Greetings and welcome to the Marcus & Millichap’s First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now pleasure to introduce your host, Mr. Steve Swett of ICR. Thank you, Mr. Swett, you may begin.

Thank you. Good afternoon and welcome to Marcus & Millichap's First Quarter Earnings Conference Call. With us today are Marcus & Millichap’s President and Chief Executive Officer, John Kerin; Chief Strategy Officer, Hessam Nadji and Chief Financial Officer, Marty Louie. Before I turn the call over to management, please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of the these words and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors including but not limited to general economic conditions and commercial real estate market conditions including the recent conditions in the global markets and in particular the U.S. Fed markets. The Company’s ability to retain and attract transaction professionals, the company’s ability to retain its business philosophy and partnership culture, competitive pressures, the company’s ability to integrate new agents and sustain its growth, and other factors discussed in the company’s public filings, including the risk factors included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2015. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statement whether as a result of new information, future events or otherwise. In addition certain of the financial information presented in this call represents non-GAAP financial measures. The company’s earnings release which was issued this afternoon and is available on the company’s website, presents reconciliations to the appropriate GAAP measure and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Finally, this conference call is being webcast. The webcast link is available on the Investor Relations section of our website at www.marcusandmillichap.com along with a slide presentation you may reference during the prepared remarks. With that, it’s now my pleasure to turn to call over to Marcus & Millichap’s President and Chief Executive Officer, John Kerin. John?

Thank you, Steve and thank you all for joining us today as we discuss our results for the first quarter of 2015. I’ll begin today’s call with an overview of the Company’s performance and a review of our operational highlights. Hessam Nadji, will follow with an update on market conditions and Marty Louie, our Chief Financial Officer will conclude by providing additional details on the company’s financial results. We will then open up the call to your questions. Before I get started, I wanted to congratulate Hessam Nadji on his promotions for the position of Senior Executive by the President. Most of you are familiar with Hessam and know that he is a talented executive with an excellent job in his current role. We’re very pleased that he will be taking on additional responsibilities which include overseeing Marcus & Millichap Capital Corporation and number of corporate functions including finance and information technology. Let me begin with a review of our first quarter results, which produced revenue increase of 28% year-over-year to $146.5 million and net income growth of a 102% to $13.7 million. Adjusted EBITDA for the quarter was $26.3 million which is approximately 95% higher than the prior year. Our adjusted EBITDA margin improved to 17.9% from a 11.8% a year ago. Thanks to the quarters strong revenue growth. These numbers reflect a combination of solid market environment and more importantly the successful execution of our growth strategy. I believe we have effectively positioned the company to leverage the market very well with our national platform. And at the same time move forward to a number of initiatives we put in place a few years ago. As we have communicated on past calls, we have a pursed a strategy to add more experienced sales and financing professionals, build our…

Thank you, John. Good afternoon everybody. My comments today are intended to provide an overview of the commercial real-estate market and therefore are not necessarily specific to Marcus & Millichap. The commercial real-estate market environment continues to be defined by improving property fundamentals, low interest rates, ample availability of debt and equity capitals and most importantly competitive yields. Much as we have seen over the past two years these macro forces resulted in rising prices and property sales during the first quarter of 2015. Besides the near-term performance invest results have appeared have positive outlook and supply demand conditions and rent growth for this foreseeable future based on our most recent investor survey responses. With this back drop is not a surprise sales rose once again during the first with the number of transactions up and estimated 10% year-over-year and dollar volume up and estimated 20%. It should be noted that the rate of growth in sales is trending towards more normalized base as we would anticipated on our prior call. As we also shared on the last call we believe that low inflation – dollar and the recent around of simulative measures by Central Bank outside the U.S. the Federal Reserve flexibility and timing and scope of eventual interest rate increase. That being said, our interest rate should be expected at front point. However we still believe that increases should happen in orderly fashion and in conjunction with the improving job growth and further commercial property occupancy and rank it that should come with it. Meanwhile U.S. economy continues to expand we are adding jobs that healthy space and demand for all categories of commercial space continues to grow as a result. The first quarter contributed 590 jobs slightly ahead of the first quarter of last year bringing in…

