Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), has recently merged its North Carolina operations with Keystone Partners, a premier integrated real estate services firm, to expand its business in the region. The strategic move is also aimed at providing its clients with a broader array of local service offerings, thereby enabling it to capture a greater pie of the total market share.
Since its inception in 2001, Keystone is widely recognized as a leading provider of real estate services for institutional and corporate customers across the country. The company provides a comprehensive range of property services, including agency leasing, investment sales, financial analysis, construction management, tenant representation, consulting and project management for office and industrial properties.
Besides operational synergies, the merger would bring strong local market knowledge and expertise of Keystone staff to bolster Jones Lang’s position as a commercial real estate leader in the region. With the merger, the company has put on board over 90 years of combined experience of the four founding partners of Keystone, who are credited with achieving superior results, exemplifying strong leadership acumen within the commercial real estate industry. The deal would also strengthen Jones Lang’s already 250-strong team with the absorption of all the Keystone employees.
On the other hand, the merger would enable Keystone to leverage upon an extensive operating platform and a broad real estate product and service range of Jones Lang to expand its client base. Chicago-based Jones Lang LaSalle has operated in the Carolinas since 1999, with an extensive knowledge of domestic and international real estate markets that had enabled it to operate as a single-source provider of real estate solutions.
With about 180 corporate offices across the globe, Jones Lang operates in more than 750 locations in 60 countries. The company is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide.
LaSalle Investment Management, the company’s investment management business, is one of the largest and most diverse in the real estate sector with nearly $41 billion of assets under management.
Jones Lang continually invests in industry-leading research to identify emerging trends and anticipate future conditions to respond to the shifting market and business trends of its clients. 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.
The company also has a strong balance sheet that provides it with an operating flexibility to protect and enhance market positions.
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.
The Real Estate Services business segment is also cyclical in nature and experiences fluctuations in revenue and operating margins. This in turn could negatively affect the long-term earnings expectations of the company.
We maintain our Outperform recommendation on Jones Lang LaSalle, which presently has a Zacks #1 Rank translating into a short-term Strong Buy rating. We also have an Outperform recommendation and a Zacks #1 Rank for NorthStar Realty Finance Corp. (NRF), a peer of Jones Lang LaSalle.
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