Welcome to Jones Lang LaSalle Incorporated's First Quarter 2018 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 first quarter 2018 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 website, ir.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 website. 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, 2017, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statement. And with that, I would like to turn the call over to Christian Ulbrich, our Chief Executive Officer for opening remarks.

Thank you, Grace, and welcome, everyone, to this review of our first quarter results. Our CFO, Christie Kelly, will provide details about our performance in a few minutes. Before I summarize those results, let me remind you that as of the first of this year, we have adopted the new U.S. GAAP revenue recognition standard, ASC 606. We have also revised how we calculate our presentation of non-GAAP fee revenue. That has caused our targeted adjusted EBITDA margin to move from a range of 10% to 12% to a range of 12% to 14%. We have restated our 2017 and 2016 comparative financial information to reflect these changes. Christie will summarize their effect in her remarks. Moving on to our performance, we had a very good first quarter. Revenue totaled $3.6 billion up 10% year-on-year. Fee revenue increased 9% to $1.3 billion, growth was diversified globally with our capital markets and annuity business leading the way. And LaSalle Investment Management contributed significant incentive fees in equity earnings. Adjusted net income reached $44.3 million for the quarter compared with $17 million in the first quarter of 2017. Adjusted diluted earnings per share totaled $0.97, up from $0.37 for the same period last year. Thanks to strong cash flows reduced year-on-year net debt by more than $470 million. On the back of this performance, we have moved the assessment of our dividend which is paid semi-annually to an annual assessment and are pleased to announce an increase of 11% over the December 2017 dividend. In connection with our annual assessment, the company's board of directors declared a dividend of $0.41 per share. The current conditions in the global economy remain positive with an annual GDP growth expected to reach 3.9% this year, up from 3.7% a year ago. For details see slide…

Thank you, Christian, and welcome to everyone on our call. Before I move into business line results, I would like to expand on the recent accounting changes reflected in this current earnings release. Effective January 1, 2018, we adopted the new U.S. GAAP revenue recognition standard ASC 606. Our adoption reflects the full retrospective approach, meaning we have recast our comparative financial information as if we had been reporting under the new standard. The adoption of ASC 606 has two primary impacts to our income statement. First, our results reflect a material increase in gross pass-through expenses and associated reimbursement revenue, primarily related to our Facility Management business. This portion of ASC 606 does not impact fee revenue or our net measures of profit such as GAAP net income and adjusted EBITDA. Second, the timing of recognition for certain revenue streams has changed, especially in our U.S. Leasing business, which also drove some timing differences to commissions expense. On a recast basis, the change in revenue timing resulted in approximately $11 million of incremental EBITDA for the full year of 2017 or 10 basis points of adjusted EBITDA margin percentage. In addition, we modified the calculation and presentation of our non-GAAP measure, fee revenue, most notably to exclude the costs associated with client-dedicated JLL labor. On a recast basis for full year 2017, this resulted in a reduction of over $900 million to fee revenue and an increase to adjusted EBITDA margin percentage of approximately 180 basis points. This change was prompted by the increase in GAAP expenses as a result of ASC 606 together with the continued growth of our annuity businesses. For more information regarding these accounting and presentation changes, please visit our Investor Relations website. Now turning to results with all references to prior year on a…

Thank you, Christie. To summarize how we achieved these results, slide 18 shows a few recent wins across service lines and geographies. In our Corporate Solutions business, we won 29 new assignments in the first quarter, expanded existing relationships with another 18 clients and renewed 9 contracts. These 56 wins total 123 million square feet across all regions and represent an overall 74% win rate. One good example is the outsourcing contract we won from Primary Health Care, a leading Australian healthcare company. We will provide facility management lease administration and space data management for more than 2,800 properties totaling 3.1 million square feet of space. Representative wins in Capital Markets included the $680 million sale of Prudential Plaza in Chicago. We also secured financing for the transaction. And we arranged the sale of the Waldorf Astoria Edinburgh, the largest hotel transaction in Scotland since 2015. In London, a multi-disciplinary team advised a major professional services firm on the sale and leaseback of its Canary Wharf headquarters. We were retained by China Resources Group to provide leasing services for the 2.9 million square foot China Resources tower in Shenzhen. We also won a 1 million-plus square foot leasing assignment from Prologis in Harrisburg, Pennsylvania. In mid-April, LaSalle Investment Management announced that it had raised more than $1.1 billion for its latest fund LaSalle Asia Opportunity V. Capital was secured from 20 institutional investors across Asia, Europe, the Middle East, and the United States. Now, let's focus on the future and turn again to slide 5, which summarizes our market outlook for the full year. With fundamentals remaining healthy in key markets around the world, we think that global investment in commercial real estate will continue to be strong. Full year volumes could soften by 5% to 10%, however, to around…

Operator, do we have any questions on the phone line?

