Good evening, everybody, and welcome to the new Savills team, as it were, and our soon-to-be colleague from Eastdil Secured. My name's Simon Shaw, 17-year veteran of these presentations, but this is the first one as CEO. To my right is Nick Sanderson, our brand new CFO, who's been drinking from the fire hose for four weeks. To his right, Mike Van Konynenburg, who is the CEO of Eastdil, and from evermore is gonna be called Mike VK. Much, much easier. We got a stack to get through today, but I have to actually just share one little snippet, which is absolutely symbolic of Savills culture. As I was coming down here to do this, one of our receptionists said, "Simon, you look a bit peaky." I said, "Well, actually, I am a bit knackered." She said, "Strap in.
You got another day of it, mate." Which I think actually articulates about as clearly as you can the sort of open and transparent Savills culture that we operate. Did make me laugh. We got a load to get through this morning, so I'll speed through the results if that's okay. It, as it's the first time you've heard from me as CEO, I thought it was useful, with Nick's help, to lay out a summary of our strategy, which is really part evolution and part firming up what you already know. If we turn to the results first, or the overall message really, is that these results exceeded our expectations as a result of a very strong finish to the year.
After a volatile couple of years with geopolitical and macroeconomic winds buffeting this way and that, and particularly during Q2 and Q3 of last year, we have, in profit terms, overtaken the clean pre-COVID year of 2019. We've done that, for the most part, with the great Savills transaction machine really only still firing on about 4 out of 8 cylinders. I think that shows the extent of the growth and development of this business between times, and I'll come onto a bit more of that in a moment, and the strength of our engine. The important factor in this really good performance was the performance of our less transactional business lines and some of the restructuring benefits that we received through the course of the restructuring we'd done in previous periods.
These helped to mitigate or improve the performance in some of our weaker markets. Finally, I suppose it's an understatement to say we've been pretty busy strategically as well, and I'm absolutely thrilled that we're announcing today the combination with Eastdil Secured. Now, many of you will be more than aware that real estate investment banking is an area that I personally have been looking to build over some years now, and we have been doing so organically for some time. We've worked with and admired Eastdil for many years on both sides of the table, and you'll see in the appendix we've got some examples of some of the deals we've worked on opposite and with each other.
I'm extremely pleased that in attracting the preeminent global real estate investment bank to join us, we're hugely accelerating that investment banking theme to our strategic development. Doing so, I think, in a compelling manner for clients, staff, and ultimately shareholders alike. Hold that thought for a bit, and we'll crack on through the highlights of the financials for the year. Under the variable market conditions I just talked about, I'm pretty happy that we hit 6%, nearly 8% constant currency growth, and then further leverage to the bottom line with double-digit underlying EBITDA and underlying PBT growth. It's worth noting that the 30 basis points improvement in margin in an environment where the commercial transaction business, for reasons I'll go into in a moment, actually had a margin that declined 20 basis points during the year.
That's evidence of the efficiency of our restructuring initiatives and the tightening of the rivets on the hull, if you like. As you look further down the page, the strong EPS growth and cash generation supported the 12% increase in dividend that we're proposing and declaring today respectively. Let's look at the segmental components of the performance. Before I start here, there's an abridged version for those of you who've been following these presentations for years of the financials. You'll be jolly glad to know. But there is a stack of slides in the appendix that contain all the normal disclosures we give around our segments, and you can look at those at your leisure.
What I'll draw attention to is the fact that our transactional revenue growth was positively affected by the burgeoning prime international residential business, which you've heard us talk about before, and by the resilience of the U.K. residential business too. On the commercial advisory side, it was affected particularly in comparison with our U.S. peer group, mainly because of our relative weighting to China and to some of the weaker markets in continental Europe of Germany and France, albeit recovering. A particular difference is our very, very low exposure currently to the U.S. capital markets. You should note that the entire globe was driven last year in volume terms by the surge in activity in U.S. capital markets, as Mike would attest.
Our small cap trans team in New York, which is excellent and grew revenues by 58%, but unfortunately, still very small in the context of the overall business. Hold that thought when we talk about the transaction we're just going to talk about. Secondly, a really good performance from our less transactional businesses. The service lines in aggregate, which were driven by consultancy growth at the upper end of our expected range. A solid PM and FM performance and our core style investment management business now coming out through the trough of last year as that investment style is coming back into favor. Let's look now at the profit component of our performance. What you see here is the impact in commercial terms of both mix, i.e., where we made our money last year.
Think less Japan, very profitable market, more Hong Kong, less profitable. Continuation of a weak mainland Chinese market and significant investment in the regional capital markets business in APAC and across Australia under new leadership. From Sydney, Melbourne, Brisbane, we've made significant strides in improving and upgrading our teams there, all during the course of around mid-year to the end of year last year. Not covering their cost at this point. That significantly affected the APAC transaction business, and you will see that if you look in the appendix. What you also see is the benefit of growth in international residential, with revenue really starting to flow through to the bottom line. Then you can see the impact of the consultancy performance, which grew significantly ahead of our normal expected rates, for all sorts of good reasons.
The return to profit in North America, in consultancy, and in project management in the Asia Pacific region. In the UK, our professional services, whether it's from rural infrastructure projects, development, planning, all grew nicely, and our valuation business was positively impacted, not just by growth, but also by its use of technology in an increasing way which improves efficiency. Finally, through a number of the line items, you can see the impact of the restructuring work we've already done. It's probably no better illustrated than in our Savills Investment Management business, where you saw revenue had stabilized, as I said, in the market conditions, but profits bounced significantly as a result of the, you know, hard yards restructuring that Alex Jeffrey and his team did last year. I should point out that unallocated costs reflect higher incentive payments.
