What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-06 compared with 2023-11-02 · 162 added, 352 removed, 229 unchanged (69% 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, 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 ).

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, 2024, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2023, which are included in our 2023 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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See Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our 2023 Annual Report on Form 10-K for a complete summary of our significant accounting policies.

The preparation of our financial statements requires management to make certain critical accounting estimates and judgments that impact (1) the stated amount of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the financial statements and (3) the reported amount of revenue and expenses during the reporting periods.

The preparation of our financial statements requires management to make certain critical accounting estimates and judgments that impact (i) the stated amount of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the financial statements and (iii) the reported amount of revenue and expenses during the reporting periods.

These accounting estimates are based on management's judgment.

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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, 2023.

There have been no material changes to these critical accounting policies and estimates during the nine months ended September 30, 2023.

There have been no material changes to these critical accounting policies and estimates during the three months ended March 31, 2024.

ITEMS AFFECTING COMPARABILITY

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

Equity Earnings and Incentive Fees

Transaction-Based Revenues and Equity Earnings

Transaction-based revenues are impacted by the size and timing of our clients' transactions.

Such revenues include investment sales and other capital markets activities, agency and tenant representation leasing transactions, incentive fees, and other services/offerings, increase the variability of the revenue we earn.

Specifically for LaSalle, the magnitude and timing of recognition of incentive fees are driven by one or a combination of the following:

changes in valuations of the underlying investments, dispositions of managed assets and the contractual measurement periods with clients.

The timing and the magnitude of transaction-based revenues can vary significantly from year to year and quarter to quarter and also vary geographically.

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 with a prior year.

LaSalle, our investment management business, is in part compensated through incentive fees where performance of underlying funds' investments exceeds agreed-to return hurdles.

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

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

The comparability of these items can be seen in Note 4, Business Segments, of the Notes to Condensed Consolidated Financial Statements and is discussed further in Segment Operating Results included herein.

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

Transaction-Based Revenue

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.

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

Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses.

Historically, we have reported a relatively smaller revenue and profit in the first quarter with both measures increasing each of the following three quarters.

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

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

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

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

Our seasonality excludes the recognition of investment-generated performance fees and realized and unrealized investment equity earnings and losses.

Specifically, we recognize incentive fees when assets are sold or as a result of valuation increases in the portfolio, the timing of which may not be predictable or recurring.

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

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

Other factors may affect seasonality.

For example, we experienced disruption to our historical seasonality trends due to rising interest rates and widespread economic uncertainty in 2022 and 2023.

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

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

Consequently, the results for the periods ended September 30, 2023 and 2022 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, 2024 and 2023 are not fully indicative of the results we expect to realize for the full fiscal year.

RESULTS OF OPERATIONS

• 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% or a change in margin of greater than 10,000 basis points ("bps"), favorable or unfavorable.

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

• We define "Resilient" revenue as (i) Property Management, within Markets Advisory, (ii) Value and Risk Advisory, and Loan Servicing, within Capital Markets, (iii) Workplace Management, within Work Dynamics, (iv) JLL Technologies and (v) Advisory Fees, within LaSalle.

In addition, we define "Transactional" revenue as (i) Leasing and Advisory, Consulting and Other, within Markets Advisory, (ii) Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, (iii) Project Management and Portfolio Services and Other, within Work Dynamics and (iv) Incentive fees and Transaction fees and other, within LaSalle.

• 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.

These costs are presented on a gross basis in Operating expenses (with the corresponding fees in Revenue).

Consolidated Operating Results

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

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

($ in millions) 2024 2023 U.S.

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Revenue $ 5,124.5 4,715.5 409.0 9 % 9 %

Gross contract costs (3,327.1) (3,123.7) (203.4) 7 6

Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 12.3 (237) (236)

Fee revenue $ 1,791.4 2,048.6 (257.2) (13) % (13) %

Markets Advisory 704.0 847.9 (143.9) (17) (17)

Capital Markets 431.4 579.1 (147.7) (26) (27)

Work Dynamics 497.7 452.9 44.8 10 9

JLL Technologies 55.6 52.7 2.9 6 5

LaSalle 102.7 116.0 (13.3) (11) (13)

Compensation and benefits, excluding gross contract costs $ 1,299.8 1,472.4 (172.6) (12) % (13) %

Operating, administrative and other expenses, excluding gross contract costs 274.7 302.1 (27.4) (9) (12)

Platform compensation and benefits $ 1,178.5 1,180.1 (1.6) — % — %

Platform operating, administrative and other expenses 270.4 291.1 (20.7) (7) (8)

Depreciation and amortization 61.0 57.5 3.5 6 6

Restructuring and acquisition charges 31.6 21.0 10.6 50 46

Total fee-based operating expenses 1,665.2 1,851.2 (186.0) (10) (11)

Gross contract costs 3,327.1 3,123.7 203.4 7 6

Total operating expenses $ 4,992.3 4,974.9 17.4 — % (1) %

Operating income $ 119.1 202.6 (83.5) (41) % (39) %

Equity (losses) earnings $ (11.2) 0.5 (11.7) n.m.

Adjusted EBITDA $ 205.2 276.2 (71.0) (26) % (23) %

Net income margin attributable to common shareholders (USD basis) 1.2 % 2.7 % (150) bps n/a

Adjusted EBITDA margin (local currency basis) 12.0 % 13.5 % (200) bps (150) bps

Adjusted EBITDA margin (USD basis) 11.5 %

Consolidated Operating Results (continued)

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

($ in millions) 2023 2022 U.S.

