Good morning, everyone, and welcome to CBRE's third quarter 2025 earnings conference call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks, and an Excel file that contains additional supplemental materials. Today's presentation contains forward-looking statements, including, without limitation, statements concerning our business outlook, business plans and capital allocation strategy, as well as our earnings and cash flow outlook. These statements involve risks and uncertainties that may cause actual results and trends to differ materially. For a full discussion of these risks and other factors that may impact these statements, please refer to this morning's earnings release and our SEC filings. We've provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures, together with explanations of these measures in our presentation deck appendix. Throughout our remarks, when we cite financial performance relative to expectations, we are referring to actual results against the outlook we provided on our second quarter 2025 earnings call in July, unless otherwise noted. Also, as a reminder, our resilient businesses include facilities management, project management, property management, loan servicing, valuations, and other portfolio services and recurring investment management fees. Our transactional businesses comprise property sales, leasing, mortgage origination, carried interest and incentive fee in the investment management business, and development fees. Before we begin, a brief technical matter. We want to note that we recently responded to a comment letter from the SEC regarding our presentation of net revenue. Going forward, while we will continue to provide supplemental information to help you understand the portion of our revenue that is pass-through in nature, our formal reporting will focus on gross revenue. I'm joined on today's call by Bob Sulentic, our Chair and CEO; and Emma Giamartino, our Chief Financial Officer. Now please turn to Slide 3 as I turn the call over to Bob.

Thanks, Chandni, and good morning, everyone. CBRE continued to produce excellent results in the third quarter. All four segments delivered strong growth and operating leverage, and we exceeded expectations we had going into the quarter. We often talk about our breadth and depth across asset type, client type, line of business and geography. This breadth and depth give us scale that supports our strategy in many ways. These include recruiting from inside and outside the sector, developing integrated solutions for clients, making capital investments, and creating an information advantage. Our scale is particularly helpful in driving growth in areas that are either secularly favored or cyclically resilient. This came through clearly in our third quarter results. The data center asset type and related client group provide a good example. We produced nearly $700 million of revenue from data centers in the third quarter, 40% more than in 2024's third quarter. This contributed to profitability in all four segments accounting for about 10% of overall EBITDA for the quarter. From a geographic perspective, Japan and India are particularly well positioned for sustained secular growth in commercial real estate services. We have large businesses in both countries, and in Q3, their combined revenue rose more than 30% to nearly $400 million. Given our results year-to-date and momentum in our business, we are raising our full year core EPS outlook to $6.25 to $6.35, from $6.10 to $6.20. Emma will discuss our outlook after she reviews the quarter's highlights. Emma?