We do. Our first question is from the line of David Ridley-Lane with Bank of America Merrill Lynch. Your line is open.

Yes, good morning.

Hi, David.

Good morning. Can you talk about the number of assignments you have in the Capital Markets business this time versus a year ago. And any color on the velocity of deals, number of bids you're seeing, and the bid/ask spread that are out there in the private markets?

David, we wouldn't be able to give you the number of assignments. We have hundreds of assignments around the globe. What we see is that it depends a little bit by region. As you know, in the U.S. investment, sales of single assets has become slightly thinner than in previous quarters, but it's still healthy. In Europe, it's still incredibly strong. And there is no sign of the market maybe taking a bit of a pause going forward. And in Asia, it's also very healthy. With regards to the spread, again, when people are considering selling their buildings in that market environment, they expect a really top price because if they can't achieve that price, they wouldn't sell because they wouldn't know what to do with the money otherwise. And so we have a situation that some of the buildings which are actually coming to market come with incredibly high expectations with regard to price from the seller side. So, if we sometimes see a bit thinner bids on some of the buildings, that isn't necessarily a sign of weakness in the market, it could actually be the opposite that people are really keen to hold on to their buildings and only if pricing really exceeds their expectations they are a willing seller. So, I guess, your question goes directionally towards are we seeing softening in the market? And the answer is, there's clearly no sign of softening in the market in Europe and in Asia, and in the U.S. we have to see how now the second quarter and the third quarter are playing out. I wouldn't say we see softening yet, but we see small signs of slight hesitation, which we have to watch.

And then last year you outperformed the global leasing market quite strongly, first quarter a bit below markets gross absorption. I know that 90 days isn't the greatest way of looking at leasing. So how does your confidence around growing the Leasing business for the full year feel today versus 90 days ago?

Well, as you rightly say, the first 90 days we would say was very much timing related as some larger deals fell out of the quarter. And then as you also rightly say, there is a tough comparison because last year we grew roughly 20% and so it's always hard to compare like-for-like. We are still very confident about our Leasing business. I just spoke with my colleague Greg O'Brien who runs our Americas business and we are still very confident with regards to the Leasing business going forward. And so there is no concern on our side.

And just if I could sneak in one more. The organic service mix contributed 165 basis points to your adjusted EBITDA margin. Curious how much of that is the work that you've been doing on the cost side coming to fruition in the quarter?

Yeah. I think, David, when you take a look at the quarter we had some really nice growth from a cost perspective associated with the margin performance. And you can look specifically at the cost measures contributing about 30% of that organic growth.

Thank you very much.

You're welcome.

Our next question is from the line of Anthony Paolone with JPMorgan. Your line is open.

Thank you and good morning. Good quarter.

Thanks, Anthony.

In terms of Project Development and Advisory and Consulting, growth rate there been really high. How do you think about that the balance of the year, and is there a quarter which you think that comp gets tougher?

You know with regard to Project & Development Services, we are pretty optimistic going forward. And this is correlating probably the most with the overall GDP development of all of our services. And with the GDP outlook still being pretty strong around the world, we expect that that business will continue to strive nicely. The whole topic of making space and experience for your employees is obviously a big driver of that business. We have lots of companies who are asking for advice what they can do to have more exciting space, and obviously we know how exciting space needs to look like, and we can deliver that turnkey for them.

Great. Is that largely like the Tetris business or is it just more broad-based?

Well, that is obviously what Tetris is doing but it's also more broad-based. With regards to the project management we do whether we are then actually delivering the general contractor services ourselves, or whether we're just managing the process and managing the concept of what we are delivering it's – we do that around the globe and you find those numbers in the PDS numbers as well as in Tetris.

Okay. And then Christie, I think you had mentioned in the Americas that there were some expenses that are going to occur in future quarters that you didn't necessarily have perhaps in the first quarter. Can you give us a little more detail on that and maybe what you expect or try to dial in when thinking about it?

Sure, Anthony. Just given the nice win and contribution of organic gains in the Americas associated with our Corporate Solutions business, we're expecting to see some costs come in throughout the year for training associated with those wins as well as T&E as we deliver services to the clients.