Markets Advisory $ 2,924.2 3,229.2 (305.0) (9) % (9) %

Capital Markets 1,240.9 1,880.3 (639.4) (34) (34)

Work Dynamics 10,165.0 9,633.9 531.1 6 6

JLL Technologies 180.9 156.6 24.3 16 16

LaSalle 368.4 357.3 11.1 3 4

Revenue $ 14,879.4 15,257.3 (377.9) (2) % (2) %

Total platform operating expenses $ 1,509.9 1,528.7 (18.8) (1) % (1) %

Gross contract costs 3,498.7 3,133.3 365.4 12 12

Net non-cash MSR and mortgage banking derivative activity 9.5 (12.8) 22.3 (174) (174)

Fee revenue $ 5,222.7 6,087.9 (865.2) (14) % (14) %

Markets Advisory 2,072.4 2,444.9 (372.5) (15) (15)

Capital Markets 1,216.5 1,831.3 (614.8) (34) (33)

Work Dynamics 1,417.5 1,330.4 87.1 7 7

JLL Technologies 169.9 146.0 23.9 16 16

LaSalle 346.4 335.3 11.1 3 4

Compensation and benefits, excluding gross contract costs $ 3,812.4 4,380.6 (568.2) (13) % (12) %

Operating, administrative and other expenses, excluding gross contract costs 859.1 874.8 (15.7) (2) (2)

Depreciation and amortization 176.5 165.5 11.0 7 8

Restructuring and acquisition charges 1.7 35.7 (34.0) (95) (96)

Total fee-based operating expenses 4,927.1 5,487.3 (560.2) (10) (10)

Gross contract costs 9,666.2 9,156.6 509.6 6 7

Total operating expenses $ 5,010.3 4,697.7 312.6 7 % 7 %

Operating income $ 114.2 17.8 96.4 542 % 569 %

Equity (losses) earnings $ (117.3) 72.6 (189.9) (262) % (262) %

Equity losses $ (3.7) (2.6) (1.1) (42) % (34) %

Net non-cash MSR and mortgage banking derivative activity $ (9.0) (1.8) (7.2) (400) % (405) %

Adjusted EBITDA $ 187.1 112.9 74.2 66 % 70 %

Net income margin attributable to common shareholders (USD basis) 0.4 % 3.1 % (270) bps n/a

Adjusted EBITDA margin (local currency basis) 8.3 % 14.9 % (670) bps (660) bps

Adjusted EBITDA margin (USD basis) 8.2 %

Non-GAAP Financial Measures

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These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following:

• Fee revenue and Fee-based operating expenses;

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

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

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

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

Effective January 1, 2024, we updated the definition of Adjusted EBITDA to exclude certain equity earnings/losses as further described below.

Comparable periods have been recast to conform to the revised presentation.

Also effective with first-quarter 2024 reporting, we no longer report the non-GAAP measures "Fee revenue" and "Fee-based operating expenses" following the conclusion of a comment letter from the Securities and Exchange Commission Staff in February 2024.

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.

These costs are presented on a gross basis in Operating expenses with the equal amount of corresponding fees in Revenue.

Excluding gross contract costs from both Fee revenue and Fee-based operating expenses more accurately reflects how we manage our expense base and operating margins and also enables a more consistent performance assessment across a portfolio of contracts with varying payment terms and structures.

Net non-cash MSR and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assets over the period that net servicing income is projected to be received.

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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 2023, the $0.5 million net loss included $1.8 million of loss related to the disposition of a business in Markets Advisory, partially offset by a $1.3 million gain related to the disposition of a business in Markets Advisory and Capital Markets.

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

Interest on employee loans, net of forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven.

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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.

Equity earnings/losses (JLL Technologies and LaSalle) primarily reflects valuation changes on investments reported at fair value.

Investments reported at fair value are increased or decreased each reporting period by the change in the fair value of the investment.

Where the measurement alternative has been elected, our investment is increased or decreased upon observable price changes.

Such activity is excluded as the amounts are generally non‑cash in nature and not indicative of core operating performance.

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,

(in millions) 2023 2022 2023 2022

Revenue $ 5,111.4 5,177.5 $ 14,879.4 15,257.3

Gross contract costs (3,327.1) (3,123.7) (9,666.2) (9,156.6)

Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 9.5 (12.8)

Fee revenue $ 1,791.4 2,048.6 $ 5,222.7 6,087.9

Operating expenses $ 4,992.3 4,974.9 $ 14,593.3 14,643.9

Gross contract costs

(3,327.1) (3,123.7) (9,666.2) (9,156.6)

Fee-based operating expenses $ 1,665.2 1,851.2 $ 4,927.1 5,487.3

Operating income $ 119.1 202.6 $ 286.1 613.4

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

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

Three Months Ended March 31,

(in millions) 2024 2023

Net income attributable to common shareholders $ 59.7 140.2 $ 53.0 479.7

Net income (loss) attributable to common shareholders $ 66.1 (9.2)

Interest expense, net of interest income 30.5 26.3

Income tax provision 14.5 42.3 13.0 155.4

Income tax provision (benefit) 15.9 (2.3)

Depreciation and amortization (1)

58.1 54.7 173.6 163.5

EBITDA $ 172.5 71.3

Restructuring and acquisition charges 1.7 35.7

Net (gain) loss on disposition (1.3) — 0.5 7.5

Net non-cash MSR and mortgage banking derivative activity 9.0 1.8

Interest on employee loans, net of forgiveness (1.0) 0.2

Equity losses - JLL Technologies and LaSalle 4.9 3.9

Adjusted EBITDA $ 187.1 112.9

(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.

In discussing our operating results, we report percentage changes in local currency, unless otherwise noted.

Amounts presented on a local currency basis are calculated by translating the current period results of our foreign operations to U.S.

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We believe this methodology provides a framework for assessing performance and operations excluding the effect of foreign currency fluctuations.

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) 2023 % Change 2023 % Change

At current period exchange rates $ 5,111.4 (1) % $ 14,879.4 (2) %

Impact of change in exchange rates (39.6) n/a 118.5 n/a

At comparative period exchange rates $ 5,071.8 (2) % $ 14,997.9 (2) %

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

Three Months Ended March 31,

($ in millions) 2024 % Change

At current period exchange rates $ 5,124.5 9 %

Impact of change in exchange rates (18.4) n/a 31.9 n/a

Impact of change in exchange rates 5.6 n/a

At comparative period exchange rates $ 5,130.1 9 %

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At current period exchange rates $ 114.2 542 %

Impact of change in exchange rates 5.0 n/a 1.6 n/a

Impact of change in exchange rates 5.3 n/a

At comparative period exchange rates $ 119.5 569 %

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At current period exchange rates $ 187.1 66 %

Impact of change in exchange rates 6.8 n/a 5.9 n/a

Impact of change in exchange rates 5.3 n/a

At comparative period exchange rates $ 192.4 70 %

For the third quarter, Revenue and fee revenue decreased 2% and 13%, respectively, compared with the prior-year quarter.

Businesses with resilient revenues continued to deliver fee revenue growth for the quarter, as Property Management, within Markets Advisory, grew 12%;

Workplace Management, within Work Dynamics, grew 5%;

and JLL Technologies grew 5%.

Consistent with the first half of the year, economic uncertainty and elevated interest rates along with geopolitical instability in several geographies adversely impacted most of our transaction-based businesses, notably Investment Sales and Debt/Equity Advisory within Capital Markets, and Leasing within Markets Advisory.

