Colliers International Group Inc (CIGI) 2010 Q4 法說會逐字稿

Welcome to FirstService Corporation fourth quarter year in 2010 conference call. Today's call is being recorded. Legal counsels requires us to advise the discussion scheduled to take place today may contain forward-looking statements that involve risks and uncertainties. Actual results may be materially different from those contained in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from the forward-looking statements is contained in the Company's annual reports on Form 10-K and on the Company's other filings with Canada and US securities commissions. As a reminded, today's call is being recorded. Today is Wednesday, February 16, 2011. At this time for opening remarks and introductions, I would like to turn the call over to the founder and chief executive officer, Jay Hennick. Please go ahead, sir.

Thank you operator and good morning everyone. As the operator said I'm Jay Hennick, Founder and Chief Executive Officer of the Company. With me today is Scott Patterson, President and Chief Operating Officer and John Friedrichsen, Senior Vice President and Chief Financial Officer. This morning, FirstService reported solid fourth quarter and year-end results. Colliers International, our Commercial Real Estate segment delivered excellent results compared to the prior year while both FirstService Residential and Property Services produced very respectable results despite challenging but improving economic conditions in the US.

For the fourth quarter revenues were up 19%, EBITDA, 3% and earnings per share was up 37% versus the prior year quarter. For the full year, revenues were up 17% at just under $2 billion. EBITDA was up 11% to $147 million and EPS was up 13% to $1.61 per share. However, our 29.6% interest in Colliers UK which we completed late last year, and is not included in our consolidated results, negatively impacted our results by about $0.12 per share. Colliers UK is in the process of restructuring its operations with our assistance and we are optimistic its results will improve going forward. Excluding this loss, the full year EPS would've been $1.73 per share, up 22% versus the prior year. Finally, our cash flow was very strong once again, demonstrating the cash flow generating power of the FirstService business model. Scott and John will have much more to say about our operational and financial results in a few minutes.

We had a very busy fourth quarter. So, let me touch on some of the highlights we dealt with. At Colliers International we continued to strengthen our franchise in the US with the acquisition of the market leader in Kansas City, the Wind Very Group as well as St. Louis' largest and most prestigious property Management firm, EDS real estate advisors. Both firms have been rebranded as Colliers International, both have significant growth opportunities and will benefit from our global platform. And both provide us with strong regional hubs in the US Midwest. 2010 was a busy year for Colliers in a number of other ways as well, especially in the United States.

During the year we completed a total of five acquisitions, added new licenses or franchises in 10 secondary markets and enjoyed tremendous success with our recruiting efforts across the board. We also enjoyed strong year over year growth in both our corporate services business and our commercial property management business with significant new client wins as you will hear from Scott. In Western Europe we also strengthened our operations with the addition of (Barhartoghoff), one of Amsterdam oldest and most well established real estate firms. We combined BHH with our existing Colliers International operations in the Netherlands and can now offer clients a complete range of services including consulting, property management, advisory and property evaluation services.

One of the most exciting things about what we are doing with Colliers International is we are literally building a new global business and we are doing it the FirstService way, one step at a time. Colliers is a highly recognized brand with 480 offices in 61 countries around the world. It has a long and successful track record with lots of visibility through the media and through signage we place on properties we manage, sell or lease. We also have significant infrastructure in feet on the street. People who are experienced at managing, leasing and selling real estate in markets all around the world. We can leverage this presence and grow our business in so many ways in the years to come.

We can continue to strengthen our local operations by recruiting key people and expanding our core services. We can acquire other high-quality real estate service businesses in existing and new markets and we can also add new services with confidence because of our strong management teams and significant operations in so many places that make a real difference. We truly have an opportunity with multiple growth opportunities. We've also been aggressively acquiring at FirstService Residential. In the third or fourth quarter alone, we added four larger property management firms having annual revenues of about $40 million including our first two acquisitions in Canada. As previously reported, we added Condominium First, the market leader in Calgary, Alberta.

