Chief Financial Officer at CBRE Group
Thank you, Bob. Before turning to our 2023 outlook, I'll first discuss the fourth quarter results for each of our segments starting with advisory on Slide 6. Advisory net revenue and SOPs declined by 21% and 33%, respectively, driven by a slightly more pronounced decline in our higher margin transactional businesses than originally expected, which was partially offset by healthy growth from our property management business. For capital market, sales and mortgage origination combined, revenue declined by 46%, in line with our expectations. Capital markets revenue growth was robust in last year's Q4, increasing by 53%, which accentuated the extent of this year's decline.
Leasing revenue was down 7%, both globally and in the Americas, a slightly bigger decline than we expected with a notable slowdown in office activity in New York, Boston, San Francisco and Seattle. In total, global office leasing revenue was 14% below prior year after increasing by nearly 50% year-to-date through the third quarter, albeit against a relatively easy prior-year comparisons. Outside the US, leasing revenue was down 6%, wholly due to FX translation headwinds. In local currency, lease revenue increased in both EMEA and Asia Pacific. The 19% decline in loan servicing was attributable to fewer prepayments amid rising mortgage rates versus record prepayments in Q4 2021. Excluding prepayments, loan servicing revenue increased by 2%. Overall costs in advisory declined by 18%, but this was not enough to offset the 21% decrease in total net revenue.
Turning to Slide 7, GWS net revenue grew by 13%, with half of that increase coming from organic revenue growth. In local currency, net revenue, excluding Turner & Townsend increased by 12% with facilities management up 9% and project management up 21%. GWS SOP increased by 30% with margin improvement driven partly by business mix. Turner & Townsend continued to grow impressively. In the first full year since acquiring a 60% interest, Turner & Townsend has exceeded our original underwriting.
2022 represented our highest ever year for client contracts coming up for renewal totaling over $4 billion. GWS renewed 94% of this total, often with increased scope of our client relationships. Looking-forward, we expect 2023 renewals to be just over half the level of 2022. The GWS revenue pipeline ended the year up 11% over year-end 2021, reflecting continued demand from first-generation outsourcing clients as well as expansion mandate from our existing client base.
Turning to Slide 8, REI SOP declined to just $17 million in Q4 against an unusually strong prior year comparison. Our global development business posted a $6 million SOP loss primarily due to a $43 million loss in our Telford UK development business. Lower SOP in US development reflects the timing of asset dispositions, which were heavily weighted to this year's first half consistent with our expectations going into the year. Following an in-depth review of the Telford business, we wrote down handful of projects where we expect costs to exceed our initial underwriting. And we also increased our fire safety reserve. We now believe Telford's financial performance will improve going forward.
Investment management AUM grew $5 billion sequentially driven by net capital inflows of $4 billion and positive FX movement, which offset $5 billion of mark-to-market decline. Investment management SOP declined due in part to co-investment losses versus a gain in the prior year quarter. Excluding co-investment gains and losses, investment management SOP was nearly flat with the prior year quarter.
Turning to Slide 9, our 2023 outlook is underpinned by the following macroeconomic assumptions. The US will experience a short moderate recession in 2023; unemployment will increase to nearly 5%; inflation will end the year above the Fed's 2% target, but clearly trending down; and 10-year US treasury yield will end the year under 3.5%. Should the economic outlook change from this base case, our business outlook would also change.
In our advisory segment, we expect a mid single-digit revenue decline. This will be driven by growth in more resilient lines of business, offset by a mid to high single-digit decline in leasing and mid-teens decline in property sales. We expect SOP to decline by high single-digit to low double-digits as cost savings initiatives, partially offset both relatively better growth in lower margin businesses and general cost inflation.
In our property sales business, we expect the number of transactions will be subdued in the first half of the year and accelerate in the back half of the year. We expect our leasing business to continue to benefit from an elevated level of lease expiration. While the return to office has been slow in the US, EMEA and APAC have seen occupancy return at a faster pace. As a result, we expect these regions to be the less pressured than the Americas in 2023. For property management and valuation, we expect accelerating revenue growth in both lines of business due to recent investments in sales support and tuck-in acquisitions as well as less FX pressure.
Within GWS, we expect low double-digit net revenue and SOP growth with margins increasing slightly as cost savings more than offset inflation and incremental investments to support growth. Our facilities management business is benefiting from new wins and expansion. All major client sectors are expected to grow, notably in healthcare and technology where the changing use of real estate is driving increased demand for outsourcing services that we believe CBRE is best positioned to deliver.
We also expect continued momentum in our project management businesses, including double-digit top and bottom line growth from our Turner & Townsend business. Within our REI segment, we expect SOP in the mid-$300 million range with roughly equal contributions from development and investment management.
Within our TCC development business, we expect SOP of just over 1% of our nearly $17 billion in-process portfolio, and we've closed over $100 million of expected SOP in January alone. Our TCC business has developed a portfolio of assets that we believe is extremely well-positioned for the current market environment with approximately 75% of our expected SOP in 2023 from industrial yields. While our Telford business remains challenged, we do expect improvement versus 2022 as significant cost inflation is now incorporated into projected results, adding approximately $20 million to SOP versus 2022.
Beyond our three main business segments, we also expect roughly flat corporate overhead and our full year core tax rate to rise to 2021 level versus a lower 2022 rate. Consistent with our approach last year, the 2023 outlook assumes only a modest use of capital. That said, we continue to have a strong appetite for M&A and share repurchases, both of which could support incremental earnings growth above our current outlook and we do not anticipate ending 2023 in a net cash position.
In summary, we expect core EBITDA to decline by high single-digit versus 2022 with over half attributable to the decline in development SOP. We expect core EPS to decline by low to mid double-digits versus 2022. This is more than the core EBITDA decline, because of higher depreciation, amortization and a higher tax rate than in 2022 when we had a number of one-time benefits that will not recur.
Lastly, we except nearly two-thirds of full-year core EPS in the back half of the year, a more pronounced seasonality to earnings than we historically experienced. The $400 million cost containment program we announced last quarter is embedded in our guidance. Fourth quarter results saw a nearly $80 million cost benefit and we expect a cost benefit in 2023 of approximately $300 million with the remainder in 2024. The entirety of the cost containment program will be reflected in our run rate by the end of this year. We expect that our cost containment efforts will allow us to counteract the general inflation pressures and enable us to make continued investments to support future growth.
Last year, we refreshed our 2025 financial guidance, which implies CBRE would achieve core EPS between $8 and $9 by year end 2025, absent meaningful capital allocation. Due to the real estate transaction downturn, our target is now likely to slip by 12 to 18 months. As I noted previously, our 2025 targets were established on the basis that there would not be a recession, following the COVID recovery. The drivers of how we achieve this core EPS growth are largely unchanged. At the midpoint of that core EPS target $8.50, CBRE will have achieved double-digit compound core EPS growth since 2019 despite needing to manage through two significant downturn. It also represents a high-teens CAGR from our 2023 projection.
In closing, we remain excited about CBRE's prospects for long-term growth, the strength of our brand and our ability to outperform during periods of market weakness.
With that operator, we'll open the line for questions.