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Item 2. Management’s Discussion and Analysis

2021-08-04 compared with 2021-05-06 · 282 added, 138 removed, 294 unchanged (59% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto, for the three months ended March 31, 2021, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2020, which are included in our 2020 Annual Report on Form 10-K, filed with the SEC and also available on our website ( www.jll.com ).

The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto, for the three and six months ended June 30, 2021, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2020, which are included in our 2020 Annual Report on Form 10-K, filed with the SEC and also available on our website ( www.jll.com ).

You should also refer to Item 7.

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Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2020.

There have been no material changes to these critical accounting policies and estimates during the three months ended March 31, 2021.

There have been no material changes to these critical accounting policies and estimates during the six months ended June 30, 2021.

ITEMS AFFECTING COMPARABILITY

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These macroeconomic and other conditions have had, and we expect will continue to have, a significant impact on the variability of our results of operations.

In 2020 and the three months ended March 31, 2021, macroeconomic conditions influenced by the COVID-19 pandemic impacted the historical seasonality of our revenue and profits and may continue to do so during the remainder of 2021.

The timing of acquisitions may impact the comparability of our results on a year-over-year basis.

In 2020 and during the six months ended June 30, 2021, macroeconomic conditions influenced by the COVID-19 pandemic impacted the historical seasonality of our revenue and profits and may continue to do so during the remainder of 2021.

Acquisitions and Dispositions

The timing of acquisitions and dispositions may impact the comparability of our results on a year-over-year basis.

Our results include incremental revenues and expenses following the completion date of an acquisition.

Relating to dispositions, comparable results will include the revenues and expenses of recent dispositions and results may also include gains (losses) on the disposition.

In addition, there is generally an initial adverse impact on net income from an acquisition as a result of pre-acquisition due diligence expenditures, transaction/deal costs and post-acquisition integration costs, such as fees from third-party advisors engaged to assist with onboarding and process alignment, retention and severance expense, early lease termination costs, and other integration expenses.

LaSalle Revenue

Our investment management business is, in part, compensated through incentive fees where performance of underlying funds' investments exceeds agreed-to benchmark levels.

Depending upon performance, disposition activity, and the contractual timing of measurement periods with clients, these fees can be significant and vary substantially from period to period.

Equity earnings also may vary substantially from period to period for a variety of reasons, including as a result of:

For dispositions, we may also incur such incremental costs during the disposition process and these costs could have an adverse impact on net income.

Investment Performance

Equity earnings may vary substantially from period to period for a variety of reasons, including as a result of:

(1) gains (losses) on investments reported at fair value, (2) gains (losses) on asset dispositions, and (3) impairment charges.

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Consequently, we provide information about the impact of foreign currencies in the period-to-period comparisons of the reported results of operations in our discussion and analysis of financial condition in the Results of Operations section below.

Transactional-Based Revenue

Transactional-based fees, that are impacted by the size and timing of our clients' transactions, from real estate investment banking, capital markets activities and other services within our RES businesses, and LaSalle, increase the variability of the revenue we earn.

Transaction-Based Revenue

Transaction-based fees, that are impacted by the size and timing of our clients' transactions, from real estate investment banking, capital markets activities and other services within our RES businesses, and LaSalle, increase the variability of the revenue we earn.

Specifically for LaSalle, we are compensated through incentive fees where performance of underlying funds' investments exceeds agreed-to benchmark levels.

Depending upon performance, disposition activity, and the contractual timing of measurement periods with clients, these fees can be significant and vary substantially from period to period.

The timing and the magnitude of these fees can vary significantly from year to year and quarter to quarter, and from region to region.

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This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year end and the fact that certain expenses are constant through the year.

Historically, we have reported a relatively smaller profit in the first quarter and then increasingly larger profits during each of the following three quarters, excluding the recognition of investment-generated performance fees and realized and unrealized co-investment equity earnings and losses (each of which can be unpredictable).

In addition, this seasonality excludes the recognition of investment-generated performance fees as well as realized and unrealized co-investment equity earnings and losses (the timing of each of these can fluctuate based on a variety of factors).

Generally, we recognize incentives fees when assets are sold, the timing of which is geared toward the benefit of our clients.

In addition, co-investment equity gains and losses are primarily dependent on valuations of underlying investments, the direction and magnitude of changes to such valuations are not predictable.

In addition, co-investment equity gains and losses are primarily dependent on valuations of underlying investments, the direction and magnitude of changes to such valuations fluctuate based on a variety of factors.

Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

A significant portion of our Compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets.

This quarterly estimation can result in significant fluctuations in quarterly Compensation and benefits expense from period to period.

Consequently, the results for the periods ended March 31, 2021 and 2020, are not fully indicative of the results we expect to realize for the full fiscal year.

Consequently, the results for the periods ended June 30, 2021 and 2020, are not fully indicative of the results we expect to realize for the full fiscal year.

RESULTS OF OPERATIONS

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not meaningful, represented by a percentage change of greater than 1,000% favorable or unfavorable.

• We renamed our Corporate Solutions business to "JLL Work Dynamics" effective June 2021.

Consolidated Operating Results

Three Months Ended March 31, Change in % Change in Local Currency

Three Months Ended June 30, Change in % Change in Local Currency

($ in millions) 2021 2020 U.S.

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Gross contract costs (684.9) (575.0) (109.9) 19 12

Net non-cash MSR and mortgage banking derivative activity (9.7) 1.6 (11.3) n.m.

Net non-cash MSR and mortgage banking derivative activity (5.7) (8.6) 2.9 (34) (33)

Fee revenue $ 1,816.9 1,244.9 572.0 46 % 41 %

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Total operating expenses, excluding reimbursed expenses $ 2,283.2 1,817.7 465.5 26 % 20 %

Operating income $ 224.3 10.8 213.5 n.m.

Equity earnings $ 40.8 14.7 26.1 178 % 178 %

Adjusted EBITDA $ 332.4 103.3 229.1 222 % 215 %

Consolidated Operating Results (continued)

Six Months Ended June 30, Change in % Change in Local Currency

($ in millions) 2021 2020 U.S.

