CBRE Group, Inc. (CBRE) Q3 2011 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the CBRE Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions being given at that time. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Nick Kormeluk. Please go ahead.

(Inaudible) CBRE’s third quarter 2011 earnings conference call. About an hour ago, we issued a press release announcing our financial results. This release is available on the homepage of our website at cbre.com. This conference call is being webcast and is available on the Investor Relations section of our website. Also available is a presentation slide deck, which you can use to follow along with our prepared remarks. An archive audio of the webcast and a PDF version of the slide presentation will be posted to the website later today and a transcript of our call will be posted tomorrow. Please turn to the slide labeled Forward Looking Statements. This presentation contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance, business outlook, ability to compete and integrate our announced acquisition of the ING REIM business in Europe, and the ability to complete a new incremental senior secured sterling denominated term A-1 loan facility. These statements should be considered as estimates only and actual results may ultimately differ from these estimates. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our third quarter earnings report filed on Form 8-K, our current annual report on Form 10-K and our current quarterly report on Form 10-Q, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SEC’s website sec.gov, for a full discussion of the risks and other factors that may impact any estimates that you may hear today. We may make certain statements during the course of this presentation, which include references to non-GAAP financial measures, as defined by SEC regulations. As required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are attached hereto within the appendix. Our management team members participating with me today are Brett White, our Chief Executive Officer; and Gil Borok, our Chief Financial Officer. I’ll now turn the call over to Brett.

Good morning and good afternoon, and thank you, Nick. Please turn to slide four. This quarter, our strong performance in evidence of the continued commercial real estate recovery comes against the backdrop of persistent sovereign debt concerns in Europe and tepid economic unemployment growth in the U.S. Revenue growth for CBRE was strong in the third quarter. Total company revenue was over $1.5 billion, representing a 21% increase over the third quarter of 2010. This growth was balanced across all geographies in most service lines. Leasing revenue increased 19% in the third quarter of 2011 with all regions increasing by double digits in the quarter. The largest percentage gains in Leasing were in Asia Pacific and EMEA. Outsourcing revenue accelerated significantly in the third quarter of 2011 with growth of 19%. All geographies had double-digit growth with EMEA leading the other two regions. Investment Sales growth was 23% for the total company entirely driven by the Americas as EMEA and Asia Pacific were essentially flat. Investment Management revenue showed a significant increase from higher asset management fees primarily driven by CBRE Clarion Securities, which we acquired on July 1st, as well as higher incentive fees. Normalized EBITDA increased to $194.8 million from $175.5 million. Our normalized EBITDA margin was 12.7% versus 13.9% in the third quarter of 2010. This margin comparison is impacted by an unfavorable variance of 60 basis points resulting from an increase in net carried interest compensation expense in our Investment Management business this year versus last. Another 60 basis point unfavorable variance was due to increased legal reserves associated with two unrelated cases and insurance reserves on claims within our Appraisal & Valuation business, which date back to the downturn. Despite these variances as well as higher Outsourcing business mix and increased staffing in EMEA, which also contributed to lower operating leverage in the quarter, we are still not satisfied with the overall EBITDA margin result and fully expect our cost production measures to show greater impact in the fourth quarter of 2011. Because of this, we reiterate our expectation that full year 2011 normalized EBITDA margin will exceed full year 2010 normalized EBITDA margin. Some of the most significant transactions we completed during or immediately following the quarter are shown here on slide five. As usual, I will not go through them individually but we have included them for your review. I will now turn the call over to Gil to go over financial results in detail.

Thank you, Brett. Please advance to slide six. Revenue was $1.5 billion for the third quarter of 2011, up 21% from last year. This increase resulted from strong growth in all business lines with the exception of development services. Normalized EBITDA was up 11% to a $194.8 million in the third quarter of 2011 from a $175.5 million in the third quarter of 2010, delivering a normalized EBITDA margin of 12.7%. Without the impact of the $7.4 million of carried interest compensation expense this year versus a reversal of $1.4 million last year and the $8.6 million impact of legal and insurance reserves taken in the quarter that Brett just mentioned, normalized EBITDA would have grown by about 21% and normalized EBITDA margin would have been almost flat compared to last year. Our cost of services as a percentage of revenue increased very slightly to 58.3% in the third quarter of 2011 versus 58.1% in the third quarter of 2010. Third quarter 2011 operating expenses as a percent of total revenue increased by a 100 basis points to 30.6% versus 29.6% in the third quarter of 2010. This was driven by the aforementioned carried interest expense, legal and insurance reserves as well as the inclusion of CBRE Clarion Securities expenses, all of which flowed through operating expense as opposed to cost of services. Interest expense decreased by $10.7 million in the third quarter of 2011 as compared to the third quarter of 2010, primarily due to lower interest rates resulting from our refinancing activities in the fourth quarter of 2010. Our third quarter 2011 normalized tax rate was approximately 40% and we also expect it to be approximately 40% for the full year 2011. Third quarter 2011 GAAP diluted earnings per share was $0.20 versus $0.18 last year. Adjusted diluted…

