Morningstar | Jones Lang LaSalle Leasing Business Soars While Capital Markets and LaSalle Fall Flat; FVE Unchanged
Jones Lang LaSalle reported decent first-quarter results with mixed performance across its various business lines. Companywide fee revenue increased by 6%, with most of that growth coming from organic sources. These results reflect particular strength in leasing and corporate outsourcing, offset by weakness in Capital Markets and LaSalle Asset Management. With recent results largely in line with our expectations, we expect to maintain our $185 per share fair value estimate for the wide-moat firm. At current levels, shares appear moderately undervalued.Despite the shroud of uncertainty that enveloped the markets at the end of 2018 and the beginning of 2019, its results seem to indicate the continued strength of the economy. This is especially evident in the Americas segment, where first-quarter fee revenue increased 15% as compared with the first quarter of 2018. This impressive performance is underpinned by strength in Leasing, which grew an impressive 29% in the Americas. Meanwhile, Capital Markets revenue decreased 8%, while Advisory and Consulting surged 28%. Adjusted EBITDA was around 12% on a fee revenue basis, which represents an improvement over last year largely attributable to the strength in leasing conversions.
In the EMEA segment, the company continued to experience difficulties, with fee revenue declining 3%. This decline was driven by weakness in Capital Markets, where revenue was down over 20%. The segment EBITDA margin also worsened due to an ongoing shift away from higher margin transactional revenue sources within the segment. Finally, fee revenue in Asia-Pacific increased 8% with strength in Property & Facility Management. This business line saw fee revenue increase by over 15%, largely attributable to organic growth. Additionally, the adjusted segment EBITDA margin improved by about from 2.5% to 3.8% on a fee revenue basis largely due to the successful implementation of cost management efforts.
Jones Lang LaSalle is a professional services firm that engages in real estate and investment management. The company delivers an array of services across four business segments. The company manage its Real Estate Services offerings across three geographic business segments: the Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific, and the company manages its investment management business globally as LaSalle Investment Management. In its Americas, EMEA and Asia Pacific operating segments, the company provides a range of leasing, capital markets, integrated property and facility management, project management, advisory, consulting, valuations and digital solutions services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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