Jones Lang LaSalle 4Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Expanding into some less headline cities

“We also continued the targeted and strategic expansion of our global platform in 2014, focusing on opening new offices in Lagos, Nigeria, Nanjing, China, and Kuala Lumpur in Malaysia.”

Plenty of money coming into real estate, the challenge is deploying it

“Strong performers like LaSalle will continue to attract significant investment capital, while investors are also increasing their appetite for risk, embracing value-added and opportunistic investment strategies in a search for higher returns. The main challenge is going to be deploying capital.’

It feels more like 2005 than late in the cycle. Prices are rational when you compare to interest rates

“So it feels more like 2005 than later in that prior cycle. If you count from the start of the cycle, we’re 5 years in, into what might be an 8, perhaps a bit longer cycle this time, given how hesitant the recovery was. If you look at pricing in the markets, we sense that there is no form of excessive pricing at this point. Yes, pricing is full, particularly for high quality assets in Malaysian markets, and I mentioned a few gateway cities in my prepared remarks. But when you compare the level of cap rate or yields, which are again in the 4’s and 5’s in those best markets, and you compare that with the bond rates and the sorts of returns that people, institutional investors are seeing from fixed income, or you compare it with negative deposit rates in Switzerland and zero in Germany, the returns on real estate still seem to be rational and not excessive. So put it all together, add the money we’ve mentioned is still flowing into the markets, and it feels like this cycle still has some way to run yet.”

We’re seeing momentum in capital markets and corporate demand at the same time

“for the first time since the great financial crisis, we’re seeing momentum in both the capital markets, as well as improving corporate occupier demand. So we’re seeing some nice, nice movement in the leasing markets, which at this time also include some very positive momentum in APAC, which we haven’t seen for many, many, many years.”

Expecting strong activity in Australia and Japan

“overall our research team is calling for regional economic growth to really stabilize at 5%, with most Asia-Pacific economies expanding in 2015, albeit China is slowing. And together with that point, we’re looking at strong activity in Australia, Japan, and a bit of a rebound in China from an investment sales perspective.”