To help Colliers get there, the company will focus on:
- Building scale
- Strategic acquisitions
- Expanding client relationships
- Creating culture (ESG policies)
- Amplifying its brand
- Innovation with technology
Can Colliers do it?
Colliers has provided some color on what action steps and opportunities will help them achieve these rather broad pillars for growth, although exact specifics have not been provided. However, from its latest presentations, there are defined opportunities for scaling and building:
- Gaining more control of the global market share (currently, in which major firms control less than 20%),
- Transitioning its revenue sources to recurring revenues within its outsourcing and advisory services, capital markets, leasing, and investment management services (of which is around 50% recurring), and;
- Scaling its number of clients and markets served.
Like many real estate stocks and investment firms, the pandemic caused major concern and developmental hurdles. In 2020, Colliers International operated in 66 countries across the globe, managing 2 billion square feet and $45 billion worth of real estate. It conducted 54,000 lease or sale transactions and earned annualized revenues of $3.6 billion. While this is a strong performance, it was significantly less than pre-pandemic levels.
The company has bounced back though in the second quarter of 2021, with 84% year-over-year growth in revenue and 126% growth in adjusted earnings per share. The company's strong second-quarter earnings gave it the confidence to increase projections for 2021 performance to 20% to 30% growth for revenues and 25% to 35% growth of EBITDA, and it seems to be taking action toward its Enterprise '25 initiatives.
In August, Colliers announced the planned acquisition of Antirion SGR S.p.A, one of the leading investment management firms in Italy and Western Europe, which is set to close in early 2022. Harrison Street, its investment management arm, closed a fund for CA$550 million, which will focus on the acquisition and management of senior living, student housing, medical office, life sciences, storage, and digital assets throughout Canada.
Colliers' Engineering & Design unit, which brought in roughly $480 million worth of revenues in Q2 2021, partnered with Bergmann to expand its services in the Northeast, Midwest, and Mid-Atlantic regions of the United States.
The Millionacres bottom line
Doubling revenues by the end of 2025 is a big goal. But big doesn't mean impossible. For the six months ended June 30, 2021, Colliers' revenues were already $1.7 billion, far surpassing the same performance a year prior. Given its estimates of 20% to 30% growth this year alone, it's very possible that Colliers can achieve its goals.
However, uncertain economic conditions, including supply chain disruptions, competition, and inflation, could cause some issues with its growth over the next year, meaning investors should use caution when predicting its performance based on a strong return in the 2021 year.