Leasing $ 1,060.4 851.0 209.4 25 % 22 %

Capital Markets 768.8 557.1 211.7 38 34

Property & Facility Management 4,880.6 4,641.0 239.6 5 2

Project & Development Services 1,169.5 1,141.2 28.3 2 (2)

Advisory, Consulting and Other 445.8 371.3 74.5 20 14

Real Estate Services ("RES") revenue $ 8,325.1 7,561.6 763.5 10 % 7 %

LaSalle 207.0 204.8 2.2 1 (2)

Revenue $ 8,532.1 7,766.4 765.7 10 % 6 %

Reimbursements (3,895.0) (3,704.9) 190.1 5 2

Revenue before reimbursements $ 4,637.1 4,061.5 575.6 14 % 10 %

Gross contract costs (1,362.1) (1,304.4) (57.7) 4 (1)

Net non-cash MSR and mortgage banking derivative activity (15.4) (7.0) (8.4) 120 120

Fee revenue $ 3,259.6 2,750.1 509.5 19 % 15 %

Leasing 1,021.5 819.0 202.5 25 23

Capital Markets 737.8 533.5 204.3 38 34

Property & Facility Management 622.5 567.8 54.7 10 5

Project & Development Services 361.2 366.9 (5.7) (2) (5)

Advisory, Consulting and Other 322.8 269.3 53.5 20 13

RES fee revenue $ 3,065.8 2,556.5 509.3 20 % 16 %

LaSalle 193.8 193.6 0.2 — (3)

Compensation and benefits excluding gross contract costs $ 2,353.3 1,993.0 360.3 18 % 14 %

Operating, administrative and other expenses excluding gross contract costs 473.9 534.5 (60.6) (11) (15)

Depreciation and amortization 107.5 111.9 (4.4) (4) (7)

Restructuring and acquisition charges 35.3 42.3 (7.0) (17) (15)

Total fee-based operating expenses 2,970.0 2,681.7 288.3 11 7

Gross contract costs 1,362.1 1,304.4 57.7 4 (1)

Total operating expenses, excluding reimbursed expenses $ 4,332.1 3,986.1 346.0 9 % 5 %

Operating income $ 305.0 75.4 229.6 305 % 295 %

Equity earnings (losses) $ 48.5 (28.3) 76.8 n.m.

Equity earnings (losses) $ 89.3 (13.6) 102.9 757 % 753 %

Adjusted EBITDA $ 522.5 198.9 323.6 163 % 158 %

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Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation to Adjusted EBITDA.

Gain on Disposition reflects the gain recognized on the sale of a business within Americas.

Gain on Disposition reflects the gain recognized on the sale of a business within Americas in 2021 and the net gain recognized on the sale of property management businesses in continental Europe in 2020.

Given the low frequency of business disposals by the company historically, the gain directly associated with such activity is excluded as it is not considered indicative of core operating performance.

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Below are reconciliations of (i) Revenue to fee revenue and (ii) Operating expenses to fee-based operating expenses.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

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Below is (i) a reconciliation of Net income attributable to common shareholders to EBITDA and Adjusted EBITDA, (ii) the Net income margin attributable to common shareholders (measured on Revenue before reimbursements), and (iii) the Adjusted EBITDA margin (measured on fee-revenue and presented on a local currency basis).

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

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The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Fee revenue, (iii) Operating income, and (iv) Adjusted EBITDA.

Three Months Ended March 31,

($ in millions) 2021 % Change

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2021 % Change 2021 % Change

At current period exchange rates $ 4,495.0 22 % $ 8,532.1 10 %

Impact of change in exchange rates (110.2) n/a

Impact of change in exchange rates (163.6) n/a (273.8) n/a

At comparative period exchange rates $ 4,331.4 18 % $ 8,258.3 6 %

At current period exchange rates $ 1,816.9 46 % $ 3,259.6 19 %

Impact of change in exchange rates (40.5) n/a

Impact of change in exchange rates (64.1) n/a (104.6) n/a

At comparative period exchange rates $ 1,752.8 41 % $ 3,155.0 15 %

Operating income:

At current period exchange rates $ 80.7 25 %

Impact of change in exchange rates (1.3) n/a

At comparative period exchange rates $ 79.4 23 %

At current period exchange rates $ 224.3 n.m.

$ 305.0 305 %

Impact of change in exchange rates (6.1) n/a (7.4) n/a

At comparative period exchange rates $ 218.2 n.m.

$ 297.6 295 %

Adjusted EBITDA:

At current period exchange rates $ 332.4 222 % $ 522.5 163 %

Impact of change in exchange rates (2.6) n/a

Impact of change in exchange rates (7.6) n/a (10.2) n/a

At comparative period exchange rates $ 324.8 215 % $ 512.3 158 %

The continued impact of the COVID-19 pandemic (the "pandemic") contributed to lower consolidated RES revenue, down 4% to $3.9 billion, and fee revenue, down 6% to $1.4 billion, compared with the prior-year quarter, as strong growth in Asia Pacific was more than offset by declines in Americas and EMEA.

Notably, the consolidated RES revenue decreases in transaction-based service lines were less significant than the trailing three quarters, with encouraging economic indicators present in many geographies.

Corporate Solutions continued to deliver stable fee revenue performance as strength in facilities management offset a decrease in Project & Development Services.

Geographically across service lines, EMEA represented 60% of the RES revenue decline for the first quarter on a local currency basis, Americas represented 54% and Asia Pacific partially offset these decreases.

With respect to RES fee revenue, Americas represented nearly all of the decline for the first quarter on a local currency basis, as growth in Asia Pacific offset the decline in EMEA.

Refer to the segment results discussion for further detail.

LaSalle revenue decreased 16% compared with the prior-year quarter.

We achieved significant second-quarter increases in consolidated RES revenue, up 18% to $4.4 billion, and fee revenue, up 43% to $1.7 billion.

Growth was broad-based across all service lines, led by Leasing (48% of RES fee revenue growth on a local currency basis) and Capital Markets (44% of RES fee revenue growth on a local currency basis).

In addition, all geographic segments experienced growth ranging from 26% to 54%.

This follows a prior-year quarter that was meaningfully impacted by the COVID-19 pandemic (the "pandemic").

Geographically across service lines, Americas contributed 75% of the RES fee revenue growth for the second quarter, on a local currency basis, followed by EMEA (14%) and Asia Pacific (11%).

The following highlights the proportion of RES service line consolidated fee revenue growth, on a local currency basis, compared with the prior-year quarter, by notable segment.

Refer to segment operating results for further detail.

