Himanshu Gupta

Himanshu Gupta inquired about the specific properties or markets for the 400,000 sq ft of lease commitments post-quarter, the reasons for Granite's portfolio vacancy outperforming market vacancy in the U.S., and if the capital recycling strategy is primarily driven by diversification. He also asked about Granite's strategy for the GTA market.

Answer

Kevan Gorrie, President and CEO, identified Columbus and Houston for the recent lease commitments, noting that remaining vacancies are smaller and spread out. He attributed Granite's outperformance to the 'flight to quality' trend, particularly in large bay Class A assets. Kevan Gorrie confirmed that market concentration and expected return profiles drive the capital recycling strategy, suggesting Memphis could be a disposition target. For the GTA, he stated Granite aims to be a net buyer when pricing is right, despite potential short-term net selling of non-strategic assets.

Himanshu Gupta inquired about the specific properties or markets for the 400,000 sq ft of lease commitments post-quarter, the reasons behind Granite's U.S. portfolio vacancy outperformance compared to market averages, and if the capital recycling strategy is primarily driven by diversification (selling in high-concentration markets and buying in lower-exposure markets). He also asked about the GTA's role in this diversification strategy and whether Granite expects to be a net seller or buyer in the region.

Answer

President and CEO Kevan Gorrie identified the recent lease commitments as being in Columbus and Houston, noting that remaining vacancies are spread out, with Memphis having the largest single availability. He attributed Granite's U.S. outperformance to the 'flight to quality' trend, benefiting Class A large bay spaces. Mr. Gorrie confirmed that market concentration and expected return profiles drive disposition decisions, with Memphis potentially being on the disposition list. For the GTA, he stated Granite aims to grow but remains disciplined on pricing, potentially being a short-term net seller due to non-strategic assets, but not intending to decrease overall exposure.

Himanshu Gupta asked for a breakdown of the low teens commercial real estate growth expectation for 2026 between Capital Markets and Leasing, specific expectations for industrial and office leasing, the platforms driving the $6 billion-$9 billion fundraising target, and the performance of funds within the Investment Management segment in the past year.

Answer

CFO Christian Mayer projected high teens growth for Capital Markets and mid-to-high single-digit growth for Leasing, with office and industrial driving U.S. leasing. He noted fundraising drivers include a new infrastructure fund, Harrison Street Fund 10, existing open-ended vehicles, new products, and credit. He also highlighted strong fund performance, with the Harrison Street Core Fund exceeding the ODCE Index by 100 basis points in 2025.

Himanshu Gupta asked for a breakdown of the low teens growth expectation for commercial real estate in 2026 between Capital Markets and Leasing. He also inquired about industrial and office leasing expectations, the $6 billion-$9 billion fundraising target for 2026, and the performance of funds within the Investment Management segment in the last year.

Answer

CFO Christian Mayer projected high teens growth for Capital Markets and mid- to high single-digit growth for Leasing, with Capital Markets driving the overall commercial real estate growth. He noted that office and industrial leasing, particularly in the U.S., along with data centers, would continue to be strong drivers. For fundraising, he mentioned the new vintage infrastructure fund, Harrison Street Fund 10, existing open-ended vehicles, new products, and the credit vertical. Mr. Mayer confirmed strong fund performance, with the Harrison Street Core Fund exceeding the ODCE Index by 100 basis points in 2025.

Himanshu Gupta asked about the mix of open-ended versus closed-end IAM fundraising, initial client feedback on the Harrison Street integration, and the geographical impact on strong industrial leasing.

Answer

Christian Mayer (CFO) explained that significant open-ended and credit capital raised generates fees upon deployment, impacting immediate revenue. Jay Hennick (Global Chairman and CEO) reported terrific client feedback on the Harrison Street integration, noting streamlined fundraising. Christian Mayer (CFO) added that U.S. industrial and office leasing led growth, recovering from earlier tariff impacts.

Himanshu Gupta asked about the mix of open-ended versus closed-end IAM fundraising, initial client feedback on the Harrison Street integration, and the geographical impact on strong industrial leasing.

Answer

Christian Mayer (CFO) explained that significant open-ended and credit capital raised generates fees upon deployment, impacting immediate revenue. Jay Hennick (Global Chairman and CEO) reported terrific client feedback on the Harrison Street integration, noting streamlined fundraising. Christian Mayer (CFO) added that U.S. industrial and office leasing led growth, recovering from earlier tariff impacts.

Himanshu Gupta asked about the drivers of Q2 capital markets outperformance and the H2 outlook, the leasing growth assumptions in guidance, Q3 real estate margin expectations, the performance of the EnGlobe acquisition, and the H2 organic growth forecast for engineering.

Answer

CFO Christian Mayer attributed strong capital markets growth to the U.S. and Western Europe, expecting similar or better growth in Q3. He confirmed H2 leasing is expected to see a healthy uptick to meet full-year guidance and that real estate margins should improve year-over-year. He praised the EnGlobe acquisition's performance and projected mid-to-high single-digit organic growth for engineering in H2.

Himanshu Gupta asked a series of questions covering the drivers of Q2 capital markets outperformance, the leasing growth outlook for H2, Q3 real estate margin expectations, a one-year review of the EnGlobe acquisition, and H2 engineering organic growth projections.

Answer

CFO Christian Mayer attributed strong capital markets growth to the U.S. and Western Europe, expecting the trend to continue in Q3. He reaffirmed mid-single-digit full-year leasing growth, implying a strong H2, and guided for year-over-year margin expansion in real estate services in Q3 and Q4. He praised the EnGlobe acquisition's performance and integration and projected mid-to-high single-digit organic growth for the engineering segment in H2.

Himanshu Gupta asked about the drivers of the strong capital markets performance and the outlook for the second half. He also inquired about leasing growth assumptions in the guidance, Q3 real estate margin expectations, the performance of the EnGlobe acquisition, and the organic growth outlook for engineering.

Answer

CFO Christian Mayer attributed the 16% capital markets growth to the U.S. and Western Europe and expects similar or better growth in Q3. He confirmed the full-year leasing guidance implies a healthy second-half rebound and expects year-over-year margin enhancement in real estate services in Q3 and Q4. He noted the EnGlobe acquisition has performed well and expects mid-to-high single-digit organic growth for engineering in the second half.

Himanshu Gupta asked a series of questions covering capital markets performance drivers and outlook, leasing growth expectations for H2, real estate margin expansion in Q3, the performance of the EnGlobe acquisition after one year, and the organic growth forecast for the engineering segment.

Answer

CFO Christian Mayer addressed the questions, noting that capital markets growth was led by the U.S. and Western Europe and should continue in Q3. He confirmed that the full-year guidance implies a healthy H2 uptick in leasing and that some margin enhancement is expected in real estate services. He described the EnGlobe acquisition as a great success and projected mid-to-high single-digit organic growth for the engineering segment in H2.

Himanshu Gupta of Scotiabank Global Banking and Markets asked about the drivers of the strong Q2 capital markets performance and the outlook for the second half. He also inquired about the guidance for leasing revenue, expected margin expansion in real estate, the performance of the EnGlobe acquisition, and the organic growth forecast for engineering.

Answer

CFO Christian Mayer attributed strong capital markets growth to the U.S. and Western Europe, expecting the trend to continue in Q3. He reiterated a full-year mid-single-digit leasing growth target, implying a strong second half, and expects year-over-year margin enhancement in real estate services. He praised the EnGlobe acquisition's performance and integration, and projected mid-to-high single-digit organic growth for the engineering segment in H2.

Himanshu Gupta asked about the drivers of Q2 capital markets performance, the leasing growth assumed in guidance, Q3 margin expectations for real estate services, the performance of the EnGlobe acquisition, and the H2 organic growth outlook for engineering.

Answer

CFO Christian Mayer cited strong performance in the U.S. and Western Europe for the 16% capital markets growth and expects similar growth in Q3. He noted that full-year guidance implies a healthy H2 leasing rebound and expects year-over-year margin enhancement in real estate services. He praised the EnGlobe acquisition's performance and projected mid-to-high single-digit organic growth for engineering in H2.

Himanshu Gupta asked if the Real Estate Services growth guidance for 2025 is net of the negative FX impact. He also inquired if the Capital Markets recovery is expected to be a second-half story, if end-of-life funds would offset new capital raising, and about private market valuation trends for M&A in the Investment Management space.

Answer

CFO Christian Mayer confirmed the guidance is net of a 2-3% FX headwind and that both Real Estate Services and Engineering are similarly impacted. He noted that while Capital Markets is seasonally skewed to Q4, they expect growth throughout the year. He also stated that overall AUM is expected to grow, with fundraising outweighing modest redemptions. CEO Jay Hennick commented that M&A valuations in the IM segment are very competitive and buoyant, making them selective.

Himanshu Gupta asked for details on industrial leasing strength, the intra-quarter timing of the Capital Markets improvement, the definition of a 'normal' market, and the cause of lower Investment Management EBITDA margins.

Answer

CEO of Real Estate Services Christopher McLernon confirmed global industrial leasing was up 11% and that the Capital Markets recovery is gradual, with a 'normal' market reflecting the 10-year average volume. CFO Christian Mayer explained that Investment Management margins were impacted by investments in fundraising staff and new strategies, with a rebound expected as fundraising accelerates.

Harmanshu Gupta followed up on roofing weakness, asking about specific commercial asset classes or geographies experiencing contract deferrals beyond Florida. He questioned the potential organic growth for roofing if the reroofing business recovers, assuming a delayed new construction cycle. He also asked if roofing remains an M&A growth segment or if they would wait for weakness to pass. Additionally, he inquired about the restoration business backlog, its magnitude compared to last year/quarter, and excluding storm-related activity. Finally, he asked if Florida's organic growth in FirstService Residential was in line with the division's mid-single-digit level, given past budgetary pressures.

Answer

Scott Patterson (CEO) identified Las Vegas as a very soft market across all brands for roofing, noting new construction is down everywhere except data centers. He stated that roofing organic growth will return with market clarity but couldn't provide specific dates. He confirmed continued interest in roofing M&A, focusing on white space and cultural fit. For restoration, the backlog is similar to the prior quarter but slightly off from last year due to strong Canadian named storm work. For FirstService Residential, Scott Patterson (CEO) confirmed Florida is 'in line,' with budgetary pressures somewhat relieved by insurance market stabilization, showing low to mid-single-digit growth in Q3.

Harmanshu Gupta followed up on roofing weakness, asking if specific commercial asset classes or geographies, beyond Florida, were experiencing the most contract deferrals and softness. He then asked about the potential organic growth in roofing, assuming a delayed new construction cycle and a recovery in the reroofing business. He questioned whether roofing remained a target for M&A growth, or if the company would defer activity until the current market weakness subsided. He also asked for an update on the restoration business backlog, comparing its current magnitude and direction to last year and last quarter, and its status excluding storm-related activity. Finally, he inquired about FirstService Residential's organic growth, specifically asking if Florida was performing at a mid-single-digit level or slower, given past budgetary pressures in the region.

Answer

Scott Patterson (CEO) identified Las Vegas as a very soft market impacting all FirstService brands. He noted that new construction is down everywhere except data centers, a vertical not historically served by their roofing platform. He stated that the company will reset and start growing, as branches are strong and leadership is effective, but he could not provide specific dates or timelines due to market uncertainty. He confirmed continued interest in roofing M&A, stating that the thesis hasn't changed. He emphasized focusing on white space areas, cultural fit, and people, and will pursue opportunities if the right fit is found. He indicated the restoration backlog is similar to the prior quarter but slightly down from last year due to strong named storm work in Canada last year. He noted that some Helene and Milton work started entering the backlog at the end of September, describing the current backlog as solid and healthy for the environment. He stated that Florida is 'in line,' with budgetary pressures somewhat relieved due to a stabilized insurance market, though challenges remain with underfunded communities. He confirmed Florida's performance was in the low to mid-single digits in Q3.

Himanshu Gupta from Scotiabank asked about the potential impact of tariffs on margins, the growth drivers for Century Fire, and how Roofing Corp's first year performed against underwriting expectations.

Answer

Jeremy Rakusin (executive) stated that tariff impacts should be modest and insignificant to margins, as most suppliers are domestic and costs would be passed through. D. Patterson (executive) explained Century Fire's growth is balanced between new construction and service. He also confirmed Roofing Corp hit its year-one forecast and successfully expanded its footprint, with long-term organic growth expected to be in the high single-digits.

Himanshu Gupta requested a breakdown of the residential organic growth slowdown between pricing pressure and reduced scope of work, and asked if the issue was primarily confined to Florida. He also inquired about the expected EBITDA margin on storm-related revenues and the potential revenue cadence from recent hurricanes into 2025.

Answer

D. Patterson (executive) attributed the residential growth slowdown to the timing of contract concessions and flat seasonal services, confirming the impact is 'focused on Florida' due to legislation, though rising insurance costs create some pressure elsewhere. Jeremy Rakusin (executive) estimated the incremental EBITDA margin on storm-related work to be 'in and around 20%,' with variability. D. Patterson stated he could not yet predict the revenue cadence from hurricanes into 2025.