However, Project Management, within Work Dynamics, was up 8% due to continued project execution in several geographies, and Portfolio Services and Other within Work Dynamics benefited from outsized transaction activity in the current quarter.

The decline in LaSalle's revenue was largely due to the absence of incentive fees.

For the first nine months of 2023, consolidated Revenue and fee revenue were down 2% and 14%, respectively, compared with 2022.

The year-to-date drivers of change between the two years were similar to the quarter-to-date drivers noted above except for Portfolio Services and Other, which had a year-over-year drop in revenue for the first half of 2023 reflecting the general correlation to leasing activity.

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

Revenue increased 9% compared with the prior-year quarter.

Businesses with Resilient revenues continued to deliver strong revenue growth, collectively up 12%, highlighted by Workplace Management, within Work Dynamics, up 15%, and Property Management, within Markets Advisory, up 8%.

Transactional revenue businesses were collectively up just over 1% as economic uncertainty and the current interest rate environment continued to weigh on client decision making.

Transaction performance was led by Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, which grew 8%.

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

Refer to segment operating results for further detail.

Our consolidated fee revenue declined 13% in U.S.

dollars (“USD”) and 13% in local currency for the third quarter of 2023, compared with 2022.

Year-to-date, consolidated fee revenue declined 14% in USD and 14% in local currency compared with last year.

The quarter-to-date and year-to-date spreads were relatively consistent given the mix of currencies which strengthened or weakened against the U.S.

Operating Expenses

Consolidated operating expenses were $5.0 billion for the third quarter, a slight decrease from the same period in 2022, and $14.6 billion for the first nine months of 2023, which was relatively flat to 2022, while consolidated fee-based operating expenses were $1.7 billion for the third quarter, down 11% from the prior-year quarter, and $4.9 billion for the first nine months of 2023, down 10%.

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

For the third quarter of 2023, Restructuring and acquisition charges increased compared with the prior-year period, driven by (i) higher severance and other employment-related charges from cost-out actions and (ii) expenses associated with rationalizing our real estate footprint in certain geographies;

Consolidated operating expenses were $5.0 billion for the first quarter, up 7% from the same period in 2023.

Gross contract costs were $3.5 billion, up 12% from the prior-year quarter, attributable to growth from businesses with higher client pass-through expenses such as Workplace Management, within Work Dynamics, and Property Management, within Markets Advisory.

Platform operating expenses were $1.5 billion for the first quarter, a 4% reduction from the prior-year quarter largely associated with the benefit of cost mitigation actions in the trailing twelve months, partially offset by higher variable incentive compensation expense attributable to improved year-over-year profitability.

For the first quarter of 2024, Restructuring and acquisition charges decreased compared with the prior-year period, driven by (i) lower severance and other employment-related charges from cost-out actions and (ii) net decreases to the fair value of future acquisition-related payments;

refer to following table for further detail.

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

Three Months Ended March 31,

(in millions) 2024 2023

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Interest Expense

Interest expense, net of interest income, for the three and nine months ended September 30, 2023 was $37.1 million and $103.9 million compared with $23.2 million and $49.1 million in the prior-year periods.

The increase primarily reflected a higher effective interest rate on our facilities but also an increase in the average outstanding borrowings.

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

Interest expense, net of interest income, for the three months ended March 31, 2024 was $30.5 million compared with $26.3 million in the prior-year period.

Equity (Losses) Earnings

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

The following details Equity losses 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) 2024 2023

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Other 1.2 1.3

Equity (losses) earnings $ (11.2) 0.5 $ (117.3) 72.6

Other non-operating income was $3.0 million and $1.9 million for the three and nine months ended September 30, 2023, compared with income of $0.5 million and $136.0 million for the comparable periods in 2022.

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.

The Income tax provision was $14.5 million and $13.0 million for the three and nine months ended September 30, 2023, representing an effective tax rate ("ETR") of 19.6% and 19.3%, respectively.

For the three and nine months ended September 30, 2022, the income tax provision was $42.3 million and $155.4 million, representing an ETR of 23.4% and 20.1%, respectively.

Equity losses $ (3.7) (2.6)

The Income tax provision was $15.9 million for the three months ended March 31, 2024, representing an effective tax rate ("ETR") of 19.5%.

For the three months ended March 31, 2023, the income tax benefit was $2.3 million, representing an ETR of 21.0%.

A number of countries in which we have a taxable presence have enacted legislation effective in 2024 inspired by the Organization for Economic Co-operation and Development (OECD) guidance for a global minimum tax rate of 15%, referred to as “Pillar Two” taxation.

Such legislation enacted through March 31, 2024 did not have a material impact on our effective tax rate for the first quarter of 2024 and is not presently expected to have a material impact for the full year 2024.

Net Income and Adjusted EBITDA

Net income attributable to common shareholders was $59.7 million for the three months ended September 30, 2023, compared with $140.2 million in the prior-year quarter.

For the first nine months of 2023, Net income attributable to common shareholders was $53.0 million, compared with $479.7 million in 2022.

Adjusted EBITDA was $205.2 million and $430.3 million for the third quarter and first nine months of 2023, compared with $276.2 million and $908.8 million in the respective prior-year periods.

Net income margin attributable to common shareholders for the third quarter was 1.2%, compared with 2.7% in the prior-year quarter.

Adjusted EBITDA margin for the third quarter, calculated on a fee-revenue basis, was 11.5% in USD (12.0% in local currency), compared with 13.5% in 2022.

Margin was impacted by lower transaction-based revenue and the change in Equity earnings/losses, net of carried interest.

Partially offsetting these items were benefits of recent cost reduction actions and lower variable compensation expense.

Net income attributable to common shareholders was $66.1 million for the three months ended March 31, 2024, compared with a loss of $9.2 million in the prior-year quarter.

Adjusted EBITDA was $187.1 million for the first quarter of 2024, compared with $112.9 million in the prior-year period.

Growth in profit was primarily attributable to (i) higher revenues, particularly Resilient revenues as well as certain Transactional revenue streams like investment sales within Capital Markets, and (ii) the benefit of cost reduction actions executed in the last twelve months coupled with continued cost discipline.

In addition to these drivers, the increase in Net income attributable to common shareholders was partially due to lower Restructuring and acquisition charges as noted above.

The following chart reflects the aggregation of segment Adjusted EBITDA for the first quarter of 2024 and 2023.

