Welcome to the Colliers International Fourth Quarter Year End Investors Conference Call. Today's call is being recorded. Legal Council requires us to advise that discussions scheduled to take place today may contain forward looking statements that involve known and unknown risk 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 securities administrators and in the company's annual report on Form 40 F as filed with the US Securities And Exchange Commission.
As a reminder, today's call is being recorded today, Wednesday, February 12 2020. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chief Executive Officer and Chairman, Mr. Jay Hennick. Please go ahead, sir.
Thank you, operator. Good morning, and thanks for joining us. As the operator mentioned, I'm Jay Hennick, chair to the chief executive of the company, With me today is John Frederickson, Chief Operating Officer and Christian Mayer, Chief Financial Officer. Before we begin, I'd like to congratulate both John and Christian on their recent appointments. They're both well deserved and they demonstrate once again the depth of our leadership team.
So congratulations, guys. As always, this conference call is being webcast and available at the Investor Relations section of our website. A presentation deck is also available there to accompany today's call. Earlier today, Colliers announced another solid year of revenue and earnings growth with strong results across each of our service segments. For the quarter, revenues were $928,000,000, up 5% in local currency.
Adjusted EBITDA was $144,000,000, up 10% and adjusted earnings per share came in at $2.01, up 14% against a very strong 4th quarter last year. For the full year, revenues topped a 3,000,000,000 milestone for the first time, up 10% over the prior year, Adjusted EBITDA was $360,000,000, up 18% and adjusted earnings per share came in at $4.67 per share up $0.14. In a few minutes, Christian will have more to say about our financial results, then John will offer his comments on our operating performance Last year, we completed a total of 4 acquisitions, including the strategically important acquisition of Synergy Project Management, the market leader in India, one of the fastest growing economies in the world. Exceptional team of professionals with deep institutional relationships that we expect to leverage significantly as we expand our operations in this During the fourth quarter, we also announced an agreement to acquire Doherty Financial, a leading debt finance and loan servicing platform in the U. S.
The transaction is expected to close in the second quarter. And then in January, we acquired our former affiliate in Austin, Texas, adding another important market to our US business. Austin is one of the fastest growing markets in the US, And as always, we expect to be able to accelerate its growth as a company owned operation. As we enter the 5th year and final year of our growth plan, we are well When we initially established this plan 5 years ago, many thought it was ambitious. In my view, growth plans always should be ambitious.
At Colliers, we use a target to provide us with a roadmap for the future, to rally our troops around and to provide milestones against, against which we could measure our success. We're currently working on our next 5 year plan, which we hope to announce this coming fall. I have little doubt that our 2025 plan our 2025 growth plan, don't know what we're going to call it just yet, will be as ambitious as the last one. Going forward, we will continue to pursue internal growth as we have in the past. And as you have seen quietly, We have also been setting our sights on new and related growth engines that will strengthen our overall business for the future.
One example of this strategy in action is the acquisition 2 years ago of Harrison Street, which established Colliers as an important player in the real estate investment management business, primarily alternate investments. Another example will be the acquisition of Daugherty, a company that provides commercial mortgage banking, debt financing, and mortgage servicing. Both open vast new opportunities for growth and both will grow faster by being part of Colliers than they could have on their own. And let's not forget something else. Both also bring more recurring and contractual revenue streams to our platform changing the composition and the fundamentals of our company for the future.
Last year, outsourcing advisory and Investment Management segment of our business represented about 44% of our overall revenues up from 41% the prior year. As we continue to grow our stable revenue streams, Callyers is slowly evolving into a different kind of professional services company. This year, we expect revenues from Outsourcing Advisory And Investment Management to approach 50% for the first time. With a higher percentage of stable revenue streams that Collier's business model is much stronger and more resilient than ever. Our shareholders know that creating value has always been at the forefront of our efforts.
That's because our leadership owns more than 40% of the equity in our company far exceeding any of our publicly traded competitors. Over the last 25 years, we've delivered compound annual returns and share price of almost 20%. That record of performance is impressive by any standard and speaks volumes about our ability to continue to maximize When you consider our well known global brand, highly diversified global platform, and more stable revenue screens than at than at any time in the past. And you couple that with the massive growth opportunities we have. The significant free cash flow we generate, not to mention proven track record I just spoke of, it is clear to me that Colliers is significantly undervalued.