Thanks Hessam and thanks again everyone for joining us on today’s call. Now I would like to discuss our first quarter’s results in more detail. Total revenues in the first quarter of 2015 were $147 million compared to $115 million for the same period in the prior year an increase of nearly 28%. This increase in total revenues was primarily driven by increases in our real estate brokerage commissions which grew to $134 million from $105 million for the same period in 2014 an increase of approximately 28%. This growth was driven by both an increase in the number of investment sales transactions as well as larger average transaction size, partially offset by a slight decrease in our average commission rate earned on transactions. As you may recall larger transactions generate lower commission rates. The increase proportion of larger transaction is reflection of our emerging agents and our focus on hiring experienced sales and financing professionals. The increase in a number of sales transactions and increase in the average commission size were also driven by overall strength of the market as well as investors anticipation of future increases in interest rates which we believe was affected and may have caused an acceleration in sales volume during the first quarter. Additionally, as John mentioned earlier we have increased our headcount over the past two years and seasoning of the sales and financing professionals that contributed to our growth. Revenue from financing fees generated principally by MMCC increased to $8 million from $6 million in the first quarter of last year for an increase of 32%. Other revenues of $4.3 million were slightly compared to $3.7 million last year driven by a increase in consulting and advisory services which was partially offset by decrease in referral fees from other real estate brokers.…

Thank you. We will be conducting a question-and-answer session. [Operator Instructions]. And our first question comes from Phil Stiller from Citi. Please go ahead.

Hi, thank you and congratulations on the results and Hessam congratulations on the promotion.

Thanks a lot, Phil.

Thanks, Phil

I guess I wanted to ask about market conditions obviously you guys had a very strong quarter but you also talk about some pull forward revenue and kind of a normalization for the rest of year is there anything you’re seeing in your transaction trends in the early in the second quarter or listing volumes that are leading you to make those comments or is this just kind of a broader cautionary tale that you are talking about.

Well, I think the normalization we are talking about is last quarter, if you look at our fourth quarter 2013 and the increasing transactions in fourth quarter 2014 equates about 14% because the same thing in first quarter 2015 versus first quarter of 2014. So we are kind of in some types of normalized transaction gain sort to speak, but everything is still normal we are still doing our business in the right way, but that’s really nothing – that’s really changed too much from what we have been experiencing in the first quarter.

From the standpoint of the market so the 10% increase in the first quarter is really reflecting a slowdown from last several years and that’s really the trending towards a more normalized base of growth that we have been talking about for a while, but again we don’t anticipate any market issues, market is very active the rate of growth of beginning.

Okay, that makes sense. I guess and looking at the geographic breakout that you guys provide the transaction growth in the west was bit below the average just wondering if that’s indicative of any market issues there or is it just an indication of where the hiring is taking place over the last couple of years?

Yes, there is no real indication of any weakness on the western part of the country. I think a lot of our growth has been in the Northeast I think the Northeast is growing rather nicely, Texas was very good, but there is really no I think you mentioned it we’ve recruited more people – more people I think out of the Midwest, Texas and the Eastern part of the country. So there might be the way it’s allocated at that point in time.

Okay, and then last one and then I’ll turn it over was on margins so obviously very good performance in the first quarter I know margin is typically raised throughout the year, is this something level that you think continue to increase through the course of the year?

Okay, so let’s look at the typical year as investor brokerage company, we have a number of agents this year who kind of moved into – been out two or three years. We started making some more deals, okay. So therefore, they are on a little bit of a lower split of time. Some of these people go up during the year based on the splits they are on, our senior agents probably – splits move a little bit more because in the first quarter they are on the lower split any graduate during the year, so our cost of services will go up a little bit, our margin will go down a little bit, but we did a pretty good job in the first quarter, but keep that margin it’s going to be difficult because splits will go up as the years move forward.

Okay, great. Thank you, guys.

Thanks Phil.

And our next question comes from Mitch Germain from JMP Securities. Please go ahead.

Good afternoon guys. John you mentioned and I think you have it in your text to about maybe an acceleration of activity due to some rate fears in the back of the year. Just maybe put that into context is that just an opinion or is that something that you're hearing from some of the customers that you are working with.

Okay, so at the end of March we had a number of transactions that were really not scheduled to close by March 31. So what I did was I really went around to lot of our offices and try to find out what happened with some of these transactions and there was a number of the managers in the filed that basically said this deal probably close later in April, it closed a little bit earlier. This larger transaction was an all cash transaction and they wanted to get out and start to refinance progress now rather than wait for another month or so. But possibly the interest rates rising at some point in time, so yes, there was a little bit I can’t quantify in how many millions was – but that was an issue and going around to the offices and talking to the local management team that was really what came out of it.

