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Edited Transcript of MMI earnings conference call or presentation 8-May-18 9:00pm GMT

Q1 2018 Marcus & Millichap Inc Earnings Call

Calabasas Jun 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Marcus & Millichap Inc earnings conference call or presentation Tuesday, May 8, 2018 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Evelyn Infurna

ICR, LLC - MD

* Hessam Nadji

Marcus & Millichap, Inc. - President, CEO & Director

* Martin E. Louie

Marcus & Millichap, Inc. - Senior VP & CFO

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Conference Call Participants

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* Mitchell Bradley Germain

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Peter Corwin Christiansen

Citigroup Inc, Research Division - VP and Analyst

* Stephen Hardy Sheldon

William Blair & Company L.L.C., Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, greetings, and welcome to the Marcus & Millichap's First Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Evelyn Infurna. Thank you. You may begin.

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Evelyn Infurna, ICR, LLC - MD [2]

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Thank you. Good afternoon, and welcome to Marcus & Millichap's First Quarter 2018 Earnings Conference Call. With us today are President and Chief Executive 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 statement. Words such as may, will, expect, believe, estimate, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statement. 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 condition; the company's ability to integrate new agents and sustain its growth; and other factors discussed in the company's public filings, including its annual report on Form 10-K, which was filed with the Securities and Exchange Commission on March 16, 2018. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can make 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 on this call represents non-GAAP financial measures. The company's earnings release and earnings conference call presentation, which was issued this afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measures and explanations of why the company believes such non-GAAP 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, www.marcusmillichap.com along with the slide presentation you may reference during the prepared remarks.

With that, it is my pleasure to turn the call over to Hessam.

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [3]

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Thank you, Evelyn. On behalf of the entire Marcus & Millichap team, good afternoon, everyone, and thank you for joining our first quarter 2018 earnings call.

We began the year on a positive note. Our expanded client outreach and marketing initiatives over the past year, along with investment and brokerage tools and infrastructure, generated steady improvement in our results. These countermeasures to heighten market uncertainty and interest rate volatility culminated in total revenue growth of nearly 14% for the first quarter and 16% in brokerage revenue, with improvements across all market segments. These efforts reflect the agility and expertise of our team in helping clients successfully navigate through changing market conditions and a hallmark of our value-added brokerage model throughout our 47-year history.

Investor sentiment was much improved during the first quarter due to solid economic performance and the passage of the new tax law in December of 2017. Commercial real estate investors continue to perceive the new law as favorable. At the same time, the 50 basis point rise in interest rate and persistent bid-ask spread kept sales transactions in the market flat to modestly higher during the quarter, as reported by RCA. We believe this also points to additional share gains for MMI, as our total transactions grew 6% and Private Client transactions grew 4.2% in the first quarter.

In our view, the market does not yet fully reflect the benefits of improved investor psychology and positive aspects of the new tax law for commercial real estate. Answers to tax treatment questions in specific areas are slowly emerging, which we expect will gradually lead to more capital formation and buyer demand throughout the year. This, coupled with the steady economic growth and still healthy property fundamentals, should counter rising interest rate to a high degree.

Taking a closer look at the quarter, our brokerage sales volume rose nearly 22% on a year-over-year basis, which was largely due to gains in our mid-market and larger transactions. Broker sales volume in these segments grew 34% and 48%, respectively. These results were supported by numerous internal growth initiatives led by our specialty executives as well as a marked improvement in larger investors' appetite for transaction. It is also a function of higher sales variability, particularly in larger transactions, which had a significant decline in the first quarter of 2017 and gradually improved throughout the year.

As we look to diversify our market coverage and revenue in various niches and larger sales, we remain steadfast in maximizing further growth in our Private Client business. This vital segment accounted for 65% of our revenues and 74% of brokerage transactions during the quarter. The Marcus & Millichap platform is well aligned with the broader marketplace with Private Client transactions accounting for 84% of all sales consistently. Over the past year, we steadily grew share in this segment by an estimated 40 basis points, and we are now approaching 9%, by far the highest market share of this segment in the industry. This includes progress in Private Client office and industrial sales, both of which give us plenty of growth opportunity ahead. In fact, in 2017, Marcus & Millichap was the #2 broker of office sales in the $1 million to $10 million price range and #3 for sales under $20 million.

Another noteworthy trend for the quarter was the decline in refinancing activity, which was driven by higher interest rates, less of a preference for recapitalization and lower maturing loan volumes. Our financing revenue declined 3.3% in the first quarter as a result of these factors. To some degree, this was also due to a natural lag time needed to rebuild our financing pipeline on the heels of a record fourth quarter when financing revenue grew 23%.

Our strategy of reconfiguring our financing team with more experienced professionals continues and will temporarily result in headcount reduction, as we have indicated before. Having added a number of experienced professionals over the past 18 months, it is clear that this recruiting process takes longer, but it's proving to be the right strategy for us.

Our expanded lender relationships, particularly our programs with ReadyCap and PGIM, have also been affected and continue to gain traction.

Last but not least on the financing front, we are continuing with the process of selecting a new head of business for MMCC to succeed Bill Hughes, who will be retiring. As a reminder, Bill is fully engaged in supporting our loan originators and clients and will remain so throughout this transition.

As we indicated on our last call, we're being even more selective than usual on the hiring and retention of new brokers. This is a function of the extended -- the wrap-up time for new brokers required in a maturing cycle with more complex market dynamics. In addition, hiring and retention of talent is more challenging in a low unemployment economic environment. Therefore, our headcount trends will have more volatility in the next several quarters, but our goal of continually growing the sales force with the right individuals remains intact. As in past cycles, our managers are relying more heavily on mentorship programs, sales internships and intensified training to grow the sales force and help our teams succeed. Over the past 12 months, we've added 40 investment sales brokers and continue to have success in recruiting experienced professionals.

Let me now turn to the market environment. We remain positive about the broader economic outlook, notwithstanding concerns about potential trade dispute. Evidence is starting to show that lower corporate taxes are not only boosting earnings, but may spur additional investment in facilities, equipment and growth-oriented projects by companies. In fact, nonresidential investment was up nearly 9% in the first quarter, the highest since 2014. This should help extend job creation and the economic expansion.

Occupancies continue to be solid across the industry with overbuilding limited to luxury apartments, industrial and self-storage in specific metros. We see no major factor disrupting the supply-demand balance for the industry in the foreseeable future. This has been pointed out before and widely covered by the media, but it can become somewhat overlooked as a compelling reason U.S. commercial real estate remains an attractive investment alternative globally.

On the capital markets front, the increase in interest rates to a 4-year high is clearly showing up in a persistent bid-ask spread. So far, lender spreads have come in and helped limit the rise in actual borrowing cost to some extent. With unemployment now at 3.9% and concerns of rising inflation, the Fed will likely stay on the tightening path, pushing cost of borrowings higher. The combination of healthy fundamentals, steady employment gains, lack of over-leveraging and rent growth are positive factors, offsetting rising debt costs. As I mentioned, the benefits of the new tax law should also gradually result in more capital flows and CRE sales.

The bottom line in terms of transaction activity is the speed at which the market absorbs all of these dynamics with reasonable price adjustment. On that note, we continue to see rationally-priced assets generate multiple offers, willing lenders and expeditious closings. We believe the market sales trend is headed in a positive direction, but growth will likely be gradual. We are well positioned to continue growing market share and revenue, albeit at a more temperate pace given the sequential improvements we achieved last year starting in the second quarter. Our management team continues to lead marketing campaigns, investor symposiums and local client outreach programs to increase inventory and help our sales force access the largest pool of buyers across the firm.

Before I turn the call over to Marty, let me update you on our capital planning. Since our last call, we've taken additional steps in evaluating acquisition opportunities as our top capital allocation priority and are finding that valuation expectations continue to become more reasonable. As such, we believe being positioned to pursue what may be a window of expanded opportunity in an evolving M&A market is critical, given the positive effect of strategic and accretive acquisitions on maximizing shareholder returns.

