Good day, and welcome to the Second Quarter 2014 Earnings Release Conference Call for Jones Lang LaSalle Incorporated. Today's call is being recorded. 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, 2013, and in our other reports filed with the SEC. The company disclaims any undertaking to update or revise any forward-looking statements. 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'd like to turn the call over to Mr. Colin Dyer, Chief Executive Officer, for opening remarks. Please go ahead, sir.

Thank you, operator. Good evening, everybody, and thank you for joining us to review our results for the second quarter and first half of 2014. With me on today's call is Christie Kelly, our Chief Financial Officer, and Christie will review details of our performance in a few minutes. But first, to summarize our results, we produced record second quarter fee revenue of $1.1 billion, which is 18% higher than the second quarter of last year. Year-to-date fee revenue increased to just under $2 billion, a 16% increase. Adjusted net income reached $76 million in the quarter or $1.68 per share, which is up 46% from the $52 million, $1.15 a share in the second quarter of last year. First half adjusted net income totaled $94 million or $2.07 per share, compared with $68 million or $1.50 per share in the first half of 2013. We saw margin expansion in all 3 of our geographical segments, even as we continue to invest in targeted growth across the firm's global platform. And LaSalle Investment Management assets under management reached $50 billion during the quarter, the highest level since 2008. So all in all, a very good quarter and first half, as markets and business segment -- sentiment continue to improve and business investment increased in much of the world. So let's start with those market trends. Conditions in the global economy and in real estate markets worldwide continue to develop in a positive direction. Economic growth remained steady, with world GDP currently forecast to increase by 3% in 2014. That's down marginally from earlier projections, but still matching last year's growth rate. Asia Pacific remains the fastest-growing region, with GDP expansion close to 5% expected this year. The Americas and Europe are each anticipated to grow by 1.6%. Strong second quarter…

Thank you, Colin, and welcome to everyone on the call. As Colin mentioned, we had strong performance for the second quarter and first half of 2014. Moving to the quarter performance. We delivered record second quarter fee revenue results. Notably, we increased adjusted net income earnings per share 46% over last year. Our performance again was broad-based, demonstrating the strength of our globally diverse, profitable, growth-oriented firm. Our strength starts with our brand and our people, who remain focused on our clients and investors. Our results were delivered within an improving market, where we have seen leasing build momentum for 3 quarters and begin to exhibit the trends we have seen in capital markets for some time. Our previous acquisitions, such as Staubach, King Sturge and Tetris, among many others, are now generating impressive organic growth. We see the real benefits of these transactions in our results, particularly in the Americas Leasing business and across all of EMEA service lines. These transactions, large and small, were successful because we chose our acquisition partners carefully. We structure our transactions for financial success based upon performance and execute integrations well to ensure that we realize growth over the long term. Our consolidated results demonstrate our ability to perform for our clients and to consistently produce profitable revenue growth while investing in our business. As Colin noted in his introduction, adjusted earnings per share were $1.68 for the quarter, an increase of 46% over 2013, calculated on adjusted net income of $76 million. We had record consolidated second quarter fee revenue of $1.1 billion, an increase of $178 million or 18% in local currency compared to second quarter last year. Again, all 3 of our geographic segments had healthy year-over-year increases in revenue growth and profitability across varied markets globally. Our revenue increase…

