Thank you for standing by. Welcome to Jones Lang LaSalle Incorporated's Fourth Quarter 2017 Earnings Conference Call. For your information, this conference call is being recorded. I would now like to turn the conference over to Grace Chang, Managing Director of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and welcome to our fourth quarter 2017 conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release, which is available on the Investor Relations section of our Web site, jll.com, along with a slide presentation intended to supplement our prepared remarks. During the call, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures where appropriate to GAAP in our earnings release and supplemental slides. As a reminder, today's call is being webcast live and recorded. A transcript of this conference call will also be posted on our Web site. 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 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, 2016 and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking comments. And with that, I would like to turn the call over to Christian Ulbrich, our Chief Executive Officer, with opening remarks.

Thank you, Grace, and welcome to everyone joining today's review of our 2017 results for the fourth quarter and full-year. Our CFO, Christie Kelly, is also with us. Christie will discuss our financial results in detail in a few minutes, but first let me summarize our performance. We delivered record double-digit revenue growth for both the quarter and the year. Fee revenue reached $2.2 billion for the quarter, 18% above the fourth quarter of 2016, thanks to broad based growth in Real Estate Services revenue and in particular outstanding performance in our capital markets and leasing businesses. In addition, LaSalle delivered solid advisory fees and equity earnings. For the year, fee revenue increased 16% to $6.7 billion. Adjusted net income was $226 million for the quarter, compared with $180 million for the same period in 2016. Full-year adjusted net income totaled $419 million, up from $370 million a year ago. Adjusted diluted earnings per share reached $4.92 for the quarter and $9.16 per share for the year. Adjusted EBITDA totaled $360 million for the quarter, up from $286 million a year ago, and $760 for the full-year compared with $658 million in 2016. And we are particularly pleased with the improvements in working capital and reduction of our net debt position last year. Above all, we achieved these results while continuing to make substantial investment in our data and technology agenda. To put our results in context, the global economy grew up 3.6% annually last year, up from 3% in 2016. Global real estate transaction volumes grew to $228 billion in the fourth quarter, 10% above the same period in 2016. This brought full-year volumes to $698 billion, 6% higher than a year ago. Despite everything going on the in the world investors clearly remained confident about real estate performance,…

Thank you, Christian. And welcome to everyone on our call. Christian provided the headline summary of our results for the fourth quarter and year. So I will move directly to the details of our performance. We had a strong finish to 2017 with the fourth quarter, always our most important, contributing to record fee revenue. As Christian mentioned, for the full-year we achieved consolidated local currency fee revenue growth of 16%, of which 10% was organic and 6% was attributable to M&A. The year's Real Estate Services fee revenue growth reflect double-digit expansion of our transactional and annuity businesses across all geographic segments. This robust top line growth, together with productivity initiatives contributed to a 13% increase in total consolidated adjusted EBITDA for the year. Additionally, we generated $790 million of operating cash flow, reducing net debt by $547 million. We achieved a net debt to adjusted EBITDA of 0.8 times, a significant improvement compared to 1.7 times at year-end in 2016. For the quarter, we had local currency fee revenue growth of 14%, and adjusted EBITDA growth of 22%. This was largely the results of organic growth in Leasing and Capital Markets across all geographies, which contributed 70% of the quarter's fee revenue growth. Turning to specific consolidated service line highlights, all JLL leasing revenue increased 15% for the full-year, and 20% for the fourth quarter. The full-year growth was substantially organic, led by the Americas which accounted for nearly 80% of the increase. Strong organic growth was also driven by larger than average deal size as well as leasing related to Corporate Solutions' clients and market share gains across all regions. JLL Capital Markets fee revenue growth of 18% for the full-year and 35% for the quarter was primarily organic. We also benefited from geographic and product diversification.…

