CBRE - Earnings call transcript Q3 2020

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Operator

Greeting and welcome to the Third Quarter 2020 CBRE Group Incorporated Earnings Conference Call. [Operator Instructions] As a reminder this call is being recorded. It is now my pleasure to introduce your host, Kristyn Farahmand, Vice President, Investor Relations and Corporate Finance. Please go ahead.

Kristyn Farahmand

Good morning, everyone, and welcome to CBRE's third quarter 2020 earnings conference call. presentation a on announcing of along the cbre.com, supplemental with issued and financial our with we you materials. file along it that that as posted Investor a an our today, prepared press to well our release results, website can remarks, Earlier use deck as follow Excel slide Relations additional page contains

questions. for first, the for CFO morning's quarter next, Leah our call I follows: will open After detail. this as of and provide in comments, agenda results our Our financial will Sulentic, we up be results quarter; Bob CEO; your third President will overview an call will the more their discuss and our our Stearns, for

undertake and update XXXX reflect you in this subsequent you of other any to will and that circumstances. We that the performance integration, statements these prospects, these future effect forward-looking of to historical begin number operations, you cost capital a regarding involve savings including the market matters I consider information factors initiatives CBRE’s presentation contained acquisition COVID-XX statements are we urge to and impact that our that risks this not and financial Examples outlook, Before of share, no growth including the expectations profitability regarding statements call I margin, uncertainties. contains our include obligation fact. of remind remind on events or deployment,

materially expressed estimates these and us the cause in You to actual could should these affect from may in be certain future factors be those aware statements. should differ only that forward-looking statements and considered results

other statements, most refer Form XX-K discussion morning's release to please these may our and quarterly of impact that full on factors a and filed respectively. XX-Q, the and this earnings risks annual reports recent and For forward-looking

measures together revenue most certain in with appendix We this the deck. provided GAAP reconciliations measures these to directly our financial the remarks fee of other adjusted EBITDA, included in adjusted non-GAAP comparable of of and slide have EPS, measures presentation explanations

to financial Total our benefits around turn and respectively, about was Lower advisory management and the cost reduction, initiative the X X% our business, please of temporary declines XXXX. of fell fee as quarter costs partially of by the the offset GAAP third cost segment. EBITDA initiatives by adjusted revenue transformation in which to totaled XX% presentation, the and highlights for limited while adjusted revenues revenue well Overall, ongoing by $X.XX the disciplined services driven Slide as for Now results improve of transformation quarter initial the was targeted of to $X.XX, which $X.XX. includes which X%. EPS EPS, declined structure cost

longer-term for to call insight on please turn turn to and outlook, Bob. the Now I over as the quarter X, Slide our

Robert Sulentic

highlight revenue we has that in billion company good capability and crisis. results now were years, resilient and morning the and management, portfolio data more XX the Kristyn, recurring financial is X.X exponentially improved. ways X.X that by grown global feet. one occurs some feet evolved morning management Thanks the added the growing square We Facilities provide up specific this square different the we ago. last totaling billion steady progress everyone. center a And business since has which with have CBRE reported endured briefly robustly. in the more has made a The I'll from decade a side than company markedly downturn building

for COVID real They majority specialized very this the also grown management XX offerings mortgage years, portfolio. be our multifamily in comprise have services. of resilient grown are origination group's Our estate is also across These to has and environment. and five-fold U.S. and industrial the further together cut proving and current capitalizing demand in leasing, and development offerings project dramatically sales servicing.

