Welcome to the Fourth Quarter Year-End Investors Conference Call. Today’s call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties.

Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s annual information form as filed with the Canadian Securities Administrators and in the Company’s Annual Report on Form 40-F as filed with the U.S.

Securities and Exchange Commission. As a reminder, today’s call is being recorded. Today is Wednesday, February 13, 2019. And at this time, for opening remarks and introductions, I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir..

Thank you, operator. Good morning, and thanks for joining us for the fourth quarter and year-end conference call. As the operator mentioned, I’m Jay Hennick, Chairman and Chief Executive Officer of the company and with me today is John Friedrichsen, Senior Vice President and Chief Financial Officer.

This conference call is being webcast and is available in the Investor Relations section of our website. And a presentation slide deck is also available there to accompany today’s call.

Earlier today, Colliers reported more than double-digit revenue and profit growth for the fourth quarter and the full year, copping – capping out an outstanding year for our company. For the quarter, revenues were $890 million, up 18% in local currency. Adjusted EBITDA was $133 million, up 39%.

And adjusted earnings per share came in at $1.77 up 30% against a very strong fourth quarter last year. For the year, revenues were $2.8 billion, up 16%. Adjusted EBITDA was $311 million, up 28%. And adjusted earnings per share came in at $4.09 per share, up a strong 29% over the prior year.

John will have much more to say about our quarter and year-end results in a few minutes. Without question, 2018 was a defining year for Colliers.

Not only did we establish a new Investment Management platform with the acquisition of Harrison Street, a company that is a true pioneer in demographic-based investing with a proven track record of best-in-class returns for investors.

Together with our existing business, our new platform had more than $28 billion in assets under management at the end of 2018. We also completed a record 11 other acquisitions, including five in the Americas, four in the EMEA and two in Asia Pacific.

All of this maintained Colliers’ pace as the world’s fastest growing global real estate and investment management firm.

Most importantly, though, because our leadership team owns more than 40% of the equity in our company, greater than any of our public competitors by a country mile, creating value for shareholders over the long-term means much more to us.

Colliers also made excellent progress increasing our recurring revenue streams, adding stable investment management fees to further diversify our revenue mix. Today, about 75% of our earnings comes from recurring or repeat revenue streams.

And geographically, about 60% of our revenues comes from the Americas, with the remainder split almost equally between Europe and Asia Pacific. All of this means, we have more balance and opportunity in our operations than in any other time in our history.

Finally, just after year-end, we completed another significant acquisition, the market leader in Virginia with more than 340 professionals. This acquisition strengthens our operations in the Mid-Atlantic region and brings another exceptional group of professionals on to the Colliers’ platform.

In late 2015, as you know, we established an ambitious five-year growth plan to double the size of our company by the year 2020. I’m pleased to say that we’ve now finished the third year of our plan and we’re well on track to achieving our growth target.

Importantly, we continue to see excellent opportunities to continue our impressive long-term growth history over the long-term. Over the past 24 years, this leadership team has delivered more than 20% compound annual returns for shareholders.

That record of performance is unsurpassed in our industry, and it speaks volumes about our ability to maximize our growth potential and create value – significant value for our shareholders over the long-term. Looking to 2019, I’m optimistic we will continue another year of great success towards our five-year Enterprise 2020 Plan.

With that, let me turn things over to John, and once he’s completed, we’ll open up things for questions.

John?.

Thank you, Jay. As announced in the press release earlier this morning and highlighted by Jay in his opening remarks, Colliers International Group reported strong fourth quarter and annual results, capping off an exceptional year. Our finish in 2018 includes substantial contributions from most of our major operations across our global platform.

Since our consolidated quarterly and full-year results are already outlined in our press release and the conference call slides posted on our website accompanying our call, to streamline my conference call comments, I’ll focus on our operating results by reporting the region focused on the fourth quarter and then turn to our consolidated cash flow, capital deployment and financial position.

I will then conclude with our comments on our 2019 outlook. Please note that my comments may reference non-GAAP measures such as adjusted EBITDA and adjusted EPS, both of which include adjustments composed primarily of non-cash charges that we view as largely unrelated to our operating results for the period.

References to revenue growth, including internal growth, are calculated based on local currency unless otherwise indicated.

