Colliers International Group Inc (CIGI) 2017 Q3 法說會逐字稿

Welcome to the Third Quarter Year-end Investors Conference Call. Today's call is being recorded.

Legal counsel requires us to advise that the discussion 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. Additional information concerning 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 Security Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission.

As a reminder, today's call is being recorded. Today is Tuesday, October 31, 2017.

And at this time, for opening remarks and introductions, I would like to turn the call over to the Founder and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thanks for joining us for the third quarter conference call. I am Jay Hennick, Chairman and CEO of the company. And with me is John Friedrichsen, Chief Financial Officer.

This morning -- this morning's conference call is being webcast and is available on the Investors Relations section of our website, as is a presentation slide deck to accompany today's call.

Earlier today, Colliers International reported strong financial results for the third quarter, continuing the momentum we have had since the first half of the year. Revenues were up 24%, adjusted EBITDA up 39%, and adjusted earnings per share increased a strong 53% over the prior year. Year-to-date, revenues were up 17%, adjusted EBITDA up 25%, and adjusted earnings per share up 39%.

Based on our performance to date, our pipelines of pending transactions and a relatively stable market condition as we continue through the year, we expect the fourth quarter and the final -- and the full year to finish very well.

As mentioned, I'll limit my initial comments today and then pass things over to John for his financial report so we can leave as much time as possible for questions.

Since our last earnings call, we completed 2 smaller but important acquisitions. In Australia, we doubled the size of our project planning and management business. And in Washington, D.C, we further strengthened our operations with the addition of a high-quality tenant advisory business in that market. So far, this year, we added about $200 million in revenue through acquisitions, well an excess of our acquisition target for the year, setting up -- setting us up nicely for further growth in the years ahead.

During the quarter, we also formally established company-owned operations in Japan for the first time. Although a significant long-term growth opportunity for Colliers, our efforts in Japan will be dilutive to EBITDA in the near term as we invest in building a solid and sustainable platform in the third largest economy in the world.

The other item of note is the appointment of Gil Borok as the COO of Colliers U.S.A. Gil bolsters our existing senior leadership team in the U.S. led by President Marty Pupil. Attracting a high caliber and experienced leadership team to our rapidly growing business is further evidence of our commitment to growth and operational effectiveness as we continue to take our business to the next level.

With that, I'd like to turn things over to John. John?

Thank you, Jay.

As announced in our press release earlier this morning and highlighted by Jay in his opening remarks, Colliers International Group reported strong financial results in our third quarter, benefiting from acquisitions and solid internal growth compared to 2016 when our operations were negatively impacted by uncertainty related to the Brexit vote in the U.K. and the U.S. presidential election campaign.

I will address our Q3 regional financial results, overall capital deployment, cash flow and financial position and our outlook for the balance of 2017, following the flow of slides posted on our website that accompany this call. Please note that my comments may reference non-GAAP measures such as adjusted EBITDA and adjusted EPS, both of which are outlined in our press release issued this morning as well as the accompanying slide deck and are composed primarily of noncash charges that we view as largely unrelated to our operating results for the quarter. References to revenue growth, including internal growth, are calculated based on local currency and outlined in our press release issued this morning.

Our Q3 revenues of $574 million were comprised of $188 million Sales Brokerage revenue versus $134 million last year, up 38%; while Lease Brokerage revenue came in at $188 million versus $148 million last year, up 25%. Meanwhile, we generated $198 million in revenue from Outsourcing & Advisory services compared to $180 million last year, up 8%. The more recurring revenues generated by our Outsourcing & Advisory services segment represented 34% of our overall revenues compared to 39% in Q3 of 2016. Geographically, both revenues and adjusted EBITDA remain well balanced with 58% and 53%, respectively, being generated in the Americas and the balance being relatively evenly split between EMEA and Asia Pacific.

Turning to the regions. In the Americas, revenues were $331 million, up 28%, benefiting from acquisitions and strong internal growth. Our Lease Brokerage showed the strongest growth, up 38%, and included several significant office leasing transactions in our major markets. Growth in Sales Brokerage revenue was also strong, up 27% versus last year. And Outsourcing & Advisory revenues showed sturdy growth in the Americas, up 16%, with growth across all 3 of our principal service lines in both the U.S. and Canada. Adjusted EBITDA came in at $29.1 million versus $22.6 million last year and a margin of 8.8%, the same as last year.

