executive Committee. That is the group of 9 people who report to our CEO. And I also became a Board member for some of the companies that we invested in over the past couple of years. So I joined the Board of SPAC, which I think everyone knows is in the process of have acquiring Altus Power, and I also joined the Board of Industrious, which we invested in about a year ago. And what's been great about my work in the role as Chief Investment Officer, is that it's allowed me to work across the company and really get to know our businesses and generate some really strong insights that I hope will be really helpful in my new role, adding CFO to CIO. I took over the CFO role over the summer. So we're a couple of months in here. And we think it's a really great way to bring together all the facets of our capital allocation strategy under 1 executive given how important it is for us and the capital position that we're in. So instead of having M&A and organic investments and returning capital to our shareholders all separately, we're now managing it all under one roof.

And do you think perhaps the combined role signals an increased focus on capital allocation?

I think we've always been focused on it, but I think coming out of the pandemic, as I hope we are, we've seen that our business is very different than it was in the last downturn, and we've shown a level of resiliency that makes us more confident in our ability to return capital and to invest capital. We're no longer in the position of obviously shoring up our balance sheet and getting ready for the next recession. So absolutely. I think it will continue to be a really strong focus for us.

Thanks very much. An exciting time for the maturation of the overall finance and investment function at CBRE. Turning to recent trends. Can you provide any update as to how transaction pipelines have been trending? Whether you're seeing any slowdown or perhaps pause as a result of the Delta variant in perhaps the office sector or leasing trends overall?

Yes. So I'll just remind everyone, we're not -- today, I'm not going to provide any more color beyond what we said in Q2 as it relates specifically to our business. But I can talk about overall what we're seeing in the market and then have a little reminder of what we saw in the first half of this year. So I think what's clear to all of us is that there's a really healthy and strong property sales environment in the first half for this year. The big driver that we see of that is secular growth drivers, especially the fact that more and more institutional capital is focused on real estate and that continues to increase. Our Q2 from a property sales perspective was very strong. We had results that were 152% over 2020 and 27% over 2019. And yes, it was driven by the secular tailwinds. But we also think that there were some benefits, one from pent-up demand as investors saw the vaccine being rolled out. They were more confident in their ability to deploy capital. And also, we've talked about this before, but potential tax code changes likely resulted in some investors pulling towards that activity. And then shifting to the leasing side. We're keeping close tabs on that. We all saw that EMEA and APAC is really leading the charge there. We had really strong growth in office leasing in the first half of this year. Q2 office leasing rose 52% in EMEA and 35% in APAC. So those are really strong results. And Americas office leasing in the first half grew modestly in comparison. And what we're seeing is that geographic divergence between EMEA and APAC and the Americas is continuing. It existed throughout the pandemic. And outside of the U.S., workers tend to be more eager to get back to the office. And because leasing and occupancy are closely tied, that's obviously driving greater growth in EMEA and APAC. On the U.S. side, though, we are -- we do believe we're reaching an inflection point. Occupiers are continuing to get more clarity around when they'll bring people back to work. And as that continues to become clearer and clearer what we think that we'll have more of a sustained pickup in office leasing in the U.S.

Thank you very much. On the international side, in APAC, do you see any expected impact from China Evergrande or anything that's going in the property markets there?

Yes. So it's something we've actually been taking a look at. I think it's important to put some context around our exposure to China and APAC, it's relatively small. So China, it makes up about 2.5% of our total revenue. And APAC is about 10.3%. So if you think about that, the impact just isn't significant. But I do want to talk a little bit about what our research team is expecting. And they're -- just as everyone else is, they're expecting some short-term volatility in China. But they think that the risk in Mainland China is manageable and that there are meaningful, structural and cyclical opportunities for investors who have a long-term time horizon. And there are specific areas where that we continue to see as attractive. So multifamily remains very attractive for all the reasons we've talked about before. Sales prices continued to remain beyond the reach of many buyers and China has a government policy that's very supportive of development of rental apartments. So multifamily is attractive. Logistics and data centers, there continues to be a large demand supply imbalance for more modern facilities in those spaces. And so there's -- we're seeing continued investment in both building those modern facilities but also upgrading legacy spaces. And then finally, in the office space, there are certain aspects of office that remain attractive in China. Properties that are focused on technology and life sciences are obviously very attractive and also high-quality well-located office. And I think that stands not just for China, but more broadly.

