Jones Lang Lasalle Incorporated · NYSE:JLL
Jones Lang Lasalle — Investor Day (December 2017)
68 slides from Jones Lang Lasalle's investor day presentation, December 2017
Slide 1: Program begins at 8:15AM
Program begins at 8:15AM December 2017
Slide 2: Safe harbor statement
Safe harbor statement This presentation, and other statements that Jones Lang LaSalle Incorporated (“JLL”) may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, with respect to JLL’s future financial or business performance, stra
Slide 3: Welcome & Our Beyond Strategy
Investor Day Christian Ulbrich Welcome & Our Beyond Strategy December 2017
Slide 4: Global Executive Board
Global Executive Board Christian Ulbrich Christie Kelly Greg O’Brien Guy Grainger Anthony Couse CEO CFO CEO Americas CEO EMEA CEO Asia Pacific Jeff Jacobson John Forrest Richard Bloxam Trish Maxson CEO LaSalle CEO Corporate Solutions Global Head of Chief HR Officer Investment Management Capital Mark
Slide 5: Agenda
Agenda Technology Innovation Showcase Opens at 7:30AM Opening Disclosures Grace Chang, Corporate Finance & IR Welcome & Our Beyond Strategy Christian Ulbrich, CEO Morning Session Global Real Estate Market Overview Ben Breslau, Research & Strategy 8:15AM start LaSalle Global Growth & Beyond Jeff Jaco
Slide 6: Trends shaping our future
Trends shaping our future Rising investment Growth in Urbanization 4th Industrial Revolution allocations corporate outsourcing • RE shifting from • Sustained market growth • Continues as major • Rapid global alternative to defined in outsourcing global trend transformational effects asset class • CR
Slide 7: Leveraging our Beyond Strategy
Leveraging our Beyond Strategy Industry dynamics • Inflationary workforce cost • Consolidation of peers • Fee pressure Our strategic focus • Continued revenue growth • Margin expansion • Drive shareholder value • Strong cash generation 7
Slide 8: The Pillars of Beyond
The Pillars of Beyond Clients Brand Digital People Values • Driving value as • Building our brand • Substantial multi-year • Leading professional • Unwavering strategic partners beyond real estate investment plan services / tech commitment to employer shared Values • Seamless global • Reaching more
Slide 9: Beyond in 2025
Beyond in 2025 2025 $12B Target Fee revenue growth 2016 $5.8B 2025 12% - 14% Target EBI T DA margin 10% Current - 12% 2025 $1B+ Target Cash from Operations $215M 2016 2025 12% Target ROIC 2016 10% Creating value for all our stakeholders 9
Slide 10: Leadership priorities
Leadership priorities Capital allocation focused on transformative growth • Drive differentiation through Technology • Leverage Corporate Solutions platform to drive profitable growth • Broaden Global Capital Market capabilities across capital stack • Complete platform transformation to support oper
Slide 11: Global Real Estate Market Overview
Investor Day Ben Breslau Global Real Estate Market Overview December 2017
Slide 12: Global economy set to accelerate from 2016 lull
Global economy set to accelerate from 2016 lull and growth to continue through extended late cycle 5.0% Forecast 4.0% Year-Over-Year Real GDP Growth (%) 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sources: Oxford Econ
Slide 13: Synchronized and accelerating global growth
Synchronized and accelerating global growth GDP forecasts United States China Japan Germany United India France Australia Kingdom 2017 (Jan forecast) 2.3% 6.3% 1.0% 1.5% 1.5% 6.7% 1.5% 1.8% 2017 (Nov forecast) 2.2% 6.8% 1.6% 2.5% 1.5% 6.5% 1.8% 2.1% 2018 forecast 2.6% 6.4% 1.7% 2.4% 1.5% 7.5% 1.8% 2
Slide 14: Policy uncertainty has declined globally and in the U.S.
Policy uncertainty has declined globally and in the U.S. but volatility remains likely Brexit followed U.S. Debt by U.S. election 300 Ceiling and Global European Financial Debt Crisis Economic policy uncertainty index 250 Crisis 200 150 100 50 U.S. Global 0 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03
Slide 15: A bull market in everything – how long can it last?
A “bull market in everything” – how long can it last? 4 Global Stocks Global Corporate Bonds 3 Global REITs from Long Term Price Trend line Sigmas (Standard Deviations) 2 1 0 -1 -2 -3 Dec-80 Dec-81 Dec-82 Dec-83 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-
Slide 16: Secular trends underpin real estate performance
Secular trends underpin real estate performance Everything Flexibility as a & Blockchain Ecommerce Profit Service Specialization Human Autonomous Sharing pressures vehicles Experience economy Consolidation & AI and Centralization Automation SMART buildings Outsourcing Technology Millennial Urbanizat
Slide 17: The fourth industrial revolution – macro trends
The fourth industrial revolution – macro trends The Internet is considered Technology is ubiquitous Connected devices are now the norm a standard building utility AI, Automation and robotics Expectation of “on demand” Experience is everything digitizing human jobs consumption, mobility and flexibili
Slide 18: Property market fundamentals overview
Property market fundamentals overview Most sectors to enjoy healthy conditions throughout 2018 Office Industrial Retail Hotel Multifamily • Steady, technology- • Strongest, most • Ecommerce and • Positive hotel market • Solid U.S. demand, fueled leasing activity consistent momentum changing consumer
Slide 19: Office markets spread around the clock
Office markets spread around the clock with major cities clustered and active in the late cycle phase Beijing, Washington DC Paris, New York, Chicago, San Francisco Tokyo, Hong Kong Dallas Shanghai Los Angeles Boston Frankfurt, Prague Stockholm Rental Growth Rental Values Slowing Falling Berlin Amst
Slide 20: Commercial real estate market outlook
Commercial real estate market outlook Investment -5-10% lower Leasing Capital Stable values 2% higher 2018 prospects Vacancy rate Rents Rising 3% higher Development Slowing Leasing, vacancy, development, rents and capital values relate to the office sector Source: JLL, October 2017 20
Slide 21: Global office leasing volumes remaining healthy
Global office leasing volumes remaining healthy Gross office absorption across 86 office markets millions sq. m 45 Forecast 42 39 36 33 30 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 24 markets in Europe; 50 markets in the US; 22 markets in Asia Pacific. Source: JLL, October 2017 21
Slide 22: U.S. leasing activity demonstrates stability and growth
U.S. leasing activity demonstrates a broad spectrum of stability and growth, with technology leading volumes Growing Stable Shrinking Education 73.0% 22.1% 4.9% Leisure and hospitality 72.3% 27.7% Professional services 68.5% 28.5% 3.0% Real estate/coworking 66.0% 32.3% 1.7% Technology 59.2% 30.6% 10
Slide 23: Expect a 5-10% decline in investment volumes in 2018
Expect a 5-10% decline in investment volumes in 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (F) 2018 (F) 800 US$ billions ~0% 700 -5-10% 600 500 -10% 400 +10% -15% -10% 300 ~0% 200 +5% 100 0 Americas EMEA Asia Pacific Global Projected change 2016-2017 Projected change 2017-2018
Slide 24: Less conventional structures and financing activities are rising
Despite conventional volumes being down, less conventional structures and financing activities are rising Single asset sales (through Q3) Recaps (through Q3) Loan originations (through Q3) $120.0 $25.0 800 -12.9% +79.2% +16.9% Transaction volume (US$ billions) Transaction volume (US$ billions) Year-
Slide 25: Key risks for the market outlook
Key risks for the market outlook U.S. Fiscal Policy Synchronized global growth Balance sheets Potential GDP Major markets growing Markets may be due for Upside boost for 2018 from together with trade some price correction, but tax reform accelerating systemic risk has declined Downside Monetary Poli
Slide 26: LaSalle Global Growth & Beyond
Investor Day Jeff Jacobson LaSalle Global Growth & Beyond December 2017
Slide 27: LaSalle is one of the world's leading real estate investment managers
LaSalle is one of the world’s leading real estate investment managers Countries Offices Employees Across the Globe Global Assets Under Management 17 24 730+ $59B Building trust through a differentiated combination of knowledge, people and client focus 27
Slide 28: Client snapshot + capital raising success
Client snapshot + capital raising success A trusted advisor to leading investors for more than 40 years 400+ investors across 30 countries Total AUM by Investor Type Total AUM by Region 4% 3% Public Pension Funds 7% 22% North America Family Office / High Net Worth / Mass Affluent 32% 37% EMEA 12% Co
Slide 29: Diversified mix of assets under management
Diversified mix of assets under management Deep experience across multiple investment products, regions and risk profiles Total AUM by product (US$ billions) Public real estate Private equity AUM Private equity AUM securities $11.7 by region by risk strategy $2.7 Opportunistic $7.9 Asia Pacific Priv
Slide 30: Secular tailwinds ahead
Secular tailwinds ahead Economic expansion and rising allocations to real estate drive demand for LaSalle services Global institutional AUM - all asset classes (in $US trillion) Institutional investor owned real estate (in $US trillion) 200 150 17.4 100 50 12.8 0 2016 2020F 2025F 9.9 Institutional t
Slide 31: Dual-track approach
Dual-track approach Delivering on stabilized annuity earnings + incentive fees via superior investment performance LaSalle Fund Offerings: Core Funds Core+ Funds Driving Strong Separate Accounts Annuity Earnings Foundation Value-Add Funds Performance-based Incentive Fees Opportunistic Funds 31
Slide 32: Private equity AUM trajectory
Private equity AUM trajectory Targeting accelerated AUM growth through 2025 $100B LaSalle AUM growth 2X revenue Other Private Equity growth (from 2016) $82 +7% CAGR +3.7% $45 $36 CAGR 2010A 2016A 2025E Total AUM: $44B $60B $100B Looking back 2010-16 AUM trend: Looking ahead 2025 target: Modest AUM g
Slide 33: Understanding incentive fees
Understanding incentive fees LaSalle’s proven track record of value-add and opportunistic execution Value-Add / Opportunistic fund stages over ~7-9 year lifecycle When Raise capital Invest Asset manage Harvest / Dispose Incentive fee = LaSalle share of profits above preferred return (typically ~20%)
Slide 34: Growth in Corporate Solutions
Investor Day John Forrest Growth in Corporate Solutions December 2017
Slide 35: JLL Corporate Solutions
JLL Corporate Solutions We offer strategy, services and technology across the entire real estate life cycle to corporates and public institutions globally
Slide 36: Clients use us to drive strategic value from real estate portfolios
Clients use us to drive strategic value from their corporate real estate portfolios Typical Client Real Estate Enables Desired Outcomes at the Real Estate Cost Profile Business Performance Portfolio Level Corporate real • Talent attraction/retention Portfolio estate is typically a • Enhanced user ex
Slide 37: Full real estate life cycle calls for a complex suite of services
Full real estate life cycle calls for a complex suite of services Portfolio Strategy Workplace Site Acquisition/ Strategy Disposition Corporate Solutions’ full suite of Lease Occupancy services addresses clients’ needs Admin Planning across the full real estate life cycle globally Employee Capital D
Slide 38: Client-centric business model
Client-centric business model We have organized around the client, adopting a key account management approach, with 4 global service lines Portfolio-level client outcomes are delivered through optimizing people, process and technology Best-in-class data management and technology have become central
Slide 39: Strategic acquisitions have transformed our business
Strategic acquisitions have transformed our business Integrated Project and Technology Integrated Portfolio Facilities Development Solutions Services Management Services 39
Slide 40: Our growing, dynamic global business
Our growing, dynamic global business 500+ strategic accounts 5 years average 80 35K 1.5B $35B countries employees globally sq ft facilities client project capital spend contract length under management managed/advised annually 40
Slide 41: Going Beyond: Corporate Solutions' growth strategy
Going Beyond: Corporate Solutions’ growth strategy 2x fee revenue growth 2025 goals 200 basis points margin expansion • Transform our operating model for improved efficiency Strategies • Lead digital innovation to address an evolving market • Enhance our EMEA platform and growth with European corpor
Slide 42: Delivering transformational workplace experiences
Delivering transformational workplace experiences …and driving business performance Past Real estate assets Local and regional Siloed functions and services “Corporate real estate (CRE) is changing dramatically. At DBS, CRE has gone well beyond Future managing buildings. It’s helping us drive innova
Slide 43: Global Capital Markets Strategy
Investor Day Richard Bloxam Global Capital Markets Strategy December 2017
Slide 44: JLL Capital Markets Vision Statement
Vision Statement JLL Capital Markets The most strategic, creative and connected real estate investment advisor to our clients in the world
Slide 45: Increasing demand for real estate allocation
Increasing demand for real estate allocation Increasing saving rates Increasing allocations to real estate Underfunded pension systems Increasing cross border investing Strong inflows to real estate set to continue, underpinned by long-term investment fundamentals 45
Slide 46: Global cross border transaction volumes
Global cross border transaction volumes Increasing faster than domestic investments 800 50% US$ B $708 $704 700 $661 40% 600 $589 500 $463 30% 400 $320 $434 20% 300 $209 200 10% 100 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 Domestic Intra-regional Inter-regional Cross Border as % of total 46 Sour
Slide 47: Investment management clients growing
Investment management clients growing AUM growth from 2011 to 2016 Top 5 Investment Managers $378B* $630B** Top 5 Investment Managers – Big are getting bigger Source: Property Funds Research, Institutional Real Estate *As of 31st December 2011 47 **As of 31st December 2016
Slide 48: Capital Markets
Capital Markets • Focus on strategic relationships with high growth clients • Increase market share and broaden the range of high value financial services • Leverage our granular market knowledge and occupier intelligence • Harness technology to optimise client solutions, and enhanced client experie
Slide 49: Capital
Debt Strategies $ £ Capital Raising Office Retail Warehouse JV & Club Deals Capital JLL Direct Investment JLL Structured Finance Hotel Residential Student Housing € ¥ Fund Raising M&A Logistics Medical Data Center Office We have an opportunity…..to be the first point of contact for all real estate i
Slide 50: Harness technology to provide better service at greater velocity
Harness technology to provide better service at greater velocity Foundational technology platform for capital markets AI technology to extend and refine lead generation Enhance digital experience for our clients 50
Slide 51: Capital Markets revenue by geography
Capital Markets revenue by geography JLL Capital Markets fee revenue Fee revenue distribution ($ in millions) Consolidated Asia Pacific $956 CAGR 20.8% $949 APAC $823 $149 $158 17% CAGR 11.8% $716 $145 41% $164 EMEA EMEA $387 $513 $475 CAGR $460 $411 18.3% $109 $95 43% $333 $306 $81 $235 Americas $2
Slide 52: Increasing revenue diversification
Increasing revenue diversification 2016 Vision: 2025 Capital Markets fee revenue = $949 million 2x fee revenue growth Debt & Other Debt & Other Financial Services Financial Services 22% 40% 60% 78% Investment Sales Investment Sales & Acquisitions & Acquisitions Ambition to create a broadly diversifi
