What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-04 compared with 2022-11-02 · 159 added, 296 removed, 263 unchanged (63% 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 and nine months ended September 30, 2022, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2021, which are included in our 2021 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 months ended March 31, 2023, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2022, which are included in our 2022 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, 2022.

There have been no material changes to these critical accounting policies and estimates during the nine months ended September 30, 2022.

There have been no material changes to these critical accounting policies and estimates during the three months ended March 31, 2023.

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 early 2021, macroeconomic conditions influenced by the COVID-19 pandemic more notably impacted our operations compared with the current year.

Acquisitions and Dispositions

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Equity Earnings and Incentive Fees

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.

Equity earnings may vary substantially from period to period for a variety of reasons, including as a result of (i) valuation increases (decreases) on investments reported at fair value, (ii) gains (losses) on asset dispositions and (iii) impairment charges.

The timing of recognition of these items may impact comparability between quarters, in any one year, or compared to a prior year.

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Transaction-based fees, which are impacted by the size and timing of our clients' transactions, from real estate investment banking, capital markets activities and other services within our segments, 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 quarterly estimation can result in significant fluctuations in quarterly Compensation and benefits expense from period to period.

Consequently, the results for the periods ended September 30, 2022 and 2021 are not fully indicative of the results we expect to realize for the full fiscal year.

Consequently, the results for the periods ended March 31, 2023 and 2022 are not fully indicative of the results we expect to realize for the full fiscal year.

RESULTS OF OPERATIONS

In conjunction with our change in reporting segments, effective January 1, 2022, comparable period information has been recast to conform with current presentation.

• Assets under management data for LaSalle is reported on a one-quarter lag.

Middle East & North Africa

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

Europe, Middle East and Africa

Consolidated Operating Results

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

($ in millions) 2022 2021 U.S.

Markets Advisory $ 1,111.5 1,079.9 31.6 3 % 6 %

Capital Markets 595.2 680.3 (85.1) (13) (8)

Work Dynamics 3,289.8 2,960.4 329.4 11 16

JLL Technologies 56.5 38.8 17.7 46 47

LaSalle 124.5 129.8 (5.3) (4) 5

Revenue $ 5,177.5 4,889.2 288.3 6 % 10 %

Gross contract costs (3,123.7) (2,810.5) (313.2) 11 16

Net non-cash MSR and mortgage banking derivative activity (5.2) (28.1) 22.9 (81) (81)

Fee revenue $ 2,048.6 2,050.6 (2.0) — % 4 %

Markets Advisory 847.9 837.0 10.9 1 4

Capital Markets 579.1 639.2 (60.1) (9) (5)

Work Dynamics 452.9 416.6 36.3 9 14

JLL Technologies 52.7 34.4 18.3 53 54

LaSalle 116.0 123.4 (7.4) (6) 3

Compensation and benefits, excluding gross contract costs $ 1,472.4 1,446.1 26.3 2 % 7 %

Operating, administrative and other expenses, excluding gross contract costs 302.1 271.3 30.8 11 17

Depreciation and amortization 55.7 52.8 2.9 5 11

Restructuring and acquisition charges 21.0 15.6 5.4 35 45

Total fee-based operating expenses 1,851.2 1,785.8 65.4 4 9

Gross contract costs 3,123.7 2,810.5 313.2 11 16

Total operating expenses $ 4,974.9 4,596.3 378.6 8 % 13 %

Operating income $ 202.6 292.9 (90.3) (31) % (30) %

Equity earnings $ 0.5 17.4 (16.9) (97) % (97) %

Adjusted EBITDA $ 276.2 352.0 (75.8) (22) % (19) %

Consolidated Operating Results (continued)

Nine Months Ended September 30, Change in % Change in Local Currency

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

($ in millions) 2023 2022 U.S.

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Operating income $ 17.8 175.7 (157.9) (90) % (93) %

Equity earnings $ 72.6 106.7 (34.1) (32) % (32) %

Equity (losses) earnings $ (2.6) 18.5 (21.1) (114) % (115) %

Adjusted EBITDA $ 109.0 273.6 (164.6) (60) % (61) %

Net (loss) income margin attributable to common shareholders (USD basis) (0.2) % 3.0 % (320) bps n/a

Adjusted EBITDA margin (local currency basis) 6.6 % 14.4 % (750) bps (780) bps

Adjusted EBITDA margin (USD basis) 6.9 %

Non-GAAP Financial Measures

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• Fee revenue and Fee-based operating expenses;

• Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") and Adjusted EBITDA margin;

• Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") and Adjusted EBITDA margin (measured on fee revenue);

• Percentage changes against prior periods, presented on a local currency basis.

However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S.

generally accepted accounting principles (“GAAP”).

Any measure that eliminates components of a company’s capital structure, cost of operations or investment, or other results has limitations as a performance measure.

In light of these limitations, management also considers GAAP financial measures and does not rely solely on non-GAAP financial measures.

Because our non-GAAP financial measures are not calculated in accordance with GAAP, they may not be comparable to similarly titled measures used by other companies.

Adjustments to GAAP Financial Measures Used to Calculate non-GAAP Financial Measures

Any measure that eliminates components of a company’s capital structure, cost of operations or investments, or other results has limitations as a performance measure.

In light of these limitations, management also considers U.S.

GAAP financial measures and does not rely solely on non-GAAP financial measures.

Because our non-GAAP financial measures are not calculated in accordance with U.S.

GAAP, they may not be comparable to similarly titled measures used by other companies.

Adjustments to U.S.

GAAP Financial Measures Used to Calculate non-GAAP Financial Measures

Gross contract costs represent certain costs associated with client-dedicated employees and third-party vendors and subcontractors and are directly or indirectly reimbursed through the fees we receive.

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

In 2022, the $7.5 million net loss on disposition included $10.5 million of loss related to the disposition of our Russia business, partially offset by a $3.0 million gain related to a disposition within JLL Technologies, both during the second quarter.

In 2021, $12.0 million of the activity related to a business disposition within JLL Technologies during the first quarter and $0.4 million related to a sold business within Markets Advisory in the third quarter.

Interest on Employee Loans, Net of Forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven.

Certain employees (predominantly in Leasing and Capital Markets) receive cash payments structured as loans, with interest.

Employees earn forgiveness of the loan based on performance, generally calculated as a percentage of revenue production.

Such forgiven amounts are reflected in Compensation and benefits expense.

Given the interest accrued on these employee loans and subsequent forgiveness are non-cash and the amounts perfectly offset over the life of the loan, the activity is not indicative of core operating performance and is excluded from non-GAAP measures.

Reconciliation of Non-GAAP Financial Measures

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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Operating income $ 17.8 175.7

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), and (iii) the Adjusted EBITDA margin (measured on fee revenue and presented on a local currency basis).

Three Months Ended September 30, Nine Months Ended September 30,

Below is a reconciliation of Net (loss) income attributable to common shareholders to EBITDA and Adjusted EBITDA.

Three Months Ended March 31,

(in millions) 2023 2022

Net income attributable to common shareholders $ 140.2 237.2 $ 479.7 540.2

Net (loss) income attributable to common shareholders $ (9.2) 145.6

Interest expense, net of interest income 26.3 10.2

Provision for income taxes 42.3 65.3 155.4 148.4

Depreciation and amortization (a)

54.7 52.8 163.5 160.3

Income tax (benefit) provision (2.3) 40.3

Depreciation and amortization (1)

EBITDA $ 71.3 250.5

Restructuring and acquisition charges 35.7 19.5

Net (gain) loss on disposition — (0.4) 7.5 (12.4)

Net non-cash MSR and mortgage banking derivative activity 1.8 3.6

Interest on employee loans, net of forgiveness 0.2 —

Adjusted EBITDA $ 109.0 273.6

Net income margin attributable to common shareholders 2.7 % 4.9 % 3.1 % 4.0 %

Adjusted EBITDA margin 13.3 % 17.2 % 14.8 % 16.6 %

(a) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders.

(1) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders.

In discussing our operating results, we report Adjusted EBITDA margins and refer to percentage changes in local currency, unless otherwise noted.

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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 September 30, Nine Months Ended September 30,

($ in millions) 2022 % Change 2022 % Change

Three Months Ended March 31,

($ in millions) 2023 % Change

At current period exchange rates $ 4,715.5 (2) %

Impact of change in exchange rates 223.6 n/a 475.7 n/a

Impact of change in exchange rates 120.6 n/a

At comparative period exchange rates $ 4,836.1 1 %

At current period exchange rates $ 1,584.0 (17) %

Impact of change in exchange rates 90.6 n/a 190.2 n/a

Impact of change in exchange rates 40.8 n/a

At comparative period exchange rates $ 1,624.8 (15) %

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At current period exchange rates $ 17.8 (90) %

Impact of change in exchange rates 1.5 n/a 7.6 n/a

Impact of change in exchange rates (5.1) n/a

At comparative period exchange rates $ 12.7 (93) %

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At current period exchange rates $ 109.0 (60) %

Impact of change in exchange rates 8.6 n/a 18.3 n/a

Impact of change in exchange rates (2.5) n/a

At comparative period exchange rates $ 106.5 (61) %

For the third quarter, revenue and fee revenue were up 10% and 4%, respectively, compared with the prior-year quarter;

over 85% of the increase in fee revenue was organic.

Our annuity-based businesses continued to deliver solid fee revenue growth as Workplace Management, within Work Dynamics, grew 19% and Property Management, within Markets Advisory, grew 12%.

Transaction-based businesses, specifically Capital Markets and Leasing, within Markets Advisory, experienced challenges from the sharp increases in interest rates and swift changes in economic sentiment across the globe.

Continued growth in LaSalle advisory fees for the quarter was largely offset by lower incentive fees.

For the first nine months of 2022, we achieved strong revenue and fee revenue growth of 17% and 19%, respectively, compared with the prior year, substantially all of which was organic.

The year-to-date fee revenue growth was led by Markets Advisory, up $344.3 million or 19%, and Capital Markets, up $265.4 million or 21%.

Work Dynamics delivered solid fee revenue growth of 16%, led by our corporate outsourcing business, Workplace Management.

Higher advisory fees outpaced the drop in incentive fees to drive fee revenue up 13% for LaSalle.

The following highlights the proportion of consolidated top-line growth on a local currency basis, compared with the prior year, by business line segment ($ in millions).

For the first quarter, revenue was up 1% while fee revenue was down 15%, compared with the prior-year quarter.

Economic headwinds and continued interest rate uncertainty continued to adversely impact most of our transaction-based businesses, notably Investment Sales and Debt/Equity Advisory within Capital Markets as well as Leasing within Markets Advisory.

However, continued demand in Project Management, within Work Dynamics, drove its fee revenue growth of 24%.

Our annuity-based businesses continued to demonstrate resilience while delivering fee revenue growth for the quarter, as JLL Technologies grew 29%;

Property Management, within Markets Advisory, grew 12%;

LaSalle advisory fees grew 9%;

and Workplace Management, within Work Dynamics, grew 3%.

The following highlights revenue and fee revenue by segment, for the current and prior-year quarters ($ in millions).

Refer to segment operating results for further detail.

Our consolidated fee revenue was flat in U.S.

dollars (“USD”) and grew 4% in local currency for the third quarter of 2022, compared with 2021.

Year-to-date, consolidated fee revenue increased 16% in U.S.

dollars (“USD”) and 19% in local currency compared with last year.

The quarter-to-date and year-to-date spreads were driven by the strengthening of the U.S.

dollar against most major currencies, especially the British pound sterling, euro, Japanese yen and Australian dollar.

Our consolidated fee revenue declined 17% in U.S.

dollars (“USD”) and 15% in local currency for the first quarter of 2023, compared with 2022.

The quarter-to-date spreads were driven by the weakening of the U.S.

dollar against several major currencies, especially the British pound sterling, euro, Japanese yen, Australian dollar and Canadian dollar.

Operating Expenses

Consolidated operating expenses were $5.0 billion for the third quarter, up 13% from 2021, and $14.6 billion for the first nine months of 2022, up 18%, while consolidated fee-based operating expenses were $1.9 billion for the third quarter, up 9% from the prior-year quarter, and $5.5 billion for the first nine months, up 20%.

Third quarter increases in fee-based operating expenses were primarily attributable to our Markets Advisory and Work Dynamics segments, which drove 35% and 31% of the overall increase on a local currency basis for the quarter, respectively.

Year to date, Markets Advisory and Capital Markets were responsible for 37% and 32% of the overall increase, respectively.

Refer to the segment discussions for additional details.

For the third quarter and first nine months of 2022, Restructuring and acquisition charges increased compared with the prior-year period, primarily due to severance and other employment-related charges;

Consolidated operating expenses were $4.7 billion for the first quarter, up 4% from 2022, while consolidated fee-based operating expenses were $1.6 billion, down 6% from the prior-year quarter.

The decrease in fee-based operating expenses were attributable to our Capital Markets and Markets Advisory segments, partially offset by revenue-related expense growth in Work Dynamics.

For the first quarter, Restructuring and acquisition charges increased compared with the prior-year period, driven by incremental severance and other employment-related charges as a result of cost-out actions taken in the current quarter;

refer to following table for further detail.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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Restructuring, pre-acquisition and post-acquisition charges 10.0 16.9

Fair value adjustments that resulted in a net (decrease) increase to earn-out liabilities from prior-period acquisition activity (0.1) — 0.2 1.0

Fair value adjustments that resulted in a net decrease to earn-out liabilities from prior-period acquisition activity — (0.7)

Total restructuring and acquisition charges $ 35.7 19.5

Interest Expense

Interest expense, net of interest income, for the three and nine months ended September 30, 2022 was $23.2 million and $49.1 million, respectively, compared with $9.6 million and $30.6 million in the respective prior periods.

Interest expense, net of interest income, for three months ended March 31, 2023 was $26.3 million compared with $10.2 million in the prior-year quarter.

The increase reflected an increase in the average outstanding borrowings as well as a higher effective interest rate on our Facility.

Refer to the Liquidity and Capital Resources section for additional details on our Facility.

Equity Earnings

The following details equity earnings (losses) by relevant segment.

Equity (Losses) Earnings

The following details equity (losses) earnings by relevant segment.

Refer to the segment discussions for additional details.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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Other 1.3 1.6

Total equity earnings $ 0.5 17.4 $ 72.6 106.7

Other income was $0.5 million and $136.0 million for the quarter and nine months ended September 30, 2022, compared with $1.3 million and $12.9 million for the comparable periods in 2021.

During the second quarter of 2022, Other income included a $142.3 million gain by a consolidated variable interest entity in which we held no equity interest.

This gain, therefore, is also included in net income attributable to noncontrolling interest, and as a result, there is no net impact to Net income attributable to common shareholders (or other measures like Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share).

Also in the second quarter of 2022, we recognized a $10.5 million loss related to the disposition of our Russia business.

In 2021, we recognized a $12.0 million gain related to a business disposition within JLL Technologies during the first quarter.

The provision for income taxes was $42.3 million and $155.4 million for the three and nine months ended September 30, 2022, respectively, representing effective tax rates ("ETRs") of 23.4% and 20.1%, respectively.

For the three and nine months ended September 30, 2021, the provision was $65.3 million and $148.4 million, respectively, representing an ETR of 21.6% for both periods.

The lower ETR for the first nine months of 2022 was partially attributable to the removal of pass-through income from noncontrolling interests which is included in Income before income taxes and noncontrolling interest on the Statements of Comprehensive Income but excluded from the tax computation.

Net Income and Adjusted EBITDA

Net income attributable to common shareholders for the three and nine months ended September 30, 2022 was $140.2 million and $479.7 million, respectively, compared with $237.2 million and $540.2 million in the respective prior periods.

Adjusted EBITDA was $276.2 million and $908.8 million for the third quarter and first nine months of 2022, compared to $352.0 million and $874.5 million in the prior-year periods.

Net income attributable to common shareholders for the nine months ended September 30, 2022 included a $3.0 million gain recognized on an asset sale within JLL Technologies and a $10.5 million loss on the disposition of our Russia business.

This gain/loss on disposition activity is excluded from adjusted measures.

Net income margin attributable to common shareholders for the third quarter was 2.7%, compared with 4.9% in the prior-year quarter.

Adjusted EBITDA margin for the third quarter, calculated on a fee-revenue basis, was 13.5% in USD (13.3% in local currency), compared with 17.2% in 2021.

The decrease in margin against an outsized prior-year performance was primarily due to lower Capital Markets revenue coupled with higher compensation expense and incremental T&E and marketing expenses.

The higher compensation expense reflected increased headcount and wage inflation over the trailing twelve months as well as higher commissions associated with the strong year-to-date Leasing revenue growth and changes to Capital Markets variable compensation structures.

Refer to the segment operating results commentary for additional detail.

Total equity (losses) earnings $ (2.6) 18.5

The income tax benefit was $2.3 million for the three months ended March 31, 2023, representing an effective tax rate ("ETR") of 21.0%.

For the three months ended March 31, 2022, the income tax provision was $40.3 million, representing an ETR of 21.9%.

Net (Loss) Income and Adjusted EBITDA

Net (loss) income attributable to common shareholders for the three months ended March 31, 2023 was a loss of $9.2 million, compared with income of $145.6 million in the respective prior-year period.

Adjusted EBITDA was $109.0 million for the first quarter of 2023, compared to $273.6 million in the prior-year period.

Net (loss) income margin attributable to common shareholders for the first quarter was (0.2)%, compared with 3.0% in the prior-year quarter.

Adjusted EBITDA margin for the first quarter, calculated on a fee-revenue basis, was 6.9% in USD (6.6% in local currency), compared with 14.4% in 2022.

The lower adjusted EBITDA margin compared with the prior-year quarter was largely driven by the decline in higher-margin transaction-based revenue, specifically Leasing, Investment Sales, and Debt/Equity Advisory, as well as the change in equity earnings.

In addition, run-rate growth in fixed compensation expense over the past few quarters was partially offset by ongoing cost reduction actions.

Segment Operating Results

Effective January 1, 2022, we manage and report our operations as five business segments:

We manage and report our operations as five business segments:

Markets Advisory, Capital Markets, Work Dynamics, JLL Technologies, and LaSalle.

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Markets Advisory

Three Months Ended September 30, Change in in Local

($ in millions) 2022 2021 U.S.

dollars Currency

Revenue $ 1,111.5 1,079.9 31.6 3 % 6 %

Gross contract costs (263.6) (242.9) (20.7) 9 13

Fee revenue $ 847.9 837.0 10.9 1 % 4 %

Leasing 696.4 689.1 7.3 1 3

Property Management 122.9 115.9 7.0 6 12

Advisory, Consulting and Other 28.6 32.0 (3.4) (11) (3)

Compensation, operating and administrative expenses, excluding gross contract costs 717.3 688.9 28.4 4 7

Depreciation and amortization 17.6 16.4 1.2 7 12

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 734.9 705.3 29.6 4 8

Gross contract costs 263.6 242.9 20.7 9 13

Segment operating expenses $ 998.5 948.2 50.3 5 % 9 %

Equity (losses) earnings $ (0.2) 0.1 (0.3) (300) % (275) %

Adjusted EBITDA $ 132.1 149.2 (17.1) (11) % (8) %

Markets Advisory (continued)

Nine Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2023 2022 U.S.

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Advisory, Consulting and Other 17.7 25.7 (8.0) (31) (27)

Compensation, operating and administrative expenses, excluding gross contract costs 2,072.3 1,775.0 297.3 17 19

Compensation and benefits, excluding gross contract costs $ 461.0 540.8 (79.8) (15) % (13) %

Operating, administrative and other expenses, excluding gross contract costs 93.6 91.9 1.7 2 5

Depreciation and amortization 17.1 17.1 — — 2

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 2,124.3 1,824.0 300.3 16 19

Segment fee-based operating expenses 571.7 649.8 (78.1) (12) (10)

Gross contract costs 279.1 258.3 20.8 8 12

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Adjusted EBITDA $ 71.6 111.2 (39.6) (36) % (36) %

In the third quarter, Markets Advisory achieved modest revenue and fee revenue growth following a strong prior-year quarter.

Leasing results were mixed as broad-based growth in the office sector across geographies and an over $30 million outsized non-office transaction in the U.S.

were largely offset by declines in industrial and retail.

While average deal size again increased this quarter, particularly in office, deal volume fell in substantially all asset classes.

For the first nine months, all major asset classes, except retail, achieved double-digit growth compared with 2021, led by office and industrial, driven by a strong first half of 2022.

Average year-to-date deal size in the U.S.

increased across all major asset classes while deal volume fell year over year in all major asset classes except office, which increased.

The Americas, with both organic and inorganic contributions, led the increase in Property Management fee revenue for the third quarter and first nine months of the year.

The increases in segment operating expenses and segment fee-based operating expenses for both the third quarter and first nine months of 2022, compared with the prior-year periods, were mostly attributable to higher compensation costs.

These incremental expenses were primarily due to (i) leasing brokers achieving higher commission tiers earlier in 2022 compared to 2021, which correlates to the 2022 year-to-date revenue growth, and (ii) additional headcount over the last twelve months to meet increased business demand.

Specifically for the third quarter, higher compensation expense was partially due to the timing of bonus accruals year-over-year, however, this was not a driver of year-to-date expense movement.

In addition, increased T&E and marketing costs, reflecting more normalized business activities following the past couple years which were more heavily impacted by the pandemic, contributed to higher expenses compared with the prior-year periods.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 15.6% in USD (15.8% in local currency), compared with 17.8% in 2021.

The lower margin was primarily driven by the expense drivers noted above, which outpaced the fee revenue growth.

Adjusted EBITDA margin (local currency basis) 11.2 % 15.0 % (360) bps (380) bps

Adjusted EBITDA margin (USD basis) 11.4 %

The declines in Markets Advisory revenue and fee revenue were predominantly driven by Leasing, the result of lower transaction volume across asset types and a decrease in average deal size, particularly in the office sector, across most geographies.

The lower Leasing fee revenue was in line with global market volumes as global gross absorption fell 19%, according to JLL Research.

The increase in Property Management fee revenue was partially attributable to portfolio expansion in the Americas and also reflected incremental fees from interest-rate sensitive contract terms in the United Kingdom.

The decrease in Advisory, Consulting and Other was primarily due to the absence of revenues associated with exiting a business in the fourth quarter of 2022.

The net decreases in segment operating expenses and segment fee-based operating expenses for the quarter, compared with the prior-year quarter, were almost entirely due to lower commissions expense, correlated with the significant decline in revenue, as well as lower incentive compensation expense, reflecting segment performance.

The adjusted EBITDA margin contraction was substantially due to the lower Leasing fee revenue described above.

Capital Markets

Three Months Ended September 30, Change in in Local

($ in millions) 2022 2021 U.S.

dollars Currency

Revenue $ 595.2 680.3 (85.1) (13) % (8) %

Gross contract costs (10.9) (13.0) 2.1 (16) (6)

Net non-cash MSR and mortgage banking derivative activity (5.2) (28.1) 22.9 (81) (81)

Fee revenue $ 579.1 639.2 (60.1) (9) % (5) %

Investment Sales, Debt/Equity Advisory and Other 452.1 516.6 (64.5) (12) (8)

Valuation Advisory 86.5 84.1 2.4 3 12

Loan Servicing 40.5 38.5 2.0 5 5

Compensation, operating and administrative expenses, excluding gross contract costs 496.6 503.0 (6.4) (1) 4

Depreciation and amortization 15.2 15.1 0.1 1 3

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 511.8 518.1 (6.3) (1) 4

Gross contract costs 10.9 13.0 (2.1) (16) (6)

Segment operating expenses $ 522.7 531.1 (8.4) (2) % 3 %

Equity earnings $ 0.7 1.3 (0.6) (46) % (46) %

Adjusted EBITDA $ 83.2 138.4 (55.2) (40) % (37) %

Capital Markets (continued)

Nine Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2023 2022 U.S.

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Loan Servicing 37.4 39.9 (2.5) (6) (6)

Compensation, operating and administrative expenses, excluding gross contract costs 1,505.4 1,251.0 254.4 20 25

Compensation and benefits, excluding gross contract costs $ 283.9 418.2 (134.3) (32) % (30) %

Operating, administrative and other expenses, excluding gross contract costs 56.1 55.9 0.2 — 3

Depreciation and amortization 15.9 15.6 0.3 2 4

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 1,551.6 1,298.7 252.9 19 24

Segment fee-based operating expenses 355.9 489.7 (133.8) (27) (25)

Gross contract costs 9.3 12.7 (3.4) (27) (22)

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Adjusted EBITDA $ 10.7 118.2 (107.5) (91) % (91) %

The slight drop in third-quarter Capital Markets revenue and fee revenue was primarily driven by lower Investment Sales and Equity Advisory fees as rising interest rates and economic uncertainty impacted transaction volumes and elongated the deal-cycle time.

Globally, market volumes of third-quarter investment sales were down 24% in USD (18% in local currency) according to JLL Research.

An outstanding first half of 2022 drove broad-based year-to-date Capital Markets fee revenue growth, led by Investment Sales and Debt Advisory activity.

Higher Loan Servicing revenue for both the three- and nine-month periods were attributable to continued growth of the servicing portfolio, particularly under our Fannie Mae DUS license.

For the third quarter of 2022, segment operating expenses and segment fee-based operating expenses were largely flat as variable compensation expenses were slightly lower, a product of lower third-quarter revenue, offset by higher T&E and marketing expenses.

For the first nine months of 2022, compared with the comparable prior-year period, expense growth was primarily driven by (i) wage inflation and incremental headcount over the last twelve months, (ii) higher year-to-date commissions, reflecting changes to the incentive compensation structure in 2022, and (iii) an increase in T&E and marketing expenses.

The increase in commissions was partially offset by reductions to other variable compensation plans as a result of changes to the commission structures.

In addition, expenses for the first nine months of 2021 included a $13.8 million non-cash reduction to loan loss credit reserves, versus a comparable reduction of $2.6 million recognized this year.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 14.4% in USD (14.3% in local currency), compared with 21.7% in 2021.

The margin contraction was primarily due to the decline in fee revenue and expense drivers noted above.

Adjusted EBITDA margin (local currency basis) 2.9 % 20.0 % (1690) bps (1710) bps

Adjusted EBITDA margin (USD basis) 3.1 %

The declines in Capital Markets revenue and fee revenue reflected uncertainty with interest rates and the macroeconomic outlook as transaction volumes fell and the deal-cycle time remained elongated.

This was most visible in Investment Sales and Debt/Equity Advisory which had declines across asset classes and geographies compared to the prior-year quarter.

This aligned with broader market performance as, Q1 global market volumes for investment sales were down 58% in USD (56% in local currency) according to JLL Research.

Loan Servicing included continued growth in the portfolio originated under the Fannie Mae DUS program.

This growth was overshadowed by a $4.5 million decline in prepayment fees compared to the prior-year quarter, as elevated interest rates continued to dampen refinancing activity.

The adjusted EBITDA margin contraction was predominantly driven by the meaningful decline in fee revenue described above.

Work Dynamics

Three Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2023 2022 U.S.

6 unchanged sentences

Portfolio Services and Other 47.9 52.8 (4.9) (9) (7)

Compensation, operating and administrative expenses, excluding gross contract costs 399.6 379.2 20.4 5 12

Compensation and benefits, excluding gross contract costs $ 305.0 281.8 23.2 8 % 12 %

Operating, administrative and other expenses, excluding gross contract costs 111.5 93.8 17.7 19 24

Depreciation and amortization 19.3 16.5 2.8 17 22

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 417.2 396.1 21.1 5 12

Segment fee-based operating expenses 435.8 392.1 43.7 11 15

Gross contract costs 2,834.2 2,623.1 211.1 8 11

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Adjusted EBITDA $ 25.7 35.2 (9.5) (27) % (33) %

Work Dynamics (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2022 2021 U.S.

dollars Currency

Revenue $ 9,633.9 8,494.7 1,139.2 13 % 17 %

Gross contract costs (8,303.5) (7,306.1) (997.4) 14 17

Fee revenue $ 1,330.4 1,188.6 141.8 12 % 16 %

Workplace Management 550.5 478.3 72.2 15 18

Project Management 600.6 541.3 59.3 11 16

Portfolio Services and Other 179.3 169.0 10.3 6 9

Compensation, operating and administrative expenses, excluding gross contract costs 1,185.5 1,074.9 110.6 10 15

Depreciation and amortization 51.1 49.9 1.2 2 7

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 1,236.6 1,124.8 111.8 10 15

Gross contract costs 8,303.5 7,306.1 997.4 14 17

Segment operating expenses $ 9,540.1 8,430.9 1,109.2 13 % 17 %

Equity earnings $ 1.3 0.1 1.2 n.m.

Adjusted EBITDA $ 146.2 113.8 32.4 28 % 26 %

The increases in Work Dynamics quarter-to-date and year-to-date fee revenue were driven by Workplace Management and Project Management.

New client wins and the expansion of existing global mandates drove the growth in Workplace Management, whereas Project Management saw continued momentum in project demand across the three- and nine-month periods in the return-to-office movement and fewer pandemic-driven restrictions.

The increases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2022, compared with the prior-year periods, were primarily due to revenue-related compensation expense increases to support the revenue growth and incremental T&E and marketing expenses.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 11.8% in USD (10.9% in local currency), compared with 9.0% in 2021.

The margin expansion was attributable to the fee revenue growth described above and cost management strategies, partially offset by incremental T&E and marketing expenses.

Adjusted EBITDA margin (local currency basis) 5.1 % 8.6 % (280) bps (350) bps

Adjusted EBITDA margin (USD basis) 5.8 %

Work Dynamics revenue and fee revenue achieved double-digit growth compared with the prior-year quarter, propelled by the increase in Project Management and continued resilience within Workplace Management.

Project Management's growth was attributable to continued project demand in several geographies, most notably the U.S., France and MENA.

The increases in segment operating expenses and segment fee-based operating expenses for the quarter, compared with the prior-year quarter, were primarily due to (i) revenue-related expense growth over the trailing twelve months and (ii) $9.0 million of contract losses (included in Operating, administrative and other expenses) related to certain Tetris contracts in Europe.

The margin contraction was primarily attributable to the aforementioned contract losses as well as incremental investments in sustainability and technology products.

These margin dilutive impacts were partially offset by the higher revenue described above.

JLL Technologies

Three Months Ended September 30, Change in in Local

($ in millions) 2022 2021 U.S.

dollars Currency

Revenue $ 56.5 38.8 17.7 46 % 47 %

Gross contract costs (3.8) (4.4) 0.6 (14) (12)

Fee revenue $ 52.7 34.4 18.3 53 % 54 %

Compensation, operating and administrative expenses, excluding gross contract costs (1)

69.0 52.4 16.6 32 35

Depreciation and amortization 3.7 2.2 1.5 68 69

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 72.7 54.6 18.1 33 36

Gross contract costs 3.8 4.4 (0.6) (14) (12)

Segment operating expenses $ 76.5 59.0 17.5 30 % 32 %

Equity earnings $ 1.0 7.3 (6.3) (86) % (86) %

Adjusted EBITDA $ (15.3) (10.7) (4.6) (43) % (50) %

JLL Technologies (continued)

Nine Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2023 2022 U.S.

3 unchanged sentences

Fee revenue $ 57.8 45.3 12.5 28 % 29 %

Compensation, operating and administrative expenses, excluding gross contract costs (1)

Compensation and benefits, excluding gross contract costs (1)

$ 61.3 62.2 (0.9) (1) % — %

Operating, administrative and other expenses, excluding gross contract costs 14.7 14.2 0.5 4 4

Depreciation and amortization 3.9 3.8 0.1 3 4

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 236.5 160.7 75.8 47 49

Segment fee-based operating expenses 79.9 80.2 (0.3) — 1

Gross contract costs 3.6 4.1 (0.5) (12) (13)

2 unchanged sentences

Adjusted EBITDA $ (13.3) (12.3) (1.0) (8) % (12) %

(1) Included in Compensation, operating and administrative expenses for JLL Technologies is carried interest expense related to equity earnings of the segment.

Such amounts were $0.6 million and $16.6 million for the three and nine months ended September 30, 2022, respectively, and $0.7 million and $9.5 million for the three and nine months ended September 30, 2021, respectively.

For the third quarter and first nine months of 2022, JLL Technologies top-line growth included $9.2 million and $26.0 million, respectively, of incremental fee revenue from acquisitions closed in late 2021.

Organic fee revenue against the comparable quarter and first nine months increased approximately 28% and 25%, respectively, driven by new customers as well as growth from existing customers in software and solutions offerings.

Equity earnings in both years were primarily attributable to valuation increases to our investments in early to mid-stage proptech companies as well as proptech funds, primarily reflecting subsequent financing rounds at increased per-share values.

In the third quarter of 2022, valuation increases were more modest and were largely offset by valuation declines related to a handful of investments.

The increases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2022, compared with the prior-year periods, were driven by incremental compensation related to recent acquisitions and the ramp up of operations for future growth, coupled with higher T&E expenses.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was negative 29.0% in USD (negative 30.1% in local currency), compared with negative 31.1% in 2021.

The slight margin improvement was driven by fee revenue growth, largely offset by lower equity earnings and incremental compensation related to the continued ramp up of operations to support future growth.

Three Months Ended September 30, Change in in Local

($ in millions) 2022 2021 U.S.

dollars Currency

Revenue $ 124.5 129.8 (5.3) (4) % 5 %

Gross contract costs (8.5) (6.4) (2.1) 33 32

Fee revenue $ 116.0 123.4 (7.4) (6) % 3 %

Advisory fees 95.4 92.8 2.6 3 11

Transaction fees and other 8.7 8.3 0.4 5 14

Incentive fees 11.9 22.3 (10.4) (47) (35)

Compensation, operating and administrative expenses, excluding gross contract costs 92.0 93.9 (1.9) (2) 9

Depreciation and amortization 1.6 2.2 (0.6) (27) (23)

Segment fee-based operating expenses (excluding restructuring & acquisition charges) 93.6 96.1 (2.5) (3) 8

Gross contract costs 8.5 6.4 2.1 33 32

Segment operating expenses $ 102.1 102.5 (0.4) — % 9 %

Equity (losses) earnings $ (1.1) 8.4 (9.5) (113) % (114) %

Adjusted EBITDA $ 22.8 37.4 (14.6) (39) % (35) %

LaSalle (continued)

Nine Months Ended September 30, Change in in Local

Adjusted EBITDA margin (local currency basis) (23.7) % (27.2) % 420 bps 350 bps

Adjusted EBITDA margin (USD basis) (23.0) %

(1) Included in Compensation and benefits expense for JLL Technologies is carried interest expense of $0.7 million and $6.2 million for the first quarter of 2023 and 2022, respectively, related to Equity earnings of the segment.

The increases in JLL Technologies revenue and fee revenue over the prior-year quarter were primarily driven by growth from existing customers, led by solutions and services offerings, especially from large enterprise clients.

Equity earnings in both periods were primarily attributable to net valuation increases of JLL Technologies' investments, largely reflecting subsequent financing rounds at increased per-share values.

The net decreases in segment operating expenses and segment fee-based operating expenses for the quarter, compared with the prior-year quarter, were substantially attributable to lower carried interest expense, as a result of reduced equity earnings, largely offset by revenue-related expense growth.

Fee revenue growth with greater operating efficiencies drove the margin improvement, which was tempered by lower equity earnings, net of carried interest.

Three Months Ended March 31, Change in in Local

($ in millions) 2023 2022 U.S.

6 unchanged sentences

Incentive fees 3.5 4.2 (0.7) (17) (2)

Compensation, operating and administrative expenses, excluding gross contract costs 267.1 249.5 17.6 7 15

Compensation and benefits, excluding gross contract costs $ 68.9 74.8 (5.9) (8) % (3) %

Operating, administrative and other expenses, excluding gross contract costs 15.2 13.7 1.5 11 17

Depreciation and amortization 1.3 1.4 (0.1) (7) (6)

Segment fee-based operating expenses (excluding restructuring & acquisition charges) 271.9 255.9 16.0 6 14

Segment fee-based operating expenses 85.4 89.9 (4.5) (5) —

Gross contract costs 7.1 6.3 0.8 13 13

Segment operating expenses $ 92.5 96.2 (3.7) (4) % 1 %

Equity earnings $ 4.0 44.8 (40.8) (91) % (91) %

Equity losses $ (8.8) (1.9) (6.9) (363) % (358) %

Adjusted EBITDA $ 14.3 21.3 (7.0) (33) % (30) %

For both the third quarter and first nine months of 2022, LaSalle achieved strong advisory fee growth, concentrated in core open-end funds and driven by strong capital raising and increases in fair value of assets under management over the trailing twelve months.

Lower incentive fees, which related to real estate dispositions on behalf of clients, were attributable to greater economic uncertainty, which slowed transaction activity.

The current quarter's equity losses and the low equity earnings for the first nine months of 2022, were largely attributable to a negative share price movement for a co-investment in a LaSalle-managed publicly traded REIT in Japan as the remainder of the co-investment portfolio was largely flat.

In addition, equity earnings in the third quarter and first nine months of 2021 were meaningfully driven by the recovery of pandemic-driven valuation declines recognized in 2020.

The net increases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2022, on a local currency basis and compared with the prior-year periods, were primarily driven by incremental compensation expense, notably expenses associated with the loss of a client mandate in the UK to right-size the advisory fee platform.

Adjusted EBITDA margin for the quarter, calculated on a fee-revenue basis, was 19.7% in USD (19.0% in local currency), compared with 30.3% in 2021.

The decline in margin was primarily driven by lower equity earnings and incentive fees, and the net expense drivers noted above.

As of September 30, 2022, LaSalle had $81.7 billion of AUM, a change of less than 1% in USD (increase of 4% in local currency) from $82.1 billion as of June 30, 2022.

The AUM change resulted from (i) $3.5 billion of foreign currency decreases and (ii) $1.0 billion of dispositions and withdrawals, partially offset by (iii) $3.2 billion of acquisitions and (iv) $0.9 billion of net valuation increases.

Adjusted EBITDA margin (local currency basis) 13.3 % 19.0 % (570) bps (570) bps

Adjusted EBITDA margin (USD basis) 13.3 %

LaSalle advisory fee growth was concentrated in core open-end funds, primarily in North America and Asia Pacific.

This growth was offset by lower transaction fees attributable to muted deal activity, consistent with global trends in transaction volumes.

The current quarter's equity losses were primarily attributable to valuation declines in the co-investment portfolio.

In addition, the co-investment in a LaSalle-managed publicly-traded REIT in Japan experienced a lower negative share price movement compared with the prior-year quarter.

The net decreases in segment operating expenses and segment fee-based operating expenses for the quarter, on a local currency basis and compared with the prior-year quarter, were primarily driven by lower incentive compensation expense.

The adjusted EBITDA margin contraction was largely attributable to higher equity losses, as additional advisory fee platform scale was offset by lower transaction fees.

As of March 31, 2023, LaSalle had $78.5 billion of AUM, a decrease of 1% in USD (decreased 5% in local currency) from $79.1 billion as of December 31, 2022.

The AUM change resulted from (i) $3.3 billion of dispositions and withdrawals and (ii) $1.6 billion of net valuation decreases, partially offset by (iii) $3.0 billion of foreign currency increases and (iv) $1.3 billion of acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

Cash Flows from Operating Activities

Operating activities used $401.9 million of cash in the first nine months of 2022, compared with $210.3 million of cash provided in operating activities during the same period in 2021.

This change in cash flows from operating activities was primarily due to greater incentive compensation paid in 2022, compared with 2021, a higher a net outflow related to changes in net reimbursable receivables/payables balances, and an incremental $108.0 million of cash paid for taxes, partially offset by higher cash provided by earnings.

Operating activities used $716.3 million of cash in the first three months of 2023, compared with $716.4 million of cash used in operating activities during the same period in 2022.

This relatively consistent cash flows used in operating activities was primarily due to lower incentive compensation and commission payments in 2023, compared with 2022, and incremental cash inflow associated with trade receivables, offset by (i) a decline in cash provided by earnings (largely driven by the Capital Markets and Markets Advisory change in business performance), (ii) an additional pay period in the current quarter, and (iii) incremental cash outflow associated with net reimbursables, due to continued growth in Workplace Management over the last four quarters.

Cash Flows from Investing Activities

We used $147.8 million of cash for investing activities during the first nine months of 2022, as compared to $316.0 million used during the same period in 2021.

The decrease in cash used was driven by the year-over-year change in investment activity by less than wholly-owned entities as the year-over-year change in net investment activity (JLL Technologies and LaSalle) was marginal.

We discuss these drivers, along with other investing activities, individually below in further detail.

We used $74.0 million of cash for investing activities during the first three months of 2023, as compared to $94.0 million used during the same period in 2022.

The net decrease in cash used for investing activities was primarily due no investment activity in 2023 relating to less than wholly-owned subsidiaries.

In the prior year, we funded $12.0 million net capital additions related to these consolidated VIEs.

Cash Flows from Financing Activities

Financing activities provided $500.5 million of cash during the first nine months of 2022, as compared to $39.3 million provided during the same period in 2021.

The net increase of $461.2 million in cash inflows from financing activities is substantially driven by an increase in borrowings on our Facility.

This increase resulted from higher cash outflows for operating activities, as discussed above, as well as over $400 million of incremental share repurchases compared with the first nine months of 2021.

In addition, the cash outflow relating to noncontrolling interest distributions included a $142.3 million gain by a consolidated variable interest entity in which the company held no equity interest that was also distributed this quarter.

The offset to this is included in cash from investing activities, specifically investment activity by less than wholly-owned entities.

On August 31, 2022, we executed Amendment No.

4 ("Amendment No.

4") to the Credit Agreement which increased the borrowing capacity of our Facility from $2.75 billion to $3.35 billion.

Our Facility matures on April 14, 2026 and bears a variable interest rate.

As of September 30, 2022, we had outstanding borrowings under the Facility of $1,587.9 million versus $138.2 million at December 31, 2021.

The average outstanding borrowings under the Facility were $1,599.8 million and $497.1 million (with average effective interest rates of 3.2% and 1.0%) during the three months ended September 30, 2022 and 2021, respectively, and $1,295.9 million and $432.5 million (with average effective interest rates of 2.2% and 1.0%) during the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we redeemed all of our outstanding 4.4% Senior Notes due November 2022.

The redemption price for the notes was equal to the $275.0 million principal amount plus accrued and unpaid interest on the Notes.

In addition to our Facility, we had the capacity to borrow up to $50.1 million under local overdraft facilities as of September 30, 2022.

We had Short-term borrowings (including financing lease obligations, overdrawn bank accounts and local overdraft facilities) of $244.2 million and $147.9 million as of September 30, 2022 and December 31, 2021, respectively, of which $26.1 million and $9.2 million, respectively, were attributable to local overdraft facilities.

Financing activities provided $775.3 million of cash during the first three months of 2023, as compared to $806.5 million provided during the same period in 2022.

The net decrease of $31.2 million in cash inflows from financing activities is substantially driven by a decrease in borrowings on our Facility.

This decrease in borrowings was a product of lower cash needed for incentive compensation payments in the first quarter of 2023, as discussed above, as well as no share repurchases in the first quarter of 2023.

In the prior-year quarter, we paid $150.0 million for share repurchases.

Our $3.35 billion Facility matures on April 14, 2026 and bears a variable interest rate.

As of March 31, 2023, we had outstanding borrowings under the Facility of $2,089.7 million versus $1,213.8 million as of December 31, 2022.

The average outstanding borrowings under our credit facilities were $1,719.9 million and $683.2 million (with average effective interest rates of 5.4% and 1.0%) during the three months ended March 31, 2023 and 2022, respectively.

We had Short-term borrowings (including financing lease obligations, overdrawn bank accounts and local overdraft facilities) of $104.3 million and $164.2 million as of March 31, 2023 and December 31, 2022, respectively.

In addition to our Facility, we had the capacity to borrow up to $54.8 million under local overdraft facilities as of March 31, 2023.

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.

Refer to Note 9, Debt, in the Notes to Condensed Consolidated Financial Statements for additional information on our debt.

Investment Activity

As of September 30, 2022, we had a carrying value of $890.9 million in investments, primarily related to investments by JLL Technologies in early to mid-stage proptech companies as well as proptech funds, and LaSalle co-investments.

For the nine months ended September 30, 2022, and 2021, funding of investments exceeded return of capital by $123.2 million and $93.2 million, respectively.

As of March 31, 2023, we had a carrying value of $896.0 million in investments, primarily related to investments by JLL Technologies in early to mid-stage proptech companies as well as proptech funds, and LaSalle co-investments.

For the three months ended March 31, 2023 and 2022, funding of investments exceeded return of capital by $23.6 million and $30.9 million, respectively.

We expect continued investments by JLL Technologies as well as 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.

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

In the prior year, JLL technologies funded a $45 million convertible note to Turntide Technologies.

This activity was included within "Other" in the cash flow from investing activities.

Capital Expenditures

Net capital additions for the nine months ended September 30, 2022 and 2021 were $136.0 million and $111.6 million, respectively.

Our capital expenditures in 2022 were primarily for leased office space improvements, hardware, and purchased/developed software.

Investment Asset Activity of Consolidated Less Than Wholly-Owned Entities

Net capital proceeds related to consolidated VIEs in which we held no equity interest for the nine months ended September 30, 2022 were $132.4 million, compared with net capital additions of $53.8 million during the prior-year period.

The activity primarily relates to the acquisition of real estate (net of sales).

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

Net capital additions for the three months ended March 31, 2023 and 2022 were $49.3 million and $46.6 million, respectively.

Our capital expenditures in 2023 were primarily for purchased/developed software and leased office space improvements.

Business Acquisitions

During the nine months ended September 30, 2022, we paid $21.6 million for business acquisitions.

This included $5.7 million of payments relating to acquisitions in 2022 and $15.9 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.

During the three months ended March 31, 2023, we paid $13.8 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.

We completed no business acquisitions in the three months ended March 31, 2023.

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 $27.9 million as of September 30, 2022.

Deferred business acquisition obligations totaled $12.9 million as of March 31, 2023.

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 September 30, 2022, we had the potential to make earn-out payments for a maximum of $136.6 million on 18 completed acquisitions subject to the achievement of certain performance conditions.

As of March 31, 2023, we had the potential to make earn-out payments for a maximum of $113.2 million on 16 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.

2 unchanged sentences

In February 2022, our Board of Directors authorized an additional $1.5 billion for the repurchase of our common stock in the open market and privately negotiated transactions;

as described above, this repurchase program was suspended in late 2022.

The number of shares repurchased and cash paid for repurchases is noted in the following table.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2023 2022

1 unchanged sentence

Total paid for shares repurchased $ — 150.0

As of September 30, 2022, $1,155.6 million remained authorized for repurchases under our share repurchase program.

As of March 31, 2023, $1,155.6 million remained authorized for repurchases under our share repurchase program.

Repatriation of Foreign Earnings

1 unchanged sentence

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

As of September 30, 2022 and December 31, 2021, we had total cash and cash equivalents of $489.4 million and $593.7 million, respectively, of which approximately $380.5 million and $487.9 million, respectively, was held by foreign subsidiaries.

As of March 31, 2023 and December 31, 2022, we had total cash and cash equivalents of $485.4 million and $519.3 million, respectively, of which approximately $387.9 million and $400.8 million, respectively, was held by foreign subsidiaries.

Restricted Net Assets

1 unchanged sentence

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 both September 30, 2022 and December 31, 2021.

The assets of these countries aggregated to approximately 4% of our total assets as of both March 31, 2023 and December 31, 2022.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

7 unchanged sentences

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