AUM management XX up over nearly asset years driven property of sales. our and are now helping sharp us Finally, total The quite has investment comprises well XXX% in XX% the portfolio, which than more held aspects our business has COVID whether core grown leasing resilient fall year. of and businesses this

Another earlier. and was other market rapidly team be work of the strategic structure will with Inevitably, has actions. prime the our call handing designed Many before and our expect of following sales and management the passes. beneficiaries. several to efficiency. largely COVID quickly were of highlighted portion COVID's current on parts, for future. putting scalability considerably health demand. cost COVID automatically business effective compromising I other contemplated briefly actions our where want I enhance appropriate diminish in the making our A parts key is our cutting significant contributor decision which review public magnitude now expenses before is global pressure without creating macro been impact compensation of can a present aligning the We of leadership larger these quite our comment falls and the in has At reduced frozen environment, once implemented environment crisis to to to downward opportunities businesses time, leasing on Leah. This

However, COVID be of a driven amount significant change permanent. the will

take more that that confirms office managed quality model with a clients and towards Occupiers and employees For will space a instance, buildings our managed, hybrid from continue premium more companies for densely flexible. space high populated, but will There work on home. working well infrastructure. be with be intensely that great combines fewer the will occupier will from moving less

assets, cycle, by trends that space, are experience advantage driven secular institutional the quality to services. take We and and continuing strong outsourcing, of workplace multifamily logistics the last industrial including occupier growth were

the in and be to through you over to our in opportunities will turn them in quarter the wake of I'll strategy leadership expect positioning capital COVID most new to detail. of We created unfolds. the secular make who as With our new cycle the focus the our and that, Leah, take allocating call

Leah Stearns -

Bob. Thanks

EBITDA nearly XX% XX% and fell and weakness Advisory alluded respectively, Turning X, Services and Bob to fee leasing activities reflecting and margin our sales Slide to. over high segment revenue adjusted that

year-over-year, basis improved was management bonus XXX XX.X%. reduction to short-term margin points effort. of and accruals of While cost lower points travel about as transformation tight well and expenses, including and our due improvement approximately initial advisory impact about it adjusted sequential furloughs, continued the to the This of combined as EBITDA XXX sequentially fell entertainment optimization basis workforce impacts

in execution in seek points sequential by for and XXX related sequential decreased revenue X% e-commerce three in QX. XX%, was leasing space. basis Europe fell Continental added out to market pandemic The XX% Continental respectively. in In period as large basis just sequentially QX, according about offset XX% our to global Global compared quarter, advice continue improvement the about we major COVID to investors paced year-over-year Europe versus In and points the year-to-date. the the U.S., revenue XX% and XX% falling of to about Additionally, to best fueled U.S., during cadence the as continued shift XXX market. improvement XX% impact where sales QX. revenue benefited items. challenging regions leasing in increased Advisory declined RCA, share X% leasing our Globally, in a office negatively of the the due which X% Advisory XX%, improved global XX%, saw and the U.K. by which weak All QX, the together in comprised market. U.K. from industrial QX to to transaction a helped sales demand industrial the

year-to-date assets Commercial real rates, the Given estate volumes. fell which demand marginally low multifamily the pandemic. continued XX% the underwriting with volumes exceeded The conservative strong tenants quarter institutional environment creditworthy typical rebounded revenue XX% despite and mortgage from to interest sequentially dry of Refinancing in up for in originations the investor XX% activity from remains high by quarter. level the second lending comprised on prior-year quality quarter, powder remain Notably but the rent weighed lenders rolls and of and improved range. quite the solid XX% level. September our standards during our

was in quarter. Slower result in quarter, fee with excluding other grown and prepayment advisory portfolio fell billion. with loan would lines and COVID X% impacted line Our services over X%. last the grew over the growth XX% double-digit less fees business project during prior loan growth revenue at saw and while each of $XXX sequentially servicing advisory loan fees, prepayment about of were Valuation have a consistent our loan lower growth XX% the servicing revenue period revenue by low servicing year previous servicing the management quarters. nearly to property The

requests continued immaterial business. Forbearance also be for this to

the nearly record in at high to expenses in quarter contributed This solutions improvement. in measures XX% offset revenue. nearly not fee $XX revenue. in X, increased basis facilities X% did of despite to recurring. a XX% prior transaction consecutive profitability. about initiatives points margin of temporary our improvement growth bonus to driven about as business transaction loss was cost global and partially decline with the accruals. period And and Turning of changes and margin discretionary growth Slide primarily structure million X% margin lower EBITDA Adjusted second expanded Long-term our spending one-third year associated the by GWS that Structural in in profitability the project strong efficiency management workplace was management, cost steep nearly XXX revenue, this

their mature. in relationship, profitability service of needs. scope expect and and project satisfied us to also client expand long-term We gradual Long - improvements to support drive management typically, transaction tenured and as their clients our engage expand

new improving are business pipeline margins strong. our our and While is

on slipped continue QX, from feel the are temporarily contract We to large others related GWS QX in new pandemic of effects hold. on Several securing clients. and to decisions delays while to boarding

we normal would growth continue typically we top-line in be to expect than a environment. more As result, more a expect muted recessionary to

Slide October. $XX at the $XX our acquired the a EBITDA from rising real of year increase of we multifamily where and adjusted with development reflecting Turning achieved million performer to number period. EBITDA now small and large a estate $XX approximately investment from to segment business we Development XX, prior million, sales, and was UK million let's adjusted last look contribution asset standout

our healthcare are elevated assets. industrial We benefiting and to meet portfolio demand multifamily, for positioning from

this moving these we business leased fact, three property expect in-process are our XX% pipeline, resilient comprised plus sizable development of our of at In Because that our remain and least buildings activity. forward. will XX% type, over office

Adjusted interest in $XXX.X over management, EBITDA impressive under EBITDA more from new also than nearly adjusted revenue continued lower which strong Our from record importantly, co-investment returns. rose had business and at a and quarter. carried sources reached XX% XX%. reflected contribution and investment a This recurring billion increased an assets management growth offset

EBITDA than lower anticipated be by in $XX occupancy. quarter. results Hana’s slightly impacted loss adjusted was to Hana’s last million of higher the than nearly Lastly, continue

of with As expanding the a enterprise result flexible as solutions. well associated costs pandemic, space our focused as

and by XX% to the adverse also and this transaction business. again than We benefit partially In refrain business will revenue expected driven million. QX impact, has more XXX,XXX deals transaction guidance, diversification trajectory comprise provide but total of uncertain Transaction COVID-XX’s fourth but full size the are U.S. over given a of anticipate XX, the year-to-date economic versus we transaction in update than during view Slide In explicit is taking results, EPS transactions the embedded this for we gradually. half our to declined less similar on Turning expect in an crisis, which year transaction in from geographic performed better decrease revenue quarter. of diversification a providing recover conservative will expectations from over X our our which QX. advisory, XX% activity and about

lagging expect the be approximately with the line down in and and of QX, with XX% the trends parts together third to XX% in world. revenue second other We quarters in saw slightly we leasing to Americas sales the

highest a For that the revenue as combined, of quarter we it is. QX in fourth advisory business revenue quarter. reflects the the be rest our will the decline usually This foresee mid-single generating digit expectation

in advisory QX. Given this on focus revenue we to fee expanding with our margin uptick adjusted around cost X% continue compared expect EBITDA and continued management, by

contractual more revenue in transaction. GWS, facilities in management weakness reflects view lower This for year GWS we management will than and the with mid project benefit growth reflecting in single-digit continued expectation EBITDA slowly offsetting fee now performance of stronger previously that time, and and the our our revenue believe marginally pandemic expected. improve adjusted the the efforts QX we related earlier into At expect full-year the delays I cost will we than than of management growth, double-digit expected continuation same the normal Moving growth to growth rise range QX. mentioned

temporary We be expect sequentially expansion as margin benefit dissipate. will slower the cost of actions

development performance to current the lines at management, global Looking EBITDA performance in more adjusted We for last is the EBITDA for of consistent $XX million and REI, recurring around XXXX growth our anticipated to to growth more higher for we more outlook and than stronger achieved with in In the complemented expected now remain than of we previously in well multifamily for in expectations in with teens stemming investment of small, from year-end. fees anticipated. project to the peak loss previous we exceed we the be high has the We sequential than full This higher from our improvement year. development resilient we has expect adjusted development and Demand the will grow improvement And since adjusted our previously. positioned foresee we multifamily adjusted before management interest incurred incentive EBITDA growing AUM, quality QX. $XX carried an range expect by from We assets XXXX. the $XXX Hana development exceeded UK in from expect during EBITDA than which year. anticipate XXXX. now the $XX our environment but EBITDA UK than our U.S. downturn. The positive expectations investment the finally, complete business sales now EBITDA from a contribution for and million breakeven again we asset generated are last million previously now marginally expect been and pace an is pandemic expectations for million loss

COVID-XX On a rate the run fortify our Turning position have million. lowered expense $XXX our nearly throughout XX, financial we by structure basis, we continue crisis. to to Slide

We changes focusing our by teams in and demand. realize future base $XX reductions our also in We approximately of right-sizing design million XXXX. workforce, achieved making on expect the this $XXX to meet about in XXXX while and to these of million structural cost primarily

turns ago almost over billion the a improvements strategic long-term to down from cash just by a addition, QX turns X.X and This from increased In our initiated of to flow we ended liquidity conversion. improvement with $X the pandemic before billion profitability X.X work we in has $X.X year period well and ago. drive year leverage reflects

meaningfully crisis. our position at been COVID-XX that to Given able depths strengthen we've financial the of the

We ample challenges to are capital. have simultaneously while future deploying we highly confident discretionary capacity attend

and well we our impacted. to are financial capacity as well believe driven using plan run. business secular that we there profitability Bob to our repurchases. over internal we liquidity prioritize for capital to a we’ll demand. will revenue will As internal rather the at business investments the from as highlighted the We and enhance are and see M&A investments focus our outset be to trajectory discretionary and parts as call, resiliency to the of ensure adversely of our strategic that to deploying benefit on are increasing of deployment of the evaluating the we want likely portions we be accelerate share COVID begin the our strongly as means areas than believe as where business This pipeline crisis capital likely moment, long steadily is We At actively growth trends M&A opportunities.

are this also recognizing our cost have taken we've We people. year the actions that impacted

As we've identify said repurchases. opportunities, then are will and time appropriate, consider once the if unable is acquisition suitable before, properly we share we valued to

and that the ever only our more to Bob. environment by earnings growth. weather that, and I'll than capital turn industry business maximize position call remains uncertain, to structure, With our but back Slide flow confident the presented build and position please highly COVID, turn should our cash on leadership not our XX we're challenges While and to long-term the

Robert Sulentic

Thanks Leah.

has provide Employee our grants truly to hard on briefly than us from facing to clients Their enabled we hardship. strong Resilience acknowledge and our focus who take brought a CBRE the challenges from company stemming closer also The financial for more Fund at CBRE the together These colleagues, company. to X,XXX and employees. crisis. million the your $X.X company challenges our we are people us as questions, have are work raised our distinguishing time significant want Before health our I a of public

We are time. this lives make help pleased easier a little to stressful their during

Now, take operator questions. we'll

Operator

our Sakwa ISI. with And take Instructions] Evercore [Operator first we'll from Steve question

Steve Sakwa

to how kind that was forward? we and those of benefits longer to I that going a in $XX expenses transformation wanted to that term million and wanted benefit is to the get up you these of of just circle I the the more of of company how current just talked about or quarter, measure Leah kind much couple really sort things. bit little much of on initiatives, How a understanding? do benefits see

Leah Stearns

costs Sure, will transformation. second the that expenses in quarter one-time of attributable Steve. will Those this will to the related in run quarter that to in was and savings, more million rate to took The about the separation XXXX. other $XX rest in than amount workforce - that will actions $XXX of combination and we year, little a we commence recognized the benefit from million with the half

Steve Sakwa

Okay, today? great activity, the likely more maybe for too be you're the see thanks. three guess just to I'm you bit likely if get And then I M&A specific or opportunities maybe think can't maybe you're arise I you feel about about a are areas, trying little to but your deploy capital where you better to divisions where seeing more or more opportunities know where

Robert Sulentic

will we're the identified Yes that be thorough M&A Bob. of it secular those we positioned business for very that And business areas business to we're And our gone to update this or grow strategy we've areas year, of We've disproportionately think targeting activity. well a is our past there through either carefully in our Steve, in pretty subject tailwinds. did. we

we for on we holes if what's think or we're coverage, the we now, business have, can point going get but because pretty areas do And we're will particularly of we powder out clients, to be It's add but of can because can to deal things areas a about M&A good it they're the a have that we'll our think geographic to our going We're focused nature. not patient. we if very we much of core us activity our there run and have we to we're we for ability in as do stuff just our And really I the Now say nice out in a bunch other in offering. what capability think in to have some dry we part is excited unless we line we with cultural going integrate make well. tailwinds up in secular we're think got of that low a buy cycle market and reasonable good deal. fit and right

Operator

We'll JPMorgan. go to next Anthony Paolone with

Anthony Paolone

considering you question First with last things, done. the places, there M&A just add of go can we'll about guess is, are that years already you Similarly several businesses to deals into? you've in you in as think new I that side you're Are think the stick you this.

centers more you're curious build just side? You on infrastructure so additive runs approximately you focused with - platform? is did what if the data just the new on to And investment it's or if management

Robert Sulentic

what be that, we more enough quarter because is And We we would are client do, afield base. think far for Yes our with would that there how skill closely we and we Tony, set been consistent we that from not and that will like what that. to that's adjacent basically our about to requirement opportunities relevant we've meet too do. think or go look things what

Anthony Paolone

had sizing you having it putting you And some the on sounds buyback see burner. back said Okay. the like do opportunity you mentioned,

would these to sounds are do able it So both? are - size you be that potential not like

Leah Stearns

it’s Anthony Leah. So

in than is Our we could any one entertain actually quarter. current pipeline reasonably larger

So the to the sure if we of act want are we we being dry find right opportunity to cognizant powder that we set have that We very have. opportunity. make sufficient quickly,

our we that are a we have think buyback off one, the directly us two, prudent it's so balance actions the for pipeline. given we impact our And And to on our per that measure approach very perspective, taking M&A quarter. put people and active from

Anthony Paolone

And there. the the thanks on side Okay cost all then for great. right, detail

think if long-term way change as Just guess, wondering the thought that on $XXX if to of a should a of there margins a million for is more about think it we that I baseline about as piece XXXX the what we more basis? would being instance, of permanent

Leah Stearns

That reduction all XXXX incremental from levels. is

all run rate. So it is

Anthony Paolone

temporarily? And think just all you and that's more part of current the environment permanent not doing things

Leah Stearns

There have that actions we've Correct. [ph] other taken. been

deferring, at of won't furloughs example, we’re bonuses certain were of that naturally be on year the the that because based outset For targets reduces commissions structure compensation set our achieved. and

structural So the those headcount in really cost million were The $XXX not basically is reducing either reducing through overhead, reductions, - million. headcount. included actual $XXX through and

Anthony Paolone

me. And then last one from

GWS of mentioned a items in had just You couple slipping.

last quarter you mid-to-high I change part that I single-digit high I you Does and think updated EBITDA? had that if had topline think didn't single-digit mentioned catch it? of

Leah Stearns

So, the expect single-digit. in GWS we to now be revenue the

expect EBITDA to we do growth profitability or be However, double-digit.

So updated we have that.

Anthony Paolone

Okay, Thank you. great.

Operator

go to with next Rahmani We'll KBW. Jade

Jade Rahmani

questions. the much very for taking Thanks

a Just lease last And you to their in terms seeing duration I you maturity? office reduction the at lease was by looking trend kind that pipeline exposure. start average down are said occupiers their about quarter. average off of in of are that What XX%. with, [indiscernible] seeing how are in think office

Robert Sulentic

Yes is leases big Jade have just of aren't a maturity been on lease - that average we’ll that’s hold, the lot the overwhelming put made. being thing decisions long-term impacting

people. of have CBRE We that space for our own circumstance portfolio our office with

that's what come We'll the to like aren't come back. out tries back is it something way, everybody hold. use figure to come of being and look that's all By back will not, big going that those on As it but space will probably much decisions post-COVID made. definitively

average it’s But and that now. that all you're continue done. So what deals that, averages renewals, of having result the COVID is seeing long lease expect as impacts is a impact now we small shorter to the of having extensions as is the getting is

