Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), has reported first quarter 2011 net income of $1.5 million or 3 cents per share compared to $0.2 million or 1 cent in the year-earlier quarter. Earnings for the reported quarter were well below the Zacks Consensus Estimate of 31 cents.
Revenues for the reported quarter came in at $687.9 million compared to $580.7 million recorded in the year-ago quarter. Total revenues during the quarter exceeded the Zacks Consensus Estimate of $651 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $28.3 million for first quarter 2011 compared with $29.4 million for the same period in 2010.
By segment, revenues from ‘Real Estate Services’ were $621.2 million during the quarter, compared to $515.3 million in first quarter 2010 – a year-over-year increase of about 21%. By geographic region, revenues from the Americas came in at $288.1 million reflecting a year-over-year increase of 26%, while that in EMEA (Europe, Middle East, and Africa) increased 11% to $168.1 million. In the Asia-Pacific region, revenue growth during the quarter was 22% to $165.5 million. The solid year-over-year increase in revenue across all the segments was largely due to strong income from ‘Project & Development Services’, ‘Capital Markets & Hotels’ and ‘Leasing’, which improved 37%, 26% and 23% respectively during the quarter.
Advisory fees from LaSalle Investment Management segment were $61.3 million during the quarter – an increase of approximately 5%. The segment raised net equity of $1.5 billion during the quarter. At quarter-end, assets under management were $43.0 billion. Total operating expenses were $675.8 million for the quarter compared to $562.7 million in the year-ago period.
At quarter-end, Jones Lang had a net debt of $512 million compared to $696 million in the year-ago period. Outstanding debt on the long-term credit facility of the company decreased by $57 million compared with the previous year, to $278 million at quarter-end.
Although, Jones Lang failed to meet the overall earnings expectations of the investors, it generated a healthy year-over-year increase in revenue due to strong performances across all business segments and geographic regions. Management further expected to continue the growth momentum in fiscal 2011 as well, with gradual improvement in the market fundamentals.
We maintain our ‘Neutral’ rating on Jones Lang, which presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating, indicating that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Grubb & Ellis Company (GBE), a competitor of Jones Lang.
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