Our $890 million in fourth quarter revenues were up 18%, comprised of $309 million from Outsourcing & Advisory services, up 16% versus last year; $257 million in brokerage, up 8%; and $285 million in Lease Brokerage, up 17% versus 2017.

Meanwhile, our Investment Management revenues came in at $38 million compared to $4 million entirely attributable to the Harrison Street acquisition completed in Q2. Overall, internal growth across our operating segments came in better than expected, up 7% compared to a strong finish in 2017.

Geographically, revenues remained well balanced, with 53% of our revenues generated in Americas, 25% in Europe, 18% in Asia Pacific and 4% from Investment Management.

Adjusted EBITDA generated by our operations outside the Americas continued to generate a higher proportion of our consolidated amount at 55%, the Americas contributing 32%, and Investment Management fee-driven adjusted EBITDA at 13%.

Our service line and geographical diversification continues to be an important component of our strategy, providing growth opportunities that reach new clients, while increasing our capabilities to serve existing clients and adding greater stability to Colliers than ever before. Turning to the regions.

In the Americas, revenues were $475 million, up 14%, comprised of strong internal growth of 9%, along with 5% contribution from acquisitions.

Outsourcing & Advisory revenues were up 12%, with strong growth in property management and consulting and appraisal services across the region, including particularly robust growth in our market-leading property management and project management services in Canada.

Sales Brokerage revenues were up 8% versus last year, led by strong low-double digit internal growth in Canada and relatively flat internal growth in the U.S., bolstered by mid-single-digit growth from acquisitions. Lease Brokerage revenues were up 20% versus last year, with both our Canadian and U.S.

operations generating strong mid-teens percentage growth internally and the balance from acquisitions. Adjusted EBITDA came in at $45.6 million versus $37.5 million last year, up 22%, And a margin of 9.6% versus 8.9% last year, with the increase due to operating leverage from existing operations. Turning to EMEA.

Revenues of $217 million in the quarter increased 21%, with revenues up 6% internally compared to Q4 last year and the balance from acquisitions completed earlier in the year in Finland, Spain, Denmark and Germany.

Outsourcing & Advisory revenues increased 20% with solid mid-single-digit internal growth, led by a strong performance in turnaround from last year in France, with the balance of growth from our acquisition in Finland completed earlier in the year.

Sales Brokerage revenue was up 33%, led by strong internal growth in Germany, Netherlands, offsetting a sharp decline in the UK compared to a very strong Q4 last year and strong contributions from our acquisitions in Denmark, Spain, multi-family business in Germany.

Lease Brokerage revenue was up 7% over last year, with a strong performance in Germany, France, Netherlands, tempered by a decline in the UK.

Meanwhile, adjusted EBITDA increased 38% to $48.9 million compared to $35.4 million in 2017, with the margin increase to 22.6% versus 19.5%, due primarily to improved performance in France and the impact of acquisitions completed in 2018.

And finally in our Asia Pacific region, revenues came in at $159 million, up 5% were 3% generated internally and the balance from acquisitions.

Outsourcing & Advisory revenues increased 19%, with strong internal growth in property management across the region, consulting and valuation in Australia and project management in Australia and China, the latter both benefiting from recent acquisitions.

Lease Brokerage revenues were up 13% with strong performances in New Zealand, China, Hong Kong and India offsetting a decline in Australia. Sales Brokerage revenues declined 12%, with strength in New Zealand, Hong Kong and Singapore falling short of offsetting declines in Australia, China versus very strong Q4 performances in 2017.

Adjusted EBITDA was $29 million, up from $26.2 million last year, with a margin at 18.2% versus 16.5%, benefiting from higher revenues, better productivity in both New Zealand and Asia and operational improvements made over the last few years, particularly in our Asia businesses.

Finally, revenues in our Investment Management operations came in at $39 million versus $4 million in Q4 2017, with substantially all of the increase attributable to the Harrison Street acquisition completed last July. Adjusted EBITDA totaled $17.7 million compared to $1.8 million in the comparative quarter.

We’re expecting significant fundraising and investment activity in the first half of the year based on pipelines currently in place, which will translate into recurring management fee revenue and a solid momentum continuing through 2019. Assets under management increased to $26.4 billion as of the end of 2018.