• Leasing — Americas (86%), EMEA (8%) and Asia Pacific (6%)

• Capital Markets — Americas (72%), EMEA (17%) and Asia Pacific (11%)

• Property & Facility Management — EMEA (59%) and Americas (41%)

• Project & Development Services — Asia Pacific (78%), Americas (12%) and EMEA (10%)

• Advisory, Consulting and Other — Asia Pacific (42%), Americas (33%) and EMEA (24%)

LaSalle revenue increased 12% compared with the prior-year quarter, driven by advisory fee growth.

Refer to the LaSalle segment discussion for further detail.

Our consolidated fee revenue decreased 4% in U.S.

dollars (“USD”) and 7% in local currency for the first quarter of 2021, compared with 2020.

For the first half of 2021, consolidated RES revenue and fee revenue increased 7% and 16%, respectively, compared with the prior year.

Capital Markets and Leasing also led the year-to-date growth contributing 45% and 44%, respectively, of the RES fee revenue growth on a local currency basis.

Our consolidated fee revenue increased 46% in U.S.

dollars (“USD”) and 41% in local currency for the second quarter of 2021, compared with 2020.

Year-to-date, consolidated fee revenue increased 19% in U.S.

dollars (“USD”) and 15% in local currency compared with last year.

The spread was driven by the weakening of the U.S.

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Operating Expenses

In the first quarter of 2021, consolidated operating expenses, excluding reimbursed expenses, were $2.0 billion, down 9% from 2020, and consolidated fee-based operating expenses, were $1.4 billion, down 7% from the prior-year quarter.

For the first quarter, the decrease in fee-based operating expenses was driven by Americas (97% of the reduction on a local currency basis).

Americas results reflected an $8.1 million non-cash reduction to loan loss credit reserves, compared with a $30.6 million increase in reserves during the prior-year quarter.

Restructuring and acquisition charges increased compared with the prior year;

Consolidated operating expenses, excluding reimbursed expenses, were $2.3 billion for the second quarter, up 20% from 2020, and $4.3 billion for the first half of 2021, up 5% from 2020, while consolidated fee-based operating expenses were $1.6 billion for the second quarter, up 24% from the prior-year quarter, and $3.0 billion for the first six months, up 7% from last year.

For the second quarter, the increase in fee-based operating expenses was primarily attributable to the Americas, which represented 74% of the increase on a local currency basis (62% of the year-to-date increase).

Asia Pacific represented 13% of the second-quarter increase (25% year to date) and EMEA also represented 13% of the second-quarter increase (17% year to date).

Americas year-to-date results reflected a $13.8 million non-cash reduction to loan loss credit reserves, compared with a $30.6 million increase in reserves during the prior year.

For the second quarter and first half of 2021, Restructuring and acquisition charges decreased compared with the prior-year periods;

refer to following table for further detail.

Three Months Ended March 31,

Charges associated with the acquisition and integration of HFF included retention and severance expense, early lease termination costs, and other integration expenses.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

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Restructuring, pre-acquisition and post-acquisition charges 17.9 20.6 33.4 41.6

Fair value adjustments that resulted in a net decrease to earn-out liabilities from prior-period acquisition activity (0.1) (8.2)

Fair value adjustments that resulted in a net increase (decrease) to earn-out liabilities from prior-period acquisition activity 1.1 0.6 1.0 (7.6)

Total restructuring & acquisition charges $ 18.1 28.2 $ 35.3 42.3

Portion of total restructuring & acquisition charges related to the acquisition and integration of HFF $ 12.4 20.1 $ 23.9 41.4

Charges associated with the acquisition and integration of HFF included retention and severance expense, early lease termination costs, and other integration expenses.

Equity Earnings

For the first quarter of 2021, we recognized equity earnings of $48.5 million, compared with equity losses of $28.3 million in the prior-year quarter.

Valuation increases of JLL Technologies' investments contributed $34.7 million this quarter, reflecting progress in the strategy to invest in early-stage proptech companies;

For the second quarter of 2021, we recognized equity earnings of $40.8 million, compared with $14.7 million in the prior-year quarter.

For the first half of 2021, we recognized equity earnings of $89.3 million, compared with losses of $13.6 million in 2020.

Valuation increases of JLL Technologies' investments contributed $16.2 million this quarter ($50.9 million year to date), reflecting progress in the strategy to invest in early-stage proptech companies;

refer to the Americas segment discussion for additional detail.

In addition, substantially all of the $12.7 million of equity earnings in the Americas segment in 2020 were attributable to gains by consolidated variable interest entities in which we held no equity interest;

In addition, substantially all of the $12.7 million of first-quarter 2020 equity earnings in the Americas segment were attributable to gains by consolidated variable interest entities in which we held no equity interest;

these gains are also reflected in net income attributable to noncontrolling interest and, therefore, have no impact to net income attributable to common shareholders.

LaSalle recognized $13.0 million of equity earnings in 2021, compared with $40.3 million of equity losses last year.

LaSalle recognized $23.3 million of equity earnings in second-quarter 2021 ($36.3 million year to date), compared with $11.3 million in the prior-year quarter ($0.7 million of equity losses in the first half of 2020).

Refer to the LaSalle segment discussion for additional detail.

The provision for income taxes was $28.2 million for the three months ended March 31, 2021, representing an effective tax rate of 21.6%.

For the three months ended March 31, 2020, the provision was $5.0 million, representing an effective tax rate of 22.0%.

The provision for income taxes was $54.9 million and $83.1 million for the three and six months ended June 30, 2021, respectively, representing an effective tax rate of 21.6% for both periods.

For the three and six months ended June 30, 2020, the provision was $1.5 million and $6.5 million, respectively, representing effective tax rates of 10.0% and 17.1%, respectively.

The lower effective tax rates in 2020 reflected relatively low prior-year pretax earnings as well as the geographic distribution of the earnings.

Net Income and Adjusted EBITDA

Net income attributable to common shareholders for the three months ended March 31, 2021 was $103.0 million, compared with $5.3 million in 2020.

Adjusted EBITDA was $190.1 million for the first quarter of 2021, an increase of 96% from the prior-year period.

Net income attributable to common shareholders in 2021 included a $12.0 million gain recognized on the sale of a business as part of a broader investment made in Roofstock, a marketplace for investing in the dynamic single-family rental sector.

Net income attributable to common shareholders for the three and six months ended June 30, 2021 was $200.0 million and $303.0 million, respectively, compared with $15.2 million and $20.5 million in the respective prior-year periods.

Adjusted EBITDA was $332.4 million and $522.5 million for the second quarter and first half of 2021, respectively.

Net income attributable to common shareholders for the six months ended June 30, 2021 included a $12.0 million gain recognized on the sale of a business as part of a broader investment made in Roofstock, a marketplace for investing in the dynamic single-family rental sector.

This gain on sale is excluded from adjusted measures.

Net income margin attributable to common shareholders for the first quarter (against Revenue before reimbursements) was 4.8%, compared with 0.2% in the prior-year quarter.

Adjusted EBITDA margin for the first quarter, calculated on a fee-revenue basis, was 13.2% in USD (13.4% in local currency), compared with 6.4% in 2020.

The net margin expansion was primarily due to the year-over-year non-cash changes in LaSalle equity earnings and loan loss credit reserves discussed above.

Remaining margin expansion was driven by JLL Technologies' investments as well as strong contributions from Asia Pacific, partially offset by a decline in EMEA.

Refer to the segment operating results discussions for additional detail.

Net income margin attributable to common shareholders for the second quarter (against Revenue before reimbursements) was 8.0%, compared with 0.8% in the prior-year quarter.

Adjusted EBITDA margin for the second quarter, calculated on a fee-revenue basis, was 18.3% in USD (18.5% in local currency), compared with 8.3% in 2020.

Margin expansion was primarily driven by (i) a significant increase in revenue, particularly from higher margin transaction-based service lines and (ii) higher equity earnings, including $16.2 million from valuation increases to JLL Technologies' investments, reflecting continued progress in the strategy to invest in early-stage proptech companies (refer to the equity earnings discussion in the Americas segment highlights for additional detail), and an incremental $12.0 million from LaSalle.

This expansion was partially offset by the impact of temporary cost savings in 2020, including the benefit from government relief programs.

Segment Operating Results

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Americas - Real Estate Services

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

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Gross contract costs (220.3) (192.3) (28.0) 15 13

Net non-cash MSR and mortgage banking derivative activity (9.7) 1.6 (11.3) n.m.

Net non-cash MSR and mortgage banking derivative activity (5.7) (8.6) 2.9 (34) (33)

Fee Revenue $ 1,063.2 683.1 380.1 56 % 55 %

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Segment operating expenses (excluding reimbursed expenses) $ 1,099.1 844.4 254.7 30 % 29 %

Equity earnings $ 34.5 12.7 21.8 n.m.

Equity earnings $ 16.5 2.9 13.6 469 % 456 %

Segment income $ 206.6 42.5 164.1 386 % 382 %

Adjusted EBITDA $ 235.9 74.0 161.9 219 % 217 %

The pandemic continued to negatively impact the Americas transaction-based service lines, although the decline in U.S.

Leasing was notably less significant than recent quarters.

Continued growth in industrial partially offset a decline in office leasing activity, however, U.S.

office leasing again outperformed market gross absorption, which was down 45% according to JLL Research.

Lower investment sales and debt placement activity drove the decline in Capital Markets revenue while our multifamily business continued to deliver stable revenue performance.

Strong revenue and fee revenue growth in Property & Facility Management was attributable to new client wins and expansions of existing Corporate Solutions client relationships.

Equity earnings were entirely driven by valuation increases to JLL Technologies' investments, a reflection of subsequent financing rounds at increased per-share values for certain investments.

In the prior year, equity earnings were largely attributable to gains by consolidated variable interest entities in which the company held no equity interest, and therefore, these gains had no net impact to Adjusted EBITDA.

The decreases in segment operating expenses and segment fee-based operating expenses for the first quarter of 2021 compared with 2020 were driven by savings resulting from cost mitigation efforts during the trailing twelve months and lower revenue-related expenses.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 20.3% in USD and in local currency, compared with 13.2% in 2020.

The equity earnings noted above and year-over-year change in loan loss credit reserves substantially drove the margin expansion.

The residual nominal improvement reflected cost mitigation savings noted above which offset the impact of lower revenue.

Americas - Real Estate Services (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

dollars Currency

Revenue $ 5,145.4 4,752.1 393.3 8 % 8 %

Reimbursements (2,798.0) (2,738.5) (59.5) 2 2

Revenue before reimbursements $ 2,347.4 2,013.6 333.8 17 % 16 %

Gross contract costs (436.1) (405.1) (31.0) 8 7

Net non-cash MSR and mortgage banking derivative activity (15.4) (7.0) (8.4) 120 120

Fee revenue $ 1,895.9 1,601.5 294.4 18 % 18 %

Leasing 824.5 672.6 151.9 23 22

Capital Markets 495.7 378.1 117.6 31 31

Property & Facility Management 300.7 276.0 24.7 9 9

Project & Development Services 173.8 184.5 (10.7) (6) (6)

Advisory, Consulting and Other 101.2 90.3 10.9 12 12

Compensation, operating and administrative expenses excluding gross contract costs $ 1,543.3 1,410.5 132.8 9 % 9 %

Depreciation and amortization 67.4 76.5 (9.1) (12) (12)

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 1,610.7 1,487.0 123.7 8 8

Gross contract costs 436.1 405.1 31.0 8 7

Segment operating expenses (excluding reimbursed expenses) $ 2,046.8 1,892.1 154.7 8 % 8 %

Equity earnings $ 51.0 15.6 35.4 227 % 226 %

Segment income $ 351.6 137.1 214.5 156 % 155 %

Adjusted EBITDA $ 404.9 195.3 209.6 107 % 107 %

Year-to-date and quarter-to-date revenue and fee revenue expansion in the Americas was driven by exceptional performance in transaction-based service lines, with second-quarter organic fee revenue reaching pre-pandemic levels.

The growth in Leasing was largely attributable to notably higher second-quarter transaction volume in the U.S.

with strength in office, industrial and retail sectors, despite lower average transaction size and shorter average lease/renewal terms compared with before the pandemic.

The over 100% second-quarter growth in Capital Markets reflected a rebound in deal activity, particularly in investment sales, as well as a double-digit increase in servicing revenue from our multifamily business.

Solid year-to-date revenue and fee revenue growth in Property & Facility Management was attributable to new client wins and expansions of existing Work Dynamics client relationships.

Equity earnings for the second quarter and first half of 2021 were attributable to valuation increases of JLL Technologies' investments in early-stage proptech entities, with half of the current quarter driven by an investment in a company purchased by Procore Technologies, Inc., which went public in May 2021.