Condominium First has three offices in Alberta and manages in excess of 28,000 residential units. In early December we acquired Houston's market leader, a company called Association Management Inc. AMI, a company we have been pursuing for many years manages more than 70,000 units from three offices in the greater Houston area and nicely complements our market leading position in Dallas, Texas. Then we finished the year with the acquisition of Crosby Property Management in Vancouver, British Columbia. Crosby, another market leader, manages in excess of 26,000 units including a number of rental units for institutions and individual investors.

Between Condominium First and Crosby, we are fast becoming a significant player in the Canadian marketplace, a new area of growth for FirstService Residential. In our Property Services division revenues were up strongly for the quarter primarily because of the stronger than expected performance from Field Asset Services, as you will hear from Scott. Revenues from the franchise group were also up but more importantly the division finished the year with stronger than expected profits allowing us to be optimistic about the prospects for 2011 and beyond.

One of the strengths of FirstService that often gets overlooked by investors is the size and the scope of our property management operations. Managing commercial and residential properties is part of our heritage, and core to our service offerings across each of our three service platforms. Through Colliers International we manage more than 1.3 billion square feet of commercial property. At FirstService Residential, we managed another 1.2 billion of low, medium and high-rise residential and mixed-use properties and through fixed Field Asset Services we manage more that 80,000 single-family homes on a temporary basis for our clients.

Across the board we manage in excess of 2.5 billion square feet of commercial and residential properties making us one of the largest property management companies in the world. In fact, more than 60% of our total revenues at FirstService come for property management contracts in one form or another, giving us an extremely stable source of recurring revenue from which to build. Looking forward, we are very optimistic about the coming year. While the global commercial real estate market continues to recover from the 2008 global financial crisis, Colliers International is in an excellent position to benefit.

At FirstService Residential we expect stronger internal growth in the coming year than we saw last year. And we should also benefit nicely by having the full year operations of the acquisitions we completed in 2010. Finally in Property Services, our well-known consumer brands should benefit from the recovery of consumer confidence. And at FAS, we expect the inventory of foreclosures and delinquencies to remain strong. Now let me pass the microphone over to John to take you through the financial details for the quarter and then Scott will provide his operational report. Following that we will open things up for questions. John?

Thank you, Jay. As reported this morning and already highlighted by Jay in his opening remarks, FirstService reported solid operating results across three real estate services platforms in our fourth quarter, ended December 31. Here are the highlights of our consolidated results for the quarter and the full year 2010. Revenues totaled $552.1 million in our fourth quarter, up 19% from the $465.8 million reported in our fourth quarter in 2009. With internal growth accounting for 12%, acquisitions 5%, and foreign exchange 2%.

For the full year 2010 revenues totaled $1.986 billion versus $1.703 billion last year, up 17%. Internal growth of 11%, 3 % from acquisitions and 3% on account of foreign exchange. The adjusted EBITDA for the quarter was $37 million, up 3% from $36 million in the same period last year. And for the year a adjusted EBITDA totaled $147.3 million, an increase of 11% over the $133.1 million we reported in 2009. Finally, adjusted diluted earnings per share were $0.37 compared to $0.27 in the fourth quarter last year, an increase of 37%. For the year, adjusted diluted earnings per share was $1.61 versus $1.42 in 2009.

As outlined in prior conference calls and detailed in our press release this morning that are several adjustments made from GAAP earnings per share to determine our reported adjusted earnings per share. Terms of GAAP EPS we reported a loss of $0.$0.12 per share versus a loss of $0.40 per share in our fourth quarters 2010 versus 2009. And for the year, GAAP EPS was $0.11 per share versus a loss of $1.85 in 2009. As Jay already outlined, our adjusted diluted earnings per share in 2010 was negatively impacted to the tune of $0.12, related to the results of Colliers UK in which we have a 29.6 % interest. We do not consolidate results from this operation, we are required to equity account for this investment, and therefore record our share of their loss for 2010.