Is there any brackets around either impact on margin to think about over the next few quarters when you try to put that in or is it not going to be that significant?

Nothing out of the norm, Anthony, just from a run rate perspective.

Okay. And last question and LaSalle obviously had strong incentive fees and some gains at the outset of the year here, to change just the broader year picture in terms of those things returning back to, I think you've characterized them in the past as being kind of back to normal levels, or does the start of the year suggest we're going to end up higher?

Hi, Anthony. From the perspective of the incentive fees, we had said that our five-year historical average is really around $70 million to $80 million now. And as we look to the first quarter, we're not expecting any change in that $70 million to $80 million at this point in time and are expecting incentive fees to be backend loaded for the year, as I commented upon in my remarks.

Okay. Got it. Thank you.

Thanks, Anthony.

Our next question is from Jade Rahmani with KBW. Your line is open. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: Just following on the incentive fees, it seems that looking back over the past six quarters to eight quarters, there's been at least half the quarters where they meaningfully outperformed expectations as well as the company's guidance. And so, does the general trend represent rising overall fair values in the market and prices outperforming management's expectations, or is there any acceleration of disposition activity that's driven the higher incentive fees?

No, not really. I mean, the market has been obviously very strong and the stronger the market is, the more we can achieve those incentive fees. So it hasn't been any acceleration. I mean, there's a pretty strong leverage on these incentive fees, so relatively a small increase in pricing has a pretty strong impact on the incentive fees LaSalle is able to achieve or which we are able to achieve in our broader Capital Markets business. So you don't have to read much into it other than that the market was very, very strong over the last couple of quarters, as you know. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: And how did the number of transactions or number of dispositions compare with a year ago, since incentive fees were up more than double a year ago?

Again, we are not counting single transactions because we have so many and incentive fees are coming from two major buckets to us. One bucket is the LaSalle bucket. There it's relatively easy because they're coming from very specific funds, so that is not a large number. But there's also those incentive fees who are coming from our broader Capital Markets business and there they are coming from dozens of more than 100 different transactions, which we don't count the single transaction, but the individual incentive fees, they're much smaller than the incentive fee we would get from a LaSalle fund. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: And following on your comments regarding the U.S. and the hesitancy you cited, what do you think is driving that? Is it fears about or concerns that cap rates may start to increase as a result of interest rate activity, is it worries about future interest rate hikes and the pace that they may take? What do you think is driving the hesitancy you cited?

Well, I guess we have two things here. On the one hand, the seller sits on a good property and selling that property means they have to reinvest that money into something else which is not easy to find at the moment. And so sellers only want to sell when they have a real outstanding price to agree to. Whereas buyers are looking at the stage of the cycle and say well we are in an extended cycle. We don't know how long that cycle will continue. We don't want to be caught as the ones who are buying right at the end of the cycle and pay top prices. So that cautious behavior which we see from some of the buyers, we believe is very healthy. And so we have a lot of discipline in the market. Buyers are very disciplined. Sellers also have a firm view on what they want to do. So that could actually drive that market forward for many, many more quarters, that extended cycle, if that discipline in the market continues. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: In terms of the multifamily business, what growth did you see in the GSE mortgage originations?

Hey, there Jade. From a GSE perspective, we saw high 24% GSE business growth year-over-year for the quarter. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: That's meaningfully above the market, which declined due to Fannie Mae. Are you seeing continued traction maybe post quarter end or in terms of the outlook from the GSEs?

We've just seen nice cross-sell across our platform, which was really part of the Oak Grove thesis and the business is doing well. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: Thanks for taking my questions.

When you see our positioning in the market around that topic, we believe that we can still show some growth going forward and grow that business quite significantly. So, our expectation is that we will always outgrow the market. Jade Rahmani - Keefe, Bruyette & Woods, Inc.: Thanks very much.

Thanks, Jade.

Our next question is from the line of Nick Yulico with UBS. Your line is open.

Hey, good morning. This is Greg McGinniss on with Nick. Just looking at the Property & Facility Management business, so in America, the growth seems like it was driven by contracts signed in 2017 but commenced this year. And considering the high renewal rate, does this mean we should see a similar level of mid-teens growth in Americas throughout this year?

We had an outstanding year last year, and we are very focused on driving margin into that business. And so, I wouldn't want to make that call at this point in the year. We have a very high renewal rate, which is excellent. That is what we want to do, because a high renewal rate means that we are delivering a great service to the client, and it works for both sides. And we want to be very focused on the type of contracts we are taking in. And we want to be very mindful with new contracts, so that we can increase that margin level in that business. So I'm more interested in the bottom line than I'm interested in the top line around that topic.

