Colliers International Group (NASDAQ: CIGI) is a well-known brand in the world of commercial real estate (CRE), but the Canadian firm has long expanded well beyond brokerage services into diversified professional services and investment management.
Colliers now has 15,000 employees and operations in 67 countries, and it makes its money through a combination of capital markets, corporate solutions, landlord and tenant representation, occupier services, project and real estate management, and valuation and advisory services.
Colliers has provided investors with a compound annual growth rate (CAGR) of nearly 20% for more than 25 years -- including the years before FirstService and Colliers International became separate companies in 2015 -- and currently has annualized revenues of about $3.3 billion and $40 billion in assets under management (AUM).
The breadth of this company’s subject-matter expertise is reflected on its website, which includes market segment reports on life sciences, health care, retail, and single-tenant net leases.
Colliers is also building its professional services business through acquisition, most recently with the purchase of Bolton Perez & Associates (BPA), a Miami-based transportation engineering and design firm. "The new addition will immediately rebrand as Colliers E&D and will be fully integrated into the rapidly growing business unit," Colliers said in the announcement.
But is this name-brand real estate stock a buy?
Making money but not paying out a lot in dividends
At mid-day on April 12, Colliers stock was trading at $101.48 a share, 9.16% off its 52-week high of $111.71 from Feb. 11. Not too many big investors are betting against Colliers, either, since its short interest was only 0.94% at that point, too. And 80% of its stock is held by institutions.
Meanwhile, the company’s annual dividend yield on April 12 was 0.10% based on an annual payout of only $0.10, in the form of a nickel a share every six months. That payout has been the same since 2016. Before cutting its dividend in 2015, the company had been paying $0.10 a share per quarter for a few years, so that’s a notable step away from paying cash dividends.
But that hardly means Colliers isn’t making money. Revenue has grown at a 10% CAGR from 2015 through 2020, while earnings before interest, taxes, and amortization (EBITDA) expanded at a 15% CAGR clip at the same time.Colliers revenue did take a dip in 2020, down 9% for the full year to $2.79 billion, the company said, and adjusted earnings per share (EPS) were down 10% from 2019 to 2020 at $4.18. But adjusted EBITDA was up 1% from the year before, and the company’s global chairman and CEO says results were better than expected.
In the fourth quarter and year-end report, Jay Hennick attributed that performance to the company’s diversification into professional services and investment management. "The majority of our revenues and more than 60% of our adjusted EBITDA now come from high-quality recurring services with the balance coming from transactional services," Hennick said.
The Millionacres bottom line
Colliers is not a real estate investment trust (REIT). It doesn’t have that obligation to pay 90% of its taxable income straight through to investors in the form of dividends. It’s probably best to consider CIGI as a growth stock.
That said, that 52-week high of $111.71 is just below the all-time high closing price of $110.65, also from Feb. 11. CIGI stock dipped as low as $40.78 during the pandemic plunge, but it recovered nicely and, as of that April 12 close, has averaged $74.44 for the past 52 weeks as of April 12.
Given its diverse revenue streams -- geographically and among CRE segments -- CIGI does seem like a safe bet for steady, though not spectacular, growth, but certainly not for income.
Colliers has a number of competitors who provide similar services -- including industry giants like CBRE Group (NYSE: CBRE) and Jones Lang LaSalle (NYSE: JLL) -- so if you’re interested in this kind of CRE play, look at them, too.