Jones Lang LaSalle Inc (JLL) 2007 Q4 法說會逐字稿

Good day, and welcome to the fourth quarter 2007 earnings release conference call for Jones Lang LaSalle Inc. Today's call is being recorded. Any statements made about future results and performance or about plans, expectations and objectives are forward-looking statements. Actual results and performance may differ from those included in the forward-looking statements as a result of factors discussed in the company's annual reports on form 10-K for the year ended December 31, 2006 and in our other reports filed with the SEC. The company disclaims any undertaking to update or revise any forward-looking statement.

The transcript of this call will be posted and available on the company's website within two business days of this call. A Web audio replay will also be available for download within 24 hours of the call. Information and the link can be found on the company's website. At this time I would like to turn the call over to Mr. Colin Dyer, Chief Executive Officer, for opening remarks. Please go ahead, sir.

Thank you, operator. Good morning, everybody, and thank you for joining us for this review of our fourth quarter and full-year 2007 financial results. With me on today's call is our chief operating and financial officer, Lauralee Martin, who will discuss our financial performance in detail in just a few minutes. First of all, let me review a few headlines.

Revenues increased 32% for the year to a record $2.7 billion. Operating income increased by 40% to $342 million, another record. We reported record net income of $256 million or 46% increase over 2006, and 2007 earnings per share totaled $7.64, up from $5.24 per share a year previous. Finally, earlier this month Jones Lang LaSalle was named to the Forbes 400 best big companies list for the third consecutive year.

Before turning the call over to Lauralee, I first want to review a few global market conditions. Global GDP growth is expected to slow in 2008 given the likelihood of a US economic slowdown and mixed conditions in global financial markets. The economist intelligence unit estimates that global growth could fall to 3.1% this year, down from 3.6% in 2007. The tightening of credit markets has been most severe in the US and Western Europe while Asia, Latin America and the Gulf states finished the year relatively unaffected. Nevertheless, financial turmoil is beginning to have a global impact.

How long it will take for credit market confidence to be restored is not yet clear, and it is too early to assess the impact of central bank interest rate cuts or proposed stimulus packages. Commercial real estate entered this environment in relatively strong shape. With healthy corporate demand for space, no massive overhang of unleased space and a generally limited development pipeline. Demand for space is likely to fall in some of the sectors that generate demand for office space, banking and financial services, for example. Other sectors, however, including high-tech, life sciences, healthcare and energy show few signs of weakness.

In 2008 capital flows to Asia, Latin America and Eastern Europe are likely to remain strong. However, lower US and UK transaction volumes will contribute to total capital flows. This could be significantly below last year's record volume particularly during the first half of the year. Current levels of interest in Asia Pacific's property markets indicate that investors remain convinced that the region will present superior returns. Capital is moving into Asia from all regions of the world.

Highly leveraged investors are largely absent from the market today, but institutional investors, [southern world] funds and Middle Eastern investors have significant funds to deploy, and though many remain cautious about pricing in the US and Western Europe. Occupancy demand for commercial real estate is likely to grow more slowly in developed countries during 2008 but healthy growth is expected to continue in emerging countries ranging from Brazil, Russia, India and China to Mexico, Thailand, Turkey and the Gulf states.

In US leasing markets supply and demand fundamentals in most office markets remain solid throughout 2007 with occupancy increasing in the fourth quarter in nearly all markets which we cover. US rental growth was above 10% nationally in 2007 and it is likely that rates of rental growth peaked last year and will moderate going forward. Nationally, rents should continue to increase at a pace close to inflation for the coming year.

In Europe, office growth take-up increased 6% in 2007 compared to the previous year. All European markets reported positive net absorption for the year. European vacancy rates dropped to 7.3% in the fourth quarter falling below 5% in the major markets of London, Madrid and Paris. Prime rental growth totaled 10.5% in 2007, and rental expectations remain positive although somewhat lower right across Europe.

Office demand in Asia Pacific continues to push most markets ahead with most markets likely to see further rental value increases throughout 2008. So with that broad background on certain financial markets and economic conditions buffered by generally strong real estate fundamentals, let me hand the call over to Lauralee.

Thank you, Colin, and good morning to everyone on the call. As Colin has just highlighted, 2007 was another record financial year for the firm. Our performance came from market leadership positions across a diverse business platform and growing global footprint together with the performance from our growth investment decisions over the past two years. Starting in the second quarter of 2002 when LaSalle Investment Management earned the unusually large incentive fee we advised we would be investing earnings from this onetime event aggressively into the balance of our business, such that we would be positioned to provide growth and performance from the strength of bigger and more diversified platform.

