Colliers International

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Annual Message to Shareholders

Colliers International had another record year in 2016 and for the first time revenues in the Americas region topped the $1 billion mark. These results demonstrate excellent year-over-year growth and represent another important step forward in our ambitious five-year plan to double the size of Colliers by 2020.

As one of the leading global players in the massive global real estate services industry we see significant opportunities to continue to take market share, consolidate and add services. Our strategy of internal growth and acquisitions coupled with our highly recognized global brand and proven management team, puts us in an excellent position to capitalize and generate value for our shareholders for many years to come.

NFL Hall of Fame coach Bill Parcells said, “You are what your record says you are.” Over the last 22 years, the Colliers management team has delivered 20% annualized returns to shareholders. This record of performance is unique in our industry and speaks volumes about our ability to execute over the long term. With record results in 2016, the momentum we have achieved so far this year and the opportunities we continue to see, we expect 2017 to result in another significant step forward in achieving our ambitious growth plan.

Let me touch on some of the highlights from 2016:

  • We generated strong fourth quarter results overcoming a softer than expected third quarter. Not only did we make up the difference, we soundly exceeded the year-end outlook demonstrating once again that our business should not be evaluated on quarter over quarter results. Quarters are often impacted by a number of factors including prior period results, the timing of significant transactions or geopolitical events like the impact of Brexit in the third quarter.
  • During the year we made further progress diversifying our revenue streams. Revenues from Outsourcing and Advisory increased to 38% with 32% coming from Leasing and 30% from Sales Brokerage. About 70% of our revenues now come from Outsourcing and Advisory and Leasing – both largely recurring. We also further diversified our revenues by geography. 54% now come from the Americas with the balance split between the EMEA at 25% and AsiaPacific at 21%. Having a well-balanced business underpins our already strong foundation and helps to smooth revenue streams especially in challenging markets.
  • Operationally, we continue to win accolades as one of the best places to work like the recognition we received from AON Hewitt in Canada as the “Gold Level Best Employer”. Our plan is to retain our top professionals and build our platform around accelerating the success of our clients and employees. We also add top talent, especially in key markets or where we can expand our services or capabilities. During the year we were successful recruiting top-flight professionals in several key markets worldwide, including New York and London.
  • During the year we strengthened our board with the addition of The Right Honourable Stephen Harper, Canada’s 22nd Prime Minister, and a long-serving G7 and NATO leader. Mr Harper brings unique geopolitical insights and high level relationships to our governance.
  • Colliers growth strategy is focused on growing internally faster than the overall market and augmenting this growth with prudent acquisitions, well integrated. During 2016, we completed ten acquisitions, six in the Americas and four in EMEA and so far this year, we have completed another three: one in the Americas and two in EMEA (including the important addition of Colliers Northern California and Nevada as well as Colliers Denmark).
  • This year we also increased the dividend on our semi-annual common shares by 25% to $0.05 per share.

One of the cornerstones of our strategy is having the most technologically advanced capabilities in the industry. That means continuing to invest in technology. Just after year-end, Colliers introduced a new fully integrated industrial and logistics site selection and incentive negotiation technology – called “Colliers Indsite”. Along with the industry leading Colliers 360 for corporate users … and Colliers Office Expert for office users … Colliers Indsite is another example of the differentiated value Colliers advisors offer our clients.

What has always set Colliers apart is its enterprising culture. Colliers professionals are smart, creative, nimble and entrepreneurial. Being enterprising encourages them to think differently, share great ideas and provide innovative insight to clients. Equally important is the significant equity stake our leadership holds in our company. At almost 25% of the equity, this is more than double our competitive peer group combined. Having money on the table and complete alignment with our shareholders creates even more incentive to go above and beyond for our clients and deliver outstanding returns for shareholders.

Finally, in early January 2017, we reinforced our already strong financial position by expanding our credit facility to US$700 million and extending its term for another five years. The new unsecured facility confirms Colliers’ proven long-term growth strategy, increased scale and geographic and service line diversification. This important move will provide us with additional flexibility as we continue to execute on our strategic growth plan.

Looking ahead to the balance of 2017 and beyond we have every reason to be optimistic. As one of the top players in a $150 billion industry with a highly recognized global brand and proven management, Colliers International is in an excellent position to continue generating exceptional value for shareholders in the years to come.

I would like to thank all our business leaders, professionals and employees for their inspired and enterprising work over the past year. Together we take pride in continuing to build upon our already strong foundation, momentum and market leadership as we write the next chapter in the story of Colliers International.

Jay S. Hennick
Chairman and Chief Executive Officer