Thank you, Christie. Slide 22 lists a few of our recent business wins across service lines and geographies. In our Corporate Solutions business last year, we won 185 new assignments, expanded existing relationships with another 70 clients, and renewed 50 contracts. These 305 wins totaled just over 1 billion square feet across all regions, and represent a 70% overall win rate for new business expansions and renewals. And one highlight, we expanded our relationship with IBM, adding facilities management responsibility for 27 million square feet of space in 220 locations across the United States. This adds to our existing facilities management contract with IBM for 16.5 million square feet of space in Asia-Pacific. Representative wins in capital markets included, representing Amway in a long-term sale and leaseback in Tokyo between Amway Japan affiliate and the Blackstone Group. The transaction achieved Amway's financial objectives marked Blackstone’s first core investment in Japan, and it's the largest office transaction in Shibuya submarket to-date this year. The $220 million redevelopment of the Dime Savings Bank building in New York, and the SEK4 billion, that's about $500 million, financing of residential real estate of D. Carnegie in Sweden. In Leasing and Management activity, we completed the largest lease signed in Houston in 2017, a 369,000 square feet lease extension for the Transcontinental Gas Pipeline Company at the Williams Tower. Leasing 118,000 square feet of space in Paris to Bank of America, we represented the landlord post-MO, and for rework the lease for the entire China Overseas International Center, a new 291,000 square foot building in Shanghai. It was 2017's largest leasing transaction in Shanghai Central Business District. LaSalle Investment Management closed two funds during the fourth quarter. LaSalle real estate debt Strategies III, which closed in November at $1.1 billion, and LaSalle Income & Growth…

[Operator Instructions] Our first question comes from the line of Anthony Paolone with J.P. Morgan. Your line is open.

Thank you, and very nice quarter.

Thanks, Anthony.

I'll start with I guess one of the areas where Christian left off, how do you tie an outlook where leasing activity is down globally with, I guess, the comments at Davos and in a global economic picture that's pretty strong?

That's a great question. I mean, the outlook which was painted at Davos was really strong, and you kind of wonder whether it was a bit over the top. I mean leasing take-up is a reality check. And it's a reality check not only with regards to the overall sentiment which is amongst corporates, it's also a reality check about availabilities and what people think about future employment. So we had an exceptional strong year with regards to the leasing volumes in 2017 pretty much across the board, and which was then topped by a very, very, very strong fourth quarter. So even if kind of leasing volumes for next year we believe will be slightly down they will be still at a very, very strong level. And so I think you can bring the comments from Davos and the research forecast from our own people in line.

Okay, thanks for that. And then I have a question, you talked through some of the components of your organic growth, and one of them I think was just picking up more activity from your outsourcing clients in other parts of the business. Just wondering, that seemed like a very strong move. Are you all doing something different there to better penetrate that client base or what's happening? Because that seemed to be, if I heard your comments right, it seemed to be a big part of the pickup in, like, leasing and some other areas?

Well, I mean, obviously I have to say to you that we believe that we are delivering outstanding quality to our clients, and so that should be rewarded with a growing market share going forward. On top of that, I think what we see is that our clients tend to get bigger and bigger. And the more our clients are growing the more they will revert back to the leaders in the real estate industry when they have real estate needs. So the overall trend of consolidation which you see is a trend which is favoring the leaders of the industries you are addressing. And so that is one other reason, over and above the quality that we are de-levering, that we are benefiting and taking more market share year by year.

Okay. And just last question, can you spend a minute on the M&A backdrop in what you're seeing right now in terms of just potential volume of business. Do you like the deals that you're seeing? And maybe a view of whether you think you'll spend more or less money on M&A in 2018 versus 2017.

Well, I mean, we are looking at quite a lot of deals. And I think the picture we are seeing is a bit of a reflection of what you see in the public markets. It's a bit more mixed; it's a more volatility in it in the sense that some of the deals we are seeing are becoming more attractive again. And we believe people are getting more realistic about their price expectations. And that may be driven that people are getting maybe slightly nervous that we are peaking the cycle, and they still want to sell before the cycle turns. And others are still asking for outrageous multipliers where we are not willing to play. So it's obviously hard to give you a forecast whether we will have more M&A in 2018 than in 2017. We will continue to be very, very rigorous in our approach of assessing these opportunities. But overall, as I said, we see more interesting deals on our table, and so I wouldn’t be surprised if we have a bit of a pickup compared to 2017, where we were extremely small in our M&A activity.

Okay. Thank you, and nice quarter again.

Thank you.

Thanks, Anthony.

And our next question comes from the line of David Ridley-Lane with Bank of America. Your line is open.

Sure, thank you.

Hi there, David.

Hi. Within the kind of normalized volumes of LaSalle of $20 million in equity earnings and $40 million for incentive fees, as you look forward into 2018, is there any reason to believe that they would be kind of above or below the normal kind of historical run rate for the business?

