Operator: Our next question comes from the line of Frederic Bastien of Raymond James.
Frederic Bastien: Question is for Jay or Chris. Obviously, it’s a tough slug on the capital market side. But if you take a step back and do a bit of a health check on your brokerage business, what are the things that excite you most? You did cite great employee engagement scores earlier but are there other things that you’d like to highlight?
Jay Hennick: I’ll jump in. Chris, you can jump in if you want. I mean one of the things that Chris mentioned in his prepared remarks, is the entire Colliers Mortgage business and over the past several years, we have created a national platform which Colliers never had before where we’re ready, willing and able and busy providing debt advisory advice and restructuring advice to our clients everywhere. This is particularly needed in times like this. It doesn’t necessarily translate into transactions immediately but clients — this team of professionals and I think it’s up to [indiscernible]. They are busier than ever working with clients on existing portfolios and loans that are coming due and they need help in not only re-envisioning their portfolios but finding new financing sources.
So — and we do this in other parts of the world but I think Colliers Mortgage has really set the standard and that we’re excited about what that could mean for the U.S. business or the North American business going forward.
Chris McLernon: Thanks, Jay. I think if I look at the overall brokerage business, one of the key highlights to our success is our strong culture that people really enjoy working at Colliers and we have a lot of long tenure within the business. We’ve also worked a lot on retention. So we have a high retention rate of our key producers throughout the world. And we’re positioned quite strongly for when that recovery comes. One of the exciting things in the U.S., we continue our recruiting and we’re ahead of plan in 2023 and that’s exceeding our recruiting targets in the year before. So lots of excitement in the brokerage business about strengthening our team, keeping our team in place and getting ready for that recovery.
Frederic Bastien: That’s helpful. Next one is for Christian. I think you partly answered this saying the fundraising, you expected roughly $3 billion in fundraising for the full year. Is that all back-end loaded? Or did some of this already get kind of recorded in year-to-date results?
Christian Mayer: Yes, Frederic, we’ve got about $2 billion [ph] year-to-date fundraising already completed. So we’re expecting $800 million to $900 million in the fourth quarter. So some activity but like I said, modest and we have pretty high visibility on that at this point. And we’re obviously gearing up for a return to more normal fundraising activity in 2024 with the products we have in the market.
Frederic Bastien: Come from a mix of alternative assets and infrastructure? The fundraise.
Christian Mayer: Exactly.
Frederic Bastien: Yes. And then obviously, you might explain the modest sequential increase we saw in AUM this quarter that I think you had an increase of what $8.8 billion.
Christian Mayer: AUM is pretty flat this quarter.
Operator: Our next question comes from the line of Jimmy Shan at RBC Capital Markets.
Jimmy Shan: So just a follow-up on the capital markets business. Yes, timing of the recovery is hard to predict but how should we think about the level at which the revenue when it does recover like the level at which it normalizes at? Because on the one hand, it sounds like there’s a lot of operating leverage in the business. But on the other hand, asset values are down, so presumably lower fees on a proportionate basis. So if 2022 was $1 billion of revenue, do you think you get back to that level at some point?
Christian Mayer: So I’ll start on that one, Jay and maybe Chris can add to it. We have been adding productive capacity to our brokerage business over the last few years. So we have a strong team of professionals on the ground that is positioned to participate in the recovery. And we talked about when that happens, not exactly sure when that happened but it will happen. So we’re well positioned on that front. Now you make a good point about asset values and it’s really impacting office only which is about 1/3 of our sales activity. So that will have a modest impact perhaps on our commission levels. That being said, as assets are more difficult to sell, the commission rates tend to increase. So that’s a bit of an offset to that. So I think the recovery will be strong. Our position in the market has gotten stronger. Our number of producers and our productivity has increased. So I think we’re well positioned for the recovery.
Chris McLernon: And just to add some color, 3 years ago, we, as a senior management team, identified capital markets is an area of significant growth and we looked at where our gaps were so we’ve been doing recruiting of senior professionals and also doing acquisitions. So we’re poised to really get back to where we were in terms of revenues and exceed that as we take market share going forward.
Jay Hennick: The last thing I would add just for additional color, my take on asset values is maybe different than most. Industrial continues to be very strong. And Chris already mentioned that there is a shortage of industrial space around the world. So not only are our rates going up but the valuations of those properties are going up. Multifamily continues to be good. Retail has rebounded very nicely. So the only category that I think there is price adjustment coming is in office and not all office. It’s only probably Tier 2 B Plus office, suburban office where valuations will fall. And the beauty of our business is we’re a service business. We don’t own those assets. We just trade those assets and that’s one of the great things about having a high cash flow generating low CapEx type business.
So — and as Christian said, the tougher the asset to sell, the higher the fee we typically get. So I don’t think valuations of real estate will have any impact on us. And at the end of the day, we’ll see what happens. And just to circle again, what Chris said, our numbers of real estate professionals are up. The number of debt professionals we have is up materially over the past 3 years. So that creates additional revenue streams. So all of that, together with an overall relative stabilization in real estate values will and should continue to translate into a very solid rebound for Colliers and to the point where we’ll do better in the future than we have in the past in our view.
Jimmy Shan: I appreciate the color. And then my second question is on the investment management side. Can you give us a sense of how big that pipeline is in terms of the funds that you have in the market today?