In the prior year, substantially all of the $12.7 million first-quarter equity earnings were attributable to gains by consolidated variable interest entities in which the company held no equity interest;

therefore, these gains had no net impact to Adjusted EBITDA.

The increases in segment operating expenses and segment fee-based operating expenses for the second quarter and first half of 2021, compared with the prior-year periods, were driven by revenue-related expense growth, partially offset by savings resulting from cost mitigation efforts during the trailing twelve months, especially fixed compensation expense.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 22.2% in USD and local currency, compared with 10.8% in 2020.

The margin expansion was primarily due to (i) transaction-based revenue growth, (ii) savings from cost mitigation efforts, especially related to fixed compensation costs, as well as continued variable operating and administrative expense containment, and (iii) higher equity earnings (each noted individually above).

EMEA - Real Estate Services

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

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Segment operating expenses (excluding reimbursed expenses) $ 632.0 490.8 141.2 29 % 17 %

Equity earnings $ — — — n.m.

Equity earnings $ — — — — % — %

Segment income (loss) $ 0.3 (33.4) 33.7 101 % 95 %

Adjusted EBITDA $ 11.2 (23.7) 34.9 147 % 135 %

EMEA - Real Estate Services (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

dollars Currency

Revenue $ 1,526.0 1,382.1 143.9 10 % 1 %

Reimbursements (330.9) (351.6) 20.7 (6) (14)

Revenue before reimbursements $ 1,195.1 1,030.5 164.6 16 % 6 %

Gross contract costs (510.0) (452.0) (58.0) 13 3

Fee revenue $ 685.1 578.5 106.6 18 % 9 %

Leasing 120.6 92.5 28.1 30 20

Capital Markets 162.9 115.1 47.8 42 30

Property & Facility Management 160.9 144.1 16.8 12 2

Project & Development Services 123.4 124.9 (1.5) (1) (8)

Advisory, Consulting and Other 117.3 101.9 15.4 15 6

Compensation, operating and administrative expenses excluding gross contract costs $ 698.7 614.2 84.5 14 % 5 %

Depreciation and amortization 21.9 18.2 3.7 20 10

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 720.6 632.4 88.2 14 5

Gross contract costs 510.0 452.0 58.0 13 3

Segment operating expenses (excluding reimbursed expenses) $ 1,230.6 1,084.4 146.2 13 % 4 %

Equity earnings $ — — — — % — %

Segment loss $ (35.5) (53.9) 18.4 34 % 33 %

Adjusted EBITDA $ (24.8) (10.6) (14.2) n.m.

EMEA’s revenue and fee revenue in 2021 continued to be affected by the pandemic, compared with the prior-year quarter which had not yet been meaningfully impacted.

Transaction-based revenues were largely stable as significant growth in certain geographies, highlighted by Switzerland, was offset by geographies that experienced more restrictive lock-down measures, such as Germany and the UK.

Lower activity in our fit-out business and significant prior-year project activity in MENA that did not recur this quarter primarily drove the decline in Project & Development Services.

A decrease in fee revenue from the UK mobile engineering business impacted Property & Facility Management.

The decreases (in local currency) in segment operating expenses and segment fee-based operating expenses, compared with the prior-year quarter, were primarily due to savings resulting from cost mitigation efforts during the trailing twelve months and lower revenue-related expenses, partially offset by a contract loss in our UK mobile engineering business.

Adjusted EBITDA margin for the first quarter, calculated on a fee-revenue basis, was negative 8.0% in USD (negative 8.4% in local currency), compared with negative 3.4% in the prior-year quarter.

The decline in revenue as well as the above-noted contract loss contributed to the lower margin performance, more than offsetting the cost mitigation expense savings.

Adjusted EBITDA $ (13.6) (34.3) 20.7 60 % 53 %

EMEA achieved significant revenue and fee revenue growth for the second quarter of 2021, especially in Capital Markets and Leasing, following a pandemic-impacted prior-year quarter.

While total segment organic fee revenue for the current quarter was nearly on pace with second-quarter 2019, both Leasing and Capital Markets notably eclipsed second-quarter 2019 performance.

The growth in Capital Markets was driven by stronger market sentiment evidenced through deal volumes, particularly in geographies with higher COVID-19 vaccination rates.

The increase in Leasing revenue was primarily driven by transaction volume increases in office and industrial.

A partial rebound in the UK mobile engineering business, partially driven by the easing of government-mandated restrictions compared with the prior-year quarter, contributed to higher Property & Facility Management revenue.

In addition, Valuation Advisory, particularly in the UK, led growth in Advisory, Consulting and Other.

Lower activity in our fit-out business and significant prior-year project activity in MENA that did not recur this year primarily drove the year-to-date decline in Project & Development Services.

Geographically across service lines, quarter-to-date fee revenue growth in EMEA was led by the UK, France and Spain.

Year-to-date, Switzerland also drove fee revenue growth as a result of meaningful first-quarter Capital Markets deal activity.

The increases in segment operating expenses and segment fee-based operating expenses, compared with the prior-year quarter, were primarily due to revenue-related expense growth and the absence of temporary cost savings (specifically the benefit related to government relief programs recognized in 2020), partially offset by savings resulting from cost mitigation efforts during the last 12 months, especially related to fixed compensation costs.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 3.0% in USD (2.4% in local currency), compared with negative 8.8% in the prior-year quarter.

The margin improvement was primarily driven by higher transaction-based revenue and fixed compensation expense savings, partially offset by the prior-year impact of temporary cost savings (each discussed above).

Asia Pacific - Real Estate Services

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

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Segment operating expenses (excluding reimbursed expenses) $ 437.1 369.6 67.5 18 % 10 %

Equity earnings $ 1.0 0.5 0.5 100 % 107 %

Segment income $ 36.5 19.2 17.3 90 % 73 %

Adjusted EBITDA $ 44.2 26.1 18.1 69 % 55 %

Asia Pacific - Real Estate Services (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

dollars Currency

Revenue $ 1,653.7 1,427.4 226.3 16 % 8 %

Reimbursements (762.2) (611.9) (150.3) 25 15

Revenue before reimbursements $ 891.5 815.5 76.0 9 % 2 %

Gross contract costs (406.7) (439.0) 32.3 (7) (12)

Fee revenue $ 484.8 376.5 108.3 29 % 19 %

Leasing 76.4 53.9 22.5 42 32

Capital Markets 79.2 40.3 38.9 97 79

Property & Facility Management 160.9 147.7 13.2 9 2

Project & Development Services 64.0 57.5 6.5 11 3

Advisory, Consulting and Other 104.3 77.1 27.2 35 24

Compensation, operating and administrative expenses excluding gross contract costs $ 417.6 341.1 76.5 22 % 14 %

Depreciation and amortization 14.9 13.6 1.3 10 3

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 432.5 354.7 77.8 22 13

Gross contract costs 406.7 439.0 (32.3) (7) (12)

Segment operating expenses (excluding reimbursed expenses) $ 839.2 793.7 45.5 6 % (1) %

Equity earnings (losses) $ 2.0 (0.2) 2.2 n.m.

Segment income $ 17.8 2.4 15.4 n.m.

Adjusted EBITDA $ 25.0 9.4 15.6 n.m.

Asia Pacific's double-digit fee revenue increase reflected strong growth in transaction-based revenue along with continued stability in Corporate Solutions.

An increase in large-deal transactions, particularly in Singapore and Australia, drove revenue expansion in Capital Markets.

Growth in Leasing was led by a pick-up in office volumes, especially in Greater China.

Significant growth in valuations services, notably in Greater China and Australia, led Advisory, Consulting and Other.

Higher segment fee-based operating expenses, compared with 2020, was primarily attributable to revenue-related expense increases, partially offset by savings resulting from cost mitigation efforts during the trailing twelve months.

Lower segment operating expenses, compared with last year, was due to a decrease in gross contract costs.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 11.7% in USD (11.3% in local currency), compared with 5.3% last year.

The significant margin expansion was attributable to growth in transaction-based revenue and expense savings noted above.

Three Months Ended March 31, Change in in Local

Segment income $ 54.3 21.6 32.7 151 % 126 %

Adjusted EBITDA $ 69.2 35.5 33.7 95 % 77 %

Asia Pacific's double-digit fee revenue increase for the second quarter and first half of 2021 reflected a rebound in transaction-based revenue.

An increase in large-deal transactions, especially in Australia (which included an outsized deal this quarter) and Singapore, drove fee revenue expansion in Capital Markets for the second quarter and first half of the year.

Leasing fee revenue growth for the current quarter and first half of 2021 was led by Australia, Greater China and India, primarily due to a pick-up in office volumes and ongoing strength in industrial.

Significant business growth continued in Valuation Advisory, notably in Australia, which led the revenue increase in Advisory, Consulting and Other.

Higher segment operating expenses for the second quarter of 2021 and fee-based operating expenses for the second quarter and first half of 2021, compared with respective prior-year periods, were primarily attributable to revenue-related expense increases and the absence of temporary cost savings (specifically the benefit related to government relief programs recognized in 2020), partially offset by savings resulting from cost mitigation efforts during the trailing twelve months.

Lower year-to-date segment operating expenses (on a local currency basis), compared with last year, was due to a decrease in first-quarter gross contract costs.

Adjusted EBITDA margin for the second quarter, calculated on a fee-revenue basis, was 16.3% in USD (16.1% in local currency), compared with 13.1% last year.

The margin expansion was attributable to growth in transaction-based revenue, partially offset by the benefit from government relief programs in the prior year.

Three Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

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Segment operating expenses (excluding reimbursed expenses) $ 96.9 84.7 12.2 14 % 10 %

Equity earnings (losses) $ 13.0 (40.3) 53.3 n.m.

Equity earnings $ 23.3 11.3 12.0 106 % 107 %

Segment income $ 39.8 25.4 14.4 57 % 56 %

Adjusted EBITDA $ 41.1 26.8 14.3 53 % 51 %

LaSalle (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2021 2020 U.S.

dollars Currency

Revenue $ 207.0 204.8 2.2 1 % (2) %

Reimbursements (3.9) (2.9) (1.0) 34 26

Revenue before reimbursements $ 203.1 201.9 1.2 1 % (3) %

Gross contract costs (9.3) (8.3) (1.0) 12 12

Fee revenue $ 193.8 193.6 0.2 — % (3) %

Advisory fees 164.2 158.5 5.7 4 (1)

Transaction fees & other 14.4 15.2 (0.8) (5) (7)

Incentive fees 15.2 19.9 (4.7) (24) (24)

Compensation, operating and administrative expenses excluding gross contract costs $ 167.6 161.7 5.9 4 % — %

Depreciation and amortization 3.3 3.6 (0.3) (8) (11)

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 170.9 165.3 5.6 3 —

Gross contract costs 9.3 8.3 1.0 12 12

Segment operating expenses (excluding reimbursed expenses) $ 180.2 173.6 6.6 4 % — %

Equity earnings (losses) $ 36.3 (29.0) 65.3 225 % 224 %

Segment income (loss) $ 59.2 (0.7) 59.9 n.m.

Adjusted EBITDA $ 62.0 2.4 59.6 n.m.

Lower LaSalle advisory fees were largely attributable to pandemic-driven valuation declines in assets under management over the trailing twelve months.

Transaction and Incentive fees reflected decreased acquisition/transaction activity in 2021.

Equity earnings in the current quarter were substantially driven by increases to the estimated fair value of underlying real estate investments within LaSalle's co-investment portfolio.

In the prior year, equity losses were largely driven by the pandemic's impact on real estate prices which drove lower estimated fair values within the portfolio.

The decreases in segment operating expenses and segment fee-based operating expenses, compared with the prior-year quarter, was driven by lower revenue-related variable expenses.

Adjusted EBITDA margin for the quarter was 24.5% in USD (24.7% local currency), compared with negative 24.8% last year.

Margin improvement was attributable to the year-over-year change in equity earnings, partially offset by lower revenue.

AUM was $70.9 billion as of March 31, 2021, an increase of 3% in USD (no change in local currency) from $68.9 billion as of December 31, 2020.

The AUM increase resulted from (i) $1.9 billion of foreign currency increases, (ii) $1.1 billion of acquisitions, and (iii) $0.9 billion of net valuation increases, partially offset by $1.9 billion dispositions and withdrawals.

LaSalle's second-quarter advisory fee growth, compared with 2020, was concentrated in our core open-end funds and was partially due to recent valuation increases in assets under management ("AUM").

Year-to-date, this growth was offset by pandemic-driven valuation declines in AUM during the second half of 2020.

Equity earnings in the second quarter and first half of 2021 were driven by increases to the estimated fair value of underlying real estate investments within LaSalle's co-investment portfolio across asset classes and geographies.

For the first half of 2020, equity losses were largely driven by the pandemic's impact on real estate prices which drove lower estimated fair values within the portfolio.

The increases in segment operating expenses and segment fee-based operating expenses for the current quarter, compared with the prior-year quarter, was driven by deferred variable compensation expenses from the legacy compensation program.

Adjusted EBITDA margin for the second quarter was 37.9% in USD (38.7% local currency), compared with 28.2% last year.

Margin improvement was driven by higher equity earnings as well as an increase in the productivity of the asset management platform, partially offset by the impact from deferred compensation expense relating to incentive fees from prior years.

AUM reached a record $73.4 billion as of June 30, 2021, an increase of 4% in USD (6% in local currency) from $70.9 billion as of March 31, 2021.

The AUM increase resulted from (i) $3.3 billion of net valuation increases, and (ii) $1.9 billion of acquisitions, partially offset by (iii) $1.6 billion of dispositions and withdrawals, and $1.1 billion of foreign currency decreases.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations, co-investment activity, share repurchases and dividend payments, capital expenditures and business acquisitions with internally generated funds, borrowings on our Facility, and through issuance of Long-term debt.

We finance our operations, co-investment activity, share repurchases, capital expenditures and business acquisitions with internally generated funds, borrowings on our Facility, and through issuance of Long-term debt.

Cash Flows from Operating Activities

Operating activities used $461.8 million of cash in the first three months of 2021, compared with $546.1 million of cash used during the same period in 2020.

The decrease in cash used was primarily due to less incentive compensation paid in 2021, compared with 2020, a result of 2020 business performance compared with 2019.

This was partially offset by lower collections of trade receivables, reflecting higher revenue in 2019 compared with 2020.

Operating activities used $246.1 million of cash in the first six months of 2021, compared with $44.7 million of cash used during the same period in 2020.

The increase in cash used was primarily due to a significant increase in trade receivables, reflecting higher year-over-year second-quarter revenue this year.

This was partially offset by (i) less incentive compensation paid in 2021 compared with 2020, reflecting our performance in 2020 compared with 2019, and (ii) higher cash provided by earnings in 2021, driven by a substantial increase in net income.

Cash Flows from Investing Activities

We used $97.8 million of cash for investing activities during the first three months of 2021, as compared to $90.5 million used during the same period in 2020.

The slight increase in cash used was driven by an increase in acquisitions in investment properties (less than wholly-owned), partially offset by a decrease in net capital contributions to real estate ventures and lower capital expenditures in 2021.

We used $213.8 million of cash for investing activities during the first six months of 2021, as compared to $109.4 million used during the same period in 2020.

The increase in cash used was driven by (i) incremental JLL Technologies investments in early-stage proptech companies, (ii) an increase in net capital contributions to real estate ventures, and (iii) acquisitions in investment properties (less than wholly-owned), partially offset by (iv) lower capital expenditures in 2021.

We discuss these key drivers individually below in further detail.

Cash Flows from Financing Activities

Financing activities provided $376.7 million of cash during the first three months of 2021, as compared to $883.3 million provided by financing activities during the same period in 2020.

The net decrease of $506.6 million in cash flows from financing activities is substantially driven by a decrease in borrowings on our Facility.

The borrowings on our Facility in the first quarter fund seasonal liquidity needs, specifically annual incentive compensation payments made in the first quarter, which were notably lower in 2021 as discussed in the cash flows from operating activities section above.

Our $2.75 billion Facility matures on May 17, 2023.

As of March 31, 2021, we had outstanding borrowings under the Facility of $350.0 million and outstanding letters of credit of $0.7 million.

Financing activities provided $314.7 million of cash during the first six months of 2021, as compared to $114.1 million provided by financing activities during the same period in 2020.

The net increase of $200.6 million in cash flows from financing activities is substantially driven by an increase in borrowings on our Facility.

The increase in borrowings resulted from higher cash outflows for operating and investing activities as discussed above, incremental share repurchases, and an increase in payments of acquisition-related obligations.

On April 14, 2021, we amended our $2.75 billion Facility, which extended the maturity date from May 17, 2023 to April 14, 2026.

As of June 30, 2021, we had outstanding borrowings under the Facility of $350.0 million and outstanding letters of credit of $0.7 million.

As of December 31, 2020, we had no outstanding borrowings under the Facility and outstanding letters of credit of $0.7 million.

The average outstanding borrowings under the Facility were $184.4 million and $935.2 million during the three months ended March 31, 2021 and 2020.

In addition to our Facility, we had the capacity to borrow up to $63.4 million under local overdraft facilities as of March 31, 2021.

We had Short-term borrowings (including financing lease obligations, overdrawn bank accounts and local overdraft facilities) of $90.6 million and $62.0 million as of March 31, 2021 and December 31, 2020, respectively, of which $16.0 million and $12.0 million, respectively, were attributable to local overdraft facilities.

The average outstanding borrowings under the Facility were $612.5 million and $1,351.5 million during the three months ended June 30, 2021 and 2020, respectively, and $399.6 million and $1,143.4 million during the six months ended June 30, 2021 and 2020.

In addition to our Facility, we had the capacity to borrow up to $64.9 million under local overdraft facilities as of June 30, 2021.

We had Short-term borrowings (including financing lease obligations, overdrawn bank accounts and local overdraft facilities) of $102.5 million and $62.0 million as of June 30, 2021 and December 31, 2020, respectively, of which $8.0 million and $12.0 million, respectively, were attributable to local overdraft facilities.

We will continue to use the Facility for working capital needs (including payment of accrued incentive compensation), co-investment activities, share repurchases, capital expenditures and acquisitions.

See Note 9, Debt, in the Notes to Condensed Consolidated Financial Statements for additional information on our Facility, Long-term debt and Short-term borrowings.

On April 14, 2021, we renewed our Facility and extend its maturity date to April 2026.

See Note 13, Subsequent Events, in the Notes to Condensed Consolidated Financial Statement for additional information about the Amendment.

Investment Activity

As of March 31, 2021, we had a carrying value of $545.1 million in investments, primarily related to LaSalle co-investments in real estate ventures and investments by JLL Technologies in early-stage proptech companies.

For the three months ended March 31, 2021, and 2020, funding of investments exceeded return of capital by $29.8 million, and $40.6 million, respectively.

As of June 30, 2021, we had a carrying value of $614.0 million in investments, primarily related to LaSalle co-investments in real estate ventures and investments by JLL Technologies in early-stage proptech companies.

For the six months ended June 30, 2021, and 2020, funding of investments exceeded return of capital by $63.9 million, and $30.2 million, respectively.

We expect to continue to pursue strategic co-investment opportunities with our investment management clients globally as co-investment remains an important foundation to the continued growth of LaSalle's business.

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See Note 6, Investments in Real Estate Ventures, in the Notes to Condensed Consolidated Financial Statements for additional information on our investment activity.

In addition, JLL Technologies funded a $45 million convertible note to Turntide Technologies.

This activity is included within "Other" in the cash flow from investing activities and primarily included in Long-term receivables on the Condensed Consolidated Balance Sheet.

Share Repurchase and Dividend Programs

On February 21, 2021, our Board of Directors authorized an additional $500.0 million for the repurchase of our common stock in the open market and privately negotiated transactions.

During the three months ended March 31, 2021 we did not repurchase any shares.

During the three months ended March 31, 2020 we repurchased nearly 188,000 shares for $25.0 million.

As of March 31, 2021, $600.0 million remained authorized for repurchases under our share repurchase program.

On February 21, 2021, our Board of Directors authorized an additional $500.0 million for the repurchase of our common stock in the open market and privately negotiated transactions in addition to the $100.0 million remaining from the initial authorization.

During the three and six months ended June 30, 2021 we repurchased 200,000 shares for $41.1 million.

Du ring the three months ended June 30, 2020 we did not repurchase any shares;

during the six months ended June 30, 2020 we repurchased nearly 188,000 shares for $25.0 million.

As of June 30, 2021, $558.9 million remained authorized for repurchases under our share repurchase program.

Capital Expenditures

Net capital additions for the three months ended March 31, 2021 and 2020, were $34.6 million and $44.4 million, respectively.

Net capital additions for the six months ended June 30, 2021 and 2020, were $69.8 million and $77.3 million, respectively.

Our capital expenditures in 2021 were primarily for leased office spaces improvements and purchased/developed software.

Investment Asset Activity of Less Than Wholly-Owned Entities

Net capital additions made by consolidated VIEs in which we held no equity interest for the three months ended March 31, 2021 and 2020, were $37.2 million and $3.2 million, respectively, primarily to acquire real estate (net of real estate sales).

Investment Asset Activity of Consolidated Less Than Wholly-Owned Entities

Net capital additions made by consolidated VIEs in which we held no equity interest for the six months ended June 30, 2021 and 2020, were $41.8 million and $7.7 million, respectively, primarily to acquire real estate (net of real estate sales).

The funding for these investments (largely from employee-investors and related third-party debt) is included within financing activities.

Business Acquisitions

During the three months ended March 31, 2021, we paid $26.4 million for business acquisitions.

During the six months ended June 30, 2021, we paid $78.6 million for business acquisitions.

This included $0.2 million of payments relating to acquisitions in 2021 and $78.4 million for deferred business acquisition and earn-out obligations related to acquisitions completed in prior years, which are primarily reflected in cash flows from financing activities.

Terms for many of our past acquisitions have typically included cash paid at closing with provisions for additional deferred consideration and earn-out payments subject to certain contract requirements, including the passage of time and performance, respectively.

Deferred business acquisition obligations totaled $26.9 million as of March 31, 2021.

Deferred business acquisition obligations totaled $26.4 million as of June 30, 2021.

These obligations represent the current discounted values of payments due to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time.

As of March 31, 2021, we had the potential to make earn-out payments for a maximum of $157.8 million on 24 completed acquisitions subject to the achievement of certain performance conditions.

As of June 30, 2021, we had the potential to make earn-out payments for a maximum of $106.7 million on 22 completed acquisitions subject to the achievement of certain performance conditions.

Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Condensed Consolidated Financial Statements for further information on Business Acquisitions.

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We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity.

As of March 31, 2021 and December 31, 2020, we had total cash and cash equivalents of $456.6 million and $574.3 million, respectively, of which approximately $375.4 million and $445.2 million, respectively, was held by foreign subsidiaries.

As of June 30, 2021 and December 31, 2020, we had total cash and cash equivalents of $494.0 million and $574.3 million, respectively, of which approximately $403.9 million and $445.2 million, respectively, was held by foreign subsidiaries.

Restricted Net Assets

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However, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries.

The assets of these countries aggregated to approximately 4% of our total assets as of March 31, 2021 and December 31, 2020.

The assets of these countries aggregated to approximately 4% of our total assets as of both June 30, 2021 and December 31, 2020.

Off-Balance Sheet Arrangements

We have unfunded capital commitments to investment vehicles and direct investments for future co-investments, totaling a maximum of $309.9 million as of March 31, 2021.

We have unfunded capital commitments to investment vehicles and direct investments for future co-investments, totaling a maximum of $315.5 million as of June 30, 2021.

See our discussion of unfunded commitments in Note 6, Investments in Real Estate Ventures, in the Notes to Condensed Consolidated Financial Statements.

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Such statements do not relate strictly to historical or current facts as they relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events.

This includes, but is not limited to, our expectations regarding the potential impact of the COVID-19 outbreak and the efficacy of vaccines and therapeutics on reducing the spread of the virus, as well as any further impacts to us, the economy as a whole, and/or related government and regulatory restrictions issued to combat the global pandemic, including any adverse changes in such restrictions that may impact us.

This includes, but is not limited to, our expectations regarding the potential impact of the COVID-19 pandemic and the efficacy of vaccines and therapeutics on reducing the spread of the virus, as well as any further impacts to us, the economy as a whole, and/or related government and regulatory restrictions issued to combat the global pandemic, including any adverse changes in such restrictions that may impact us.

Management believes that these forward-looking statements are reasonable as and when made.

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These risks and uncertainties are described in our Annual Report on Form 10-K for the year ended December 31, 2020 in Part I, Item 1A.

Risk Factors and may also be described from time to time in our subsequent filings with the Securities and Exchange Commission.

Risk Factors and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and may also be described from time to time in our subsequent filings with the Securities and Exchange Commission.

You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis