Jones Lang LaSalle Inc (JLL) 2012 Q1 法說會逐字稿

Good day, and welcome to the first-quarter 2012 earnings release conference call for Jones Lang LaSalle Incorporated. 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 report on Form 10-K for the year ended December 31, 2011, and in our other reports filed with the SEC. The Company disclaims any undertaking to update or revise any forward-looking statements.

A transcript of this call will be posted and available on the Company's website. A web audio replay will also be available for download. Information and a 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, and hello to everybody. Thank you for joining us for this review of our results for the first quarter of 2012. Lauralee Martin, our Chief Operating and Financial Officer, is with me today in Los Angeles, and in a few minutes she'll review our financial performance in detail.

First of all, a few headlines. Our revenue totaled $813 million for the quarter, an 18% increase from the first quarter of 2011. And we were pleased with the broad geographical spread of growth across all of our reporting segments. Adjusted net income was $22 million or $0.50 a share, compared with $1 million or $0.03 per share in the first quarter of last year. Adjusted operating income margin improved in all operating segments. And on a consolidated basis, the overall margin improved to 3.4% from 1.9% last year. And our Board of Directors has declared a semi-annual dividend of $0.20 per share of our common stock, which is up from $0.15 per share previously.

To put these very encouraging results in context, here's a look at conditions in different economies and real estate markets around the world. The global economy continues to move forward, with growth driven by improving conditions in the US and in emerging economies. And by injections of liquidity in the eurozone, rising equity markets, and strengthening business and consumer sentiments. According to the latest forecast from the IMF, the global economy will grow by 3.5% in 2012, down marginally from 2011. Annual GDP growth is expected to be 1.4% in advanced economies, and 5.7% in emerging and developing countries. For largest economies, the IMF forecasts 2.1% growth for the US, 8.2% in China, and 2% in Japan.

To summarize conditions in key real estate markets, we've posted, in the Investor Relations section of our website, www.joneslanglasalle.com, some slides which we'll now review. Slide 3 shows the Jones Lang LaSalle investment sales clock depicting capital values in major world markets at different stages of the real estate cycle. Despite our positive stance on global growth this year, our figures indicate a relatively quiet first quarter. With direct investments into real estate totaling $77 billion globally, 21% below the first quarter of 2011. We predict that volumes will pick up during the year, and total around $400 billion by year-end, or about the same as last year. You'll see that year-on-year capital values are still growing in virtually all major markets, although the pace of that growth has begun to slow in a number of them.

Prime office yields have remained stable in most major global markets, the result of attractive spreads and continued investor demand for high-quality, well-let assets. We have seen some yield compression in Hong Kong and Singapore. While in the US yields have temporarily softened in New York, Washington, DC and Chicago.

Turning to slide 4, you'll see a picture of conditions in leasing markets worldwide. Compared to a year ago, growth in rental values has begun to slow in a number of markets. And values have actually begun to fall in Singapore and Hong Kong. In Asia-Pacific, leasing activity decreased during the quarter due to corporate caution and slower economic growth. With net absorption falling by 50% quarter-on-quarter and year-on-year to around 600,000 square meters. Gross leasing volumes fell by about 30% quarter-on-quarter. And in Europe, gross take-up in the first quarter totaled 2.3 million square meters, 15% below the first quarter of 2011. Absorption in the US remained positive, but was 23% below the quarter one 2011 levels. These declines may be explained in part by tenants delaying decisions on space during the fourth quarter of 2011 at the peak of concerns on Euro-related issues. Those delayed decisions may have had an impact on the first quarter of 2012 market volumes.

Office vacancy rates continued to trend down during the quarter. With vacancy rates across 94 global markets now standing at 13.4%, its lowest level in more than two years. Regional rates vary from 16.4% in the Americas, to 10.2% in Asia, and 9.9% in Europe. Rental growth on prime assets in top markets also slowed during the quarter, growing 0.4% across 90 major world markets compared to 0.9% growth in the fourth quarter of 2011. The majority of major global office markets registered modest or unchanged prime rental growth. Whilst the strongest growth was seen in Beijing and Sao Paolo.

All in all, an ongoing but rather hesitant recovery, and a relatively slow start to the year. But as Lauralee will now tell you, in this environment we continued to gain market share, posting double-digit growth in all three of our geographic segments, and across all of our real estate service business lines.

Lauralee?