Especially when you compare it to the the attributes of other public companies. But, of course, I'll leave all of that to you to figure out for yourselves. There are remarkably few companies out there that have the quality and growth potential of a company like Colliers. With that said, and looking forward to the company, the coming year, provided we have stable, relatively stable market and geopolitical conditions, we remain confident that we will deliver again solid revenue and earnings growth. In 2020.
With that, let me turn things over to Christian for his comments. Christian? Thank you, Jay. As announced earlier today, Collier's reported solid 4th quarter and full year financial results. My comments will follow the flow of the slide posted on the Investor Relations section of callers.com to accompany this call.
Please note that my comments reference non GAAP measures such as adjusted EBITDA and adjusted EPS, both of which are defined in our press release issued today, as well as the company's slide presentation. The adjustments are composed primarily of noncash charges that we view largely as unrelated to our operating results. All references to revenue growth are calculated based on local currency. 4th quarter revenues were 928,000,000 up 5% over the prior year with growth led by our Dursing Advisory And Investment Management. Consolidated adjusted EBITDA was $144,000,000 for Q4 compared to $133,000,000 with our margin at 15.5% versus 15% in the prior year quarter.
Margin growth was led by the Americas and Asia Pac Regions as I will discuss in a moment. Quarterly revenues in the Americas totaled $486,000,000, up 2% with internally generated revenues down slightly. America's Outsourcing Advisory revenues were up 15% but continuing robust growth in each of project management, property management, and valuations. Sales brokerage revenues were down 6% for the quarter, relative to a very strong prior year quarter. Lease brokerage revenue was down 1%, also against a strong prior year quarter.
Adjusted EBITDA was $50,000,000, up 10% versus last year, with a 10.3% margin, up 70 basis points compared to last year, primarily due to lower costs and operating leverage. Up 6%, almost entirely from internal growth. Outsourcing Advisory revenues were down 8%. Impacted by significantly lower project management revenues in our French Workplace Solutions business. Sales brokerage revenues, however, were up 18% with significant contributions from Germany, the Netherlands and Spain.
Lease brokerage revenues were likewise up 18%. 8 is in part by the closing of transactions that were deferred from Q3, as we indicated on our Q3 conference call. Adjusted EBITDA for the region was $51,000,000 compared to $49,000,000 last year. At a 22.7 percent margin, up 10 basis points from last year. Asia Pacific Region revenues were $172,000,000, up 11% with 6% internal growth and the balance from the recent acquisition of Synergy, a leading project management firm in India.
Adservicing Advisory revenues were up strongly at 18%. Sales brokerage revenues were up 3% and lease brokerage revenues were up 9%. Adjusted EBITDA was $32,000,000 compared to $29,000,000 last year with margins at 18.9% up seventy basis points due to operating leverage. In our Investment Management operations, revenues were $45,000,000 in Q4, up 15%, all from internal sources. Revenue growth reflects incremental management fees from new capital commitments in all fund products.
Assets under management stood at $32,900,000,000 as of December 31, 2019, up 25% from 1 year ago. Adjusted EBITDA for the quarter was $17,000,000 versus $18,000,000 in the comparative period and was impacted by investments to establish new fund products in both Europe and the U. S. In 2020, as well as timing of transaction fee revenue in our legacy European operation. Our net debt position was $496,000,000 as of December 31, 2019, compared to $545,000,000 1 year ago.
During the fourth quarter, our debt decreased $94,000,000 as a result of an investment I'm sorry, our debt increased $94,000,000 as a result of an investment in real estate assets to see the new fund in Europe. We expect to transfer these assets off our balance sheet obtain our loss during the second quarter of 2020. Our financial leverage expressed in terms of net debt to EBITDA was 1.4 times for the quarter, down from 1.6 times reported 1 year ago. The reduction in leverage is attributable to debt repayment from operating cash flow, as well as the proceeds from our accounts receivable facility implemented earlier in the year. Offset a temporary increase in debt related to the real estate assets noted above.