Our investments have included both new hires for organic growth, as well as multiple acquired businesses now successfully integrated into the firm. Today these investments are starting to deliver revenue growth and will be contributing increasing margin, as well, as we enter 2008. I will be covering our success with these investments as I review each segment.

In the Americas region the pace of the year changed rapidly in the fourth quarter such that our added new talent investment costs were not fully covered by our overperformance and strength of the business. As a result, operating income was down year-over-year in the fourth quarter. Despite decline in the fourth quarter we maintained our operating income margins at last year's levels for the full year. Prior to the fourth quarter, all markets and product lines were up in revenues over the prior year. In the fourth quarter we continued to see strong growth of 20% in our accounts business as we continued to expand existing relationships, as well as add new corporate clients.

This is a business that historically has demonstrated to be countercyclical in slower growth periods. We also had an almost 25% growth in our public institutions group, which focuses on the government and higher education spaces and which is, again, a countercyclical business. Additional strong growth year-over-year came from our project management business, our West Coast leasing teams that have a number of large technology and healthcare clients, as well as outstanding performance from Mexico and South America.

Offsetting these positives, we experienced a decline in US capital markets revenues of almost 35% in the fourth quarter due to slower investment sales in tightened credit markets, and a decline in large leasing transactions in the New York area as the financial sector delayed decisions on large transactions. Leasing revenue across the Americas was up 10% in the quarter and 20% for the year, reflecting our significant expansion in targeted key markets where we are gaining market share together with increased tenant representation transactions due to the growth in new accounts.

Our financial focus in the Americas for 2008, leverage and achieve margin off of our new hires and acquisitions, maximize our leadership positions in the corporate accounts and public institutions space where growth is countercyclical, continue to pursue market share in our targeted local markets, as well as our newer service lines of industrial, healthcare and energy and sustainability. And finally, selectively hire and strategically acquire.

In EMEA throughout the year we were very active in expanding our presence across the region as well as diversifying our product lines. Despite a fourth quarter significant decrease in revenue from the UK capital markets, the area most affected by the market are liquidity. The overall capital markets revenues for the EMEA region decreased only 12% for the quarter and more importantly the region's full-year revenue grew at just over 20%.

The UK capital markets decrease was offset by healthy increases in the developing markets of Russia, Central and Eastern Europe and the Nordics, as well as our corporate finance group which focuses on debt and equity services for clients. Additionally, our recent acquisition in the Netherlands settled in and contributed nicely in the fourth quarter, being now well positioned for 2008. The EMEA region continued to deliver strong leasing revenue with growth of 40% for both the quarter and the year. While the advisory business, which has both annuity and countercyclical behaviors grew 47% in the quarter and 65% for the full year.

EMEA's full-year operating income margin was 9.9% an increase of 3.4 percentage points moving us into the range of our long-term target. This margin was achieved while absorbing the purchase accounting and integration costs from seven strategic acquisitions made in 2007. Acquisitions added approximately 3% to the EMEA revenue growth but decreased margins by 1.5 percentage points. Our EMEA financial focus for 2008, maximize acquisition performance and synergies, leverage and strengthen our new markets being Russia, Dubai, the Nordics, Turkey; continue acquisitions taking advantage of continued industry consolidations and finally, capitalize on the strength of our Pan-European and global capital markets teams in transitioning acquisition markets.

Asia Pacific had a strong full-year growth across all countries and business lines in 2007. Our investment in the region over the past several years is now paying back. All countries and product lines increased both profit and margin in 2007 except for China where we continue to increase our capabilities and footprint given the country's immense opportunity. The region's 2007 results were not impacted by the credit crises. Capital markets revenues increased nearly 75% for the year as we advised on $9.3 billion of transactions in 2007 versus $5.3 billion in 2006.

Leasing gained additional momentum in the fourth quarter, with revenue up 62% while full-year revenue was up over 50%. Our Asia Pacific financial focus for 2008, increased margins and profits by continuing to leverage our expanded footprint and staffing investment; maximize our India acquisition which is performing strongly and only reported in the second half year of our 2007 results. And finally, capitalize on the growing investor interest for investments in the Asia-Pacific region with our strong capital markets capabilities.

LaSalle Investment Management, our leading global real estate money management business completed another strong year of performance for its clients and the firm. Assets under management grew 22% to $50 billion, which drove the growth in annuity-like advisory revenue. The funds business showed the highest growth percentage in assets under management for the year at 58%. As the earning power grows in the Asia-Pacific portion of LaSalle Investment Management both through advisory fees and incentive fees we are reaching a more balanced profit contribution across the three regions.