This loss was non-cash in nature to FirstService. Moving on, cash flow for operations was very strong for the quarter with FirstService generating $55 million, and $115 million for the year. Working capital changes positively contributed to the strong cash flow and we do expect of some this contribution to reverse in Q1 2011. Investment and financing activity during the quarter included about $21 million invested in new businesses and a further $19 million invested to increase our stake in existing businesses. During the quarter, we invested just over $9 million in CapEx. Bringing our CapEx expense for 2010 to about $32 million versus $24 million for calendar 2009. Averaging about 20% of adjusted EBITDA during this period. 2011 we anticipate increasing our annual investment in CapEx by about 10%

Turning to our balance sheet our net debt position at the end of the quarter, inclusive of our $77 million in convertible debentures was about $217 million, up slightly from $213 million at the end of 2009. While our leverage ratio expressed in terms of net debt to trailing 12 month adjusted EBITDA was 1.38 times down from 1.76 times a year ago. Excluding the convertible debentures from our debt, our leverage ratio was 0.9 times. Needless to say our leverage continues to be well below our historical peak of three times and considerably below the 3.5 maximum permitted by our loan covenants. And with combined cash on hand and availability under our revolving credit facility, at the end of the quarter we had well over $200 million and our modest leverage. We continued to have ample liquidity and financial capacity to fund our operations and investment activity to support future growth.

Now I would like to turn things over to Scott for his comments. Scott?

Thank you, John. I'll focus my comments on the quarterly operating performance, highlights and trends. If there are requests for 12 month total and metrics, we can deal with that in the Q&A or separately. Let me start our review with our largest division, Commercial Real Estate where revenues for the quarter were $268 million, up 30% over the prior year, 26% after adjusting for the impact of foreign exchange. Organic growth was 20% for the quarter after adjusting for FX.

The strong global results were supported by gains in each of our major regions, but driven by particularly strong results in the Americas. Market conditions and transaction activity improved in most countries and regions that we operate, which led to significant increases in leasing revenues up 50% globally and investment sales up 30% globally. Other revenues including appraisal, property management and project management together were up a solid 11% globally. Let me spend a minute focusing on each of our major regions.

In the Americas, revenues were up 37% driven by very strong year-over-year gains of 40% in the US, 25% in Canada and 50% in Latin America. Across the region, leasing activity lead the way up 49%. With investment sales, appraisal and property management also showing strong growth, all up approximately 30 % over prior year levels. In the US, growth was particularly strong in New York City, Chicago, and the US Southwest, especially the LA and San Francisco offices. In Canada, fourth quarter growth was driven primarily by very strong comparative results in eastern Canada. And in Latin America, growth was entirely due to strong investment sales activity in Brazil.

As Mexico and the rest of Latin America was flat year over year. Our margin in the Americas for the fourth quarter was high single digits, up approximately 300 basis points from the prior year. But negatively impacted by continuing investment in the US, primarily in our property management and corporate solutions platforms, as well as technology. As I mentioned in our third quarter call, we expect these 2010 investments will start to yield a return beginning this year. During the quarter we also incurred rebranding costs in the Americas and continue to aggressively recruit high potential, high impact producers. Both of which impacted margin in the short-term but would yield long-term returns.

Looking forward in the Americas we expect to see solid year over year growth in 2011 lead primarily by strong growth in our US brokerage business. In our Asia PAC region, year-over-year revenues were up 24% in US dollars and approximately 16% in local currency. Driven by strong increases in Australia and New Zealand and our major markets in Asia, China, Hong Kong and Singapore. Growth in Australia and New Zealand was led by continued strong increases in office leasing revenues and a resurgence in investment sales activity.

Growth in China, Hong Kong, Singapore and the rest of Asia was driven by strong increases in investment sales and appraisal revenues relative to the prior year. We generated a solid double-digit margin in Asia PAC for the quarter, up 160 basis points from the fourth quarter of 2010 due to operating leverage on the higher revenues. Looking forward in Asia PAC, we expect to see continued solid year over year gains in the first half of 2011, pipelines and activity levels are quite strong in all our markets. We are somewhat cautious about the second half of 2011, on the expectation that Asian markets will cool and as we encounter top year over year comparisons.