In terms of financial capacity, with cash on hand and committed availability under our revolving credit facility, we had more than $700,000,000 of liquidity at year end, and amounts sufficient to fund operations, capital investments, and future acquisitions. In terms of our 2020 outlook, We expect low to mid single digit internal revenue growth in local currency combined with growth from recent acquisitions, for total revenue growth in the high single digit percentage range. We anticipate a full year adjusted EBITDA margin improvement of 50 to 80 basis points compared to 2019, including operating leverage and the favorable impact of the acquisition of Dougherty Financial, which generates higher margins than our consolidated average. We expect mid teens percentage growth in adjusted EPS when compared to 2019. This excludes the impact of any future acquisitions that may be completed between now and the end of the year.
Finally, during 2020, we expect to make incremental investments in our global capital markets and occupier services businesses to further expand these important revenue streams. These costs expected to be in the $12,000,000 range and will be reported on separately going forward. John will discuss our capital markets and occupier services strategies in more detail shortly. That concludes my prepared remarks, and I'd like now I can pass the call over to John. Thank you, Christian.
As announced a couple of weeks ago, I have stepped into a newly created role as Global Chief Operating Officer. In this role, I will provide Executive Oversight, leadership at the global level for a number of growth initiatives, including strengthening our occupier services, corporate solutions, and capital markets businesses. With a particular focus on driving further internal growth and greater collaboration among the established chains, across the business globally. While also providing oversight for a few key functional business support areas, and continue to assist with Collier's investor and debt capital relations. I'd like to share some recent notable highlights from our occupierge Services And Capital Market initiatives, as well as briefly outline some of our priorities to support future growth in these important areas.
Later in third quarter of 2019, we appointed Scott Nelson, CEO Global Occupier Services, and rolled out a new global operating model for our occupier services and corporate solutions businesses to accelerate the road. With 10 years of experience leading our U. S. Occupire Services business, to deep industry knowledge, Scott was a natural choice to lead our global initiative. We're already achieving significant successes.
Having added and renewed 58 client mandates in 2019, mostly in the back half of the year, including new major and multi market clients, Nestle, Alcon, and IWG, the latter being the most established, flexible workplace provider globally, just to name a few. Setting us up well for increased activity in 2020. We also released the next gen version of Colliers 360, and added flexible workplace consulting as a global offering. With our unique Colliers 360 technology offering, we continue to evolve the platform as the most agile and customizable portfolio analytics and dashboard technology in the industry. With more than 600 multi market clients, we have an established well established occupier services business with an exceptional group of regional leaders and teams.
Yet, for the very early stages of developing this into a much more robust global business. In the fourth quarter of 2019, we also initiated a plan to accelerate the growth of Collier's capital markets globally and the success but more than 1000 professionals focused on driving exceptional outcomes for our clients wherever they choose to do business. Our goal is simple, drive more cross border collaboration, leveraging our local knowledge and expertise across our global platform, to increase the number of clients transactions was larger than ever, particularly in Europe, as we made further inroads with institutional clients. Despite the impact of Brexit Colliers Capital Markets had a very strong fourth quarter 2019 in EMEA. With over 25 transactions valued at more than EUR 100,000,000, greater an all time high in aggregate investment volumes advised by our company, representing a diverse selection of property types and portfolios.
Across the multitude of markets. Looking ahead to 2020, we plan to make significant investments in both our global occupier services. In our Capital Markets platforms, as Prussia noted earlier. These investments will mostly be made in the form of additional professionals will deepen our expertise and client service capabilities, adding incrementally to leverage our existing global platforms and significantly increase the amount of revenue and multimarket referrals in the coming years. These teams will be focused on identifying servicing and retaining key global clients, providing a seamless interface with our local knowledge experts.
However, consistent with all our capital allocation decisions and coders. These long term investments We'll look through our dynamic and rigorous process to review analysis and decision making. To ensure we maintain our discipline, and generate acceptable returns for shareholders. That concludes my prepared remarks, and I would now like turn the call back to the
And our first question comes from the line of George Doumet of Scotiabank. Please go ahead. Your line is open.
Good morning, guys. Jay, your previous 2019 outlook called for a low single digit organic growth. For 2020, you guys are calling out low to mid. So I'm just wondering where the modest incremental bullishness in coming from maybe bike to your bike geography?
