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Jones Lang Lasalle Q1 2010 Earnings Call Transcript

Jones Lang Lasalle Q1 2010 Earnings Call Transcript

Jones Lang Lasalle (JLL)

Q1 2010 Earnings Call

April 28, 2010 9:00 am ET


Lauralee Martin - Chief Operating & Financial Officer, Executive Vice President, Director and Chairman of Global Operating Committee

Colin Dyer - Global Chief Executive Officer, President and Director


Vikram Malhotra - Morgan Stanley

Michael Fox - JP Morgan

William Marks - JMP Securities LLC

Sloan Bohlen - Goldman Sachs Group Inc.

John Miller - Morgan Stanley

David Gold - Sidoti & Company, LLC

Michael Mueller - JP Morgan Chase & Co

Kevin Doherty - BofA Merrill Lynch

Brandon Dobell - William Blair & Company L.L.C.

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Good day, and welcome to the First Quarter 2010 Earnings Release Conference Call for Jones Lang LaSalle Inc. [Operator Instructions] Any statements made about future results and performance or about plans, expectations and objectives are forward-looking statements. Actual results and performance may differ from those included in the forward-looking statements as a result of factors discussed in the company’s annual report on Form 10-K for the year ended December 31, 2009, and our report filed with the SEC. The company disclaims any undertaking or update of any revised forward-looking statement. A transcript of this call will be posted and available on the company’s website. A web audio replay will also be available for download. Information and the link can be found on the company’s website.

At this time, I would like to turn the call over to Mr. Colin Dyer, Chief Executive Officer, for opening statements. Please go ahead, sir.

Colin Dyer

Thank you, operator. Hello, everybody, and thanks for joining us for this review of our results for the first quarter of 2010. With me today on today's call is Lauralee Martin, our Chief Operating and Financial Officer. And Lauralee will review our performance in detail in a few minutes. And as I sit today on the 43rd floor of our office building in Chicago, it's a bright spring day, and that's pretty much how we feel about our Q1 results.

Summing up the quarter, we were encouraged by reporting adjusted earnings per share of $0.14, which compares with a loss of $0.65 per share in the first quarter of 2009. Our revenues totaled $581 million, up 18% for the same period a year ago and 12% in local currency. Adjusted EBITDA was $37 million, up from $11 million in Q1 2009. And finally, we announced that our Board of Directors has declared a semiannual dividend of $0.10 per share of our common stock.

A few comments, first of all, on conditions in global real estate markets will help us put these numbers into context. We posted slides in the Investor Relations section of our website,, for your reference.

Slide 3 shows the Jones Lang LaSalle investment sales clock, which, as you know, we update each quarter. It provides a picture of conditions in major markets around the world at the different stages of the real estate cycle. As you can see in the first quarter of 2009, capital values were falling uniformly in almost all major real estate markets globally. One year later, and with remarkable speed, we see values increasing in major Asian markets and select European and American cities, but with very different drivers and dynamics between the countries and cities.

In debt capital markets, banks with exposure to commercial real estate loans continue to work with owners to modify loans and prevent foreclosures wherever possible. However, today, we are seeing debt activity increasing across the world as more organizations expect healthy economic growth, which make real estate lending a profitable prospect again on a risk-adjusted basis. Debt financing emerged strongly in Asia at the end of 2009, but securitized debt has yet to make any meaningful comeback in developed countries.

Equity capital raising is evident across all three regions, boosting the volume of funds targeting real estate. Competition for a limited supply of prime product in all core markets is driving up capital values and encouraging some investors to move into second-tier markets and value-added opportunities.

With Asia, and particularly China, Hong Kong and Taiwan leading the way, direct commercial real estate investment volumes totaled $63 billion globally in the first quarter, and that's 57% of our quarter one 2009 levels.

In Europe, capital from pension funds and insurance companies is targeting high-quality, well-located assets. And in London, Paris, prime yields have fallen and second-tier cities are also starting to see yield compression as investors are forced to look further in stable Tier 1 core assets.

In the U.S., yields are well-located in leased properties and top-tier markets have been compressed to very low levels with the depth of supply driving this effect.

Turning to Slide 4, you'll see a snapshot of conditions in leasing markets worldwide. It tells a similar story, but clearly, leased markets progress continues to lag the recovery in global investment sales. Leasing property markets in Asia as developing economies have seen a strong recovery since mid-2009 when rental rates hit their cyclical lows. In most of the Americas, rents are still falling and vacancy rates continue to rise. With the exception of London, rental rates in most European cities also continue to fall. At the same time, leasing activity has begun to pick up, not only in Asia but in several core markets in Europe and the U.S. as well, presaging a gradual return to rental growth. In general, recovery in Asia-Pacific is leading Europe and Latin America, and those in turn are generally leading the U.S. So with that background, I'll turn the call over to Lauralee.

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