Thank you, Gill. And please turn to slide 18. Despite foreign debt challenges in Europe and uncertainty in the economic recovery in the U.S., we continue to believe that we are in the early stages of a cyclical recovery. Outsourcing fundamentals remained very strong as evidenced by the strong growth this quarter and revenues should continue to grow in the double digits for the intermediate term. The ING REIM acquisition will provide another significant source of stable, growing revenue that will be accretive to our overall EBITDA margin. In addition, we expect to see increased revenue flowing to our other lines of business as the ING REIM operations are integrated. The final piece of the ING REIM acquisition will close as scheduled during the fourth quarter. When it does, we will hold a special call to discuss that business in much more detail. Investment Sales should continue to grow due to financing availability for core assets, investor appetite per yield and attractiveness of the asset class as an inflation hedge. Leasing growth rate should revert to historical norms as the economy begins to stabilize. We remain focused on margins balanced with strategic recruiting in the appropriate service lines and geographies. We continue to expect EPS to be within our initial guidance range of $0.95 to a $1.05 for the full year. Our full year normalized EBITDA margin should exceed prior year. And with that, operator, we’d like to take questions.

Thank you. (Operator Instructions) And our first question comes from the line of Anthony Paolone at JP Morgan. Please go ahead. Anthony Paolone – JP Morgan: All right, thanks. Good afternoon, guys.

Hi, Anthony.

Hi. Anthony Paolone – JP Morgan: Hi. I’m just curious that thus far into the year why the guidance range is still a dime for basically the last quarter of the year and kind of what would drive the high and low into that band?

Well, as you know, Anthony, this is a seasonal business and a very significant component of our earnings come true in Q4. So it’s a bit more variable than the other quarters arrange therefore it’s a bit wider and, I think that it’s – from our standpoint, it’s good to give you guys as much guidance as we can but probably foolish to try and tell you that we know within a couple of pennies where it’s going to end up. Anthony Paolone – JP Morgan: Okay, but it sounds like you’re pretty confident that the EBITDA margins at least went up higher than they were last year. And so it suggested a pretty good ramp just compared to what your margins have been year-to-date and I know that’s typically what’s happened but – with lot of concerns over business slowing down, just curious how you’re feeling about the ramp being as dramatic as its been in prior years in the fourth quarter?

Well as far as I am going to take that what we’ve said, which is we expect that we’re going to have full year margin for 2011. It’s higher than our full year margin for 2010. And you can do any kind of math you want to do but you’re right, that would imply that we are fairly confident around the business lines at the moment and we are. When you look at the third quarter numbers, it’s striking to me that both leasing and sales globally showed good increase, sales only in the U.S. but Leasing in all three geographies. And again as I think as you know you Anthony, if there’s one good leading indicator of job growth and of growth I think in the revenues for this industry, you probably pick Leasing because these are large corporate customers, entering the marketplace committing to long term space leases. So, we like what we saw on the third quarter. We particular like that the Leasing numbers held up quite well and that’s about as far as I think I can take that. Anthony Paolone – JP Morgan: Okay, just one last question on that topic. You didn’t have any expenses relating to cost reductions in the quarter and it sounds like on the last conference call, things had slowed enough that you guys would consider some cost initiatives. It sounded like – did you not have to do that or did they just not cost money or what’s the status there?

Right. Well, as we said on the last call, we actually began work on costs in the late second quarter and we ramped up those efforts a bit at the end of the second quarter, right around the time of our conference call. So, we have not changed, of course on that. Again, and that’s all about driving an acceptable level of growth in our margins. But in terms of the accounting rental there, Gil, do you want to say anything there or..?

Yeah, I think there’s two points, first of all, one of major actions we took was to slow hiring which would obviously not have had cost associated with it and then there were some cost associated with getting cost out but not material enough to call out of normalized. Anthony Paolone – JP Morgan: Okay, got you. And then just on the Outsourcing business, it seems like the healthcare and government opportunities has been redeemed now for a while and it seems to be pretty strong, just wondering how much is left there, if there’s any way just to quantify the opportunity? And also similarly in Asia and Europe where the growth just seems to be very strong and as a percentage of the total Outsourcing part is still fairly strong.

Right. Well, the first, your first question on healthcare and government, these are massive, massive opportunities both here I United States and outside the States and I will say that the outsourcing of that type of work, we’ve just begun the scratch the surface. We believe we have a particular competency in this healthcare space brought to us from the Trammell Crow acquisition. You may recall Anthony or perhaps you don’t but Trammell Crow had a very deep and very specific healthcare outsourcing business. They did Baylor down in Texas, they still have that account and that expertise really jump-started our firms exploitation of that market. As it pertains to outside the United States in terms of why that growth rate is high and what we expect for the future, remember first of all, there’s been virtually no outsourcing in those two geographies historically. I think the seminal point here or the data point that’s most interesting to us is that it appears that this is a trend that has now caught on and we saw some very large pieces of business in those geographies, led of course by our Pru business in the UK. But, I think that we’re finally at that point, where large European and it’s primarily European, lesser extent Asian customers are embracing the concept. Anthony Paolone – JP Morgan: Got you. Is there – can you give us any sense as to what the incremental EBITDA margins are in the Outsourcing business right now, does that grows?

Yeah, Outsourcing unlike the other transaction businesses is very much a cost first business, so let me just first say, you’re not going to see the delta in incremental margins in Outsourcing that you’re going to stay in Leasing or sales where we can onboard lease revenues and sale revenues with zero additional cost other than commission. In Outsourcing those structural margins you see in Outsourcing of low teens are probably close to what they probably are, what the incremental margins are or less as because as I said many times you onboard the cost before you get the revenues. But though that having been said, if you just keep in your model margins for general outsourcing in the low double-digits, you’re going to get it right. Anthony Paolone – JP Morgan: Okay, thank you.

You bet.

Thank you. And our next question comes from the line of Brandon Dobell with William Blair. Please go ahead. Brandon Dobell – William Blair: Hi guys. Thanks.

Hi Brandon.

Hi Brandon Brandon Dobell – William Blair: I guess one kind of a derivative question off of from one of the previous ones. As you guys looked at the close rate for both Leasing and sales deals during the quarter, how did it stack up versus I guess your expectations given the overall macro noise or historical quarters? Just trying to get a sense about how predictable you think the business is right now looking out three months?

Sure. Well, first of all, to your specific question in, and I’ll use here the U.S. data first, in the U.S. sales velocity so number of transactions in the quarter was about 18% higher than the same quarter in 2010. In Leasing, it was about flat, although Leasing pickup in revenue came from leased sites, in other words square footage. Brandon Dobell – William Blair: Okay.

And what we look for in these numbers as an indicator of future quarters is a couple of things. First, trending, so for instance we would look at Q1, Q2, Q3 and see if there is a trend there, our Leasing revenues going up, are they going down. Same thing for sales and what we’re taking away from all that is that it is, we’re getting to that point where Leasing is going to begin operating in normal way. And that’s not 20% or 30% growth a year, it’s probably high singles, low doubles. On the sales side, we just continue be impressed with the increases in sale revenues flowing through the business in the States. I don’t have any reason to expect that they’re going to maintain that level, but I think they’ll be good. I also believe that the sale business will pick up fairly soon in EMEA again and in Asia Pacific. So, we look forward and we see a decent business out there for the transaction businesses. Brandon Dobell – William Blair: Well let me follow on that one for a second, maybe you have the sources, your confidence for EMEA and Asia Pac sales picking up, is it just resolution on some of the sovereign debt issues or do you think there is just more just deferral demand as some of this noise filters through and there’s just too much kind of yield chasing going on?

Well, it’s a combination of those things and others but I would say, Brandon, the first place I’d go to answer that question is I look at history and what we know about the capital markets is that generally speaking, the capital markets just call a time out almost instantly when there is a large amount of uncertainty in the marketplace about resolving something. If it’s the bid ask, if it’s an event of some sort, in this case the sovereign debt issues in Europe, capital markets move very quickly. You can cancel the sales in one minute phone call and once that uncertainty goes away, it doesn’t really matter directionally where it goes, once buyers and sellers believe that they can forecast their future a bit better, typically and historically that capital markets business returns. So, if I just use history as a lesson or a guide here, I would say that there’s more certainty now that this can’s been kicked down the road a bit, maybe not sold forever but sold for a while and that should bring some enthusiasm back to that European sale market. Brandon Dobell – William Blair: Fair enough. And then I guess can you reiterate the confidence around closing the balance of the ING business by year end, didn’t really change from the last time that you guys have talked about this but there must be some reasons you’re confident that that deal gets done the next six, seven weeks or so, maybe it’s the source of that confidence or you just think it’s more to stopping the eyes at this point versus anything major to get your arms around?

Excuse me. All I’ll say on that Brandon is that that deal should close in the fourth quarter. Brandon Dobell – William Blair: Okay. And then final question from me, within the Outsourcing business obviously a lot of space and lot of clients onboarded during the quarter, I mean should we assume that given your comments around flow of business in Asia Pac and Europe that similar magnitude of onboarding the next couple three quarters and these deals kind of maybe they don’t take two weeks to onboard but take a little bit longer than that. So, I mean is this quarter indicative of one or two quarter trend or do you think it’s got more legs than that right now?

Well, first of all it’s impossible to say. The way that these contracts go out, it’s all about a very formal RFP process. I’ll tell you our pipelines look quite robust. I also got to tell you that if you had told me a year ago that we’d see these growth rates in Outsource, I would have told you you’re out of your mind. These are historically high growth rates in Outsourcing. It’s hard for me to believe that they can be maintained yet. I’ve been wrong now for two quarters. So, there is something very fundamental going on in this Outsourcing business and I think its two things. One, I think that in difficult markets and we kind of went from enthusiasm in the markets to despair this year, in difficult markets there is a real momentum around Outsourcing to reduce cost. The second I think more important dynamic here is that we believe and of course everyone else will say it’s about their firm, but we believe we have a clear competitive advantage in this business than we’ve had in the past and our win rate which is close to a 100%, I think demonstrates that. So, we feel good, we feel positive about that Outsourcing space. I think it’s become a very, very big piece of our overall story and I don’t see anything the moment in terms of headwinds in that space. Brandon Dobell – William Blair: Okay, thanks a lot.

And our next question comes from the line of Kemp Sloan Bohlen with Goldman Sachs. Please go ahead. Kemp Sloan Bohlen – Goldman Sachs: Hi, good afternoon. Brett to your comment on the European situation may be getting solved a little bit for a while I guess, how do you plan the business based on how long that well could be and basically, I guess, I’ll ask the question from a standpoint of what do you guys view as the shape of the recovery particularly on the brokerage side from here? Do you feel like we’ve kind of hit a bottom and now ramp up particularly as companies are looking for yield on the sale side or on the hiring front from the Leasing side, maybe just general comments there.

Well, I suppose, well, first of all this is a very tough question to answer and we’re in the process at the moment putting off together our 2012 budgets and that’s ground up by the Sloan. So, I’ll be learning and Gil and our team will be learning a lot more over the next month, month and half about how our – each country, each city feels in Europe about that question. I would say, in absence of that data which we don’t have yet, it would – I think be logical to forecast that we’re going to go back to this incremental recovery that we talked about at the last five quarters on this call, that incremental recovery being probably something that’s a growth rate less than the hockey stick but growth nonetheless. And that’s as far as I want to take it right now because we’re, as I said, we don’t have the data yet and maybe we should wait till we see what those pipelines look like before we give an answer to that specifically. Kemp Sloan Bohlen – Goldman Sachs: Okay. And maybe I’ll frame it this way though. You talked about the leverage on the balance sheet post the ING REIM getting to 2.5 times debt-to-EBITDA. For acquisition or opportunities beyond that, is there a level of leverage that you’d be comfortable with taking the balance sheet at this point in the cycle?

Well, it depends entirely on the type of acquisition we would be looking at. So, and let me be more clear, if we’re looking at a transformative acquisition which we have lots of experience in, and we were dead certain what the expense synergies would be and what the cash flow from that acquisition would be, we’d probably comfortable in levering up to make that acquisition. With the construct, we would de-lever as fast as we could. And that’s been our model, Sloan, which is we’re not afraid to lever up to get the right kind of acquisition but there’s very few acquisitions of any size that we would probably do right now to take at sort of that level of net debt-to-EBITDA. Our sweet spot, what we want to maintain over the long-term our net debt to EBITDA something between 1.5 and 2 times and so we levered up a bit for ING. In the absence of a transformative acquisition, you should expect that ratio be coming down until we hit our comfort range again. I’d also tell that, Sloan, we’re not any more the company that’s comfortable with four times which we were back at the MBO and back in 2001. I think those days are far behind us. Kemp Sloan Bohlen – Goldman Sachs: Okay. And then, maybe one last question just on what you thought if any big shifts in market share there were in the quarter? It seem like your results definitely a lot better than what I think a lot of the market data would have been telling us?

Yeah, I think that we definitely picked up share in Outsourcing, there is no doubt about that. In the Leasing and sale business, it’s harder to say. In the sale business in the U.S., no question we picked up share and that’s been documented by the publications that follow the capital markets in the States. Hard to tell in Asia and Europe, we need to see couple of competitors who are poor before if I can give you a better answer on that. My guess is that on the share side in Europe and Asia, Outsourcing, we may pick up some share, Leasing probably, sales I don’t know. Kemp Sloan Bohlen – Goldman Sachs: Okay. All right, thank you.

Thank you.

And now we’ll go to the line of Will Marks with JMP Securities. Please go ahead. Will Marks – JMP Securities: Thanks. Good afternoon Brett and Gil and Nick. On that last question about market share, on the Leasing side, you mentioned earlier that velocity flat square footage, what about rental rate?

Flat. Will Marks – JMP Securities: Flat. So, it’s really all about square footage?

At the moment, which I like by the way, Will. What that tells you and I is that we’ve got some bullish customers out there who are for whatever reason are taking more space than they – and by the way it was 10% was the increase in amount of space taken Q3 2011 over Q3 2010. I like that... Will Marks – JMP Securities: Is it on a global basis?

That’s U.S. Will Marks – JMP Securities: Okay.

And I don’t have that data globally, we don’t have that data. But I think is a good proxy though for global. And also the fact that rents didn’t go down, the fact that we got that growth with flat rent, I like that because we have been saying and we continue to believe that we’re going to see vacancy rates decline over the next three quarters and rental rates begin to inch up and as they do that’s free revenue, it, you don’t have to work any harder to earn more revenue in the Leasing business when rates go up. Will Marks – JMP Securities: Yes, that makes sense, thank you. Balancing question, looks like the net debt change from end of second quarter, end of third was about $300 million I think. Can you clarify that or confirm that and then mention what, remind us what you paid through the third, end of third quarter for ING and then what the cash flow would be which I guess we could figure out?

Yeah, at the end of the second quarter we had $400 million of term debt that was raised but we’re sitting on the balance sheet. We hadn’t spent that cash until July 1 for Clarion Securities and then by the end of the third quarter we had drawn down the term loan C for $400 million. We only spent $65 million of it in Asia with $335 still sitting on the balance sheet and that is to go to ING REIM at Europe in part. So, that’s the movement. Will Marks – JMP Securities: Okay. And I think so there I guess had to have been some positive cash flow in the quarter?

There was. Will Marks – JMP Securities: Okay.

Operating cash flow as well, yes. Will Marks – JMP Securities: Okay, thank you. And let’s see, on Outsourcing, I wanted to ask you give these figures now by region that there is no way to tie that to the earlier page in your slides where you show the various categories, the various lines of business, right?

No, you’re talking about the revenue pie chart versus the America’s Asia regional breakout. They were tying total, yes, it’s on the same basis Property Management and Facilities Management fees. There’s no sale or lease in those numbers obviously. They’re on... Will Marks – JMP Securities: I’m sorry, so the total Property & Facility Management line should the $522 million for the quarter should be the sum of the Outsourcing for the three regions?

Yes. Will Marks – JMP Securities: Okay, sorry, I hadn’t done the math. Thank you. Last question on the margin you’ve talked about the how the full year should be above full year 2010. I guess I haven’t really heard why third quarter would be down 120 basis points in light of the revenue growth, in light of the high margin part of ING added to the platform and maybe I think you mentioned something about Europe but maybe you could add to that a little bit?

Yeah, Will, there’s several items. The large ones are when you look year-over-year we had carried interest expense this year in the third quarter of $7.4 million versus a reversal last year of $1.4 million and then we had $8.6 million of legal and insurance reserves primarily related to our Valuation business and primarily dating to development on claims that go all the way back to the downturn.