And in terms of the APAC and China businesses, does the mix by business line vary materially from cities, other geographies? Or should we expect similar mix?

We don't provide that level of granularity, but I think it's safe to assume that it's in the same range globally versus private by market.

In terms of the capital markets environment, what do you think has driven the extremely strong acquisition activity we've seen this year?

So you're right, it has been extremely strong. And I think there are a few factors, and I touched on a few of them in your first question. But very broadly, the macro environment continues to support investment in real estate. Real estate continues to be a really attractive asset class. Yields are up slightly and continue to tick up, but rates remain relatively low. And so real estate is a really attractive investment. And even as inflation remains elevated, properties that can raise rents can help offset that impact of inflation. And so for us, and the broader market, the benefit multiplies because as sales volumes increase, we obviously have that direct impact from our investment sales business. But mortgage originations also increase, and all the services related to those assets increase as they are facilitating these transactions. So we see a multiplying effect. And so you see those strong factors. We also have the impact of the fact that everyone had a tremendous amount of dry powder prior to COVID that they are still finding ways to deploy. And so that's helped to drive this growth as well. And then finally, beyond the macro, again, we have that pent-up demand that is being released, we think, as the vaccine continues to be distributed. And we think some of those -- anticipation of those tax code changes in certain jurisdictions is driving sales volume up as well.

On the tax code side, once there's some certainty there, could that cause a dip in volumes?

We don't think the impact is large enough for that to have that impact.

And are you referring to 1031 exchanges or also some impact from carried interest, the overall higher tax rates?

Overall, and it's jurisdiction by jurisdiction.

Okay. Elsewhere across CBRE's businesses, what other areas of that performance would you highlight?

Yes. So we've obviously had a really strong year and a strong recovery we're really proud of. And there's a bunch of trends that we've been seeing for a long time that continue to benefit our business. So one is our diversification strategy. We've talked about this a lot and really embedded in the business over the last year or so. And that's focusing on these 4 dimensions of diversification. So asset types, we're really focusing on the areas where we see a lot of growth within asset types: industrial, multifamily, data centers. Within lines of business, our second area of diversification, making sure we have the capabilities we need to meet our clients' needs. Within client types, we have a broad range of client types, and we continue to try and ensure that we are serving all of them to the best of our ability. And then by geography, really building out our capabilities all across the world so that we can provide a fully integrated global solution to our largest clients. And so that's really -- the impact of focusing on the diversification strategy has really made our business resilient, but also able to grow in ways that it hasn't before. And then we've seen these long-term secular shifts that continue to benefit us and have been benefiting the company for years. So the overall shift to outsourcing. Companies continue to want to focus on their core competencies and outsource the responsibility to manage their large real estate portfolios to companies like us. As I mentioned a couple of times, institutional owners are focusing more and more on real estate. And as they continue to increase their allocation to real assets, they use our services more frequently. And then they also tend to turn over their properties more quickly than traditional owners. So we have that additional benefit as well. And then the third big secular shift that we see a benefit from is a shift to global leaders in their space. So other large companies have been shifting to providers that can really -- they have a global footprint and conserve their -- all of their needs, just like CBRE. And this is an obvious statement, but it's much easier to work with a few scaled providers tend to have many separate services providers across the globe. So all of that benefited us. And then the last thing I would say in terms of what I think driven our outperformance is that I mentioned that our diversification has led to strong resiliency in some of our business lines, and we've really seen that proven out. But we've also seen a recovery in many of our -- in more of our transactional businesses. So our resilient businesses have continued to grow over the past 18 months and then our transactional businesses have recovered or started to recover. So in Advisory, some of our recurring businesses like loan services are up 18%; valuations are up 22%; property sales, leasing and originations have also started to reaccelerate. And in GWS, Facilities Management has continued to show steady revenue growth. And Project Management, which is a part of our GWS business has grown at a really strong rate. So it grew 15% in Q2. And I should also mention within our GWS business, we have been really proud of our strong margins that we've been able to achieve in that business. We've had an average of 11% net operating margins over the past year. And then finally in REI, that business has also continued to grow steadily over the past 18 months. We're now at almost $130 billion of AUM, growing 18% year-over-year. And our portfolios continue to strengthen and diversify and we're really focused on asset types that -- where we see a lot of growth. So in our Investment Management business when you think about the AUM for that business, industrial and logistics, it's 26% of that portfolio. In development, if you think about our portfolio of over $15 billion of in-process development, more than 85% of that portfolio is in industrial, healthcare, multifamily in office that is over 90% leased. So really strong asset types.

Thank you. And looking forward, what areas of growth do you think offer the greatest potential?

So I would say we are looking for opportunities, and we see opportunities all across our company and our business across those 4 dimensions of diversification. And we're constantly looking for areas where we see the biggest opportunity and we can invest even in our most mature business lines. So I think there are ways, there are always ways to -- for us to improve our offerings, to evolve our capabilities and fill in gaps globally. But we do think there are specific growth areas where our business will benefit significantly, and we continue to invest behind. So one is sustainability. We manage 7 billion of square feet of real estate globally, and that's as of the end of 2020. So that's increased since then. And we have a really big role to play as all of our clients are continuing to drive towards net zero. And you've seen that we've done some investing behind this. We did our deal with Turner & Townsend which should close in the next quarter. And they're a global leader in program and project management, specifically in renewable energy and infrastructure. So that's going to help drive our strategy to provide sustainability services to our clients. And then within SPAC, we are hoping to close on our acquisition of Altus Power, a solar developer, which also is supportive of this space. The second big area where we see growth is in flex space. So prior to COVID, we were strong believers in the future of flex space and the use of flex space. And we thought that over the next 10 years, there would be a meaningful acceleration in the move towards hybrid work in large enterprise occupiers using flexible space as a larger part of their portfolios. And that's really been accelerated by COVID. And so while we started with Hana probably over 3 years ago. And we shifted our bet from Hana over to Industrious and merge those businesses together, we really -- we did that because we see a huge opportunity to grow that. And continue to provide those or gain share in flex space. And then the third area where we see an opportunity for growth is that -- is within specific capabilities by property type. So if we can better serve property types where we see a tremendous amount of growth or tailwinds behind like life sciences, data centers, industrial and logistics, then we're going to spend time investing in those capabilities. So that we can see the results of benefiting from the growth in those asset types. And then finally, separate from where we see those tailwinds, we're also very focused on making targeted investments in our principal business. So within Trammell Crow, our development company, continuing to find really strong investments to co-invest in industrial and multifamily. And as well as invest in global investors to either co-invest in funds or launch funds. So that's another big part of where we're looking to invest.

On the flex side, flex office, do you think that the ultimate margin profile at scale would be similar to, say, the leasing business?

So I think it depends on which direction it goes. It depends on -- Industrious is entirely asset light. So I think it looks very much like a business services company where there aren't any leases. But if you look at what we work or IWG looks like, it's very different because they have -- they obviously are mostly leases in their portfolio. So it depends on the provider and the structure of their deal.

Okay. So assuming Industrious doesn't change its strategy, the margins could be similar to perhaps CBRE's overall EBITDA margin?

Yes. Or I think about companies, I think a lot of our companies that have a similar business model. So think about hotel operators, just anyone who provides service through spaces.

Can you say what range of margins that would imply?

I can't.

Okay. Can you discuss the evolution of the Corporate Solutions business and if you expect continued very strong growth rates, they've been in the double-digit growth rates historically in that sector?

Yes. So our Global Workplace Solutions business, which we refer to as GWS. It's where all of our Facilities Management business, both enterprise and local and the entirety of our Project Management business also sits there. And we feel very strongly about where they fit and their ability to continue to drive growth similar to how they have historically. When you think about the multiyear growth framework that we laid out almost a year ago at the end of 2020, we believed that GWS would grow more than either of the other 2 segments. So that gives you some context around what we think the strength of that business is. And there's a few reasons why we really are a believer in that growth. As companies are evaluating their real estate portfolios, they're going to look to upgrade the quality of their work environment, which will better position them for a hybrid workforce. So that should drive Project Management opportunities. But it should also drive Facilities Management opportunities since they are also likely going to look to improve their in-office experience and enhance collaborative space. And how they manage that space and how they make an environment that's really appealing to their employees. So that should grow all aspects of our GWS business. And then separately, the big focus for Facilities Management and outsourcing continues to be that clients are looking for a really strong value opportunity for managing their portfolios, and that will continue to attract clients. And I think that we can provide a value for our clients, both in the level of service that we provide and the concept -- and the type of contracts that we provide that can set us apart from our peers.

Thanks very much. [Operator Instructions] Are there any gaps in CBRE's service offering or market share that we should think about as an opportunity?