Thank you, Christie. If we turn now to selected business wins for the second quarter. Slide 4 shows a few examples from across our geographies and service lines. Our corporate -- in corporate outsourcing, we won 10 new assignments during the quarter and renewed or expanded 10 more. Corporate wins included a major facilities management assignment from RBS in the Americas, while in Australia, 5 JLL service lines work together on a project for AstraZeneca. We represented the biopharma company in the sale of its headquarters in Sydney and negotiated the pre-commitments for a new head office to replace it. We once again grew our local market Corporate Solutions business, which serves corporate clients who purchase real estate services locally. To date this year, we've won 32 assignments in this growth segment, totaling 65 million square feet of platinum space. Turning to investment sales in the second quarter. In the U.S., we completed the $350 million sale of 225 Bush Street in San Francisco, the market's largest office sale since 2012. In Ireland, we sold a portfolio of 3 Dublin assets for EUR 375 million. And in Taiwan, we completed the sale of 85,000 square feet of retail space in International Square for $132 million, which was Taiwan's largest retail transaction in the first half of the year. Leasing, tenant representation and management transactions completed during the quarter included assisting Volkswagen to identify the best location for a new billion dollar manufacturing plant in Eastern Europe. JLL teams from the U.S. and Europe worked together to identify Poland as the preferred candidate. We also negotiated local and state incentives on behalf of our client. In China, we were appointed joint office leasing agent for Shanghai Tower, a 6.2 million square-foot mixed-used development and the world's top 10 tallest building. And…

[Operator Instructions] Your first question comes from the line of David Gold from Sidoti. David Gold - Sidoti & Company, LLC: So a couple of questions for you. First, as we look at business broadly, we think about Capital Markets, which has been strong for some time, and we think about the Leasing business which started picking up, presumably, late last year. I wanted to see if you could give some additional color. I know you said pipelines were strong and holding, but if there's any additional color you can give as to confidence in both sustainability of the pickup for Capital Markets and then what you see on the Leasing side, what it takes to get that to the next level?

Well, let's start with the Capital Markets area. I mean, we've made comments -- some of these comments which I'll make in answer to your questions, we made some of them in the body of the text which we've just read. For the capital markets, demand levels seem to be high and sustained, and we see no sign of any reduction in demand. We're seeing a multiple bids, some on any transactions which we put out. We're seeing extreme disappointment on the part of under bidders, which sort of makes them more determined to go out again. We've talked about the level of allocation on the part of institutions to real estate as part of their alternative strategy is rising. We see no sign of that changing. And if you put that strong equity demand together with the increasing levels of international capital flow, we're seeing those rising up to the same levels as you saw in the last cycle, a 50% or so of overall investment in real estate being cross-border money. You put that together, in turn, with the ever-improving levels of debt availability, as banks improve their balance sheets globally, as they get more confident, and indeed, as competition amongst them to put money out increases, and that brings spreads in, and it loosens, again, the covenants which we see on loans into deals. If you put it all together, there's really no sign of any end to the strong demand which we're seeing in the capital markets globally. As far as the leasing markets go, David, we have been waiting for confidence to recover for some time. You'll recall 1 year ago, 1.5 years ago, the markets were spooked by the last throes of the euro crisis, by the fiscal cliff issues in the U.S. Those…

Well, you're right. We've done a few acquisitions where the opportunities fit with our -- fit culturally and fit with our strategic aims. What we didn't mention were all the acquisitions we look at and rejected. Some because we didn't like the economics, to your point. But we are looking at lots of opportunities, it's a very active M&A market. You can see that in the broader sweep of business, with the level of activities growing across many sectors. And so there's a lot of opportunity out there. We are being picky around, particularly the cultural fit and around pricing. And if we have anything that we'd like to -- which we particularly like, we wouldn't hesitate to do it against our requirements around economics.

Your next question comes from the line of Brad Burke from Goldman Sachs.

I wanted to talk on asset management. Clearly, an impressive quarter for AUM growth. So just wanted to gauge how you're thinking about the fundraising pipeline? And then looking at the advisory fees as a percentage of AUM, it looks like there was a nice uptick. So also wondering whether you're seeing a better mix in the fees of the funds that you're raising.