Hi there, David. Yes, so just from the perspective of historical run rates, as you know, incentive fees and equity earnings are extremely difficult to forecast. And Jeff addressed that as well very nicely at our investor day. But just for modeling purposes, I would suggest that you put incentive fees at our five-year historical norm, which is now in the $70 million to $80 million range, and keep equity earnings at $20 million.

Understood. And then on EMEA margins, I think on the call you were suggesting that some of the Property and Facilities Management investments and the Integral integration costs kind of continue on into early 2018. Do they continue on through the full-year or is this more of a few more months. Just wondering how long those investments will be a drag on margins.

Yes, I think from the perspective of EMEA, you know, David we don’t give guidance. But as you can imagine, the team is working really hard to integrate and realize the benefits of the Integral acquisition. That's going to be ongoing throughout 2018. And we'll have more to report as we go through second quarter for the second-half of the year and let you know where we are.

Okay. And last one from me, within Property and Facilities Management wondering about pipeline for deals there, and whether or not you would expect a stronger organic trend in 2018 versus 2017. Thanks.

We had very strong year in 2017 in winning new contracts. And there is a general trend that companies are keen to do more outsourcing and to reduce their number of providers. So without going into too much detail about the immediate coming quarters, the overall trend is very healthy for that business segment, and it is a very important business segment for us going forward.

Okay. Thank you very much.

Thanks, David.

Our next question comes from the line of Jade Rahmani with KBW. Your line is open.

Thanks very much. In terms of 2018 goals, what do see as the greatest opportunities for growth? Could you perhaps highlight a couple of areas of focus, whether it be geography or specific to business lines?

Well, we continue to believe that the U.S. business is offering us a tremendous growth potential. We still have areas in our services where we see that our fair share of the business should be significantly higher going forward. And that will be an area of focus. And as we alluded to earlier, we are able to take an ideal market share of the overall growth rates in the market. The other area is what we just talked about, the IFM business or what we call the overall corporate solutions business, there is a very strong macro trend there. And we believe that we will be one of the best beneficiaries of that macro trend. So from that end we are quite positive about our outlook going forward with these two business areas.

And within the U.S. would you say the growth potential would lie in growing the Capital Markets offering, both the investment sales and debt placement?

Yes, when you look where we are in the ranking on the investment sales side we have room to grow there. We are very strong on the multi-family side and on the debt side, but on investment sales we have room to grow. But overall, that the broad sense of definition how we define capital markets offers still a very strong growth potential, not only in the U.S., also when you look at Asia Pacific. Historically we have been very, very strong in that segment in EMEA. And we are working hard to get to the same level of market share in the other two regions.

And does the U.S. leasing market share, is it greater -- does JLL have greater market share in U.S. leasing than in Capital Markets?

Yes, much greater. I mean this is our powerhouse, our U.S. leasing and tenant rep business, and it continues to grow much stronger than the market is offering. And I have no reason then to believe that this will continue.

In terms of the fourth quarter acceleration in revenue growth, were there any deals that had delayed closings earlier in the year or anything that represented a pull forward from 2018 as a result of higher anticipated interest rates, or do you think that this represents a reacceleration in these businesses?

I don’t think that it had anything to do with interest rates. I think what has happened is that people were really, really keen to close their deals in December. And at the end of the day, you can have a nice kind of setup as a service provider and with outstanding people servicing clients. But then you need clients who are willing to drive some urgency into closing those deals. And that is what happened in December, there was massive urgency in closing those deals. Now, your question is does that mean that we pulled deals which we expected to close in Q1 into December. Yes, in fact that happened. There were a couple of deals which we expected to close in the first quarter which closed actually in the fourth quarter. But on the other hand, we still have a massive momentum going forward. There is still an overhang of capital which tries to get into the real estate sector and into good investment. There aren't just enough willing sellers.

And that urgency to close by your end, what was that a function of, the competitive environment or capital deployment targets?

That is very often just psychology, you know. You talk to your peers and your peers are talking about closing a deal, and then you want to close the deal. I can't give you a credible answer. Maybe the U.S. tax reform has driven a little bit more kind of momentum that people were thinking, "Listen, this will give another boost into 2018 and '19, we'd rather close that deal now than wait," but you know, this is speculation. It was a great quarter. It was stronger than we expected to close in December, but the momentum continues.