Jade Rahmani

Thanks taking my very question. for much

Those the was that restructuring administrative did wondering the in charges insight was million to lot to any infrastructure a the to on you today was Just savings? relate on occur be could run annual terms it calls services rate if should really of the types actions functions? $XXX we and from and and of advisory relates investors business, that expecting fixed Where what in of benefit separately actions. as as back office I provide I've gotten

Leah Stearns

Jade Leah, So the the launched GWS distribution second workforce about it’s our of REI was third in was transformation that's took the combination XX% we about in initiative in about a as and in was XX% quarter. the we it of the actions an XX% segment, advisory quarter as well that

The standalone around that third were quarter, did. principally we our actions the exercise

possible Just looking out sure to were at the of this. organization making overall we appropriately as as structure shape our of structured and be efficient and that coming

So costs. in that do of lease that to represented through it the to of have is related vast thought We most is But come action. and severance other things as severance of separation terms majority other consolidate some we've have that our related costs terminations workforce. to

Jade Rahmani

a terms And drawn to very advisory with in does - to XXXX XXXX it and respect perhaps moderate extent out what segment? volumes of and of the reflect a expectation transaction in recovery

Leah Stearns

advisory and certainly we expense do we that Therefore our business. for recovery. be being expect said the moderate earlier I very around it more cautious to Well, a when very are structure we are we that cognizant - said that.

workforce our our so level of you make we're to coming look we'll right-sized to from and that's that reflects clients. demand should sure continue business the our at to And ways ensure expect

Jade Rahmani

you terms headcount if cost two stratify reductions that in the other could savings amongst structural lease guess terminations. of mentioned I categories? you versus those How would split changes be And

Leah Stearns

majority The severance is of costs. it

Jade Rahmani

Okay. indicator as that is outperformance you And leading side do a on markets demand transaction to EMEA the then What that you on which that and a could driving finally mentioned? just think on in capital pipeline? be pickup of the

Leah Stearns

Continental Yes, some performance we really particularly had in EMEA strong Europe. across actually

watch COVID of So, certainly some one back we're in we're into level right lockdown of those of the XXXX. terms of quarter come markets of now overly in cautious - came certainly that before Europe we'll seeing the expecting each Americas that the fourth activity headed that out

Operator

with William Blair. next go Sheldon We'll to Stephen

Josh Lamers

sales This question to the is here. actually but we characterize far recurring along thanks if why are over always valuation Stephen on for of going not? process to Sheldon the on investment ask spreads Can and I'm you there how good bid with the and side? couple if indications outline in Wondering taking is that are some Lamers could questions discovery Wondering in gap? just there Josh you last gauge. months the for price any start come

Leah Stearns

see come back I to going that overall it's leasing think on transactions significant for capital perspective. important be before there side us transactions an really to activity the occur larger from markets

So I ways resume. are from think we still seeing activity markets capital away significant a better

more cycles will One there we've constraints the been seeing of has help of the the benefits that seen more and where - credit certainly in though liquidity investment a business is than bringing that in with are we strength market. prior more market our property sales in come more back

Josh Lamers

term front, just mean here up on And the prior then longer lines we picking the of just I decisions. longer-term generally delays question making speaking leasing leasing and with one noted

process has conversations the not seem it your in so level higher going up leasing influenced about meaningful on but in more at thought picking a any activity there health it leasing way recently based to XXXX, resolution? way that So is activity more some resume and is in a

Robert Sulentic

discussions fact occupiers of going around And world we big this engaged and will most activity really we is really in do Stephen, some there they things real the big be way they make saw an the in are to but the are with level looking for U.S. how office two used. is is the decisions. space separate their is clarity to matter the related And pick thinking important and we deeply COVID summer of before in here. around there about One, up the - point think this. change they're the of start This some on

infrastructure that the Going forward, not leasing there that Isn’t come we offices from the decided think with done. back. one managed. will and densely. issue people There in more this get the all think thing be think two a We on great going separate be to to to there think going will is It's will intensively is less things. that issue going it’s whole be favored. is will environment We used be and get separate though We less it’s the office. a buildings separate in

Josh Lamers

GWS continued gears And hear to switching and then hear. good interactions to that to

I guess to surprising Although a from occupiers my delaying this hear making decision that say, front. have perspective on are their I little to

then the operations usually and outsourcing returning is bit there contract your due was next expand confidence point delays COVID? double-digit growth first year? behind what's you cost the at reason that So to added given on to GWS Just risk and this I later the year could and a and associated of savings more with hoping managing

Robert Sulentic

We examine of is much earlier big the so backlogs physical but there that's this year, get not years, relative very to only prior presence relative opportunities but think simple managers had work these to is to needed thing People one done. to need on to People and project getting people space. need site moving need another done. about to place bringing things think about people from

been space us it tell slow when it. mode delayed making out has move traveling get Not they is when decision they environment, reasons. us of going making the that hard All decision out or a the they're inevitably laid or how that, this clients those move tell into uses that decision their for of makers to knowing to is not down. And C-space they in very things directly be and in

come back decision will impact this important there leasing different all means absence the of way to so for There be on things. It's other or the the - use then and COVID. office occupancy. we of there separate think us space go and what of is as to that other of happen side so space again, the And really it’s the of our side is place of taking business, making important is office two And will those on the used that's when COVID about COVID.

Josh Lamers

by you've one early me, that Hana Okay, targeting comments makes grab that all just last sense. year next to then some you from to on And have tenants from noted looking you're now. open

I it and a considerations priority future ahead ago? office outlook around expect or maybe is you does year being as of this - mean, the Given rolled the looking apart become for more a I your guess comments to out

Robert Sulentic

what Several COVID. of short-term. satellite space space, greater evidence it Yes, that forward. users out going necessary is they're how to used is the space like so put people flexibility home. versus from Company there to working the likely is because space in home learned other like become going be kind the that about space there. Hana markets every believe of believe of aren't around sure given more Most way that about they're They're into long-term from their people we working going to think things we've not than type flex because is in, But because capital world today. office We more short-term. office will hesitant

kind other impacted a thought like materially short-term prospects So in was perform believe in prominent office has performed to long-term historically, short-term be for than we Hana the been the we're impacted like quarter. the we been and space every been it's in that materially. going space has of It Hana. pretty it it it in this could encouraged about the flex has But been strategy more

Operator

Raymond Patrick O'Shaughnessy with James. go to We'll next

Patrick O'Shaughnessy

How volume you leasing more markets in office thinking revenue, pressure on rebound? are rents wane on about capital does guys transaction fully

Leah Stearns

in tertiary at a large top on there today, see the the activity level impact smaller been the So that look cities we relative we has of markets impact the secondary lesser or to world. XX as and

occupancy help level increase price the office. more the think like we particularly levels rents that in less on began as smaller see there leases. will certainly also of and transactions price well and we on better market side, certain alluded to and COVID to some discovery, you in in happen more to be office and will space and that decisions an to able cases attenuate watching market should markets - capital smaller multifamily and those types to space if as be we in size impact industrial, vaccine property But space office that leasing the capital at path lead markets, I needs, as those and a as those In transactions drive look more would more expect really smaller see think, those on will smaller classes Bob discovery we're for have asset to near-term, occupancy we therapeutics the So perspective, lead from and sooner. I

really are there for today. that certainly asset rent would where strong cities in to just class place, expect leases activity, market there's happening risk is transactions capital we where So long-term too tenant and pause credit in be terms in larger of we're underwriting the much seeing value add in where those have happen rolls, transactions space you

Patrick O'Shaughnessy

do But major when and those and start again. see ask San you and in Francisco New transaction your centers to into narrow bid York the city happen Boston

and are the the there lower of of prices a you concern in that transactions? have that those you move level. building that - commission to that of rents is hit If market headwind you're a in long-term terms to clearing so, order of presents off if kind the thought And making

Leah Stearns

leasing ultimately I how going decisions are post-COVID. would really to depend made say it's

massive I relative it's rents or see where going there not is are go say it's amount do where may new today. distressed think online. early of specifically be where though There they to but too some to as you assets vacancy assets are some coming concessions, to

on You - time, occupancy over it a type able changes remember, of long time. able over terms short don't to at really period period a of these of coming renewal of in are being very to being a or executed massive be execute terms of radical see see and most up to once, have in need shift occupancy all you have to leases in you

Patrick O'Shaughnessy

to a maybe live still Do have multifamily in sort would the units ago? of demand areas. potential people maybe you And of the How tertiary on want see then centers major as the of structural the secondary impact for the as the thinking I are not urban on year and business, centers? same expected you city guess city suburbs multifamily versus about slide and in theme you

Leah Stearns

around really been individual more and we abating Multifamily has - in a driven challenging for by housing, an that so for don't and is perspective. single-family underlying from affordability for see getting fact us issue

there to tailwinds secular think be for continue certainly multifamily. we So

Patrick O'Shaughnessy

to one-third driven more the But more temporary Workplace one was of last by specifically go And the sorry a Global does cost margin Solutions costs remaining margins back again. expansion your environment? the to normalized come improvements, in with commentary due imply structural that regard and do and approximately reduction those back me to that from to measures was two-thirds

Leah Stearns

Correct.

Operator

with We'll America. Bank of Funk to go next Michael

Michael Funk

for you thank questions. the Yes,

could. just So, if I -

share back you're that quarter. comments XXX share the basis market your market the going what improvement? you the So on to comment the in U.S. to points gap that then and you attribute Can improve, seeing when in you during this XQ expect if

Leah Stearns

on see, bit continue too something So for it's I to Michael, will quarter. that. market and on a speculate early monitor I the that Certainly make think too it, a pleased we think to early fourth we it's to call but share were just to

Michael Funk

then. Okay. Maybe little more if I could

now. sales capital So on, Are over is in driving pause obviously availability commented recent and activity you in the they impact [indiscernible]? early right before a strong Europe COVID any the cycle all put seeing you very have on

Leah Stearns

market of how impact soon to terms to in call too way in going that's the It's make Europe. Michael a

Michael Funk

try then. Okay. one time I'll more

you end more the low type the then industrial. is about deals, multifamily out the volume margin deals, is Are there of which that, a and So more below the more full carry enough opportunistic see the more of cycle? you it's through activity towards the comment recovery and benefits on expansion, pipeline of more these we and potential think guess, know, shorter-term see, continue I sales need to of to - there to or do

Leah Stearns

fourth You're the quarter? about asking

Michael Funk

third course What of that or you to activity? as business enough not reflected for help to continue large kind of similar of see deals, to drive quarter more normal about the these of smaller [indiscernible] or during type those pool whether a time

Leah Stearns

Yes, activity so multifamily in to market we we exchange quite bit be transactions markets XXX mid-tier once tends in a to happen will to the think see capital fourth from is perspective smaller again range. come transactions a that the see when quarter I of on that

market. part to rentals, that's assets is that the build in the certain in happening within in as we we well U.S. resulting of market the business. are bigger diversified would tenant, expect But long the sales tighter asset duration are like as asset as And underlying well our There So credit spread. certain multifamily certain in that help strong industrial something office transactions a commanding well as do certain classes have that transactions particularly classes, assets, happening

leasing And more around there are a done. certainly results. and transactions a pause out such So going certainly market be to muted evidenced we But being that significant think in because third quarter was just that the particularly. our decisions sales around is are there made on it's there

Operator

Thank you.

to We closing reached turn I'd the with back our to have end session. over floor Bob of the question-and-answer like remarks. Sulentic

Robert Sulentic

next when during everyone morning look to from year-end Thanks our this you today joining for report us we we talking and with move and time results. to afternoon, forward

Operator

concludes This teleconference. you. today's Thank

day. You at a have lines and participation may this Thank your you your wonderful disconnect for time.

CBRE (CBRE) 29 Oct 202020 Q3 Earnings call transcript