So it goes back to your question around where we're looking for growth opportunities. So I can't provide a meaningfully different response than what I did there. But we're constantly looking for opportunities for growth. It's difficult to say that we have big gaps that we're trying to fill. I think we -- today, we have a full service offering. It's just about what is that next step, what is the added capability that we can add that our clients are looking for as things evolve for them. And then what can we provide that 1 step away from what they -- what we do today that can make our products even more valuable.

Thank you. Over the last 1 year, 1.5 years, I've been surprised by resiliency of margins. And I understand there are some costs that are running below normalized levels because of things like T&E and market spend. But CBRE has highlighted its transformation initiatives. Could you give any color on what those initiatives entail? And what specific areas do you think will drive permanent cost savings going forward?

Yes. So it's an important -- it's a really important question. And I think what's really important about that initiative is that we were intending to go down that road well before COVID. So we were in process of going through a strategic review right as -- finishing it up at the beginning of COVID of our business, which involves operational improvements and driving efficiencies across the company. And so what really happened is the pandemic helps to accelerate that. And so we will -- we do believe we'll see -- or we do see structural savings that we've talked about in the realm of $370 million, which we think are permanent. The majority of these costs came out of our Advisory business. And they are -- I think the number is important and -- but more importantly, it helped us streamline our operations and drive efficiency across our company, and give us real visibility into our cost structure that is going to help us to scale and grow going forward. And I think on your question on how much will come back or how much is permanent versus -- related to COVID. Just like everybody else in the first half, we saw that travel and entertainment hasn't come back. And in the first half of 2021, it was still 60% lower than it was in 2019. So we're expecting that some of these costs eventually come back, but we're not expecting to get back to 2019 levels. Because across our company, we've really seen that we've learned that we can do a lot without going back to that level of travel that we were doing before. So we'll be very thoughtful about what costs come back. But we're also thinking about where we need to invest. So if there is areas where we need to invest because we see profitable growth going forward, we are going to make those strategic investments now.

On the structural savings, is the predominance of that support staff and personnel? Or were there other things like perhaps the closing of certain office locations or buildings or curtailing the physical footprint?

It was all across the business. So some of it was technology related. We did some automation to bring costs out of the business. Some of it was just creating more efficiencies in our employee base. Some of it was consolidating offices where we just had a very large -- a big footprint that was kind of the result of many acquisitions that we hadn't consolidated. So it was a confluence of various factors.

Beyond the competitive recruitment environment, are there any challenges the company is experiencing with respect to labor shortages, perhaps of service folks within either the Product Management or Property Management businesses? Any areas where that's a constraint right now?

So we're seeing the same as everybody else. I mean we talk about a lot with our service providers. I think everyone is seeing the same thing. It is a challenging recruiting market. And so we're adjusting how we're approaching it depending on where we're looking to hire and how important that area of the company is. So we're seeing the same challenges that everybody else is.

And on the supply chain issue playing out across the industry. Is this having any impact on some of the general growth development projects? Are there any delays being experienced as a result of certain building materials or other things?

We have not yet seen an impact from any supply chain delays.

And how are you guys viewing the outlook for the gateway markets, markets such as New York, London, et cetera?

Yes. So we don't provide outlook specifically on markets. But again, I can provide some insight from our research team and what they're seeing. So I'm going to talk about both office and multifamily because there's obviously different trends in both. But in office, they're generally -- I think this is obvious to everyone, but in major gateway markets, especially those that have a high dependence on public transportation, they've been much more pressured during COVID. And so -- and like I mentioned before, we're also seeing a really strong correlation with the rate of the return to office, and so re-occupancy with the rate of leasing. And so because of this, and because of the Delta variant, which is continuing to create uncertainty across all markets, and delaying that return to office, that is continuing to create some uncertainty in those major gateway markets. But I'll point you to a specific report that our research team just put out on U.S. cities. They looked across all the major U.S. cities and looked at where they were in terms of their recovery. And they found that Boston, Atlanta, L.A. and Dallas-Fort Worth are on -- are among the markets that have most recovered. People are back in the office and leasing rates have ticked up. But in San Francisco, Chicago and Philadelphia, so in those 3, they are least recovered. And I am in Philadelphia right now. And I can say that, that is definitely the case that we're still seeing that. On the multifamily side, more than half of the major U.S. markets experienced very little decline during the pandemic, very little decline in demand and very little rent erosion. So that was a positive thing across the multifamily market. The areas that were hit the hardest were the gateway coastal markets. So think San Francisco, San Jose and New York, which I think is all logical to vary to all of us. Rent in those areas fell 10% to 20% during the pandemic. But overall, across the U.S. by the middle of 2021, so by the summer, vacancy rates were rapidly declining and rents were rising in nearly all markets. So that was a really positive -- is a really positive indicator. And looking forward, our research team is expecting rents to grow 6% over the next 12 months across the U.S. and -- which implies that all markets will exceed their pre-COVID rent levels by the middle of 2022.