Moving to EMEA. Revenues came in at $130 million, up 18% versus last year with robust internal growth against the below par performance in Q3 last year. Sales Brokerage revenue more than doubled to $40 million from $16 million last year led by a strong rebound in our U.K. sales brokerage operation, which was negatively impacted by uncertainty following the Brexit vote last year. Meanwhile, our German Sales Brokerage operation also saw a strong rebound in revenue as did our business from Russia and recently acquired operations in Denmark. Lease Brokerage revenue in EMEA was approximately flat with last year. Finally, Outsourcing & Advisory revenues were down 6%, with the decline attributable to lower revenue in workplace solutions in France, which had a very strong Q3 2016. Meanwhile, consulting and appraisal and project management in the U.K. contributed strong revenue growth. Adjusted EBITDA more than doubled to $11.2 million, up from $4.5 million Q3 of last year.

And finally, in our Asia Pacific region, revenues came in at $113 million, up 12%, driven by strong internal growth and contributions across all service lines. Sales Brokerage revenues was up 17% with robust growth in Hong Kong and China, owing primarily to people investments made in these markets over the past couple of years and a strong quarter in Australia to accompany our results in Asia Pacific. Leasing Revenue was up more modest 3%, while Outsourcing & Advisory services revenues were up 13% with strong growth in all service lines across most of the region. Adjusted EBITDA was $14.2 million, up from $13.2 million last year with our margin contracting slightly to 12.5% versus 13.3% last year, primarily due to startup operations in our new Colliers business in Japan, previously referenced by Jay in his opening remarks.

Turning to our capital deployment and balance sheet. In our third quarter, capital expenditures totaled $8.4 million, up from $5.6 million last year, bringing our year-to-date CapEx to $29 million, up from $16 million in the prior year and in line with our expected spend to date this year. Our estimated CapEx spend for 2017 remains in the $40 million to $45 million range. We invested $13 million in acquisition activities during our third quarter, down from $36 million last year. However, our year-to-date investment in acquisitions totals $98 million compared to $87 million for the 9-month period in 2016. In Q3, we continue to generate strong cash flow. Before working capital, cash flow increased to $43 million, up 35% from Q3 of last year and after working capital investment, increasing to $88 million, up 38% over 2016. Our net debt position stood at $262 million at the end of the quarter. And our leverage ratio expressed as net debt to adjusted EBITDA was 1.1x, same leverage as at the end of the third quarter last year. Subject to any additional investment in acquisitions of significance, we expect leverage to trend down during the fourth quarter to well below 1x. In terms of financial capacity with cash on hand and committed availability into our revolver, we had about $400 million of liquidity at quarter-end, a level ample to fund operations and other capital investments including acquisitions required to execute our growth strategy.

Looking across our global operations. Our pipelines of pending transactions remains solid and reflect steady commercial real estate activity, which we expect to continue into Q4. Based on stable market conditions through the end of the year, we expect solid fourth quarter results that will exceed those reported last year and support the full year outlook included in our Q3 slide presentation accompanying this call.

That concludes our prepared remarks, and I would now like to ask our operator to open up the call to questions.

(Operator Instructions) Your first question comes from the line of Anthony Zicha of Scotiabank.

Jay, could you please provide us what's the general market sentiment out there in the United States? And what's the market telling us? And second part to that question is, is there any change in the focus on your M&A activity particularly in the U.S. market? And where do you see the best prospects for M&A internationally?

