Christian Mayer: Well, Stephen, it’s pretty early to comment on Q1, but certainly the trend from Q4 was down meaningfully year-over-year relative to in particular in the Americas record volumes in Q4 of 2021. Q1 of 2022 was a pretty strong quarter too. So the comparative is tough. And as I mentioned, we do expect capital markets to be down in the 20% to 40% range in aggregate in the first half. So I think what we’re saying is that capital markets activity continues to be challenged and we expect it’s going to be challenged in the first quarter. And in particular, larger assets are not really trading right now. That doesn’t — that means that part of the market is not very active. Other parts of the market we are seeing some activity but overall it’s going to be down like we said.
Stephen MacLeod: Yes. Okay. That makes sense. Thank you. And then maybe just finally, when you highlighted the strength of the balance sheet, which I think is a huge asset in a market like this and long-term as well. As well as the capital deployment that you’ve put towards acquisitions over the last 12 months, can you talk a little bit about what you’re seeing in with potential acquisition opportunities? And then, Christian, just to follow-up you mentioned the leverage target. I was wondering if you could repeat that because I didn’t quite pick it up in your prepared remarks.
Jay Hennick: Christian, do you want to talk about your target?
Christian Mayer: Yes, I’ll start with the leverage target and then Jay will turn to acquisitions. The long-term leverage range for us is 1x to 2x, but we are comfortable exceeding 2x temporarily if an acquisition opportunity comes available.
Jay Hennick: It — in terms of acquisitions, we’ve got a with $1 billion of acquisitions done last year, we could actually rest and collect the cash flow that we generate from our business, which is extensive. Our CapEx as a percentage of our EBITDA is relatively small. So we generate a lot of free cash flow in this capital-like business. But as we have done historically, we’ve set a target of another $65 million-ish in incremental EBITDA and acquisitions for 2023. And the beauty is they’re all over the Board for us. I mean lots of opportunity in services really around the world. And there’s even opportunity in Investment Management in a couple of areas as well. But I would say the services portion of our business has got tons and tons and tons of room.
And as I’ve been saying, Stephen, for so long, having a global platform with exceptional management teams around the world who’ve been with us for a long time and are heavily incentivized through share ownership and other things, gives us the ability to execute on acquisitions virtually anywhere in the world and properly integrate them. And we’ve been doing this for a long time. So we’re going to, see for us, it’s going to continue to be business as usual and acquisitions will continue to be part of our overall growth plan.
Stephen MacLeod: Great. Thanks, Jay. Thanks Christian, and congrats on a great quarter.
Jay Hennick: Thanks.
Operator: Thank you. Our next question comes from Daryl Young with TD Securities. You may proceed.
Daryl Young: Hey, good morning, everyone, and congrats on a good result. First question around the margins in Investment Management, they took a bit of a step higher this quarter. And I think you’ve alluded to the potential for those to be sort of 50% or higher in the future. Is that going to come mostly from the organic fundraising and operating leverage? Or should we see some integration synergies upside?
Christian Mayer: Yes. I think it’s going to be mostly from organic growth and the operating leverage that comes from that. And I think as we look ahead to 2023, we’re taking a, on an incremental approach, I think the 50% margin target is a few years away for us. But certainly, 45% is well in reach for 2023.
Daryl Young: Okay. Great. And then in terms of engineering and property management both going very well, have you seen any indications that financing costs or just construction costs in general are slowing the outlook for engineering? Or is there anything to see there? It seems like it’s just continuing — construction activity just continues to be exceedingly robust.
Jay Hennick: Very robust. And in particular, the infrastructure spending everywhere is really driving engineering. I don’t have the percentages of our business handy. But I would say that the majority of our revenues are things like infrastructure rebuilds everywhere in new development everywhere and that’s really driving the growth of our engineering platform.
Daryl Young: Got it. And then just one point of clarification to Stephen’s question. I think you mentioned $63 million of targeted EBITDA. That would be above and beyond the guidance that was just put out.
Christian Mayer: Yes. Daryl, I think Jay mentioned $65 million of incremental EBITDA that could be targeted as our acquisition goal for the year. That will be — that will happen when the acquisitions happen and we’ll update you at that point. But certainly, the outlook range we have in front of you today does not include any acquisitions.
Operator: Thank you. Our next question comes from Chandni Luthra with Goldman Sachs. You may proceed.
Chandni Luthra: Hi, good morning. Thank you for taking my questions. So this is sort of trying to dig deeper into one of the questions that was already asked on guidance. How much of your 2023 revenue and earnings guidance is driven by acquired businesses rolling up where obviously there is less risk versus other segments like capital markets or leasing, where there could be more externalities. Just asked another way, how much of your 2023 revenue role is already known?
Christian Mayer: Chandni, that’s a very interesting question and a very astute one. As I mentioned earlier on the call, about $75 million of EBITDA comes from the annualization of acquisitions completed in 2022. And out of that $50 million — sorry, out of that $75 million, $50 million is Investment Management, which we have extremely high visibility on and the remainder is a combination of the other services, which includes a little bit of capital markets, but also a significant amount of property management and engineering business.
Chandni Luthra: Fair point. And then you guys talked about strong fundraising pipeline, which you expect to drive AUM growth of 10% to 15% in 2023. What’s the composition of this incremental AUM? Will this be all? Will this be traditional? Or will this be infra? And what sort of conversations are you having in this environment that’s driving such strong fundraising?
Jay Hennick: Well, it’s all over the map based on the strategies that were in the market raising capital on. So I don’t have the exact breakdown in front of me. But across the Board, whether it’s Harrison Street, Rockwood Basalt versus Colliers Global Investors all are in the market raising their next vintage of funds. There’s one or two new products. New products generally raise less incremental dollars but vintage products generally do much better than that. So the expectation that Christian talked about in his prepared remarks are, I would say, significantly existing products, re-ups.
Operator: Thank you. . Our next question comes from Frederic Bastien with Raymond James. You may proceed.