Thank you, Colin. And also good afternoon to everyone on the call. To add to Colin's comments, we feel good about our start to the year. We saw strong performance across all segments of our business in the seasonally slow first quarter, which resulted in 18% revenue growth, improved operating income margins, and $22 million of adjusted net income. We generated this performance despite declines in transactional activity in many significant markets around the globe. As noted in our earnings release, and as we've discussed in our quarterly calls for the last year, we continue to see strong growth in property and facility management, and project and development services. These are business lines we value for the consistency of their annuity revenues.

However, many of these client assignments require gross accounting under US GAAP. This accounting requires that vendor and contractor costs are included in both revenues and expenses. With our focus on cost discipline and increasing our margins, we've broken out these costs in our results to show their impact. Transactional activities, such as capital markets and leasing, are not impacted by this accounting. And the accounting also does not impact our profits. We've defined revenues excluding these gross contract costs as fee revenue.

In the Americas, fee revenue increased 15% from the first quarter of 2011, to $327 million. The most significant increases were in capital markets, up 41%, and in property and facility management, up 32%. These strong increases demonstrating that we are achieving payback on the investments we've made in people staffing and in our platforms. The 5% increase in leasing revenue reported in the quarter follows a 35% year-over-year increase in the first quarter of 2011. And well outpaced the year-over-year change in market volumes, indicating additional market share gains.

Moving to EMEA, fee revenue increased 31% in local currency from the first quarter last year, driven by significant increases across most service lines. We had a strong quarter in France, with significant revenue increases in leasing, capital markets, and in our Tetris fit-out business, which is reflected in our project and development services business line. The King Sturge acquisition has been integrated, and is performing well, particularly where it was historically stronger in England, and in Central and Eastern Europe. Looking forward, our pipelines are strong, particularly in England and in Germany. And we remain focused on managing the cost base across the region, and achieving the savings expected from our cost actions taken over the last 9 to 12 months.

In our Asia-Pacific region, fee revenue increased 14% in local currency over the prior year. Colin mentioned that transaction activity across the region's broader marketplace fell significantly compared to the first quarter of 2011, as economic growth by country was mixed. Despite these conditions, we achieved leasing revenue growth of 12%, and growth in capital markets and hotels revenue of 19%. This growth was achieved by the success in the local marketplace with local clients, which filled the voids of lower international client activity levels. Also, the 12% increase of property and facility management fee revenue reflects continued expansion of our high-quality platform serving corporate occupiers.

LaSalle Investment Management generated significant profits in the quarter, with total segment revenue up 24%, driven by a $5 million increase in incentive fees primarily from a Canadian fund, and $14 million more in equity earnings than in the prior year, driven by a gain on the largest portfolio sale in Asia-Pacific in the quarter. We will lose the advisory fee income from this portfolio of approximately $1.7 million per quarter until we successfully rebuild assets under management with new investments. However, we are anticipating a significant incentive fee from this portfolio sale later in the second half of this year to more than offset the short-term financial impact. Assets under management remain steady from the prior quarter at $47 billion. In total, LaSalle Investment Management continues to deliver leading investment performance, demonstrated solid capital raisability, and provides a steady base of advisory fees.

With respect to our financial position, the Firm's balance sheet remains investment-grade. Cash flow activity during the period was broadly consistent with historical first-quarter activity, driven by cash payments for annual incentive compensation. Interest expense was down to $7 million in the quarter. And we're happy to be in a position to increase our semi-annual dividend to $0.20 per share.

In summary, we're pleased with our first-quarter results. We continue to take market share. We continue to enhance our operating and financial position. And we are well-prepared to continue increasing the strength of our business in 2012.

Let me turn the call back to Colin, who will discuss some of our recent business wins.

Thanks, Lauralee. Let's look at some of those business wins to give you a sense of how we generated our first-quarter results. We are obviously pleased with our business-generating momentum. And slide 5 shows a few examples of recent new assignments. Starting with our global corporate outsourcing business, we won 30 new assignments during the quarter, renewed 8 contracts, and expanded our relationships with another 12 clients. And our local market-level corporate business, which services mid-market corporate clients, won business totaling 36 million square feet of space, from 14 further clients. Our corporate solutions wins included a new assignment from Ericsson to provide project management services for the telecommunications company's 26 million square foot global office portfolio.

Looking at first-quarter investment sales activity. In the largest-ever single asset property deal in the Netherlands, we advised Phillips on a EUR425 million sale of their high-tech campus in Eindhoven. Major leasing and tenant representation assignments completed during the quarter included a 355,000 square foot lease in Dublin for Merck Schering-Plough.

