Emma Giamartino
Global Group President, Chief Financial Officer & Chief Investment Officer at CBRE Group
Thanks, Bob. 2021 was an outstanding year for CBRE with strong growth across our key financial metrics and record free cash flow driven by operational discipline and our 4-dimension diversification strategy. We're also well positioned for future growth, which I'll discuss shortly. Throughout my remarks today, I'll highlight how our results benefited from asset type diversification, and in future quarters, I will focus on the benefits of other diversification dimension. Now please turn to slide nine, so we can dive into our results for the quarter. Like Q3, I'll include compares with Q4 2019 for their transactional business lines to provide insight into our performance from peak levels. On a consolidated basis, revenue grew 24% compared to Q4 2020 and 20% over Q4 2019 led by rebounding sales and lease revenue. Advisory Services added nearly $1 billion in net revenue, growing 43% for Q4 2020 and 23% over Q4 2019 to over $3.3 billion, a record for our largest segment. We continued to benefit from a supportive property sales backdrop. Globally, sales revenue jumped over 73% from Q4 2020 and 45% from Q4 2019. The U.S. led the recovery among our major markets with 89% sales revenue growth compared to the prior year quarter. We had the highest market share across all major asset types in 2021, while our overall U.S. market share rose 100 basis points in the quarter according to independent data provider, Real Capital Analytics.
Capital inflows into multifamily and industrial remained strong, allowing us to benefit from the very intentional work we have done to build leading sales platforms focused on these asset types. U.S. industrial sales revenue more than doubled from Q4 2019, while U.S. multifamily sales nearly doubled over the same period. Office continues to gradually improve back towards pre-pandemic levels. And our U.S. office sales revenue was around 14% shy of Q4 2019, an improvement from steeper declines in the prior quarters. Global leasing revenue rose 14% compared to the fourth quarter of 2019 with all three regions ahead of 2019 levels for the second consecutive quarter. EMEA leasing revenue grew 25% on Q4 2019, and the Americas was up 13%, while APAC grew 7%. Industrial leasing surged around 60% compared to the fourth quarter of 2019 as occupier demand for distribution space remains strong. Like in sales, office leasing also continued to recover with global office leasing nearly flat versus Q4 2019. EMEA and APAC office leasing rose around 7% and 11%, respectively, compared to Q4 2019. U.S. office leasing revenue trends also continued to improve. While still below its 2019 level by around 4%, the year-over-year shortfall from prior peak levels has narrowed compared to previous quarters. Notably, while it's still early in the year, we are continuing to see strong momentum in both U.S. sales and leasing thus far in 2022, with revenue trending significantly above prior peak first quarter levels.
Loan servicing was the primary growth driver within the rest of advisory, with revenue rising around 70% from Q4 2019 to nearly $93 million. Our loan servicing portfolio grew 23% versus the prior year and 10% sequentially to nearly $330 billion, primarily driven by private capital sources. Our multifamily portfolio, comprising nearly half of the total, grew about 14% versus Q4 2020. Our alternative asset type portfolio, which includes agriculture, health care, hotels and others, rose over 70% and now comprises approximately 19% of our total servicing portfolio. Growth was driven by a strong pace of third-party servicing wins, which is a key focus area for growth in this business. OMSR gains faced a tough compare and were down about $47 million. These gains were elevated in last year's fourth quarter as the government agencies were extremely active in providing liquidity to a multifamily market burdened by COVID impact. Turning to GWS. Net revenue grew 22%, increasing $330 million to nearly $1.9 billion. This includes about $175 million in net revenue from the Turner & Townsend transaction, which closed on November one and was in line with our previous expectations. We are extremely excited about the growth trajectory for this business. Project management is a fragmented market, estimated to be over $100 billion with strong secular growth tailwinds, particularly within infrastructure.
This transaction helps to bolster the nascent infrastructure capabilities within our existing businesses. We believe broadening our infrastructure offerings will help to accelerate future growth and deepen diversification, especially by helping to further insulate our business for more cyclical trends. Our legacy GWS revenue grew nearly 8% led by project management, which rose about 17%, excluding contributions from Turner & Townsend. Strong growth in project management was driven by continued recovery from the pandemic-constrained environment. Facilities Management revenue increased nearly 6%, and net revenue rose over 10% supported by growth from local clients. We expect Facilities Management growth to benefit from continued progress in returning to a more normal business environment in 2022. Looking at REI, revenue increased $125 million or 43% to over $413 million. This was driven by increasing activity in our U.K. multifamily development business, which is continuing to recover from COVID-related challenges. Investment Management revenue was relatively flat versus Q4 2020 at about $150 million due to lower carried interest revenue, which can be volatile. Excluding carried interest revenue, Investment Management revenue grew 19%, driven by strong asset management fee growth. AUM rose to a new record of nearly $142 billion with more than 80% invested in assets other than office. Industrial comprises the largest component, in line with our strategic vision to position the company to benefit from this sector's strong secular tailwinds. Flipping to slide 10. Consolidated adjusted EBITDA grew to over $1.1 billion.
Excluding noncash gains related to OMSRs, our Altus Power investment through our SPAC and venture capital investments, adjusted EBITDA grew over 37% compared to Q4 2020. On this basis, our underlying adjusted EBITDA margin on net revenue rose six basis points versus Q4 2020 to 16.5%, which is 1.7% above our Q4 2019 level. Advisory Services segment operating profit marginally exceeded our expectations, increasing $219 million to over $740 million as sales and lease revenue rose more than expected. Advisory's net operating profit margin, excluding volatile noncash OMSR gains, reached a new record of 21.5%, about 120 basis points better than Q4 2019. We achieved this despite record productivity pushing more producers into higher split tranches. In GWS, legacy segment operating profit reflected higher-than-expected medical expenses as we saw a ramp-up in year-end insurance claims compared with 2020's severely pandemic-constrained levels as well as a $3 million impact of noncash deferred purchase consideration expense for Turner & Townsend.
Turner & Townsend profitability performed in line with our expectations, contributing just over $23 million of profit from November one through year-end. REI segment operating profit rose $39 million to $156 million and was roughly in line with expectations as outperformance in Investment Management offset a modest shortfall in development. Investment Management benefited from higher-than-expected net promotes and co-investment returns driving operating profit to $41 million. Development operating profit of $122 million was affected by a $29 million increase in the reserve we had previously taken on a U.K. construction project that faced challenges that were exacerbated by the pandemic. We believe we have fully reserved for this project and don't expect it to result in further adverse financial impacts. Putting aside this reserve increase, development operating profit would have been over $150 million for the quarter and about $380 million for the year, surpassing our previous expectations. This was driven by the conversion of our average in-process portfolio to operating profit at a rate of over 2.1% over the trailing 12-month period, a level well above our historical norm of between 1% and 2% with most years around the midpoint. We also saw increased corporate overhead in the quarter. This is largely driven by higher incentive compensation as performance materially exceeded initial 2021 expectations and our investments in key corporate functions to help support our larger business. We do not expect incentive compensation to fluctuate as much in 2022 as business volatility continues to normalize.
Looking at slide 11, adjusted earnings per share rose 51% to $2.19. This includes a benefit of $0.36 from a gain in our SPAC investment and another $0.03 from mark-to-market adjustments on our Altus Power and VC investments. Excluding these noncash gains, core adjusted EPS rose 24% to $1.80. Excluding only the SPAC deconsolidation gain, which is consistent with how we've reported our results in previous quarters, adjusted EPS rose over 26% to $1.83. Robust underlying earnings growth reflects the strong increase in adjusted EBITDA as well as lower net interest expense. These were partially offset by higher depreciation and amortization, mainly related to elevated prepayments of government agency-related loans, which triggered higher OMSR amortization. Our results also include noncash interest expense related to deferred purchase consideration for our remaining Turner & Townsend payments and an increase in our effective adjusted tax rate to 23.9%. The nonrecurring reserve increase in the U.K. multifamily development business lowered earnings by approximately $0.07. Going forward, as Kristyn noted earlier, we'll report both adjusted EPS and core adjusted EPS to give you transparency into how both our core operations and noncore investments are performing.
Now we'll discuss our financial capacity on slide 12. Due to our strong profitability, we generated nearly $1.1 billion of free cash flow in the quarter, bringing our annual free cash flow total to almost $2.2 billion, which is a new record for our company. We ended the year with a net cash position of 0.2 turn while deploying nearly $1.8 billion of capital, net of debt issuance proceeds during the year, primarily for investments in future growth. We also repurchased around $370 million of stock, providing our shareholders a repurchase yield of over 1%. We intend to continue this capital deployment strategy and believe there is ample opportunity to invest in future growth while also programmatically returning cash to our shareholders. In support of this, we commenced our fifth consecutive quarter of repurchases in Q1 2022. We intend to continue repurchases throughout this year, assuming the return remains attractive and we have capacity given our evolving M&A pipeline. Additionally, as we move forward, strong free cash flow conversion will remain a priority for us, and our senior executive team will be evaluated on this metric as part of their 2022 goals. Please turn to slide 13. We expect another year of strong growth in 2022. Market conditions remain generally favorable, notwithstanding heightened geopolitical tensions, and tailwinds are likely to persist across the four dimensions of our business and areas where we are proactively investing to drive growth.
Advisory Services is positioned for another year of strong revenue and segment operating profit growth, with leasing revenue expected to rise at a high teen to low 20% rate and sales revenue expected to rise at a low to mid-teens rate. We expect incremental benefit from offices gradual recovery and that industrial leasing should decelerate modestly due to a potential near-term shortage of available properties. As Bob highlighted earlier, we believe long-term secular trends are bolstering demand for industrial space and expect strong performance for this asset class on a long-run basis. Outside of sales and leasing, we expect advisory revenue to rise at a high single-digit to low double-digit clip compared to 2021. We also expect advisory's operating margin to be roughly flat versus the prior year as the benefit of high-margin transactional revenue growth will be tempered by some operating expense investments designed to accelerate future growth. Advisory operating profit expectations also include increased strategic equity awards to help better align a broader leadership team with our enterprise strategy and shareholders. We expect strong long-run margin performance in advisory, partially driven by these investments. In GWS, we expect low to mid-double-digit organic top line growth and mid- to high single-digit organic segment operating profit growth. This is being driven by continued strong growth in project management and accelerated growth in enterprise facilities management, partially driven by a return to normal contract cycle times. We expect this growth to be more weighted to the second half of the year. GWS legacy segment operating profit expectations also include the impact of $17 million of noncash deferred purchase consideration expense for Turner & Townsend. This expense will continue through 2025 when we've made the last of our required payments.
We will also record about $10 million in noncash interest expense associated with our deferred payments. Like in advisory, GWS operating profit expectations also include an impact from increased use of strategic equity awards. This is reducing expected legacy segment operating profit growth by around 1%. We expect Turner & Townsend to grow net revenue at a mid-teens rate, in line with its historical average over the approximately $974 million it generated in calendar year 2021. Strong organic growth is expected to more than offset a small foreign exchange headwind at today's spot rate. Turner & Townsend net operating profit margin is projected to tick up around 0.5% from the 13.4% generated in the fourth quarter. This reflects strong top line growth, the restoration of certain expenses cut during COVID and about $10 million of noncash expense for retention bonuses. REI revenue is expected to grow around 20%, and segment operating profit is expected to roughly match the elevated operating profit of $520 million generated in 2021, excluding the $24 million accounting change-driven gain that we recorded in last year's first quarter. Revenue growth is being driven by continued recovery of our U.K. development business. Our REI expectations also contemplate elevated hiring and investment management for new product development, a key strategic focus as well as more moderate appreciation and asset values. Finally, we expect our development in-process portfolio will convert to operating profit at a rate of under 2%, in line with historical performance.
Our in-process portfolio is well positioned for the current environment with nearly 80% of the portfolio comprised of industrial, multifamily, health care and life sciences assets. As you can see, we are consciously orienting the portfolio towards assets with strong long-term performance potential. Setting aside any effects of our strategic noncore investments, we expect corporate overhead to decline nearly 5% from 2021. We anticipate investments in further scaling key corporate functions to be more than offset by more favorable incentive compensation impact. Going forward, core adjusted earnings, which excludes the impact of our small portfolio of strategic noncore investments, will be the basis of our financial forecast. We are making these investments for their strategic value rather than near-term financial gains. However, there will likely be sharp volatility in their investment valuation, especially for our largest noncore investment in publicly traded Altus Power. Altus is poised to benefit from the transition to a low-carbon economy while enhancing capabilities to help our clients meet their clean energy and sustainability goals. As always, for investments of this nature, short-term bouts of market volatility can cause the value of our investment to swing sharply on a quarter-to-quarter basis. For example, the majority of the noncash gain we recognized in the fourth quarter would be reversed in the first quarter at Altus' share price as of February 15. Now looking at depreciation and amortization.
We expect this to rise about 4%, and we project our effective adjusted tax rate to be in line with the 23.9% rate we saw in Q4 2021. We are also highly focused on monitoring how inflation could impact our business. Real estate provides a natural inflation hedge when held on a long-term basis, which somewhat cushions our transactional businesses. In fact, sales could potentially even benefit if inflation concerns draw more capital to real estate. On the expense side, clients reimburse us for the salary and benefits of nearly half of our employee base who work primarily in the GWS and property management businesses, and inflation provisions are typically embedded in our multiyear GWS contracts. In light of this, we believe we are well positioned to succeed in a higher inflation environment. It is also prudent to highlight that while the current operating environment remains favorable, there is heightened uncertainty given this higher inflationary environment, tighter monetary policy and rising geopolitical tensions. Please turn to slide 14 for an update of our multiyear growth framework. As Bob noted, we've raised our base case annual core adjusted EPS growth expectations to more than 20% for the 2020 to 2025 period and to low double digits for the next four years.
There is upside to both growth rates from additional capital deployment. We envision solid organic revenue and earnings growth across our three business segments. Our overall margin is expected to gradually increase over this period even with considerable growth from our lower-margin GWS segment. The GWS margin itself should also improve over time as higher-margin project management accounts for a larger share of our GWS revenue base. We will continue to manage our balance sheet prudently. We are comfortable with increasing net leverage to around one turn as we deploy capital into M&A to accelerate growth. We can even go as high as two turns for a highly compelling strategic opportunity. We expect to focus our capital deployment strategy on secularly favorite areas that will further diversify our business. We see significant opportunity to expand our investor, operator, developer model into multifamily, life sciences and infrastructure. Importantly, this model plays to our competitive advantages, including cross-functional collaboration, business line diversification and balance sheet strength, giving us the opportunity to further differentiate CBRE. Given our sizable financial capacity, we expect shareholder capital returns will continue to figure prominently within our capital allocation plans over this multiyear horizon. Ending with slide 15.
Since 2016, core adjusted EPS has achieved average annual growth of 21%, while revenue and free cash flow have also grown at double-digit annual rates over this period. This strong growth has been supported by the strategic steps we've taken to bolster our balance sheet while pursuing a disciplined capital allocation program and increasingly diversifying our business. We expect our multiyear growth framework will extend the successful track record of performance across our key financial metrics. We are extremely optimistic about our trajectory as we head into 2022 and look forward to delivering another year of strong performance. And with that, operator, we'll open the line for questions.