In our Central and Eastern Europe region including Russia, revenues were up 10% in US dollars and approximately 16% in local currency. Strong increases in central Europe and Russia were somewhat offset by declines in Southeast Europe primarily Greece and Bulgaria. Growth in the region was driven primarily by leasing activity and property management as investment sales activity remained sluggish during the quarter. We generated a low double-digit margin in Central and Eastern Europe compared to a breakeven result in the prior year and a breakeven result in the third quarter of this year. Our disciplined cost containment efforts in this region over the past 24 months has positioned us to generate strong profits during the market recovery.

Looking forward in Central and Eastern Europe, we expect to show strong year over year growth for the first quarter, off a weak comparison, and solid growth for the balance of the year. The real estate markets in Russia and Central Europe continue to strengthen and we see some early signs of recovery in Southeast Europe where markets were particularly weak throughout 2010. In summary, we are quite optimistic about 2011 for our Commercial Real Estate division, pipelines are strong in all the regions, and with markets expected to show continued improvement, we are well positioned to deliver an increase in revenues and further improvement in margins.

Let me now turn my attention to Residential Property Management, where we generated revenues of $164.4 million for the quarter, up 5.4% over the prior year. 1% organically and the balance from the acquisitions in New York, Houston, Calgary and Vancouver late in the quarter. Organic growth was driven by a 5% increase in management fee revenue which was offset by declines in ancillary service revenue. The growth in management fee revenue was led by contract wins in Florida, Atlanta, Las Vegas, the Northeast and supported by continued growth in our rental management business. The decline in ancillary service revenue was due to a number of factors.

In the fourth quarter of 2009, we enjoyed a surge in collection revenues. I pointed out at that time we had been investing during 2009 and expanding our collection services. And we saw a large pickup in revenue in the fourth quarter, as a result of backlogs and the high level of activity, particularly in Las Vegas and Phoenix. Collection revenues stabilized during 2010 and were down in the fourth quarter, relative to the high volumes of the year ago. The other factor impacting ancillary service revenues is the continuing decline in our landscaping business, which is off over 10% compared to the prior year as a result of lower landscape installation revenues and several lost contracts. The competitive environment remains very difficult particularly as it relates to ancillary services where high unemployment has driven up the number of small competitors by a significant number.

Our EBITDA margin in the quarter was 7%, down from 9.5% in the prior year due primarily to margin declines in ancillary services from reduced revenues and leverage. We also experienced modest margin reduction in our core management business from pricing pressure primarily in the Sun Belt regions. Looking forward to Residential Property Management, we expect to see solid growth in 2011 primarily from acquisitions made in 2010 but also from organic growth which we believe will improve to the mid single-digit range.

In our Property Services division, revenues were up 15.2% over the prior year to $119.6 million for the quarter. With 20% year over year growth with Field Asset Services tempered by approximately 2% growth for our franchise group. As revenues were at a similar level to that generated in the September quarter, which was higher than expectation for the fourth quarter and a pleasant surprise. In our October call, we reported our momentum was slowing as banks and services paused to review their foreclosure processes, after broad-based allegations around errors and foreclosure filings and improperly executed affidavits. In the end, our volumes did not decline as much as we feared. And further the decline was not compounded by a seasonal slowdown to the same extent we saw the past two Decembers.

In addition we have a strong quarter in terms of ancillary revenues, remodeling, repairs, code compliance and rental services. Service revenues that are outside, in addition to our standard contract. The net result was revenues for the quarter that were 10% to 20% higher than the indication we provided in our third quarter conference call. Looking forward we expect first quarter revenues to be at a similar level to that achieved then the last two quarters, September and December of 2010. This would result in high single digit year-over-year growth.

Beyond the first quarter, we hope to see higher volumes and revenue growth as the enormous inventory of delinquent mortgages begins to move through the system at a higher pace. The shadow inventory problem only worsened during 2010. A record 2.9 million homes received foreclosure filings, while approximately 1.2 million homes were repossessed by mortgage lenders. This points to an increase in the shadow inventory of well over a million homes, doing the simple math; and this leads out increases in pre-foreclosure delinquency. The Mortgage Bankers Association estimates shadow inventory is as high as 8 million homes which represents many years of inventory. It is not clear how quickly the inventory will move through the system, but our clients are expecting velocity to pick up at some point during 2011. And we are generally very bullish about the prospects for FAS over the next few years.