LaSalle Investment Management continued to deliver strong performance for its clients during the quarter, generating healthy incentive fees and equity earnings for our Firm, as Lauralee has described. LaSalle has invested approximately $1 billion to-date this year on behalf of clients, exceeding its total for the first quarter of 2011. LaSalle is also actively marketing and raising capital for a number of new products for investments in the US, Europe and Asia. Capital raising for co-mingled funds is beginning to become easier. And we believe this will also add to LaSalle's ongoing success in winning single client mandates.

Looking forward, we anticipate that prospects will continue to improve at different speeds in most markets. As I said earlier, we believe that the investment sales volumes will increase during the year to reach levels similar to 2011 totals, approximately $400 million. The weight of capital dedicated to real estate remains strong, and further inflows are expected from other asset classes. We expect prime yields or cap rates to remain relatively stable for the remainder of 2012. So, any further capital appreciation will echo rental growth rather than further yield shift. Most major office markets are expected to continue to record positive rent and capital growth in the range from 0% to 10%. Outperformers showing 10%-plus capital appreciation include Beijing, Sao Paolo, San Francisco and Toronto. Full-year lease volumes will be slightly lower than 2011, down 5% to 10% in Asia-Pacific and Europe, and flat in the US. In the funds management sector, the institutional investor community is committing new capital only cautiously to real estate. And LaSalle remains focused on raising new capital for its funds, and winning new individual client mandates.

To close our remarks, we like to talk about some of the awards we've received, which reflect our commitment to superior client service, and our position as leader in real estate services and investment management. So, already in 2012 we were named one of the world's most ethical companies for the fifth consecutive year. In the UK, we topped the Estate Gazette's 2011 lead tables for most active letting agent and most active investment agent. We were named best medium-sized company in Ireland by the Irish Independent Newspaper.

In Russia, we won Consultant of the Year 2012 honors, the eighth time in nine years that we've received this award. The Asia Retail Congress named us International Property Consultant of the Year for the fourth consecutive year. And in India, we were honored as Property Consultant of the Year in both commercial and residential segments.

General Motors awarded us its Supplier of the Year award for the fifth consecutive time. And we've seen that client, obviously, through bad times, and now into better times. And we've received the US EPA's 2012 Energy Star Sustained Excellence Award.

Looking ahead, our 2012 priorities will continue to be strong net income growth through market share gains, improved margins and increased productivity.

So, with that summary, we'll move to questions. Operator, would you please explain the Q&A process?

(Operator Instructions). David Gold.

A couple of questions for you. One, making impressive headway, obviously, by way of market share. And we see that presumably a couple of different ways. But was curious, two things. One, how do you think about or measure that? And, two, what do you do to continue down that road? Or has the hard work basically been done already, as far as adding, and now is it just productivity increasing?

The hard work is never done, David. But the way we measure it, first of all, we presage all of these remarks with comments about market developments. And I think what you've heard on the call this afternoon was us describing markets which in Q1 were broadly down in both leasing and capital markets activity across all three major world regions. And against that, you obviously heard our own numbers, which indicated market share gains. We have some competitive metrics we can compare with other published numbers in different regions around the world. And so those two together are the basic stats that we use to make those statements.

In terms of how we've achieved it, there's obviously a mixture of some small acquisitions, some medium-sized acquisitions in there. One in particular, obviously. We've been adding numbers of people, teams, individuals around the world in particularly our transaction activities. And those teams, as they become more productive through the initial 12 to 24 months with the firm, begin to contribute significantly to revenue. Add to that the fact that we just seem to be ongoing as a consolidator in the industry, and clients do seem to be moving their business towards a small number of large providers of services. And you draw out of that together the picture we've described.

Okay. That's helpful. But prospectively going forward, and on a couple of fronts, one, I would love thoughts on continuation of making progress. And two, presumably, you're very clear about the climate certainly changing. Maybe it's just that the margins are changing for the worse a little bit or slowing a little further. What do you do differently from here?

I'll comment on the market and Lauralee will pick up on the things we do from here, as you put it. What we've tried to describe to you is a world in which the economies seem to be gradually picking up across the US and continuing to grow in Asia. So, two of the three regions are at least are in reasonably good shape and have some momentum to the underlying economies.