On the M&A side, do you want to discuss the Turner & Townsend acquisition, just the strategic rationale there? I know you touched on it a little bit earlier with respect to sustainability. But what's the strategy there? And are there other areas where you expect further industry consolidation?

Yes. So we're really excited about that investment. And again, we expect that to close in the fourth quarter. But we really -- we've been focused on the project management space for a number of years. So when we go out and do our strategic reviews, we prioritize a number of areas to go and continue to invest to grow. And project management was one of the top priorities that we've all had as an executive leadership team. And so as we look out in terms of what the landscape of targets, Turner & Townsend really came to the top as the premier program and project manager in the space that is really complementary to us and can elevate what we're doing globally in project management. So they're incredibly well respected. They have a really strong operating team. And so -- and it also, I think, really fills a lot of those dimensions, those 4 dimensions that we constantly talk about. So on the asset type side, you mentioned infrastructure and renewables. But also more broadly in natural resources, it's increasing the scope of what we do into new asset types which is really exciting. On the business line side, it's adding those capabilities in program management and cost management. So we're typically in the project management space, which is really one-off projects then many instances are related to our Advisory business. So if we do a sales transaction, our Project Management team will come in and do that and set out if it's an office space as 1 example. Turner & Townsend is really focused on the very broad program management, which is -- can be a number of projects over a very long period of time. You can think about really large data center projects where they're building data centers for large tech clients. On the infrastructure side, they're doing very large either roads or railway projects that can last a number of years. So it really is an additional capability for us. And then in terms of geographies, we see a huge opportunity for us to help accelerate their expansion in the U.S. because we obviously have a big presence here, and they can really help us expand more in EMEA and to some extent in APAC as well. And then on the client type side, there -- it is increasing our access to energy clients and also they have a really strong government client base, especially in the U.K. so it's adding those to our portfolio. And then Project Management more broadly, we are going back to why we put it at the top of the priority list is because we saw a huge opportunity in the market. It is a very fragmented growing market that is estimated to be over $100 billion. And so we are obviously in a very small fraction of that. And we see really strong secular tailwinds that will continue to drive growth. So back to that sustainability point. This global drive to net zero will continue to drive revenue towards Project Management. A heightened focus globally on improving our infrastructure is something that will continue to drive this business forward. And then as everyone is looking to evolve their asset use, we talked about moving more towards a hybrid workplace, that's all being accelerated by COVID. And companies like Turner & Townsend will benefit significantly from that. And so from a strategic perspective, it really added -- it really checks a lot of boxes for us, adding capabilities in areas of secular growth in a company that we believe is incredibly well operated and can be a really strong partner to us. And then I should also say that I think this is kind of obvious in my remarks, but it's also a business that will enhance our resiliency. And so they performed incredibly well during COVID. They grew their EBITDA despite the fact that construction came to a halt in many areas and all sorts of other challenges. And like I said, they're focused on much larger long-term projects. So I think 5 years plus for an infrastructure project, it can go even longer. And so because of that, it's another factor that will help increase our resiliency going forward, which obviously is really important to us. And then you also asked about consolidation, I think, in the industry more broadly. I don't have anything specific to point to there. We are very focused on our strategic growth initiatives versus what's happening in the market. So I can't -- unfortunately, I can't provide a tremendous amount of insight.

Okay. I appreciate that. The -- I guess just some other questions, what role does culture play in how you run the business? I've gotten a lot of questions on this recently. And it's hard for me as an outsider to really have a feel for CBRE's culture because there's so many different business lines, geographies. But I guess, how do you answer that? What do you think extinguishes CBRE's corporate culture?

Yes. So it's a really great question and something that we are highly focused on. And we've always been thinking a lot about, but we're really -- we're making sure that it's a part of our constant conversation as leaders. And CBRE is always -- when I joined, it's always been talked about as an entrepreneurial company. And I think at its core, that is what we are, which has been able to drive all of this growth, all of this innovation and really set us apart from a lot of our peers, which is really exciting. But in combination with that, we're also incredibly focused on collaboration. So for a company of this size where there is so much opportunity to come together and share ideas and drive growth together as opposed to in silos, that's a huge benefit that we can bring if we collaborate together. So we're really focused on just making sure that, that culture permeates globally, obviously, it's different region by region. But it's really important to us and something that we're proud of.

You mentioned collaboration. And it seems that there is an increased trend of having team-based approaches to deal pitches, folks from multiple constituencies and parts of the organization. Do you have any sense for what percentage of deals include producers from capital markets, investment sales, debt brokerage and even leasing as well as property management?

So it isn't something that we break out externally what deals are done kind of on an individual basis or a solo basis versus what involves a bigger team. But I will say that, back to my prior comments, collaboration is a huge part of what make us successful. And so we're looking for ways to drive that collaboration and really bring all that CBRE has to offer to all of our transactions and all of the business that we do. It applies to GWS as well. It isn't just transactions. But in GWS, bringing the full suite of services and everything that we have to offer to our clients that is specific to what they need in terms of the industry that they're in or in terms of the geographies that they're in, it's a huge part of what we do as a company.

And along those lines, are there management metrics that are being brought to bear in terms of tracking how this trend evolves as well as creating incentives for producers to collaborate?

I can't speak to those specific incentive structures, but safe to say we are driving towards and continuing to support that collaboration.

Overall, inflation has been a big theme. How do you think it would impact CBRE's business? It's the same...

No. Yes. And so we -- it's obviously a question that we're asked about a lot. We think that the near-term outlook is pretty favorable for real estate overall. Historically, we have -- we have historically low rates right now and inflationary pressures will eventually recede over time. But if you look at what our research team is saying, they think that even if inflation continues to be moderately higher than expected, we'll continue to see growth through 2023.

Okay. In terms of the expense side, do you know what percentage of expenses do you expect to normalize and come back over time? Is there a way to quantify the level at which certain costs are subdued and over what time period they may normalize?

So I can't provide specific detail about what those percentages are, how much costs will come back. But I will say that and I spoke to that in the first half of 2021. Our discretionary costs, which is travel and entertainment but other discretionary costs was 60% below 2019. So that's meaningfully below where we were 2 years ago. And we do not expect all of those costs to come back and we are going to be very focused on being thoughtful about what comes back and when. And so I think what you can glean from that is that we will be lower -- we expect to be lower than where we were in 2019.

Okay. Well, right now, there's no further questions from investors and I've asked all of my questions. So are there any other final points you care to make? I think this was a thorough and enjoyable conversation.

Yes, I really appreciate it. I would just say that we're really focused on where to deploy capital, but we're really being thoughtful about it. You asked about Turner & Townsend, which is a deal we're really excited about. And I know we've spent a lot of time talking about -- recently about our focus on capital allocation. But I just want to emphasize that we're being really thoughtful about it. And so we're building a big pipeline, but that doesn't mean all of it will convert or any of it will convert in the near term and really thinking more longer term in terms of what -- where we see the biggest opportunity from a strategic perspective and where we think e can drive the most growth.

Does a deal of the size of Turner & Townsend delay being able to execute on other deals in the pipeline just to manage the integration appropriately? Or is it not big enough to affect that?

It shouldn't explicitly, and we don't want it to. And it's a great question because it's something we really thought about deeply when we structured that deal. Because Turner & Townsend has such a great partnership that they've had for a very long time, I think, 75 years that really helps them to attract and retain talent in their space in a way that their peers can't. So it's really important for us to be able to maintain that partnership. They have over 100 partners in that business right now. And so the way we structured that deal is that those partners will see the same dividends and distributions, very similar dividends and distributions as to what they saw previously. And because of that, because we're operating at separately with a Board that includes Bob Sulentic and Jack Durburg and Chandra Dhandapani on our side and it includes the CEO and CFO of Turner & Townsend, the integration isn't as meaningful as it would be as if we brought the entire thing under the CBRE structure.

Okay. Well, thanks. I think that's helpful on getting a feel for how you are thinking about structuring these deals. Well, thanks so much for your time. It's been an enjoyable conversation and look forward to speaking with you soon.

All right. Great. I appreciate it, Jade. Thank you.

Thank you. Take care.

Bye.