Thank you, Bob. Good morning, everyone. Our third quarter results exceeded expectations across the board, highlighted by 34% growth in core EPS and 19% in core EBITDA. We delivered double-digit revenue gains in both our resilient and transactional businesses, underscoring the balanced strength of our business. Throughout my segment discussion, I will cite growth rates in local currency. This does not reflect the 1% to 2% FX benefit to the USD growth rates. As Chandni mentioned, we will no longer report net revenue. However, internally, we continue to focus on revenue excluding pass-through costs as our primary growth metric as we believe it best captures the value of the services we deliver to our clients. Now I'll detail our performance for each segment, beginning on Slide 4. In Advisory Services, revenue growth exceeded expectations, rising 16%, led by outperformance in both leasing and sales. Global leasing revenue rose 17%, accelerating from the second quarter despite a tougher year-over-year comparison. In the U.S., leasing reached its highest level for any third quarter, growing 18%. U.S. industrial increased 27% as third-party logistics providers continued to take more space and larger occupiers came back to the market. Data center leasing picked up materially, resulting in more than doubling of revenue over last year. In addition, U.S. office leasing once again rose by double digits. Outside the U.S., APAC leasing was strong driven by India and Japan, while results were mixed in Europe. Our property sales business delivered 28% revenue growth. Like leasing, U.S. sales saw strength in office, industrial, and data centers. Outside the U.S., we saw particularly strong sales growth in Germany, the Netherlands, and Japan. High-teens mortgage origination revenue growth was driven by an increase in origination fees, primarily from CMBS lenders, banks, and debt funds. Advisory SOP grew 23%, reflecting strong operating leverage. Turning to our Building Operations & Experience segment on Slide 5, we saw 11% revenue growth. In the enterprise business, growth was driven by work for data center hyperscalers as well as new client wins and expansions in the technology, life sciences, and health care sectors. Our local business achieved a mid-teens revenue increase, supported by continued growth in the U.K. and the Americas. Revenue in the Americas was up 30%, reflecting strong market share gains for this business. BOE SOP grew 15%, delivering operating leverage driven by continued cost efficiencies across the segment. Please turn to Slide 6. In the Project Management segment, revenue increased 19%, while pass-through costs rose 23%. We achieved broad-based double-digit revenue growth supported by the U.K., the Middle East, and North America. Legacy Turner & Townsend revenue in North America has more than doubled since 2022, demonstrating the benefit of being part of the larger CBRE platform. And we see significant runway for further gains in this large, lightly penetrated market. Across client sectors, we saw strong activity with the U.K. government, reflecting a large national health care mandate and ongoing demand for hyperscalers for data center projects. This growth was slightly offset by continued softness from certain technology clients that are focusing capital spending on AI investments. Project Management SOP grew 16%, delivering operating leverage when viewed as a percentage of revenue excluding pass-through costs. In Real Estate Investments on Slide 7, segment operating profit was up 8%, in line with our expectations. In investment management, we raised $2.4 billion of new capital in the quarter and are on track for a strong fundraising year. AUM ended the quarter at approximately $156 billion, up $500 million for the quarter. AUM growth in the quarter was tempered by currency headwinds. Absent these headwinds, AUM increased $1.3 billion. In development, operating profit also met expectations. Our strategic land acquisitions in recent years coupled with our land development and entitlement capabilities position us to capitalize on demand for large data center development sites. We expect to monetize several of these sites later this year or next year. We continue to believe our development portfolio has more than $900 million of embedded profits that will be monetized over the next 5 years. As always, the timing of asset monetization, especially between quarters, can be difficult to predict with precision. Now I'll turn to our balance sheet and capital allocation on Slide 8. In keeping with our expectations of better full year performance, we now expect to generate approximately $1.8 billion of free cash flow for the year. Net leverage stood at 1.2 turns at quarter-end, and we continue to expect to delever through the end of the year. Please turn to Slide 9. As Bob mentioned, we've raised our full year core EPS guidance to $6.25 to $6.35, reflecting our outperformance to date and confidence in our fourth quarter pipeline. Our outlook includes contributions from the data center site dispositions in our development business. The midpoint of our new guidance range reflects 24% growth and would be more than 10% above our prior peak EPS. This is a notable outcome produced within only 2 years of the commercial real estate market trough. With that, I'll turn the call back to the operator for questions.

Our first question today is coming from Anthony Paolone from JPMorgan.

Just have a question as we start to look to the rest of the year and just the strength that you had in 3Q. Do you feel like anything got pulled forward from the fourth quarter, or perhaps how we should think about when or in what business lines do comps start to get more challenging or start to normalize from these pretty high levels of growth?

So Tony, we haven't seen a significant pull forward across our segments. We are seeing strong momentum. But as you noted, we are starting to come up against some tough comps. So going through each segment, starting with Advisory. On the leasing front, we had a tough comp in Q3, and that continues in Q4. On the sales front, you’ve seen that pick up pretty significantly in the third quarter, going into the fourth quarter, we continue to see strong activity. But just as a reminder looking against 2024, Q3 sales growth was 14% and Q4 sales growth was 35%. So that growth rate is going to start to decelerate somewhat into Q4. And then on the Project Management front, I do want to note that we have a very tough compare in the fourth quarter. In the prior year, our SOP grew 30% in the fourth quarter.

Okay. And then just my follow-up, can you maybe comment on the M&A pipeline, especially given the free cash flow? And also whether that had any impact on not buying back stock in the quarter?