You know, I have a view on internal growth, which I'm going to share with you, which, which is, I don't think it really matters which geography we generate internal growth from a market perspective because what you really need to understand is what is the internal growth company wide. So I think the, the, the, the outlook that we provided is a good proxy for overall, internal growth that we're expecting in 2020. We're hoping, that these new investments that John described and Christian described to some degree, will help accelerate our internal growth, beyond what our expectations are. But we are also, looking forward to driving internal growth in our new growth engines that I talked about. So internal growth is going to be an interesting, an interesting area for the company, especially in light of our planning for, for our growth plan 2025.
So hopefully that gives you a little color.
Okay. That's helpful. And I guess shifting over the investment management segment, can you maybe quantify the level of investment we made in the quarter And I guess the go forward nature of that investment, do we expect it to be at that pace, for the remainder of 2020 or into 2020, at least?
George, it's Christian. You know, good question. We had, some elevated costs in the, in the 4th quarter investment management, anticipation of the launch of, a couple of fun products. Those fun products are now, are now launched. And we don't expect the impact of, those costs to be, very significant going forward.
It's more of a step type process and when we develop, when we develop, new, new funds, And, this was just another step in the growth of the business.
That's helpful. Thanks. And just one last one, if I may. On the coronavirus, obviously pretty topical. Can you maybe help us frame, the direct impact in Q1 from China?
And maybe some commentary on what extent you expected to spill over into other operations in the APAC region?
Sure, George. The, Chinese business for us, generates about a $100,000,000 of revenue per annum. Half of that revenue is property management. Which is extremely resilient revenue stream for us. We are seeing a little bit of, timing, issues, around some of our transactional revenue, that could impact the quarterly pacing of of what we're what we'll generate, in China.
But like I said, you know, property management is a big part of that business, which is gonna be resilient. In terms of, you know, the other parts of Asia, Hong Kong is a small part of our overall, business. And we could see some impacts there, but it won't be significant in terms of the overall results.
Okay. Thanks for your answers.
Our next question comes from the line of Steven MacLeod of BMO Capital Markets. Please go ahead. Your line is open.
Thank you. Good morning, everyone.
I just wanted
to talk a little bit about the Dougherty business, which is a new, which Jay you highlighted as sort of a new a complimentary business line. Can you just talk a little bit about what benefits you expect this to bring to the table? And is there any difference in the underlying seasonality of ability relative to the Americas business overall?
I would say that the seasonality, just to finish that one quickly will probably follow the rest of the seasonality of our business simply because Daugherty is involved in financing transactions whenever they occur. There'll be some refinancings that might take place January first quarter, second quarter, etcetera. But, Dorothy's strength for us is that number 1, it has this it's called a dust slice. So it's a designated underwriter, under government assisted, loan. So we're able to we have power of the pen in certain cases to fund senior housing, multi family housing loans.
And, and, and so the opportunity for us in part of the Doherty business is to be able to take all of the transactions that we currently do that are multifamily and seniors and and student housing and affordable housing and provide debt as part of it. So in addition to getting a brokerage fee on the placement of that debt, We would also earn the fees to originate that debt and then service it for a 20 year period. The beauty of Fannie Mae Loans is that they're generally long term 20 year type terms. And so there's long term servicing capability. The other pieces of daugherty that are very interesting is they themselves have, a sort of a separate parallel that originates traditional debt, on commercial real estate from banks, from institutions, from, pinder, network individuals.
So they have a number of, real estate professionals, mortgage brokers operating across the country. They're originating debt every day. Now they have an opportunity to access all the transactions that we use at Colliers. And, so over the course of the next couple of years, the idea is to really penetrate our sisting flow of business and be a debt provider on any transaction that is either bought or sold in any of our offices. There's also a third piece of the business, which is a broker dealer, which, which offers us yet further opportunities, although that is, that's relatively small for us right now and not really worth talking about it until we're able to, execute on our plan, but we're quite excited about the growth prospects for Daugherty.
It's not gonna be without a lot of hard work to roll this through. To integrate it throughout the call years. But the opportunity is significant on many fronts, so we're excited about it.
That's helpful. Thank you. And I guess, would you expect that the the growth in Dougherty would roughly mimic, the underlying America's business?
No. I think it's gonna grow much more rapidly as my hope, because in addition to the Colliers business. 1st of all, we don't do this today. So this is all net new growth. All what I just described is all net new growth.