Well, there's a lot of questions in there. So my comments on the market generally in the U.S. are driven primarily around what we do for a living, and that's service real estate owners and occupiers. And I think a general conclusion -- and John may have something to add to this. My general feeling there is the market continues to be very solid. It's hard to get incremental growth year-over-year, although we're accomplishing it, and you saw a lot of incremental growth for the quarter coming out of the U.S. this past quarter. But generally, good market conditions. Real estate continues to be an asset class that people want to invest in and want to allocate capital to. And it's not just U.S. investors, it's investors from around the world. And that's one of the great advantages that we and a few others have, and that is access to international capital flows that want to allocate their capital into the United States. So that's the general market conditions. From a Colliers perspective in particular, we're really enjoying these times. Because market for market, we have the opportunity to increase our share, and we're doing that to strengthen our leadership team, which we're obviously doing. We believe that there is an opportunity for us to step up our bench strength to allow us to do more market for market, serve our clients in a way that's unique and different than -- some of our peers, and we have several initiatives that we are implementing and that are bearing fruit. So lots of growth opportunities, market for market. Some of them are little bit more mature than others. But interestingly, several of the secondary markets had become very important markets like our leadership position in Detroit, as an example, and some other markets like that where the cities themselves are rejuvenating, and it's creating opportunities for us to really build a solid sustainable business in those markets. And I think your last question was around the acquisition opportunities, primarily in the U.S. We continue to see them. We're very careful. We become more careful in the last, I'd say, 18 months because we've done a lot and invested a lot in creating a unique culture at Colliers. And we really don't want to execute on an acquisition that would, in any way, dilute the great steps that we're taking around being the most entrepreneurial company, one that doesn't have bureaucracy and makes rapid and well-informed business decisions. Believe it or not, those are factors that are incredibly important, and they're important to our clients too because our clients want entrepreneurial answers and ideas and opportunities. And having a culture that fosters that becomes, we think, different than some of the others in the marketplace. So I think I answered all of your questions. If I missed something, please let me know.

No, that's good, Jay. And my last question, Colliers decided to open up a corporate office in Japan. Why now? What's the timing? And what opportunities do you see in that market that you haven't capitalized previously or your franchisee didn't?

Well, Anthony, you've followed us a long time. And you used to ask us the question, which market would you like to expand in, that we were not yet in, and Japan was an obvious. We had an affiliate there who had been there for many, many years, but really wasn't developing the type of platform that Colliers needs to have in major markets, including Japan. It was not easy to make the changes that we did, but it took fortitude. It took a longer-term process that we had hoped. But ultimately, we were successful at the end of the day, and we're now up and operating. We have a nice little office. I think there's about 18 or 20 professionals. But for Tokyo, that's very small. And we see a big opportunity is there, but it's not an opportunity that, it's going to come overnight. The culture of that particular market is such that things move a little bit slower than in other geographic regions. But we're committed, and we're on the ground, and we have a team that we believe can accomplish it. David Hand who leads our Asia business is a very able and experienced executive and has been in the region for a lot of years, and we're looking forward to watching as he executes on our long-term strategy around Japan.

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

Great to see organic growth rebound across your operations in the quarter. My first question is actually -- just like to build on this opportunity in Japan. I understand it's only a -- not a handful but up to 20 professionals right now. But how big of a business can you grow it to? And in 2018, can you share perhaps some of the targets you have for the operations?

Fred, it's John. Look, it's going to be somewhat of a function of, obviously, the people that we have on the ground ramping up. We think we have a good start, and they will be -- are generating revenue, well, increasingly generating revenue over the next year and beyond, but we're going to need augment that operation with additional professionals. We're keen to do that. The business there is kind of a bit of a rebirth, though the brand is already known in the market, but it will be a new Colliers in that market and a highly-attractive place for those that want to come and be part of this success story. There will be acquisition opportunities, but those are not necessarily known at this time. The only thing I would say is that we would certainly expect this business to be profitable in contributing EBITDA in 2018. And given that it's the third largest market in the world, there's huge opportunity for us to establish Colliers in that market and for it to become a significant part of our Asia Pacific and global business. So we're committed.

Okay. Just wondering also if you could provide a bit more color on the -- you noted some significant office lease transactions that you completed in the U.S. Were those the ones you had contemplated closing earlier in the year? Or did they come from new leads?

These are the transactions that have been in the works for a while, and they're sizable, they're complex. And we were able to successfully conclude those in Q3. There are more out there, and a lot of this is a result of some of the investment we've made in people who are top grading our talent around our various major markets in the U.S. over the last few years. So we are very, very pleased to see the success that our people have had, working with our clients in achieving some really great outcomes, and we saw that in Q3.

Cool. Last one for me, you saw a significant increase in the acquisition-related items in Q3. And then you did announce some deals, but they were pretty small. Is that kind of a good indication of what sort of level activity we can expect from an M&A standpoint in terms of closing transactions in the short term?