Moving to our capital deployment and balance sheet. In our fourth quarter, capital expenditures totaled $14 million, up from $10.6 million last year and bringing our year-to-date CapEx to $35.6 million compared to $39.5 million in 2017.

In 2019, we have planned CapEx investment in the $40 million to $45 million range, including workplace enhancements in several offices to support our growth and productivity along with additional funding for technology investment to support our IT infrastructure and application tools. Turning to our acquisition spend.

We invested $14.8 million during our fourth quarter compared to $12.5 million last year, bringing our year-to-date investment in acquisitions to $605 million versus $104 million last year, with about three quarters of our 2018 acquisition investment attributable to Harrison Street.

All of this was funded by strong cash flow from operations, which totaled $257 million for the year, up 21% versus 2017 and a combination of attractively priced debt under our revolver and senior notes issued in Q2 of 2018. Our net debt position stood at $545 million at the end of the quarter.

And our leverage ratio, expressed as net debt to adjusted EBITDA, stood at 1.6 times compared to 0.6 times at the end of 2017, maintaining a strong balance sheet and financial position.

With cash on hand and committed availability under our revolver, we had over $600 million of liquidity to start the year, a level more than ample to fund operations and another capital investments, including acquisitions needed to execute our growth strategy. Turning to our initial outlook for 2019 and looking across our global operations.

Our pipelines in most markets continue to reflect solid commercial real estate activity. However, macroeconomic and geopolitical forces were factors that generally deteriorated somewhat relative to a year ago, providing slightly elevated real estate growth, but tempered by a moderation in the face of increases in interest rates.

Credit and financing remains largely accessible and supportive of commercial real estate investments across our major markets, where the level of supply and demand for commercial property remains well balanced.

Meanwhile, our investment management operations are well positioned to continue growing, leveraging their favorable track record of performance and overriding focus of defensive real assets in the alternative investment sector, both in the U.S. and Europe.

These factors, combined with a more secular trend, greater institutional, commercial real estate ownership directly and indirectly, are expected to drive solid activity in sales, leasing and other commercial real estate services.

With these factors in mind, we have the following comments regarding our preliminary outlook for 2019 at this early stage in the year.

We estimate consolidated revenue to grow year-over-year at an annual rate in the high single-digit percentage range with the lowest single-digit internal growth augmented by the impact of acquisitions completed in 2018 and to date in 2019.

Adjusted EBITDA margin improvement of 100 to 120 basis points based on the impact of acquisitions completed in 2018 and to date in 2019, with additional operating leverage balanced against selective investing to strengthen our operations.

The consolidated income tax rate of 29% to 30% based on our expected geographical mix of earnings being relatively consistent with 2018. Non-controlling interest share of earnings in the range of 18% to 20%, low double-digit percentage growth and adjusted EBIT – and adjusted EPS on a full year basis.

The foregoing excludes the impact of any further acquisitions, which may be completed in 2019 and which would be additive to our expected growth in revenues, adjusted EBITDA and adjusted EPS. Entering year four of our five-year Enterprise 2020 Plan, we remain well on track to achieving our revenue, adjusted EBITDA and an adjusted EPS growth targets.

That concludes our prepared remarks, and I would now like to ask of our operator to open up the call to questions..

[Operator Instructions]. Your first question comes from the line of George Doumet of Scotiabank. Please go ahead. Your line is open..

Yes, good morning guys. And congrats on a solid quarter and a strong year..

Good morning..

I guess, your outlook now calls for low single digit organic growth from 6% this year.

Jay, I’m wondering elevated conservatism in there? Or are you seeing some slowdown on activity in some of our businesses? And maybe can you – how do you think of the algorithm as it relates to the three geographies that we operate in?.

Well, you asked me the question. The outlook came from John, which actually makes some sense, because I think it is a little conservative frankly. Our five-year plan was based on 5% internal growth over the course – on average over the course of five years. We had a very good year in terms of internal growth.

We see, as John said, continued activity in the real estate sector, although probably tempered somewhat, given all the things that everybody has been talking about. But I’m optimistic for better than 5% internal growth for the year, but it’s early days and we’ll see how that translates..

Okay. I guess, I was asking earlier about the geographies that we planned.