So Tony, our capital allocation priorities remain as they've always been. We prioritize M&A and co-investment into REI, and we use the remainder of the free cash flow that we generate for share repurchases. We do continue to believe that our share price is undervalued, and we'll buy back shares in the absence of M&A. As you know, I can't comment on particulars of what we're targeting, but we continue to focus on the areas of our business that are resilient, that can benefit from secular tailwinds. And we're looking for targets that are extremely well operated that can really benefit from being a part of the CBRE platform. We're extremely patient to find the right deals. We're actively advancing our M&A approach, improving our integration, improving our identification of new deals. And we're very confident that we will find the right targets over time.

Our next question today is coming from Julien Blouin from Goldman Sachs.

Congratulations on the quarter. Bob, I wanted to ask you, Advisory sales results were very impressive again this quarter. But just taking a step back, there appears to still be this latent need to transact from both older vintage real estate funds that need to return capital to investors to start their next fundraising cycles, and then more recent vintages are still sitting on a lot of dry powder. So I guess, taking stock of all that versus what's sort of happening in the macro, where are we in the CRE transaction market recovery? And how much more room is there to run?

Well, we think about that a lot, as you would expect, Julien. And I think in general, we would say that we expect a longer, slower recovery in the sales part of our business than we've seen historically. And we're early into that recovery. We expect it to run for some time. Obviously, when September, when interest rates ticked down, sales activity picked up. But we do have strong pipelines. People talk about pent-up demand. There's pent-up demand on both sides. There's pent-up demand from buyers. You mentioned the capital stores that the real estate investors have. And there's a lot of owners of assets that are ready to sell the assets. And the gap between buy/sell expectations has closed pretty significantly. So we expect a nice, strong, steady recovery in investment sales over the next couple of years. Obviously, if something happens in the macro economy that would interrupt that in one direction or another, it could change our expectations. But that's where we are right now.

Okay. And Emma, maybe following on from Tony's question, turning to the fourth quarter, as you mentioned, there's tougher year-over-year comps. But I guess, how would you describe the deal activity so far in the fourth quarter? How do pipelines compare to this time last year? And then also, if I could take another one, on the Advisory segment. It looked like maybe the incremental margins this quarter were a little bit lower. Is there something happening maybe on the hiring side?

So to take your first question, pipelines are strong. We're continuing to see strong activity in the beginning of the fourth quarter through October, both on the leasing and sales side. I do want to say that we provided a guidance range up to $6.35, and that largely incorporates the flow-through from outperformance in the third quarter. But if everything goes as we're expecting, if transaction activity continues as we're seeing right now and as we expect, and at these development sites that we have a high confidence we'll monetize this year to turn out, we will be at the high end of our EPS range. On the margin side within Advisory, our incrementals were a little over 25% this quarter, which is lower than what we've seen earlier in the year. And the major impact there was an increase in incentive comp because of the deferments of the overall segment and business.

Your next question is coming from Ronald Kamdem from Morgan Stanley.

Could you elaborate a bit on the Advisory segment, particularly regarding your team? Are you adequately staffed, or do you plan to hire more? How is the competition shaping up? I'm interested in your perspective on the gradual recovery and your strategic position in this context.

Well, again, something we focus on all the time. And I would say we are appropriately staffed, but we're also adding where we find the right talent. We've got capacity in our leasing brokerage team to do more, and we've got considerable capacity in both our sales team and our mortgage origination teams. So we have had a really good run with talent across our brokerage business, but in particular, in the leasing business. And when you look at it, we've taken considerable market share over the last couple of years and improved our leasing product. And what's gone on there is we've, around the world, made significant upgrades to our local leasing leadership teams. We have a managed brokerage platform that we use that's supported by a technology tool that helps us identify where in the market we have gaps in our coverage, and we aggressively try to close those gaps. We also use it to manage our interface with our clients. The tools we support our leasing business with, the technology tools, the data we provide to our leasing business, the research we support our leasing business with, and the advisory tools like workplace design and labor analytics have allowed us to move ahead in that business, not only in landing new business but also in attracting and retaining talent. So we're in a really good place with our brokerage talent. We've made some significant recruits on the investment sales, and especially on the mortgage origination side of the business also. So we're well-staffed. We have plenty of capacity in that staff, but we're also looking to add talent. Because as we've already talked about on this call and in our prepared remarks, the market is strong, and our pipelines are strong and we are expecting growth.