It's not necessarily indicative. It's more of a historical capture of costs related to acquisition activities. There was a significant amount included with respect to Japan and settling that situation and repatriating the brand in our company control and then some residual acquisition-related expenditures, which, because of the way GAAP forces you to characterize certain expenses that are really related to earn outs that are tied to retention of people that we have picked up on acquisition, we adjust for those. It doesn't really make sense from our perspective to run those through the P&L, so we adjust for those. Have always done that. And those crystallized during the quarter as well, so it ended up being an elevated expense just for that reason.

Okay, but -- all right. But not too much to read into that. Okay.

Yes.

Your next question comes from the line of Stephen MacLeod of BMO Capital Markets.

Just circling back on Japan, which obviously was a significant geographic add-on to your footprint and one that you've been trying to get to for a while. You mentioned some of the costs sort of dragging in Q3. Do you expect those -- are those largely onetime in nature? Do you expect those costs to kind of drag through Q4 and into Q1 until that business becomes more profitable?

I would expect that we'll see that certainly through Q4. Probably Q1 -- Q1 tends to be a bit of a seasonally light quarter on our business, so I wouldn't expect to see positive EBITDA contribution until we get into Q2 of next year. That'd be my best estimate now. But the numbers we're talking about are small.

Right. Okay, okay. That's great. And I know you've had a couple of questions on the Japan business, but I just wanted to just get some color on what you view as -- what are you able to do with the business now that it's company-owned versus what you couldn't do previously when it was an affiliate?

Well, let me count the ways. When you have an affiliate who is, carried on business for -- in a certain way for a lot of years, they get stuck in a rut, and they do things their own way. So if that's one of the -- there's a blessing that you have an affiliate. There's also the curse of adopting the affiliate and then having to basically reformat and reinvigorate the business. But from our perspective, we have a strong and growing Asia business with great leadership that has a unique passion for the business and knowledge of Japan for a variety of reasons. Owning the business gives us the ability to go into the market and be a viable option for top professionals who may want to join us. But I think the potential -- the bigger potential is, is there a significant transformational acquisition opportunity within the market? A Japanese firm that is well-known locally that has more maturing clients that want to do business in more geographic regions, not just in Asia, but potentially around the world, they, like many others, need to have access to a global platform like Colliers provide. So we're seeing that in other markets as well, whereas the local firm becomes better at what they do and their client relationships strengthen, their clients are asking them to do more, to take them to more places, to introduce them to more opportunities and capital sources. And if you're operating only within one market, those capital sources and relationships and real estate opportunities are really limited to that country. So we're optimistic that over the next couple of years, we can find a great acquisition that will significantly enhance our position in Japan, recognizing the culture differences. And as I said earlier, in Japan, there is a significant, I don't know if significant is the right word, a longer-term dating process around acquisitions. And it's one where you have to build confidence and trust with the target over a longer period of time potentially than in many other markets.

Okay. That's great. That's some great color, Jay. And then I just had one final question. In terms of the Americas, can you just talk a little bit about some of the puts and takes on margins? In light of the 8% organic growth, I thought maybe we'd see more leverage on the margin side.

Yes. I mean, a couple of things, in fact, to margins. We've talked about this before. We have made some additional investment in people like many others have, and that has negatively impacted margins a little bit currently, and that'll alleviate going forward as many of those in the recruit side become productive and start generating revenues. And then we made a large acquisition earlier in the year, which just tends to operate with somewhat lower margins in our overall margin in the U.S. It's a little bit of a dilutive effect there on the margins. So we just didn't get as much of an uptick rate. No uptick -- the operating leverage was more muted. But notwithstanding that, this was a very, very good result for our U.S. business in the quarter and not to say that -- take any credit away from Canada, which also had a very, very strong result for the quarter.

Your next question comes from the line of Mitch Germain of JMP Securities.

So I want to talk about the Sales Brokerage business. Obviously, market is shrinking. You guys had some pretty meaningful growth there. And I'm curious, Jay, is it just kind of going -- the landlords or the customers going to the more known names? Is it a function of some of your hiring? Just curious as to what's really anchoring that growth.

Well, I think it's all over the map, and it's somewhat different in different geographic regions. So for example, the Capital Markets team that we invested in last year has had some very nice traction in New York, notwithstanding the fact that New York and Capital Markets right now is pretty muted. And I think the -- when you think about the Brexit impact last year in the U.K., and John has already alluded to this, but it's quite graphic if you look at our numbers. The Capital Markets transactions in the U.K. last year just came to a halt. So this year, you're seeing a major uptick, and we benefited by that this quarter. So there's a little bit of that. And the same in Germany. Germany was impacted somewhat by the dislocation in Europe, and they responded this quarter with great results. Last quarter was okay. They had some transactions that were delayed. But really, when you think about it, it's last year versus this year and the impact that the European situation had on the operations in Germany. So you marry a lot of that together and the share that we believe we're picking up in different geographic regions as we continue to top grade our people is bearing fruit, and it's nice to see.