A little bit of double counting during our significant succession process, it should be said, at a higher interest expense, due to the late pattern of H2 trading, this very strong finish in the last six weeks or so of the year. If we look at the regional snapshot for a second, the message here is about growth across the board, and there are a few highlights. In EMEA, we were driven by the resilient UK performance, as I've mentioned, very much back-end loaded. In Continental Europe and the Middle East, a return to profit, from the loss- making of the previous couple of years. That's really thanks to reduced losses in Germany and France and improvements elsewhere, particularly Southern Europe, and particularly in this period in the Middle East as well. Asia was resilient despite our Chinese exposure.
I should note here, I think we were number two in Capital Transactions in mainland China, and we did 4 of them all in the last month. That gives you a sense of how we are really benefiting from a very strong property management business in that region, which keeps going well. Reduction of activity in Japan, and the investment I talked about in a number of the other markets, particularly Australia. The upsides were growth in consultancy and the return to profit that I mentioned in project management and the growth of APAC residential.
In North America, improving revenue and a flow through of cost savings to the bottom line, despite continued significant investment in both brokerage and in our global occupier services business, and the acquisition of Move Management Consultancy, Hoffman all contributed to the result you see there. If we go to the next slide, it takes our standard underlying profit disclosure and reconciles it back to IFRS reported. We reported profits, EPS, and dividend. Everything is accounted for as usual on a consistent basis and has been for 15, 16 years now. The one thing I will draw your attention to is the restructuring cost of just over GBP 30 million in the middle. That will bring us benefits during the course of the coming year. Already has started to bring them, but will bring more benefit during the course of this year.
That is the well trailed restructuring that we, that you would already know about. I would say that having completed that process, there is a little bit of trailing restructuring costs that will fall into H1 this year. Stuff we couldn't account for last year, probably 10% or so of the number you see here. Having done that, I think we are broadly now in the right shape as an organization as we look forward. If we turn to the summary and the crystal ball, which is increasingly difficult to look into these days, what is the position as we look forward? Well, definitely momentum built through Q4, and we've seen very strong pipelines through the beginning of this year. They're the healthiest we've had in most locations around the world.
The obvious exceptions being, I would say, China, and I would argue also probably the U.K. residential market, which is pretty stable and performing very well under the circumstances. Our less transactional business continues to do exactly what it's supposed to. It's performing well, and we remain highly focused on controlling cost. Finally, we started the year slightly ahead of our own forecasts. The really critical thing is it's impossible to forecast with any accuracy the effect of the Middle East conflict and any contagion therefrom that may spread. We're focused really on ensuring that our 800+ staff, who collectively represent about 5% of profits just by way of background, are kept safe through this period. That's what management here and locally are completely focused upon.
Subject to how that pans out, I think we're pretty well placed to improve our performance in 2026. What we'll do now is move on to the, a sort of laying out of our strategy. Now, it would be really odd if after 17 years I was going to move sharply left or right strategically. I think it though is very useful to set out here the core principles of why we exist and the key building blocks upon which our strategy is based. You can see along the bottom of this slide a number of key building blocks, as I mentioned. I'll really only draw attention to one in particular, and it's one we've sharpened up in recent times, which is to reassert the importance in this organization of our high-performance culture. It's absolutely vital.
It's a core tenet of Savills, and I think we really have reasserted that through last year and into this year. In terms of capital allocation, to focus the organization, and I have to smile when I say this given what's coming, on fewer but more meaningful transactions that might actually turn the dial. It's fairly obvious from what we're about to talk about, but, and you can certainly see that from today's announcement. I think that is nuanced difference rather than a material departure. What I'd like to do now is put our service lines into sort of strategic context because I think it's quite an important way. It's the way we look at our business, and it might help you to do the same.
The key strategic thread which stretches from our foundation in 1855 right the way through to today's announcement is that Savills raison d'être is and always has been to help clients maximize the performance and value of their assets. We've been doing this for 170 years through war, pestilence, and plague. Of course, for a generation now, the markets we serve have themselves been evolving with a progressive institutionalization and, of real estate and its close sibling, infrastructure. It was a completely accepted and growing asset class globally for investors from sovereigns through private equity, listed sector, and family offices. Not only has technology in the sector itself advanced, but the financial structures and the language have evolved, and we have had to evolve to remain relevant. Just hold that thought for a second.
Here, many of you have heard me speak of the pyramid of service lines that we operate in the business. Clearly, transactional advisory is at the apex of that pyramid down through investment and asset management, the suite of consultancy services, and then its very strong broad base of property and facilities management. Now, the arrows on either side indicate the relationship between the volatility of revenue in the sector and the potential margin that one can obtain from these activities. It's not totally accurate by any means, but it is directionally representative. Our core strategy is to build that base of the pyramid. It's almost the boots on the ground, if you like, and a huge source of data into the organization.
Grow the suite of consultancy services, not just here, but exporting them around the world as the markets that we operate in are ripe for those services. Finally, to build that array of transactional advisory services you can see at the apex of the pyramid. Now, that part of the pyramid has a bit of weird color coding, and I'm told the base color is teal. Okay? I know nothing of these matters, but it's teal. The lighter the color, the less exposure we have to that element of the service. Now, again, this isn't completely accurate. We do do some M&A. We do do some strategic advisory. We certainly do some debt placement. We clearly advise on disposals.
It is there to show the relative growth opportunities. That, if you put those together, collectively form the real estate investment banking type operations that today this transaction is going to answer. I've kind of set out what we're looking to achieve. What are our priorities? Flip the page. Clearly to establish a position as a global leader in those transactional services, including real estate investment banking. That is really important, and there's no change in our intent to continue to fill out all of our less transactional businesses, as well. What we do aim to do within those less transactional businesses is to grow them at consistently around the high single digits across the cycle. We'll come on to today's announcement in a moment, but before that, we'll briefly cover some of the other strategic priorities that we have too.