My follow-up would be regarding the Project Management business. I noticed you didn't differentiate between Turner & Townsend and the legacy operations. Can you provide any comments on that? Additionally, could you update us on the margin opportunities both in the near and long term?

Well, the reason not to break it out is because we're now well into that integration and the operating model that supports that business has been pretty much integrated around the world. And not surprisingly, the operating model we're using is the Turner & Townsend model, which we think is the industry's best, a big part of the reason why we made that deal in the first place. Now we're starting to move on to integrating the financial platform around the world, integrating the human resources platform, as we call, the people platform around the world, etc., technology platform, that's an area where we'll use the CBRE platform. And so we expect that part of the integration to yield some cost synergies for us next year. I will say, and I've personally been involved in the interface with our clients in a number of areas, the market's recognition of those two businesses coming together and the new capability we have is starting to become pretty noticeable, and it's showing up in our new business wins. And an area where it's particularly showing up is clients we already had that gave us a certain type of project, now giving us bigger, more complex projects and giving us cost consultancy work because of this combined capability. But all of that leads us to now look at that business as one integrated business going forward.

Our next question is coming from Stephen Sheldon from William Blair.

Just starting on data center monetization. It sounds like you're seeing strength in that class across a lot of different service lines. So just as we think about the next 2 to 3 years, where do you see the biggest avenues for CBRE to grow supporting data centers? And should investors be expecting monetization around data centers to continue becoming a bigger part of the overall business mix versus the 10% of EBITDA that you called out this quarter?

We anticipate that data centers will account for about 10% of our earnings this year, with expectations for growth in the coming year. It's crucial to understand the current surge in activity, which we are benefiting from. Industry peers in real estate and data center services are likely to highlight this positive trend. Alongside this temporary increase, we are establishing businesses that we believe will remain viable as the data center cycle progresses. We foresee a significant build cycle over the next five years or more, followed by a substantial operational phase. While we do not heavily invest in the ownership of data centers, aside from our investment management business, we have considerable land investments through Trammell Crow Company. Their expertise lies in identifying, acquiring, entitling, and improving land sites, and they are now focusing significantly on land for data centers. We anticipate notable monetizations at the beginning of this cycle. Turner & Townsend is heavily involved in project management and cost consultancy for data centers, and this will continue for years, especially during the redevelopment and upgrade phases. This represents a lasting opportunity for us. Our advisory business has a large data center brokerage segment where we finance, sell, and lease these properties. We've appointed our Chief Operating Officer to oversee this effort, recognizing it as a sustainable business. Within our BOE segment, we are combining two lines of business: managing approximately 800 data centers and small project improvement work, including the business acquired from Direct Line. This integration will create a digital infrastructure services line that operates separately within BOE. This business is well-positioned to thrive not only during the construction of new data centers but also as their operation and upgrades evolve. While we are currently benefiting from the short-term surge, we are building businesses, much like our other resilient sectors, that we believe will have long-term viability in the data center space.

Got it. Yes, very helpful context. It seems like there's a lot to be excited about there. Maybe as a follow-up, just as you think about CBRE's relationship with occupiers, I think you've been talking more about how you can create better touch points with them and hopefully drive more wallet share gains over time. So any update on what you're doing there and the timeline, if some of these things work, the timeline to potentially see wallet share gains? Would large occupier prior clients pick up even more?

