Earnings Call Transcript - CIGI Q3 2023

Operator, Operator

Welcome to the Colliers International Third Quarter Investor Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussions scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additionally, information concerning the factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the US Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is November 2, 2023. And at this time, for opening remarks and instructions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Jay Hennick, CEO

Thank you, operator. Good morning and welcome to our third quarter conference call. As the operator mentioned, I'm Jay Hennick and joining me today is Chris McLernon, Chief Executive Officer of our Real Estate Services business; and Christian Mayer, our Chief Financial Officer. This call is being webcast and can be accessed in our Investor Relations section of our website where you can find the presentation slide deck. During the third quarter, Colliers achieved significant growth in our high-value recurring service lines with a 12% increase in outsourcing and advisory and a robust 23% increase in investment management. Our proven business model, marked by a diverse array of high-value recurring services, has continued to demonstrate our resilience. Today, about 70% of our earnings come from recurring revenues, which bolsters our ability to navigate through various market fluctuations, including the current disruptions affecting our transactional business. Since the release of our second quarter report back in August, we've seen further industry-wide declines in transaction volumes due to ongoing factors such as rising interest rates, stricter credit conditions, and continued uncertainty around return-to-work dynamics. As a result, we've adjusted our outlook for the traditionally strongest fourth quarter to be more conservative in our stance, as Christian will outline in just a few minutes. As I've said in the past, capital markets and leasing are essential services for all real estate investors, owners, and occupiers or tenants. They may be impacted from time to time as they are now, but they will rebound once things stabilize, which could be as early as the second half of 2024. Several years ago, Colliers embarked on a strategic journey to rebalance and reposition our company by integrating more recurring revenue streams. We introduced two important new growth engines, engineering and design and investment management, both of which have seen substantial growth and success since inception and we expect that success to continue well into the future. Our nearly 30-year track record of performance demonstrates our success and dedication to continuing to create substantial shareholder value and we'll do that by continually growing our businesses one step at a time, expanding into new high-value recurring services and continually seeking out strategic growth opportunities, especially in times like these. Now, let me turn things over to Chris McLernon to discuss some of the highlights. Following that, Christian will provide us with his customary financial report and then we'll open things up to questions.

Chris McLernon, CEO of Real Estate Services

Thank you, Jay, and good morning. Our mission at Colliers is to maximize the potential of property and real assets to accelerate the success of our clients and our people while creating value for our shareholders. Today, Colliers remains resilient, benefiting from our years of strengthening our core business while adding fast-growing recurring service lines. In Outsourcing & Advisory, we achieved an impressive 12% year-over-year growth, with 50% of that growth coming internally through new contract wins. We expect this growth to continue in Engineering, Design, Project Management, and Property Management. As mentioned, we have seen further declines in capital markets in Q3 due to interest rate volatility, limited access to debt, and the continued price gap between buyers and sellers of real estate assets. We are confident that capital markets will rebound, perhaps in the second half of 2024, and we are poised to take advantage once market conditions stabilize. Over the past few years, we've accelerated our investments in capital markets platforms to grow our business, fill gaps, and take market share. For example, in the U.S., we have built a significant debt advisory business at Colliers Mortgage. Today, our platform spans the entire U.S. with more than 150 experienced debt professionals to assist our clients in originating and placing real estate debt at just the right time. Once again, our expertise and ability to deliver exceptional results for property occupiers, owners, and investors has been recognized by Euromoney. Colliers was named Global Agency of the Year across the Americas, EMEA, and APAC, which is a testament to our strong and growing position in the industry. Our professionals around the world continue to be enterprising, especially in the current market environment. Our latest global employee engagement survey saw our strongest scores ever, nicely exceeding external benchmarks. Our strong culture was also recently recognized by our inclusion in Forbes World's Best Employers 2023 list. Now, let me pass this over to Christian.

Christian Mayer, CFO

Thank you, Chris, and good morning, everyone. I will provide some additional commentary on our consolidated results, our financial outlook for the full year, and our balance sheet. Please note that all references to revenue growth made on this call are expressed in local currency and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call. In the third quarter, revenues were $1.1 billion, down 6% relative to the comparative prior year quarter. Our Capital Markets and Leasing service lines reported revenue declines of 42% and 9%, respectively, continuing the trends that started during the third quarter of last year. Having said that, our recurring service lines, Investment Management and Outsourcing and Advisory, each reported robust growth from a combination of acquisitions and strong internal growth. On an overall basis, internal revenues declined by 10%. Consolidated adjusted EBITDA for the second quarter was $145 million, flat relative to the prior year with margins of 13.7% versus 13.1% in the prior year quarter. The margin uptick was driven by growth in our higher-margin investment management operations with margin compression in our transaction business partially offset by ongoing aggressive cost control actions across the company. We achieved cost savings of $25 million during the third quarter and $53 million year-to-date. We expect an additional roughly $30 million of cost savings in the fourth quarter. We are preparing to extend our cost control efforts into 2024 to match the duration of the expected transactional revenue downturn. We have revised our financial outlook for 2023 to reflect the declines in transaction velocity that occurred in the third quarter and the more challenging current market environment. We expect capital markets and leasing transaction volumes to be down 5% to 15% in the seasonally strongest fourth quarter relative to the prior year period with the impact partly offset by ongoing cost control efforts. In our recurring service lines, we are expecting to see continued growth, both internally as well as from recent smaller tuck-in acquisitions. In Investment Management, fundraising year-to-date has been softer than expected and that trend continued in the third quarter. For the full year, we now expect fundraising to be approximately $3 billion compared to $8 billion raised in 2022. We do, however, continue to see strong interest in our alternative investing strategies, which should translate into accelerated fundraising in 2024. Implied in our full-year outlook is the expectation that fourth quarter EBITDA will be roughly flat versus the prior year quarter. Although we had previously expected EBITDA to increase in the fourth quarter, a flat result will demonstrate the resilience of our recurring revenue streams and the highly variable nature of the cost structure in our transactional operations given the current market conditions. Our adjusted earnings per share is expected to continue being impacted by higher interest expense as well as the larger proportion of earnings coming from non-wholly owned operations. As such, we now expect full-year adjusted earnings per share to be down from last year to the range of $5.10 to $5.50. In terms of our balance sheet, our financial leverage ratio defined as net debt to pro forma adjusted EBITDA was 2.4 times at September 30, consistent with the level reported at June 30 and driven by capital deployed on acquisitions over the past two years. These acquisitions are predominantly in recurring service lines and are performing well. We now expect our leverage to decline to 2 times to 2.2 times by year-end. That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?

Operator, Operator

Our first question comes from the line of Michael Doumet of Scotiabank.

Michael Doumet, Analyst

The first question I had was really just as it relates to the slowing leasing activity. Just wondering if you can break that down in terms of end markets and how that's evolved in the last 12 months. Just wondering if you see incremental weakness in industrial and if so, what that means for the cadence into 2024.

Chris McLernon, CEO of Real Estate Services

Michael, it's Chris here. Just some commentary. There are some bright spots throughout the global platform. If you look at leasing in our Asia Pacific region, we were up 9.5% year-over-year. And that relates across the board. We had some strong leasing in Australia, New Zealand, Singapore, Hong Kong, and India, and that would predominantly be in office and industrial. Another bright spot would have been Canada. We had a 52% increase in leasing. So there is some leasing taking place, but on the negative side, you see we've always been quite strong in industrial leasing around the world. And it's the lack of supply; you're looking at 3% to 4% vacancy. So it's hard to get some transactions there. So, I think we're seeing, looking forward, some continued growth in leasing in Asia Pacific and the recovery in the Americas and EMEA may be a little bit slower.

Michael Doumet, Analyst

That's great. Just going back to the Q4 expectation for flat EBITDA, Christian, just wondering if you can maybe break that down a little bit again. So you're expecting capital markets leasing to be down between 5% and 15%. Presumably, O&A is rising there, just not sure on the quantum, if you can talk about that? And then lastly, on investment management for Q4.

Christian Mayer, CFO

Yes. Thanks, Michael. So in terms of O&A, we do expect organic growth in Q4. That's going to continue and we've been running mid- to high single-digit organic growth there this year and that's going to continue. And in terms of investment management, we have a nice cadence management fee revenue that is in the EBITDA in Q3. That's going to continue, and we do expect a little bit of fundraising in the fourth quarter as well that will be additive to EBITDA in the Investment Management segment.

Operator, Operator

Our next question comes from the line of Stephen Sheldon at William Blair.

Stephen Sheldon, Analyst

First thing here just on if you think about 2024 adjusted EBITDA, can you help us think about how much benefit you might have in terms of incremental flow-through from cost actions taken so far? And I guess the planned reduction that you talked about for 4Q, which I think was $30 million, if I heard that correctly. How much of an incremental boost could that be as we think about bridging 2024 adjusted EBITDA back to 2023?

Christian Mayer, CFO

Yes, Stephen, thank you for your question. We definitely plan to maintain the level of cost actions we have implemented so far. That is our operational expectation as we move into 2024. While it may be challenging to enhance our cost actions further, we will evaluate that during our budgeting process in the coming month, along with thorough discussions with our local and regional operators.