If you could flip the slide. That's brilliant. The three planks on this are international coverage of our key service lines, the development of the global high-end residential business, and the strategic development of our investment and asset management business. If we start with the key markets, you can see a number of initiatives here, some of which is really block and tackling, so building out and scaling of PM and consulting across Europe and Asia. I would say that the nuance change here is that I support us building with real focus and conviction on in chosen markets rather than seeking to put bread on the water across the entire waterfront. I think again, today's announcement probably indicates a high degree of that focus.
Taking APAC as an example of this, last year was a year, as I said, about building Australia, really focusing on new leadership and building our capital markets and other service line capabilities. That process still continues this year, but 2026 and 2027 is much more focused on Japan, another key market that we seek to build. Adding to that, alongside our Southeast Asian operations, which we're completely committed to, we are absolutely committed to India and to our strong Chinese business for the long term. The bigger one to scale is our U.S. business and both our existing occupier-focused organization. It's not just scaling it, but also diversifying the sectors it's operating in. We made great strides this year in logistics, for instance, which you will see in the appendix in due course.
Today's announcement also delivers the one thing that a candid number of people in this room have been crying out for for years, which is a preeminent capital markets business in the United States, the biggest capital pool, capital market for real estate in the world. That is critical, and the connectivity with our group is going to be significant. Prime residential, I said, is key, and I believe that while we've obviously made great strides to date, I do genuinely believe that the prime and super prime residential market globally is white space that the Savills brand can and should occupy. You'll see we've done a lot of that over the last couple of years. You've seen some of the benefit in the numbers I showed you of where we've got to date.
That is a core focus for our residential operation, and it does help to cement our relationship with the world's wealth too. Finally, for now, the development of the investment and asset management business, it's really around two things. It's around core conviction-led products, and that's discretionary products in the areas of our real capability, and particularly around Europe, but also in Asia. That would be living and logistics, for instance. Together with creating a platform which is a great partner or local operating partner for the world's private equity. We do a lot of that already in Southern Europe, and we're building that through the course of the Savills Investment Management platform.
As I hand over to Nick, I do hope that the last few minutes have given you a sort of sense of focus as to where we're taking this business. I'm incredibly excited about it. I think there's a real spring in our step. I will hand over to my very new colleague to take you through the numbers associated with all of this.
Thank you, Simon. Good morning, everyone. What a morning to be joining the Savills board. It's been quite an introduction to life at Savills. Now, the clear strategy Simon has laid out, when combined with delivery against our KPIs and targets, positions us to drive meaningful margin improvement, one of our key financial priorities. Starting with transaction advisory. Our teams are well positioned for market recovery as we seek to be a top three player in all our target markets and return to generating 10%+ underlying PBT margins as we leverage our operating capacity. Across our consultancy and property management businesses, we'll aim to combine both geographic and service offer expansion with market share gains so as to hit average annualized revenue growth of around 10%.
We're looking to continue generating high single-digit to low teen margins in consultancy and mid-single-digit margins in property management. Turning to investment management, we will focus on our clear areas of sectoral expertise while looking to scale our platform and consistently deliver healthy investment outperformance for clients. Over the medium term, we're targeting a margin of 20% or more from IM. With clear revenue and margin growth ambitions, we will also be maintaining our capital allocation discipline and balance sheet strength. Our strong cash flow generation, including the underpin from our resilient less transactional earnings, supports our policy of running with some low financial leverage. Ordinarily, we would expect our year-end net debt to EBITDA ratio to be around 1x or less.
Opportunistically, we'd be comfortable going a little higher, such as to finance a highly compelling cash generative acquisition, provided we have good line of sight on relatively quick debt paydown, as we do on today's transaction. We'll continue to drive organic growth, leveraging our capital-light model with ongoing investment in our platform, people and technology. We will also pursue targeted M&A where there is a strong strategic, cultural and service line fit, but only when the prospective financial returns are compelling too, ahead of our cost of capital and accretive to EPS with an attractive stabilized return on capital employed. Finally, we will maintain our attractive shareholder distribution policy. Our progressive ordinary dividend is well supported by our less transactional earnings, with the supplemental dividend driven by the transactional earnings performance.
All in all, we're looking to more than maintain Savills' track record of delivering double-digit annualized total shareholder returns, as the group has done since 2007. Now back to Simon to run through the big news of the day.
Thank you, Nick. For many of you, this, you will note that this is the first time we have put out long-term targets, which I think is a good thing. We're now gonna take you through the acquisition of Eastdil Secured, and I am so excited about this. I think it's something, as I said, I've wanted to do for some years. To be frank, over the last year, the stars have aligned, like, to enable us to do it, which is fantastic. I do want to point out very, very clearly, this is not a transaction for today or tomorrow or next week or next quarter. This is a deal that will superpower this organization for the next generation. It is that important to us to do it.
I think that I should also say it'll be important in the mutual growth of our two businesses. This slide summarizes really the rationale, the fit, and some of the financial metrics of the transaction. I won't dwell on those because Nick will take you through those in a moment. I will go a bit into a bit more detail on a few things. First of all, this is not some opportunistic deal dreamt up by investment bankers. We love you, and we particularly love those of you in the congregation today. We've known each other for years. We've worked, as I said, alongside each other and across the table from each other, and we respect and admire each other.
I can honestly say, I do not believe that in this industry, there are two more compatible major players who could come together. It's not often you can say that. We've noted some of the deals we've worked on in the appendix for you. This is so genuinely a strategic, you know, combination of two great businesses. One of the brilliant things about it is there is very, very little overlap, whether it's services, locations, or clients. This creates, to use that banal phrase, but I think it's right here, this creates a lot of white space for the combined group to move into and to bring a broader suite of services to each of our clients. I think that's hugely exciting. I can see some of my capital markets colleagues nodding their heads in the audience at the moment.