Europe is a mixed bag with some strength in northern Europe, the Baltic, Russia and parts of Eastern Europe, and obviously the well-advertised issues in Southern Europe. But overall the economic picture is one of fairly steady growth and we took the IMS number of around 3.5% as a measure. That's real economic growth world-wide, and that underpins the basis of our activity.

We also describe on top that real estate markets which have been progressing in what we believe is a fairly predictable cyclical upswing. Albeit that this first quarter we saw some hesitancy and some issues around activity, probably driven by the confidence phenomena I described where Q4 last year investors and users of real estate were all hesitant around the issues which were being experienced in Europe and around the Euro, and decisions, we believe, got delayed and that had a knock-on effect into Q1 this year. So, we're feeling okay about the prospects for economic growth and real estate market growth. The fact that there's been a hesitant first quarter in the markets, not with us, we believe you can look through that.

And David, where we focused our investments strategically have been where we really have wide open opportunity to take share. So, for example, in the United States, we moved aggressively into the tenant rep space with the Staubach acquisition. But subsequent to that we've been focusing on opportunities in industrial and now into agency leasing where we have much smaller market shares. So, again, it's an easier place to move in terms of advancing share, just like the US capital markets.

If we go to Europe, where we have a very strong capital markets and agency position, we've been aggressively focused on the corporates. And also on the retail business. And if we go into Asia, what we've done is now look into the next tier of cities and in India and or China to own that new piece of share as those markets overall grow.

And the last piece I would say on our Corporate Solutions business, we've always been very aggressive in the big multi-national corporates. But as they've been much more cost-focused, we've directed ourselves into the middle market corporates and have been very successful in winning that next round of companies that are coming up. So the investments have been strategically targeted in the areas where we see maybe an easier way to take share and a big opportunity to take share. And even though markets are slowing, that market share opportunity is still wide open.

Got you, perfect. And just one last, if I can. Lauralee, while I have you, the incentive fees you referenced for later in the year, is it possible to give us a sense for how significant that can be?

They'll be double digits. You know, low double digits. But the reason there's a delay is it's all around income recognition. There's still all of the balance of the contingencies with the closing of that. So it will be third or fourth quarter of the year. But that was a portfolio where we performed very well for the clients and they and we will be rewarded as a result for that.

Perfect, thank you both.

Will Marks.

I wanted to just ask you about the change. And it seemed like you had fairly positive or at least neutral comments related to global economies between, let's say, February when you last reported, and today. But the statistics or the figures you gave were worse than February, meaning leasing volumes. You said flat pretty much in all regions on the last call. And now you're saying 5% to 10% declines in EMEA and APAC. And then on your tables and capital markets for commercial real estate investment you're showing greater declines I believe in APAC and EMEA than you did in the past too. So has there been some weakening there?

Will, you're probably reading from the tables and got exact facts. But to my mind I don't think we changed a huge amount. We said last quarter that leasing would be slightly up in Asia, down in Europe and up slightly in the US. We've shaded that a little bit, but simply based on the actual outcome for Q1 for the market stats as a whole.

Okay. Fair enough. And on the Americas, or let's say US leasing, a big area for you, you talked a bit about I think the absorption, something like negative 20%. Your America's leasing figure grew about 5% and CB's grew in the low single digits. And I only point both of you out because you're two very big players in that business. I'm wondering, you're obviously both gaining market share, can you just talk a little bit about, you're doing a lot of hiring. I know you aren't going to comment really on what they're doing. But who is suffering in this environment?

One can only imagine it's the smaller and medium-size players, and that we don't have any perspective on, Will. The numbers are what they are, and the market's numbers are what they are. They may get adjusted slightly but it's clear that -- The phenomenon I described a little earlier on, there's an ongoing consolidation process in the industry. And how has that been characterized in the last few months? Well, one, the medium- to large-size national player had a significant financial issue. Has lost significant numbers of people. And got very close to bankruptcy. And that has an impact on business activity. I don't what their numbers were and how much business they lost. But it's from that scale of medium-size player on down, one would imagine, where market share or market activity is being lost.

Okay. And then on margins, a year ago, I think it was the first three quarters of 2011, you showed year-over-year margin declines, and they picked up in the fourth quarter, and an excellent quarter this quarter. Are some of those issues behind us? I think part of the problem, or one of the issues, was just all the new hiring hadn't played out in terms of additional revenues. Can you just comment on that?