So, if you, so Will, if you take those numbers that $17.6 million total and these unusual one-time items, if you were to normalize those out, we didn’t, but if you were we will report a 21% EBITDA growth on a margin of close to 14%. Will Marks – JMP Securities: Okay, I’m sorry, I thought those had already been taken out to get to the adjusted EBITDA of $190 million but they weren’t, right?

No, we just called them out so you could do the math. Will Marks – JMP Securities: Right, sorry, I missed that. Okay, that’s all for me. Thanks, guys.

Okay.

Thank you. And next we’ll go to line of David Ridley Lane with Merrill Lynch. Please go ahead. David Ridley Lane – Merrill Lynch: Sure. As the European banks seek to shrink their balance sheets, do you see some opportunity for you around that process?

Absolutely. And I’d be disappointed if we didn’t capture a good amount of the asset disposition business and we’re obviously very well positioned to do that. David Ridley Lane – Merrill Lynch: And I guess just sort of thinking about what is the minimal level of Investment Sales you need to hit kind of lower end of your guidance range?

Yeah, it’s – I never thought about it that way but it’s not a lot. The Investment Sales incremental additional earnings where the Investments Sales were up 10% or 15% just isn’t that big but I don’t know the answer that question. David Ridley Lane – Merrill Lynch: Okay, all right, that’s helpful. And some of the Appraisal & Valuation work you’re doing given you a bit more optimism, i.e., the large portfolio assignments I guess those sorts of things that might turn into transactions in the fourth quarter or are they more longer-term than that?

I don’t think it means anything about fourth quarter but I do think it’s just another data point that tells us we’re probably again balancing along that bottom place and looking for better things to come. But that’s as far as I would take to and extrapolate that data. David Ridley Lane – Merrill Lynch: Okay. And then you slowed the hiring of brokers in the quarter, do you have a rough idea of what broker head count is up year-over-year in the third quarter?

It’s pretty stable year-to-date versus prior. I don’t have the data broken out by quarter with me.

I think that and just, David, to be clear on that, the bidding once jest about hiring brokers is a kind of a silly thing. I don’t think for any firm it moves the needle but because other firms were making a very big deal about hiring three brokers here or five brokers there, we started getting questions from some of you about what we had done and so we reluctantly began talking about the hiring of brokers. But I would just caution even on the call that it doesn’t – first of all, it never moves the needle for the first couple of years because you got to pay something to get most of these people and even once those that’s been amortized off, I can’t imagine there is a firm that’s so small that you guys follow that are hiring 20 brokers or 30 brokers in a year matters because your attrition is going to be probably that or more. David Ridley Lane – Merrill Lynch: Okay. All right, that’s all from me. Thank you very much.

Okay.

And we have a follow-up question from Anthony Paolone. Please go ahead. Anthony Paolone – JP Morgan: All right, thanks. Just I was curious what you paid for those couple of European what like retail oriented service companies and just in terms of dollar amounts and just rough valuation metrics?

I’ll give you the latter and not the former. So, valuations at the moment for those kinds of businesses after the synergies will be extracted from them you should expect those to be in the single digits. Some we’re looking at right now are coming in low, call it the five, six range. Others that are more mature business, more stable type of cash flow are coming at the higher end of that single-digit range. But the M&A market at the moment is surprisingly active at the small end. I mean I think we all get it at the big end there are some really distressed companies out there in our space but at the small end there seem to be more and more small companies that are concluding that it just isn’t possible to compete any more as a small company and joining the large firm, whether it’s us Sir Jones Lang or somebody else, it’s probably a better way to take care of their customers. I would tell you the total amount we spent on those in-fields was $12 million. Gil just pointed out to me, it’s actually in his script for the call. So, I guess we did call that out and it’s $12 million. Anthony Paolone – JP Morgan: Oh, thank you. Sorry, I didn’t catch that.

That’s all right. Anthony Paolone – JP Morgan: And then just a follow-up to some of the commentary you just made, any sense of some of those bigger platforms that you mentioned that are more stretched at the moment in terms of any of those potentially shaking loose in the next 12 months?

I just don’t know. It’s – I think we’re all watching with interest those firms and wondering how that’s all going to play out and I think it’s very uncertain at the moment how that’s going to play out. I’ll tell you that and by the way they’re all good companies, just different strategies. But what it has done which I will comment about, is it has certainly provided the larger staple firms with a good pool of talent to recruit. Anthony Paolone – JP Morgan: Okay. Thank you.

And I have no further questions in queue.

Great. Well, thanks again for your time. We’ll talk to you next quarter.

And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive TeleConference Service. You may now disconnect.