Can you maybe, I guess, bucket, which one you think you look at EMEA, Asia and Americas, which one do you think would probably be in a position to gain in terms of the top line versus just maybe rank those three?.

Well, I think we have a great opportunity in the U.S. I don’t think we capitalized on it. We’ve done I think a great job bringing that business from strength to strength. But I think there is more work to do at both top line, and more importantly, in some respects on the EBITDA line.

If we can move the margins in that business up by 100 to 200 basis points and maybe higher over the next two or three years it’s a huge, huge benefit for all of us. So top line growth, I think the biggest opportunity is probably right now in the U.S. for a variety of reasons. We have a very strong platform in Europe.

It is – it would have had much higher internal growth if not for the geopolitical changes that are going on there now, not just Brexit, but the impact of Brexit and the reaction of various other countries in which we operate too, the implications of Brexit. So I think that is slowing down internal growth there.

But that somehow clarifies, and it doesn’t necessarily have to be solved. It just needs to be clear to everybody, a clear path. I think we can see better internal growth there. And Asia, Asia for us again is a big, big opportunity that I think we can pursue more aggressively.

The past number of years and this past year has been a good year for Asia on the profit line. But the past couple of years, we have been top grading management virtually, major market by major market. They are now well entrenched, been there for three, two and 18 months.

So we’ve got high hopes for the team there, very energized, great growth opportunities all over the place. Our brand just continues to be one of the majors in that market. And so I’m cautiously optimistic we’ll do a little bit better in Asia as well.

And that’s why on balance, when you look at everything in perspective, I might be at a 6% internal growth kind of number company-wide, but John is the – John’s number is the number you should use for modeling [ph] purposes..

That’s helpful, Jay. Thanks. And just one last one, if I may.

In that context where would you see AUM growth for 2019 on our Investment Management platform?.

You’re asking me that question or John?.

Maybe both of you guys?.

Well, you ask John..

Look, we’re bullish on the AUM growth. And I can say that we’re very confident in the low double-digit growth for sure. I think when you speak to the management team, Harrison Street in particular, they have aspirations for better than that.

But at this point, we’re feeling very positive based on the trajectory of fundraising and deployment of that capital and to track the investments for their LPs..

All right. Thanks, John. That’s it for me..

Your next question comes from the line of Stephen MacLeod of BMO Capital Markets. Please go ahead. Your line is open..

Thank you, good morning..

Good morning, Steve..

Just wanted to circle back around on the Harrison business. You put up a very strong margin there, particularly relative to Q3 and I know there was some timing issues with Q3? But how – given what you said about low double digit AUM growth through 2019 and beyond.

Can you just talk a little bit about how you see that margin expectation evolving and what the key drivers are?.

Well, look – I mean, our – we have not gotten – I don’t really want to get too detailed with respect to margin. I understand that the margin obviously in this business is conservatively higher than the balance of our business. So where we ended up – and we’ve spoken about this before, margins would be in the 40% to 45% range.

I think that those are achievable based on the company’s current focus, the value they add, the sector they’re deploying capital in, they will continue to generate – we expect them to continue to generate those kind of margins based on fee revenue. And of course, that does not include any performance-related fees that may be generated down the road..

Yes. The only thing I would add to that is there’s two sides to that equation. One is fundraising, how much are they going to – well, how much are they going to raise and what their dry powder is, and most importantly, can they access high-quality investments that deliver expected returns to investors. We only get paid if they’re able to do that.

So, Harrison Street has been historically very successful in both categories. But finding the right investment continues to be the big differentiator in that business.

So, we’ll see how they execute over the next period of time, given what’s going on in the overall industry, although they are very focused in specific areas, which gives them a leg-up, I think, over most in the traditional asset management space..

Okay. That’s very helpful. And can you just talk a little bit about, what areas you’re focusing on – Harrison is focusing on for some of the first-half-weighted fundraising? Or maybe say in another way, where are you expecting to see most of the AUM growth in Harrison.

Is it mostly – I know one of the things when you bought it was they have a larger presence – or a smaller presence in Europe and see that as an opportunity is that what you expect AUM growth to come from?.

I think, I think Harrison Street is very, very fortunate, because it has pretty much a split between a core fund, which is sort of permanent capital over a long period of time, and opportunistic funds, where they’re – they’re both closed-end funds and infrastructure funds. The infrastructure fund is also a core fund.