So we're hoping it's going to accelerate our growth by providing additional, additional services and capabilities for our clients The other piece of the business, which is very interesting. If you recall, Harrison Street's focus is on seniors and students and it it dovetails beautifully into, into Dorothy's capabilities. And in particular, their ability to underwrite loans in the Harrison Street funds. So we see a big opportunity to penetrate that as well. So I think that there's, big growth opportunities, that we'll experience from Doherty as it integrates throughout our U.
S. Business and throughout, the Harrison Street portfolios.
That's great. That's very helpful. Thank you. And then maybe just turning to, John, some of your comments around occupier Services And Capital Markets. Can you just talk a little bit about, where the growth opportunities lie in the investments that you're talking about implementing in 2020, just maybe just some more tangible color around what these investments do for you and provide for you?
Sure. I mean, at the end of the day, it is very much, a people driven capabilities business. And we have spent you know, obviously, the last 15 plus years building out this global platform that we have. Recall Colliers, And along the way, obviously, we had local market capabilities and and some top and eye professionals. What we really haven't done to date is captured the collaborative opportunity of really focusing much more significantly on multi market accounts.
And we certainly have some, as I've mentioned, But the opportunity for us now with some of focus, attention on this, some additional investment and capabilities, maybe some, a little bit of technology, if that can help. Is to really ramp up our capabilities. We have, you know, we're, in some respects, new to this business, And I think we're a breath of fresh air. I think we come up with this thing slightly differently, a lot less rigidly than some of our competitors. And we've been really delighted by the wins that we've, generated to date, but we know that there's a lot more down the road.
And all it's gonna take A lot of hard work, but some real focus on trying to drive global capabilities demonstrate this to the market. Much through the success we've already had, are ramping that up in a much more significant way. And this is, you know, on the cusp of the 2025 plan, And we're really big, you know, a critical component of that is that we mature our overall business.
Okay. That's, that's very helpful. And congrats on your appointment. Thank you.
Our next question comes from the line of Frederick Bastian of Raymond James. Please go ahead. Your line is open.
First question, you've been gradually expanding your global service offering with companies like Harris Street synergy and now doherty over the past couple of years. Having said that, are there any attractive disciplines where you're currently subscale on where you'd like to significantly ramp up over the next few years.
Well, I think I heard some of that. So I'll try and answer what I think I heard. Are we subscale in any areas? Absolutely. I mean, one of the great things about, about a global business is your subscale in virtually every market, including those markets in which you have a dominant market position.
So I would say that, we're subscale in debt, as we just described in in Dorothy, we do we do debt in Europe because it's in all markets in Europe, but in some of them, all of John's, areas, occupier services, capital markets, We do a lot of it today. We have a 1000 professionals. But as John said, do we, are we able to take Asia money and and, allocated in different geographic regions seamlessly. Our position to our clients would be, yes, has the, has the process and plan been fully developed? I think we shot some work to do there.
So, across the board, we have multiple opportunities to expand share to develop additional services. Once we, project management is another great example. We we started in Canada. We have a a 40,000,000 dollars, 50,000,000 business in the US out of nowhere. We just added Synergy, almost $100,000,000 business in India.
In Asia, we now do something like $25,000,000 or $30,000,000 worth of project management, all from the example that was set initially in Canada. So taking existing service lines where we operate well and transferring them to other geographic regions where there's a market for the services and there's an opportunity to sell them and cross sell them to our clients, all are part of the, the ethos that we're trying to create in Colliers.
Thanks, Kurt. That, very detailed answer. On Dougherty, is the expertise portable to other global regions, or would you need to acquire that expertise through M And A?
It's probably more local. There's expertise, but there's all kinds of licensing. That's, Fred, that's sort of part of the delay in the transaction. Not only, there's multiple regulators that have to approve the transfer, including the US government among other, among other regulators. And so, it's not as transferable as you would otherwise hope.
You need to be separately licensed in Canada, for example, and, and in other markets. But that doesn't mean to say that a tuck tuck in acquisition and other geographic regions that have the same types of qualities as Daugherty which will be rebranded as Colliers' mortgage, are are all viable opportunities for us. And so When I talk about the vast opportunities, it is mind boggling in many ways that we just have so many opportunities for growth. And apply great rigor to the moves that we make, over the next few years. But if we're, if we're if we continue to manage our business one step at a time, I think there's lots we can do.