I'm glad you agree. The one other thing is that I think the cultural fit is absolutely palpable. We may do largely different things around the world to date. Some similarities, as I've mentioned. The culture is extraordinarily similar. Although I don't know whether your receptionist would have said that to you on the way in this morning. There we are. She might have done. I'll start with some quick overview slides before handing over to Mike to tell you about the firm that he's been instrumental in building for a significant period of time. If we start with the deal, and you've read all of this in the release, but for good order, I'll just run through a few key points.
We're acquiring, subject to the regulatory approvals we require to get, in various locations, I should say, 100% of the equity interests of Eastdil Secured Holdings LLC and affiliates in a ratio of 60-40 cash and equity for a total of GBP 685 million. I'll say right from the start, picking up on Nick's point, we are using Savills' strong balance sheet to part-finance this compelling strategic move. Nick will give you the stats and lay out our commitment to pay down debt out of strong cash generation. Eastdil Secured's current shareholders represent three institutions, so Temasek, Guggenheim, and Wells Fargo. Our 85 senior employees will be subject to lockup arrangements on their shares. That really aligns all of our interests in delivering significant value for shareholders over a long period of time.
Finally, we believe the price and transaction structure is absolutely fair to all parties. I do think this transaction will have a real halo effect on all of our business. We've deliberately adopted a very cautious approach to the quantum and timing of direct revenue synergies that we've disclosed in this transaction. I should add here, there is no intention for any redundancies associated with this deal or any change in compensation arrangements in either group. We flip the slide. I think every presentation of this nature requires a killer slide. This is the one that encapsulates in a nutshell why we're so keen on this combination. What it shows is the global value of real estate traded over the five years, 2021-2025, in lot sizes of greater than GBP 100 million.
It's a proxy for the big deal doers. In Eastdil, we are buying the number one player in the U.S. market. Collectively, we move solidly into the number two position globally. You should also be aware that clearly for large parts of this measurement period, there are significant parts of our world that have been pretty weak in terms of Capital Transactions markets. I think that is an incredibly strong story. What this does is significantly enhance our position in the eyes of investors globally to whom the enlarged firm will provide a serious choice of a full-service advisory firm. You really can't say more than that. If we do unpack the thought a little and flip the slide, what you see here is the before and after wagon wheel of our service lines exposures.
What that shows is that 76% of Eastdil's class leading capital markets business is in North America. In combination with Savills, this immediately creates a preeminent position for us amongst the world's most significant real estate investors and will allow us to bring forward plans for ancillary services to them, which today we have not been in a position to do. It does a number of other things too. It brings a first-class financing capability, debt, and equity to our larger occupier and campus clients. Whether it's development or construction finance or indeed triple net transactions, it gives us the opportunity to bring those service lines to our large occupier client base of the current Savills business in the US.
In APAC, Savills has the local connectivity and the relationships across the investor market to enable the expansion of Eastdil service lines into that market. I know you already do some very big transactions, but I think there's a hell of a lot more we can do together to serve clients in that part of the world. Finally, in EMEA, the combination of two strong advisory businesses brings investment banking and deep property intelligence and skills to become a compelling prospect for clients. I think that really mustn't be forgotten in all of this. It's terribly important. I'll now hand over to my soon-to-be colleague, Mike VK. He's been waiting patiently to tell you about the business that he's built over all these years.
Thank you, Simon. It's good to meet a number of you and be here today. What we were doing on this slide is just to give you a little bit better picture of what our business looks like, for some people who are familiar with us, some people aren't, given that we are heavily U.S. I'll highlight a few things in the boxes on the left-hand side. That top left, as Simon mentioned, we're fortunate to have a number one market share in the U.S. of $100 million+ transactions. As we see in the world right now, the U.S. capital markets are the deepest and most liquid, and that really drives big opportunity going forward.
On the top right, I think that if you can see that, we are fortunate to do about GBP 200 billion a year of transaction activity in the capital markets business and our investment banking business, with only 450 client-facing professionals. That's analysts through Managing Director. I would say that, you know, one of the key things to be able to do that volume with only 450 professionals is really the culture of the firm, which I think we share a lot together, and that has been the biggest as we've gotten to know each other and dated for a while. It has been a unique culture because what we do in our culture is we really have driven home this internal collaboration. We're externally competitive.
It's a very competitive business, but we want to be internally collaborative by doing a single global bonus pool and sharing ideas and relationships and information across the firm to really drive the maximum outcome for clients. That's been a big part of it. I think the third thing I would point out to you is that third row across, the middle one. We are number 2 in the U.S. in terms of total debt placement, so arranging financing for clients, corporate clients, investor clients, developer clients. But we are number 1 on the average loan size. You know, we are known for bigger deals in transaction, bigger institutional deals. Our average loan size that we arrange in the U.S. is $225 million. That's the average transaction size in our financing business.
That is three and a half times bigger than our nearest competitor. Our nearest competitor's average transaction size in debt placement is $60 million. I think what you know what we really like about the debt placement business, and I'll talk about the business lines on the right, but it does have you know financing is something that needs to happen regularly, whereas you know M&A transactions, investment sales, JVs tend to happen based on the move in the market. That is a super important part of our business, and it goes very well with the others. I'll point to the next one is the bottom left. You know, as Simon pointed out, about 76% of the revenue comes out of the US, about 24% here out of EMEA, excuse me.
Sounds like I'm American. I think what's interesting for us is we see big opportunity here in Europe too. 10 or 15 years ago, when my partner, Roy Hilton March , who runs the business here, set up our European business with us and built out an amazing group of about 100 professionals here, Europe was 0% of our business. It was a big business to begin with in the US, and then being able to get to almost 25% over the last 15 years. This combination, in our mind, creates so much more additional opportunity here as well as in the US. The last box I'll point out is the bottom right, which is the average margin that we run was about 18% EBITDA margin.
Again, I think that obviously, bigger transaction activity, it's a bigger margin business. I will also point this to having a very unique bonus system and culture around compensation. We've chosen to run a single global bonus pool. We run one P&L across everything. We pay people once-a-year bonus that is tied to that global profitability. We don't pay off of gross revenue, we pay off what is the net income that the firm generates. That creates a lot of incentive internally, naturally, to, number one, collaborate with each other because we're all being paid out of the same bonus pool once a year. Number two, it makes, you know, everyone's watching the expenses because expenses drive down the bonus pool, dollar for dollar. Everyone's got a natural incentive to watch what we spend.
Number three is this major desire to cross-sell and create synergies around our business lines to grow that overall top line because it grows the bottom line. I think the margin that we're able to enjoy has really been, as we keep bringing up culture, driven by a culture of being uber collaborative internally and really pushing everyone to perform, given that we all need to hold each other accountable. Those are some of the things on that left-hand side. The right-hand side just kinda highlights the various business lines that we're in. You'll see at the top is our M&A business. This would be traditional advising large clients, particularly private equity clients, big REITs on doing major strategic transactions. That business is obviously a big fee business but is a volatile business.
The next one below that is the continuation vehicle and joint venture vehicle. We see as investment managers around the world continue to grow their AUM, and that is obviously a big push. The big investors are getting bigger around the world. There's a growing desire to have multiple different funds and move funds from when one strategy is matured, potentially buy those into another fund, create a continuation vehicle or a joint venture. We do a lot of that. The traditional asset sales, which is part of the core of the business, clearly been there. The debt placement business, which drives a lot of the ability to cross-sell back and forth and liquidity.
Our debt advisory business, our structured credit business is really one of the exciting things to work with the tenant business in the U.S. in particular, and the occupier business, because there are so many different places where occupiers are going to either build a facility, lease a facility. We wanna look at, help them look at their balance sheet, how to best finance that short term and long term. We see a lot of opportunity there together. We rotate that around to our loan sale business. That's what I'd call our countercyclical business. It tends to go down when the markets are good. When the markets get bad, lenders are looking for liquidity, it goes up. Our capital formation business, which is really raising funds. We did a very large digital infrastructure fund for a big REIT this year.
Global raise of over $3 billion for them in a discretionary fund. Then last is the traditional corporate finance business, which is, you know, helping corporations identify ways to monetize assets and best use their balance sheet. I'll go to the next slide. The left hand just kind of gives you some samples of some of the bigger marquee transactions, and some of the things that we're known for. I'll highlight the left-hand side. That's a transaction we did last year for Blue Owl. That was a $18 billion data center financing in the U.S. One of the largest financings done in the data center space.
The digital infrastructure space continues to be a huge growth opportunity that we've got going on. The next one next to that is the deal we also did last year where we served as financial advisor to Ares in their $5 billion acquisition of GLP. GLP was an investment management platform with about GBP 44 billion of assets under management. We served as financial advisor to Ares in their acquisition of that platform. The middle one there near close nearby, in 2022, we did a $1 billion financing on Bishopsgate for a partnership that's owned by AXA, PSP out of Canada, Temasek and QuadReal also out of Canada. The next one there, the GIC one, this is a very marquee transaction. We represented GIC.
We're their financial advisor in a $15 billion acquisition of STORE Capital, which is a triple net lease REIT. We did that in 2023. The last one on the right side, which is an example of a continuation vehicle, this was one of the biggest real estate transactions ever done, again, done here in Europe. We acted as financial advisor to Blackstone on the EUR 21 billion recap and continuation vehicle of Mileway logistics company in 2022. That just gives you some sense of the type of opportunities we have to work with some of the biggest investors around the world. In the right-hand side, we just highlighted some of our top 20 clients around the world.
Those clients, just those 20 that you see on that list, which would be the 20 of the biggest in the of the firm, represent over 1.6 trillion of assets under management. We're very fortunate. We talk about a lot in our firm that it is decades not deals. It is so important to be the trusted advisor to these big clients so that you're the go-to person that they can trust to be quiet, discreet, protect their information, but give them great advice by leveraging around the talent around the firm and around the world. If we go to the next slide, so this is our revenues, and that's never a good sign when it's like that. I think what's interesting, you know, obviously we're heavily U.S. business.
You know, the commercial real estate markets had not seen a major downturn since the GFC in 2008 to 2010. It felt like before that in my career, I started my career in 1985, we were lucky if we had about five good years followed by two bad years. The market had almost 15. You know, a very long run at 10, 11, 12, 13 years after the GFC, 2010 to 2022. Then the Ukraine war hit, inflation hit very hard, and we saw a major contraction and repricing of assets. You saw the revenue dip pretty steadily there to 2023. Now, it still was profitable, and that was because of having the loan sale business, the debt placement business, the different advisory businesses.
I think the trajectory now that we're seeing, and we're seeing you can't eat pipeline, we can't necessarily predict pipeline, you know, particularly in the current environment with the geopolitical environment globally. We are seeing a very strong resurgence as transaction activity picks up coming out of this downturn. Then the right-hand side just gives you a sense of the margins that we've run over this year and the profitability. Again, you know, 2023 being the nadir, but still a profitable year, again, because our compensation's tied to our net income, not our gross income. We've never had an unprofitable year in the history of the firm, because if we're unprofitable, we don't pay our people very much. Hopefully, when we are profitable, we can make up for that.
I think that covers all that I have, but I'd be happy to join Simon if whatever else he needs me to talk about.
Brilliant. Thank you, Mike. You do see on that previous slide the benefit of that debt advisory service and the loan sale in the downturn. It's not quite, as I said, our property management business, but it's a real solidity to the P&L in difficult times. I, for one, am very excited about working with you and the team, and what we can achieve together. I'm not gonna dwell too long on this slide, and we'll try and speed up a bit for you for the rest of this. This sets the two businesses side by side in terms of service line. Again, it's directional, it's not absolute.
I think what you can see is the near perfect filling of gaps or the relatively smaller provision of a service that we have today alongside our you know long-standing desire to grow those businesses. I do think this transaction effectively supercharges the capabilities that we already had in some cases in a nascent way. Debt advisory would be a classic example of that in the middle of the slide. Here you see the one tick. We do have it. It's EMEA solely and a strong desire to grow it. We will be combining with the class leader in this sphere. Over on the right we've set out a number of areas where we see potential growth through the combination. Again I'm not gonna go through that in detail.
The crucial point here is you only get these things if you have alignment between you. If we flip the slide, you've met Mike today, and I can assure you he's part of a truly impressive management team who've built this business through thick and thin and remain energetic and hungry and with a continued desire to win. As I said, both firms' long history with each other on both sides of the table has really attested to the fact that we have a natural cultural alignment. Looking at some of my colleagues, the conversation about bonus pools in the last section absolutely proves that point as well. We both share a relentless focus on the needs of the client.
Finally, in this transaction, the Eastdil Secured's existing incentivization program and the strongly equity-focused element of the transaction ensures that the team is clearly aligned collectively to the success of the enlarged group, which is important. I'm gonna put another slide, and I think this is almost the second killer slide. Before I hand over to Nick to deal with the metrics of the deal, I'd just like to focus on the market context. This picks up some of what Mike was saying and some of what I was saying earlier. What you can see from the chart is that although there's been growth in the real estate investment volumes through 25, actually, if you look across, as I said earlier, we haven't quite matched the COVID year of 2020 globally yet.
You need to look at both this transaction and the forecasts that are projections, I should say, that are there on this slide for global real estate volume growth in that light. We are nowhere near in a go-go top of the market situation right now, and that is important when it comes to timing and the stars aligning around this transaction. Likewise, if you look at the right-hand side, and this is that classic wall of debt maturity theory, but this really is what will drive the, not only the debt side of the business, but also clearly it prompts equity-type transactions as well as refinancings. I think that will also hugely benefit our combined capital markets business.
As I said earlier, this is a move that will fervently power up the organization, not just now, but for a very long period of time. With that, I will hand you over to Nick to go through the numbers.
Thank you, Simon. Not only do we think this combination will enhance outcomes for our clients, it will enhance financial returns for shareholders too, particularly through margin accretion. We've set out here the standalone 2025 financials for Savills and Eastdil, along with a pre-synergies pro forma. The combination will give us more scale, lifting total annual revenues above GBP 3 billion, including a 70% uplift in commercial transaction revenues. As you can see in the bottom pie, total transaction revenues would be around half of group revenues. Underlying EBITDA rises materially too. To aid comparability and ahead of undertaking a full GAAP conversion exercise, we show Eastdil's GBP 84 million US GAAP outturn alongside our GBP 154 million pre IFRS 16 results, which also broadly aligns with the EBITDA metric used by our lenders.
Both numbers are presented in line with the group's accounting policy of excluding exceptional non-operational items from underlying EBITDA. Taken together, this gives an EBITDA uplift of more than 50% and margin uplift of nearly 2 percentage points, while also increasing annual operating cash generation to more than GBP 300 million. Attractive combined financials even before we consider synergies and accelerated growth opportunities. As you heard from Simon, this combination positions us as the number two global real estate advisor on bigger deals and will create a significant halo effect, helping drive new client wins and market share gains. While there's a clear opportunity to deliver new service lines to the enlarged client base, in particular accelerating the group's growth strategy in the U.S. In terms of direct quantified synergies, these are driven by the provision of existing services to each other's existing client base.
As a result, the combined teams conservatively expect run rate revenue synergies of more than GBP 60 million a year, representing around 2% of the enlarged group's pro forma revenue. These synergies should generate more than GBP 15 million of annual EBITDA in the medium term. Importantly, these identified synergies are not overly dependent on any single geography, any single service line or any single client type. While this combination will drive growth, as Simon said, it is being enabled by our strong balance sheet, which we will be maintaining. The team have arranged an attractive $800 million debt facility from a couple of existing group lenders, which we expect to refinance through a flexible term bank loan and longer-dated USPP notes, a market that we know well.
As you can see on the right, on a pro forma basis, leverage will be 1.8x and with strong cash generation set to deliver a meaningful reduction by the end of this year. All else equal, we expect around 1x leverage at the end of 2027, giving us scope to pursue further growth opportunities. We have a strong underpin to leverage too, with our less transactional activities generating more than GBP 110 million of underlying profit alone. The enlarged group's through-the-year cash flow profile will be broadly similar to Savills' current one. This is a financially compelling transaction across all of our key metrics. We expect low- to mid-teens% EPS accretion next year, even before considering synergies and high-teens% group return on capital employed by 2028.
We expect to generate low teens unlevered pre-synergy returns on invested capital in the medium term, well ahead of our WACC. The group's EBITDA margin will be enhanced through more higher margin investment banking revenues. Finally, with strong cash generation and in line with our commitments to disciplined capital allocation and our attractive distribution policy, the combination also enhances our ability to deliver sustainable shareholder returns. Now back to Simon to wrap up.
Thanks, Nick. I'm conscious that we've tried to cover a lot of ground today, and it's been a bit of a marathon, so bear with, we're nearly there. Guess what? This transaction fills in beautifully the rest of my pyramid, and I'm absolutely delighted that it gives us the ability to grow every aspect of that pyramid as we grow over time. We'll only do that by executing the strategies that I laid out earlier. I'm genuinely excited by the opportunities to serve our clients with a broader range of services. I'm really excited by the combined opportunity to enable our staff, not just to do well, but in the mantra of Savills, to be extraordinary together. I'm really excited by the prospect of the shareholder value that we can create very significantly over the coming periods.