Yes, we had taken on a number of large accounts and we were working through that. We feel pretty good now that things are stabilized in that regard. And the extra resources to get that in order are moving through. If you take each of the various regions, we made a lot of moves with the benefits of King Sturge to be able to take advantage of the scale, and that's helped Europe. The Americas, I mentioned in terms of the contracts. And Asia has just continued to stay very diligent about all its costs.

So we have a cost focus. Not one that's going to cut back service to the clients or one that is not going to continue to keep us in a leadership position in terms of investments. But we think we're spending those investment dollars smartly and you're starting to see all those paybacks.

I think we described in the Q4 call at the beginning of February that we were being very careful on hiring until at least we could see the results of the end of quarter one. When you put that extreme care on hiring, together with the activity level increases that we've seen, you get generally beneficial effect on margin.

Okay. Great. Thank you both.

David Ridley-Lane.

Several large European banks have exited commercial real estate lending altogether. Do you foresee buyers having greater difficulty in getting financing for European capital markets transactions in 2012?

Yes. It's a challenge at the moment. European, Euro-based banks have exited, for example, Russia and good parts of Eastern Europe where they were building businesses. So that's created challenges in those areas. They've reduced their lending or stopped it altogether within the Eurozone. And indeed, those European banks that have set up shop in America, many of them are crimping their real estate lending or have indeed pulled out altogether, leaving portfolios behind which they are attempting to deal with or sell.

Against that we've seen other providers of real estate finance moving in, in particular in Europe. The investment banks, to an extent, insurance companies, private equity funds are all providing alternative sources of finance. The difference being they're generally charging 100 or 150 basis points higher than the source of lending we've seen from bank sources. So, it is a challenge. In general deals are getting done. There's being more use of equity in waiting for subsequent refinancing. There's been the use of these alternative sources of funding. But it's undoubtedly been part of the reason why there's been a lower level of activity in Europe.

Okay. And then I'm just looking at the difference between total property and facility management revenue growth and the fee growth. Does this suggest you're doing different types of work recently? What explains that difference?

It is the type of contract that is done whether it ends up being gross accounting or net accounting. We've been doing gross accounting principally for a long period of time in Asia, and in Europe. The US less so, just because of market nuances. But there are times where the gross account is the desire of the client. And also there is an opportunity for us to, many times, with really good management out of that, have the absolute profit that we make off of that be actually higher, even though, if you didn't separate out the various portions of that gross accounting versus the amount of money that comes to us, it would look like a lower margin. So, because of that, we felt it was good to expose that to you. And it also shows that there's significant opportunity for us to continue to grow that business globally.

In addition to that, within the Americas we had a very nice bump in our property management activity in the quarter year-on-year. So that partly explains the rather large uplift in the Americas.

Okay, great. And then just one housekeeping. What was the approximate matter benefit from King Sturge in the quarter?

We no longer can separate that because we've so integrated it in really all parts of the world. I believe that if we were to be able to put their numbers with our numbers, which we can't do perfectly because they had a different year-end, that we would have probably had flat revenue growth in Europe versus the uplift from the benefit of the acquisition.

Okay. Great. Thank you.

(Operator Instructions) Brandon Dobell.

I wondered if we could focus for a second on the property facility management. You gave us some good outlook comments about the capital markets or transaction businesses. Should we expect any directional change or magnitude change in the growth, particularly in Asia Pac and the Americas looking out for that segment?

Our pipelines are as strong if not stronger than last year. So, obviously you've got to convert the pipelines into wins. But we continue to win at the pace we always have, so we remain very optimistic about the business.

And as those deals are onboarded, especially through '10 and '11, have you seen the kind of follow-on revenue, especially in leasing, that you would have expected to see from those transactions? Or given all of the noise in the economy, has it been slower to pull through?

You can see our leasing numbers have been quite robust. So whatever was going on in the broader leasing markets we were succeeding in building our leasing revenues. Some of that undoubtedly would have been driven in the US, in particular, by the linkage with property management.

A proportion of our US property management has leasing attached, but not all of it. But those extra property management wins, which we had, would have helped that overall picture, leasing activity picture. What we don't do and can't do for you on the call, Brandon, is to break that out.

Fair enough. Okay.

If you would like to try that, we'll do it next time.

I know it's definitely a challenging thing to disaggregate, I realize that. And then I want to go back, I think, maybe, to two questions ago and make sure I understand. You guys have slowed down hiring a little bit in the context of trying to get a better idea of how the first quarter played out from a transaction, volume perspective, and how the year would play out. Given what you know how and the slight tweaks you made to, let's call it, geographic growth rates, should we expect the pace of broker additions to pick back up? Or do you think that the market is just not robust enough in some areas, in the US in particular, to resume the kind of pace or even close to pace of hiring you had going on last year?