Looking at our franchise systems, as I mentioned revenues for the quarter were up 2% from the prior year. We have been tracking a mid-single-digit growth rate for the first three quarters but system wide sales began to soften slightly toward the end of the third quarter driven by a reduction in consumer confidence. All of the franchise systems reacted similarly and had fourth quarter results that were slightly up or flat with the prior year.

The management team in our Property Services division has continued to manage down the cost structure within our franchise group through 2010 resulting in significantly higher profits on only slightly higher revenues in 2010. The margin for FAS was consistent with the margin generated in the fourth quarter 2009, and through the first three quarters of this year. That concludes our prepared comments. I would now ask the operator to open the line to questions.

Thank you.

(Operator Instructions).

Please stand by for the first question. The first question comes from David Gold from Sidoti and Co. Please go ahead.

Hi. Good morning. A couple questions for you. First, on Colliers, can you speak a little bit to where you are in the rebranding and what type of costs you might expect there, and part two on that, just a little bit more color on the general pick up momentum, if it's continuing and maybe leasing versus sales.

Rebranding is pretty much completed in North America, although we're continuing to, and John may have some additional insight on this, we'll still spend some money through the first half of 2011 but rebranding costs in the US are by and large behind us. In terms of momentum in the US, as you heard from Scott's comments we are enjoying great results virtually across-the-board and in every category, investment sales and leasing and property management and corporate services all up nicely over the prior year, so extraordinary growth.

And, so we're quite bullish about 2011 and as I said in my prepared remarks, we are spending a lot of time building a phenomenal company in Colliers USA and doing some investment spending to get there but we're confident that we have a great franchise and we'll be able to continue to deliver increased profits and better margins in the years to come.

Okay. Perfect. That's helpful, thanks Jay and, then, part two is think about where you would like to put capital to work this year on the acquisition front and why Colliers versus the certainly recent ramp up in acquisitions for residential. Give some color there, as to obviously not mutually exclusive, but where might the focus be?

Well, as John said, our leverage ratios, I don't know if they are record lows, but they are very low, below one, and so we have abundant capacity to make acquisitions. I think investors saw us substantially accelerate our acquisition activity in 2010. Our acquisitions are typically smaller acquisitions, with that we can buy our way, the FirstService way, and we see continued acquisition activity, both in Colliers and in our residential property management business in 2011. The activity levels continue.

Got it. Perfect. Thanks so much.

The next question comes from Stephanie Price from CIBC. Please go ahead.

Good morning.

Good morning.

Just following up on the last question. Could you give us a bit of an update on the acquisitions environment in the residential property management business? What evaluations are looking like and how many of these smaller multiples are out there looking to be acquired?

We are using this markets to fill up some of the regions that we don't currently cover. As you may recall in previous conference calls and comments made, what's happening now is there are several national players entering the market place that have acquired multiple high-rise properties across virtually every region in the US. So, we need to have full coverage in some of these markets that we currently don't service. There are numbers of, just many, many acquisition opportunities in different geographic regions. Multiples have remained pretty much the same in that business, as we've seen in past years. And, I think the general sentiment of a seller has turned to our advantage. A lot of people, particularly in the US, want to build their business over their lifetime.

They've made a good living and they want to stay and operate their business but they also want to put some money away for a rainy day. I think that is happening more in the last 18 months then we have seen historically in this business and that's what's opening up acquisition opportunities for us. So, multiples haven't really changed. There are still many out there. There are not huge ones, Stephanie, but there's a lot that are million dollar plus EBITDA acquisitions and as you know we have ways in which we can take those types of businesses and accelerate both the top line and the bottom line growth with many of the programs we have in that space, so that's my answer to you on that.