Our relationship with occupiers is evolving pretty rapidly right now, and our view as to how we serve the big occupiers has evolved. A big part of that is driven by our acquisition of Turner & Townsend and our acquisition of Industrious. And when you look at what we provide to big occupiers, we provide things for them across all four segments. So obviously, in BOE, we provide facilities management. And obviously, in the Turner & Townsend or the Project Management segment, we provide program management, project management, cost consultancy. So you look at where those two businesses are today compared to where they were historically, we went out and spent the better part of $1 billion to buy an experience business, Industrious. We now have that as part of our facilities management as part of our occupier offering. And it doesn't exist elsewhere in our segment, and it is proving to be a real advantage as we go to market in that business. We now have a Project Management capability and a cost consultancy capability to do a different kind of project work than we or others in our sector were able to do previously. And that is appealing to our clients. In our brokerage business, we've talked already today about the gains we've made in leasing. Leasing is a huge business for us. Leasing is a very, very important part of what we do for occupiers. That business has pulled away from where it's been historically. And we've taken the approach of going to our clients and saying, 'We can offer any one of these four things to you in a way that we think is unique and beneficial for you.' And if you want to buy them that way, we'll sell them to you in that manner. And if you enjoy the benefits of what we offer because it's better than you can get elsewhere, we know you're going to buy the other services. And we've learned a lot of these clients like to buy that way. They want to just purchase facilities management or project management or build-to-suit services. But the cross-sell that comes is when they're satisfied with each of those, they're more likely to buy the others. And then in certain cases, we will have clients, and we've had some recent experiences that have been very compelling, that will say, 'You know what, we want to buy some of this on a bundled basis.' And that's how we're thinking about that today.

Next question is coming from Alex Kramm from UBS.

Yes. Not sure if this is on the same topic, but maybe can you just talk about your BOE outlook and pipelines a little bit more? I know earlier this year with all the tariffs, etc., I think there was maybe some uncertainty and maybe things took a little bit longer. So just wondering how pipelines have trended and if you think things have generally normalized on the BOE side.

Yes, absolutely. I'd say normalized and improved even beyond that. So within our BOE segment, especially within enterprise, our pipelines are very strong, and we're expecting to have a volume of sales that is at a significantly elevated level. As you mentioned, Alex, there is a decent lead time between a sale and when that shows up in our revenue when that contract is converted because these are very large contracts. And so that elevated volume of sales should start to show up in our BOE revenue towards the second half of next year.

All right. I have a quick follow-up regarding the data center divestment. I don't think you provided the size of that. Can you clarify the potential impact on EPS, especially for the part that might be delayed until 2026?

So think about the range of outcomes for EPS that we've cited the $6.25 to $6.35. The bottom and top end of that range are really dependent on the development monetization.

Your next question is coming from Steve Sakwa from Evercore ISI.

Yes. And I just want to maybe go back on the buyback. I just am trying to understand if maybe there were some deal activity that was maybe being kicked around internally that, I guess, precluded you from buying back stock in the third quarter or that was more of an active decision kind of not to buy back stock in the third quarter?

I will say it was not an active decision not to buy back stock. We feel, as we've always said, we feel that our share price is undervalued. We continue to believe that it's undervalued. And so when we have cash flow available, or in our projections, it's available, we will be buying back shares. But as you know, it's difficult to talk about our M&A pipeline or our activity there until we get something done.

Well, Steve, we've forever tried to measure that TAM, and you can get some pretty crazy large numbers. What I will say is we've consistently expanded our TAM. So the work we do with data centers definitively has expanded the TAM. We operate a lot of data centers and we're positioned to operate more and that's a growing asset class. The J&J acquisition, which moved us into government work in a bigger way in the hospitals expanded our TAM. And of course, that dimension is very, very large potentially. The Direct Line acquisition, where we do work inside the white space and data centers, expanded our TAM. So right on down the line, the things we've done in that business have expanded our TAM. And each of these, depending on how you measure it, could have a huge impact. That's one of the things that has made us increasingly optimistic about our ability to grow CBRE is, A, we've expanded our TAM in a way that we think is pretty hard for others to do; and B, we've grown into that space as we've expanded it. So I would tell you that we've done all kinds of work with our strategy group in-house. We've done a bunch of work with very, very top strategy people outside. And there's not a single view that would suggest we're anywhere near bumping up against our total addressable market. And we believe we can continue to expand that market.

Your next question is coming from Seth Bergey from Citi.

I guess my first one is back on the data center development side. So do those have access to power, or is that kind of a constraint there?