And could you make any comment on how -- you're saying the momentum continues. It sounds like the market volatility over the last few days and couple of weeks hasn’t had an impact in terms of investor sentiment. Is that a fair statement?

Well, that would be too quick. I mean we had market volatility predominantly on Friday, Monday, and Tuesday. And today is Wednesday. I don’t know whether that will have an impact on our clients in closing deals. I think people are getting used to a pretty challenging overall environment. I mean, when you think about the political issues and kind of trouble in the world which is out there you could argue it's surprising that the market sentiment is so strong. I think people are really getting used to compartmentalizing the world and focus on what they want to get done. And so, I don’t want to speculate whether the last three days will have an impact or not.

Okay, thanks very much for taking the questions.

Thanks, Jade.

Pleasure.

And our next question comes from the line of Mitch Germain with JMP Securities. Your line is open.

Hi, Mitch.

Christian, I think you mentioned mid to high single-digit fee revenue growth. I'm curious if you could attribute that to your major business lines. Is that going to be somewhat consistent or are you guys predicting some possibly on the lower end versus others in the higher end?

Mitch, that's a very detailed question. I think that our Capital Markets business has the opportunity to be slightly higher than that. And I would hope that our Corporate Solutions IFM business will be slightly higher than that. And then to get to the number we have forecasted you need a couple of areas which will be slightly lower than that.

That's great…

And Mitch and you'll recall. Mitch, we don’t give guidance.

Understood, and I appreciate that color. Christian, you've talked about diversifying your offerings across capital markets, and I know that you've got the GSE business that you brought on a couple of years ago. And I know you guys are good in hotels. Maybe if you could, in debt placement, if you could maybe just provide some context as to the areas that you're focusing in on trying to improve as you look to build that business out even further.

Mitch, we are working to be a one-stop shop around the whole capital stack. And what we have seen in 2017 again is when people feel very comfortable with their real estate portfolio they won't necessarily sell. But at the end of the day they may want to kind of refinance, they want to get some equity out and restructure their money in the deal. And so there's always something to do. And historically, our industry was coming only from the investment sales side, and has moved over the last 10 years to be a full service provider, and we try to lead in that sector, and that's where we see tremendous growth.

Got you, that's helpful. Moving over to Integral -- and I appreciate the transparency you guys provided this quarter on some of the I don’t want to call them challenges but some contract losses, and I am just curious was that part of your original underwriting or did this come up as a bit of a surprise to you?

From the perspective of the original underwriting, Mitch, we had forecast the loss of some higher margin business that we thought would be cancelled as I communicated last quarter, but just given the economic backdrop in the U.K., there has been some challenges with large construction related clients and just the overall industry segment which has had some follow-on or ripple effect into our Integral business. So we proactively moved forward, canceled the contract. And now, we are focused on winning new business, integrating the business, and moving on for 2018.

Great. That’s helpful.

And Mitch, if you will have followed the press -- you will have followed the press that some of big players in that sector, or in that adjacent sector have come into real trouble, and we are not completely unaffected by that because in some cases we were sub-providers to them.

Got you. I have seen some of that. Last question, I wanted to shift over to LaSalle. And I have noticed that your dry powder up pretty significantly. And I know you’ve got -- you’ve had pretty consistent levels of capital raising. Is here -- is some of that a function of the inability to find the targeted returns that your team is looking for? And I know that you guys somewhat laid out that in your investor day. Given the current pricing environment, is that kind of delaying your ability to put some of that dry powder to work?

Well, Mitch, if you kind of take very simple description of what is currently happening in the market is that many owners of real estate don’t want to sell because they are comfortable with that portfolio. And the ones who want to sell only want to sell it if they get really a top, top price. And on the buy side, you have a lot of dry powder but people don’t want to make a mistake that they are buying at the peak of the cycle and overpaying at the peak of the cycle. And so, sometimes it’s quite hard to bring the seller and the buyer together. And when LaSalle is a buyer, then they are the ones who are thinking we don’t want to overpay. And so, they are very cautious in deploying the money of our investors. And that is the reason why you see this massive dry powder at LaSalle. But you see that was pretty much every professional fund manager that they have massive dry powder at the moment because they are cautious to deploy that money.