Great, thanks. Maybe turning over to the commercial real estate markets, as that markets improving, can you talk generally about what to see as potential areas of future expansion, either organically or through acquisition?

Future expansion, we're spending a lot of time in our backyard in the US. There is a lot of [Inaudible] out there. There is huge opportunity. Some of the larger competitors are having their own capital structure issues which are opening the doors to some excellent people in different geographic regions that we can recruit in and we've been very successful in doing that. There are also acquisition opportunities in the US, so we feel very comfortable that our US business is strengthening.

The corporate services component of our business is enjoying some great growth this year with some significant client wins and we're spending a lot of time around property management because it's really what FirstService is known for and it creates great stability in the business, leasing revenues and a variety of other services. Asia -- I just came back from Asia and did a full tour of our operations there and is also an exciting place for growth.

Scott and I generally alternate one year as Scott, and one year I will go to visit the operations and talk about their growth plans and there's a lot of exciting things happening in Asia and we think that we can double the business over the next five years or better and it's blocking and tackling. It's adding property management and services and markets that we don't currently operate. It's adding project management services in markets that we don't currently offer. It's expanding a region by opening a suburban office as industrial growth expands in different areas. So, we see Asia as an area of growth.

Europe is an interesting one because there's lots of work to do there. It's going to be a lot tougher, I think, over the next couple of years. We've got strategy around it, and -- but Europe, I'm talking about Western Europe in particular here, there is work to be done there and we're on it but we don't see near-term growth as rapid as, for example the US or Asia.

Great. I guess just the last question, CB Richard Ellis said they are acquiring ING's real estate management business. Can you talk a bit about how this changes the competitive landscape if it does, and whether you believe investment management is something that Collier's requires?

There's not much public information known about that asset. We have some proprietary information. I think the acquisition was a very good one from their perspective because it was not the US piece, it was more the global side of it. And I think, from their perspective, it was an interesting acquisition. They are already in the asset management business and it gave them an opportunity to substantially increase that business. We have -- we've looked at asset management and real estate asset management many times and right now our focus is on being an exceptional service business, one that doesn't compete with its clients and provides exceptional service in every market that we operate in.

That's a big challenge especially when you are in a people oriented business. The management team at Collier's has done a terrific job at bringing a great culture of service excellence to the table and I think we've got our hands full, just delivering on that promise. I think, near term, unless some special opportunity presents itself, we're going to focus on being a tremendous service business as consistent with what our FirstService strategy has always been.

Perfect. Thank you very much.

Thank you. The next question comes from Frederic Bastein from Raymond James. Please go ahead.

Good morning.

Good morning.

I'm just wondering on the Collier's side, are double-digit margins achievable and, if so, how long do you think it will take you to get there?

Certainly, this is Scott, Frederic, certainly think that are achievable. Our goal is driving the margins towards 10%. We are there. Right now, regionally, in most places except for the US principally. We need market recovery in Europe and we need continued recovery in the US plus we need time for our aggressive investment to begin to yield returns which we will start to see that this year. We will not hit 10% globally this year but we are marching steadily towards it. It's a few years out.

No, I appreciate that. I understand that also the larger hubs tend to be more lucrative and with your recent moves in Chicago and New York, is that going to help you get there faster?

Certainly, it will. Those are robust offices that generate good margins, but, again, we have been investing aggressively through 2009 and 2010 and in corporate solutions, our property management platform and particularly technology, that has inhibited our margins. We will continue to invest through 2011, but we'll also start to see the fruits of those investments.

Okay, and then, I understand also that your broker splits are quite healthy relative to what the other comps are doing and that is obviously part of your appeal as a business, are you continuing on that particular strategy?

Our broker splits on average are higher. We have some legacy split agreements that certainly are above market but as we recruit and acquire and grow our business, those issues are diluted. Our compensation expense is down in the US in this year compared to last and will be down next year again and it's all part of our progress toward driving our margins out.

Thanks for that color. Lastly, I have a question on the property services margin. You saw a very good lift quarter on quarter over last year's quarter, 10.7 to 13.3. I'm surprised to see that. I know you mentioned the franchise business had a better profitable performance, but this fourth quarter is generally a weak one for the franchise business and I'm wondering if you could reconcile the two of them?

