Jimmy Shan: Okay, great. And then – sorry, just a follow-up in the pipeline of the different recurring businesses that you’re looking at. How are the multiples? Or like how is valuation? We’ve seen fairly big, healthy multiples in the private market for investment management platforms. How are those multiples looking today?
Jay Hennick: Well, that’s a great question. The multiples have gone up significantly, especially for the quality assets that we’re looking at. And it’s not just in the IM space, I think it’s in professional services as well. One of the things that I think people overlook with Colliers is that we are very much a highly diversified global professional services business with an engineering business that is circa $1 billion. And if you look at the peer set in that space, our margins are as good or better. We do have a global growth platform. There is multiple opportunities to grow that business, and those companies trade at much higher valuations, obviously, than Colliers does. And so we have an environment where valuations have gone up, but the reverse is that the types of deals that we are looking for are partnership deals, and they bring with them strong leadership teams that have stronger internal growth characteristics.
And there are many, and they are global. And so as many people know that have followed our story for many years, we’ve created value one step at a time. And we continue to think that there is exceptional opportunities for us to continue to add value to our business, and probably reposition our company in some way to one that is much more highly diversified, high value, more recurring revenue, global in nature. And it’s nice to see some of the peers in the traditional business add – start to add engineering to their mix of business as well. So, there is lots of those kinds of factors that are swirling around, which are – we consider to be very positive to our longer-term strategy, which we’ve outlined in our five-year plan among others.
Jimmy Shan: Okay, thank you.
Operator: Thank you. Next question will be from Himanshu Gupta at Scotiabank. Please go ahead.
Himanshu Gupta: Thank you. And good morning. And thanks for taking my question. So, my question is on the leasing revenue. How has your outlook for leasing revenue changed compared to the last three months? I mean is leasing turning out to be much weaker or slower compared to what you thought, say, three months ago?
Christian Mayer: So Himanshu, I’ll try to answer that, and Chris, maybe you can jump to. But our leasing was down 5% or 6% in the fourth quarter of 2023. And looking ahead, we expect leasing to be probably flat in the beginning of 2024 and maybe up slightly for the full year. So, it’s going to be steady. It has been rough, relatively steady, but we’re not expecting any strong rebound in that particular service line in the near future.
Chris McLernon: And having a global business, there are going to be bright spots. If you look at Canada, we were up 5%; UK 11%; India, 11%; and LatAm, 27%. Leases come up every three, five, seven years. It’s a regular business. People want to transact. There is the desire to upgrade and move into top quality buildings to make sure that employees want to be attracted to coming into the office. So, as Christian said, we’re looking at middle single-digit growth.
Himanshu Gupta: Got it. Thank you. And maybe a follow-up, your European leasing was positive in Q4. What led to that like positive growth there?
Christian Mayer: Can you repeat that question, Himanshu?
Himanshu Gupta: Yes. So, if I look at the leasing revenue by region, so if I see your Americas and Asia were down, but Europe was actually up on year-over-year basis. So, just wondering, is there anything which is driving European leasing revenues to be higher?
Christian Mayer: Yes, I can’t think of anything in particular in Europe, Chris, unless…
Chris McLernon: No, not particularly in Europe. The one thing over the last couple of years, that industrial leasing has become stronger for us. Pre-pandemic, it was probably at around 20% to 25%, and now it’s up to 40% of the leasing revenue. So you’re seeing higher rents in Industrial & Logistics. So that’s translating into higher fees. And then also, there’s been such a great demand for retailers, the e-commerce and the onshoring that has been quite a successful service line for us.
Himanshu Gupta: Okay. And maybe just last question on Investment Management, IM, was there any fundraising done this quarter? Or was there any – and was that offset any redemptions this quarter?
Christian Mayer: Yes. Himanshu, we did raise capital in the fourth quarter as we expected to do, around $750 million in the fourth quarter. And we also had some modest reduction activity in the fourth quarter as well.
Himanshu Gupta: Got it, okay. And maybe just last one. The AUM expected growth of $5 billion to $8 billion, is it going to be first half-driven or second half-driven? Any visibility there?
Christian Mayer: It should be across the full year. And just to clarify, the $5 billion to $8 billion is the fundraising we expect for the year. So, AUM growth will be similar to or higher than that number because AUM includes leverage on capital deployed.
Himanshu Gupta: Got it. Thank you guys and I’ll turn it back.
Operator: Thank you. Next question will be from Stephen Sheldon at William Blair. Please go ahead.
Matt Filek: Hi, everyone. You have Matt Filek on for Stephen Sheldon. What can you share about your overall producer headcount in both capital markets and leasing? And how do you feel about your positioning when volumes start to improve?
Christian Mayer: Yes. I don’t think we’re going to share the exact numbers on headcount, but I can tell you that – and then Chris mentioned this, that we have a stronger headcount than ever, particularly in our U.S. business, where we’ve had significant recruiting success over the past 18 months. I think those trends are strongest in the U.S., but are also true across our operations around the world.
Chris McLernon: We have a global initiative to increase the market share in capital markets around the world. So, we are out strategically looking at top talent in all regions. But I would say that there has been stronger emphasis in the U.S., which is the biggest market and the biggest market share opportunity for us to grow.
Matt Filek: Got it, that’s helpful. And then how does the current lending environment compare to what you were seeing towards the end of last year? Just curious how things have trended with respect to the lending environment over the near term.
Jay Hennick: The lending environment is not really clear because you’ve got different lenders now and new lenders entering the marketplace, for example, there’s a lot of private capital entering the marketplace. You’ve got smaller banks that are under pressure from regulators. But I would say, generally speaking, the fact that interest rates have, going into 2023, there was no clarity on where the rates might go. I think there is a general view now that the rates have topped out and might start coming down, which creates more certainty in the lending market throughout. The other factor around the lending market generally is that those that are under pressure are going to start to take action, whereas in the past, they were delaying their action.
So that creates a more transaction activity, obviously for us because people are encouraged to transact. And so I think with clarity or more clarity around rates and the hope that rates might come down a bit. We’re in an election year, we’ll see what happens. But with that happening with more clarity that rates might come down more than would go up with banks being more active about dealing with loans that are under some duress. All of that should lend to more capital markets activity towards the middle to the end of this year, number one. And fortunately, for Colliers, we invested very heavily in building a very significant debt capital practice where we have some 150 to 175 debt professionals across the U.S., in particular. And they are very busy meeting with clients and discussing various financing options that we hope will translate into transactions, whether they are capital transactions on the sale of a business property or the refinancing of a property or both.
So we’re quite excited about how quickly this can turn once there’s certainty around debt. But at this point, there’s positive signs, but we’re not seeing significant momentum,
Matt Filek: Got it. Very helpful color, Jay. And then lastly, just wanted to circle back on leasing, what are you seeing in terms of lease duration for office? And then more broadly, just curious if there are any signs that tenants are becoming more comfortable signing longer-term lease commitments?
Chris McLernon: I think most occupiers tenants are looking for flexibility, but it is market-driven. If you’ve got a market that has a low vacancy of 1%, 2%, it’s really the landlord that’s going to determine the lease length. But I think we’re still looking at traditional three-year, five-year, seven-year, ten-year leases, but it’s really going to be market-dependent and asset class-dependent.
Matt Filek: Got it. Thank you, everyone.
Operator: Thank you. Next question will be from [indiscernible] at Wolfe Research. Please go ahead.
Unidentified Analyst : Hi, good morning. Just on the Investment Management side. The FP AUM declined slightly in Q4. You said there were some redemptions in the quarter, but was the AUM decline driven by outflows or valuation marks?
Christian Mayer: There were some modest valuation marks taken as well, Dave, as well as some redemption activity, but very modest.
Unidentified Analyst : That’s helpful. Just a quick follow-up. What are the outflows from the traditional real estate funds or alternatives?