Pipeline for -- and we mentioned a couple of times in the prepared remarks, the pipelines are strong in that the institutional sector is continuing to allocate more money into alternatives as a group, and within that, to real estate. That's across the sweep of the international and institutional investment community. And indeed, you saw in wealth funds, you saw perhaps Norges announcing a couple of weeks ago their commitment to invest a whole lot more into the real estate markets globally. So no change in that trend in our pipelines. In terms of discussions that we have underway are continuing strongly. You'll recall that, as well as the $2 billion to $3 billion we've raised this year, so far we've raised $7 billion at LaSalle last year. So close to $10 billion in 18 months. As to the fees, in general, what we've been raising in the funds area, where we've been raising funds, we've been able to more or less maintain the historical fee levels that we've seen in the past, where fees have become tighter, has been in the individual mandates which we've taken from clients and they have been a larger proportion of the mix. So over the last 2 to 3 years, you've seen our fees as a percentage of assets under management come down. So we do expect that trend to stabilize at this point. You made the comment that you're seeing that stabilizing. Now we expect that to stabilize and bottom out around now and then hopefully, continue to move off of that bottom in the coming quarters.

And Brad, this is Christie. The only thing I would add to that is just in terms of capital raise and where we're sourcing capital. Just looking at where we've been for the quarter, round numbers, 60% of that raise has come from Asia, and about 35% from EMEA and the remainder from the U.S. And then as it relates to the fee performance, that's been pretty stable, thanks to the hard work of our team.

Okay, that's helpful. And then the investments that you're making in the business, and I know they weighed on margins in the first quarter, I assume that you continued at a pretty steady pace in the second quarter from where you were in the first quarter. So I'm curious if, one, if that's the case? And then, two, what the margin growth would have been had you not been making these investments in the second quarter of '14?

Well Brad, we've been making those investments, revenue investments, for 10 years. There's nothing new about it. So it's the same, if you like, the same level of pressure on our margins, quarter in, quarter out, year in, year out. If you said, what if we stopped it, what would that do? That it will certainly raise our margins by at least 50 basis points. Our own estimates are between [indiscernible] 70 and 100 basis points.

And I would agree with that, too. I mean, we've been tracking it, 2013, and then through the 2014 pretty closely, and we have upticked a bit to the 70 to 100 basis points, as Colin mentioned.

Your next question comes from the line of David Ridley-Lane from Bank of America.

Question on the Leasing business, you're massively outperforming year-to-date and gaining market share in the U.S. I'm just wondering about what you think of, about the factors that are driving that outperformance, and how sustainable is that over the course of the next, say, 6 to 12 months?

Well, we're pleased with it. It's a mixture of factors. Interestingly, we saw roughly the same level of increase in the major cities as we saw in secondary markets. I think it's up 20% in the major cities and 25% in what we call secondary markets. So it's very similar performance across the scale of markets that we're in the U.S. What's driving it? Well, a number of factors. Firstly, as we mentioned, we've been hiring steadily and consistently, bringing in teams to strengthen our business and improve our service to clients across all markets and opening the odd new market as we go. The teams, as we come onstream, take 12, 18 months to get up to normal running speed. So as we've been bringing them on, those that have joined in the last 2 years are still raising their level of productivity. And then, of course, as markets improve, the existing teams have been in situ for a time are able to really capitalize from the strong position which we have and pick up market share as markets improve. If you add to that the improved rental rates that you're seeing, that's obviously helping to drive our own revenue, as is the increasing length of leases that you see in market as markets have gained confidence and recover. So if we put all those factors together and that's the reason why we're seeing this above-market rate of growth. We wouldn't see any reason at this point to expect that -- not to expect that, where the market share gain to continue.

And I think the only thing I would add to that, David, is the fact that we've been preparing for this for quite some time. We're always in the market looking for the best teams and planning where we've got the opportunity, for example, to infill or to put more talent out to drive profitable performance for our shareholders. We track it. We really work on ensuring when we bring new people in that we are averaging up and improving their performance in terms of revenue per head. And we watch it, we monitor it, we coach it. And it's something that we are very focused on now and for the future.

