Jones Lang LaSalle Inc (JLL) 2013 Q4 法說會逐字稿

Good day and welcome to the fourth quarter 2013 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, 2012 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 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. And good evening everybody, and welcome to this review of our results for 2013's fourth quarter and for the full year.

I'm in a freezing Washington, DC, and Christie Kelly, our Chief Financial Officer, joins me from a frigid Chicago. She's going to be reviewing our performance in detail in a few minutes.

Thanks to an excellent finish to the year, we delivered strong fee revenue growth, increased adjusted net income and improved adjusted operating income margins for both the quarter and the full year. Fee revenue reached $1.3 billion for the fourth quarter, and that's 17% above the fourth quarter of 2012. Full-year fee revenue was $4 billion, 12% higher than 2012 levels.

And adjusted net income for the fourth quarter increased 28% to [$150 million] from the fourth quarter of 2012. For the full year, adjusted net income was $285 million, up 16% from last year, and full-year adjusted earnings per share reached $6.32 per share, up 15% from last year. And during the year, we continued to improve the financial strength of our balance sheet by reducing our net debt levels.

Our results came in a market environment of improving conditions in most parts of the world. You will find additional information on the slides posted on the investor revenue section at www.JLL.com.

At year end, world economic growth for 2013 stood at 2.5%. For 2014, we anticipate steadily increasing growth with GDP growth reaching 3.3% globally.

We're seeing this positive movement reflected in Real Estate markets around the world. Investors remain confident and active, and corporate markets show signs of a more sustainable recovery following two challenging years.

As you will see on slide 3, Capital Markets continued to expand strongly through the fourth quarter with investment volumes rising 22% globally, compared with Q4 2012, to [$200 billion]. Full -year market volumes were [$560 billion], 21% above 2012 levels.

While global Leasing activity still trailed the more buoyant Capital Markets, levels did improve in the fourth quarter as gross absorption increased 4% compared with Q4 2012. Full-year Leasing volumes were up 1% on 2012 levels.

To sum up, we think the world's commercial Real Estate markets finished 2013 substantially stronger than the year before. Capital Markets continued to show remarkable strength while the more cautious occupier market demonstrated early signs of progression. So for a sense of how we performed in this environment, I will turn the call over to Christie.

Thank you, Colin. Good afternoon, and good evening to everyone on our call.

As Colin mentioned, we had an excellent fourth quarter to finish out the year. We delivered strong fee revenue growth, increased adjusted net income, and improved adjusted margins for both the quarter and the year. Our consolidated results demonstrate our ability to produce profitable revenue growth while consistently investing in our business for long-term benefits.

Our results were delivered with a global economy that appears to be on the upswing, particularly in developed economies, albeit muted, and with continuing challenges. Our performance continued to reflect the contrasting market conditions between Capital Markets and Leasing where strong Capital Markets were supported by low interest rates while Leasing markets were impacted by the hesitancy of corporate occupiers to make decisions. Although Leasing lagged Capital Markets activity, we delivered for our shareholders an overall record level of revenues as well as a record bottom line.

As Colin said, adjusted earnings per share were $6.32 for 2013, an increase of 15% over 2012, calculated on record adjusted net income of $285 million. Consolidated fee revenue was $4 billion for 2013. Our 12% consolidated fee revenue growth on a local currency basis over 2012 was broad-based in 2013.

All three of our geographic segments delivered double-digit year-over-year increases in revenue performance as we continued to deliver profitable growth across varied markets globally. We are consistently delivering our growth with a combination of M&A activity and organic growth, leveraging the expertise of our people and the strength of our JLL brand to win new clients and expand existing relationships.

For the fourth quarter 2013, consolidated fee revenue was $1.3 billion. Our 17% consolidated fee revenue growth on a local currency basis also was broad-based across geographic and services segments. Our revenue increases of 38% in Capital Markets and Hotels and 8% in Leasing demonstrate our ability to continue to capture share while at the same time illustrating the improving but lagging momentum in Leasing.