And we are hearing a lot about obviously liquidity in the market how sensitive are some of these acquirers or sellers if we do see a rate rise I mean what's your view if we’re looking and staring at 3% treasuries

Well, I’ve been in the business for a long-time and there is always something that disrupts the business for a very short period of time, I mean if you look back in May of 2013, when we had a little bit of interest rate rise. We continue to do very, very but there was a two, three, four week period of time, when some of the local banks might look at their underwriting. Some of the sellers might look and say, am I selling in order, buyers excuse me looking and saying like buying too much. But usually that last few weeks and let me go back to business as usual. That’s typically what’s happened, but the key is you don’t wanted to lose that two or three week process in a year which could effect our ability to transactions for a short period of time.

Mitch the only thing I’ll add to is that if you look at the occupancy outlooks, the rent growth outlooks, job market owning up really well, all those budgeted factors are in a way of overshadowing the amount of interest rate increase but maybe in the pipeline, there is really nothing that indicates that whatever in interest rate increases we will experience at some point it’s going to be significant or disruptive to the balance of the market place.

Great. And last one for me, you know stellar quarter guys in terms of the amount of volumes and I know that historically speaking, the first quarter is X percent of total volumes and then, kind of graduate your way up to the fourth quarter on any should we think that there's any change in that pattern or probably this is usual

Hey, it’s Marty. I’ve always said, we’ve always said that the first quarter tends to be about 17% to 20% of our total year, I also said in the mid last year, that we started to see kind of a what I call a flattening of the seasonality curve, I think that started mid year, last year and we still see it. So now yes, we think that Q1 is probably going to end up being in kind of part of our spectrum in that range maybe plus or one or two points.

That’s helpful. Great, guys, thank you so much.

Thanks, Mitch.

And our next question comes from [indiscernible] from Goldman Sachs. Please go ahead.

Hi, guys, good afternoon. I wanted to ask about the GSEs, which is something that we’ve been hearing a lot about in the quarter and so since you do so much within the multifamily space. I wanted to get your thoughts on whether or not that might have driven an outsized increase in multifamily volumes at the start of the year and just related to that if we did see the GSE start to pullback and it seems like that maybe already started your thoughts on whether or not that would impact your business at all?

Hi Brad, this is Hessam I’ll take that one. We’ve been hearing a lot about that and obviously there is some anticipated slowdown in GSE lending by this reasons, but given the size of the transactions that we normally finance that are well below $5 million. The vast majority are been financed by local, regional and national commercial banks and there is ample of those availability of lenders that are willing to lend in that category. So we don’t anticipate any issues at all in our core private client business which is by far the vast majority of what we did.

Okay, that’s actually interesting and helpful. And then just – I wanted to get your thoughts on headcount at this point, it looks like you had a couple of transactional professionals from Q4 and realized that the first quarter isn’t going to be necessarily biggest quarter for having headcount, but just a sense of how you are thinking about momentum for headcount growth over the balance of the year?

I think its really the same as it has been over the last couple of years I mean part of the local managers job is to really bring new people on board, hopefully bringing more experience people on board as what we’ve been really focusing on over the last couple of year. So I don’t think there is any real difference in headcount I think if you are talking about what happens in the beginning of the year typically you might loose a couple of people because they are coming to the end of the year deciding what they wanted to do. So I would say that our net headcount will probably move up throughout the year.

Hey, this is Marty and also what we have indicated to everyone and still holds true is that our goal is adding a net headcount of about 100 agents, 75 to 100 agents.

Okay, and that’s unchanged.

That is unchanged.

Okay, and actually Marty, well I have to just wanted to touch on the cash balance and obviously a very good quarter and that held up liquidity and I think that if I look at cash plus the marketable securities balance which continues to increase you are up about $60 million or so from last year, so just wanted to get your thoughts on how you are thinking about the deploying that cash and also thinking about how much liquidity you really think that you need for this business?

Well, obviously to operate our current business it generates quite a bit free cash flow, but I said that having this amount of cash that we have gives us great flexibility in considering how we are going to strategically deploy our capital. So right now we are currently looking at various ways to invest that that’s going to ultimately increase the value for our stack holders.

Is there anything you can do to elaborate on how we might think about your investing?

I mean we spoke about lot of different things, but that also includes potential or opportunistic M&A.

Okay. All right that’s’ it from me. Appreciate it, thank you.

Thank you, Brad.

Thanks, Brad. End of Q&A

There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Thank you. I want to thank everyone for joining our call today and we look forward to speaking with you after our second quarter. Thank you very much.