Aggregation of Segment Adjusted EBITDA (in millions)

Segment Operating Results

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Our Work Dynamics business provides a broad suite of integrated services to occupiers of real estate, including facility and project management, as well as portfolio and other services.

We consider "Property Management" to be services provided to non-occupying property investors and "Workplace Management" to be services provided to owner-occupiers.

We consider "Property Management" to be services provided to non-occupying property investors and "Workplace Management" to be services provided to facility occupiers.

Our JLL Technologies segment offers software products, solutions and services, while LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals.

For segment reporting, (i) gross contract costs and (ii) net non-cash MSR and mortgage banking derivative activity are both excluded from revenue in determining Fee revenue.

Gross contract costs are excluded from operating expenses in determining Fee-based operating expenses.

In addition, our measure of segment results also excludes Restructuring and acquisition charges.

Segment operating expenses comprise Gross contract costs and Segment platform operating expenses, which includes Platform compensation and benefits;

Platform operating, administrative and other expenses;

and Depreciation and amortization.

Our measure of segment results excludes Restructuring and acquisition charges.

Markets Advisory

Three Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Revenue $ 992.4 1,111.5 (119.1) (11) % (11) %

Gross contract costs (288.4) (263.6) (24.8) 9 10

Fee revenue $ 704.0 847.9 (143.9) (17) % (17) %

Leasing $ 497.3 487.0 10.3 2 % 2 %

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Advisory, Consulting and Other 23.1 19.2 3.9 20 20

Compensation and benefits, excluding gross contract costs $ 531.2 620.4 (89.2) (14) % (15) %

Operating, administrative and other expenses, excluding gross contract costs 86.5 96.9 (10.4) (11) (11)

Depreciation and amortization 16.9 17.6 (0.7) (4) (4)

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 634.6 734.9 (100.3) (14) (14)

Gross contract costs 288.4 263.6 24.8 9 10

Segment operating expenses $ 923.0 998.5 (75.5) (8) % (8) %

Equity earnings (losses) $ 0.1 (0.2) 0.3 150 % 120 %

Adjusted EBITDA $ 85.1 132.1 (47.0) (36) % (33) %

Adjusted EBITDA margin (local currency basis) 12.6 % 15.6 % (350) bps (300) bps

Adjusted EBITDA margin (USD basis) 12.1 %

Markets Advisory (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2023 2022 U.S.

dollars Currency

Revenue $ 950.1 906.4 43.7 5 % 5 %

Gross contract costs (851.8) (784.3) (67.5) 9 11

Fee revenue $ 2,072.4 2,444.9 (372.5) (15) % (15) %

Leasing 1,613.0 1,996.8 (383.8) (19) (19)

Property Management 396.5 363.7 32.8 9 11

Advisory, Consulting and Other 62.9 84.4 (21.5) (25) (24)

Compensation and benefits, excluding gross contract costs $ 1,538.6 1,779.7 (241.1) (14) % (13) %

Operating, administrative and other expenses, excluding gross contract costs 273.4 292.6 (19.2) (7) (6)

Platform compensation and benefits $ 462.5 461.0 1.5 — % — %

Platform operating, administrative and other 86.9 93.6 (6.7) (7) (7)

Depreciation and amortization 17.4 17.1 0.3 2 3

Segment fee-based operating expenses 1,863.4 2,124.3 (260.9) (12) (12)

Segment platform operating expenses 566.8 571.7 (4.9) (1) (1)

Gross contract costs 304.9 279.1 25.8 9 10

2 unchanged sentences

Adjusted EBITDA $ 95.3 71.6 23.7 33 % 33 %

Adjusted EBITDA margin (local currency basis) 12.4 % 15.4 % (300) bps (300) bps

Adjusted EBITDA margin (USD basis) 12.4 %

The declines in Markets Advisory revenue and fee revenue were largely driven by Leasing, both on a year-to-date and quarter-to-date basis, and reflected lower transaction volumes and a decline in average deal size across nearly all asset types, particularly in the office sector.

Continued economic uncertainty has delayed commercial real estate decision making, particularly for large-scale leasing actions.

The decreases in Advisory, Consulting and Other for the quarter and first nine months were substantially driven by the absence of revenues associated with a business exited during the fourth quarter of 2022.

Property Management achieved top-line growth for the quarter and year-to-date, primarily attributable to portfolio expansion in the Americas and incremental fees from interest-rate sensitive contract terms in the U.K.

The net decreases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2023 were primarily due to (i) lower commissions and other revenue-related expenses, (ii) lower incentive compensation expense, reflecting segment performance and (iii) cost containment measures.

The margin decrease was predominantly attributable to the lower Leasing fee revenue, net of the lower operating expenses noted above.

Markets Advisory revenue growth was largely driven by Property Management and a mid-single digit increase in U.S.

Leasing revenue.

Higher Property Management revenue was primarily attributable to portfolio expansions in the U.S., UK and Canada, including incremental revenue associated with pass-through expenses.

Leasing growth, which follows a softer prior-year quarter, was led by the office sector, which saw increased deal size and transaction volumes.

The growth in U.S.

office was partially offset by industrial, globally, where deal size decreased.

Consistent with the trend from recent quarters, economic uncertainty has delayed commercial real estate decision making, particularly for large-scale leasing actions where JLL has a greater presence.

The net decreases in segment platform operating expenses for the quarter, compared with the prior-year quarter, were due to the continued impact of cost management actions taken in the last twelve months, notably in (i) lower fixed compensation and benefits attributable to reduced headcount, largely offset by higher variable revenue-related compensation expense, and (ii) lower T&E.

Gross contract costs increased over the prior-year quarter consistent with revenue growth, predominantly associated with Property Management.

The Adjusted EBITDA increase was predominantly driven by revenue growth and the continued impact of cost management actions described above.

Capital Markets

Three Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Investment Sales, Equity & Debt Advisory $ 258.7 240.6 18.1 8 % 8 %

Valuation Advisory & Other 80.2 79.1 1.1 1 2

CM Loan Servicing 38.7 37.4 1.3 3 3

Revenue $ 377.6 357.1 20.5 6 % 6 %

Gross contract costs (11.5) (10.9) (0.6) 6 1

Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 12.3 (237) (236)

Fee revenue $ 431.4 579.1 (147.7) (26) % (27) %

Investment Sales, Debt/Equity Advisory and Other 308.9 452.1 (143.2) (32) (33)

Value and Risk Advisory 84.4 86.5 (2.1) (2) (4)

Loan Servicing 38.1 40.5 (2.4) (6) (6)

Compensation and benefits, excluding gross contract costs $ 323.8 430.6 (106.8) (25) % (26) %

Operating, administrative and other expenses, excluding gross contract costs 58.3 66.0 (7.7) (12) (13)

Platform compensation and benefits $ 287.6 283.9 3.7 1 % 1 %

Platform operating, administrative and other 60.8 56.1 4.7 8 8

Depreciation and amortization 16.4 15.9 0.5 3 3

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 398.5 511.8 (113.3) (22) (23)

Segment platform operating expenses 364.8 355.9 8.9 3 3

Gross contract costs 13.6 9.3 4.3 46 50

1 unchanged sentence

Equity earnings $ 0.1 0.6 (0.5) (83) % (81) %

Adjusted EBITDA $ 50.3 83.2 (32.9) (40) % (40) %

Adjusted EBITDA margin (local currency basis) 11.7 % 14.4 % (270) bps (270) bps

Adjusted EBITDA margin (USD basis) 11.7 %

Capital Markets (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2023 2022 U.S.

dollars Currency

Revenue $ 1,240.9 1,880.3 (639.4) (34) % (34) %

Gross contract costs (33.9) (36.2) 2.3 (6) (6)

Net non-cash MSR and mortgage banking derivative activity $ (9.0) (1.8) (7.2) (400) % (405) %

Fee revenue $ 1,216.5 1,831.3 (614.8) (34) % (33) %

Investment Sales, Debt/Equity Advisory and Other 854.0 1,448.6 (594.6) (41) (41)

Value and Risk Advisory 248.0 261.9 (13.9) (5) (4)

Loan Servicing 114.5 120.8 (6.3) (5) (5)

Compensation and benefits, excluding gross contract costs $ 943.1 1,318.7 (375.6) (28) % (28) %

Operating, administrative and other expenses, excluding gross contract costs 183.6 186.7 (3.1) (2) (1)

Depreciation and amortization 48.5 46.2 2.3 5 6

Segment fee-based operating expenses 1,175.2 1,551.6 (376.4) (24) (24)

Gross contract costs 33.9 36.2 (2.3) (6) (6)

Segment operating expenses $ 1,209.1 1,587.8 (378.7) (24) % (23) %

Equity earnings $ 6.1 2.1 4.0 190 % 195 %

Adjusted EBITDA $ 25.0 10.7 14.3 134 % 145 %

Adjusted EBITDA margin (local currency basis) 7.9 % 17.9 % (990) bps (1,000) bps

Adjusted EBITDA margin (USD basis) 8.0 %

The lower Capital Markets revenue and fee revenue continued to reflect the meaningful drop in transaction volumes compared with 2022, both on a year-to-date and quarter-to-date basis, as ample capital continues to remain heavily sidelined with economic and interest rate uncertainty.

This impact was most pronounced in Investment Sales and Debt/Equity Advisory, which experienced declines across nearly all asset sectors and geographies compared with the prior year.

Our performance outpaced broader market trends for the quarter and first nine months of 2023, as global market volumes for investment sales were down 46% in USD (48% in local currency) on a quarter-to-date basis, and 50% in USD (and local currency) on a year-to-date basis, according to JLL Research.

The decline in Loan Servicing was attributable to lower prepayment fees (down $3.8 million for the quarter and $12.0 million for the first nine months of the year), as refinancing activity slowed over the last twelve months, overshadowing continued growth in servicing fees from the portfolio originated under the Fannie Mae DUS program.

The net decreases in segment operating expenses and segment fee-based operating expenses for the quarter and first nine months of the year, against the comparative periods, were almost entirely due to lower revenue-related expenses, as well as lower incentive compensation expense, reflecting segment performance.

The margin reduction for the quarter was predominantly driven by lower Investment Sales and Debt/Equity Advisory revenue described above.

Capital Markets revenue increased across all business lines though market uncertainty persisted, especially around the future of interest rates.

Investment Sales and Debt/Equity Advisory revenue increased compared to the prior-year quarter across most asset classes, with strength in Japan and Germany, most notably office.

Investment Sales and Debt/Equity Advisory growth in the U.S.

was low single digits but outperformed the broader market for investment sales, which declined 12% according to JLL Research.

The increase in segment platform operating expenses was largely driven by higher variable compensation expense compared with the prior-year quarter, as segment profit grew.

The increase in variable compensation more than offset the impact of headcount reductions over the trailing twelve months.

Operating and administrative costs generally decreased, also due to continued cost discipline, largely overcoming $5.7 million of headwind attributable to the year-over-year non-cash change in loan loss credit reserves, as the slight increase to the reserve this quarter followed a decrease to the reserve last year.

The Adjusted EBITDA improvement was attributable to revenue growth and the benefit associated with cost management actions taken over the trailing twelve months as described above.

Work Dynamics

Three Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Revenue $ 3,514.2 3,289.8 224.4 7 % 6 %

Gross contract costs (3,016.5) (2,836.9) (179.6) 6 6

Fee revenue $ 497.7 452.9 44.8 10 % 9 %

Workplace Management $ 2,871.7 2,497.2 374.5 15 % 15 %

1 unchanged sentence

Portfolio Services and Other 111.4 102.7 8.7 8 8

Compensation and benefits, excluding gross contract costs $ 332.9 285.0 47.9 17 % 15 %

Operating, administrative and other expenses, excluding gross contract costs 103.3 114.6 (11.3) (10) (12)

Depreciation and amortization 19.7 17.6 2.1 12 9

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 455.9 417.2 38.7 9 7

Gross contract costs 3,016.5 2,836.9 179.6 6 6

Segment operating expenses $ 3,472.4 3,254.1 218.3 7 % 6 %

Equity earnings $ 0.1 0.1 — — % (34) %

Adjusted EBITDA $ 61.6 53.4 8.2 15 % 17 %

Adjusted EBITDA margin (local currency basis) 12.7 % 11.8 % 60 bps 90 bps

Adjusted EBITDA margin (USD basis) 12.4 %

Work Dynamics (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2023 2022 U.S.

dollars Currency

Revenue $ 3,639.5 3,276.2 363.3 11 % 11 %

Gross contract costs (8,747.5) (8,303.5) (444.0) 5 6

Fee revenue $ 1,417.5 1,330.4 87.1 7 % 7 %

Workplace Management 566.5 550.5 16.0 3 4

Project Management 670.2 600.6 69.6 12 13

Portfolio Services and Other 180.8 179.3 1.5 1 1

Compensation and benefits, excluding gross contract costs $ 958.9 870.8 88.1 10 % 11 %

Operating, administrative and other expenses, excluding gross contract costs 316.0 314.7 1.3 — 2

Platform compensation and benefits $ 319.8 305.0 14.8 5 % 5 %

Platform operating, administrative and other 99.3 111.5 (12.2) (11) (11)

Depreciation and amortization 20.7 19.3 1.4 7 7

Segment fee-based operating expenses 1,333.8 1,236.6 97.2 8 9

Segment platform operating expenses 439.8 435.8 4.0 1 1

Gross contract costs 3,170.6 2,834.2 336.4 12 12

2 unchanged sentences

Adjusted EBITDA $ 50.9 25.7 25.2 98 % 102 %

Adjusted EBITDA margin (local currency basis) 9.9 % 11.0 % (90) bps (110) bps

Adjusted EBITDA margin (USD basis) 10.1 %

Work Dynamics revenue and fee revenue growth was broad-based across service lines and included strong Project Management results from ongoing project execution in certain geographies, most notably the U.K., MENA, Italy and Southeast Asia for the third quarter (the United States, France, the U.K.

and MENA for the first nine months of 2023).

Portfolio Services outperformed the prior year quarter primarily due to one large transaction on behalf of a client in the United States;

the first half of the year was lower given the meaningful correlation with leasing activity.

Workplace Management continued to deliver growth, highlighted by the ramp-up of new, global client wins that began in the third quarter.

The increases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2023, compared with the prior-year periods, were primarily due to revenue-related expense growth over the trailing twelve months.

For the first nine months of 2023, contract losses in the first half of the year related to certain Project Management contracts in Europe also contributed to the expense growth.

These increases were partially offset with continued management of costs unrelated to revenue.

The net margin expansion in the current quarter was primarily attributable to the revenue growth, notably from Portfolio Services, together with continued cost management, both as described above.

Work Dynamics revenue growth was led by continued strong performance in Workplace Management, as 2023 contract wins and mandate expansions in the Americas further ramped up this quarter.

This was partially offset by Project Management, where lower pass-through costs drove the decrease in revenue while management fees were flat.

In addition, the quantum of new project contracts reflected softer leasing activity in 2023.

The net increase in segment platform operating expenses was primarily due to higher incentive compensation accruals, reflecting segment growth and operating results, largely offset by continued cost discipline and the absence of $9 million of Tetris contract losses recognized in 2023.

Gross contract costs increased over the prior-year quarter consistent with the revenue growth in Workplace Management.

The increase in Adjusted EBITDA was primarily attributable to the top-line performance described above, most notably from Workplace Management, coupled with nearly flat platform operating costs.

JLL Technologies

Three Months Ended September 30, Change in in Local

Three Months Ended March 31, Change in in Local

($ in millions) 2024 2023 U.S.

1 unchanged sentence

Revenue $ 53.9 61.4 (7.5) (12) % (12) %

Gross contract costs (3.3) (3.8) 0.5 (13) (12)

Fee revenue $ 55.6 52.7 2.9 6 % 5 %

Compensation and benefits, excluding gross contract costs (1)

Platform compensation and benefits (1)

$ 47.3 61.3 (14.0) (23) % (23) %

Operating, administrative and other expenses, excluding gross contract costs 12.6 11.3 1.3 12 11

Platform operating, administrative and other 10.5 14.7 (4.2) (29) (28)

Depreciation and amortization 4.5 3.9 0.6 15 16

Segment fee-based operating expenses (excluding restructuring and acquisition charges) 65.2 72.7 (7.5) (10) (11)

Segment platform operating expenses 62.3 79.9 (17.6) (22) (22)

Gross contract costs 1.2 3.6 (2.4) (67) (68)

Segment operating expenses $ 63.5 83.5 (20.0) (24) % (24) %

Equity (losses) earnings $ (3.0) 1.0 (4.0) (400) % (394) %

Adjusted EBITDA (2)

Adjusted EBITDA margin (local currency basis) (15.5) % (29.0) % 1,340 bps 1,350 bps

Adjusted EBITDA margin (USD basis) (15.6) %

JLL Technologies (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2023 2022 U.S.

dollars Currency

Revenue $ 180.9 156.6 24.3 16 % 16 %

Gross contract costs (11.0) (10.6) (0.4) 4 4

Fee revenue $ 169.9 146.0 23.9 16 % 16 %

Compensation and benefits, excluding gross contract costs (1)

$ (5.1) (18.2) 13.1 72 % 73 %

Operating, administrative and other expenses, excluding gross contract costs 39.8 39.4 0.4 1 1

Depreciation and amortization 11.9 11.4 0.5 4 5

Segment fee-based operating expenses 207.0 236.5 (29.5) (12) (12)

Gross contract costs 11.0 10.6 0.4 4 4

Segment operating expenses $ 218.0 247.1 (29.1) (12) % (11 %)

Equity (losses) earnings $ (1.0) 4.9 (5.9) (120) % (121) %

Adjusted EBITDA $ (127.2) (14.7) (112.5) (765) % (773) %

Adjusted EBITDA margin (local currency basis) (75.2) % (10.1) % (6,480) bps (6,510) bps

Adjusted EBITDA margin (USD basis) (74.9) %

(1) Included in Compensation and benefits expense for JLL Technologies is a reduction in carried interest expense of $0.1 million and $9.4 million for the three and nine months ended September 30, 2023, respectively, and a carried interest expense of $0.6 million and $16.6 million for the three and nine months ended September 30, 2022, related to Equity earnings of the segment.

For the third quarter and first nine months of 2023, JLL Technologies revenue and fee revenue increased over the prior-year periods led by growth in solutions and service offerings, largely from existing enterprise clients.

Equity losses for the quarter and first nine months of 2023 resulted from valuation declines in JLL Technologies' investments due to subsequent financing rounds at decreased per-share values.

The most significant equity losses, recognized in the second quarter of 2023, were predominantly driven by two investments for which we previously recognized significant equity earnings.

The decrease in current-quarter segment operating expenses and segment fee-based operating expenses included an approximate $5 million reduction to incentive compensation expense, which related to true-ups based on performance achievement, and improved operating efficiencies.

Further driving a reduction in expenses for the first nine months of 2023, carried interest expense decreased $9.4 million (only $0.1 million in the third quarter) in response to the equity losses described above.

Margin improvement for the quarter was attributable to fee revenue growth and the expense drivers noted above, partially offset by the change in equity earnings/losses.

Three Months Ended September 30, Change in in Local

(1) Included in Platform compensation and benefits expense is a reduction in carried interest expense of $0.1 million for the first quarter of 2024 and carried interest expense of $0.7 million for the first quarter of 2023 related to Equity (losses) earnings of the segment.

(2) Adjusted EBITDA excludes Equity (losses) earnings for JLL Technologies.

The decline in JLL Technologies revenue was partially due to 2023 cost-out activities in the business's go-to-market approach aimed at improving profitability and resulted in lower contract signings in the second half of 2023.

In addition, the lower revenue reflected delayed decisions on technology spend from existing solutions clients, which included certain contract renewals.

The decrease in current-quarter segment operating expenses was driven by the reduction of certain expenses associated with cost management actions and improved operating efficiency over the trailing twelve months.

The year-over-year improvement in Adjusted EBITDA was driven by the reduction of operating expenses associated with cost management actions described above, which outpaced the impact of lower revenue.

Three Months Ended March 31, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Revenue $ 110.1 124.5 (14.4) (12) % (13) %

Gross contract costs (7.4) (8.5) 1.1 (13) (13)

Fee revenue $ 102.7 116.0 (13.3) (11) % (13) %

Advisory fees $ 92.3 100.5 (8.2) (8) % (7) %

1 unchanged sentence

Incentive fees 2.2 3.5 (1.3) (37) (38)

Compensation and benefits, excluding gross contract costs $ 63.2 78.7 (15.5) (20) % (21) %

Operating, administrative and other expenses, excluding gross contract costs 14.0 13.3 0.7 5 2

Depreciation and amortization 2.2 1.6 0.6 38 37

Segment fee-based operating expenses (excluding restructuring & acquisition charges) 79.4 93.6 (14.2) (15) (17)

Gross contract costs 7.4 8.5 (1.1) (13) (13)

Segment operating expenses $ 86.8 102.1 (15.3) (15) % (17) %

Equity losses $ (9.1) (1.1) (8.0) (727) % (667) %

Adjusted EBITDA $ 16.9 22.8 (5.9) (26) % (28) %

Adjusted EBITDA margin (local currency basis) 16.3 % 19.7 % (320) bps (340) bps

Adjusted EBITDA margin (USD basis) 16.5 %

LaSalle (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2023 2022 U.S.

dollars Currency

Revenue $ 103.4 114.4 (11.0) (10) % (8) %

Gross contract costs (22.0) (22.0) — — —

Fee revenue $ 346.4 335.3 11.1 3 % 4 %

Advisory fees 284.4 284.3 0.1 — 1

Transaction fees and other 22.7 33.9 (11.2) (33) (30)

Incentive fees 39.3 17.1 22.2 130 130

Compensation and benefits, excluding gross contract costs $ 216.5 225.7 (9.2) (4) % (3) %

Operating, administrative and other expenses, excluding gross contract costs 46.3 41.4 4.9 12 13

Platform compensation and benefits $ 61.3 68.9 (7.6) (11) % (11) %

Platform operating, administrative and other 12.9 15.2 (2.3) (15) (15)

Depreciation and amortization 2.0 1.3 0.7 54 50

Segment fee-based operating expenses 268.6 271.9 (3.3) (1) —

Segment platform operating expenses 76.2 85.4 (9.2) (11) (11)

Gross contract costs 8.4 7.1 1.3 18 19

Segment operating expenses $ 84.6 92.5 (7.9) (9) % (9) %

Equity (losses) earnings $ (23.0) 4.0 (27.0) (675) % (680) %

Adjusted EBITDA (1)

Adjusted EBITDA margin (local currency basis) 17.4 % 21.4 % (380) bps (400) bps

Adjusted EBITDA margin (USD basis) 17.6 %

Subdued transaction volumes in the market contributed to the decrease in LaSalle transaction fees for both the quarter and first nine months as well as incentive fees for the third quarter.

For the first nine months of 2023, top-line growth was driven by incentive fees, specifically in Japan and United States.

Quarter-to-date and year-to-date, advisory fee performance remained resilient despite declines in real estate valuations over the trailing twelve months, impacting assets under management.

The equity losses on both a quarter and year-to-date basis were primarily attributable to net valuation declines in the co-investment portfolio.

For the first half of 2023, this decline was partially offset by the co-investment in a LaSalle-managed publicly-traded REIT in Japan, which had a greater negative share price movement in 2022.

Current-quarter segment operating expenses and segment fee-based operating expenses were lower than the prior-year quarter due to the absence of expenses associated with the loss of a client mandate in the U.K., as well as lower incentive compensation expense.

For the first nine months of 2023, this current-quarter decrease was largely offset by variable compensation expense associated with the higher incentive fees earned in the first half of 2023.

The third quarter margin decline was driven by the equity losses and an absence of incentive fees, partially offset by the expense drivers noted above.

As of September 30, 2023, LaSalle had $77.7 billion of AUM, a decrease of 1% in USD (with no change in local currency) from $78.2 billion as of June 30, 2023.

The AUM change resulted from (i) $0.7 billion of foreign currency decreases, (ii) $0.5 billion of net valuation decreases and (iii) $0.4 billion of dispositions and withdrawals, partially offset by (iv) $1.1 billion of acquisitions.

$ 21.0 23.1 (2.1) (9) % (2) %

Equity losses $ (3.9) (8.8) 4.9 56 % 57 %

(1) Adjusted EBITDA excludes Equity losses for LaSalle.

LaSalle’s decrease in revenue was primarily due to lower advisory fees, attributable to (i) valuation declines in assets under management ("AUM"), particularly in North America and (ii) lower fees in Europe as a result of structural changes to a lower-margin business.

Transaction fees and incentive fees reflected the on-going global trend of dampened investment sales transaction volumes.

The net decline in platform operating expenses was driven by the benefit of cost management actions over the last twelve months and lower variable compensation accruals.

The slight decline in Adjusted EBITDA reflected lower revenues, which were nearly offset by the impact of lower expenses as described above.

As of March 31, 2024, LaSalle had $89.7 billion of AUM.

Compared with AUM of $93.5 billion as of March 31, 2023, the AUM as of March 31, 2024 decreased 4% in USD (3% in local currency).

The net decrease in AUM over the trailing twelve months resulted from (i) $4.4 billion of dispositions and withdrawals, (ii) $3.4 billion of net valuation decreases, (iii) $0.7 billion of foreign currency decreases, partially offset by (iv) $4.2 billion of acquisitions and (v) $0.5 billion increase in uncalled committed capital and cash.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

Cash Flows from Operating Activities

Operating activities used $153.6 million of cash in the first nine months of 2023, compared with $401.9 million of cash used in operating activities during the same period in 2022.

The year-over-year decrease in cash used in operating activities was primarily due to (i) incremental cash inflow associated with trade receivables, (ii) lower incentive compensation and commission payments in 2023 and (iii) $157.3 million of lower cash taxes paid compared with last year.

This is partially offset by lower cash provided by earnings, largely attributable to the change in business performance for Capital Markets and Markets Advisory.

Operating activities used $677.5 million of cash in the first three months of 2024, compared with $716.3 million of cash used in operating activities during the same period in 2023.

The year-over-year improvement was primarily due to an increase in cash provided by earnings driven by improved business performance, partially offset by incremental cash outflows associated with trade payables and other liabilities.

Cash Flows from Investing Activities

We used $220.4 million of cash for investing activities during the first nine months of 2023, compared with $147.8 million used during the same period in 2022.

The prior year included $132.4 million of net capital proceeds relating to less than wholly-owned subsidiaries that did not recur in 2023.

In addition, net capital contributions to investments were lower in the first nine months of 2023 compared with 2022.

There was no such activity in the current year.

We used $54.3 million of cash for investing activities during the first three months of 2024, compared with $74.0 million used during the same period in 2023.

The decrease of $19.7 million was driven by lower net capital contributions to investments and lower net capital additions.

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

Cash Flows from Financing Activities

Financing activities provided $231.2 million of cash during the first nine months of 2023, compared with $500.5 million provided during the same period in 2022.

The net decrease of $269.3 million in cash inflows from financing activities was substantially driven by a decrease in net borrowings on our Facility.

This decrease in borrowings against the prior year was a product of less cash used in operating activities as well as lower share repurchases in 2023 (refer to the Share Repurchases section below).

Finally, the 2022 cash outflow relating to noncontrolling interest distributions included a $142.3 million gain by a consolidated variable interest entity in which we held no equity interest that was also distributed in the second quarter of 2022 (offsetting the net capital proceeds from less than wholly-owned subsidiaries noted in cash flows from investing activities).

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

Financing activities provided $703.4 million of cash during the first three months of 2024, compared with $775.3 million provided during the same period in 2023.

The net decrease of $71.9 million in cash inflows from financing activities was substantially driven by a decrease in net borrowings on our Facility, in part due to less cash used from operating activities compared with the prior-year quarter.

Our $3.3 billion Facility matures on November 3, 2028 and bears a variable interest rate.

Outstanding borrowings, including the balance of the Facility and Short-term borrowings (financing lease obligations, overdrawn bank accounts and local overdraft facilities) are presented below.

(in millions) September 30, 2023 December 31, 2022

(in millions) March 31, 2024 December 31, 2023

Outstanding borrowings under the Facility $ 1,395.0 625.0

Short-term borrowings 124.6 147.9

In addition to our Facility, we had the capacity to borrow up to $52.9 million under local overdraft facilities as of September 30, 2023.

In addition to our Facility, we had the capacity to borrow up to $54.2 million under local overdraft facilities as of March 31, 2024.

The following table provides additional information on our Facility and Uncommitted Facility, collectively.

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

Three Months Ended March 31,

($ in millions) 2024 2023

4 unchanged sentences

Investment Activity

As of September 30, 2023, we had a carrying value of $865.2 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 first nine months of 2023 and 2022, funding of investments exceeded return of capital by $65.3 million and $123.2 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.

As of March 31, 2024, we had a carrying value of $816.2 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 first three months ended March 31, 2024 and 2023, funding of investments exceeded return of capital by $11.7 million and $23.6 million, respectively.

We expect continued investment activity by both JLL Technologies and LaSalle.

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

Capital Expenditures

Net capital additions for the nine months ended September 30, 2023 and 2022 were $137.7 million and $136.0 million, respectively.

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

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.

The distribution of proceeds from the sale of this investment (the initial acquisition of which was largely funded from employee-investors and related third-party debt) also occurred in 2022 and is included within financing activities.

Net capital additions for the three months ended March 31, 2024 and 2023 were $43.2 million and $49.3 million, respectively.

Our capital expenditures in 2024 were primarily for purchased/developed software and leasehold improvements.

Business Acquisitions

During the nine months ended September 30, 2023, we paid $36.4 million relating to business acquisitions.

This included $13.6 million of payments associated with 2023 acquisitions and $22.8 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years, which are primarily reflected in cash flows from financing activities.

During the three months ended March 31, 2024, we paid $3.1 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years, which are primarily reflected in cash flows from financing activities.

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

Deferred business acquisition obligations totaled $14.3 million as of September 30, 2023.

Deferred business acquisition obligations totaled $8.0 million as of March 31, 2024.

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, 2023, we had the potential to make earn-out payments for a maximum of $103.8 million on 16 completed acquisitions subject to the achievement of certain performance conditions.

As of March 31, 2024, we had the potential to make earn-out payments for a maximum of $99.7 million on 12 completed acquisitions subject to the achievement of certain performance conditions.

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

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Share Repurchase and Dividend Programs

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.

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,

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

Three Months Ended March 31,

($ in millions) 2024 2023

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Total paid for shares repurchased $ 20.1 —

As of September 30, 2023, $1,115.5 million remained authorized for repurchases under our share repurchase program.

As of March 31, 2024, $1,073.5 million remained authorized for repurchases under our share repurchase program.

Repatriation of Foreign Earnings

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

As of September 30, 2023, and December 31, 2022, we had total cash and cash equivalents of $389.5 million and $519.3 million, respectively, of which approximately $301.7 million and $400.8 million, respectively, was held by foreign subsidiaries.

As of March 31, 2024, and December 31, 2023, we had total Cash and cash equivalents of $396.7 million and $410.0 million, respectively, of which approximately $302.3 million and $310.1 million, respectively, was held by foreign subsidiaries.

Restricted Net Assets

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

The assets of these countries aggregated to approximately 4% of our total assets as of both September 30, 2023, and December 31, 2022.

The assets of these countries aggregated to approximately 4% of our total assets as of both March 31, 2024, and December 31, 2023.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis