Emma E. Giamartino
Global Group President, Chief Financial Officer and Chief Investment Officer at CBRE Group
Thanks, Bob, and good morning, everyone. Turning to slide eight. Let's start with our Advisory segment. This segment rebounded strongly from the pandemic suppressed levels of Q3 2020 and performed very well compared with pre pandemic activity in 2019. In my comments today, I'll include compared with Q3 2019 for the transactional business lines. We believe this is the best barometer of how these business lines are faring. Advisory Services net revenue and operating profit set new third quarter records, surpassing the Q3 2019 peak by 13% and 29%, respectively. This strong performance reflects not only our ability to capture reviving demand for real estate services, but also our diligent focus on managing costs during the recovery. The strong operating profit growth also reflects a $7.5 million gain from our industrious investment. Leasing continued to bounce back strongly, particularly outside the U.S. with global revenue up 58% from Q3 2020 and 7% from the Q3 2019 peak. All three regions generated leasing revenue above Q3 2019 peak levels: Up 4% in the Americas; 20% in EMEA; and 11% in APAC. Office demand in the U.S. continues to trail pre pandemic levels. However, the shortfalls from the 2019 peak levels narrowed to just 16% in Q3 versus 54% in Q2. We also continued to see strong small deal performance with revenue from U.S. leasing transactions below $1 million, up about 8% versus Q3 2019, while the contribution from large deals over $1 million remained about 5% below its pre-pandemic level. Property sales activity remained robust. All regions exceeded their pre-pandemic peaks, with global property sales, up 93% from Q3 2020 and 27% from the Q3 2019 peak. Like in leasing, U.S. office sales activity saw a significant improvement, coming in just 16% below Q3 2019 levels versus 31% in Q2. An improved investment market also helped generate strong growth in commercial mortgage origination. Revenue rose 41% from Q3 2020 and 11% from the Q3 2019 peak. Both the government agencies and private lenders were noticeably more active in Q3.
We expect the agency's higher lending caps through 2022, coupled with a healthy appetite from private lenders and the attractive yields available from real estate debt to provide a supportive backdrop heading into next year. Strong origination activity helped to drive a 19% increase versus the prior year quarter in our loan servicing portfolio, which reached $300 billion at quarter's end. The portfolio growth propelled a 35% revenue increase from the prior year Q3. Valuation revenue accelerated more than 27% from last year's quarter, partially reflecting particularly strong growth in the U.K. and Ireland. Property management revenue increased 6% year over year. Moving to slide nine. Our Global Workplace Solutions segment again posted solid revenue and segment operating profit growth across its global business base. Revenue rose over 8% from Q3 2020, comprised of 21% growth in project management and 6% in Facilities Management. Total GWS segment operating profit rose over 16% compared with Q3 2020. Our local client business was a standout performer, accounting for 1/4 of total segment operating profit. This growth has been driven in part by selective infill M&A. Importantly, despite evidence of increased inflation throughout the economy, we believe our GWS business is well protected by contract provisions that enable us to factor inflation into our pricing annually or even more frequently in certain cases. We are optimistic about the future growth trajectory of GWS. Our new business pipeline is growing and remains well diversified, with representation from financial services, industrial, life sciences and technology clients.
The pipeline increased markedly from Q2 and is up from both Q3 2020 and Q3 2019. We expect continued pipeline strength as the business environment increasingly settles into a new normal. Turning to slide 10. Our Real Estate Investments segment continued to deliver strong growth with segment operating profit nearly matching last quarter's record level. This performance reflects how well positioned our development and investment management businesses are to capitalize on the strong investment climate and the flow of capital into industrial, multifamily and other favorite asset classes. Global Development generated nearly $100 million of operating profit in the third quarter, primarily driven by selling industrial properties at high valuations, reflecting asset and tenant quality as well as strong market fundamentals. Industrial comprises the largest portion of our in process portfolio and pipeline at 35% and 39%, respectively, and we continue adding new projects to the pipeline at a strong pace. This will drive revenue and profit opportunities for years to come. On a trailing 12 month basis, we have converted the average value of the in process portfolio to operating profit at a rate of 1.9%, which is towards the high end of the historical range. Importantly, our in process portfolio set another new high this quarter, rising to $16.8 billion, largely driven by multifamily activity. Investment Management benefited from a record level of asset management fees as well as higher incentive, acquisition and disposition fees. Compared with Q3 2020, revenue rose 35% to $135 million while operating profit increased 68% to $49 million. Assets under management continued to grow steadily, rising to over $133 billion despite negative currency effects.
Industrial and logistics properties remain the largest asset class in the portfolio, comprising more than $35 billion of AUM or over 26% of the total. Fundraising also remained strong as the performance of our funds and separate accounts attracts new capital. Dry powder rose 6% from Q2 to $13.2 billion. Looking at the business as a whole, we're on track to surpass 2019's record performance across all key financial metrics by a substantial margin. On slide 11, we'll briefly walk through our revised qualitative 2021 outlook. We now expect full year global advisory sales revenue to be about 15% above the 2019 peak and global leasing to fall 5% or so short of peak. Q4 will likely see more moderate sales and leasing growth rates than we've experienced the last few quarters as prior year comparisons become tougher. However, both U.S. sales and leasing have been running well ahead of 2019 peak levels thus far in October. Across the rest of our advisory business, we reiterate expectations for low double digit revenue growth on a combined basis. We also anticipate stronger incremental margin expansion than we previously forecast due to the more robust revenue growth. The Q4 net margin should be around the 22.7% achieved in the prior year fourth quarter. We expect the benefit of more revenue from high margin business lines will likely be offset by increased discretionary spending to drive growth and by lower OMSR gains compared with Q4 2020. In GWS, we expect mid to high single digit net revenue growth, accompanied by operating profit growth of 20% or more year over year before contributions from the Turner & Townsend transaction. Our policy is to reflect transactions once closed. Currently, we expect this transaction to close early next week. Given this timing, we anticipate the transaction will contribute about $160 million to $170 million in revenue and about $20 million to $25 million in operating profit to our 2021 consolidated results.
November and December are usually seasonally light months for the company. For calendar year 2021, Turner & Townsend is expected to generate roughly $1 billion in net revenue at the current spot rate at a similar operating profit margin to their prior fiscal year. Importantly, as I noted previously, our broader GWS new business pipeline is building, and we expect to see the benefit from this in 2022 and beyond. For REI, we have raised our expectations modestly, driven by investment management. We now expect this business lines revenue to rise in the low to mid teens range and its operating profit to increase slightly 30% versus 2020. This includes some incremental opex investments slated for the fourth quarter. We continue to expect global development operating profit to roughly triple the $122 million generated in 2019. This reflects the movement of some transactions previously expected to close in Q3 to Q4. They are developing properties in markets and sectors with strong underlying fundamentals and expect to continue monetizing these assets in Q4 and for the next several years. As we've noted in past quarters, corporate segment expenses will be up from both 2019 and 2020 and are expected to end the year at just over 2% of total net revenue. year to date, discretionary operating expenses have been trending well below pre-COVID levels. However, we expect some of these expenses to gradually return as business activity recover. Flipping to slide 12. We've strengthened our balance sheet while committing approximately $2 billion thus far in 2021 to long term growth initiatives while also, returning $188 million to shareholders through repurchases. Trailing 12 month free cash flow generation reached a company record at over $1.9 billion. As a result, we ended the quarter with a net cash position of 0.3 turns and nearly $6 billion of liquidity. We expect to maintain our net cash position in Q4 even with our initial payment for our stake in Turner & Townsend, which will be about $700 million. We will continue to prioritize investments that enhance our diversification, resiliency and long run growth trajectory. Going forward, we are poised to continue investing in our growth while returning capital to our shareholders and maintaining a strong balance sheet. Our market leading position, the underlying momentum in our business and our substantial balance sheet capacity make us very excited about our future growth prospects. We look forward to closing out 2021 with another strong quarter. With that, operator, please open the line for questions.