We now have a truly diversified global platform in our money management business. Advisory fee revenue was up nearly 40% for the year compared with 2006. As a result of market willingness to pay on fund commitments and the firm winning an increased number of global securities mandates. Excluding the large fee earned last year, incentive fees were higher this year compared with 2006 for both the fourth quarter and full year. We continue to exceed benchmarks and focus on building a portfolio of opportunities for our clients that will generate a solid underlying level of incentive fees for the firm in the future.

During the year performance from separate accounts was very strong, representing approximately 75% of the total incentive fee with commingled funds representing the other 25%. At the end of 2007 we have four funds in the final asset liquidation phase of their life and therefore positioned to contribute in 2008.

The financial focus for LaSalle Investment Management in 2008, continue investor performance to maximize incentive fees while harvesting the incentive fees from the liquidating funds, receive the benefit of locked in annuity fee growth from the new funds raised to pay on committed capital while we invest these commitments in a more favorable acquisition market; continue to grow separate accounts in public securities to achieve additional advisory fee revenue; achieve acquisition fees from several open-end funds now in place such as Asia property fund. Additionally, the business is well positioned having $300 million of equity capital to invest in and take advantage of potential special situations or opportunities in today's less liquid real estate marketplace.

In terms of cash flows and balance sheet, we generated EBITDA of $413 million for the full-year; our primary uses of cash for growth during the year included $134 million for acquisitions, a net increase of coinvestments of $20 million to support the growth of LaSalle Investment Management funds and the repurchase of 367,000 shares in the fourth quarter, bringing the total year to over just $1 million of repurchased shares. We ended the year with a solid balance sheet and a net cash position.

This concludes my discussion, and let me turn the call back to Colin.

Thank you, Lauralee. One reason which we focused on making targeted growth investments in recent years has been to continue to diversify our operations both geographically and in terms of our service offerings, to be able to offset and take advantage of the kind of changing conditions which we are witnessing in markets today. As you know, we focused on five key areas, strengthening our local and regional service operations, expanding our three global service delivery lines, global corporate solutions, global capital markets and LaSalle Investment Management and finally, establishing the world standard for client service delivery.

Reviewing each of those in order, 2007 was a very active year for investments in our local and regional operations. We opened new offices, hired talented individuals and teams in markets around the world and completed 13 strategic acquisitions globally during the course of the year. Our objective for these investments is to extend our geographical presence to new markets where clients need our assistance, to expand our position in existing markets where we see opportunities for additional growth and to establish new, strengthen existing service offerings in established markets.

Less than the year after we expanded into the near East with the acquisition of the RSP Group, for example, our Dubai team won the first major leasing assignment in the history of the Emirates rapidly expanding real estate market, the 2.3 million square foot to Dubai World Trade Center district. After opening our first office in Bucharest early in 2007, we closed the largest ever structured sale of an office investment in Romania. After opening an office in Istanbul we won the property management and leasing assignment for Turkey's largest shopping center. We joined forces with Trooswijk Makelaars. We created a new market leader in the Netherlands and our capital markets team was retained for all three of the Netherlands' major portfolio sales last year and our Amsterdam agency leasing team achieved the top position in its market.

Our November acquisition of Upstream*, the leading UK environmental sustainability consultancy, significantly strengthened our position in the sustainability arena, an area of rapidly increasing importance for corporate clients and more recently for our investor clients, as well. And Jones Lang LaSalle Meghraj, the merged entity which we created in India in July has helped us grow our business substantially in that fast-growing market, making us the market leader.

Acquisitions in the US strengthened our presence in the industrial sector, in retail transaction management and in real estate invested banking. We remain active this year as well. To date in January we have acquired a retail management firm in Germany, a commercial property agency in Australia and a leisure and hotel specialist business in Scotland. And just on Monday this week we completed negotiations to acquire Kemper's Group, the German market leader in retail, capital markets and retail leasing, a business with more than $50 million in annual revenues. The acquisition which is subject to the approval of German authorities will make us the leading property advisory business in Germany, which is EMEA's second-largest market, and it will additionally give us new offices in Leipzig, Cologne and Hannover.

As we continue to build our business, we also continued to serve the comprehensive needs of our clients in local and regional markets during the fourth quarter. In the US our real estate investment banking team has arranged debt financing on behalf of Spaulding & Sly Investments and Prudential Real Estate Investors for the Victory Center, a 1.25 million square foot office development in Alexandra, Virginia. In Europe our Russian and Pan-European retail agency teams were retained by IKEA to act as coexclusive leasing agents for IKEA's megacenter retail park developments. The portfolio includes eight existing projects across Russia, ranging in size from 1.4 to 3.2 million square feet, each one anchored by an IKEA store and plans for another four Russian megacenters are scheduled to open by next spring.