So, its business as usual for them and they’ve been highly ranked in terms of funds raised and funds returned to investors and returns – dollars returned to investors and returns for investors over the long-term. But – so I think you’re going to continue to see exciting growth in North America. They have a nice beachhead in Europe.

We’re spending a lot of time with them on the Europe piece more so than North America, because all of our relationships there and opportunities to source off market transactions and help them accelerate their growth and help with strategic hires.

So, I think in 2019, for us, the big challenge/opportunity is how do we double or triple the size of our business in Europe. And that’s – there’s all hands on deck on that one right now..

Okay. That’s helpful. Thank you. And then finally, just with respect to the EMEA business. Jay, I think, you referenced in your comments around the segmented, segmented outlook.

But can you just talk a little bit about the impact you have seen from Brexit and how you maybe, expect that to evolve going forward?.

I’ll take that one. It’s a mixed bag, honestly. I spoke about sales down sharply in the UK, in the quarter, opposite, strong finish to 2017 when basically at that point, the whole Brexit thing, well, as an issue was further away.

And I think because of its close proximity to the self-imposed exit day of March, there was greater decision and transactions, which were deferred pending more clarity around Brexit. So that applied to both sales, and to a lesser extent, but also to leasing activity in the UK, where a number of our clients were just kind of waiting and seeing.

Those who don’t have to make a decision immediately are deferring that. But as we’ve seen before, when the whole Brexit thing initially impacted the business, when there became more clarity around the path forward, we saw a resumption in, quite frankly, a catch-up. So, we would expect to see that again. So that was the UK.

On the flip side, we had a very, very strong performance in Germany. I think the other European countries perhaps are being impacted somewhat by uncertainty, but much less so. And really, real estate continues to be very active in that market, and we saw that and benefited from the diversification we had throughout our EMEA business..

Okay. That’s helpful, John. Thank you..

You’re welcome..

Your next question comes from the line of Mitch Germain of JMP Group. Please go ahead. Your line is open..

Good morning..

Good morning..

Jay, I know that you’ve got about 60% of the revenues coming from the Americas region.

I’m curious as the plan, Enterprise 2020 Plan takes shape, is that geographic mix kind of the target? Or are you looking for a little bit of a further upside from Europe and Asia?.

I think by virtue of the size of the opportunities in the U.S., we’re probably going to range between 55% and 60%, that’s just the reality. But we see lots of opportunity in EMEA and some opportunity in Asia Pacific. So, it’s all going to be strategic.

I think, Mitch, at the end of the day, what makes sense to our business in a particular region, how does it – how does it skew – how does it skew our numbers. Obviously, we have a very close eye on recurring revenue and that raises our incentive in different geographic regions. But five years out, I think it’s probably 55% to 60% Americas..

Okay, that’s helpful. With regards to the balance sheet, John, I mean, obviously, you had a pretty meaningful decline in leverage – excuse me quarter-over-quarter.

Care to share kind of what your thoughts are as maybe one year from now, where you think that’s going to sit?.

You’re asking me to give my crystal ball, Mitch. I guess there’s two answers. I suppose if we were to just continue to run the business without a whole lot of capital deployment on acquisitions, we end up delevering down to one times or below.

The reality is we’re going to continue to find attractive acquisitions, which we can generate a good return on capital. And if we end up next year in the 1.5 times range of where we are right now, that would be fine. I mean, we’re content to be in the 1.5 to two times range.

However, if we don’t see opportunities, we will naturally delever the balance sheet, always being in a very strong position to continue to operate our business, notwithstanding what might transpire in the business cycle, and of course, most importantly, perhaps taking advantage of great acquisition opportunities that markets turn the other direction, as we’ve done in the past..

Great. And then sticking with capital deployment, obviously, some of our peers are taking it pretty meaningful investments in technology, obviously, both efficiency of their producers and personnel as well as client facing.

And I’m curious, Jay, what your view is of technology and what it means to Colliers and what it means to your capital allocation strategy?.

Well, we’ve spent extensively on technology. Our philosophy on base technology, which is some of the existing proprietary programs we have, we want to constantly make sure that they’re world-class. And so we’re constantly making upgrades in that regard. Remember, we established the Proptech Accelerator. There were 10 cohorts.