It's really based on the cost structure and the efforts to reduce the cost structure through 2009 and continuing into 2010. A big part of it was around our franchise operations which we focused on in terms of reducing the cost structure there. Those revenues are about the same in 2010 as they were in 2009 but all much more profitable in 2010. And, really, the profitability improved across each of the franchise systems but not as significantly.

Is your cost structure such as you can maintain at that level as activity picks up?

I think it will certainly, the margins will increase as the market picks up. Certainly, they will, but we will have to add costs also.

Okay, thank you.

The next question comes from Stephen MacLeod from BMO Capital Markets. Please go ahead.

Thanks, good morning guys. Just looking at the residential property management business, obviously, you had a bit of difficulty with ancillary services. This year part of it related to tough comparable's last year, and I'm just wondering, are you having more difficulty organically getting interactions with these newer services in terms of products, banking and lockbox collection services?

We have different types of ancillary services. We have our financial products, which are more white collar administrative services, collection and lockbox and we are getting traction with those services and the margin is stable in those services. But, in our more blue-collar type ancillary services, landscape and pool management, the revenues have declined and its caused us a problem in terms of negative leverage if you will maintaining our margin.

The number of small competitors has increased significantly as the unemployed begin to maintain pools and maintain lawns and do it for very little and don't have any infrastructure or health benefits, et cetera that we must maintain. We are seeing our pricing decline and losing some contracts as the competition buys business, if you will. So, that revenue loss and a margin loss weighs the financial products side.

Okay. And, then looking at that business, you indicated that you expect to see sort of mid single-digit organic growth in the residential property management business. Is that largely coming from contract wins and pushing through these white-collar ancillary services?

Yes. In fact, the fourth quarter we are seeing more wins, it didn't come through in the numbers, but we are expecting 2011 to be a better year organically.

That's great. Just looking at the field asset services revenue growth, I just missed the number you talked about Scott, what was the revenue growth in the quarter?

Field asset was up 20% year-over-year.

Turning to commercial real estate, the Collier's rebranding costs were a bit lower than I expected and maybe a bit lower than you indicated on the Q3 call, is this just because you had completed more than you had originally thought and didn't need to put that money through or are you further ahead in the rebranding than you thought you would be?

I think we are a little bit further ahead and when we were dealing with the costs previously they were basically estimates. Everybody has been focused on trying to be as efficient around that spend as possible so that we come in a little bit lower than the estimated. I think we probably got, I think David Gold had a question earlier on the call, we probably have $1 million to $2 million to spend but likely at the lower end of that range will get spent during the first part of this year than we should be pretty much done.

Okay, great. And, then, finally, on the Colliers UK impact for the year, was there any impact in the quarter?

It was relatively small in the quarter, a couple of cents.

Great. Thank you.

The next question comes from Will Marks from GMP securities. Please go ahead.

Thank you and good morning. A question on the Colliers and the brokerage business. Can you give us a sense of where people are paid on commission? I know in the US, the standard is commission but I know parts of the rest of the world are not, can you maybe break it down a little bit for us?

The North America, Will, would be commission so Canada as well. Everywhere else, it becomes more of a base plus bonus. And, in Australia, it would be more variable, in Europe and Asia and perhaps more on the fixed side but all of those regions would based on bonus.

Okay, thank you. And, just one other question on Colliers, how many markets around the world in terms of target markets do not have a Collier's office right now?

Well, Colliers has 480 offices. I'm not sure we're targeting more offices. What we are doing is we are looking at our better producing offices and expanding and strengthening there and some of our less producing offices in second and third tier markets, we are -- we're really not investment spending there. We are looking at alternate strategies to have a presence and serve clients in those markets, but not invest.

Okay, great. That's all for me. Thank you.

The next question comes from Brandon Dobell from William Blair. Please go ahead.

Thanks, good morning.

Good morning.