In Scotland we were selected to manage Waverly Gate in Edinburgh. This is the redevelopment of a former General Post Office building in the city center, and this assignment represents an early return on the investment which we've made to build our Scottish business.

In Asia Pacific EDS appointed Jones Lang LaSalle Meghraj to undertake transaction management services on its behalf throughout India. Finally, Fidelity Investments selected us to provide tenant representation and transaction management services across the financial services companies portfolio in Greater China and Singapore.

Our second priority is to continue to build our Global Corporate Solutions business. During 2007 we recorded 13 multiregional Corporate Solutions wins, achieving 68% win rate, and we were retained in all of the 12 multiregional renewals that came up during the course of the year. As part of our global relationship with Microsoft we were retained to project manage the development of 1.6 million square foot China headquarters facility in Beijing. We assisted Adidas with the development of a 1.8 million square foot global distribution center in South Carolina, which generated similar assignments for Adidas in Panama, Brazil and the UK as a result.

And the global bank, HBOS, selected us to provide facilities management services for more than 300 sites across Australia. In a recent high-profile, we also substantially expanded our relationship with BP, having provided that company with transaction and lease administration services in the Americas since 2005 we will now deliver transaction management services for them in EMEA and Asia Pacific, as well. This global portfolio now totals nearly 22 million square feet.

Our third growth priority is to build a truly global capital markets service line. And during the fourth quarter our Pan-European capital markets team partnered with local teams to sell three separate assets on behalf of [Reef]. The 650 million square foot portfolio located in Paris, Budapest and London was sold to a consortium of investors for more than GDP300 million. In December on behalf of JPMorgan Chase Investments Management we completed $262 million sale of Union Square in Washington, D.C., the two building, 600,000 square foot office complex. In London our Western investment team completed more than GDP240 million of transactions during the final weeks of the year disposing of 4 Western buildings and acquiring another two on behalf of institutional clients.

In Asia we completed the $70 million acquisition of the Chungmuro Tower in Seoul, Korea on behalf of CGI. In Australia we represented QIC, a government-owned investment corporation in the sale of a central plaza complex in Brisbane. The $840 million Australian dollar sale price set an Australian record for a single complex transaction. Also in Australia Jones Lang LaSalle Hotels negotiated the sale of the Park Hyatt Hotel in Sydney to a private Japanese investor, and the price set an Australian record on a per room basis.

Our fourth strategic priority is to maximize value from Jones Lang LaSalle Investment Management. LaSalle recorded another impressive year in 2007, growing our global money management business significantly while continuing to deliver superior results to our client. LaSalle raised more capital in 2007 than in any previous year, $10.1 billion separate accounts, private direct funds and publicly listed investment programs. During the year we invested $8.4 billion worldwide. 2007 highlights for LaSalle also included the launch of five new private equity vehicles. We also grew our position in the global securities business raising $3.9 billion for these investments and establishing 16 new client relationships in the process.

Finally, our fifth strategic priority is to develop the world standard business delivery platform for our company. Global financial and human resources systems are now installed in the Americas and in Asia Pacific and installation in the EMEA region remains on schedule for completion in the course of this year. We also continued to introduce market leading technology for our clients to enhance our performance and service delivery capabilities.

So to sum up, one month into this new year we are focused on continuing to build our business by delivering the superior client service our clients have grown to expect from us. While 2008 is shaping up to be a challenging year in some markets we do see ample opportunity to grow our business by continuing to invest selectively and take market share across our operations. So with that, we would now like to open up the call to your questions. Operator, would you please explain the process for us?

(OPERATOR INSTRUCTIONS) Jeff Kessler.

Firstly, congratulations on a good quarter in a challenging environment. The first question I have is the margin, your margin in EMEA clearly was higher than what we or I think any other analyst had, and I guess my question is what were the components of that margin increase, and are those sustainable given the amount of new investments that you want to make in those areas?

I think there are a couple of components, Jeff. First of all, as you know it has been our strategy to raise the margin in the region and so we've been working hard on a number of different funds to do that. I talked about the very successful growth of our advisory business, which now is about 40% of the size of our capital markets business in EMEA. That is the business that has a very high margin. It is a business that performs relatively consistent even through cycles, and I think is a demonstration of really the expertise and advice that Jones Lang LaSalle can be to clients. And we expect we will continue to grow that.

We also talked to you about the leasing market in Europe had lagged a little bit the recovery in some of the other areas, again a very high margin business. I talked about the growth in leasing and the predictions that leasing will continue to grow in EMEA throughout the year as Colin talked about the fundamentals of real estate across the board being very good. Additionally, we've obviously done a number of acquisitions. Those to date are clearly leveraging our platform, which is our infrastructure cost. We are not getting the margin yet off of those, but those are the [piece] that will get us into the -- solidly into the margin that we want because they actually knock the margin down about 1.5 percentage points.

The last piece I would say is just the footprint of Europe gets bigger. And typically the market that you play in you play with the growth in those markets. In Europe and in Asia and hopefully in the Americas as we have the service lines and the other geographies into South America and Canada more robustly, all these markets give us a bigger footprint. But the growth in Russia, Eastern Europe, the additions of the Nordics, Turkey, all of which are markets where we sell our high margin business into very successfully, contributed very strongly. So a theme we've been emphasizing and will continue to emphasize is that the platform that we have today is a very different platform than what I think many of our investors are judging us on. And therefore it is that new platform that gives us the margin and the growth.

One other question, your tax rate had been running in the mid-20s, 26.5 or so for most of the first three quarters of the year. That fell by a good 200, 300 basis points. Is that regional related, or is that related to something else?

We continue to manage our tax on a global basis. You are correct throughout the year and the year before actually we've been running in the higher 26% range. We have now for the year are down in the low 25%. We believe we have a sustainable tax rate in that 25 to 26% range going forward. So what you have in the fourth quarter is the adjustment that brings the total year now to the absolute tax rate that we are having for 2007. So if you look at the total year that is an indication of the, that is the base of the run rate.

One final question about Europe and then I will get off. The leasing business particularly I think in mid Europe, Germany and Eastern Europe had lagged the recovery. That seems to be recovering now. However, the actual transaction business in Germany seems to be a little bit disappointing. Is Germany turning a little bit to the negative a little bit he faster than you would've expected, or is the dynamic in the middle of Europe just that much different than Western Europe at is point between transactions and leasing? Or between sales and leasing -- excuse me?

Let's go to a little bit of detail then and split Europe into three zones. The UK, Western Europe and then Eastern Europe that Lauralee just referred to. Taking the easy bit first, Eastern Europe, that's Russia and Central Eastern Europe down to Turkey, Romania where we opened up last year, what you see there is very robust demand for space, very rapid, general very rapid increases in rental rates, low levels of vacancy. On the lease demand-side lots of corporate activity, very healthy economic growth.

The investment sale side is very patchy in those markets. You still see strong sales activity in Eastern Europe which is the most robust investment market with cap rates, for example in Prague we sold a suburban office park in Prague for a cap rate of 5.5%, yield of 5.5% in the course of the last quarter. So Eastern Europe generally active, the capital market in Russia and the more marginal states have yet to really develop. So not a lot of comparable activity there except that there is a lot of interest by investors and demand is generally healthy albeit with relatively low transaction levels.

Flipping across to Britain, what you see there is what we've described in the course of the year in the capital markets which is to say that from the beginning of 2007 you saw volumes dropping and market corrections. And the generally accepted wisdom in British markets is that cap rates yields have moved out by 100 basis points. And that means something like a 15 to 20% drop in the, from the peak prices we saw end of '06 beginning of '07. But a sense that maybe markets are beginning to bottom and there is some interest on the part of investors in moving back into UK real estate investment as it begins to look comparatively attractive again, in the sense that maybe there is some sort of a bottom to the market. But volumes have been depressed in those markets, off 20 to maybe 30% in the quarter, the last quarter of the year.

Leasing demand in Britain has been healthy. It dropped not at all in the last quarter of last year with the exception of central London where we saw some softness as Lauralee referred to around the financial sector which we're seeing also in other cities, notably in New York. Getting to Central Europe and closing quickly, the demand there for space has remained healthy. We've seen no drop-off in demand for lease activity, rental rates continue to rise, your vacancy rates as I referred to in my talk are sub 7 and sometimes sub 5%, so you're seeing very tight markets, healthy levels of demand, increasing levels of rental activity.

And as far as capital markets goes, really fairly robust activity even through the last quarter of last year, with the exception of some fallaway in the sort of the very large portfolio deals that we saw end of '06 and beginning of '07. But generally surprisingly robust activity in the capital markets too, in Europe. So a rather long answer to your question. I hope I covered it.

Yes, thank you very much. I appreciate it.

David Gold.

A couple of questions and points of clarification. One, can you comment on the acquisition front. A couple of things. One, contribution during the quarter and two, I think when you work that if you can break down the 5.25 as to geographies and maybe give us a sense for size.

