Good morning and welcome to Jones Lang LaSalle Incorporated Second Quarter 2016 Earnings Conference Call. For your information this conference is being recorded. I would now like to turn the conference over to your host Grace Chang, Managing Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning and welcome to the second quarter 2016 earnings conference call for Jones Lang LaSalle Incorporated. As a reminder, today’s call is being recorded. A transcript will be posted in the Investor Relations section at jll.com. 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 fiscal year ended December 31, 2015 and in other reports filed with the SEC. The Company disclaims any undertaking to publicly update or revise any forward-looking comments. Now with that, I would like to turn the call over to Colin Dyer, Chief Executive Officer, for opening remarks.

Thank you, Grace. And welcome to everybody joining today’s review of our results for the second quarter and first half of 2016. With me today his Christie Kelly, our CFO who will review our financial results in detail in a few minutes. Also with us is Christian Ulbrich who became President of JLL on June 1st this year. After an outstanding seven years leading our EMEA region Christian is spent the last two months getting more deeply familiar with our colleagues in the Americas and Asia Pacific. So welcome to your new position Christian and to these quarterly calls. We're very happy to have you as President of the Company. With Christian’s promotion, his role as ahead of Europe was taken by Guy Grainger and in Asia Pacific, Anthony Couse replaced Alastair Hughes, who retired. The transitions have been well planned and seamless and shareholders should be impressed with the depth and experience of our senior management team and indeed of our leadership development process which underpinned these changes. To summarize our performance, we produced a strong second quarter and first half. Despite pronounced uncertainty and anxiety in Europe created by political and security challenges we saw record second quarter revenue. First revenue $1.6 billion was a 17% increase on the second quarter a year-ago while fee revenue increased 14% to $1.3 billion. For the first half revenue was a record $2.9 billion up 14% from the prior year. Fee revenue reached $2.5 billion and 11% increase on the first half of 2015. Adjusted net income for the quarter totaled $88 million or $1.93 per share compared with $93 million for the same period a year ago. First half adjusted net income was $125 million or $2.75 per share and that compared with $137 million last year. We continued through…

Thank you, Colin, and welcome everyone to everyone on our call. As Colin mentioned we had strong performance for the second quarter with double-digit revenue growth across our diversified service segment and LaSalle as well as solid adjusted operating income performance. Our positive results were driven by an increased proportion of our growth from recurring business and also strong incentive fees at LaSalle. These results were partially offset by a slowdown in transactional business particularly in the UK. We also continue to make longer-term investments in technology, data and our people, which we see translating to increased business wins and improve productivity. We remain focused on containing fixed operating and administrative costs for managing the variable costs that are key to converting our pipeline. Our performance demonstrates the diversity and strength of our global platform and our people who are dedicated to delivering our investor and corporate occupier clients within a cautious, slower-growth market environment. As noted earlier, we finished the second quarter with record consolidated revenue of $1.6 billion up 19% over the prior year and fee revenue of $1.3 billion up 15% over the prior year both on a local currency basis. Adjusted earnings per share for the quarter was $1.93 on adjusted net income of $88 million. All three geographic segments delivered year-over-year growth for the quarter and first half led by our recurring business. Property and facility management grew 17% for the quarter up $16 year to date with both growth rates nearly twice as large as the second quarter and first half of 2015. Projects and development services grew 30% for the second quarter and 32% year to date. Advisory and consulting grew 14% for the second quarter and year to date. When combined revenues from these businesses generated 72% of the second quarter real…