We invested in three of those cohorts. We have created joint ventures with those three. So there’s very interesting new technologies virtually around the world. So, technology is a very keen focus for us.

A part of the CapEx that John talked about earlier stepping up in 2019 is all around new technology for our own base business and it happens not to be the technology spend around our Proptech Accelerator. So, we think that we are more than pacing our peers from a relative size standpoint.

I think we’d look at things differently than they do in a sense that we’re very disciplined in what we expect to get in return for those investments. We’re not talking fliers on things that they might take a flier on.

We’ve seen most of the deals that they’ve looked at, had an opportunity to be a country club investor in some of those investments as they have done. And so that’s just not our way at Colliers, never been our way at Colliers.

And so we’ve realized the benefits and have over the past five years at least spent a significant amount of our CapEx on making our technology state-of-the-art. And by the way, we have tons more to do. There are – I’m looking at you, John.

There’s two or three very significant initiatives we’re executing on this year, which are going to substantially make our business better, create more data for us as leaders and create much more data for our clients to make decisions out in the field.

And we just don’t seem to talk about those things until directionally up and running and delivering results that we can brag about. So that’s sort of our philosophy on technology..

Thank you very much..

You’re welcome..

Your next question comes from the line of Stephen Sheldon of William Blair. Please go ahead. Your line is open..

Thanks. Good morning..

Good morning, Stephen..

With the high single-digit revenue growth expected in 2019, can you maybe help us frame what your broad expectations might be by service line? And second, how are you thinking about growth in the leasing, given your strong performance there over the last few years, which has created some tough comparisons?.

Stephen, I don’t think we have a particularly differentiated view with respect to service line growth. I mean, whether it’s Outsourcing & Advisory, which for us is property management, project management, evaluation and appraisal. Obviously, leasing and sales, I’d say, is a very balanced, at least at this stage of the year.

We have a pretty balanced view on internal growth opportunities across those three areas.

I’d say that given some of the macroeconomic stuff we’ve talked about or geopolitical things, one might suggest that sales revenue could be a little bit more at risk, at least from a timing perspective, in Europe in particular, pending what may happen over the next few months. But we think that that’s largely timing related.

We’re very bullish on Europe longer term once they sort out their internal issues with respect to the UK and other countries. So, I think that’s the best I can provide at this point..

Okay. That’s helpful. And then can you maybe – can you help us maybe walk through the factors driving the expected 100 basis points to 120 basis points of margin expansion.

How much of that is driven by the continued boost from Harrison Street and excluding it, how are thinking about potential to include margins in the rest of the business and include the….

Yes. So, yes. The bulk of that three quarters of it, for sure, would be Harrison Street related, just a higher margin business and the impact it would have once you combine that. And we get a full year from that business in 2019.

And then there’s incremental – we do expect incremental improvement in – from our other businesses, balancing additional scale benefits and operating leverage against ongoing investments in those businesses to build strength and enter new markets, like we’ve done in Japan and a few other places, which are paying off well for us.

So that’s the way I would characterize the increase – expected increase in margin..

Got it. Thank you..

[Operator Instructions]. Your next question comes from the line of Michael Smith of RBC Capital Markets. Please go ahead. Your line is open..

Thank you and good morning..

Hey, Mike..

Good morning..

I just wanted to switch back to Harrison Street, a couple of questions.

First, are there any news that are being marketed [Technical Difficulty] it’s relatively new one for a perpetuity capital?.

Okay. Mike, slow down, because you’re going in and out of your call. So, we didn’t hear either of those questions. I’m sure the rest of the people on the call didn’t hear it again.

So, can you try it again?.

Okay. Sorry about that. Must be my headphone, I’ve just picked up my line..

Yes, yes. Perfect..

So, there is a trend in the industry for perpetual capital.

I think Blackstone has about 15% of its AUM as perpetual; it’s a big number of $64 billion? And I’m just wondering if there’s new strategies that are being marketed today? Or is it a traditional strength of Harrison Street?.

Well, let’s start with Harrison Street has about 50% of its capital as perpetual capital. 50% and that’s one of the great attributes of this company and one of the big reasons why it made so much sense for us. So we’re on it. And for the most part, our growth initiatives are all around core, open-ended funds for that reason.