To this point, I am pleased to announce that MMI has entered into a definitive agreement to acquire Pinnacle Financial Group, one of the largest privately-owned and highly regarded commercial mortgage brokerage and servicing companies in the Midwest. Based in Cleveland, Ohio, Pinnacle is a 28-year-old, 17-person company that originates loans in virtually all commercial real estate property types with particular strength in multifamily, retail, office and industrial. Pinnacle also provides mortgage servicing for lenders, including life insurance companies, pension funds and CMBS. The integration of Pinnacle's highly-experienced team into our financing division, MMCC, fills an immediate service gap throughout our 3 Ohio-based offices and parts of the Midwest. Our sales force will benefit from synergies and gain crossover business opportunities, given Pinnacle's longstanding relationships with major owners and lenders. In addition, Pinnacle's life insurance correspondent relationships and loan servicing capabilities will open up business opportunities for our existing senior-level MMCC professionals, who will be able to collaborate with Pinnacle as part of our national platform. We are excited to have the Pinnacle team join MMI, as their business philosophy, client-centric culture and outstanding reputation are well aligned with our values. The team will be based in our Cleveland office and we anticipate the acquisition closing by the end of the second quarter.

Pinnacle is a great example of how M&A opportunity can expand our business, and we are encouraged by our current dialogue with additional investment sales and financing targets. We continue to evaluate various aspects of our capital allocation plan, including appropriate options and strategies for returning capital to shareholders, with the priority being a pursuit of M&A opportunities. Let me emphasize that we remain vigilant on valuations given the maturing real estate cycles, as our acquisition focus is driven by quality, not quantity.

And last but certainly not least, let me reiterate management's unwavering focus on the fundamentals of our business and optimal operations of the company. We strive each day to achieve the best results for our clients and provide the best support, tools and training to our brokers.

I will now turn the call over to Marty to discuss results in more detail. Marty?

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Martin E. Louie, Marcus & Millichap, Inc. - Senior VP & CFO [4]

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Thanks, Hessam. Total revenues in the first quarter increased 13.9% year-over-year to $175 million, primarily due to revenue growth from our real estate brokerage commissions, which grew 16% to $163 million driven by strong performance in all market segments. Our real estate brokerage business accounted for 93% of our total revenue during the quarter.

Revenues from our Larger Transaction Market segment grew 47% as compared to the 40% decline during the same period last year. The mid-market business had a strong quarter as well, growing 42% on top of a 12% increase in the prior year.

Lastly, our Private Client market segment grew [6.3%] on a year-over-year basis. Overall, performance was encouraging when compared to a market that was flat to modestly higher than previous year.

Total sales volume for the quarter increased 15% on a year-over-year basis to $9.8 billion supported by strong sales in multifamily, hospitality, industrial and self-storage. The market was particularly challenging for these property types during the first quarter of 2017, and this year's volume increase was also elevated by gains in our mid-market and larger business segments.

Revenue from financing fees generated by MMCC fell roughly 3.3% to $9.7 million for the quarter, reflecting an 18% decline in refinancing fees, partially offset by purchase-related financing fees increasing 7%. As Hessam discussed, our mix of purchase and refinancing fees mirrors the current market dynamic of an active sales environment.

Other revenue, comprised primarily of consulting and advisory fees, along with referral fees from other real estate brokers, fell 24% to $2.3 million in the first quarter.

Total operating expenses for the first quarter were $151 million, up nearly 13% year-over-year. The increase was due to higher cost of services, SG&A and depreciation and amortization. Cost of services increased 13.4% year-over-year as -- and as a percent of total revenues came in at 58.2%, just slightly under last year's rate. As a reminder, this expense is primarily comprised of commissions paid to the company's investment sales professionals and compensation related to financing activities.

First quarter's SG&A increased 11% year-over-year to $48 million due to the following factors: First, higher cost associated with our sales recognition programs related to 2017's performance. As a reminder, the majority of our sales recognition programs typically take place during the first quarter. Secondly, higher sales support and compensation-related costs. The increased compensation is primarily reserves for managers' performance-based bonus and directly correlated with the company's strong first quarter's result. Third, higher stock-based compensation expense, primarily due to fluctuations in our stock price. And lastly, cost associated with office lease renewals and space expansion in key strategic markets.

For the first quarter of 2018, net income was $18 million or $0.46 per share compared to $12 million or $0.31 per share in 2017, for an increase of roughly 50%. Our tax rate for the quarter was 25.9% as a result of the new tax law versus 38.5% last year. For an apples-to-apples perspective, adjusting last year's results for the lower tax rate, net income would have increased nearly 25%.

Adjusted EBITDA increased by 22.3% to $27.4 million during the quarter. Our adjusted EBITDA margin for the first quarter increased 110 basis points to 15.7%. The expense leveraging we expected to resume in 2018 is starting to manifest, as we have executed the majority of the increased investments in key areas we have been discussing with you over the last 2 years. These include facilities, broker support, development and support cost related to proprietary technology and other technology infrastructure, all of which are essential to keeping MMI competitive.

From a balance sheet perspective, Marcus & Millichap is well positioned to continue to grow its business organically and to pursue selective acquisitions. Our liquidity levels are very healthy, ending the quarter with cash and core cash investments of approximately $293 million.

As mentioned earlier by Hessam, M&A is our priority for the use of the company's capital, which we believe would have the most impact on enhancing the platform and shareholders' value over the long run. The impending acquisition of Pinnacle is a result of our efforts in executing this strategy.

Before opening the call to Q&A, I would like to point out a number of key items and highlights, which may have an impact on our 2018 results. Last quarter's double-digit growth was partially due to the easier comparison to last year. Our management team has been and continues to execute programs that are focused on growing our inventory and pipeline. However, comparison to prior year's quarters will progressively become more difficult when considering a flat to moderately-improved market.

In addition, while our outlook on market activity is positive, the market is digesting the impact of higher interest rates and, as such, improvement in market sales will likely be gradual.

Lastly, despite 2017 second quarter declines in our mid-market and larger transaction businesses of 10% and 16%, respectively, these market segments remain susceptible to meaningful variability from quarter to quarter.

With that, I would like to now open up the call to Q&A. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Pete Christiansen from Citibank.

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Peter Corwin Christiansen, Citigroup Inc, Research Division - VP and Analyst [2]

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Congrats on the deal. Hessam, I was wondering if you can just give us a sense of some of the terms of the deal and maybe potential contribution, I guess, or at least on an annual basis, what kind of revenue or even profitability would be helpful, as well, that Pinnacle has been doing.

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [3]

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Pete, so we're not in a position to disclose those kinds of details. But what I can tell you is that the addition of Pinnacle is a very important addition to our services in an area, particularly our Cleveland office and a number of other Midwest offices and -- where we don't currently have MMCC representatives. And so by bringing in very, very seasoned senior-level partners of Pinnacle as a part of our team and their support staff and so on, we immediately add a very important service component for our clients and our investment sales teams. And so it is, just almost immediately, a value-add because currently, we have no MMCC representation.

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Peter Corwin Christiansen, Citigroup Inc, Research Division - VP and Analyst [4]

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So this goes to that void in the Midwest. Is this -- do they have added capabilities that you currently don't have that you're able to expand to other areas -- other regions?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [5]

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Well, the advantage of Pinnacle is that they also have a servicing portfolio that's been part of their business for a very long time. And they have longstanding relationships with life insurance companies and CMBS lenders, which MMCC typically has not done a lot of business with. So both of those advantages are definitely transferable to other opportunities across the company, through our more senior existing loan originators. But I really want to emphasize that we run our businesses at a very local level, and the driver of this transaction was primarily making sure that the team we have on the ground now has a world-class financing origination capability. The ancillary benefits of being able to open up the other advantages through servicing and other types of lenders to our other teams is really secondary.

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Peter Corwin Christiansen, Citigroup Inc, Research Division - VP and Analyst [6]

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And one more before I go back into the queue. I hate to put you on the spot, but we've been talking about capital return to shareholders for a while here. And I know that M&A is certainly your priority and that makes kind of sense. What are the next pieces of the puzzle do you think there are for MMI to come up with a decision or some type of framework as it relates to returning capital back to shareholders?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [7]

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Sure, Pete. Pete, it's really a process in that the variable since the last call that we held is that we are seeing a transitioning M&A market environment. We're seeing valuations become more reasonable. And having been patient over the past several years, at the same time, that really expanded the company's visibility and platform as a public company. There are a lot of people out there that are more intrigued and more familiar with MMI than ever before. So there is more interest and there is, in our opinion, an evolving kind of an environment for M&A. And it behooves us to really participate in that and look at that window of opportunity first and foremost. That's why it's our priority right now.

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Operator [8]

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Our next question comes from the line of Mitch Germain from JMP Securities.

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Mitchell Bradley Germain, JMP Securities LLC, Research Division - MD and Senior Research Analyst [9]

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Hessam, just to that point, have you shelved or just postponed thoughts around a dividend or call a special dividend?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [10]

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No. We're evaluating it. It's definitely an important topic of discussion. But from a priority perspective, given the changes in the market environment that we're seeing in the last 60 days, our focus really has been to look at the M&A opportunities and remains so right now.

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Mitchell Bradley Germain, JMP Securities LLC, Research Division - MD and Senior Research Analyst [11]

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Great. That's helpful. And I know that you've talked about total producers and changing your hiring methodologies and might have some fluctuations around the total number of producers, maybe trimming some of the bottom 5% or so. Surprised to see as large a decline in the MMCC division. Is -- was there anything behind that? And is it really waiting for new leadership to grow? Or are you actively pursuing new producers there as well?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [12]

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Sure, Mitch. First of all, we're waiting for nothing. The transition in terms of leadership and Bill Hughes going into retirement is not slowing down any of our initiatives or focus on services at all. So I want to make that very, very clear. And it's really nothing different than what we've been messaging and the reconfiguration of our sales force. It takes longer to recruit experienced folks, as I mentioned in my formal remarks. And so there's been no change of direction or any surprise factor to that, only more of a focus on it. And we do expect that to start to stabilize in the coming quarters. But the -- there's going to be some noise in the numbers as we move forward.

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Mitchell Bradley Germain, JMP Securities LLC, Research Division - MD and Senior Research Analyst [13]

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Got you. Two more for me. Number one, are you seeing a narrowing -- based on the discussions you're having, a narrowing or a widening of the bid-ask spread?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [14]

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It's pretty stable, overall. Obviously, there's a lot of variation by property type and by location. It seems that there is a kind of a dichotomy between a lot of positive forces, including the tax reform, which is very positive for commercial real estate, great fundamentals, ongoing rent growth. And of course, we now have the higher interest rates on the other side of the ledger. And those dynamics are just kind of working their way through, ending up with a pretty stable bid-ask spread. We haven't really seen it come in or widen in the last quarter.

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Mitchell Bradley Germain, JMP Securities LLC, Research Division - MD and Senior Research Analyst [15]

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Got you. And last one for me. Just curious about some of the dialogue you're having. I know that you guys -- you've mentioned there is a number of marketing events that you've been hosting. I'm curious about the dialogue and the sentiment across your -- the private segment of your business, your core customer, as well as maybe just directionally how pipelines sit today.

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [16]

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Sure, Mitch. The market sentiment, particularly in our Private Client core business, has definitely improved in the last few months. There is hesitation in the marketplace because of this bid-ask spread. We have no distress in the marketplace. So our sellers don't see a reason for unjustified price adjustments. And buyers that are waiting for distressed pricing are very frustrated and going to remain very frustrated. But at the same time, realistic pricing, there has been some movement in interest rate. There are reasons that pricing of the 2015, 2016 peaks are not justifiable in a number of situations. And when they're adjusted, the product moves very quickly. And we have multiple offers on those reasonably-priced assets. The sentiment has improved. We haven't really seen it translate into more transactions yet. But we anticipate that over the unfolding quarters, it will.

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Operator [17]

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(Operator Instructions) Our next question comes from the line of Stephen Sheldon from William Blair.

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Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [18]

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So I guess, first, your just really strong production volume growth, particularly in mid- and large market. I know you hadn't really comped for larger transactions. But anything else to point to that drove the strong volume growth in those markets? And did you see that trend continue into April and early May?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [19]

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Stephen, well, as we mentioned, the improvement in the mid-market and larger transactions were large contributors to the first quarter results. But also, let's not forget that our core Private Client, which makes up by far the largest portion of our revenues, had a very healthy gain on a year-over-year basis. So that is a function of a lot of our activity, frankly, mostly because of the added initiatives that we've taken over the past 12 months to 18 months to increase our market share, increase our market coverage. On the larger and mid-market transactions, as a reminder, those are much more variable. We could have some very large quarters and we could have some not so large quarters, or even declines from time to time. And a lot of those, I also want to be clear, that the larger transactions aren't necessarily just institutional transactions. A lot of our Private Clients are now in the $10 million to $20 million price range and the $20 million and above price range. So it's not limited to just institutions coming back into the marketplace more than they did a year ago. So it's a combination of all those different factors. And as a reminder, going forward, the kind of growth that we experienced in the first quarter will be a much more difficult comp because of our sequential improvement each quarter last year.

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Martin E. Louie, Marcus & Millichap, Inc. - Senior VP & CFO [20]

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Stephen, this is Marty. Just to add on to that. Just want to remind everyone that as you look at the growth rate or the decline in large transaction business in Q1 2017, it actually declined 40% year-over-year. So that kind of accounts for the large group this quarter.

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Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [21]

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Okay. Understood. And then on Pinnacle, sounds like a nice complement to your financing business. And I know you're not giving financial details on Pinnacle. But I believe you said the company has -- you've talked about 17 employees. Any detail on how many kind of frontline financing professionals position-wise in the financing business?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [22]

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Sure. Happy to share some of that with you. Pinnacle has 5 mortgage originators and a very professional level support staff and great infrastructure and systems that did set up for their mortgage brokerage business as well as their servicing business over the years.

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Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [23]

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Okay. That's very helpful. And then, I guess, in your view, do your commercial real estate participants have the clarity as regard tax changes to become more comfortable taking advantage of those changes here in the near term? Or do you still perceive a lot of uncertainty regarding interpretation?

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [24]

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Well, there's a big contrast in the market environment right now versus throughout most of 2017 when the marketplace was waiting for tax reform, what it was going to look like, if it was going to be favorable for real estate or not and the broader economy. And the answers to those questions had been answered. It is very favorable for commercial real estate. There is evidence that it's starting to spur corporate investment, which is very good for commercial real estate demand of all sorts. And so from that perspective, at the macro level, it's already been a positive sentiment-mover. However, there are mechanical question that a lot of our clients are still trying to get answers to. They want to transact. They want to set up partnerships. They want to set up different strategies to take advantage of the environment, but there's questions about the definition of pass-through entities or details of mortgage deductibility or accelerated depreciation. So there are mechanics that are still being worked through with answers coming that are beginning to come that's gradual. And that's why we believe it's kind of a process before the real effect of this favorable tax package should they trickle through the marketplace.

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Operator [25]

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Ladies and gentlemen, we have no further questions in queue at this time. I'd like to turn the floor back over to management for closing comments.

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Hessam Nadji, Marcus & Millichap, Inc. - President, CEO & Director [26]

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Thank you, operator, and thank you, everyone, for joining our first quarter call. And we look forward to having you join us on our second quarter call in a few months. Thanks a lot.

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Operator [27]

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Ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.