Jones Lang Lasalle 1Q15 Earnings Call Notes

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Some comments on completed transactions

“Turning to investment sales transactions, we represented Blackstone in the $1 billion sale of a U.S. hotel portfolio. In the largest single-asset real estate deal in Finland’s history, we advised developer SRV on a joint venture to develop the $480 million REDI mall. And in Tokyo, we advised on a sale of the five assets of the Hotel B Portfolio to the Japan hotel REIT.

First quarter highlights in other service lines included securing a 320,000 square foot headquarters lease for The Capital Group Companies in downtown Los Angeles, a 320,000 square foot lease for Daimler-Benz near Stuttgart. In Bangalore, we recently completed a 2 million square foot lease for Flipkart, India’s equivalent to Amazon, and that was for build-to-suit headquarters office. And in China, our valuation contract of 17 properties and 17 million square feet was completed for Alibaba.”

Companies focused on expanding, not right sizing

“We see notable shift in the composition of demand as corporates focus now on expanding activities rather than right-sizing their portfolios.”

Capital looking for management

“In funds management, we see sustained strong capital flows and deal velocity as low interest rates and low inflation attract global investors. Appetite for risk is increasing as investors seek yield in value-add and opportunistic plays. Strong performers like LaSalle are going to continue to attract investment capital in this healthy environment.”

Overall market in Americas is solid, not over exuberant

“the overall market sentiment in the Americas, it’s solid, it’s not over-exuberant, but we’re seeing a lot of capital both domestic and particularly international trying to get into assets. And as we mentioned, the result is that investors are moving out along the risk curve somewhat into big cities, tier 2 cities, tier 2 properties, to find deals as well as a little extra return.”

Companies taking more space with growth in mind

” Look, it’s — as we talked about the level of confidence amongst the corporates globally, I think if you go back to the period just after the crisis, when everyone was in cost cutting mode, and that period lasted about two to three years. Then we had a couple of years of consolidation where corporates were trying to drive productivity, not just cut costs, and so there was a different mindset coming through on that. What we’re now seeing is company’s much more inclined to invest for growth and building their top lines. And so we have this ongoing portfolio rearrangement process still in place, but in addition to that, you’ve got companies of all sizes now across all geographies increasingly prepared to go out and take more space with growth in mind.”

There may be some supply constraints too

” in some critical markets around the world, so, London’s one, Tokyo is another, the Chinese cities are a third set of examples, you’ve got a situation where the development pipeline has been relatively constrained. And so you there beginning to see, as we look forward, a situation where there could be supply constraints. And so there’s a level of enhanced activity amongst the corporates to get space now while pricing is relatively attractive, space is available, and they’re not in a cycle where the landlords have control of the markets. So put all that together, I think that’s reason we’re seeing this healthy uptick in leasing.”