Item 1. Financial Statements
Item 1. Financial Statements
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data) June 30, 2021 December 31, 2020
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 494.0 574.3
Trade receivables, net of allowance of $ 72.3 and $ 66.5
1,584.1 1,636.1
Notes and other receivables 381.8 469.9
Reimbursable receivables 1,426.4 1,461.3
Warehouse receivables 741.7 1,529.2
Short-term contract assets, net of allowance of $ 2.1 and $ 1.8
286.0 265.8
Prepaid & other 414.0 517.1
Total current assets 5,328.0 6,453.7
Property and equipment, net of accumulated depreciation of $ 867.3 and $ 806.2
683.8 663.9
Operating lease right-of-use assets 694.3 707.4
Goodwill 4,205.1 4,224.7
Identified intangibles, net of accumulated amortization of $ 320.7 and $ 295.3
672.5 679.8
Investments in real estate ventures, including $ 505.0 and $ 340.3 at fair value
614.0 430.8
Long-term receivables 281.5 231.1
Deferred tax assets, net 285.8 296.5
Deferred compensation plan 503.5 446.3
Other 186.6 182.3
Total assets $ 13,455.1 14,316.5
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,034.6 1,229.8
Reimbursable payables 1,042.3 1,154.5
Accrued compensation & benefits 1,171.6 1,433.2
Short-term borrowings 102.5 62.0
Short-term contract liabilities and deferred income 174.6 192.9
Short-term acquisition-related obligations 25.4 91.7
Warehouse facilities 714.1 1,498.4
Short-term operating lease liabilities 157.6 165.7
Other 219.4 299.6
Total current liabilities 4,642.1 6,127.8
Credit facility, net of debt issuance costs of $ 13.3 and $ 8.7
336.7 ( 8.7 )
Long-term debt, net of debt issuance costs of $ 2.1 and $ 2.5
687.9 702.0
Deferred tax liabilities, net 110.6 120.0
Deferred compensation 485.4 450.0
Long-term acquisition-related obligations 19.1 26.2
Long-term operating lease liabilities 691.1 683.9
Other 575.0 597.5
Total liabilities 7,547.9 8,698.7
Redeemable noncontrolling interest 7.5 7.8
Company shareholders' equity:
Common stock, $ 0.01 par value per share, 100,000,000 shares authorized; 52,075,494 and 51,970,307 shares issued; 51,145,228 and 51,105,417 outstanding
0.5 0.5
Additional paid-in capital 2,040.6 2,023.3
Retained earnings 4,278.9 3,975.9
Treasury stock, at cost, 930,266 and 864,890 shares
( 122.3 ) ( 96.1 )
Shares held in trust ( 5.3 ) ( 5.6 )
Accumulated other comprehensive loss ( 383.1 ) ( 377.2 )
Total Company shareholders’ equity 5,809.3 5,520.8
Noncontrolling interest 90.4 89.2
Total equity 5,899.7 5,610.0
Total liabilities, redeemable noncontrolling interest and equity $ 13,455.1 14,316.5
See accompanying notes to Condensed Consolidated Financial Statements.
3
Table of Contents
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Revenue:
Revenue before reimbursements $ 2,507.5 1,828.5 $ 4,637.1 4,061.5
Reimbursements 1,987.5 1,841.9 3,895.0 3,704.9
Total revenue $ 4,495.0 3,670.4 $ 8,532.1 7,766.4
Operating expenses:
Compensation and benefits $ 1,551.3 1,175.3 $ 2,885.7 2,499.8
Operating, administrative and other 659.3 557.3 1,303.6 1,332.1
Reimbursed expenses 1,987.5 1,841.9 3,895.0 3,704.9
Depreciation and amortization 54.5 56.9 107.5 111.9
Restructuring and acquisition charges 18.1 28.2 35.3 42.3
Total operating expenses $ 4,270.7 3,659.6 $ 8,227.1 7,691.0
Operating income $ 224.3 10.8 $ 305.0 75.4
Interest expense, net of interest income 10.6 14.9 21.0 29.5
Equity earnings (losses) 40.8 14.7 89.3 ( 13.6 )
Other (loss) income ( 0.2 ) 5.2 11.6 6.1
Income before income taxes and noncontrolling interest 254.3 15.8 384.9 38.4
Income tax provision 54.9 1.5 83.1 6.5
Net income 199.4 14.3 301.8 31.9
Net (loss) income attributable to noncontrolling interest ( 0.6 ) ( 0.9 ) ( 1.2 ) 11.4
Net income attributable to common shareholders $ 200.0 15.2 $ 303.0 20.5
Basic earnings per common share $ 3.90 0.29 $ 5.91 0.40
Basic weighted average shares outstanding (in 000's) 51,288 51,635 51,231 51,623
Diluted earnings per common share $ 3.82 0.29 $ 5.80 0.39
Diluted weighted average shares outstanding (in 000's) 52,324 52,173 52,253 52,305
Net income attributable to common shareholders $ 200.0 15.2 $ 303.0 20.5
Change in pension liabilities, net of tax 0.7 — 0.5 —
Foreign currency translation adjustments ( 0.2 ) 33.8 ( 6.4 ) ( 109.6 )
Comprehensive income (loss) attributable to common shareholders $ 200.5 49.0 $ 297.1 ( 89.1 )
See accompanying notes to Condensed Consolidated Financial Statements.
4
Table of Contents
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
Company Shareholders' Equity
Common Stock Additional Shares
(in millions, except share and
per share data) (unaudited) Outstanding Paid-In Retained Held in Treasury Total
Shares Amount Capital Earnings Trust Stock AOCI (1)
NCI (2)
Equity
December 31, 2020 51,105,417 $ 0.5 2,023.3 3,975.9 ( 5.6 ) ( 96.1 ) ( 377.2 ) 89.2 $ 5,610.0
Net income (loss) — — — 103.0 — — — ( 0.6 ) 102.4
Shares issued under stock-based compensation programs 290,563 — ( 15.6 ) — — 15.9 — — 0.3
Shares repurchased for payment of taxes on stock-based compensation ( 89,780 ) — ( 9.7 ) — — ( 5.5 ) — — ( 15.2 )
Amortization of stock-based compensation — — 17.5 — — — — — 17.5
Shares held in trust — — — — 0.2 — — — 0.2
Change in pension liabilities, net of tax — — — — — — ( 0.2 ) — ( 0.2 )
Foreign currency translation adjustments — — — — — — ( 6.2 ) — ( 6.2 )
Decrease in amounts attributable to noncontrolling interest — — — — — — — ( 1.9 ) ( 1.9 )
March 31, 2021 51,306,200 $ 0.5 2,015.5 4,078.9 ( 5.4 ) ( 85.7 ) ( 383.6 ) 86.7 $ 5,706.9
Net income (loss) — — — 200.0 — — — ( 0.6 ) 199.4
Shares issued under stock-based compensation programs 13,712 — ( 1.0 ) — — 1.5 — — 0.5
Shares repurchased for payment of taxes on stock-based compensation ( 2,184 ) — ( 0.2 ) — — ( 0.2 ) — — ( 0.4 )
Amortization of stock-based compensation — — 26.3 — — — — — 26.3
Shares held in trust — — — — 0.1 — — — 0.1
Change in pension liabilities, net of tax — — — — — 0.7 — 0.7
Repurchase of common stock ( 172,500 ) — — — — ( 37.9 ) — — ( 37.9 )
Foreign currency translation adjustments — — — — — — ( 0.2 ) — ( 0.2 )
Increase in amounts attributable to noncontrolling interest — — — — — — — 4.3 4.3
June 30, 2021 51,145,228 $ 0.5 2,040.6 4,278.9 ( 5.3 ) ( 122.3 ) ( 383.1 ) 90.4 $ 5,899.7
(1) AOCI: Accumulated other comprehensive income (loss)
(2) NCI: Noncontrolling interest
5
Table of Contents
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
Company Shareholder's Equity
Additional Shares
(in millions, except share and
per share data) (unaudited) Common Stock Paid-In Retained Held in Treasury Total
Shares Amount Capital Earnings Trust Stock AOCI (1)
NCI (2)
Equity
December 31, 2019 51,549,654 $ 0.5 1,962.8 3,588.3 ( 5.7 ) — ( 427.8 ) 86.6 $ 5,204.7
Net income — — — 5.3 — — — 12.3 17.6
Shares issued under stock-based compensation programs 363,308 — 4.4 — — — — — 4.4
Shares repurchased for payment of taxes on stock-based compensation ( 102,370 ) — ( 16.2 ) — — — — — ( 16.2 )
Amortization of stock-based compensation — — 18.6 — — — — — 18.6
Shares held in trust — — — — 0.1 — — — 0.1
Cumulative effect from adoption of new accounting for credit losses — — — ( 14.9 ) — — — — ( 14.9 )
Repurchase of common stock ( 187,753 ) — — — — ( 25.0 ) — — ( 25.0 )
Foreign currency translation adjustments — — — — — — ( 143.4 ) — ( 143.4 )
Decrease in amounts attributable to noncontrolling interest — — — — — — — ( 17.0 ) ( 17.0 )
March 31, 2020 51,622,839 $ 0.5 1,969.6 3,578.7 ( 5.6 ) ( 25.0 ) ( 571.2 ) 81.9 $ 5,028.9
Net income (loss) (3)
— — — 15.2 — — — ( 1.0 ) 14.2
Shares issued under stock-based compensation programs 23,762 — — — — 0.6 — — 0.6
Shares repurchased for payment of taxes on stock-based compensation ( 4,546 ) — ( 1.0 ) — — — — — ( 1.0 )
Amortization of stock-based compensation — — 30.7 — — — — — 30.7
Shares held in trust — — — — ( 0.1 ) — — — ( 0.1 )
Foreign currency translation adjustments — — — — — — 33.8 — 33.8
Increase in amounts attributable to noncontrolling interest — — — — — — — 2.3 2.3
Balances at June 30, 2020 51,642,055 $ 0.5 1,999.3 3,593.9 ( 5.7 ) ( 24.4 ) ( 537.4 ) 83.2 $ 5,109.4
(1) AOCI: Accumulated other comprehensive income (loss)
(2) NCI: Noncontrolling interest
(3) Excludes net income attributable to redeemable noncontrolling interest of $0.1 million for the three months ended June 30, 2020.
See accompanying notes to Condensed Consolidated Financial Statements.
6
Table of Contents
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
(in millions) (unaudited) 2021 2020
Cash flows from operating activities:
Net income $ 301.8 31.9
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization 107.5 111.9
Equity (earnings) losses ( 89.3 ) 13.6
Net (gain) loss on dispositions ( 11.4 ) 1.1
Distributions of earnings from real estate ventures 4.6 8.7
Provision for loss on receivables and other assets ( 0.2 ) 54.2
Amortization of stock-based compensation 43.8 49.3
Net non-cash mortgage servicing rights and mortgage banking derivative activity ( 15.4 ) ( 7.0 )
Accretion of interest and amortization of debt issuance costs 2.2 2.7
Other, net ( 21.1 ) ( 36.9 )
Change in:
Receivables 70.1 632.0
Reimbursable receivables and reimbursable payables ( 77.4 ) 46.7
Prepaid expenses and other assets ( 75.8 ) ( 18.0 )
Deferred tax assets, net 1.3 ( 18.3 )
Accounts payable and accrued liabilities ( 265.7 ) ( 189.7 )
Accrued Compensation ( 221.1 ) ( 726.9 )
Net cash used in operating activities ( 246.1 ) ( 44.7 )
Cash flows from investing activities:
Net capital additions – property and equipment ( 69.8 ) ( 77.3 )
Net investment asset activity (less than wholly-owned) ( 41.8 ) ( 7.7 )
Business acquisitions, net of cash acquired ( 0.2 ) —
Capital contributions to real estate ventures ( 77.4 ) ( 54.9 )
Distributions of capital from real estate ventures 13.5 24.7
Other, net ( 38.1 ) 5.8
Net cash used in investing activities ( 213.8 ) ( 109.4 )
Cash flows from financing activities:
Proceeds from borrowings under credit facility 2,373.0 3,433.0
Repayments of borrowings under credit facility ( 2,023.0 ) ( 3,258.0 )
Net proceeds from (repayments of) short-term borrowings 47.6 ( 4.8 )
Payments of deferred business acquisition obligations and earn-outs ( 54.3 ) ( 19.1 )
Repurchase of common stock ( 37.9 ) ( 25.0 )
Other, net 9.3 ( 12.0 )
Net cash provided by financing activities 314.7 114.1
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash ( 9.7 ) ( 15.1 )
Net change in cash, cash equivalents and restricted cash ( 154.9 ) ( 55.1 )
Cash, cash equivalents and restricted cash, beginning of the period 839.8 652.1
Cash, cash equivalents and restricted cash, end of the period $ 684.9 597.0
Supplemental disclosure of cash flow information:
Restricted cash, beginning of period $ 265.5 200.2
Restricted cash, end of period 190.9 183.5
Cash paid during the period for:
Interest $ 19.9 29.0
Income taxes, net of refunds 114.8 48.5
Operating leases 98.6 93.6
Non-cash activities:
Business acquisitions (including contingent consideration) $ 3.8 —
Non-cash consideration received for disposition 23.9 —
See accompanying notes to Condensed Consolidated Financial Statements.
7
Table of Contents
JONES LANG LASALLE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM INFORMATION
Readers of this quarterly report should refer to the audited financial statements of Jones Lang LaSalle Incorporated ("JLL," which may also be referred to as "the Company" or as "we," "us" or "our") for the year ended December 31, 2020, which are included in our 2020 Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission ("SEC") and also available on our website ( www.jll.com ), since we have omitted from this quarterly report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to the "Summary of Critical Accounting Policies and Estimates" section within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.
Our Condensed Consolidated Financial Statements as of June 30, 2021, and for the periods ended June 30, 2021 and 2020, are unaudited. In the opinion of management, we have included all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the Condensed Consolidated Financial Statements for these interim periods.
Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses. This is the result of a general focus in the real estate industry on completing transactions by calendar year end, while certain expenses are recognized evenly throughout the year. Our LaSalle Investment Management ("LaSalle") segment generally earns investment-generated performance fees on clients' real estate investment returns when assets are sold, the timing of which is geared toward the benefit of our clients, as well as co-investment equity gains and losses, primarily dependent on underlying valuations. Within our Real Estate Services ("RES") segments, revenue from transaction-based activities (e.g. leasing and capital markets) is driven by the size and timing of our clients' transactions and can fluctuate significantly from period to period. 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.
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 process can result in significant fluctuations in quarterly compensation and benefits expense from period to period. Non-variable operating expenses, which we recognize when incurred during the year, are relatively constant on a quarterly basis.
We provide for the effects of income taxes on interim financial statements based on our estimate of the effective tax rate for the full year, which we base on forecasted income by country and expected enacted tax rates. As required, we adjust for the impact of discrete items in the quarters in which they occur. Changes in the geographic mix of income can impact our estimated effective tax rate.
As a result of the items mentioned above, the results for the periods ended June 30 are not fully indicative of what our results will be for the full fiscal year.
8
Table of Contents
2. NEW ACCOUNTING STANDARDS
Recently adopted accounting guidance
In January 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020‑01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) , which, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323 and clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This ASU is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. We adopted this guidance effective January 1, 2021, and the adoption did not impact our financial statements and related disclosures.
3. REVENUE RECOGNITION
Revenue excluded from the scope of ASC Topic 606 - Our mortgage banking and servicing operations - such as Mortgage Servicing Rights ("MSR")-related activity, loan origination fees, and servicing income - are excluded from the scope of ASC Topic 606. Such revenue was included entirely within Americas Capital Markets and is presented below.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Revenue excluded from scope of ASC Topic 606 $ 63.4 53.4 $ 133.6 102.7
Contract assets and liabilities - Our contract assets, net of allowance, are included in Short-term contract assets and Other assets and our contract liabilities are included in Short-term contract liabilities and deferred income on our Condensed Consolidated Balance Sheets. The majority of contract liabilities are recognized as revenue within 90 days. Such contract assets and liabilities are presented below.
(in millions) June 30, 2021 December 31, 2020
Contract assets, gross $ 366.1 347.8
Contract asset allowance ( 2.4 ) ( 2.1 )
Contract assets, net $ 363.7 345.7
Contract liabilities $ 95.7 111.0
Remaining performance obligations - Remaining performance obligations represent the aggregate transaction price for contracts where our performance obligations have not yet been satisfied. As of June 30, 2021, the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue. In accordance with ASC Topic 606, excluded from the aforementioned remaining performance obligations are (i) amounts attributable to contracts expected to be completed within 12 months and (ii) variable consideration for services performed as a series of daily performance obligations, such as facilities management, property management, and LaSalle contracts. Contracts within these businesses represent a significant portion of our contracts with customers not expected to be completed within 12 months.
9
Table of Contents
4. BUSINESS SEGMENTS
We manage and report our operations as four business segments:
The three geographic regions of RES including:
(1) Americas,
(2) Europe, Middle East and Africa ("EMEA"), and
(3) Asia Pacific;
and
(4) LaSalle.
Each geographic region offers our full range of real estate services, including agency leasing and tenant representation, capital markets, property and facility management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services. LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals.
We allocate all indirect expenses to our segments, other than interest and income taxes, as nearly all expenses incurred benefit one or more of the segments. Allocated expenses primarily consist of corporate global overhead, which we allocate to the business segments based on the budgeted operating expenses of each segment.
Segment income does not include (i) restructuring and acquisition charges, (ii) interest expense, net of interest income, (iii) other income, and (iv) provision for income tax, which are otherwise included in Net income on the Consolidated Statements of Comprehensive Income.
The Chief Operating Decision Maker of JLL measures and evaluates the segment results based on Segment income for purposes of making decisions about allocating resources and assessing performance.
10
Table of Contents
Summarized financial information by business segment is as follows.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Americas
Leasing $ 484.2 278.1 $ 847.9 697.0
Capital Markets 296.0 140.8 512.9 388.2
Property & Facility Management 1,517.2 1,439.5 3,012.0 2,898.3
Project & Development Services 303.0 275.3 572.8 581.7
Advisory, Consulting and Other 101.1 95.3 199.8 186.9
Revenue $ 2,701.5 2,229.0 $ 5,145.4 4,752.1
Depreciation and amortization $ 34.3 39.1 $ 67.4 76.5
Equity earnings $ 16.5 2.9 $ 51.0 15.6
Segment income $ 206.6 42.5 $ 351.6 137.1
EMEA
Leasing $ 74.0 46.7 $ 128.4 94.8
Capital Markets 99.4 50.0 173.6 123.2
Property & Facility Management 361.9 320.5 706.0 695.5
Project & Development Services 204.8 164.3 388.5 367.5
Advisory, Consulting and Other 69.7 44.7 129.5 101.1
Revenue $ 809.8 626.2 $ 1,526.0 1,382.1
Depreciation and amortization $ 11.0 9.0 $ 21.9 18.2
Equity earnings $ — — $ — —
Segment income (loss) $ 0.3 ( 33.4 ) $ ( 35.5 ) ( 53.9 )
Asia Pacific
Leasing $ 52.7 33.8 $ 84.1 59.2
Capital Markets 53.0 24.0 82.3 45.7
Property & Facility Management 587.5 515.2 1,162.6 1,047.2
Project & Development Services 109.9 97.2 208.2 192.0
Advisory, Consulting and Other 64.8 45.1 116.5 83.3
Revenue $ 867.9 715.3 $ 1,653.7 1,427.4
Depreciation and amortization $ 7.6 7.0 $ 14.9 13.6
Equity earnings (losses) $ 1.0 0.5 $ 2.0 ( 0.2 )
Segment income $ 36.5 19.2 $ 54.3 21.6
LaSalle
Advisory fees $ 89.6 80.9 $ 173.1 166.5
Transaction fees & other 11.0 4.8 18.7 18.4
Incentive fees 15.2 14.2 15.2 19.9
Revenue $ 115.8 99.9 $ 207.0 204.8
Depreciation and amortization $ 1.6 1.8 $ 3.3 3.6
Equity earnings (losses) $ 23.3 11.3 $ 36.3 ( 29.0 )
Segment income (loss) $ 39.8 25.4 $ 59.2 ( 0.7 )
11
Table of Contents
The following table is a reconciliation of Segment income to consolidated Operating income.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Segment income - Americas $ 206.6 42.5 $ 351.6 137.1
Segment income (loss) - EMEA 0.3 ( 33.4 ) ( 35.5 ) ( 53.9 )
Segment income - APAC 36.5 19.2 54.3 21.6
Segment income (loss) - LaSalle 39.8 25.4 59.2 ( 0.7 )
Less: Equity (earnings) losses ( 40.8 ) ( 14.7 ) ( 89.3 ) 13.6
Add: Restructuring and acquisition charges ( 18.1 ) ( 28.2 ) ( 35.3 ) ( 42.3 )
Operating income $ 224.3 10.8 $ 305.0 75.4
5. BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
2021 Business Combinations Activity
During the six months ended June 30, 2021, there were no strategic acquisitions and we paid $ 78.4 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.
2020 Business Combinations Activity
During the year ended December 31, 2020 we completed no new acquisitions.
Earn-Out Payments
($ in millions) June 30, 2021 December 31, 2020
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria 22 35
Maximum earn-out payments (undiscounted) $ 106.7 $ 199.2
Short-term earn-out liabilities (fair value) (1)
13.4 77.2
Long-term earn-out liabilities (fair value) (1)
4.6 8.5
(1) Included in Short-term and Long-term acquisition-related obligations on the Condensed Consolidated Balance Sheets.
Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next five years. Refer to Note 8, Fair Value Measurements, and Note 11, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.
Goodwill and Other Intangible Assets
Goodwill and unamortized intangibles as of June 30, 2021 consisted of: (1) goodwill of $ 4,205.1 million, (2) identifiable intangibles of $ 620.0 million amortized over their remaining finite useful lives, and (3) $ 52.5 million of identifiable intangibles with indefinite useful lives that are not amortized. Notable portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates.
12
Table of Contents
The following tables detail, by reporting segment, movements in goodwill.
Real Estate Services
(in millions) Americas EMEA Asia Pacific LaSalle Consolidated
Balance as of December 31, 2020 $ 2,878.0 959.7 329.2 57.8 $ 4,224.7
Dispositions ( 11.0 ) ( 0.7 ) — — ( 11.7 )
Impact of exchange rate movements 1.0 ( 4.5 ) ( 4.4 ) — ( 7.9 )
Balance as of June 30, 2021 $ 2,868.0 954.5 324.8 57.8 $ 4,205.1
Real Estate Services
(in millions) Americas EMEA Asia Pacific LaSalle Consolidated
Balance as of December 31, 2019 $ 2,877.6 915.9 317.6 57.1 $ 4,168.2
Dispositions — ( 0.7 ) — — ( 0.7 )
Impact of exchange rate movements ( 1.7 ) ( 41.4 ) ( 2.5 ) ( 1.0 ) ( 46.6 )
Balance as of June 30, 2020 $ 2,875.9 873.8 315.1 56.1 $ 4,120.9
The following tables detail, by reporting segment, movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.
MSRs Other Intangibles
(in millions) Americas Americas EMEA Asia Pacific LaSalle Consolidated
Gross Carrying Amount
Balance as of December 31, 2020 $ 572.1 265.8 55.7 23.6 57.9 $ 975.1
Additions, net of adjustments (1)
61.9 — 3.8 — — 65.7
Adjustment for fully amortized intangibles ( 17.2 ) ( 9.0 ) ( 16.1 ) ( 3.7 ) — ( 46.0 )
Impact of exchange rate movements — — 0.3 ( 0.5 ) ( 1.4 ) ( 1.6 )
Balance as of June 30, 2021 $ 616.8 256.8 43.7 19.4 56.5 $ 993.2
Accumulated Amortization
Balance as of December 31, 2020 $ ( 147.8 ) ( 94.1 ) ( 39.5 ) ( 8.6 ) ( 5.3 ) $ ( 295.3 )
Amortization, net (2)
( 44.9 ) ( 20.7 ) ( 4.0 ) ( 0.7 ) ( 0.9 ) ( 71.2 )
Adjustment for fully amortized intangibles 17.2 9.0 16.1 3.7 — 46.0
Impact of exchange rate movements — ( 0.1 ) ( 0.2 ) 0.1 — ( 0.2 )
Balance as of June 30, 2021 $ ( 175.5 ) ( 105.9 ) ( 27.6 ) ( 5.5 ) ( 6.2 ) $ ( 320.7 )
Net book value as of June 30, 2021 $ 441.3 150.9 16.1 13.9 50.3 $ 672.5
(1) Included in this amount for MSRs was $ 7.6 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights.
(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income.
13
Table of Contents
MSRs Other Intangibles
(in millions) Americas Americas EMEA Asia Pacific LaSalle Consolidated
Gross Carrying Amount
Balance as of December 31, 2019 $ 480.4 285.7 55.9 21.4 54.0 $ 897.4
Additions, net of adjustments (1)
43.0 — — 0.5 — 43.5
Adjustment for fully amortized intangibles ( 20.0 ) ( 6.2 ) ( 0.5 ) — — ( 26.7 )
Impact of exchange rate movements — ( 0.4 ) ( 3.5 ) ( 0.4 ) ( 0.1 ) ( 4.4 )
Balance as of June 30, 2020 $ 503.4 279.1 51.9 21.5 53.9 $ 909.8
Accumulated Amortization
Balance as of December 31, 2019 $ ( 104.0 ) ( 68.3 ) ( 33.1 ) ( 6.7 ) ( 2.7 ) $ ( 214.8 )
Amortization, net (2)
( 42.5 ) ( 23.4 ) ( 3.5 ) ( 0.7 ) ( 1.3 ) ( 71.4 )
Adjustment for fully amortized intangibles 20.0 6.2 0.5 — — 26.7
Impact of exchange rate movements — 0.3 2.2 0.1 — 2.6
Balance as of June 30, 2020 $ ( 126.5 ) ( 85.2 ) ( 33.9 ) ( 7.3 ) ( 4.0 ) $ ( 256.9 )
Net book value as of June 30, 2020 $ 376.9 193.9 18.0 14.2 49.9 $ 652.9
(1) Included in this amount for MSRs was (i) $ 9.3 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights and (ii) $ 2.8 million relating to an impairment valuation allowance, recognized during the three months ended June 30, 2020.
(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income .
6. INVESTMENTS IN REAL ESTATE VENTURES
As of June 30, 2021 and December 31, 2020, we had Investments in real estate ventures of $ 614.0 million and $ 430.8 million, respectively.
Approximately 90% of our investments, as of June 30, 2021, are primarily (i) direct investments in 50 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement and (ii) investments by JLL Technologies in early-stage proptech companies. The remaining 10% of our Investments in real estate ventures, as of June 30, 2021, were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, generally, in certain real estate ventures that own and operate real estate. Of our investments attributable to investment vehicles, the majority was invested in LaSalle Investment Company II ("LIC II"), in which we held an effective ownership interest of 48.78 %.
We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 315.5 million as of June 30, 2021. Of this amount, while we remain contractually obligated, we do not expect a call on the $ 60.4 million relating to our investment in LIC II as its fund life terminated in January 2020.
We evaluate our less-than-wholly-owned investments to determine whether the underlying entities are classified as variable interest entities ("VIEs"); we assess each identified VIE to determine whether we are the primary beneficiary. We have determined that we are the primary beneficiary of certain VIEs and accordingly, we have consolidated such entities. The assets of the consolidated VIEs are available only for the settlement of the obligations of the respective entities and the mortgage loans of the consolidated VIEs are non-recourse to JLL.
14
Table of Contents
Summarized financial information for our consolidated VIEs is presented in the following tables.
(in millions) June 30, 2021 December 31, 2020
Property and equipment, net $ 157.8 117.4
Investments in real estate ventures 9.3 9.0
Other assets 12.7 21.0
Total assets $ 179.8 147.4
Other current liabilities $ 2.0 1.9
Mortgage indebtedness (included in Other liabilities) 91.4 60.3
Total liabilities 93.4 62.2
Members' equity (included in Noncontrolling interest) 86.4 85.2
Total liabilities and members' equity $ 179.8 147.4
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Revenue $ 2.9 2.9 $ 5.5 7.2
Operating and other expenses ( 3.5 ) ( 3.9 ) ( 6.7 ) ( 8.2 )
Net gains on sale of investments (1)
— — — 12.2
Net (loss) income $ ( 0.6 ) ( 1.0 ) $ ( 1.2 ) 11.2
(1) The 2020 gain was included in Equity earnings.
We allocate the members' equity and net income of the consolidated VIEs to the noncontrolling interest holders as Noncontrolling interest on our Condensed Consolidated Balance Sheets and as Net income attributable to noncontrolling interest in our Condensed Consolidated Statements of Comprehensive Income, respectively.
Impairment
There were no significant other-than-temporary impairment charges on Investments in real estate ventures for the six months ended June 30, 2021 and 2020.
Fair Value
We report a majority of our investments in real estate ventures at fair value. For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity earnings. The table below shows the movement in our investments in real estate ventures reported at fair value.
(in millions) 2021 2020
Fair value investments as of January 1, $ 340.3 328.6
Investments 98.6 29.8
Distributions ( 15.9 ) ( 29.6 )
Change in fair value, net 85.1 ( 21.4 )
Foreign currency translation adjustments, net ( 3.1 ) ( 3.3 )
Fair value investments as of June 30, $ 505.0 304.1
See Note 8, Fair Value Measurements, for additional discussion of our investments in real estate ventures reported at fair value.
15
Table of Contents
7. STOCK-BASED COMPENSATION
Stock Unit Awards
Restricted stock unit ("RSU") and performance stock unit ("PSU") awards activity is presented in the following tables.
RSU Shares
(in 000's) PSU Shares
(in 000's) Total Shares
(in 000's) Weighted Average
Grant Date
Fair Value Weighted Average
Remaining
Contractual Life
(in years)
Unvested as of March 31, 2021 940.3 439.1 1,379.4 $ 134.84 1.70
Granted 200.5 107.2 307.7 186.21
Vested ( 10.7 ) — ( 10.7 ) 142.07
Forfeited ( 12.0 ) ( 1.1 ) ( 13.1 ) 123.85
Unvested as of June 30, 2021 1,118.1 545.2 1,663.3 $ 144.01 1.92
Unvested as of March 31, 2020 1,208.9 286.8 1,495.7 $ 144.71 1.78
Granted 152.3 272.0 424.3 113.67
Vested ( 10.2 ) — ( 10.2 ) 118.91
Forfeited ( 7.8 ) — ( 7.8 ) 143.09
Unvested as of June 30, 2020 1,343.2 558.8 1,902.0 $ 137.93 2.01
RSU Shares
(in 000's) PSU Shares
(in 000's) Total Shares
(in 000's) Weighted Average
Grant Date
Fair Value Weighted Average
Remaining
Contractual Life
(in years)
Unvested as of December 31, 2020 1,096.2 531.5 1,627.7 $ 137.42 1.69
Granted 257.1 107.2 364.3 179.95
Vested ( 218.1 ) ( 79.0 ) ( 297.1 ) 150.45
Forfeited ( 17.1 ) ( 14.5 ) ( 31.6 ) 138.47
Unvested as of June 30, 2021 1,118.1 545.2 1,663.3 $ 144.01 1.92
Unvested as of December 31, 2019 1,532.3 286.8 1,819.1 $ 141.51 2.39
Granted 162.0 272.0 434.0 118.66
Vested ( 334.8 ) — ( 334.8 ) 136.36
Forfeited ( 16.3 ) — ( 16.3 ) 140.22
Unvested as of June 30, 2020 1,343.2 558.8 1,902.0 $ 137.93 2.01
As of June 30, 2021, we had $ 104.0 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2026; $ 16.7 million relates to the awards issued in conjunction with the HFF acquisition.
8. FAIR VALUE MEASUREMENTS
We measure certain assets and liabilities in accordance with ASC 820, Fair Value Measurements and Disclosures , which defines fair value as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants on the measurement date. In addition, it establishes a framework for measuring fair value according to the following three-tier fair value hierarchy:
• Level 1 - Quoted prices for identical assets or liabilities in active markets accessible as of the measurement date;
• Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
• Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
16
Table of Contents
Financial Instruments
Our financial instruments include Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, Warehouse receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, Short-term borrowings, contract liabilities, Warehouse facilities, Credit facility, Long-term debt, and foreign currency forward contracts. The carrying amounts of Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, contract liabilities, and the Warehouse facilities approximate their estimated fair values due to the short-term nature of these instruments. The carrying values of our Credit facility and Short-term borrowings approximate their estimated fair values given the variable interest rate terms and market spreads.
We estimated the fair value of our Long-term debt as $ 706.0 million and $ 723.7 million as of June 30, 2021 and December 31, 2020, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy. The carrying value of our Long-term debt was $ 687.9 million and $ 702.0 million as of June 30, 2021 and December 31, 2020, respectively, and included debt issuance costs of $ 2.1 million and $ 2.5 million, respectively.
Investments in Real Estate Ventures at Fair Value - Net Asset Value ("NAV")
We report a significant portion of our investments in real estate ventures at fair value. For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity earnings.
For the majority of our investments reported at fair value, we estimate the fair value using the NAV per share (or its equivalent) our investees provide. Critical inputs to NAV estimates included valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates, and asset-specific market borrowing rates. In instances where the reported NAV per share did not fully incorporate the COVID-19 pandemic’s impact on the fair value of underlying investments, we recognized an adjustment to decrease the reported NAV. As of June 30, 2021, there were no such adjustments compared with adjustments of $22.8 million as of December 31, 2020. We did not consider any adjustments to NAV estimates provided by investees, including adjustments for any restrictions to the transferability of ownership interests embedded within investment agreements to which we are a party, to be necessary based upon (i) our understanding of the methodology utilized and inputs incorporated to estimate NAV at the investee level, (ii) consideration of market demand for the specific types of real estate assets held by each venture and (iii) contemplation of real estate and capital markets conditions in the localities in which these ventures operate. As of June 30, 2021 and December 31, 2020, investments in real estate ventures at fair value using NAV were $ 234.8 million and $ 203.8 million, respectively. As these investments are not required to be classified in the fair value hierarchy, they have been excluded from the following table.
17
Table of Contents
Recurring Fair Value Measurements
The following table categorizes by level in the fair value hierarchy the estimated fair value of our assets and liabilities measured at fair value on a recurring basis.
June 30, 2021 December 31, 2020
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Investments in real estate ventures - fair value $ 88.6 — 181.6 77.2 — 59.3
Foreign currency forward contracts receivable — 8.7 — — 13.1 —
Warehouse receivables — 741.7 — — 1,529.2 —
Deferred compensation plan assets — 503.5 — — 446.3 —
Mortgage banking derivative assets — — 57.6 — — 87.1
Total assets at fair value $ 88.6 1,253.9 239.2 77.2 1,988.6 146.4
Liabilities
Foreign currency forward contracts payable $ — 17.3 — — 3.4 —
Deferred compensation plan liabilities — 475.4 — — 427.6 —
Earn-out liabilities — — 18.0 — — 85.7
Mortgage banking derivative liabilities — — 45.0 — — 73.4
Total liabilities at fair value $ — 492.7 63.0 — 431.0 159.1
Investments in Real Estate Ventures
We classify two investments as Level 1 in the fair value hierarchy as quoted prices are readily available. We increase or decrease our investment each reporting period by the change in the fair value of the investment. We report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity earnings.
Investments classified as Level 3 in the fair value hierarchy represent investments in early-stage non-public entities where we elected the fair value option. The carrying value was deemed to approximate fair value for the majority of these investments due to the proximity of the investment date or date of most recent financing raise to the balance sheet date as well as consideration of investee-level performance updates. To the extent there are changes in fair value, a result of pricing in subsequent funding rounds or changes in business strategy, for example, we recognize such changes through Equity earnings.
Foreign Currency Forward Contracts
We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to intercompany lending and cash management practices. We determine the fair values of these contracts based on current market rates. The inputs for these valuations are Level 2 inputs in the fair value hierarchy. As of June 30, 2021 and December 31, 2020, these contracts had a gross notional value of $ 2.15 billion ($ 1.17 billion on a net basis) and $ 2.34 billion ($ 1.42 billion on a net basis), respectively.
We record the asset and liability positions for our foreign currency forward contracts based on the net payable or net receivable position with the financial institutions from which we purchase these contracts. The $ 8.7 million asset as of June 30, 2021, was composed of gross contracts with receivable positions of $ 11.1 million and payable positions of $ 2.4 million. The $ 17.3 million liability as of June 30, 2021, was composed of gross contracts with receivable positions of $ 1.0 million and payable positions of $ 18.3 million. As of December 31, 2020, the $ 13.1 million asset was composed of gross contracts with receivable positions of $ 13.5 million and payable positions of $ 0.4 million. The $ 3.4 million liability as of December 31, 2020, was composed of gross contracts with receivable positions of $ 2.7 million and payable positions of $ 6.1 million.
18
Table of Contents
Warehouse Receivables
As of June 30, 2021 and December 31, 2020, all of our Warehouse receivables were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S. government or GSE mortgage-backed security program.
Deferred Compensation Plan
We maintain a deferred compensation plan for certain of our U.S. employees that allows them to defer portions of their compensation. We recorded this plan on our Condensed Consolidated Balance Sheet as of June 30, 2021, as Deferred compensation plan assets of $ 503.5 million, long-term deferred compensation plan liabilities of $ 475.4 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.3 million. We recorded this plan on our Condensed Consolidated Balance Sheet as of December 31, 2020, as Deferred compensation plan assets of $ 446.3 million, long-term deferred compensation plan liabilities of $ 427.6 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.6 million.
Earn-Out Liabilities
We classify our earn-out liabilities within Level 3 in the fair value hierarchy because the inputs we use to develop the estimated fair value include unobservable inputs. See Note 5, Business Combinations, Goodwill and Other Intangible Assets, for additional discussion of our earn-out liabilities.
Mortgage Banking Derivatives
Both our interest rate lock commitments to prospective borrowers and forward sale contracts with prospective investors are undesignated derivatives and considered Level 3 valuations due to significant unobservable inputs related to counterparty credit risk. An increase in counterparty credit risk assumptions would result in a lower fair value measurement.
The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Balance as of March 31, 2021 Net change in fair value Foreign CTA (1)
Purchases / Additions Settlements Level transfer out (2)
Balance as of June 30, 2021
Investments in real estate ventures $ 140.1 6.3 — 37.1 — ( 1.9 ) $ 181.6
Mortgage banking derivative assets and liabilities, net 32.9 ( 7.6 ) — 29.6 ( 42.3 ) — 12.6
Earn-out liabilities 68.2 1.1 — — ( 51.3 ) — 18.0
Balance as of March 31, 2020 Net change in fair value Foreign CTA (1)
Purchases / Additions Settlements Balance as of
June 30, 2020
Investments in real estate ventures $ 41.4 2.5 — 0.4 — $ 44.3
Mortgage banking derivative assets and liabilities, net ( 64.0 ) ( 15.4 ) — 38.4 35.5 ( 5.5 )
Earn-out liabilities 130.0 0.6 1.1 — ( 33.9 ) 97.8
19
Table of Contents
(in millions) Balance as of December 31, 2020 Net change in fair value Foreign CTA (1)
Purchases / Additions Settlements Level transfer out (2)
Balance as of June 30, 2021
Investments in real estate ventures $ 59.3 38.1 — 86.2 ( 0.1 ) ( 1.9 ) $ 181.6
Mortgage banking derivative assets and liabilities, net 13.7 11.3 — 70.7 ( 83.1 ) — 12.6
Earn-out liabilities 85.7 1.0 ( 0.3 ) 3.8 ( 72.2 ) — 18.0
(in millions) Balance as of December 31, 2019 Net change in fair value Foreign CTA (1)
Purchases / Additions Settlements Balance as of
June 30, 2020
Investments in real estate ventures $ 34.4 2.5 — 7.4 — $ 44.3
Mortgage banking derivative assets and liabilities, net 10.2 ( 90.6 ) — 64.7 10.2 ( 5.5 )
Earn-out liabilities 148.5 ( 7.6 ) ( 0.9 ) — ( 42.2 ) 97.8
(1) CTA: Currency translation adjustments
(2) In May 2021, an investment previously treated as a Level 3 investment became publicly traded on the NYSE and was considered a Level 1 investment immediately.
Net change in fair value, included in the tables above, is reported in Net income as follows.
Category of Assets/Liabilities using Unobservable Inputs Condensed Consolidated Statements
of Comprehensive Income Account Caption
Earn-out liabilities (Short-term and Long-term) Restructuring and acquisition charges
Investments in real estate ventures Equity earnings
Other current assets - Mortgage banking derivative assets Revenue before reimbursements
Other current liabilities - Mortgage banking derivative liabilities Revenue before reimbursements
Non-Recurring Fair Value Measurements
We review our investments in real estate ventures, except those investments otherwise reported at fair value, on a quarterly basis, or as otherwise deemed necessary, for indications of whether we may be unable to recover the carrying value of our investments and whether such investments are other-than-temporarily impaired. When the carrying amount of the investment is in excess of the estimated future undiscounted cash flows, we use a discounted cash flow approach or other acceptable method to determine the fair value of the investment in computing the amount of the impairment. Our determination of fair value primarily relies on Level 3 inputs. We did not recognize any significant investment-level impairment losses during either of the six months ended June 30, 2021 or 2020. See Note 6, Investments in Real Estate Ventures, for additional information, including information related to impairment charges recorded at the investee level.
20
Table of Contents
9. DEBT
Short-term borrowings and long-term debt obligations are composed of the following.
($ in millions) June 30, 2021 December 31, 2020
Short-term borrowings:
Local overdraft facilities $ 8.0 12.0
Other short-term borrowings 94.5 50.0
Total short-term borrowings $ 102.5 62.0
Credit facility, net of debt issuance costs of $ 13.3 and $ 8.7
336.7 ( 8.7 )
Long-term senior notes, 4.4 %, face amount of $ 275.0 , due November 2022, net of debt issuance costs of $ 0.4 and $ 0.8
274.6 274.2
Long-term senior notes, 1.96 %, face amount of € 175.0 , due June 2027, net of debt issuance costs of $ 0.8 and $ 0.8
206.7 213.9
Long-term senior notes, 2.21 %, face amount of € 175.0 , due June 2029, net of debt issuance costs of $ 0.9 and $ 0.9
206.6 213.9
Total debt $ 1,127.1 755.3
Credit Facility
On April 14, 2021, we amended our $ 2.75 billion unsecured revolving credit facility (the "Facility"), which extended the maturity date from May 17, 2023 to April 14, 2026. Pricing on the Facility ranges from LIBOR plus 0.875% to 1.35% , with pricing as of June 30, 2021, at LIBOR plus 0.95 %. In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.7 million as of both June 30, 2021 and December 31, 2020.
The following tables provides additional information on our Facility.
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2021 2020 2021 2020
Average outstanding borrowings under the Facility $ 612.5 1,351.5 $ 399.6 1,143.4
Effective interest rate on the Facility 1.0 % 1.4 % 1.0 % 1.8 %
We will continue to use the Facility for, but not limited to, business acquisitions, working capital needs (including payment of accrued incentive compensation), co-investment activities, share repurchases and capital expenditures.
Short-Term Borrowings and Long-Term Debt
In addition to our Facility, we have the capacity to borrow up to an additional $ 64.9 million under local overdraft facilities. Amounts outstanding are presented in the debt table above.
As of June 30, 2021, our issuer and senior unsecured ratings are investment grade: Baa1 from Moody’s Investors Service, Inc. and BBB+ from Standard & Poor’s Ratings Services.
Covenants
Our Facility and senior notes are subject to customary financial and other covenants, including cash interest coverage ratios and leverage ratios, as well as event of default conditions. We remained in compliance with all covenants as of June 30, 2021.
21
Table of Contents
Warehouse Facilities
June 30, 2021 December 31, 2020
($ in millions) Outstanding Balance Maximum Capacity Outstanding Balance Maximum Capacity
Warehouse Facilities:
LIBOR plus 1.30% , expires September 20, 2021 (1)
$ 83.4 700.0 144.4 400.0
LIBOR plus 1.30% , expires September 18, 2021 (2)
463.9 1,200.0 768.9 1,600.0
LIBOR plus 1.30% , expires August 27, 2021 (3)
151.1 200.0 195.9 900.0
Fannie Mae ASAP (4) program, SOFR plus 1.25% (5)
16.0 n/a 128.8 n/a
LIBOR plus 1.50%
— — 261.6 300.0
Gross warehouse facilities 714.4 2,100.0 1,499.6 3,200.0
Debt issuance costs ( 0.3 ) n/a ( 1.2 ) n/a
Total warehouse facilities $ 714.1 2,100.0 1,498.4 3,200.0
(1) In the second quarter of 2021, JLL increased the maximum capacity of the Warehouse facility with a decrease to the interest rate, previously, the facility had an interest rate of LIBOR plus 1.40% and a maximum capacity of $400.0 million.
(2) In the second quarter of 2021, JLL amended the Warehouse facility with a decrease to the interest rate, previously, the facility had an interest rate of LIBOR plus 1.40%. The temporary maximum capacity increase to $1,600.0 million expired on January 31, 2021; thereafter, the maximum capacity reverted to its original contractual amount.
(3) In the second quarter of 2021, JLL amended the Warehouse facility with a decrease to the interest rate, previously, the facility had an interest rate of LIBOR plus 1.40%. The temporary maximum capacity increase to $900.0 million expired on January 6, 2021; thereafter, the maximum capacity reverted to its original contractual amount.
(4) As Soon As Pooled ("ASAP") funding program.
(5) JLL amended the Fannie Mae ASAP program interest rate to Secured Overnight Financing Rate ("SOFR") plus 1.25%, previously, the facility had an interest rate of LIBOR plus 1.15%.
We have lines of credit established for the sole purpose of funding our Warehouse receivables. These lines of credit exist with financial institutions and are secured by the related warehouse receivables. Pursuant to these warehouse facilities, we are required to comply with certain financial covenants regarding (i) minimum net worth, (ii) minimum servicing-related loans and (iii) minimum adjusted leverage ratios. We remained in compliance with all covenants under our Warehouse facilities as of June 30, 2021.
22
Table of Contents
10. COMMITMENTS AND CONTINGENCIES
We are a defendant in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount.
Professional Indemnity Insurance
When a potential loss event occurs, we estimate the ultimate cost of the claim and accrue the amount in Other current and long-term liabilities on our Condensed Consolidated Balance Sheets when probable and estimable. In addition, we have established receivables from third-party insurance providers for claim amounts in excess of the risk retained by our captive insurance company. In total, these receivables were $ 2.5 million and $ 44.0 million as of June 30, 2021 and December 31, 2020, respectively, and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.
The following table shows the professional indemnity accrual activity and related payments.
(in millions)
December 31, 2020 $ 48.2
New claims 1.3
Prior year claims adjustments (including foreign currency changes) ( 30.7 )
Claims paid ( 11.9 )
June 30, 2021 $ 6.9
December 31, 2019 $ 38.1
New claims 0.7
Prior year claims adjustments (including foreign currency changes) ( 0.7 )
Claims paid —
June 30, 2020 $ 38.1
Delegated Underwriting and Servicing (" DUS") Program Loan Loss-Sharing
As a participant in the DUS program, we retain a portion of the risk of loss for loans that are originated and sold under the DUS program. Net losses on defaulted loans are shared with Fannie Mae based upon established loss-sharing ratios. Generally, we share approximately one-third of incurred losses, subject to a cap of 20% of the principal balance of the mortgage at origination. As of June 30, 2021 and December 31, 2020, we had loans subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 13.2 billion and $ 12.2 billion, respectively.
For all DUS program loans with loss-sharing obligations, we record a non-contingent liability equal to the estimated fair value of the guarantee obligations undertaken upon sale of the loan, which reduces our gain on sale of the loan. Subsequently, this liability is amortized over the estimated life of the loan and recognized as Revenue on the Condensed Consolidated Statements of Comprehensive Income. As of June 30, 2021 and December 31, 2020, the loss-sharing guarantee obligations were $ 23.6 million and $ 22.1 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets. There were no loan losses incurred for the three and six months ended June 30, 2021 and 2020.
The loss-sharing aspect of the program represents an off-balance sheet credit exposure. We record a separate contingent reserve for this risk calculated on an individual loan level. As of June 30, 2021 and December 31, 2020, the loan loss guarantee reserve was $ 22.9 million and $ 36.7 million, respectively, and are included within Other liabilities on our Condensed Consolidated Balance Sheets.
23
Table of Contents
11. RESTRUCTURING AND ACQUISITION CHARGES
Restructuring and acquisition charges include cash and non-cash expenses. Cash-based charges primarily consist of (1) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership, or transformation of business processes, (2) acquisition, transaction and integration-related charges, and (3) other restructuring including lease exit charges. Non-cash charges include (1) stock-based compensation expense for retention awards issued in conjunction with the HFF acquisition and (2) fair value adjustments to earn-out liabilities relating to prior-period acquisition activity. Restructuring and acquisition charges are presented in table below.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Severance and other employment-related charges $ ( 0.9 ) 7.0 $ 0.9 8.3
Restructuring, pre-acquisition and post-acquisition charges 11.9 7.6 21.4 17.4
Stock-based compensation expense for HFF retention awards 6.0 13.0 12.0 24.2
Fair value adjustments to earn-out liabilities 1.1 0.6 1.0 ( 7.6 )
Restructuring and acquisition charges $ 18.1 28.2 $ 35.3 42.3
The following tables show the accrual activity and payments relating to cash-based Restructuring and acquisition charges.
(in millions) Severance & Employment-Related Lease
Exit Restructuring, Acquisition and
Integration Costs Total
December 31, 2020 $ 41.3 2.5 1.2 $ 45.0
Accruals 0.9 4.9 16.5 22.3
Payments made ( 26.4 ) ( 6.4 ) ( 15.8 ) ( 48.6 )
June 30, 2021 $ 15.8 1.0 1.9 $ 18.7
(in millions) Severance & Employment-Related Lease
Exit Other Restructuring,
Acquisition and Integration Costs Total
December 31, 2019 $ 24.3 8.4 3.8 $ 36.5
Accruals 8.3 6.7 10.7 25.7
Payments made ( 16.0 ) ( 13.5 ) ( 14.0 ) ( 43.5 )
June 30, 2020 $ 16.6 1.6 0.5 $ 18.7
We expect the majority of accrued severance and other accrued acquisition costs as of June 30, 2021 will be paid during the next twelve months. Lease exit payments depend on the terms of various leases, which extend as far out as 2026.
HFF Acquisition
Included in Restructuring and acquisition charges were $ 12.4 million and $ 23.9 million, respectively, for the three and six months ended June 30, 2021 compared to $ 20.1 million and $ 41.4 million, respectively, for the three and six months ended June 30, 2020 of charges relating to the acquisition and integration of HFF (including retention and severance expense, early lease termination costs, and other integration expenses).
24
Table of Contents
12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT
The tables below present the changes in Accumulated other comprehensive income (loss) ("AOCI") by component.
(in millions) Pension and postretirement benefit Cumulative foreign currency translation adjustment Total
Balance as of March 31, 2021 $ ( 81.4 ) ( 302.2 ) $ ( 383.6 )
Other comprehensive loss before reclassification — ( 0.2 ) ( 0.2 )
Amounts reclassified from AOCI after tax expense of
$ - , $ - and $ - 0.7 — 0.7
Other comprehensive loss after tax expense of $ - , $ - and $ - 0.7 ( 0.2 ) 0.5
Balance as of June 30, 2021 $ ( 80.7 ) ( 302.4 ) $ ( 383.1 )
(in millions) Pension and postretirement benefit Cumulative foreign currency translation adjustment Total
Balance as of March 31, 2020 $ ( 72.0 ) ( 499.2 ) $ ( 571.2 )
Other comprehensive loss before reclassification — 33.8 33.8
Amounts reclassified from AOCI after tax expense of
$ - , $ - and $ - — — —
Other comprehensive loss after tax expense of $ - , $ - and $ - — 33.8 33.8
Balance as of June 30, 2020 $ ( 72.0 ) ( 465.4 ) $ ( 537.4 )
(in millions) Pension and postretirement benefit Cumulative foreign currency translation adjustment Total
Balance as of December 31, 2020 $ ( 81.2 ) ( 296.0 ) $ ( 377.2 )
Other comprehensive loss before reclassification — ( 6.4 ) ( 6.4 )
Amounts reclassified from AOCI after tax expense of
$ - , $ - and $ - 0.5 — 0.5
Other comprehensive loss after tax expense of $ - , $ - and $ - 0.5 ( 6.4 ) ( 5.9 )
Balance as of June 30, 2021 $ ( 80.7 ) ( 302.4 ) $ ( 383.1 )
(in millions) Pension and postretirement benefit Cumulative foreign currency translation adjustment Total
Balance as of December 31, 2019 $ ( 72.0 ) ( 355.8 ) $ ( 427.8 )
Other comprehensive income before reclassification — ( 109.6 ) ( 109.6 )
Amounts reclassified from AOCI after tax expense of
$ - , $ - and $ - — — —
Other comprehensive (loss) income after tax expense of $ - , $ - and $ - — ( 109.6 ) ( 109.6 )
Balance as of June 30, 2020 $ ( 72.0 ) ( 465.4 ) $ ( 537.4 )
For pension and postretirement benefits, we report amounts reclassified from AOCI relating to employer service cost in Compensation and benefits within the Condensed Consolidated Statements of Comprehensive Income. All other reclassifications relating to pension and postretirement benefits are reported within Other income.
25
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.