Slide 53: Financial Overview
Investor Day Christie Kelly Financial Overview December 2017
Slide 54: Drive sustainable profitable growth
Drive sustainable profitable growth • Accelerate organic revenue growth • Expand margins • Increase cash generation and maintain financial strength • Disciplined capital allocation 2025 Target 2x Fee revenue 12-14% EBITDA margin $1B+ Cash from operations >12% Return on invested capital 54
Slide 55: Accelerate profitable growth
Accelerate profitable growth Corporate Capital Local LaSalle Investment Solutions Markets Markets Management 2025 Target 10%+ 2x 7%+ 2x Revenue Revenue Revenue Revenue CAGR CAGR Partner Integrate Leverage market Fewer, strategically globally position simpler, bigger • Client centricity • Diversify c
Slide 56: Balanced and disciplined capital allocation strategy
Balanced and disciplined capital allocation strategy Priorities Cash flow from operations target Technology Invest with defined hurdles Improving cash $500M+ flow generation growing to Platform Working capital efficiency $1B+ per year in 2025 Balance sheet strength Maintain net debt M&A Investment g
Slide 57: Optimize cash generation
Optimize cash generation Cash flow from Cash flow drivers operations • Quality earnings growth $1B+ • Efficient operating expense structure • Best-in-class working capital management $215M 2016 2025 Target Deliver strong cash flow from operations 57
Slide 58: Transform & Simplify
Transform & Simplify Finance & JLL Business Supply Chain & Human Resources Services Procurement $60M $40M $25M P&L Impact P&L Impact P&L Impact Integrated 6 global $30B+ managed platform centers spend • Migration to global ERP Platform • Workforce transitioning • Leverage total purchasing power • Pr
Slide 59: Beyond in 2025
Beyond in 2025 2025 $12B Target Fee revenue growth 2016 $5.8B 2025 12% - 14% Target EBI T DA margin 10% Current - 12% 2025 $1B+ Target Cash from Operations $215M 2016 2025 12% Target ROIC 2016 10% Creating value for all our stakeholders 59
Slide 60: Slide 60
Slide 61: Key Messages for 2025 & Beyond
Key Messages for 2025 & Beyond . . . Christian Ulbrich Capitalize on macro trends & strong JLL foundation to deliver operating and Chief Executive Officer financial growth through 2025 Ben Breslau Stable global economy supports continued real estate demand and MD, Research & Strategy fundamentals Je
Slide 62: Q&A
Q&A Christian Ulbrich Christie Kelly Greg O’Brien Guy Grainger Anthony Couse CEO CFO CEO Americas CEO EMEA CEO Asia Pacific Jeff Jacobson John Forrest Richard Bloxam Ben Breslau CEO LaSalle CEO Corporate Solutions Global Head of Managing Director Investment Management Capital Markets Research & Stra
Slide 63: Technology Innovation Showcase
Technology Innovation Showcase Insights Productivity Experience RED Corrigo Digital Lead Edward Wagoner Rick Michaux Generation CIO, Corporate Solutions Vice Chairman and Aaron Rinaca Chief Strategy Officer, Head of Online Markets, Corrigo AM Research Utilization IQ JLL Marketplace Digital Marketing
Slide 64: Appendix
Slide 65: 2010 and 2016 Fee revenue / fee-based operating expenses reconciliation
2010 and 2016 Fee revenue / fee-based operating expenses reconciliation • Gross accounting requirements increase revenue and costs without corresponding increase to profit • Reimbursable vendor, subcontractor and out-of-pocket costs reported as revenue and expense in JLL financial statements have be
Slide 66: Reconciliation of GAAP Net Income to Adjusted EBITDA
Reconciliation of GAAP Net Income to Adjusted EBITDA Twelve months ended Twelve months ended Dec 31 Dec 31 ($ in millions) 2010 2016 GAAP net income attributable to common shareholders $ 153.5 $ 317.8 Interest expense, net of interest income 49.0 45.3 Provision for income taxes 45.8 108.0 Depreciati
Slide 67: Non-GAAP Measures
Non-GAAP Measures Management uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to prior periods. These measures are believed to be useful to investors and other external stakeholder
Slide 68: December 2017
December 2017