Executive Summary / Key Takeaways

• A Resilient Professional Services Platform, Not a Broker: Colliers has evolved from a cyclical real estate brokerage into a three-engine professional services powerhouse with over 70% recurring earnings, fundamentally altering its risk profile and earnings durability compared to traditional peers.
• The Engineering Inflection Point: The Engineering segment, built from zero to $1.7 billion in annualized revenue since 2020, is on track to dwarf the legacy Real Estate Services business, representing a massive TAM expansion and margin opportunity that remains underappreciated by the market.
• Investment Management at Scale: With $108.3 billion in AUM and 85% in long-dated vehicles, the rebranded Harrison Street Asset Management generates predictable, high-margin earnings while providing capital for strategic acquisitions and organic growth.
• Capital Allocation Machine: A disciplined decentralized partnership model, 98% free cash flow conversion, and a leverage ratio declining toward 2x create a self-funding growth engine capable of doubling Engineering revenue and profitability again within five years.
• The Asymmetric Risk/Reward: While macro headwinds and integration costs pressure near-term margins, the multi-year capital markets recovery and Engineering's infrastructure tailwinds create 20%+ operating leverage potential that could drive meaningful earnings acceleration as revenues scale.

Setting the Scene: From Brokerage to Professional Services Powerhouse

Colliers International Group, founded in 1972 and headquartered in Toronto, spent its first four decades building a respectable global real estate brokerage. For most of that history, it was a cyclical business, thriving when capital markets boomed and suffering when rates rose and transactions froze. That traditional model explains why the stock historically traded at a discount to its more diversified peers. But around 2016, a deliberate strategic shift began that has fundamentally transformed the company's identity and investment proposition.

The transformation started with curating the Investment Management division, which by 2018 had become a substantial platform. Then, approximately five years ago, Colliers made a move that would redefine its future: it entered the Engineering sector. This wasn't a small adjacency—it was a bet on building a global, multidisciplined technical services platform from scratch. Today, that bet has delivered over $1.7 billion in annualized revenue and more than 10,000 professionals, making it one of the top global players in a massive, fragmented industry.

What makes this evolution matter is how the pieces fit together. Colliers now operates three distinct but complementary growth engines: Real Estate Services (a top-three global leader), Engineering (a rapidly scaling infrastructure platform), and Investment Management (a $108 billion AUM alternative asset manager). The critical detail is that these engines collectively generate over 70% of earnings from recurring revenues—a structural shift that insulates the business from the transaction volatility that punishes pure-play brokers. This isn't just diversification for diversification's sake; it's a deliberate strategy to build a resilient, self-funding professional services firm that can compound capital through cycles.

The competitive landscape reveals why this matters. Traditional peers like CBRE (CBRE) and JLL (JLL) remain largely tethered to brokerage and property management, while Cushman & Wakefield (CWK) and Newmark (NMRK) are even more exposed to transaction cyclicality. Colliers' unique partnership philosophy and decentralized operating model—where country-specific businesses operate as large partnerships with significant equity ownership—creates alignment and agility that centralized bureaucracies cannot replicate. This structure enables the company to identify and integrate acquisitions faster, while the Colliers brand enhances the stature of previously unknown regional engineering firms. The result: Colliers is taking share, mostly from secondary players struggling with global operations, while building a moat that becomes deeper with each acquisition.

Technology, Products, and Strategic Differentiation: The Full-Cycle Advantage

Colliers' competitive differentiation extends beyond structure into capabilities that traditional real estate services firms cannot easily replicate. The most compelling example is the company's full-cycle approach to data centers—an asset class experiencing explosive growth driven by AI and cloud computing. While peers like CBRE and JLL can lease or finance data centers, Colliers designs them, entitles land for development, manages construction and maintenance through its Engineering group, and invests in them through its Investment Management segment. This end-to-end capability creates multiple touchpoints with the same capital, capturing value at every stage while competitors fight for transactional scraps.

