Greetings, and welcome to the Fourth Quarter 2024 CBRE Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chandni Luthra. Thank you. You may begin.

Good morning, everyone, and welcome to CBRE’s fourth quarter 2024 earnings conference call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an Excel file that contains additional supplemental materials. Today’s presentation contains forward-looking statements, including, without limitation, statements concerning our business outlook, our business plans and capital allocation strategy and our earnings and cash flow outlook. Forward-looking statements are predictions, projections or other statements about future events. These statements involve risks and uncertainties that may cause actual results and trends to differ materially from those projected. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this morning’s earnings release and our SEC filings. We have provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures, together with explanations of these measures in our presentation deck appendix. Also in our press release, we have provided historical non-GAAP financial information for the new segments, which we will begin reporting with Q1 2025 results. We will provide more detail, including historical quarterly financial information by lines of business based on the new segments prior to releasing our Q1 results. I’m joined on today’s call by Bob Sulentic, our Chairman and CEO; and Emma Giamartino, our Chief Financial Officer. Throughout their remarks, when Bob and Emma cite financial performance relative to expectations, they are referring to actual results against the outlook we provided on our Q3 2024 earnings call in October, unless otherwise noted. Also, as a reminder, our resilient businesses include facilities management, project management, property management, loan servicing, valuation and recurring investment management fees. Our transactional businesses comprise property sales, leasing, market origination, carried interest and incentive fees in the investment management business and development fees. Finally, unless otherwise noted, whenever we cite growth rates, we are referring to the percentage change versus the 2023 fourth quarter in U.S. dollars. With that, I’ll turn the call over to Bob.

Thank you, Chandni, and good morning, everyone. Q4 of 2024 was CBRE’s best quarter ever for core earnings and free cash flow with broad strength across our business. We also made significant progress in executing our strategy, positioning the company to continue to deliver double-digit earnings growth on an enduring basis. First, we acquired Industrious, the premium flex workplace provider. This advances our ability to meet office occupier and landlord demand for flexibility and an elevated experience. The Industrious transaction also became the catalyst for us to consolidate all our building management businesses into one segment called Building Operations & Experience. This move allows us to build expertise and scale advantage across many areas that are common to the operation of buildings. Jamie Hodari, Industrious’ CEO, who has exceptional strategic, operational and entrepreneurial skills is leading this segment as its CEO. We also completed the combination of CBRE project management with Turner & Townsend. This creates a large uniquely positioned program and project management business with multiple avenues for resilient revenue growth in areas like infrastructure, energy and data centers. Finally, we took two additional steps to upgrade our senior leadership team. First, we gave our COO, Vikram Kohli, whose capabilities are evident in the major impact he had on our business in 2024, additional responsibility as CEO of our Advisory business. Second, we named Adam Gallistel, who will join CBRE in April and Andy Glanzman as co-CEOs of our Investment Management business. As a leader of GICS Americas business, Adam forged an exceptional track record and prominent industry profile, while Andy has proven to be a strong operational leader who has overseen CBRE Investment Management’s strategic evolution. With all these moves in mind, we have reorganized the company into four business segments. Two of the segments, Building Operations &…

Thank you, Bob. We exceeded expectations with a record quarter across almost every metric. Our resilient businesses, which are facilities management, property management, project management, loan servicing, valuation and recurring investment management fees grew net revenue 16% in the quarter and 14% for the year, while delivering operating leverage. Resilient businesses contributed nearly 60% of our total SOP for the year, essentially matching 2023. This relative contribution by our resilient businesses is notable in a year when our transaction revenue grew considerably, yet capital markets activity is still well below peak levels. In our Advisory segment, results were driven by record leasing revenue and a continued rebound in capital markets. Globally, leasing revenue grew 15%, with notable strength in APAC and the Americas. U.S. office leasing delivered 28% revenue growth. Office occupiers are increasingly comfortable making long-term decisions given improved return to office momentum and a healthy economic outlook. The durability of office leasing growth was a prominent question as recently as October when we last reported earnings. While New York led most of the office leasing recovery in 2024, other markets accelerated substantially in the fourth quarter. Gateway markets comprised of New York, San Francisco, Los Angeles, Chicago, Washington, D.C. and Boston grew approximately 30% in aggregate. Other large markets like Dallas, Atlanta and Seattle grew even faster. And certain smaller Midwest markets, including Cleveland, Pittsburgh and Minneapolis, picked up considerably. This gives us confidence that office leasing will continue to increase as activity has spread broadly. Retail leasing also exhibited solid growth, while industrial leasing was essentially flat. Turning to global property sales. Revenue growth accelerated to 35%. Growth was strong across all asset classes globally with a notable increase in office sales in the U.S. and EMEA, albeit off a low base of activity. Our mortgage origination…

Thank you, Emma. I’ll conclude with some thoughts on our participation in the data center sector for two reasons: first, we’re receiving many questions on this topic given the amount of activity in the sector; and second, our work with data centers clearly demonstrates how our strategy plays out in practice. A foundational element of that strategy is to focus financial and operational resources in areas benefiting from secular tailwinds. And we have brought this focus to the data center sector, growing its contribution to core EBITDA from 3% three years ago to almost 10% in 2024. Over that time, our total data center profit has increased over 2.5 times. Emma commented that our development business is capitalizing on its competency in acquiring, improving and monetizing land sites to take advantage of the data center opportunity. As a reference point, we did this with industrial land to great effect coming out of the pandemic. CBRE participates meaningfully in the data center sector across multiple other lines of business as well, including project management, facilities management, brokerage and, to a lesser degree, investment management. Turner & Townsend has more than 150 data center projects underway and has completed over 500 of these projects in the last decade. Data center revenue for Turner & Townsend has increased 50% annually in each of the last three years. Our facilities management group manages over 700 data centers. Within this business, we fortified our technical services capabilities with last year’s acquisition of Direct Line Global, which serves a large base of hyperscale clients. In our advisory business, we arranged $9 billion of sales, lease and financing transactions for North America data centers last year. While total data center inventory in the market has nearly doubled in the past four years, our data center profit growth has outpaced this market expansion and is poised for continued strong growth. With that, operator, we’ll open the line for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Anthony Paolone with JPMorgan. Please proceed with your question.

Thank you and good morning. First question relates to capital markets. Can you talk about just your guidance around a more muted sort of recovery there versus kind of what you’re seeing right now today? Trying to understand if this volatility in rates over the last couple of months is actually paused things or if you’re just being prudent kind of with the more muted rebound.

Tony, thanks for the question. I want to step back and say when we look at our transaction activity for the year, just like we did in 2024, we look at leasing and capital markets combined because we can get to our outlook with – across a broad range of scenarios and a broad range of rate outlook. And then the other comment I want to make on rates specifically in capital markets is that this is a much smaller portion of our business than would be implied by the number of questions we get asked about this business. So moving to capital markets specifically, what we saw in Q4 is transaction activity picked up across the board, but we’re still far below peak levels. We’re 40% of 2021, and we’re not back at 2019 levels. We expect a continued pickup in 2025. We’re very early in the year, but in the first six weeks of the year, we’re seeing 20% growth in U.S. sales activity. But we are being cautious because we don’t know the trajectory of rates will be through the remainder of the year. On the financing side, we saw very strong growth in the fourth quarter. We’re expecting that to continue. And one of the important components of financing is that there’s still a tremendous amount of refinancing ahead of us. Maturities in 2025 will be at the same level of 2024, so that will drive our loan origination revenue above our sales revenue. But to tie it all together, you’ve got to think about our leasing and capital markets revenue combination. And as long as the economy remains healthy and it’s growing, our leasing revenue is going to grow. There is upside to our numbers if rates come down more than everyone is expecting at the moment.

Okay, thank you. Thanks for that. Then if I – on that note, zoom out a bit for my follow-up to just the Advisory segment more broadly. How much of the growth in SOP that you expect there is from like, say, revenue versus some margin expansion? Just trying to understand how much come from each.

So on the top line, we’re expecting low double-digit revenue growth, and then we’re expecting margin expansion on top of that.

Okay. Yes. Thanks for the color.

Thank you. Our next question comes from the line of Michael Griffin with Citi. Please proceed with your question.

Great, thanks. Appreciate all the color you guys have given on the project management business and the growth opportunity there. Obviously, I know there’s going to be some integration aspect of the Turner & Townsend part of that business in 2025. But as you look ahead to maybe 2026 and beyond, does the Turner & Townsend growth run rate of 20% makes sense for that business? Because it seems like there’s a pretty large TAM there. So maybe how should we think about kind of long-term organic growth potential with the integration of that business?

Michael, this is Bob. The – we don’t expect that business to grow 20% on an enduring basis, but we do expect it to grow in the mid-teens. Turner & Townsend’s portfolio of projects and the capability set they bring to the table is in areas that grow faster than what our legacy business grows. So they are, obviously, based on our opening comments, very big in data centers. They’re very big in infrastructure, very big in green energy and in traditional energy. They’re very big in manufacturing, et cetera, areas that have lots of tailwinds. What our legacy business did was much more focused on tenant finish projects for our occupier clients that would be attendant to the campuses they have and so forth. We also did some data center work, and we also did assume more complex work. But Turner & Townsend tilt us heavily in the areas that are growing more rapidly, so we expect that business combined to grow in the mid-teens. The Turner & Townsend piece was growing closer to 20%. But when you combine the two and Turner & Townsend leads it, we see it as a mid-teens grower, and we’re confident in its ability to do that. We also think there’ll be some M&A opportunities that come out of that business.

Thanks Bob. Appreciate the color there. And then, Emma, I just kind of want to go back to your comments around your development opportunities. It seems like you’re pretty optimistic about the industrial portion of that. But if it seems like industrial leasing, at least this past quarter, was flat sequentially. Should we take this as you’re getting ahead of an expected recovery? And should we – do you expect an inflection point in fundamentals maybe toward the back half of this year?

Michael, I’m going to take that one. What’s happened forever in the development business is that when the very best time comes around to acquire sites for future development opportunities, because there’s not going to be big deliveries, because rental rates are going to recover over the next several years, many, many of the participants in the market go to the sidelines. Capital sources get – are afraid to invest. And developers can’t acquire sites and start projects because they can’t raise capital. I was just at a conference offsite this week, and there was a lot of talk about that. We have a business that, because of its track record, can do a good job of raising capital right now, but we also lubricate the raising of third-party capital by putting more of our own capital into those projects at this juncture. So last year, we’ve talked about it quite a bit. We – on balance sheet, capitalized two big portfolios, one office portfolio and one industrial portfolio – excuse me, one multifamily portfolio and one industrial portfolio. We think those projects are going to harvest at a time when there’s very little new product coming on, when rental rates will have recovered and when vacancies are down. We believe those projects will create great profit opportunities for us. There’s smaller investments we’ve made in other projects that we think will have the same dynamics when they harvest. We’re going to start 50 projects in Trammell Crow Company this year. We think they’re going to harvest at a great time, and that’s really the strategy in that business. So we have very seasoned developers. They’re very, very good at land acquisition. They’re very good at land development, which allows us to get land lifts on things like industrial at the right time and data centers at the right time. But we believe that business is positioned to do very, very good things for CBRE, as evidenced by Emma’s comments that we see $900 million of embedded profit in what we have underway in the business now.

Great. That’s it for me. Thanks for the time.

Thank you. Our next question comes from the line of Julien Blouin with Goldman Sachs. Please proceed with your question.

Hi. Thank you for taking my question. There was mention of the investment management division being sort of one of the more underappreciated parts of the business and where there’s maybe the most opportunity. I’d love to dig in a little bit on that. And also when we sort of think about the guidance for 2025 being flat, I guess, just trying to understand what the drivers of that are. Is it more on the sort of cost side affecting the SOP growth? Is it top line? Is FX having a meaningful impact? Just sort of trying to unpick that.

Julien, we think the entire Real Estate Investment segment of our business is underappreciated. It includes Trammell Crow Company, our development business, I just commented on that. Why do we think that our investment management business is underappreciated? It’s a big business. It’s generated tremendous returns for our clients over the last decade. We have a number of funds that are very high-performing funds, a logistics fund here in the U.S., a core fund in the U.S., a core fund in Europe, value-add funds in the U.S. and Asia, a secondaries fund in the UK, all of which has – have performed extremely well. There are other funds that we would like to start that we have not been in a position to start because we didn’t feel that we had the experience in our leadership to do that. With the changes we’ve made to our leadership team, bringing Adam Gallistel in to be our Chief Investment Officer and elevating Andy Glanzman, who’s been on a rapid rise in his career in that business, and with our balance sheet strength that we now have, we believe we’ll be able to do additional funds to fill out holes that we have in our offering right now, and we believe we’ll be able to scale the funds that we have in place, again, by using co-investments to attract other capital. We don’t think that’s fully appreciated in the market, and we expect to see a lot of growth come out of that business and our development business over the next several years.

And I want to just comment on your question around flat SOP year-over-year. Two components. One is remember that in 2024, we had a large incentive fee in our highly successful U.S. logistics fund. If you remove that incentive fee from 2024, we would be at high teens SOP growth in 2025, which is a great outcome this early in the recovery. The other thing is this is a huge year for – we expect this to be a huge year for capital raising, and it already is in January. We expect to raise a near record amount of capital for our investment management business, which will position us very well to deliver really strong returns and strong growth in 2026 and beyond.

That’s extremely helpful. I guess, maybe turning to share repurchase activity. The – It’s been really encouraging, the update since the end of the third quarter. I guess just zooming out, how do you think about share repurchase activity fitting into your strategy in 2025? And how do you see that sort of balancing against the acquisition outlook and sort of opportunities you see out in the market right now?

So as you alluded to on the last call, we both declared that we believe our shares are significantly undervalued. We still think that’s the case given the growth trajectory of our business over the near and long-term. And so we took advantage of that over the past four, five months. Moving into 2025, as we’ve always said, we’re going to continue to prioritize M&A. We have a strong pipeline. It’s very challenging to time M&A, and it’s all about the timing of conversion and finding really great businesses that are going to help accelerate our strategy. So we’ll continue to prioritize M&A. If we get towards the latter half of the year and a number of those don’t come to fruition, we’ll fill in with buybacks.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Hey, congrats on a great 2024. Just two quick ones. If I look at the Global Workplace Solutions, so the facilities management and project management, looks like 2024 margin was sort of well above what you guys expected. So I guess, I’m curious as you’re thinking about forward, would love an update on what the pipeline is looking at, at this point of the year and what more opportunities for margin expansion there may be there.

So there’s two components of your question, I’ll start with the margin piece. So in 2024, in the beginning of the year, you’ll recall that we talked about our initiative to rapidly bring our costs in line with revenue in that business, and we were highly successful in getting those costs out in 2024 and resulted in solid margin expansion for the full year. The benefit of those impacts is not – has not entirely been realized in 2024. So we’ll see continued margin expansion in GWS and now the new BOE segment in 2025. From a pipeline perspective, our pipeline is very strong in enterprise. As I mentioned in my remarks, it’s across sectors, technology, health care. We’re seeing a bunch of renewals within financial services. And so we’re very optimistic about the organic growth within our enterprise business. And then in local, we have a really strong pipeline and a lot of growth to come in the U.S. market, which, as I’ve – as we’ve mentioned a number of times, really, is barely penetrating the U.S. market. And so we expect to continue to see a ton of growth there.

Great. And then my second question, just staying on the Building Ops & Experience sort of segment and so forth. If I sort of think about the combination of those businesses, just would love a little bit more color on just the competitive dynamics in that business and sort of what CBRE sort of leg up is as you sort of go forward. Thanks.