Well, that is without a doubt the constraint, and it's become more of a constraint. It's a constraint for anybody that's doing land work in data centers. It's a constraint for the co-locators. It's a constraint for the hyperscalers as they try to expand. And what we do is we put ourselves in a position by acquiring land or securing control over land, getting entitlements to that land, making certain improvements to that land and putting that land in a position where the ultimate users of the land, who are often hyperscalers, are well positioned to work with the utility authorities to gain power. And that's really how our strategy in that part of the business works. And it tends to work well. But it's very competitive to get power.

I have a follow-up question about leasing. Specifically for office spaces, are you observing widespread activity, or is it mostly concentrated in gateway cities or different office classes? Any additional insights on the pipelines you're seeing would be appreciated.

It is broad-based, but it hasn't been consistent each quarter. Last quarter, we noted that secondary and tertiary markets were performing relatively well compared to the gateway markets, which surprised us. What caught our attention in the third quarter was the strong comeback of the gateway markets, particularly New York and San Francisco. Looking back over the past year and examining our pipelines, we expect to see broad growth in office building leasing. We don’t think we are borrowing from future demand. Rather, there are many ways to consider this situation. While some discuss a return to the office, we view it as more of a return to the norm. COVID is largely behind us now, and the debates regarding office space usage have faded, with people reverting to pre-pandemic thoughts. Additionally, real estate has become increasingly important to companies, which contributes to our excitement about this opportunity. I spend considerable time with occupiers who emphasize how crucial their real estate is to their culture, team collaboration, and productivity. This is a prominent theme today. In our warehouse and distribution center business, clients are finding it far more strategic than they did in the past.

To follow up on office, can you talk about the strength in the sector in the U.S. and if you're seeing the recovery being driven by Class A and Class A-plus premier workspaces plus new development that has robust leasing? Or if you believe it's becoming more widespread, and that below Class A, Class B such assets, in secondary submarkets, is the next leg of growth that you see coming?

Yes. Well, what's going on, Jade, is kind of what we thought might go on a year ago. So when the very best main and main buildings get filled up and there's still demand for really high-quality space, then you see people starting to convert buildings that are of lesser quality to a higher quality. That's really happening here in Manhattan. The demand has clearly moved into secondary and tertiary markets where there are a lot of good buildings available, or at least were available, they're quickly going. And you are starting to see new development now. And I'll give you a perfect example, from our own business. So for years and years and years, we've had one of the very best office site in Uptown Dallas, and you can develop between 0.5 million and 0.75 million square feet of space on that site. And we've been sitting on that site. We own it on our balance sheet. We're not in a hurry to do anything with it. And we now have a couple of large users, high credit users, that are very interested in that site. Pretty good odds we'll go ahead and kick that site off and bring 500,000, 600,000 square feet of new prime Class A space into the market.

And then on the industrial side, it had been oversupplied and dealing with, not just tariff uncertainty, but negative absorptions due to that excess supply. It seems like the market has clearly turned a corner. Could you comment on what you think drove the growth in the quarter?

There is strong demand for significant leases in top-tier buildings, and on the other hand, many smaller leases in smaller buildings are being renewed. These shorter leases involve older, second-generation spaces. Recently, we've seen a higher than usual vacancy rate, but we anticipate that it will begin to decrease by midyear next year. Part of this trend appears to be driven by large, sophisticated users who rely heavily on their expansive spaces. Additionally, several companies in our sector reported strong performance in the last quarter and are optimistic about the future, which is reflected in the current market dynamics.

If I could ask one follow-up, it would be about EBITDA margins. Are you expecting steady EBITDA margins for the full year moving forward? Or do you believe there are still opportunities for margin expansion beyond 2025?

So Jade, we look at our margins within our services segments. And as you know, the development margins can be pretty lumpy. And so within Advisory, for the full year, I think we're very close to our peak margins, at least going back to 2019. And we think that that's a pretty healthy margin, and we expect that to be sustained. Within BOE, we're going to deliver, as you know, good margin expansion this year. And as Bob noted, across facilities management, property management, we're going to see more synergies next year. And so you should expect that margin to continue to increase. And then Project Management as well as those cost synergies start to come in. And so you should expect to see some incremental margin expansion going into next year.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thanks for joining us, everyone, and we'll talk to you next when we report year-end earnings.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.