Great. Thank you. And once again, great quarter.

Thanks, Mitch.

Thank you.

Our next question comes from Stephen Sheldon with William Blair. Your line is open.

Yes, thanks.

Hi, Stephen.

Great result -- hi.

Thanks.

First, kind of great results in both capital markets and leasing across the regions; I was just curious how trends I guess in those businesses progressed throughout the quarter. I think you mentioned December was strong on the capital market side. But just was it steady throughout or did you see activity build throughout the quarter and kind of continue into first month or so here in 2018?

As I said, the momentum is still very strong. And so, irrespective of the last three days of volatility in the public markets and I don’t know whether that will have an impact as I said earlier. We are seeing our teams being incredibly busy from the first day of the New Year on. There wasn’t any break [technical difficulty] and hopefully that will continue.

Okay. That’s helpful. And then, you gave great detail about revenue exposure to FX trends and filings, but wanted to get an update on the potential margin impact as we look at 2018 just from the weakening of the U.S. dollar. Could that become a headwind to margins as we think about this year?

Stephen, I think, we don’t forecast rates or anything like that. But I think that if you just look at the major bank together with the spot rate, I mean you can continue to project strong Euro. And, I would really expect just more of the same in terms of the impact on our result as you look forward for your modeling purposes. Not material at this point.

Okay, thanks.

You bet.

Our next question comes from the line of Patrick O’Shaughnessy with Raymond James. Your line is open. Patrick O’Shaughnessy: Hey, so you spoke about your average deal size being a fair amount larger in the fourth quarter. Do you think there is something structural with that, or is that just a relatively unique event during the fourth quarter?

I think that is something which we see on a regular basis in the fourth quarter that big deals tend to take a bit longer until they close, but then everybody wants to close them in the fourth quarter. So, I think that is just a regular trend every year and that was maybe slightly more pronounced in the first quarter of 2017 than before. But, I wouldn’t read too much into that.

Got it. And then, going back to Integral. So we assume at this point that kind of the customer runoff or in those loss making contracts that was all completed during the fourth quarter? And presumably they will return to growth in the first quarter of 2018?

Yes, Patrick, yes. For the most part, yes, and we are focused on growth in 2018 in integrating the business. And as I mentioned before, to completing our technology upgrade for the team.

Great. Thanks. And then last one from me, obviously we are still only little bit more than a month into the year, but long-term rates have risen pretty remarkably. I think you touched on this a little bit earlier, but how had the nature of your conversation with clients changed if at all given this deepening on the yield curve and the long-term rates moving up?

I think with regards to interest rates, it’s all about expectations. As long as that rise in interest rates is in line with expectations, it doesn’t really impact the outlook for our business because we still have to accept that the absolute level of interest rates in a long-term comparison is very low. And real estate is still super attractive as an investment class. The only thing which is sometimes or can be a bit disturbing is if we have unexpected spike. And that’s what you saw a little bit hitting the RIET market not only in the U.S. when people were thinking, oh, it’s now going faster. But I think, overall, it’s nothing which is really of concern to us.

Great. Thank you very much.

Thanks, Sheldon.

And next question is from -- sorry about that. Our next question is from Marc Riddick with Sidoti. Your line is open.

Hi, good morning.

Hi, Marc.

Wanted to touch base, I wasn’t sure if you would gone over this. So if I missed this, forgive me. But I wanted to touch base on forward looking thoughts around our comfort level of debt. And I know in the past you have stressed investment grade rating in and of course, a target -- a ballpark target I believe of around a couple of turns. So, I just want to get your thoughts, given where the levels are now, if those thoughts are updated? Thank you.

Oh, yes, thanks Marc. Just overall from a strategic perspective, we are very focused on managing our business for the long-term at net debt to EBITDA of under 2, maintaining our investment grade rating. And as you could see with the focus coming off of the acquisitions that we did, really driving cash flow generation, and really remaining focused on discipline working capital. So you are going to see more of the same in 2018.

Okay, great. Thank you very much.

Thanks, Marc.

I am not showing any further questions, so I will now turn call back over to management for closing remark.

Okay, thank you. With no further questions, we will close today’s call. Thank you for participating and for your continued interest in JLL. We look forward to speaking with you again following the first quarter. Thanks.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a wonderful day.