Yes. Well, let me start by describing how we think about the opportunity to operate buildings around the world and then talk specifically about what we’re doing here and why we combine those businesses. First of all, we think the opportunity is defined by the base of commercial real estate buildings that exist around the world. Now obviously, there’s a whole lot less penetration in places like China than there is in places like the UK. But it is an enormous base of buildings, and it includes all kinds of asset classes, industrial, office, multifamily, hospitals, warehouses, manufacturing facilities. When you look across that base of assets, the management of that base of assets is very, very fragmented. Even though we manage 7 billion square feet, that’s just a small, small piece of that portfolio. When you manage all those different classes of assets, there are some very common things that go on: procurement; building engineering; maintaining records on the maintenance of the building and then responding to the – what you find in those records about preventative maintenance; accounting for the operations of the building. There’s all kinds of commonality, whether you’re managing a hospital or a complex warehouse. We think by bringing these businesses together that we’ll generate some strong synergies and strong learning across that kind of horizontal element to that portfolio of buildings. Then we’re building on top of that very specific capabilities. As we mentioned in our opening comments, we manage 700 warehouses. We manage a huge number of complex distribution centers around the world. It’s a huge amount of office space. We’re a very, very big manager of hospitals. And we have specific expertise on a – in a vertical sense in each of those types of buildings. What we think we’ll do by bringing this all together is grow our knowledge, grow the synergies across them, be able to scale our capabilities and, by the way, add experience to the mix with Industrious and Jamie Hodari and really grow that business faster than it’s been growing already. And it’s already been growing well into the double digits. We also think we’ll end up with a capability that’s different than has been seen in the market before. I would say it’s one of the areas of our future for CBRE that we’re most ambitious about.

Thanks so much. That’s it for me.

Thank you. Our next question comes from the line of Stephen Sheldon with William Blair. Please proceed with your question.

Hey, thanks. Just wanted to follow up on industrial leasing. I think you mentioned flat industrial revenue in the fourth quarter, and I think that would maybe reflect some stabilization versus prior quarters. So specifically, how are you thinking about the outlook for industrial leasing in 2025? And are you seeing early signs of things there maybe starting to pick up?

We are expecting to see some pickup this year in industrial leasing, not huge. There is still some sublease space or underutilized space with the big users of industrial that needs to be worked through out there. If that didn’t exist, it would – the leasing would grow faster. But we are – we expect to see industrial grow in the low single digits this year and we expect vacancies to be down by the end of the year, new deliveries to be down by the end of the year. And so as you get beyond 2025, we expect to see leasing pick up. And by the way, the opportunity for delivering new space into the market through our development business to be really strong.

Got it. That’s helpful. And then on the – just as we think about talent within Advisory Services, I guess, how are you kind of managing headcount in this environment? Are you – have you been able to grow capacity, grow producer headcount? How much competition is out there for talent at this point? Is that getting more elevated? Or just curious what you’re seeing from a talent perspective and how that’s playing into the capacity you have as things recover.

There’s always competition for talent, and it’s a talent business. And there’s always competition for talent. That discussion comes and goes over the years and you think, oh, my gosh, it’s more competitive than it’s ever been before. I would say it’s about like it’s been before. We compete very effectively because, particularly given what’s happened in the last couple of years, the performance of CBRE, the stability of our whole business, the prominence of our brand, our ability to invest in the business, the leadership of – our new Advisory CEO, Vikram Kohli, brings to the table and his savvy around the technology that supports that business has been helpful to us in attracting people. So I would say we’ve got capacity in that business. We can grow our revenues without adding headcount. We are likely to add some headcount and do some recruiting. And you should expect the dynamics around that recruiting, the economics around that recruiting to be about what they’ve been, maybe a little better. Some of our competitors aren’t in a position to be as aggressive as they’ve been in the past on recruiting. So that situation is sorting out pretty nicely for us right now.

Got it. That’s helpful. Great results.

Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Great. Thanks. Emma, I guess, in terms of the guidance of the $5.80 to the $6.10, how much of that incorporates sort of the potential $2 billion of sort of capital deployment that you did in 2024. If you were to deploy that same amount in 2025, meaning, are all incremental buybacks, I guess, incremental to that earnings? Or have you factored in some benefits from M&A and/or buybacks?

So the short answer, and I want to provide a longer answer, the short answer is there’s no incremental buybacks or M&A in that guide. So anything that we do above what we’ve already reported on will be incremental to our EPS this year. But I do want to talk more broadly about our outlook. Again, it is a wide range like we provided last year, but I want to provide some more context around it. So at the midpoint, if you look at this outlook, we believe it’s very strong. If you take out the FX headwind, we’re at a high-teens EPS growth rate, which is a really strong outcome in a year when we’re early in a recovery, but we’re not expecting the acceleration that you’d see when interest rates dropped to near zero. Our resilient lines of business in aggregate, we’re expecting to grow around 15% organically, which is a really fantastic outcome. And then there’s an upside to what we’re expecting. So to get towards the higher end of the range, more development monetizations could drive that increased sales activity. And we’re also doing a lot of work around our interest expense. So we’re doing a bunch of balance sheet hedging, which I expect should positively impact our EPS in the latter half of the year. The downside would be around the slowdown in the economy, which would drive leasing growth a little bit slower than we’re expecting. No one expects that to be the case. And so if you step back and you look at our entire outlook, we have more confidence that we’ll be at the upside, the higher end of our range from the downside.

Great, thanks for that extra color. I guess, I don’t know, Bob or Emma, just I was curious on the comments you made about office leasing and said you paced 28% gain in the U.S. I guess, my question was just more around the volume of improvement versus, say, doing a short-term renewal, pay CB one rate, but a 10-year deal where the company has got confidence pays you guys a lot more. So was the upside more driven by more volume or just length of lease or both?

Well, we saw volume increase, Steve, across many markets. I think – I would argue there was a pretty profound shift in what was going on in office leasing toward the back half of last year. So it has been, let’s call it, a Park Avenue phenomenon that was really driving this thing, leases in New York, there’s big fees around leases in New York. Well, what we saw in the back half of the year was pretty strong growth in all the gateway markets and upward rental pressure in the Park Avenue type locations, except for, really, Boston and San Francisco. We saw strong growth in other markets like Dallas and Atlanta and Seattle. And even beyond that, in the next tier of cities, Minneapolis and Pittsburgh. So we saw something different happen. We spent a lot of time with our clients, and what our clients said is their view of their use of office space has kind of stabilized. And it wasn’t down as far as we thought. They were down about 8% per employee. We thought it might be settling lower than that. And the ones that weren’t certain about how much office space they were going to use suggested that it was more likely they would use more rather than less. And so I do think we’re seeing a little bit of a return to the mean post-COVID. I don’t think we’re going to go all the way back to where we were in 2019. But it also appears, based on empirical evidence, that we’re going to go further back than we thought we were before. And so that’s really what you’re seeing come through our numbers, and that’s what is causing us to – in 2025 the way we do in terms of the growth of the business. Emma, you might want to add to that.

Yes. And specifically to your question around term versus volume, it was a mix of all of it. So rent was, like Bob said, relatively flat year-over-year. We saw some increases in New York and other markets in – from a rent perspective. But we saw the big drivers were average square footage per lease, which a big deal. That increased significantly, and then term obviously increased as well. So it was a good mix.

Great, thanks. That’s it for me.

Thank you. Our next question comes from the line of Alex Kramm with UBS. Please proceed with your question.

Hey, good morning everyone. Just – I think this was mostly GWS or BOE related. But can you just remind us about your exposure to the U.S. government? I know you did the J&J acquisition last year to scale up that business. So with all this talk about DOGE, et cetera, just wondering how you think about any sort of risk or maybe near-term opportunities as all that is reviewed.

Alex, we don’t have a lot of government exposure. J&J was an important acquisition that did give us government exposure. But think about where the exposure was. It’s hospitals and defense. It’s in areas that we wouldn’t expect a lot of downward pressure. And more importantly, it’s just a little teeny piece of our business that gives us exposure to expand no matter how big the government is. It’s very, very huge compared to what we’re doing with them now. So we expect that to be an expansion opportunity. The other thing that comes to mind quickly in our business whenever the government slows down, we’ve got a big business in Washington, D.C. on the advisory side. We don’t own space in Washington, D.C. We’re doing – we’re not doing office development in Washington, D.C. But we did do a lot of leasing in Washington, D.C. And so if there’s churn in that market because of downsizing or exiting spaces to go into smaller spaces, we think the churn probably will help our business there. Now it’s not going to be big enough that it’s going to be a needle mover for our whole company, but that’s one of the good-sized markets we have. And we expect some churn there that might be helpful to our business. We just had our – all of our advisory local market leaders from around the country in Dallas for a meeting this week. And I met with the woman that runs our D.C. business, and she was feeling like the churn might be a good thing for them. So a lot of uncertainty about what’s going to go on there. But we’re not concerned that there’s going to be any meaningful downward impact on our business anywhere.

Fair enough. Thank you for that. And then I understand that capital markets are becoming a smaller and smaller piece of your revenue and earnings base. But maybe given that it’s the beginning of the year, how do you think about the ultimate potential for that business? I heard you talk about slightly below 2019. And obviously, much below 2021. But obviously, the economy and your footprint has grown. So how – what’s your latest thought about the ultimate, I guess, TAM when we get into a much bigger environment? And what’s the latest thoughts on how that flows to the bottom line? Thanks.

So if you step back and you think about prior recoveries, I think you’re talking to what the growth rate should be over the next couple of years because of the recovery. We saw strong growth last year. Like I said, we’re seeing on the sales side 20% growth in the early part of this year. That should continue through the first half of this year, but then you get into the second half and you’re up against some challenging comps. And again, we have to remind everyone, we’re not seeing this flood of activity like you would see when the economy is challenged and rates dropped significantly, and none of us expect that to happen this year. But you could see the steady growth continue through this year and the next year. And we’ll get – it will take a few years to get back to prior peak levels. Coming out of prior downturns, even when we’ve had interest rates dropped significantly, it’s taken five years plus to get back to peak levels of capital markets activity. So once we get back there, the steady-state growth in that business is around a mid to high single-digit – mid-single-digit range, but we have a long way to go. We have a good amount of growth until we get back to that level of growth.

Good, thank you.

Thank you. And our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question.

Thank you very much. I was wondering if you could comment on a few discrete earnings items, including integration and cost reduction charges, tax rate and share count. On the cost and add-back side, I think those items were around $350 million, half of which came in 4Q. So just wondering if that’s an ongoing item, if there’ll be some increase due to resegmentation. Second would be tax rate, which came in at 18%. And I noticed some tax and audit charges, if there’s anything there you would like to mention. And finally, share repurchase. You said $800 million since 3Q, which I think implies – most of that was actually so far in 2025. I estimated around 2 million shares repurchased in 4Q. So if you could comment on those three items, please. Thank you.

So starting with the adjustments, Jade, I provided a good amount of color in my opening remarks. We announced, as you recall, in early 2024 that we were going through a cost reduction initiative within our GWS segment to rapidly bring those costs in line with our revenue. That program was highly successful, but it is now complete. And so going into 2025, those restructuring costs that you see in our adjustments should largely go away. M&A integration costs and amortization will, of course, continue as we continue to do M&A, but we are very focused on bringing those onetime restructuring costs down to near zero in 2025. On the tax front, you’ll recall that in Q1 2024, we had a large tax benefit. And for the full year, that drove our tax rate below what we typically see to 18%. In 2025, we expect our tax rate to return to its normalized levels of 22%. On the share repurchase front, we did $500 million worth of share repurchases in the fourth quarter, and the remainder was in January and February.

Thanks very much.

Thank you. We have reached the end of our question-and-answer session. And I’ll now turn the call back over to CEO, Bob Sulentic, with closing remarks.

Thank you, everybody, and we’ll talk to you again when we report first quarter results.

This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.