Most investment managers would rather have closed-end funds, because the promotes are higher for their employees. We believe that we want to build over the long-term an institutional investment management firm that is 60/40 perpetual funds, so that we can manage core assets over the long-term.

There is no sense – I’ve been a real estate investor and a student of the real estate industry for so many years. You build or you acquire a – an irreplaceable asset. And because the fund is 10 years old, you have to sell it. It’s a travesty.

And you sell it, because not so much that the investors want it, but potentially, the portfolio managers need to do that to crystallize their promote.

So, Harrison Street has built its business on the basis of having a balance there, and we see that as one of the great differences of the Harrison Street platform to any others we might have looked at over the years..

Okay, thank you. Very helpful.

And any new strategies? Or are they still sticking to – are they sticking to their core competencies?.

Well, they did establish last year a – an infrastructure, open-ended, so permanent capital fund. I believe it was just a startup. They raised about $500 million. They have a pipeline of transactions, and these are infrastructures, primarily – their focus interestingly is primarily around institutions in which they have relationships with.

So if you think about student housing and medical office, their relationships are with universities and colleges and hospitals. And so their infrastructure fund is around funding projects for universities and for hospitals, leveraging those relationships that they’ve already built. So, it’s early days. It was just kicked off last year.

They have lots of opportunity there. We’re excited about. They’re more excited about it. And so that would – I would consider that to be a new product.

But their view of specialty is to remain in their – Harrison Street, it’s a good name along their street, whether it’s students, whether it’s seniors, whether it’s medical office and be the absolute leader in those spaces. And once they are able to take in on the road into Europe, as they’ve started to do to remain focused in those areas.

I think infrastructure will follow in the future, but one step at a time..

Okay. That makes sense. Jay, I’m wondering if you could just highlight your top two or three priorities for 2019..

That’s easy. 2019, we’d like to take another big step towards our five-year plan. If you roll out the numbers and we have a decent year, we might even be able to hit our five-year plan in four years.

When we set the plan, and you were there at the time when we set out on the plan several years ago, 3.5 years ago, people said, doubling your business in five years, boy that sounds ambitious. And here we are in the fourth year of our plan with a real shot and exceeding expectations by the end of the fourth year.

So that’s a big priority for all of us. Another priority is to continue to strengthen our U.S. business, which is strong and – but has margin opportunities there and primarily around the fact that we have strategically acquired and added significant businesses to that platform over the past five years.

Every time, we add a business, we’re adding back-office infrastructure, different IT systems. And so there’s a huge integration challenge and opportunity for us. So, we have a specific team that integrates these operations as quickly as possible. And if we do a good job with that, it will add basis points to our margin. So that’s another area of focus.

And again, in the U.S., it’s top grading our talent, how do we position ourselves with the best real estate professionals and perhaps most – more importantly, the leadership of our business for the next five to 10 years. And we’ve made some great strides, but we have more work to do there..

Great. Thank you. That’s it from me..

Your next question comes from the line of Felicia Frederick of Raymond James. Please go ahead. Your line is open..

Hi. I just wanted to touch on some M&A since most of my questions have been answered already.

How should we look at your M&A profile for 2019 or just assume that it’s similar to 2018 less Harrison Street?.

Yes. I think Felicia, it’s John. Just to reiterate your question, you’re just wondering about our expected pace of M&A in 2019 and would it be similar to 2018, excluding Harrison Street, which obviously was a very, very large acquisition..

Yes, yes..

You can answer that, John. I mean, my view of it is 2018 was an outlier year. We – putting aside Harrison Street, we added a lot of activity there, 10 other acquisitions in strategic areas. We might be able to do that again. Our pipelines are such that we could, but I wouldn’t forecast that.

I would stick with 10% of the prior year’s EBITDA on acquisitions for 2019. And if we can do better, as we did in 2018, we will..

Okay. Thanks. That’s all I have..

There are no further questions in the queue. I’ll turn the call back over to the presenters..

Thanks very much, everyone, for participating. We look forward to doing this again at the end of the first quarter. Have a great week..

Ladies and gentlemen, this concludes the quarterly investors conference call. Thank you for your participation, and have a nice day..