The majority of the sizable acquisitions that we've done have been in Europe. So the discussion that I had covered was principally Europe because in the rest of the part of the world it probably doesn't impact either growth or margins at this point. And so in Europe the acquisitions from this year contributed 3% to their revenue growth. And because when we first bring the acquisition onboard, there is a number of things with purchase accounting which means that we've got to recognize the pipelines they have in place for transactions, or amortization off of the customer relationship. And then have a fair amount of integration costs that relate to incorporating our offices together and putting them on our technology and so forth that those costs run in through our operations. And in EMEA that decreased their margin about 1.5 percentage points.

Clearly those go away very quickly, those costs once they are done and then that revenue growth would, in fact then be adding margin to our performance as we go forward. So if we look at acquisitions going clear back to Spaulding & Sly that is now in our operations, strongly contributing margins and that is the profile we target is that we're sort of neutral the first 12 months, maybe a little positive. And as we enter the second twelve months they are contributing strongly to our performance.

And so the 3% Lauralee, to revenue, that is primarily in the fourth quarter? In other words, those were the fourth quarter acquisitions largely?

No, no, they would be running throughout the year, David. The costs actually are more in the fourth quarter. Second half of the year is probably the best way to put it. Because if you look at our larger ones the Dutch one was done in the middle of the year. So those, they would be largely second half at both revenue and cost.

Of course in the course of 2008 you're going to see full-year contributions from Troostwijk, the Dutch acquisition. The Indian consolidation, both of which were in one case made in the Troostwijk earlier in 2007 and as we get through the clearances from the competition authority in Germany you will see a contribution from Kemper's chipping in as well in the course of 2008. So those are the incremental pieces of revenue which will come in in this current financial year.

Okay, and then I guess a point to gratification. Did you say the capital markets business in the US was off 35% in the fourth quarter, did I hear that right?

Yes you did, but remember it is a small part of our business in the US.

That's fair because I was just trying to, I thought the release actually said 20%.

We'll check that out. By the way, David, the overall market volumes were down significantly more. Our impression is that we continued to gain market share in the US capital markets business and our overall picture for the year was a gain of 20%. And maybe that is the --.

Got you.

Was about 20, and I think the last quarter was down 35.

And just one last one. In the environment as it is, presumably I would sense probably become a little bit easier at least domestically for you to put some more money to work on the investment management side. Just curious if you can update us sort of looking at the fourth quarter one, if investment management has been more active presumably in the US of late, or I guess if I look at the last couple of funds you've raised, the mixes of Americas, Asia Pacific; is that money more targeted at Asia-Pacific?

Well, we've got in total north of $10 billion to invest over the coming couple of years, so with no shortage of activity to get on with. And it is spread, there is obviously a chunk of that in Asia-Pacific but is spread also across Europe and the Americas. So we have healthy levels of funds available in both of the mature continents. What we are doing first of all, it is important to note that despite the credit market issues, which the market as a whole has seen, LaSalle Investment Management has had no difficulty in raising financing to put on transactions it chooses to do. And LaSalle has always had a relatively conservative 50 to 60% level of leverage in Europe and Asian activities. So we have not been impacted by availability of credit.

On the buying side there are clearly lots of opportunities, and the cash rich, equity rich funds such as LaSalle have seen good opportunities coming their way with relatively much less competition from the very highly leverage players who were dominating the markets two years ago. That being said, they are being very careful they are being very careful about the transactions which they do undertake. They are being very cautious given the market conditions and keeping front and center the thought not that they just have to invest money for the sake of meeting quotas but they are investing money on behalf of their clients be they commingled funds or individual mandates. And so they are keeping very front and central the issue of what is in the best interest of their client. And in some cases, in some markets, that means holding back for a while, they will do that.

To make a case in point, our UK Ventures Fund was very cautious and actually spent very little of its capital during the early part of last year when the London markets were showing difficulty and pricing levels were not clear to everybody. They are now seeing more opportunities open up as that market begins to feel more interesting for them.

Perfect. Thank you both.

Will Marks.

Thank you. On share repurchase you mentioned the amount during the quarter, and I am not sure if you gave an average price.

Our average price was $80.77 a share.

And any just thoughts on your plans to continue? How much do you have left in the program, and do you plan to (inaudible) version?

We still have substantial in the program, and the board has typically upped that at the point in time we go back to them and ask for more. Our pattern normally is not to be aggressive at the start of the year because we will in fact be borrowing into our credit lines with our bonus payments here. And so as we borrow for that we are more likely to focus on that use of cash. And as we get further into the year we do the trade-off between growth and acquisitions, coinvestment and share repurchases as the appropriate balance. So that will be our pattern again. I would not anticipate we will be fairly aggressive in the first quarter just because of managing the balance sheet.

We have been focusing on keeping our share count constant or slightly moving it down despite the fact that we do pay our people with stock as part of their bonus compensation in order to keep alignment and everybody motivated for the same purpose. But we understand we do not want that to in any way dilute shareholders. So that has been our strategy.

Great. Bigger picture question. You guys say in the press release, show over $400 million of operating cash flow in 2007. How should we think about uses of cash in 2008? Regarding share repurchase you kind of mentioned, but also CapEx and acquisitions?

Well, CapEx, we ended up the year spending a little over $110 million, which actually was up significantly from 2006 where we spent $62 million. What I will say is the majority of that increase actually was in leasehold FF&E, combination of the platform growth, which will not probably be as aggressive as what we have been doing. And then the fact that as we do acquisitions we integrate those offices quickly, and that requires us to do the spinout and so forth that goes with that. So our intention on a base level is to come down from that 110 more in the $75 million range. However, it could flex back up to an equal number again if the acquisition pace comes through.

Acquisitions are opportunities, so they are hard to predict. But what we do is we know where we want to strategically add. We evaluate the fit of the opportunities just as they evaluate the fit of being part of our platform in their decisioning. And we plan to, again, be aggressively selective in order to expand our capabilities. The advantage of an acquisition over organic growth is that the staff more quickly hit the ground in terms of production. You can't be as targeted or selective as you can with organic. But we do know the organic growth takes an 18 to 24 months time period before it is fully productive. So in this marketplace, it pays for us to pursue acquisitions over organic, and that will be our strategy.

Okay, and then regarding acquisitions, you guys had mentioned a 3% contribution number in '07. How should we think about -- in a way, I was a little bit confused by the answer. And if you look at '07 acquisitions and maybe what you've announced so far in '08, how much of '08 revenues are from those acquisitions, or will be from those acquisitions?

We can give you -- we will do some sums while we're talking, but think in the order of 5 to 10 percentage points of revenue.

Okay.

But we will refine that and hopefully give you that before we close the call. Just as a matter of sort of market dynamics, it is not surprising perhaps that we are seeing lots of opportunities to acquire companies currently. And as Lauralee said in that night nice phrase, we are being aggressively selective about those whom we choose to discuss the potential merger, and even more aggressively selective about those with whom we choose to finally get together. But we have a useful level of activity in the merger area, and really across the full suite of our geographies and product lines.

David, just to go back to your earlier question -- I'm sorry, Will -- David's question on capital markets, I was discussing US capital markets down 35%. The press release discusses America's capital markets, which is offset from Canada, South America, which is why when we sum those together, it is down 20%.

I think it reinforces, just like the story in Europe, that the diversification can offset the dynamics and maybe some of the more mature markets of the US and the UK. So that is the difference.

Lauralee and Colin, on new hires, I imagined you hired a lot of people from the former Trammell Crow platform in '07. Can you quantify your growth in employee base at all in '07 from new hiring?

Within the US, you're referring to, Will?

Yes.

It is in the order of many hundreds of people, many hundreds of transactors.

Relative specifically to competition, it is 100, but relative to adding accounted in all those others as Colin says, it is much more than that.

Okay. And then just one final thing. Lauralee, on your website are you going to post an updated investor presentation soon?

Yes, we are. It may have just a couple days lag because we want to make sure that some of the pages that are more meaningful to you, such as the invested dollars in LaSalle Investment Management Funds, etc., are there. But we will either get partially up something immediately and then update it one more time, or we will have the full one concluded here very shortly.

Great, thank you very much.

Brandon Dobell.

I'm not sure if this is a better question for Colin or for Lauralee, but in the context of some of the kind of the outlier growth rates, both good and bad in Q4, I wonder if we could get a sense of now that one month into the year gives you all that much visibility into the near-term, let's call it, versus the first half of the year; but wonder if we could get a sense of where the momentum has continued or has not continued. Have you seen a significant snapback, i.e. in capital markets transactions in the US which were down a lot, or perhaps a slowdown in growth in some of the outlier areas like Russia?

Just trying to get a sense of where that bell curve might sit in terms of near-term growth rates.

Yes, Brandon, good question. We've obviously been focused on that ourselves. As you say, only 30 or so days into the new year. Our overall impression -- and this is not a passive, this is an active impression we have from talking to our regions -- is that there has been no change in the market picture in the first month of this year as compared to Q4 last year.

Okay.

So the economic dynamics haven't changed. The demand dynamics haven't changed. And the level of transactions in either the leasing or capital markets worldwide have not really changed fundamentally. So you are seeing continuing softness in capital markets transactions in the US and the UK, softening markets but still reasonable levels of activity in Central Europe, and across east of that good levels of transaction, demand and robust pricing in the capital markets area.

And leasing activity, demand for leasing has continued to be firm. I think it is sort of underpinned to some extent by the numbers we've seen in the US in the last couple of days where you have seen -- while the consumer spending has been relatively depressed, capital goods orders up in the order of 10%, 11%. And you're seeing another round of corporate profits which are again healthy, and we see corporate clients, the corporate planets we talk to and work for generally still feeling positive about their expansion plans with the exception of the financial services sector as we referred to.

Critical issues for the course of 2008 and how are the things we are looking at; we are looking in the -- for capital markets, we're looking for stability and confidence to return to the debt markets. It certainly isn't there yet. You will have to talk to other people to get a better, a more informed opinion as to when it might come. But our sense is it will be the first half, somewhere in the middle of the year at least, before that level of confidence returns and some of the pricing which debt providers are putting on their transactions begins to come back into more normal levels.

And in the economic, in the leasing area, clearly the key indicator is economic activity. And finding the level to which that will slow in the US and potentially Western Europe is the other thing we're watching carefully. So two sort of key determinants of how the markets will develop for us in 2008, which we are watching very closely.

As a kind of an add-on to that, historically how relevant have jobs reports been in, let's say, in Western Europe and the US; how relative relevant have those been to the leasing business for you guys, or have you seen a disconnect over the past couple of years, just given your exit business within those two geographies?

Clearly, sooner or later, slowing or increasing or growing job market is going to have an effect on demand for space. And you've seen in the course of 2007 a slowing level of uptake of gross demand in the US market, but still positive absorption. So you've got this odd dynamic everywhere, but although the economies are slowing in US and parts of Western Europe, gross absorption is still positive and the level of vacancies are falling.

What that means in the dynamic that introduces into the market is that as corporates think about their needs for space, they are very hesitant to delay for very long because their choices or their options in the market for taking up space are relatively limited when the markets are this tight.

And they are not about to be rescued, if that is the right word, by a sudden influx of development activity. Because with the possible exception of the D.C. area in the US, the level of the development in Western Europe and the US has remained very constrained during this cycle.

And one final question, I think we've got a pretty good feel for margins or at least profit expectations in the EMEA. I wonder if we could get some similar color in the US as in investment management; anything that you look out in the near horizon that would change kind of the trajectory of profit margin direction within investment management or the Americas.

Well, let me take the LaSalle Investment Management first, because it really hasn't gotten much airing in the questions. And clearly, it is a business that for us has been and will continue to be one of our strongest growth businesses. Because the capital raised last year in our funds, which is where the majority of the capital was raised, principally is now being paid on committed dollars.

We have that revenue stream locked in even before we add the additional staff that will be required as we put that investment dollars to work, which means if we've got margin pressures there, we actually get a fair amount of space to work that through.

Second of all, that our maturing funds were invested a number of years ago prior to what had been a rise in pricing markets. So the asset prices they were purchased at, and quite honestly because we are at the tail end of liquidation means that most of the assets were liquidated in that favorably priced marketplace, we've locked in very healthy returns on those.

So as we liquidate the tail end of the assets, we still should have strong performance in those funds. So on a cycle basis relative to what is happening out in the economic environment and the real estate space, we happened to hit the cycle about perfectly, both in asset disposition and capital raised.

So the one thing we will be watching is that like in all businesses, it will probably take a little bit longer to get the assets sold, because things seem to be slower. And we will probably be more selective in buying assets just to make sure that we've completely taken advantage of the environment. But other than that, the business is in a very healthy state.

Addressing your question on the US, go back to what I said earlier. The fundamentals of the market have not really changed in the first month of this year, and looking forward we don't see significant changes at this point. So the momentum of our US business, remember that individual elements of it, we talked about our advisory business being very strong in the US. For example, our corporate finance business has been up very strongly in the last quarter of last year.

We've seen increased levels of rental and tenant representation activity, such that we are growing that area of our business on the order of 10% in the last quarter of last year and 20% for the year as a whole. I've talked about the slowdown in our capital markets business in the US, but against that we have a good, strong pipeline of capital markets transactions which will clearly, obviously, just take longer to close than they did a year ago.

So no fundamental changes in the picture for demand in the US. But we are watching, obviously, the leading indicators that I described earlier on of restoration of confidence in the debt markets and any changes in the level of corporate confidence or investment in growth in space.

Thanks, very helpful.

At this time, there are no further questions.

Operator, thank you. We will then draw this call to a close, and I would like to thank everybody who joined today for participating. Thank you for your interest in Jones Lang LaSalle, and we look forward to talking to you again at the end of the first quarter.