Thank you, Christie. Slide 16 shows a few of our recent business wins across service lines and geographies. To date in 2016, our corporate services business has won 73 new assignments, expanded existing relationships with another 40 clients and renewed 20 contracts. These 133 wins totaled 287 million square feet across all regions and represent 70% overall win rate. One notable expansion was probably NSW, Australia's largest state government portfolio. We have been retained for facilities management, leasing and lease administration services across more than 2,200 leased and owned assets totaling more than 20 million square feet. We increased the scope of our involvement from 40% to 100% of the portfolio. And now our Red technology platform was identified as a key reason for the win. Turning to capital markets second quarter highlights included the $2.45 billion sale of Asia Square Tower 1 in Singapore, which Christie referred to. This is the largest ever single building transaction in Asia Pacific. And in the UK, we advised on the sales of 6 Bevis Marks in the city of London for GBP220 million. Key leasing transactions included winning leasing, management, and project and development services responsibilities to reposition 353 Sacramento in San Francisco. Our approach focused on proposing a total brand of a whole for the building even to the point of changing the building entrance to another street, so that the rebranded property will have a new address, 288 Battery. And we closed JLL's biggest-ever leasing transaction in Germany, the consolidation of CRX Insurance Rhineland operations and a new 646,000-square-foot development in Cologne. As Colin mentioned in his opening remarks, we continue to invest strategically in businesses that expand our service capabilities and geographical reach. The 21 transaction we have completed this year have a total valuation of nearly $640 million.…

Thank you, Christian. Before taking questions on the call, a few items about our Board of Directors. Bridget Macaskill joined the Board on the July 1. Bridget is the Non-Executive Chairman of First Eagle holdings Incorporated and serves as a Senior Advisor to First Eagle Investment Management and to its Board. Until this year she was President and CEO of First Eagle which has $94 billion dollars in assets under management. Prior to joining First Eagle in 2009 Bridget served as Chief Operating Officer, President and Chief Executive Officer and Chairman of the Oppenheimer Funds Incorporated. Bridget will serve on the Jones Lang LaSalle Board’s audit committee and its nominating and governance committees. In addition, Ann Marie Petach who joined the Board in 2015 has been appointed Chairman of the audit committee. Anne Marie is an audit committee financial expert for the purposes of SEC rules. So we're very fortunate to have these two very talented women as members of our Board. Ann Marie has already proven itself to be a valuable contributor to Board activities and discussions and she will continue to promote the highest levels of corporate governance in her new role. Bridget is a highly respected leader in the investment management sector who will bring new perspectives and expertise to what is already a very strong Board. With her appointment, four of our nine independent directors are women. For the final note last week JLL issued its new sustainability report where we announced the new name of our global program. It's called Building a Better Tomorrow. The reports which you can find on our website reaffirms our commitment to sustainability and the tangible ways the firm is delivering positive financial, environmental, and social results for all of our stakeholders. It highlights the way we are continuously investing to adapt and grow JLL to ensure that we sustain our business over the very long. So with that review we will now take your questions. Operator could you please explain the process.

Yes, sir. [Operator Instructions] Our first question or comment comes from the line of Brandon Dobell. Your line is open.

Wanted to focus first, I guess, just on Integral. How do we think about the impact - since it was a pretty sizable acquisition, the impact on the different revenue lines with EMEA in the back half of the year?

I think Brandon just from the perspective of the impact we can expect that you will see that in the facilities management business and essentially from a revenue perspective, picking up a good 25% to 30% on the UK revenue line on a gross basis.

Got it. On a gross basis? Okay, perfect. And then, second, given the good capital raise in LaSalle this quarter and what's a pretty big dry powder number, maybe some color or commentary on, I guess, a couple things. Where are you finding the most traction, raising new equity? And it seems like that's one of the bigger dry powder numbers I've seen in a while. So what does that - does that tell us anything about the markets, what the team at LaSalle is seeing? Is there any particular, I guess, reason for holding out on putting that capital to work, or is it more just the usual process of putting that much money to work in these markets?

Well the capital is coming from multiple sources. We continue to see inflows into our Japanese funds which are invested in global securities. We see continued inflow in through the retail distribution system into our JLLITP fund [indiscernible]. As we've mentioned on the call, we expect Brexit - continued strong investment from institutional clients through separate accounts in Europe and in the U.S. So there are multiple sources. The single theme is that we are 10-year bond of 1.3% or 1.4% and German rate less than half a percent for the same period or even negative for shorter periods. Real estate yields at 45% even for the best assets in gateway cities show a really good yield pickup for institutional investors. So they're increasing their allocation to the sector, alternatives as a whole and within that to real estate. There is no change, and no abatement in that trend. With respect to the dry powder, which is of the order of $10 billion. You've heard us talk about the market uncertainty in Britain which is making trading there on the buy or sell side a little difficult. So there is some pricing clarity but generally globally, markets are liquid, deals are getting done. They may be taking a little longer, particularly as financing - financing resources take a little bit of a longer look at underwriting, pressure from the regulators globally. So the markets are healthy. We believe all very nicely. We have no trouble - we have no trouble spending that capital. But we will do it wisely and continue to do it in the best interest, obviously of our clients.

Okay. And then final one for me, I think Christie, it felt like your comments about margins - that we should expect, I guess, a continuation of the near-term pressure just given the mixed change but also the investments in tech and people and systems and things like that. Is that a fair way to characterize the back half of the year should look? And I know there's going to be incentive fees that muck that answer up a little bit. But comparing the back half of this year to the back half of last year, should we see continued pressure on a geographic basis given those factors you mentioned?

Yes. I think Brandon a couple of things. First of all we don't give forward guidance but I think looking back what you can you know is that we’ve increased margins effectively and consistently over the past five years where the growth in both our transactions business as well as recurring business. As you can see reflected in the mix, you can see our margins moderate. And that's good news. I wouldn't call it pressure. I’d call it great balance representing the diversification of our portfolio both from a transaction and recurring perspective. So with that I think that you know we're really pleased with the performance and also the investments that we're making in the payoffs that we're seeing from a growth perspective in revenues as well as the benefits from a productivity…

Okay, great. Thanks. Appreciate it.

Thanks, Brandon.

Thank you. Our next question or comment comes from the line of Mitch Germain. Your line is open.

Good morning.

Good morning.

Colin, you mentioned some caution with regards to the leasing markets in the UK post-Brexit. Curious if there's been a drafting impact across broader Europe after the vote. And does this maybe create opportunity for leasing away from the UK?

Christian?

Yes. Thank you. Well, not really notable at the moment. What happens is people were shocked up first sight. And then within a couple of day’s people at that and it is more or less business as usual on the continent. There has been a lot of press attention to who will be the winners of that Brexit. I would like to answer there cannot be any winners of that Brexit, but there are clearly some cities who are trying to get a bit of attention from that situation. First of all, it will be Dublin, but most of the buildings have to be built because there is no vacancy in class A quality in Dublin. And then there might be a bit of a spill over towards Frankfurt and Paris, but I think none of those will offset the potential hesitation we see in the London market to sign up for a long-term lease at the moment. So we have to take the Brexit as it is. It is creating a bit of uncertainty. But on the other hand we shouldn't overplay it.

Great. Thanks, Christian. And then the last one for me Christie, we are at about one - I think it's - looking at the leverage, which pro forma leverage - and 1.4 times, sorry. Which pro forma leverage and the year and where does your appetite to continue to invest today versus maybe waiting for some cash flow to help bring that leverage level down a bit post-Integral?

Yes. Mitch, I think we've got a really healthy leverage profile and when we take a look at the investments together with M&A activity, the cash flow coming from that M&A activity, we're well in alignment with our fantastic investment grade balance sheet and managing our leverage to under 2.

And we're seeing no lack of opportunities to make further consolidation investments along the lines that we described in the prepared remarks to expand our geographical or service line footprint. So with the balance sheet that Christie’s described in that capacity we have will continue to be picky about what we acquire, but those opportunities are there and they are abundant at this point in the cycle.

And Colin, has there been any change in the pricing environment?

It's tended to I mean as you get through the cycle, pricing tends to get higher and so we've seen some of that. That's caused us to back away a little bit particularly as our PE fell back through the reaction to or the anticipation of Brexit in particular during Q1 and Q2. So we've been more cautious on pricing, I would say. What we do is where we see something which is really strategic. Example would be the Corrigo acquisition in the U.S. which brought a whole layer of technology into our business, which we believe is strategically necessary. We will stretch a little bit on that, but otherwise with the pricing, we are looking at deals with very much inline our own market cap and market valuation and being suitably cautious.

