We maintain our Neutral rating for Jones Lang LaSalle Inc. (JLL), a leading full-service real estate firm that provides corporate, financial, and investment management services to corporations and other real estate owners, users, and investors worldwide.
Jones Lang divides its business into two primary segments: Real Estate Services (RES) and Investment Management (IM). The RES segment is sub-divided into three geographic regions – the Americas, EMEA (Europe, Middle East, Africa) and Asia Pacific. These units collectively manage owned or leased properties in international locations, represent tenants for the acquisition and disposal of properties, provide leasing to agencies, service corporate properties, manage property and provide valuation services. The IM division provides real estate investment-management services across the globe, mainly to institutions, corporations, and affluent individuals.
Jones Lang reported third quarter 2012 net income of $49.5 million or $1.10 per share compared to $33.9 million or $0.76 in the year-earlier quarter. Excluding non-recurring items, earnings were $55.0 million or $1.23 per share during the reported quarter versus $49.5 million or $1.12 in the year-ago quarter. Recurring earnings for the reported quarter exceeded the Zacks Consensus Estimate of $1.18.
The company has a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets. These enable it to operate as a single-source provider of real estate solutions.
With a worldwide portfolio of approximately 2.1 billion square feet, Jones Lang is an industry leader in property and corporate facility management services. Its investment management business is one of the largest and most diverse in the real estate sector with nearly $47 billion of assets under management.
In addition, Jones Lang continually invests in industry-leading research to identify emerging trends and anticipate conditions to respond to the shifting market and client business trends. This enables the company to develop new investment products and services tailored to the specific investment goals and objectives of its clients, thereby maintaining profitable long-term relationships during challenging market conditions.
However, Jones Lang depends on a vibrant global real estate market to fuel its growth engine. Although global real estate fundamentals are gradually picking up, transaction volumes are yet to reach its pre-recession peak values. As such, we remain circumspect about the long-term earnings prospect of the company.
Jones Lang currently retains a Zacks #3 Rank (short-term Hold rating). However, we have a Neutral recommendation and a Zacks #5 Rank (short-term Strong Sell rating) for CBRE Group, Inc. (CBG), one of the competitors of Jones Lang.