All right. Thanks. Last question for me. Christian, you responded earlier to a question about the investment you made in your investment platform, but I don't believe you quantified it. Is it a million bucks 10 or somewhere in between?
In the range of volume, maybe a bit more. And of course, we also had, some timing in an investment management, feed in our European business. So that was the other driver of the variance in the quarter.
Got it. Thank you very much.
Our next question comes from the
line of Steven Sheldon of William Blair. Please go ahead. Your line is open.
Thanks, guys. This is actually Josh Sitting in for Steven, and congrats as well to Christian and John. First, just wanted to ask, yep, You noted in your prepared remarks that you're benefiting from some strong operating leverage in the outsourcing business. So I'm wondering if it's a specific service line within that segment What's the potential for that operating leverage to carry forward?
Yes. Josh, we're really seeing it across all of the services, you know, property management, project management, and evaluations, consulting business. You know, will that continue? I think we have more room to go there, and we were pleased to see what we saw in, in 2019.
Good. Thanks. And then within the Americas, I know that you did quite a bit of hiring in 2018, early 2019. So I'm wondering if you're still expecting to see some good productivity gains in the first half of this year. From those producer hires.
And then just generally speaking, wondering how sales pipelines look to start this year versus, the beginning of last year.
Yeah. Definitely. We we did some, significant recruiting, over the past couple of years. We started to see traction with that. In Q3 and Q4.
And we definitely expect to see productivity gains as we roll into, 2020.
Gotcha. Okay. And then I guess last for me, just curious, where your comfort level sits right now with, trailing leverage at 1.4 turns. Are you comfortable with that? I know you're balancing a few things right now, and I guess what expectation for capital allocation in the year ahead
beyond some of the investments
that you noted, of course.
Jake and Jason speak to the, the acquisition, strategy going forward. But certainly, we're comfortable with 1.4 times, leverage, and, we will generate significant free cash flow in 2020. We will naturally delever. And really, the, you know, the driver will be our, our few or deployment of capital into, into accretive acquisitions. Yep.
We always we always wanna have sufficient dry powder. That's the way we've managed this business for, for all these years. We always want to have capital available if that's and when others, run into trouble. But, as Christian said, you know, from our perspective, you know, we're at relatively low leverage rate rate right now. And, but if, if we, start to add to some of the acquisitions from our pipelines, we might look and doing, doing some equity, but it all, it's all predicated on, opportunities that present themselves and, and so forth.
So we'll always maintain a, a, a, a prudent leverage ratio. I'm sure John and Christian both come from a more prudent leverage ratio, than I would, but, but, it's the the Colliers, strategy has worked well for many years, so I don't think we're going to change much going forward. Yes.
Our next question comes from the line of Matt Logan of RBC Capital Markets. Please go ahead. Your line is open.
Thank you and good morning.
Good morning, Matt.
Jay, you mentioned that the recurring revenues from outsourcing and advisory as well as investment management could reach 50% this year. Can you tell us what that would be as a percentage of EBITDA and maybe your thoughts on where you see that those percentages trending over the next 2 or 3 years?
Well, that's a great question. I, there's a real chance that, the EBIT, although revenues would be fifty-fifty, that EBITDA might be 55, 6 percent, of the recurring revenues. We, you're on a, you're on a very interesting point that we discuss internally here. Quite a bit. We actually generate, more EBITDA from our recurring revenue streams than we do from, I don't know how to describe this, right.
But from a, from a percentage basis, when you look at the, revenue percentage because some of the recurring revenue streams, investment management, Dorothy, etcetera, have a higher EBITDA percentage margin, then we actually generate more from our recurring pieces of our business than we do from the non transit from the, from the transactional side of our business. So I hope that gives you a little color.
It certainly does. And I guess with, you know, Doherty being a big part of your growth plan as well as Harrison Street, you know, could we see that going from 55 to 60% up to maybe 70 or 75% in the near term, or is that maybe a part of the 2025 plan down the road?