As we said on previous calls, we're trying to hire early in the cycle and we believe we were successful in doing that. We do that for a couple of reasons. First of all, the economics work well for us because we have the benefit of those people through the better parts of the cycle. But they also work because early in the cycle brokers don't have as much vested interest in their prior place of employment with deals that are in the pipeline.

As things stand at the moment, we feel, obviously, with these Q1 numbers, a little better about our prospects for the year because we've just seen a good performance in the first quarter. And so we would be tempted to move ahead a little more aggressively with hiring against that. It's also clear that in the US in particular the market has got tougher for hiring brokers. It's just gotten more price competitive.

Okay. And then final question for me. We saw some pretty good results out of HF today in their debt origination business. I know you have a small capability there. What are the thoughts on that market opportunity as you look out the next couple of years? And do you think you can build that internally or do you have to go get some people? Or is that a business that you think you don't need to be in given the relative size and scale of the capital markets business in the US? Thanks.

From the comments I just made about debt availability in Europe it sure is an opportunity in the European theater. We've been building that capability specifically around the former head of our German business who has moved across to run what we call corporate finance in Europe.

So, yes, in Europe, and we're building currently organically. If there's an opportunity to change that approach then we may look at that. Within the US, we already have that capability. And we've been building it. It's not the size of HFF, obviously, but we've been building it steadily. The real opportunity short-term to help clients is in Europe.

Okay, great, thanks.

Michael Mueller.

Two questions. First of all, Lauralee, I think you mentioned there was about $1.7 million of fee income associated with the Japan fund that you sold. Was any of that recognized in the first quarter? Or can you give us a sense of how much of that still has to come out of the run rate?

That's about $1.7 million a quarter going forward until we rebuild the asset levels. But like I say, we got equity earnings and we will get an incentive fee, which is the normal churn in a fund. That's what you want to do. When you get the return for the client, you want to execute, get paid, and have that. So that's a normal cycle. But we pretty much had the transaction in most of the quarter, most of the first quarter, so it's going forward.

You'll recall in my comments I said we were raising funds, co-mingled funds in the US, Europe and Asia. And that Asian comment was with respect to, as Lauralee said, replacing that fund with a follow-on version.

Okay, great. Secondly, I remember at this time last year expenses ticked up, and it was a function of, I don't know if the correct term was conferences but you had a bunch of meetings, pulling people in from the different regions that were impacting the first-quarter earnings and expense margins. Did that occur this year or is that something that is more of a every-other-year event?

You're right. We were buzzing around the world, Lauralee and I, on Q1 last year, doing internal conferences. You're right. And many of hundreds of people came together in various areas. We didn't have a repeat in Europe or Asia. We did in the US where it's actually a big sales meeting and very productive.

Okay. Okay, thank you.

(Operator Instructions) Todd Lukasik.

Just a quick question. With revenues up in real estate services, say, 17% to 18%, is it generally fair to assume that overall headcount also grows in that range?

No, way less than that. We'll try to dig out the numbers, if we can. But there's a big productivity boost there. Partly us taking the shares structurally, partly the ongoing cyclical recovery, which I described in my comments. So the headcount growth would be significantly below that.

Okay, great. Yes, I'd be interested in that. Maybe I will follow-up later with Lauralee. And then just with regards to the net and gross accounting for revenue, can you just remind us what your long-term expectations or goals are in terms of margins, operating margins or EBITDA margins, on a net basis?

Our margin figures have not changed.

Operating income target for the firm is 12%, which depending on the acquisition activity, is 14.5% to 15% EBITDA. And then they run in a range for the various businesses, with the highest above that being the Americas. 12% to 14%. Europe actually being 8% to 10% and then Asia between 10% to 12%. And LaSalle Investment Management running in the 20%s.

Okay. And do you think about those on a net basis?

Yes.

Against the net revenue numbers.

Okay, great, thanks for taking my questions.

And we have no further questions at this time, sir.

Okay, thank you, Operator. We'll finish today's call. And I would like to thank everybody on the call for your interest in Jones Lang LaSalle. And we'll look forward to speaking with you again following the second quarter's earnings. Good evening.

This concludes today's call. You may now disconnect.