Stephen Sheldon, Analyst

Okay. As we consider the $52 million in cost reductions so far this year, are we anticipating that this will reach its full impact by 2023? Or will there be some carryover effects into 2023, and how much will flow into 2024?

Christian Mayer, CFO

Exactly. So we have reached our run rate at this point and $25 million to $30 million a quarter is the run rate. And those actions took effect in Q2 of this year. So they are now fully in effect and they will continue until we see a meaningful recovery in the transaction business.

Stephen Sheldon, Analyst

Okay. On the IM side, how should we approach modeling AUM in the fourth quarter? You mentioned there might be an increase due to fundraising activity. So how should we consider Q4? What indicators give you confidence that fundraising equity might pick up again next year?

Jay Hennick, CEO

Let me pass it over to Christian to discuss the fourth quarter and our perspective on it. Fundraising has been challenging for all publicly traded firms, regardless of asset class, which is noteworthy. Traditional real estate has faced the most difficulty, while alternative asset classes and infrastructure, like ours, have fared somewhat better, although still weak. Notably, there is significant interest in our funds and others like ours in the market, but delays are affecting us. When we compare our pipelines to last year, they have improved significantly; however, whether we can convert them by the end of this year or mainly in the early part of 2024 remains uncertain. Nonetheless, our investment management team's performance has been outstanding compared to industry peers. They are actively in the market with various strategies, which keeps us engaged. We are cautiously optimistic that 2024 will be a strong year for fundraising. I expect it will surpass last year's overall fundraising, but we will have to wait and see.

Christian Mayer, CFO

And Stephen, on turning to the fourth quarter, we do expect some fundraising. It will be modest. And as I outlined in my comments, fundraising this year is significantly less than it was in 2022. And so I would expect our AUM will be roughly flat to perhaps up a little bit in the fourth quarter. Positive benefit from fundraising and also some ongoing activity in terms of mark-to-market, which we've been experiencing now over the last year, modest mark-to-market on our traditional real estate assets primarily. So hopefully, that's helpful.

Operator, Operator

Our next question comes from the line of Stephen MacLeod at BMO Capital.

Stephen MacLeod, Analyst

Great. I appreciate the color. Just a couple of follow-up questions just relating to your commentary around the potential transaction activity picking up in the back half of next year. I'm just curious sort of how you could characterize your visibility into that? I mean, is that something that you're hearing from your clients because they have demand pent up? Or is it more just a reflection of the macro backdrop and the rates backdrop? Just curious if you could give a little bit of color there.

Jay Hennick, CEO

It's a great question, Steve. Just 90 days ago, we provided our best information on how we would be performing if market conditions had remained the same. Since then, interest rates have risen significantly. Everyone is aware of the challenges around credit availability and the tougher conditions that are affecting the whole industry. A lot of money is being raised in private debt collection, but it hasn't been put to use yet, and these factors are impacting transactions. It's typical in the industry that when interest rates rise substantially and debt becomes difficult to obtain, companies reassess their portfolios, especially with existing debt coming due soon. This situation causes everyone in the industry to pause. There are some transactions occurring on premier assets, and banks are supporting their reliable clients but at much higher interest rates and lower loan-to-value ratios. Reflecting on the changes over the past 90 days, we are taking a more conservative outlook for the fourth quarter. From my perspective, unless we see stability in interest rates, lenders providing debt at historical ratios, and sellers adjusting their price expectations, we will face delays. Earlier this year, we anticipated a strong fourth quarter, expecting some stability in the rates, but no one foresaw the stringent lending conditions developing throughout the year. Therefore, we remain uncertain about when conditions will change. However, once they do, it will be a significant shift, starting slowly but gaining momentum since there's considerable capital available in the market. Banks need to lend to generate profits, and the real estate sector is substantial. As Chris McLernon stated, we have invested heavily in our core business, transforming Colliers into a diverse service and asset management provider. We are prepared to assist clients with buying, selling, and financing transactions, but we need a return to normalcy. As operators, our focus is on maintaining financial strength to seize opportunities, continue investing in our platform, and manage costs effectively during challenging times. We believe these efforts will eventually bring significant value to our shareholders, though I cannot predict exactly when that will occur—whether it's mid or late next year is still uncertain.

Stephen MacLeod, Analyst

That's great color, Jay. And then I just wanted to follow up because I think it's important. You mentioned, obviously, the recurring revenue business continues to hold in quite well which is a significant piece of your evolution. Can you just talk a little bit about if you have any incremental color around the areas of relative strength and weakness within the O&A business? And how you see those potentially evolving going forward as well?

Jay Hennick, CEO

The strength of our Operations & Advisory business lies in its stability. We have seen significant growth in property management globally, which has been somewhat surprising for us. This is a very encouraging indication. Project management also remains robust, as we represent owners in large construction projects. This segment of our business is performing strongly, with long-term retainers lasting five to seven years from the start of a project to its completion. Consequently, we are experiencing considerable growth in these areas. Chris, are there any other unexpected developments you've noticed across the board?

Chris McLernon, CEO of Real Estate Services

So I think what's great is that in these regions, the Americas, EMEA, and Asia Pacific, O&A is up year-over-year growth. It's balanced across the world. Some of the bright spots, Jay mentioned, property management. We've grown in the U.S. and this is new clients or expanding clients' portfolios. And it's time to see the growth in L.A., Chicago, New York, Atlanta, some of those bigger centers in the U.S. but also, you're looking at the U.K., Netherlands, Finland, Poland, expanding property management. So it's quite exciting there. The second pillar is our project management. We've got a fantastic business in India that is going all guns. Obviously, there's strong GDP growth in India and we're taking advantage of that. We invested at the right time. So we're seeing some real significant growth there. The acquisitions in Australia, New Zealand in engineering and project management are now fully integrated into the Colliers business and we're seeing synergies on the revenue side and the cost side. So that's quite exciting in the O&A space on a global basis.

Operator, Operator

Our next question comes from the line of Frederic Bastien of Raymond James.

Frederic Bastien, Analyst

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, CEO

I'll jump in. Chris, feel free to add your thoughts. One of the points Chris made in his prepared remarks is about the Colliers Mortgage business. Over the past few years, we've established a national platform that Colliers previously didn't have. We are now fully equipped to provide debt advisory services and restructuring advice to our clients everywhere, which is especially crucial during challenging times. While this may not lead to immediate transactions, our team of professionals is extremely active. They are working closely with clients on their existing portfolios and loans that are maturing, assisting them in reimagining their portfolios and sourcing new financing. We've successfully implemented these strategies in other regions, and I believe Colliers Mortgage has set a new benchmark, which gives us great optimism for the future of our U.S. and North American businesses.

Chris McLernon, CEO of Real Estate Services

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, Analyst

That's helpful. Next one is for Christian. I think you partly answered this by 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, CFO

Yes, Frederic, we've got about $2 billion 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, Analyst

Come from a mix of alternative assets and infrastructure? The fundraise.

Christian Mayer, CFO

Exactly. 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.

Operator, Operator

Our next question comes from the line of Jimmy Shan at RBC Capital Markets.

Jimmy Shan, Analyst

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, CFO

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. We talked about when that happens; not exactly sure when that happens 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 one-third 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, CEO of Real Estate Services

And just to add some color, three years ago, we, as a senior management team, identified capital markets as an area of significant growth, and we looked at where our gaps were, so we've been doing the 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, CEO

I want to emphasize that my perspective on asset values might differ from others. The industrial sector remains incredibly strong, and as Chris mentioned, there is a global shortage of industrial space. This is leading to increasing rates and property valuations in this area. The multifamily sector is also performing well, and retail has made a strong recovery. The only sector where I anticipate a price adjustment is in tier 2 B plus suburban office spaces, and even then, it's not widespread. The advantage of our business model is that we operate as a service company without owning these assets; we simply trade them. This setup provides us with high cash flow and low capital expenditures. As Christian pointed out, the more challenging an asset is to sell, the higher our fees tend to be. Therefore, I believe fluctuations in real estate valuations won't affect us. Ultimately, we'll monitor developments closely. I’d like to reiterate Chris’s point that the number of real estate professionals and debt professionals in our team has significantly increased over the past three years, resulting in additional revenue opportunities. All of this, combined with a general stabilization in real estate values, should lead to a robust recovery for Colliers, positioning us to perform even better in the future than we have in the past.

Jimmy Shan, Analyst

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?

Jay Hennick, CEO

You never know if you can predict who will subscribe or when. It's always a situation of waiting. We have a very detailed process for evaluating our fundraising potential, and our overall pipeline in every category of certainty of close has significantly increased. We believe this growth is broad and should lead to substantial additional fundraising moving forward.

Operator, Operator

Our next question comes from the line of Andrew Rosivach at Wolfe Research.

Andrew Rosivach, Analyst

I was going to go again with one more asset management question. You guys have kind of hit it a lot in different pieces. If I put some numbers around it, your AUM September 30 was down 1% sequentially, up 14% year-over-year. If we were kind of decompose that between redemptions in marks or maybe even funds that you purchased, is there any way we could kind of break down what's driving that?

Christian Mayer, CFO

Yes, that's a great question. I don't have year-over-year numbers available, but I do have year-to-date figures that illustrate the point. We've raised approximately $2 billion in new capital this year, with modest redemptions amounting to around $500 million or less. Our mark-to-market activity has been about 2%, which also equates to around $2 billion in the portfolio. These are the primary drivers of the situation. The mark-to-market is mainly related to traditional assets, and this trend has been present since last year and may continue modestly into the fourth quarter.

Andrew Rosivach, Analyst

So modestly means you can continue to see increases in the valuation despite kind of the challenges that we're seeing.

Christian Mayer, CFO

I mean, look, we can't predict the future of the valuations, but it's certainly possible that we will have further mark-to-market negative adjustments in the coming one or two quarters as interest rate volatility continues. I should point out, though, that most of our portfolio is in closed-end funds, which do not get impacted by mark-to-market activity in terms of the management fee revenue. So it's only one-third of our portfolio that has mark-to-market activity and then even in that part only a small amount of traditional real estate assets. So it's not a big driver of our fee revenue in terms of considering mark-to-market activity.

Jay Hennick, CEO

Most of what Christian is talking about is in infrastructure and alternative asset classes, which the marks have been modest, extremely modest, almost non-existent because they're wonderful assets and they're valued over a long period of time. So we don't really see much there. And we haven't even felt it over the past 12 months.

Christian Mayer, CFO

Yes. The mark-to-market is not something that's driving our management fee revenue. The driver is fundraising. And we've talked about that quite a bit.

Operator, Operator

We currently have one question in the queue. The next question comes from Maxim Sytchev of National Bank Financial.

Maxim Sytchev, Analyst

Jay, or maybe Christian, wondering if you can comment around the market share dynamics in capital markets and leasing because when we look at how you guys performed during the financial crises, I mean, it was much better versus peers. And even right now, kind of the levels of declines are less. So do you mind maybe if you have some data points that you can point to on that front, that would be helpful.

Chris McLernon, CEO of Real Estate Services

Yes. I think the data we have from RCA has the market down 51% and we're down 42%. So I think there is some market share gain. That's the data point that I have handy.

Jay Hennick, CEO

Yes. I think if you look across the board at virtually all of the peers that have reported so far, we're either at or better than every single one of those peers in virtually every category. So I would say in each case, we're picking up market share all the way along. And a lot of that has to do with what Chris said. Our culture is very strong. Our retention rates are exceptionally strong. We've been recruiting nicely over the past number of years. We've built significant platforms within our core services business in addition to engineering and design and investment management, we continue one step at a time to invest in our core platform, which is getting stronger. It's global. So there are global growth opportunities. So we're feeling very good about our business and its future, and we believe that we're picking up market share virtually everywhere.

Maxim Sytchev, Analyst

Excellent. And just one follow-up question. I guess, Jay, you spent time with sort capital allocators, and everybody is trying to figure out what is kind of the trigger for certain things to start normalizing because when you're expectation of sort of a rebound during Q2 commentary. I think the long-term rate was around kind of 3.5%. Do you think that's kind of the level where the 10-year in the U.S. has to go to in order to sort of see catalysts for activity to get going? Or like what is your sense from that perspective? And again, I appreciate it's a super fluid dynamic, obviously.

Jay Hennick, CEO

Yes, frankly, I don't care. I really don't care like it can be pick your rate. Everybody's got an opinion. We just need stability. In our business, we just need stability, and we need availability of debt and the market will look after itself. The buyers and sellers will come together, and they will make transactions because they either have to or they want to or they've got dry powder. So the problem that we've all had in this industry, and by the way, it's leaked out into the entire marketplace. The availability of capital has impacted the ability to make acquisitions. It's impacted the earnings per share of every company out there that borrows money. So this is a market that is impacting everybody. But I think in real estate, it's such a massive market. And as soon as there's stability, you'll see activity. And that's all we really focus on.

Operator, Operator

And there are no further questions in the queue at this time. So I'll hand the floor back to Mr. Hennick for the closing comments.

Jay Hennick, CEO

Thanks very much, operator. Thanks, everyone, for joining us on this conference call. Let's see how we do in the fourth quarter, and we've given you our best information at this point. Hopefully, we'll be able to do a little bit better than that, but we'll see how things transpire. So looking forward to speaking at the next conference call. Thanks for joining us today.

Operator, Operator

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you for your participation and have a nice day.