I'm not going to go through this slide. We talked about the outlook earlier, but what I will do is say, I need to say thank you very much to all of our employees for really working at it in 2025 to give us the results that you gave us. It's massively appreciated, and it's part of the Savills culture where nose to the grindstone come rain or shine. I'd lastly say to you guys, we put you through a bit of a marathon this morning, thank you for that. Please don't hesitate to ask any questions you may have. Alternatively, given the time, we will be around for a moment or two afterwards if you'd like to talk to any of the three of us. With that, thank you very much indeed. Questions. Millie.
Thank you. There's no microphone.
No, there is.
There is. Both sides. Thank you. Chris Millington at Deutsche. I suppose the first question is to both you, Simon, and you, Mike. Kind of why now? Why one another, I suppose, is the first one.
Well, shall I start and you tail?
I think the why one another, I'd hark back to the point I made earlier. I genuinely think on every measure, from cultural compatibility to service line to client to lack of overlap, et cetera, it would be very, very hard to find two big players in this industry that fit together so well. Just complete complementarity. I think that is straightforward. The now, well, we've been badgering a bit for some time, but the stars do align at times, and I think everybody realizes as the world evolves that, in fact, if we were going to do this, now is the time to just get on with it. Mike, do you want to.
Yeah, no, I agree with that. I think we were looking at opportunities to grow and have a cultural compatibility and really have a symbiotic transaction that didn't have a lot of overlap. I think that was super interesting to us, and at the same time, looking for that growth and that opportunity to grow other business lines and opportunity to do well as co-shareholders with the people in the audience. You know, the market is, you know, we've watched these markets. They turn, they bottom, they start to accelerate, and if you're positioned well when they start to accelerate, business begets business. We're in that part of that cycle where this becomes very, very accretive.
The flywheel starts going, and by having us together, there's a flywheel of even more business lines that the firms can cross-sell together and drive overall EBITDA to the enterprise.
Next one's just about the journey of Eastdil.
Yeah.
You know, we've seen a reference to an article out there saying it was acquired in 2019 at $400 million. Obviously, it's been a good return. I'm just curious really about what's changed over that period. How has Eastdil matured.
Sure
You know, why is Savills paying, you know, more than you did?
Yeah, the price that was reported that was paid is below what the actual price is, so just put that out there. That was, you know, the firm is almost 60 years old. We were a wholly owned subsidiary of Wells Fargo for 20-plus years. Had a very good opportunity with them to grow and it was a very good financial return for Wells Fargo, and they're the biggest real estate lender in the country. In 2016, the regulatory environment changed. You know, that became harder and harder for a commercial bank to own a real estate investment bank, particularly one that did property type transactions. There are certain restrictions on that.
It really became a point to where we agreed together with Wells Fargo that the firm needed to move outside the wire, so to speak. We did a transaction where Wells Fargo was able to retain the most they could retain without us being under the regulatory environment, which unfortunately was only 4.9%. We worked collectively together to bring in Temasek and Guggenheim Investments to partner with management team in a collaborative transaction with Wells Fargo to take the firm into a management-led recap, but outside the regulatory environment of a large bank. Sure enough, three months after that transaction, COVID hit, and it was a little.
Sorry, let's say that, but the reality was it allowed us, you know, with the relationships that those three investors bring and they have come moving forward with us in this transaction, albeit in certain reporting, it allowed us to really continue to grow the firm, and really build out business lines, whether it be in the data center business, whether it be in logistics business, housing, really build those out more fully. Those have allowed the firm to continue to grow in revenue and profitability. You know, we're now almost, you know, in October will be seven years since that transaction occurred.
There was no specific clock that we needed, but we all collectively, our shareholders and us, decided this was the time to find how do we take it to the next level, leveraging the opportunity. When this became available out there, the possibility of doing this transaction, it really was a situation we saw, "Hey, this could be 2 + 2 equals 6, 8, 10 if we do this right." That's what led us to do what we're doing right now.
Final one, and I'll be quiet. First time you've ever put targets out there.
Yep
Look quite ambitious from a margin point of view, albeit not dissimilar to where you've been in the past. How should we think about timeframe on these targets?
We talk about medium term. That's basically 3-5 years.
3-5 years.
Yeah. Joe, I think you had a hand up.
Thanks very much. Joe Spooner from Shore Capital. The revenue synergies you talk about, I guess instinctively feel relatively modest given the opportunity you describe. Perhaps you can just talk a little bit more around what you're kind of specifically looking at there and maybe what isn't in that number. Secondly, you've grown this business being very careful to balance the less transactional side with the transactional side. This swings you more transactional, and I just wonder how you think about that less transactional side as you move forward? Thanks.
Should I start? If you kick me if I get this wrong. I think the synergies, I said we've been very cautious on the synergies. Just actually by way of background, the synergies that we've clearly articulated are actually exactly the same as in terms of percentage of revenue as those that were articulated when JLL bought HFF, which is the most analogous transaction in the industry thus far to date. I think we're all careful. I know perfectly well, you know, markets don't give you credit for revenue synergies, they give you credit for cost synergies. This is not about cost synergies, but we feel confident enough, and it's a sort of measure of confidence that we've had to put a number out there.
The reality is, if we get this even half right, the reality will eclipse those explicit numbers. What we deliberately did was made sure we looked at locations in the world where we provide a service which is applicable to Eastdil Secured's client base and vice versa, and took a very small proportion of that client base's potential need for that service. Very small. Infinitesimal, in fact. We also projected a very long period of time for those synergies to come in. To be honest, I would argue the next two reporting events will completely outlive any synergy forecast we've made in this presentation, without question.
Joe, it's probably worth adding, you know, clearly, as relatively new into the seat, getting up to speed on two businesses, two sets of numbers. For me, when it came to the synergy work, the real focus was just ensuring that the right process was run through, that if in doubt, we went for conservative rather than aggressive. I think the fact that we've put out a number which is relatively unusual, I think as Simon says, suggests our confidence that they will come through. Equally, when underwriting the transaction, we were comfortable doing it on a pre-synergy basis. Crucially when underwriting the transaction, clearly the lead metric we're using is the earnings accretion. Actually, for me, the more relevant number is the return, the unlevered return on invested capital.
If we are, as we're saying, we're guiding to mid-teens%, our cost to capital is, say, 9% or 10%, that to us is a healthy margin for the risk that we're running, particularly given the upside that we're not factoring into the numbers.
Joe, I've got to apologize. We three have been up all night. I cannot remember what the second question was.
Sorry. It was about the balance between the less transactional side.
Yes. Yes, of course. Now, I think if you picked up what I said earlier, Eastdil Secured's revenue is not all the top volatile parcel of transactional activity that and Mike referenced this earlier. I think what we're comfortable with is the strategic connection of the two businesses firstly, and the ability for us finally to access the U.S. market directly. I would also argue that debt advisory strip is a very repeatable or recurring business line within the transactional segment. What I think you'll find is that we're increasingly going to see the obvious appearance of resilience and a relatively different levels of volatility with market activity, even within our own transactional environment. That's position number one. Position number two is we are gonna continue to grow.
That's why I said this enables us to grow the size of the base of the pyramid and the entire pyramid itself over time. We will continue to drive. We gave indications through Nick of the growth rates of our less transactional business, that everything we do today is equally important tomorrow as it is today. Clyde.
Thank you. Clyde Lewis at Peel Hunt. Simon, you mentioned you've got to get some regulatory approvals.
Yeah.
How burdensome are those?
Well, I think regulators the world over don't like the target of the approval saying how easy or difficult it's gonna be. They are standard customary. It's FCA type approvals for the businesses that we're talking about here. I don't expect there to be a significant issue.
Okay. Second one was around, I suppose, the growth markets that I think you referred to. One of the slides popped up. I haven't got the numbers now, but in terms of the outlook for Eastdil for this year in terms of the refinancing and the sort of flow of Capital Transactions you expect to see. I suppose, have you already started to see those coming through in the first couple of months of the year, and sort of what sort of balance of sort of timing do you think that will come through over the next couple of years?
Yeah. I think what we are clearly seeing, again, being cautious about, you know, engaged transactions. We're seeing, you know, close to the highest revenue of engaged transactions. Not closed, so they've got market risk, but they've engaged. We're seeing nearly the highest we've seen since 2020, peaked at 2021, so. First two months, you know, absent the conflict in the Middle East, things have gone well and they're, you know, clearly accelerating. I think the continued length of the conflict in the Middle East makes things a little bit shaky. What we see in terms of transactions that clients want and need to get done this year is accelerating across all the property types and all the business lines.
Second one I had was probably a combination for Nick and for Mike around probably cash flow of Eastdil compared to Savills. Obviously, there's been a historic second half bias, and particularly around sort of bonus accruals. Is it a similar sort of situation within Eastdil?
Our bonus accrual tends to track our net profitability every month. The transaction cycles tend to be second half loaded, particularly in a market where transaction activity is accelerating. Depending on the year, it will be 40% of the revenue in the first half of the year, 60% in the second half of the year. If the market's falling off like it was in 2003, that may flip the other way. Things tend to get going and people end up getting closings in the second half of the year, so you do see that natural trend line where revenue accelerates, particularly in the fourth quarter in the US in particular, as people head to year end.
I think I would say broadly put the two businesses together, similar seasonality of revenue, similar seasonality around the cash flow cycle as well, given as you know, for us, big outflows in the first half are the dividend and year-end comp. Similar timing for comp around at Eastdil.
The final one I had was around accounting and we're obviously looking at U.S. GAAP versus IFRS 16. A bit boring, but what's your best guess as to?
I said I'd be trying to get my head around two businesses, two sets of numbers, and three sets of GAAP. I hadn't realized there was frozen GAAP as well thrown in. What I would say is that what we try to do in the deck here is give you some early building blocks. For the first time, we've disclosed, and we will continue to disclose, our EBITDA number. We've also disclosed, which is clearly on a pre-IFRS 16 and on an IFRS basis. We haven't got the exact comparable. I don't wanna give you that yet. I think that'll be inappropriate. What I can do, though, is give you some guidance around UPBT 'cause we've disclosed about $84 million of EBITDA from Eastdil.
You can work out there's about GBP 30 million annual cost for the finance over the early years. There's probably circa GBP 10 million for D&A. You're getting to an underlying PBT contribution of about GBP 40 million. Take that in very simple terms, 40 over our existing is up 30%. There's some dilution from the shares, about 18%. That's how you get through to the earnings accretion. What we will do, by the time we get to the half year, A, hopefully we'll have clarity about timing of closing, but B, we'll also have been through the GAAP conversion process, so we'll be able to give you better clarity numbers for the full year, but also for 2027.
Perfect. Thank you.
Any more?
We've got time for one last one.
Go on then.
It's something our sales team was asking this morning. It's about retention in a human capital business. You've given us some stats, but I just wonder if you could flesh it out and give us some confidence that, you know, you're gonna retain the key people then.
That's a lovely question to finish with, isn't it, Chris? I think what we're not gonna give you is chapter and verse on the overlay, the mosaic of largely equity related interests that are part of this transaction. I would suggest that it is very strong alignment, as I said earlier. It's meaningful to every participant in the scheme, and it is for a period of time which gives Mike and me the opportunity to make sure we create the environment that everybody wants to continue to thrive in. I've got no worries about that.
Thank you.
Well, everybody, thank you very much for being so patient. We've got more work to do, and so have most of you actually in the audience. Thanks very much indeed, and we look forward to updating you at the AGM and then obviously at the half year. Thank you.