Colliers International reported an 11.5 percent jump in net income during the third quarter, despite a pandemic that has significantly slowed commercial real estate activity.
The real estate firm reported a profit of $32 million, up from $28.7 million in the same period last year, according to its third-quarter earnings report. It was also a significant improvement from the second quarter, when net income was just $6.5 million.
That increase came despite third-quarter revenue dropping by 6 percent over the same period in 2019, to $692.3 million, because of a decline in leasing and investment sales.
The company made $169.7 million from leasing, down 22 percent from 2019. Its revenue from capital markets was $165.6 million, down 17 percent.
“While uncertainties persist, we expect our full-year results to come in stronger than anticipated,” said Jay Hennick, global chairman and CEO, during a conference call with analysts.
A key factor in the income spike is the firm’s growing “recurring services” sector, which now accounts for 60 percent of its earnings, according to Hennick. In recent years, the company has added services including engineering (via Maser Consulting, which it acquired this year) and mortgage processing to its portfolio.
But Hennick emphasized that the firm will not abandon its traditional commercial real estate brokerage services. “There’s nothing wrong with traditional capital markets and leasing,” he said.
“Transaction volumes may be down, but they will be back, and they’ll be back strongly as the economy stabilizes,” the CEO added. “These are essential services that are needed and required by real estate owners and occupiers everywhere.”
The uptick in net income was also the result of cost-cutting, such as furloughing employees, 6 percent of whom are still not working, Hennick said. Total cost savings will amount to about $150 million this year, said Christian Mayer, Colliers’ chief financial officer.
The stock market reacted positively to the results: Colliers’ shares rose from $63.73 Monday to around $72 on Tuesday.