Great. That's really helpful. And then the last for me, I hate to ask another one on Japan. But when you kind of envision the growth of that business, you said around 18 or 20 people, what's the mix in terms of personnel there? Is it focused on leasing? Focused on investment sales? Is it kind of -- I'd love to just kind of know what that population of people in the roles are and maybe how you foresee that kind of building out over time.

It's a great question. But I think it is early because we're going to have to be -- and the management in the region has been very clear about this. We're going to have to be opportunistic. We have a clean slate. And so the opportunity is, for us, to strengthen virtually every line of our business in that region, and we're going to have to capitalize on high-caliber professionals when and if they become available. So it's a good question and one that we might have a clearer answer on 12 months from now. But right now, it's -- let's get up and operating, let's bring ourselves to at least the level of profitability and let's capitalize on -- and be strategic about -- as much as we can about professionals that we recruit.

Great. I'm sure in 12 months, we'll be seeing that business being very profitable.

Your next question comes from the line of Marc Riddick of Sidoti & Company.

So I was all set to ask a Brexit-related question, but you did a nice job with a summary on the question before, so I don't have to ask that one. I can move sort of onto -- I wanted to get a sense of if you could give kind of a general update or view of what you're seeing in the -- in Outsourcing trends and if there are any particular trends to call out that you think could pick up over -- in the next 12 to 18 months, what you see that could sort of be jump-started going forward.

Well, I would say that we see at Colliers a big opportunity around multi-market transactions and larger corporate relationships that have started to open up to Colliers because of the growing strength of our platform. Historically, these large corporate contracts have been limited to 2 or 3, and we now have a seat at the table, and we've enjoyed some great growth around our corporate solutions business. We're not talking about it too much just yet. But I think John at corporate solutions is up at least 30% this year, maybe more. And it's led by our long-term Colliers team in North America, headed by Scott Nelson. And our teams in Europe and Asia are all strong as well. They're working together cohesively, but I think there's a lot more work to do and opportunity to create as well as the multi-market transactions that we are emphasizing around the organization, how do we take a client that we have an incredibly strong relationship with in Germany and help them grow their business into different geographic regions better than we have historically. And we've got some initiatives going on internally around those things. But really, too early to start to track them and turn them into KPIs that would be meaningful for anybody.

I would just like to add to that, just picking up on what Jay said. I mean, we're clearly focused on the whole Outsourcing area. It's absolutely, I think, a secular growth story. It's not going away. It's a permanent sort of ongoing growth as companies decide to outsource those activities that were not core to their operations, we're completely dialed into that. What we won't do and what we aren't doing today in any event compared to our -- many of our competitors is force, force our clients into a situation where we are a provider of facility management services. We've chosen not to invest heavily in that business like other competitors have. We are mindful to have some service that some of our clients want us to be involved in procuring. We're happy to do that, but it's a client-first strategy for us.

Okay. Great. And to the extent that -- especially with the multi-market large clients that you're looking at, are there any additional services or pieces that you would like to add, or with you as a priority, to add to your platform to get further along in that process? Or are you comfortable with the way you are currently?

Well, it's an excellent question. But the answer is we have a full spectrum of services. In places around the company but not necessarily in all places. So just to give you by way of an example, in Germany, which is a very strong business for us, we dominate in leasing capital markets and a variety of other things, we don't do project management, as an example. We do very little property management, as an example. And so I can give you country-by-country, region-by-region where we're strong in some areas, but we have gaps in our business, including our base business. I would say in some markets, we are -- we have a gap in high-end tenant rep and landlord agency, in areas where we dominate in other areas throughout the region. So there's -- the beauty of this business is that there are so many different areas of growth, and the way we have chosen to do this strategically is to understand what our gaps are market-for-market and fill those gaps and transfer capabilities from one market to another if we have it and grow that way. So we're quite excited about the various areas that we can grow our business virtually around the world.