Okay. Thanks. How much of the income from Property & Facility Management is incentive driven, so like it will be more of a 4Q impact versus 1Q, 2Q, 3Q?

Yes, Graham (sic) Greg. From the perspective of incentives, et cetera, in the business, we don't track that specifically as we meet SLAs throughout the year.

Okay. Thanks. And just a final question. It sounds like timing related impacts seem to drive a lot of the flat growth in certain businesses, APAC and Leasing, so should we be expecting more of outsized growth in 2Q then?

Well, I think the business is balancing itself out. When we look at our Leasing business, we would expect that they're catching up over the coming quarters. But obviously we had other areas in our business which had a stunning first quarter. So, I wouldn't read too much into the quarter. Our business is not driven by quarters. We are happy if we can really forecast the year in a good way. And so, please don't read too much into one quarter.

Okay. That's understandable. And so compared to your full year from the research assumption of a flat to down 5% Leasing business, so that's going to beat that I assume?

Well, yes, I mean, that is a good example because what we also forecast is that vacancy rates will increase over the full year but, frankly, in the first quarter they decreased. And so there's lots going on. As I said earlier with regards to our Oak Grove business, we have the expectations that we are beating market. And so even if the market is coming down a little bit, we would still expect to beat market.

Okay. Thank you.

Thanks, Graham (sic) Greg.

Thank you. Our next question is from Mitch Germain with JMP Securities. Your line is open.

Thanks for taking my question. I noticed technology investment's 120 basis point drag this quarter, obviously more than you've seen throughout 2017. Should we expect this investment to be ticking higher for the better part of the year? Is this the start of what we should expect on a trend?

Mitch, hi. This whole technology investment is really high on our agenda and we have really that relentless ambition to be leading in that whole space in our industry. And we gave you guidance now on a recast basis that we run the company between 12% and 14% EBITDA margin. And so, we are feeling confident for this year that this year allows us to really do quite some significant investments into the tech space and that's what you have seen in the first quarter.

Great. And I know it was part of your strategic plan, Christian, broadening – you mentioned broadening your Capital Markets capabilities. I'm trying to understand exactly, is that going to be organic, is that through hiring? Tell me about the framework for how you want to deliver on that priority?

Well, organic, in that sense will mean we will hire people in because if we are broadening our business in some areas where we aren't that strong, at least not as strong as we want to be, let's say on the debt side in Europe, or on the investment sales side in the U.S. and we have to hire more talent in. That would be our priority. If there's another option which makes sense to us, we will also look at other options.

And just the hiring environment in general, obviously we've been hearing over the last couple years the cost to hire had grown pretty considerably. Are you seeing any change?

No, no. And it would be surprising because the market cycle is very favorable for talented people. And so, it's a very tough environment to hire people. Obviously, our brand helps but it still is a tough environment. And so that's why we are open for all kinds of solutions which will help us to drive results in that area.

Thank you.

Thanks, Mitch.

And our last question comes from the line of Stephen Sheldon with William Blair. Your line is open. Stephen Hardy Sheldon - William Blair & Co. LLC: Yeah, good morning. I appreciate you taking my questions. I guess just first looking at Integral, any updates there on how the initiative to win new clients in that business is progressing. And then looking at the pipeline, has your level of optimism about Integral returning to growth changed at all over the last, call it, few months?

Hey there, Stephen. Just from the perspective of the core business, we saw some nice increases versus last year mainly in the Midlands and in the London region. And just from the perspective of our expectations as it relates to Integral, no change from my previous comments last quarter. Stephen Hardy Sheldon - William Blair & Co. LLC: Okay, that's helpful. And then I guess just wanted to ask about I guess producer head count growth. What kind of growth you've seen over the past few quarters and where you may be adding either by region or service line?

We don't have those numbers at hand, how many people they have employed in the producer side. You know this is normal course of business where we would note if something exceptional is happening, but it's just normal course of business at the moment. As I said, the market is quite tough to hire people in. So nothing has happened which is exceptional and worth mentioning with regards to hiring people. Stephen Hardy Sheldon - William Blair & Co. LLC: Okay. Great, thank you.

Thanks, Stephen.

Thank you. I am not showing any further questions. So I'll now turn the call back over to management for closing remarks.

Okay. With no further questions, we will end today's call. Thank you for joining Christie and me and for your continued interest in JLL. We look forward to talking again following the second quarter.

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