Got it. Okay. And then a competitor spoke about tougher market conditions for advisory and valuation work this year. I'm just wondering if you're seeing similar trends and is this something you're concerned about for your advisory and consulting service line?

I don't know what that comment, particularly was exactly referring to...?

I think they were referring to loan workouts coming to an end here in the U.S. in particular?

Okay, well, they may have been referring to valuation work, which we do very little of that in the U.S. So that would not be affected for us.

Yes, we really don't do valuation work in the U.S.

Correct. And as for advisory work, in general, our advisory work for our corporate clients has been strong. We've continued to do loan workouts, but you're correct, they have been declining as the distress gets worked through the python. But in general, our consulting and advisory business for both our investors and our corporate clients has been growing strongly. So we have no concerns about that area.

Great. And maybe a question, how much of an impact on your business would rising U.S. interest rates have? I know your U.S. mix in capital markets is only about 1/3 of the total or so, so it's pretty good geographic diversification. But just sort of wondering your thoughts on, if we do start to see rates pick up, what that might do to the capital markets environment?

Yes, our perspective on that is, first of all, you hit it. We've got geographic diversification, we've got business sector diversification and we've got a nice majority of our revenue source tied to annuity-based income versus capital markets. Our -- we've done sensitivities. We've analyzed it and our best guesstimate is that as long as rate increases are steady and moderate and the market is not surprised, that there won't be any significant pullback on capital markets. However, we do view that if rates move in chunks of 100 basis points, 150 basis points, like we saw in October of 2011, that would cause the market pause for concern.

Adding to that, the fact that, as we mentioned, we're seeing now real rental growth across all markets. And 4% was the number we mentioned for the global average for major cities. That means that investors can underwrite an improvement in their cash flows, which -- and they can do that with some certainty now, and that will counterbalance any negative impact of interest rates on the loan parts of their capital stack.

That all makes sense. And then last one for me, just EBITDA margins are up about 50 basis points year-to-date. Is 2014 shaping up to be sort of an average year for you in terms of what you're targeting for margin expansion annually going forward?

I'll jump in there and then see if Colin's got any further comments, since I've been asked this for about a year now. But my perspective on that is that as we look forward, that the year will chalk up to be an average year. But when I say average, I mean, based on us focused on driving profitable growth and really managing our business for incremental margin improvement.

To add my 10 years experience then in the firm, Christie, the other element here is the cyclical nature of the markets that you're in, and we're still, obviously, seeing cyclical improvements across Leasing and Capital Markets in particular. That looks as though it will continue. And what we see when markets rise cyclically in this way is that our margins continue to improve. So as this cycle continues to build, so our margins build with it, that's just market-driven. And as Christie said, we are now working hard on the productivity side to improve, so that we add further fuel to that fire of improved margin.

The next question comes from the line of Mitch Germain from JMP Securities.

So just sticking with that productivity, the margin. You've talked about those productivity initiatives. I think you mentioned, Christie, 70. Curious -- I mean, how -- where was the 70 maybe at the start of your tenure and how much has been added? And then is this something that you're going to continue to update us on as this progresses over the next couple of years?

So first, just to set the stage a little bit. Our business has really focused on productivity for quite some time. It's part of our DNA, and I would say over the past year, we have really worked to elevate and heighten and, if you will, bring the game up, based on our people's capabilities. And we have operating rigor around the productivity initiatives now. We have certain initiatives that are focused based on where we view the key levers to be and price, improving process productivity through simplification, as well as further improving revenue per head. As I mentioned before, revenue per revenue generator. And so we're focused on key projects that align around those levers. And I think yes, the productivity initiatives will continue, because I mentioned -- as I mentioned, it's part of what we do every day. We'll just keep getting better at it.