Your next question comes from the line of Brandon Dobell of William Blair.

Maybe for John, I guess, to start with. How do we think about, in the U.S. and EMEA in particular, headcount growth, organic headcount growth, year-to-date? And any color around, let's call it, transactional businesses versus nontransactional businesses?

Headcount growth is in the low single-digit percentages. We're really focused on that, but it's an exercise around quality and fit. It's just very, very important. And we're as focused on the quality of our headcount professionals, which means culling in some markets as opposed to absolute numbers. And that is going to assist us in dealing with the kind of clients we want to engage with, our productivity, which we've talked about before, and all those kinds of things. So it's very, very important. The second part of your question was regarding transactional -- was that also headcount? Or was that sort of a separate question?

Yes, no, it was headcount in the -- I guess it's called the transactional service lines versus -- wanted to focus more on corporate services.

Yes. I mean the -- we're always -- I think just to pickup on Jay's comment before. I would say there's very few markets where we feel topped out in any respect, and I think that's a really great thing for us in terms of growing our business. And I think Colliers has an incredibly attractive platform really for others who may feel quite stifled where they are. It's a different environment within the business here. We're very focused on adding high-quality professionals on the transactions side in virtually all the markets around the world, but being again very selective in making sure we have a very good fit with who we already have on board.

Okay. Maybe a couple of years ago, on one of the calls there was a decent discussion about just the breadth or scale of the affiliates that still were out there especially in the North American market. Any color that you guys can give us on how much affiliate revenue was still out there and what the prospects are for you guys from an M&A point of view to bring some of those affiliates back into the fold?

Yes. They're still -- in North America alone, there might be $300 million to $400 million worth of affiliate revenue per se. In fact, we recently initiated a program to increase the number of our affiliates in secondary markets. We are always interested in bringing affiliates on as company-owned operations, but those that are market leaders in their own region and those that we think that we can accelerate their growth as part of a company-owned business as opposed to being independent. So there's a lot still out there, but for the most part with a few exemptions, all major markets now are pretty much company-owned. And some of the secondary markets that I alluded to earlier are fast becoming major markets at least for us, and so we're excited about some of those things. But I think, overall, the U.S. business could top for us this year a billion dollars in revenue with another, as I said, $300 million, $400 million in other revenues out there and -- which gives us opportunities to grow. But it also doesn't preclude us from adding other well-managed real estate professionals to our ranks whether they're -- whether we're recruiting a team or whether we're making an acquisition of a third-party branded organization.

Okay. And the one last one for me, maybe, John, just to make sure I understand how you guys are communicating some of the year-on-year comparison issues around Brexit in the EMEA transaction part of the business. Recognizing that Q3 was noisy, how do we think about Q4? Was it as noisy as Q3? I know there was some progress back in Q4, but it felt like it was still a really difficult fourth quarter last year for transaction businesses in the U.K. in particular but just in European in general. I just want to make sure I understand that kind of -- the relative pain you guys felt last year.

Well, Q4, we did see some recovery in the U.K. last year. It would have been relatively close to prior year in Q4, so there was some reasonable recovery. We saw that continue through this year, and obviously, played out well in the last quarter we just completed. So it was not quite the train wreck you saw in Q3 by any stretch or was decent recovery. We also had a relatively strong finish in Germany last year in Q4. So we've got a little bit of FX tailwind as well, just to read into some of this. Right now, we've seen currencies particularly the U.K., the pound were pretty much on par. But we saw some deteriorations, so we'll have a little -- presumably a little bit of a tailwind around the pound in the next few quarters. And we have already seen a little bit of a tailwind around the Australian dollar, Canadian dollar and euro. On a year-over-year basis, to the tune of around 4%. So hopefully, that will be additional tailwind going into Q4.

Your next question comes from the line of Michael Smith from RBC Capital Markets.

Just continuing on the U.K. theme. Barring anything that comes out as any surprises, would you say it's back to normal for the investment [builds] market in the U.K?

I would say that it is largely business as usual, certainly with respect to, I'd say, leasing in particular, which tends to be a little -- perhaps, less affected by some of the noise that we saw and indecision that stemmed from the Brexit over the last year. I would say that, perhaps, capital flows in terms of composition of investors and who is looking at the U.K. and deploying capital in the U.K., that may have changed but -- in terms of the players. But we continue to see lots of interest in the U.K. from Asian and U.S. investors in particular, who, I still believe, are looking at the U.K. as a near-term opportunity with the pound, again, relatively low compared to historical levels. And I guess, those taking a view of that, notwithstanding Brexit, the U.K. is going to continue to be a significant economy and participant within the Europe. So maybe a little bit different than it was in the past, but I would say, not nearly the situation we saw a year ago.