I think it's I think it's the 2025 plan. Look, we we have a very viable and profitable transaction business globally. But it is becoming less as a percentage But I think over time, my goal for sure is to transform, call yours into a different type of, a professional services firm, as I mentioned in my prepared remarks. You know, I've been doing this for a long time, And if it's hard to find companies that have the same growth prospects that we do, with the same percentage of recurring revenue. And this is one of them.
And sooner or later, that the light will go on for some people and realize that, the, the composition of our business. And frankly, some of our peers as well, are significantly undervalued relative to other companies that we analyze out there.
And maybe just lastly, in terms of the 2025 plan being just as ambitious as your last one. Should we take that to mean that you plan to double the size of the business again by 2025?
I I wouldn't take, I wouldn't take it as that because, of course, we're a lot bigger today than we were then. But we might be able to double the profitability of the business, over the next 5 years, but, you know, we still, we still have a lot of work to do to get there. But, you know, just if you run the profitability numbers out over that, that period of time, and I'm not committing to that, and it's, it's a huge, huge opportunity, and this company is global. This is global. And so, you know, there's opportunities with exceptional management teams in so many different parts of the world And, you know, as we look forward to 2025, there's lots of opportunities for Ed to for us to add shareholder value.
Well, I appreciate the the color we're looking forward to hearing more, in the fall.
Good.
Our next question comes from the line of Samaya Saeed of CIBC. Please go ahead. Your line is open.
Thanks. Good morning. Just, firstly, to touch on, the leasing side. There was some deal timing impact that pushed some q 3 deals into q 4. So that those come into q4, q4 as you were expecting, or are there any, spillovers into Q1?
Well, we we, we we had, the transaction that we expected in Q4, closed in Q4. Of course, there's always, spillover, and there were some transactions that might have, would have been nice to close in Q4 that will, will happen in Q1. But, you know, to your to your question, the transaction that we'd expected on our Q3 call certainly all did close to Q4.
Okay. Great. And then just sticking to leasing, just what are you seeing in terms of trends for office absorption maybe from a year ago and how do you see that impacting the segment, this year?
It's drawn here. Look, I think it's a relatively healthy, leasing market. I mean, certainly there's challenges but they're isolated. You know, Calgary is an example of one that is challenging with the oversupply there. But I think in most other markets, you know, the, the, the balance between demand for space and, and that that's coming on is pretty much in check.
So we expect there to continue to be a relatively solid stream of leasing activity. That, you know, we are going to benefit from an advisor clients on, going into 2020.
Okay. Sounds good. And then just moving on to the outlook for sales brokerage, obviously, comping against a very strong 2018. How do you see this segment shaping out in, 2020?
Sorry, you were talking specifically about sales brokerage?
Yes, correct.
Look, I mean, again, purpose on, you know, market conditions remaining consistent with where they are today. And as Christian indicated earlier, you know, there's going to be situations perhaps in Asia where, you know, a coronavirus is going to have a dampening impact, I think, probably short term, but certainly could impact parts of, of 2020. And, delays of the activity. But I think if you look fundamentally at the demand for real estate, And the net of capital is interested in being deployed into this asset class, which we've talked about before, at a secular trend around institutional ownership around real estate. We think we're in a good spot to continue to see activity, and it may be a little bit lumpy from quarter to quarter.
But I think the long term trend remains intact. And, that's wasn't reasons that we're focused on building up this business for callers.
Okay. Thank you. Just lastly from me, just on the CapEx expectation of $65,000,000 plus, higher than previous years, is that just tied to the greater focus on, occupier services going forward or just where are those investments being mostly allocated?
The, the main driver for the elevated, CapEx is really, few significant investments in, new office space and in particular in New York City in 2020. Some of that, expenditure will be landlord funded. So it, you know, the CapEx we show there is the gross number. But, you know, it's, on net basis, it's not much different than what, we would, have that we'll be spent in 20, in 2019, which is around the $44,000,000 mark.
Good. That's helpful. Thank you.
You're welcome.
There are no further questions in the queue. I turn it back over to management for closing remarks.
Well, there's no closing remarks other than to thank everyone for participating, and we look forward to, speaking again at the, at our first quarter. So thanks everyone for participating, and we'll speak to you soon.
Ladies and gentlemen, this concludes the quarterly investors conference call. Thank you for your participation, and have a nice day.