Your next question comes from the line of Brandon Dobell from William Blair. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: I want to focus on the Property & Facility Management business for a little bit. As you guys are out pitching for new business or talking to the customers about renewals, maybe a sense of how broad those discussions are about different service lines, different competencies now, as opposed to, I don't know, 6 or 12 months ago. Are you seeing customers embracing a broader potential array of services with you guys, even at first conversations? And are you having same or more or less success on renewals, and trying to get a broader list in front of your potential customers?

Brandon, the easiest ones are renewals, because we're sort of 95% on those. Once you are the incumbent, you can generally retain the business and that's very broadly been the case down through the years and nothing much has changed there. As to the tenor of the conversations, and I'm talking Facility Management for corporates first, the trend over the last decade, as you see more and more procurement people show up in discussions, that has not changed a lot. What we are seeing is that they have less preponderance in the final decision. And that in turn means that price is slightly less relevant. And the other parts of what you might call the balanced scorecard come into play. So in particular, the satisfaction of the individual employees that are in clients' companies is taken into account. And in some cases, companies have made choices on price, and that's proven to be something they've regretted. And so we're seeing a slight [indiscernible], a slight swing back towards a more balanced quality as well as price evaluation in the services that are being bid out. As far as the numbers of services go, it's all over the place still. No real change in that front. Those doing global RFPs for single service on a global basis, to those breaking up 5 services by 4 regions and bidding out each one individually, and each individual company makes its decision on what it wants to do, depending largely on their level of centralization, decentralization and their level of alignment that they have within their own individual businesses. Some occasions -- we've learned to recognize these now, we're actually used as the unifying catalyst, where businesses are highly decentralized. That's to say they have their own local rules and central management would like to change that and they kind of use us to impose global standards. Those are a two-edged sword. I mean, on one hand, they're fantastic. The interesting challenge is, on the other hand, it could be incredibly difficult to execute, because you're working against entrenched behaviors in clients. So I hope that gives you a feel for what's happening on the corporate side. On the property side, that's the investor management part of the business, we've seen great success in the U.S. in particular this year. We've been much more focused around selling those services harder, around linking up with our investment salespeople, and of course, that growing part of our U.S. business in order to enhance our access to new -- new buildings, and we've worked generally harder at retaining buildings that get sold and where our management is under risk.

The only thing, too, I would add to that is if you take a look at some very important survey statistics out there, specifically the Watkins survey and the Kingsley Associate survey. We scored overall customer satisfaction to be the best in relation to the Watkins survey, or one of the top, '05 to '13. And then in the Kingsley Associate survey, we also score above the Kingsley index, which drives that renewal rate that Colin was mentioning, very highly correlated. And then further that, there are a couple of recent quotes from our corporate clients around why JLL? Top talent, comprehensive service delivery platforms, service lines with our business, seamless service delivery, aligned and connected across services and regions and a trusted advisor and partner. Just to give you a little flavor. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay, that's helpful. Maybe Christie, back to your, I guess your comment about your kind of DNA around productivity. If you were to compare, I guess, your visibility or the buy-in from the local market managers on driving margin expansion or just -- or better profitable growth now versus a year ago or maybe the first couple of quarters that you were at JLL. What kind of order of magnitude kind of change have you seen in your ability to dig into the numbers, control the numbers, get buy-in from the people who are on the ground running the different offices?

I think, Brandon, I've been really trying to get out and visit our major markets. And I pretty much this first year managed to get to a little over 50% of them. And with that, when I first started talking about productivity, I said we've been at this for a long time, that's something that's part of our DNA. If you go to the Atlanta office, our team has a productivity room, as well as innovation. And whether you're in Atlanta or whether you're in Beijing or whether you're in São Paulo or Warsaw, our people talk about productivity and they talk about innovation and they talk about how to drive superior customer service. So that operational excellence piece is no new news. But I think what we've done, as what I've said before, is just become even better at it, and really captured the ability to quantify and then have, if you will, process discipline around what we're doing, even just a little bit more. And so it gives us visibility and transparency into where we think there are major levers to move on behalf of our clients and our shareholders, as well as our people. So more to come. It's exciting and folks are energized about it. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay. And then final one for me, going back to the adding people thesis here. So you continue to add people at a pretty consistent clip, has the amount of churn, take the GE approach and trim off the bottom performers on a consistent basis. As the amount of churn out of people that the organization feels just aren't up to par, up to snuff, has that picked up or has that been pretty consistent?