Thank you.

Thanks, Mitch.

Thank you. Our next question or comment comes from the line of Marc Riddick. Your line is open.

Good morning.

Hi, Marc.

I wanted to get a sense of whether or not the activities over the last few months, either pre- or post-Brexit, had led to any changes in your views on where we are in the cycle or maybe - perhaps maybe confirmed where you felt we were already.

I've said in my remarks that interestingly this cycle seems to be elongated beyond where one might have expected. The interest rate - so take a few of the factors that you watch. Interest rates have not come off the floor that often helps to bring a cycle to a close. There is plenty of confidence, but quite sensible equity in the market. For the no slacking in the level of demand and I described institutional investors attitude to real estate was giving them a very significant uptick on the risk free rate that they're looking at. We don't see over construction because construction lending has been restricted through this cycle because banks have been better regulated. So there is a pipeline of product to come through and destroy the dynamics of the supply demand equation. So all those things argued for a continuation of a very steady low, low, low sort of environment not spectacular growth, but that may also be helping just elongate the cycle. So as we said today we can't see what factor would trigger the cycle to come to an end at this point.

Okay. Great thank you.

I am sorry, I just wanted to add the level of equity which is chasing product and the probably after the Brexit even for a long period of very low interest rates will certainly help to get that - to keep that kind of cycle moving. As Colin said not in an overly impressive way, but it will continue to go down the way it has been. And on the corporate side the overall increased level of uncertainty is pushing corporate to think even harder about how they can manage their costs and it will continue to drive the outsourcing trend especially in the two regions EMEA and Asia Pacific where the outsourcing is still a bit lagging behind the Americas.

Okay. Thank you very much.

Thanks Marc.

Thank you. Our next question or comment comes from the line of Jade Rahmani. Your line is open.

Hi, Jade.

Thank you for taking my questions. How are you?

Great thanks. How are you?

Great thanks. The decline in global tenant demand that you predict in your forecast slides - outlook slides? Can you just give a little more color on the regional drivers and if that's a moderation in your expectations from when you last provided the guidepost slides?

Yes, it’s a very slight moderation. You are going from flat to down 5% which is kind of almost within the margin of error, but these sorts of researcher forecasts, which they can compile both amounts from our businesses and countries around the world independent of any input from us. And what it reflects is just a general broad continuation of this 3% global GDP growth. If you look at those growth rates the Americas are in two to three percentage points. Europe is in the one to two percentage point range with Britain falling back into that range now. And Asia Pacific is at five percentage point growth. So in broad terms that level of economic activity is what drives the fundamental demands. The individual markets around the world are city-specific and show very different dynamics, but in general what we can say is that the level of vacancies in office around the world is low driven by significant demand as I described the low levels of replenishment and building in this cycle. So you can expect to see as we described in our slide in over a few markets continued rental growth across all major cities in the world. The only exceptions are the areas of significant problems - Moscow, Buenos Aires; Perth, Australia, because of the oil and commodities bust and put our London for the reason the question is this described Christian, anything to add those comments on rental dynamics.

No, not really to be honest, I think it's understandable that there is a bit hesitation when there are so many concerning factors out there but as Christie has said our leasing revenues have an element of recurring. Because you can only wait for so long until you take your decision when your lease is coming to an end. And so that that period of hesitation will only last for some time and that's why we are still predicting the second best year since 2008. So we are - we shouldn’t complaint here we are at a very high level.

And in terms of the leasing business, what percentage overall of leases typically do renew?

That depends, market by market. You have markets where you have very long leases like in the UK. And you have markets where you tend to have much shorter leases. So my best guess is that you can say that a lease renews about every seven to eight years on average across the markets.

Yes, they will reset at three-year intervals in France and they’ll reset with pricing annually in Britain with upward-only leases. You’ll get all sorts of different terms within the U.S. markets. So if you say - your question is do people tend to stay where they are or do they tend to move. Just overwhelmingly people tend to renew their leases and stay where they are. With expansion or contraction or as in our case in Chicago by moving around floors moving to different floor plates as their requirements change.

Can you give any color on the equity income, other income and noncontrolling interest line items?

Just that from the perspective of equity income data, this is really being driven by our LaSalle business.

And the other income line and noncontrolling interest - the other income, I think, was a new line item, and the non-controlling interest did spike upward?

Yes. And so from the other income perspective that represents an employee managed fund for which we do not consolidate. We do consolidate and we just wanted to carve it out on the other income line because we don’t control it.

Okay. Given what looks like a more moderate outlook in your slides and your view on the cycle, can you give any color on where you think the most attractive M&A opportunities are in terms of business line and perhaps region? And also whether at this point it might make sense to pivot toward a stock buyback, which would be highly accretive given where your stock is trading?

Well, we, first of all, are seeing M&A opportunities right across our business. As I said earlier on this is a point in a cycle where sellers are happy to sell because they believe pricing is fair, buyers such as ourselves have cash and confidence. So it's a liquid market currently across the world. There are no regions where you can say that there is no M&A to be done. Albeit, the historical patterns that do apply there being lots of possibilities for consolidation in the U.S. and in Western Europe but very much fewer opportunities in Asia and in the preponderance of developing markets across that region where the industry is relatively immature. So we're seeing it across all geographies, we're seeing it across all types of business lines from capital markets and debt, as we've described. The Oak Grove capital acquisition late last year in the technology driven corporate solutions business areas such as Corrigo and indeed in leasing businesses in Europe and Asia Pacific. We also purchased and are looking at other valuation businesses. So across the broad sweep of what we do, there’s plenty of M&A available. As to the choice between the use of - how we use that capital. We’ve obviously keep an eye on the options for stock repurchases. And we don’t believe there is accretive - anywhere near as accretive as the returns that we can achieve for the M&A work that we do. But we keep our eye on that as an option with the Board.

Thank you very much for taking my questions.

Thank you, Jade.

Thanks, Jade.

Thank you. Our next question or comment comes from the line of Brad Burke. Your line is open.

Hey, good morning, guys. Nice quarter.

Thanks Brad.

Christie, I appreciate the color on M&A and driving 50% of the growth. And considering that you are closing Integral in the third quarter, any sense of the EBITDA tailwinds due to M&A in the back half of the year?

Specifically no Brad I mean we have some really nice contributions to offset the service mix on the benefit from a margin perspective with M&A both for the quarter and year-to-date. And we're expecting that we see some really nice accretion coming through to near the revenue performance. So as you know, we don't give forward guidance, but suffice it to say that we've chosen our acquisitions very selectively both from an accretion perspective together with integration and cultural fit perspective. So we're very pleased and we expect these to continue to fuel growth, continue together with our organic profile. So very pleased going forward.

Okay. And sticking with the margin comment, the Americas margins fee revenue basis declined by 1.2% in the quarter. And considering the mix in the strong growth in leasing and capital markets, I thought that was a little surprising. Is there anything choppier that we ought to be thinking about that wouldn't recur as we go forward?

I think a couple of things, Brad just to put into perspective. Last year second quarter, the Americas capital markets transaction business did exceedingly well. And to that point, we have a little bit of a mix shift in the outperformance given the growth transaction. So with that, we don't have as much throughput from a transactional margin perspective in the Americas in the second quarter. All that being said, we've got to remember the seasonality in our business and the fact that things from a transaction perspective just given some of the uncertainty, and the like buy/sell transactions coming together have been a bit slower even though our team is working double time. So we'll see how that transpires here going forward for the second half of the year. But the teams got a lot of work in here.

Okay. And then last one. I appreciate the additional detail that you gave in the supplemental on FX impacts to EPS. It looks like you've had a $0.05 tailwind in each of the last two quarters. And as you are looking at spot rates now, any sense of how that $0.05 number is going to trend over the next couple quarters?

We're expecting, if you took 2015, Brad, for it to be pretty consistent, but then, if you will impacted by seasonality.

Okay. I appreciate it. Thank you very much.

Thanks so much Brad, and thanks for the input.

Thank you. Our next question or comment comes from the line of David Ridley-Lane. Your line is open.

Sure. So you have made a number of technology and data investments between your internal rev platform, Corrigo and now the SCI global occupiers benchmarking business. Maybe taking a step back, are these investments intended to increase your competitive position within the outsourcing industry, or are you looking to create standalone subscription revenue streams around these?

I take that question. It’s Christian. I think as other industries, our industry is moving very rapidly into that technology space. And so we all have to be very focused on that topic and clearly we would like to create a position where we are standing out, but I have confidence that all our competitors will go down the same route, so we are extremely pleased with these acquisitions and with all the activities we have being pursuing over the last couple of years on the technology side. All our service lines are massively changing with regard to the usage of technology, so we get proposals from the different business that’s across the regions with new ideas how we can use technology to increase productivity or to develop a competitive edge in that specific service.

Yes. I mean broadly, David any company in any industry that isn’t spending incrementally more on technology is a company that's not investing well for its future and that applies in real estate as much as any other sector. Maybe real estate has been a little bit late in coming to this digitization process, but it is coming and quite quickly and that's why we've been talking consistently over the last few years about the level of our spend, in organizing our data, in expanding our base business systems, but also our client-facing technology systems because it's the medium to long-term strategic imperative to do that. We're very pleased with the progress that we've been making. We like to think, we have good reason to think, we're ahead of most others in the industry, and we certainly believe we're spending as a proportion of our total revenue compared to market leading levels.

Understood. And then on the Integral acquisition, should we expect it to have a similar gross to fee revenue proportions as your existing property and facilities management?

Hi, David. It's Christie. No, it a gross business. So, you will see it all come through on the gross revenue line.

Our facility business is a mixture of gross and net fee revenue. This business is measured entirely on gross. So as compared to a broader business that has a slightly more diluted margin.

Understood. Okay. And then…

A good quality margin, continuous reliable, annuity type margin with good growth behind as well.

Got it. Understood all right. Thank you very much.

Thanks David.

Thank you. Our next question or comment comes from the line of Peter Siciliano. Your line is open.

Hi, yes, thanks.

Hi, Peter.

Hi, how are you?

Good. Thank you.

Good. I was looking at your outlook chart on the top of Page 6 there for capital markets. And maybe you already explained this and I just missed it, but you show how overall in the market was down 8% in the quarter, but you guys are only down 1%. You strongly outperformed in Americas and Asia-Pac. But in EMEA, it shows the quarter was actually flat. So I was wondering is that actually true? And if it was, then why did you guys underperform so much down minus 17%?

Well, these quarterly views are obviously impacted by deal closing of some major transactions and what we had in EMEA we had a very strong deal pipeline in the UK which was getting on hold due to the vote in June. And since that has being kind of behind us we have seen most of these deals closing now in the months of July.

Okay.

So I would call it more coincidence than under performance we had a similar challenge in Germany where we had a couple of very large deals which didn't close before the end of the quarter, but close then in July. So we are very happy with our capital markets business in EMEA and we see an incredibly strong pipeline and that goes across the Board. I just heard this morning that even our Russian business is doing better than they planned at the beginning of the year because they're with that low yield environment especially the sovereign wealth funds are looking desperately for higher yielding properties and have stepped into several new transactions in the Russian market.

Okay. Thank you.

I think Peter, the only thing I'd add too is excluding the UK, we're up 5% overall. We have to remember to the tough comps from last year.

So that number overall, that's minus 17%, would be plus 6%, not including the UK?

That’s correct.

Okay. All right. Thank you.

You’re welcome.

Thank you. Showing no additional questions in the queue. I would like to turn the conference now back over to management for any closing remarks.

Well, thank you, operator, and thank you for joining Christie, Christian and myself today. today. And thanks for your continued interest in our Company. And we of course look forward to speaking with you again following the third quarter results. Have a good day everyone.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.