A couple questions on commercial for second, I don't know how much transparency you can give us, but any sense of what the broker count finished out in 2010, compared to where it was in 2009? Any geographic color would be helpful as well.

Brandon, it is up significantly. Total employees would be up about 1000. Brokers would be, I would say 60% of that. Some of that obviously is from acquisitions, but a big part of that is also recruiting and in particular in the US.

Okay, that's helpful. I want to go back to one of your questions about, and you one of the answers you gave about brokers splits. Any sense of the magnitude of a couple things, one the difference between some of the legacy splits you mentioned and where the people are coming in? And, then, also, I guess especially with in the US business, are we talking a significant number of the brokers on that legacy split structure or is it just a handful so the impact that runs off would be relatively minor? I'm just trying to get a feel for trajectory on that gross margin.

I can see Scott has the answer for you. But, I want to jump in and just add a little bit on the brokers split issue. One of the things Scott mentioned and we have invested heavily in is our corporate services business which has enjoyed some great growth. We have a very strong corporate services business in Asia as well and I've spent a lot of time with the guys recently and it's very interesting what is happening there. Referral business going from North America, which has always been the traditional way of growing corporate services is local US companies growing on a global basis or Canadian companies growing on a global basis.

What's happening now is there is a backfill. There is Chinese companies coming into North America and other Asian and European companies coming to different markets all over the world. The reason that is relevant is there is tremendous referral business going back and forth and as that platform grows, just by nature, the splits fall because the broker splits on average will fall. There is some legacy splits typically with high producers in a few geographic regions, but the whole corporate services initiative that we are on, will help bring down the overall average.

Okay. Thanks.

Scott, did you want to add anything to that?

I think that it's going to take some time but we would be looking at reducing the variable comp by about a 100 basis points a year on average over the next few years, so we should see, the margin increase in the US, 100 basis points coming from the dilution of those legacy splits.

A quick one for John, as I think about corporate costs in 2011, there's a little bit of noise in the back half of the year, how do we think about that line relative to 2010 or the quarter to quarter growth in those brokerage companies?

Corporate expenses were elevated this year because of incentive compensation and to some extent the strength in the Canadian dollar which these expenses are incurred in. It was higher in 2010 relative to where we would expect it to be in 2011. I think you could use in the neighborhood for $15 million to $16 million, would be my best estimate right now as to how that would rollout next year. With probably a little bit of a bump in the fourth quarter but the rest of it pretty much flat across the different quarters as we estimate and accrue some of those expenses.

Okay, and then final one, I guess more about the residential property question, any sense of how big the landscaping business historically has been as part of the total and at what point do you start to see some easier comparisons on the headwind there or do you think it's going to be a structural issue for a couple of years given the economy and the competition? I'm just trying to get a sense of the top line with that issue.

I think we are probably at a lower level in that business right now. Certainly, five years ago was a bigger part of our business and the bigger focus, frankly, but it's one of our service offerings. It's probably 10% of the business right now or a bit less and I'm guessing it will stay there. It's not going to increase dramatically.

Thanks a lot.

The next question comes from Valerie Blume with RBC Capital Markets. Please go ahead.

Most of my questions have been answered but I was just wondering on the residential side just the EBITDA margin profile. Was 2010 sort of a normal year for you and is that how should we should think about 2011?

It's a bit low. That business, the last five years has been within a 50 basis point band basically between 9% to 9.5% that's the low end of that right now. We expect it to see to move up from here. Certainly, we expect to be higher next year.

Okay. From quarter to quarter, the Q2 and Q3 being a little stronger than the first and the last quarters, is that the normal way to think about it?

Yes. There is a rhythm to the seasonality and it's driven by our pool business primarily and if you go back over the past few years, you will see that seasonality pretty clearly.

Okay, so the Q4 2009, 9.5% or what ever margin it was? That was just sort of a one off then?

I would say that is high and this year it is low.

Thanks, that's it.

Thank you. Mr. Hennick, there are no further questions at this time. Please continue.

Okay, well thank you everyone for joining us on the year-end conference call. We look forward to having you participate at the first quarter conference call. Thanks.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line and have a great day.