Additionally, we continue to grow our annuity Real Estate services businesses, such as Property and Facility Management, where fee revenue was up 23% in the quarter versus fourth quarter 2012. Our LaSalle Investment Management business continued its momentum, achieving a total of $7 billion in capital raised for 2013, and ending the year with $47.6 billion in assets under management.

We continue to make investments in our platform to drive growth and enhance our client experience. We also were focusing on productivity enhancements to increase revenue in key markets while achieving improved long-term profitability.

Adjusted operating income margin calculated on a fee revenue basis was 9.7% for the year, compared with 9.3% last year. This increase represents 12.8% incremental margin to fee revenue for the year, and a 19.3% incremental margin to fee revenue for the fourth quarter. We remain focused on balancing top line growth, platform investments, and productivity to achieve incremental margin and earnings per share growth.

And now turning to the segment results, first in the Americas. Full-year fee revenue increased 10% in local currency over 2012. Capital Markets and Hotels had year-over-year fee revenue growth of 29%, outpacing broader market volumes which were up 18% for both the quarter and the year.

Recurring Property and Facility Management fee revenue grew 14% for the full year 2013, driven by new outsourcing wins on-boarded during the year. The Americas Leasing revenue increased 6% from last year, essentially in line with the slow market that started showing signs of improvement in the fourth quarter.

Operating income margin calculated on a fee revenue basis was 10.2% for the full year 2013, consistent with last year. And a 14.7% in the fourth quarter, up 60 basis points over the fourth quarter of 2012.

Solid growth and positive operating leverage in US Corporate Solutions, Capital Markets, and Leasing for the year as well as strong Capital Markets activity in Mexico during the fourth quarter, combined with cost actions taken earlier in the year, were somewhat offset by continued challenging market conditions in Brazil. Excluding Latin America, the Americas operating income margin increased by 20 basis points compared with last year.

Moving to our EMEA business. We had an exceptionally strong finish to 2013, where our people delivered full-year fee revenue growth of 17% on a local currency basis over 2012. Capital Markets and Hotels led the year-over-year increase with 41% growth, and Property and Facility Management fee revenue grew 12% over full-year 2012.

EMEA's Leasing revenue grew 7% for the year. Where France's performance has been consistently positive, UK performance began building momentum during the second half of the year, and Germany finished with a very strong fourth quarter. EMEA Leasing performances was bolstered by a 21% revenue increase in the fourth quarter led by the performance of our Paris Leasing team, which grew revenue despite Leasing in their market declining 16% against the prior year.

EMEA's adjusted operating income, excluding King Sturge amortization, grew to $92 million for the year, up from $59 million a year ago, an impressive 56% growth rate. Adjusted operating income margin on a fee revenue basis grew to 8.2% in 2013, up from 6.2% in 2012. EMEA's growth came from throughout the region, with a few exceptions where decisions were made to prune underperforming businesses and position for better long-term performance.

In Asia-Pacific, fee revenue across the region was up 14% in local currency over 2012, again with a very strong fourth quarter to finish 2013. We are seeing sustained growth across our annuity business with Property and Facility Management continuing to gain market share and winning nearly 70% of our corporate outsourcing opportunities.

Capital Markets and Hotels also had a strong year, with an increase in fee revenue of 53% on a local currency basis from last year. Although we outperformed in a Leasing market that was down 12%, our Leasing revenue was down 6% from last year as corporate clients and many Asia-Pacific markets remained hesitant to make commitments.

Operating income grew to $77 million for the year, up from $65 million a year ago. And operating income margin improved by 70 basis points to 9.1% on a fee revenue basis.

The tone across Asia-Pacific remains mixed. Regardless of the complexities faced in performing throughout APAC region, we have invested for our future in the region, gained market share in key markets and businesses, and continued to work hard on productivity, all of which is reflected in these strong results for Asia-Pacific.

LaSalle Investment Management had a robust quarter and year in terms of capital raised. Assets under management grew by $900 million in the quarter, to nearly $48 billion. Advisory fees for the year decreased slightly from last year, to $223 million, with contributions from new business offset by portfolio dispositions, particularly in Asia-Pacific.

Incentive fees added almost $14 million of revenue during the year, a decrease from the $23 million earned in 2012. We expect similar lower levels of incentive fees to continue at least through the first half of 2014. Equity earnings for the year were $31 million, driven by gains from continued disposition activity and from increases in asset values.

With respect to our investment grade balance sheet and the strength of our financial position, we reduced our total net debt to $437 million, making this the second consecutive year that the firm has reduced net debt by more than $100 million, while continuing to invest in the business. We benefited from the lower pricing on our credit facility, which was amended and extended at the beginning of the fourth quarter, with $34.7 million in interest expense for the full year and $8.1 million in the fourth quarter, down 20% on the quarter versus last year.

To sum up, we had an excellent fourth quarter and year. The Americas had double-digit fee revenue growth, driven by strong Capital Markets activity and new wins for Property and Facility Management. EMEA's adjusted operating income margin on a fee revenue basis grew 2 full percentage points in 2013.

Asia's Corporate Solutions business continued to win new clients at an impressive rate, and LaSalle continued to deliver performance for its investors and the firm. Further, we continued to strengthen our financial position and investment grade balance sheet.

Looking to 2014, our pipelines are healthy, and our business is confident. I will now turn the call back over to Colin.

Thank you, Christie. So turning to representative business wins for the fourth quarter and the full year, slide 4 lists some recent wins from across the firm's core service lines and geographies.

In our corporate outsourcing business, we won 43 new assignments in 2013, expanded existing relationships with 18 more clients, and renewed another 17 contracts. Early in the fourth quarter, JPMorgan Chase appointed us to deliver facilities management services for its 27 million square foot portfolio in the Eastern US, and Asia-Pacific. We are also providing the global IT platform for all of their Real Estate data, and in an innovative service extension, we're doing this on an application service provider or ASP basis.

We were appointed global Real Estate partner by Gemalto, the Amsterdam based global digital security business, for its 43 country portfolio. Exelis, a global aerospace Company, selected us for facilities management for its 7.5 million square foot portfolio.

We continued to expand our local market level Corporate Solutions business, which serves mid-market corporate clients. During the year, we won 59 assignments covering 245 million square feet of space in this growth segment.

Looking back over 2013 as a whole, we successfully implemented three major outsourcing assignments: HSBC, [aneffon steelglass] globally, and Canada Post in Canada -- hence, successfully launching key global customers with speed and efficiency. During the quarter, our property and asset management teams were awarded assignments by MetLife for 617,000 square feet of space at 1 N. Franklin in Chicago and by Larsen and Toubro for the 1.9 million square foot Cyber Tower HITEC complex in Hyderabad, India.

Turning to representative investment sales transactions, in Moscow, we advised on the sale of White Gardens, an office center. While the price remains confidential, the transaction was one of Russia's largest investment transactions in 2013.

And in Singapore, we completed the SGD970 million sale of TripleOne Somerset, a retail and office development. Fourth quarter Leasing and tenant representation transactions included completing a 450,000 square foot blend and extend lease renewal for Wells Fargo Bank in Minneapolis and representing Marks & Spencer in the UK to lease 450,000 square feet of industrial and logistical space in Sheffield.

At LaSalle Investment Management in 2013, LaSalle's strong performance and strong relationships with top institutional investors generated $7 billion of private equity capital commitments. This level of activity indicates that institutional investors are continuing to allocate capital to commercial Real Estate through investment advisors that they trust.

We continue to invest in future growth across our business in 2013, attracting top professionals to our ranks and completing five tactical mergers during the year. Our global executive board sets the tone and strategy for acquisitions and demands a cultural and strategic and financial fit for any candidate. But we prefer that M&A opportunities come up from regions and countries and from LaSalle Investment Management as they are the best positioned to source and filter good opportunities.

