Colliers International Group (NASDAQ:CIGI) reported third-quarter revenue growth and higher adjusted earnings across its three operating segments, while lowering its full-year growth outlook amid geopolitical uncertainty and interest-rate volatility that are weighing on commercial real estate transaction activity.
Global Chairman and CEO Jay Hennick said the company was pleased with performance across Commercial Real Estate, Engineering and Investment Management, though its more cautious fourth-quarter view reflected external market conditions rather than underlying business performance.
“We never manage Colliers quarter for quarter or even year for year,” Hennick said. “We manage it for the long term.”
Third-Quarter Results
Chief Financial Officer and CEO of Commercial Real Estate Christian Mayer said consolidated third-quarter revenue was $1.6 billion, up 12%, while net revenue rose 13% to $1.4 billion. Internal revenue growth was 2%, or 4% on a net basis, against a prior-year period in which internal growth was 13%.
Adjusted EBITDA increased 14% to $219 million, and adjusted earnings per share rose 20% to $1.97.
- Commercial Real Estate: Net revenue increased 6%. Capital markets revenue rose 9%, led by the Americas and Europe, Middle East and Africa region, while leasing revenue increased 6%. Segment margin expanded to 11.3% from 10.9% a year earlier.
- Engineering: Net revenue grew 37%, primarily due to recent acquisitions, including a full quarter of contribution from Ayesa, as well as internal growth. Net margin increased 30 basis points to 17.3%.
- Investment Management: Net revenue rose 8%, while net margin was 38% as the company continued investing in personnel, new capabilities and integration under the Harrison Street Asset Management brand.
Engineering backlog stood at just over 12 months at Sept. 30, up from the end of the second quarter. Mayer said demand remained supported by infrastructure, defense and technical consulting work. Organic Engineering net-revenue growth was 4% in the third quarter and is expected to continue at a mid-single-digit pace in coming quarters.
Hennick cited work awarded to modernize supporting facilities at Canadian Forces Base Bagotville for NORAD air operations as an example of Engineering opportunities tied to Canadian investment initiatives. He also said Colliers’ pending acquisition of Calgary-based Obsidian Engineering would augment the company’s existing Western Canadian operations.
Capital Markets Activity Slows Late in Quarter
Mayer said capital markets transaction velocity slowed late in the third quarter as geopolitical tensions and interest-rate volatility increased. The company has not seen transactions being canceled, he said, but has seen deals delayed or pushed out.
The delays have been most notable in Europe, particularly France, according to Mayer. He also pointed to some pressure in Australia, where the market has faced interest-rate increases and government taxation challenges.
Colliers said its fourth-quarter capital markets pipeline remains healthy, but the probability weighting assigned to prospective transactions has been reduced because of the market environment. Capital markets revenue is still expected to grow in the fourth quarter, though at a slower rate than management previously anticipated.
Mayer added that Commercial Real Estate margins benefited in the third quarter from higher transactional revenue, but the company expects a more difficult comparison against strong fourth-quarter 2025 margins.
Fundraising Gains, Fee Recognition Deferred
Investment Management assets under management totaled $110.5 billion at Sept. 30, up 2% from a year earlier, driven by capital raised net of realizations. The business had raised $5.3 billion of new capital commitments through the end of October, including $800 million raised during October alone.
Colliers maintained its expectation to raise between $6 billion and $9 billion for the full year. During the quarter, Harrison Street sold $1.8 billion of assets, with proceeds returned to investors. The company expects to sell more than $5 billion of assets during 2026.
However, deployment of newly raised capital has been slower than expected, meaning certain management-fee revenue will begin later than originally anticipated and extend into 2027. Hennick said the slower deployment reflects macroeconomic conditions, including interest rates and a continuing gap between buyers and sellers.
Management expects Investment Management margins to stabilize around 40% through 2027. Mayer said changes in the segment’s business mix, including credit capabilities and ancillary services, could affect the longer-term margin profile.
Hennick said investor demand has been especially strong for infrastructure as well as Harrison Street’s needs-based strategies, including senior housing, student housing, public-private partnerships and healthcare facilities. He also said the integration of the firm’s investment-management businesses and consolidation of fundraising under one global group have expanded the number of limited partners participating across strategies.
Acquisitions, Balance Sheet and Outlook
Hennick said Colliers completed the foundation of its global Engineering platform with the May acquisition of Ayesa, which added more than 3,300 professionals across 23 countries. The company also agreed to acquire Obsidian Engineering, which has approximately 400 professionals and experience in energy, infrastructure and data-center projects.
Through Harrison Street funds, Colliers also agreed to acquire a controlling interest in Vicinity Energy in a $2.9 billion transaction. Vicinity is a U.S. district-energy provider serving more than 1,000 hospitals, universities and other buildings across 12 cities under long-term contracts.
The company said acquisitions announced this year have added about $80 million in annualized EBITDA, and Colliers has nearly $1 billion of available capital for additional opportunities. Management said those acquisitions, once annualized, would contribute about 5% to revenue and approximately 7% to adjusted EBITDA in 2027, all else equal.
Colliers’ leverage ratio improved to 2.7 times in the third quarter, and management expects to end the year at or below 2.5 times as seasonal cash flow is received. Trailing 12-month free cash flow was $428 million, equal to 118% of adjusted net earnings.
For full-year 2026, Colliers now expects low-teens growth in key metrics, reduced from its prior mid-teens outlook. Mayer said the revision was primarily tied to lower expected fourth-quarter capital markets revenue, along with delayed Investment Management fee commencement and broader effects from the macroeconomic environment. Segment margin expectations were unchanged.
About Colliers International Group (NASDAQ:CIGI)
Colliers International Group Inc is a global professional services and investment management company focused on commercial real estate and related business services. The company serves corporate, institutional and private clients through a broad platform that includes leasing, capital markets, valuation and advisory services.
Its other activities include property, facilities and project management, engineering and consulting services, and real estate investment management. These services are designed to help clients manage, develop, lease, acquire and dispose of commercial properties and portfolios across a range of sectors.
Colliers operates across the Americas, Asia Pacific and Europe, the Middle East and Africa through a combination of company-owned operations and affiliated offices.