Okay. Great. And during the quarter, you benefited from some large lease transactions that you've been working on for some time. Just wondering if you're working on any -- how your pipeline is for large -- additional large lease transactions?

I'd say the pipeline remains solid. And again, I think there is the overall market, and then there is us and our business and the investments we've made previously I think they're bearing fruit and our professionals having a great success. And I also think that on top of that, as we build this global platform and Jay referred to multi-market transactions, that's increasingly getting traction within our business. And it is resulting in the kind of things we saw in the Q3. So there's obviously no promises on these repeating themselves, but we feel very, very good about where we're positioned in the activity we're seeing currently in our pipeline.

Great. And last question, any let-up in the strength of the Canadian and Australian markets?

Any let-up, do you mean sort of in Q3? Or are you talking about going forward?

Like it is -- going forward, like is it still holding on strong? Canada was a pretty strong contributor. I guess, Australia, it was the same?

Yes. Yes, we see good activities, solid market conditions and continuing activity. And our visibility on terms of what we can see relating to our pending transactions and so forth tends to be strong.

(Operator Instructions) Your next question comes from the line of Stephanie Price of CIBC.

Jay, you mentioned the opportunity to increase market share several times during the call. Can you talk a bit about the competitive environment in the different geographies?

Oh, boy. It's competitive everywhere, Stephanie. But I think that if you distill it down, we are different than our other global peers. There's a very few global peers. They've been around a long time. They have lots of legacy issues. They also have lots of strong legacy relationships. But I think as the new kid on the block with a more entrepreneurial approach and [tone] throughout the organization, not just of this level, but in every level in our organization, and the efforts that we are expending and continuing to communicate that is reflecting on our professionals, it's reflecting on our pitches to our clients, we're getting a seat at the table to offer new and different ideas to our clients rather than just simply be order takers. We come to the table with an opportunity or some different way of looking at their portfolio. And so I think it is building culture, and strengthening it is an everyday occurrence and not easy when you're dealing with professionals around the world. But we have great management teams in our different geographic regions that are all aligned around this vision and strategy, and it's helping us to continue to win share. And again, winning share in the U.S. is an amalgam of share because you're doing better in New York, you may not be doing as well in a different market, and so you've got to balance it all to actually come up to a conclusion that you're gaining share. But I would say that 11% growth in growing internally over the past quarter in a growing market or a stable market in the U.S., I would say, is taking share.

Absolutely. And maybe can you talk a little bit more, I know we've talked about it on the call already, about the organic growth in the U.S.? And we talked about leasing transactions. But where are you seeing the growth in sales and outsourcing? And how would you kind of characterize U.S. and Americas environment?

We're seeing -- we're -- Stephanie, it's John. We're seeing most major markets. I mean, again, Jay referenced New York. New York, for us, is a work in progress. We've made significant gains there in terms of our business, but we're certainly not done, and we've got lots more to do. But extending that to other major markets within the U.S., the West Coast, the San Francisco, the L.As, all important markets and then of course the Heartland, Chicago. Jay mentioned Detroit, which is an up-and-coming reemerging kind of market. And there are others like that in the U.S. that -- we're well placed and have been there for a while. And I think in some respect, some of our competitors have probably overlooked those markets, and now we're focused on those and benefiting from some of those. We're also growing our property management and project management business in the U.S. that -- again, those businesses were a fraction of their size. And in accordance with what we've talked about before, having a balanced business, those are areas of great focus as well, and we are continuing to build momentum across the entire platform and all those markets. But the secondary markets in the U.S. are interesting. Because not surprisingly, as pricing has maybe gotten a bit toppy in some major markets, capital has pursued opportunities in secondary markets and along with companies that are seeking to expand. So it's a good news story around the U.S. for us.

There are no further questions in the queue at this time. I'd turn the call back over to Mr. Jay Hennick.

Well, thanks, everyone, for joining us, and we look forward to our next conference call in February with our final year results. Thanks again, and have a good rest of the week.

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