It's been pretty consistent, Brandon. I mean, as Colin mentioned, we're very selective about who we bring in. And then further to that, we are very disciplined about managing our performers from, if you will, the bottom quartile, in getting them over the median. And so our productivity in terms of revenue per head really points to that. And as well, part of the key value outside of integrity in our firm is collaboration and our folks work to make sure that they, as a team, bring that overall productivity up. And at the end of the day, increase the size of the pie.

A couple of numbers for you. A couple of numbers for you, Brandon. Voluntary turnover in the U.S. is 8%, and that's very low for a services firm. We've added about 10% to our brokerage community in Capital Markets globally, as I think Christie mentioned, this year -- sorry, over the past year, and about 5% to our Leasing professionals, globally. So some numbers for you. If you want a qualitative comment. As the markets have gotten more competitive and as actually, as markets become richer in terms of where we get to in a cycle, we have seen an increase in competitors calling our people, despite that we've kept turnover, voluntary turnover low, as I described. And similarly, we're finding it more expensive to hire people away in the markets where we -- where we're trying to do that. So it's a market in which retention around employment and the price of employment is certainly increasing.

And Brandon, there's one thing, too, I just want to leave you with in terms of this discussion, as well as productivity, is that when I said it's all about growing the pie, I want to emphasize that it's not about cost takeout at JLL, it's about revenue enhancement, as well as margin -- incremental margin improvement. It's a very different way to think about it.

[Operator Instructions] Your next question comes from the line of Michael Mueller from JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: You just answered my question about headcount. I do have one more. I was wondering, can you elaborate a little bit more on the debt placement impact in the quarter. And then, do you see that playing out again in Q3 and Q4?

Debt placement, you mean...? Michael W. Mueller - JP Morgan Chase & Co, Research Division: [indiscernible] for the Capital Markets growth in the Americas?

It's just simply that the availability of debt is just getting easier. It's, again, a cyclical thing. The banks came out of the crisis in 2008 with all doors locked and there was no debt to be had, even in the U.S. The U.S. market debt -- sorry, the U.S. banks, compared to their European colleagues, would cover their capital bases comparatively quickly. But since then, we've seen a gradual, steady improvement in the availability of debt, so liquidity. We've seen our other providers of debt, such as private equity funds and insurance companies, come into the market and to some extent, withdraw again as the -- as the margins got squeezed. But we've seen this process of banks, as their confidence and their availability of capital rose, and the competition between them increase, we've seen banks make more debt available at lower spreads. So spreads coming in from over the last 12 months, for example, from 250 to 125 basis points or lower, and we've seen them loosen the covenant, the terms around the loans they are giving. So putting it all together, and there is adequate debt -- more than adequate debt available within the U.S. market. The same comments would apply to Europe, but more -- the process has been slower, but since debt is now pretty freely available for well-underwritten transactions. In Asia Pacific, really didn't have a great debt problem, the banks were very robust throughout the crisis and came out strong. So that's the sort of world deal for the situation.

And I'll just, Michael, loop that back to our business. So in relation to my comments for the Americas, I would just -- with all of the backdrop that Colin's given, and just say that we don't expect that to repeat and it was more around timing and we've got strong pipeline.

There are no further questions at this time.

Okay. Well, thank you, operator. With that, we'll end today's call by thanking everybody for joining us. Thank you for your interest in JLL. We look forward to speaking with you again at the end of the third quarter. Have a good evening, everyone.

This concludes today's conference.

Bye.

You may now disconnect.