The Engineering segment's value proposition goes beyond traditional engineering. It encompasses project management, program management, and a widening array of technical services across infrastructure-oriented markets: transportation, energy, communications, public sector investments, water, environmental, power, aviation, and marine. This breadth matters because it positions Colliers to capture spending from the global infrastructure build-out that governments and corporations are accelerating. The segment's 6% internal growth in Q3 2025, on top of acquisition-driven expansion, demonstrates that this isn't just a rollup story—it's a platform generating organic momentum.

The Investment Management rebrand to Harrison Street Asset Management in Q2 2025 represents more than a name change. It's an acceleration plan to unify four previously independent platforms under one brand, one leadership team, and integrated back-office functions. This integration creates synergies that competitors with siloed operations cannot match. The 85% of funds held in long-dated or perpetual vehicles generates predictable, high-margin earnings that fund the acquisition engine and provide stable capital through downturns. The $4.4 billion in year-to-date fundraising, on track to hit the midpoint of the $5-8 billion target, demonstrates that investors are buying into this vision despite macro uncertainty.

What makes this differentiation durable is the partnership model. Key professionals own equity in their businesses, aligning incentives with shareholders and creating a culture that is "extremely difficult to replicate." In Engineering, the U.S. and Canadian businesses operate as one large partnership, generating significant synergies and organic growth opportunities. This structure attracts top talent and acquisition targets who want to participate in the upside rather than simply cash out. The result is a self-reinforcing cycle: better talent wins more business, which funds more acquisitions, which expands the platform, which attracts more talent.

Financial Performance & Segment Dynamics: Evidence of a Working Strategy

Colliers' financial results provide compelling evidence that the three-engine strategy is working. In Q3 2025, the company delivered 13% internal growth across the enterprise, with Real Estate Services revenues up 13%, Engineering net revenue up 36%, and Investment Management net revenues up 5%. The consolidated picture shows a business accelerating through macro headwinds that have stalled traditional brokers.

The Real Estate Services segment's performance is particularly instructive. Capital markets revenues surged 21% in Q3, reflecting sales growth across all geographies and asset classes, with particular strength in the U.K., Japan, and Canada. Debt finance activity was robust, especially in U.S. multifamily originations. Leasing revenues increased 14%, led by the U.S. across industrial, office, and data centers. Outsourcing revenues rose 8%, with valuation and advisory leading growth. The segment's net margin expanded 180 basis points year-over-year to 11.3%, driven by solid operating leverage from higher transactional revenues. This margin expansion matters because it demonstrates that Colliers is capturing more value per dollar of revenue, even while investing aggressively in recruiting and capabilities.

The Engineering segment's 36% net revenue growth in Q3, fueled by 6% internal growth on top of acquisitions, shows a platform hitting its stride. The net margin of 15.2% reflects a slight mix-related decline, but the underlying trajectory is clear: this business is scaling profitably. Backlogs remain solid across geographic markets, providing visibility and confidence for 2026. Management's ambition to double Engineering revenue and profitability again over the next few years isn't aspirational—it's achievable given the massive, fragmented market and staggering acquisition opportunities.

Investment Management's 5% net revenue growth in Q3 masks a more important story. The segment raised $1 billion in new capital commitments during the quarter and an additional $1.2 billion since quarter-end, bringing year-to-date fundraising to $4.4 billion. AUM reached $108.3 billion, up from $100.3 billion in Q1. The net margin declined slightly to 42.3% due to integration costs from the HSAM rebrand, but this is a deliberate investment to create a unified platform that can compete with larger alternative asset managers. The 85% of funds in long-dated vehicles provides earnings predictability that pure-play asset managers cannot match.

The balance sheet supports continued aggression. With a leverage ratio of 2.3x as of September 30, 2025—slightly elevated due to the acquisition pace—management expects to decline to just under 2x by year-end. Free cash flow conversion of 98% of adjusted net earnings on a trailing twelve-month basis demonstrates the business's ability to fund its growth internally. This financial flexibility matters because it allows Colliers to act opportunistically on acquisitions without diluting shareholders or taking on excessive debt.

Outlook, Guidance, and Execution Risk: The Path to Doubling Again

Management's guidance reveals a company confident in its trajectory but realistic about near-term headwinds. For the full year 2025, Colliers expects to come in near the midpoint of its $5-8 billion fundraising target for Investment Management. Real Estate Services and Engineering may exceed previous full-year guidance, while Investment Management may be slightly off due to integration costs and fundraising timing. On a consolidated basis, management remains confident in meeting its outlook.

The Real Estate Services outlook is particularly encouraging. Management anticipates leasing will be up nicely year-over-year in Q4 2025 and may exceed previous full-year guidance. The capital markets recovery is described as broad-based and multi-year, with Europe well-positioned to capture the rebound. While activity hasn't returned to previous peak levels, this represents significant upside for the future. The company expects 20-plus percent operating leverage as revenues continue to increase, a powerful driver of margin expansion that most peers cannot replicate due to their cost structures.

Engineering's trajectory appears even stronger. Management expects to come in near the midpoint of its mid-to-high single-digit organic growth ambitions for the year and expects this to continue. The segment has a strong pipeline ahead, positioning it for continued expansion. Backlogs remain solid across geographic markets, providing visibility and confidence for 2026. The hope to double this business again in terms of both revenue and profitability over the next few years isn't just talk—it's supported by a massive, fragmented market and the company's proven ability to integrate acquisitions while driving organic growth.

Investment Management's outlook requires patience. The integration costs associated with unifying operations under the HSAM brand will continue for the next two to three quarters, modestly impacting margins. However, new vintages of flagship funds launching later in Q4 2025 and into 2026 are expected to drive ongoing revenue growth. Management explicitly states they are building this business for the long term and are prepared to accept a modest impact on margins in the short term to achieve 20%+ internal growth. The objective is for margins to improve over time to the 45-50% range as the business scales and fundraising succeeds.

The key execution risk lies in the pace and scale of integration. The RoundShield acquisition added $5.4 billion in AUM and approximately $35 million in annual management fee revenue at margins consistent with the existing division. The Astris Finance acquisition significantly expanded investment banking capabilities in infrastructure and energy transition. These are large, complex integrations happening simultaneously with the HSAM rebrand. If management can execute without disrupting the underlying businesses, the result will be a unified platform with significantly more optionality. If integration falters, the near-term margin pressure could extend longer than the guided 2-3 quarters.

Risks and Asymmetries: What Could Break the Thesis

The most material risk to the Colliers thesis isn't competition—it's macroeconomic deterioration that freezes capital markets and infrastructure spending. While the company has proven resilient through recent uncertainties, a severe recession could halt the capital markets recovery and slow public sector infrastructure investment. The 2-3% FX headwind mentioned by management is manageable, but a stronger dollar could pressure reported results more significantly. Trade policy issues and tariff discussions have already caused transaction delays, particularly in industrial leasing. If these headwinds intensify, they could offset the positive operating leverage management expects.

Integration risk in Investment Management is the second key concern. The HSAM rebrand involves consolidating four previously independent platforms, integrating back-office functions, and unifying fundraising efforts. While management is accelerating these plans to capture synergies faster, the complexity is high. The 42.3% net margin in Q3 2025, down from 46.2% in Q1, reflects these costs. If integration extends beyond the guided 2-3 quarters or disrupts fundraising momentum, the expected step-change in EBITDA and margins in 2026 could be delayed.

The Engineering segment's growth ambitions also carry execution risk. Doubling revenue and profitability again over the next five years requires both successful acquisitions and sustained organic growth. While the market is massive and fragmented, valuations for quality engineering firms are rising. Management noted that acquisition costs for data center-related firms are "very high," and they cannot see a return at those valuations. If competition for assets intensifies, Colliers may need to pay more or accept lower-quality targets, potentially diluting returns.

On the positive side, the asymmetry lies in the capital markets recovery. Management is explicit that activity has not returned to previous peak levels, and this represents "just upside for our future." If interest rate stability and investor confidence build faster than expected, Colliers could see 20%+ growth in capital markets, driving significant operating leverage. Similarly, if the infrastructure spending boom accelerates—driven by AI data center construction, energy transition, and transportation investment—Engineering could exceed its already ambitious growth targets.

Valuation Context: Pricing a Transforming Platform

At $146.01 per share, Colliers trades at a market capitalization of $7.44 billion and an enterprise value of $9.67 billion. The EV/EBITDA multiple of 15.04 and EV/Revenue of 1.77 position it at a premium to traditional real estate services firms but at a discount to pure-play alternative asset managers and engineering consultants. This hybrid valuation reflects the market's ongoing struggle to categorize a company that has fundamentally transformed its business mix.

The price-to-free-cash-flow ratio of 33.61 and price-to-operating-cash-flow of 25.76 appear elevated at first glance, but they must be viewed in context of the 98% free cash flow conversion and the quality of those cash flows. Over 70% of earnings are recurring, and 85% of Investment Management funds are long-dated or perpetual. This predictability justifies a premium multiple relative to transaction-dependent peers like Cushman & Wakefield and Newmark, which lack comparable recurring revenue streams.

Comparing segment-level economics reveals the valuation opportunity. CBRE trades at EV/Revenue of 1.42 with operating margins of 4.92% and ROE of 14.09%. JLL trades at EV/Revenue of 0.73 with operating margins of 4.38% and ROE of 8.99%. Colliers' operating margin of 7.10% and ROE of 8.61% demonstrate superior profitability, yet its EV/Revenue of 1.77 is only modestly higher than CBRE's and significantly higher than JLL's. The difference should be more pronounced given the recurring revenue quality and Engineering growth trajectory.

The balance sheet supports a higher valuation. With debt-to-equity of 0.92 and a leverage ratio declining toward 2x, Colliers has financial flexibility that levered peers lack. The 2.3x leverage ratio as of Q3, including recent acquisitions, is expected to decline to under 2x by year-end. This deleveraging, combined with $260.9 million in trailing twelve-month free cash flow, creates a self-funding growth engine that doesn't require dilutive equity issuance.

The key valuation question is whether the market is fully crediting the Engineering segment's potential. If Engineering can double again to $3.4 billion in revenue while maintaining 15% margins, it would contribute over $500 million in segment EBITDA. At a typical engineering consultancy multiple of 12-15x EBITDA, that segment alone would be worth $6-7.5 billion—approaching the entire current enterprise value. This suggests the market is either undervaluing the transformation or applying a significant conglomerate discount that may dissipate as the segment matures.

Conclusion: A Professional Services Compounder at an Inflection Point

Colliers International has executed a strategic transformation that repositions it from a cyclical real estate broker to a resilient, three-engine professional services platform. The 30-year track record of 20% compound annual returns, established when the company was a different beast, may actually understate the potential of the new structure. With over 70% recurring earnings, a rapidly scaling Engineering segment that could dwarf the legacy business, and an Investment Management division generating predictable fees from $108 billion in long-dated AUM, Colliers has built a compounding machine that can thrive through cycles.

The central thesis hinges on two variables: the pace of the capital markets recovery and the execution of the Engineering growth strategy. If interest rate stability unlocks pent-up transaction demand, Colliers' 20%+ operating leverage could drive meaningful margin expansion in Real Estate Services. More importantly, if Engineering can sustain mid-to-high single-digit organic growth while integrating accretive acquisitions, the segment could double again within five years, fundamentally changing the company's earnings mix and justifying a higher valuation multiple.

The risks are manageable relative to the opportunity. Integration costs will pressure Investment Management margins for 2-3 quarters, but the long-term benefit of a unified HSAM platform outweighs the short-term pain. FX headwinds and macro uncertainty may persist, but the recurring revenue base provides a floor that transaction-dependent peers lack. The balance sheet is strong, cash conversion is exceptional, and the partnership model creates alignment that competitors cannot replicate.

For investors, the question isn't whether Colliers is expensive at 15x EBITDA—it's whether the market is fully valuing a business that has fundamentally transformed its earnings quality and growth trajectory. The Engineering inflection point, combined with the capital markets recovery and Investment Management scale, creates a rare combination of resilience and optionality. If management executes, the stock's premium valuation today may look conservative relative to the earnings power of the platform they've built.