Looking forward to 2014, slide 5 summarizes our projections for global investment sales and Leasing markets for this year. Continued positive momentum in the global Capital Markets will see investment volumes increasing by about 15% above 2013 levels to around [$650 billion].

Leasing volumes will also improve this year with gross absorption up 5% to 10% compared to last year's flat results. This in turn is the result of corporate occupiers shifting their sights from consolidation and hesitancy to growth and expansion during the year.

In Real Estate investment management, we anticipate that institutional investors will continue to allocate incremental capital to commercial Real Estate. With prime assets in top markets increasingly hard to come by, many investors will move up the risk curve in search of higher returns. They're seeking non-core deals in core markets and core deals in non-core markets.

As for our own prospects for 2014, we continue to see positive momentum across our business as our markets continue to improve. Confidence and optimism continues to build amongst our clients around the world, and we have the financial strength to keep investing in future growth, whether that involves further M&A activity, capital investments, or co-investments alongside LaSalle's clients. So we are looking forward enthusiastically to the coming year.

So in closing, as on previous calls and before Christie and I take your questions, I want to mention some of the independent honors that we've received in the fourth quarter, reinforcing we believe our reputation as a leader in global Real Estate services and Investment Management. So a few examples.

At the Southeast Asia Property Awards, our Indonesia, Singapore, Thai and Philippine businesses were all voted best property consultant. That's all of the major [axian] economies.

Julien Zhang, managing director of our Beijing office, was named distinguished corporate Real Estate service provider executive by CoreNet Global, and in the UK, we won the national property advisor of the year honors at the Estates Gazette annual awards. In the Americas, finally, we won best place to work awards in Chicago and Charlotte, bringing the year's total to 12 such regional awards.

Also in the Americas, we recently announced Greg O'Brien's appointment as the region's new CEO. Greg has a long record of driving growth and profits across a range of businesses. He has shown a real commitment to advancing our global agenda and strategy, and he constantly reinforces our shared values of client service, teamwork and integrity, and so we're glad to welcome Greg to our global executive board.

Finally, Christie and I would like to thank all of our colleagues around the world for an excellent year in 2013. Their ongoing commitment to our clients and to teamwork and to the highest ethical standards will continue to serve us, our clients and our shareholders well in this coming year.

So with those remarks, we will now turn over to questions. Operator, could you please explain the Q&A process?

(Operator Instructions)

Your first question comes from the line of David Gold with Sidoti & Company.

Hi. Good afternoon. Sorry, hope you can hear me. I'm on the road a little bit. But nice work as usual, your fourth quarter. Quick question, actually. Was curious on the Leasing side of the house. Some commentary on Leasing momentum, can you talk about what you see in there by way of pipelines and really what it takes to get us to the next step on the Leasing side?

Yes, if you look at our quarterly numbers, David, you will see that the Leasing picture picked up steadily throughout the year. So Q1 -- from memory, was down over 20% globally on the prior year, and then it improved through the year so we were around about even year-on-year by Q4, perhaps a little ahead in some regions. So what you have there is a picture of momentum building.

I think as the economic growth picked up, and as the concerns which corporate had a year ago around the euro, around the fiscal cliff, around Chinese government change, all gradually one by one fell away, and the things to worry about were diminished or disappeared. What we see at the moment is as Christie said good pipelines and a prospect of steadily building momentum, and as you saw from our chart or will see from our charts when you get back off the road, our people are projecting 5% to 10% overall growth in Leasing activity for the full year.

Perfect. That's helpful. And then one other. Some contracts that gave us a little bit of difficulty a little bit earlier in the year, presumably from my calculation has to be profitable to you by now. Can you give a sense for if that's true and also how far along we are on the ramp-up there or how much more incremental profitability might we see, or are we at the full run rate?

The three big ones that we listed there, HSBC, NSG and one other that's escaped me. Those will be reaching profitability at varying speeds. They're not all there yet, but from memory, one is, one's break even and the other is in a loss making phase. They're coming through. They will build profitability throughout 2014.

Against that, as you heard right at the end of the year, we won JPMorgan; we will be implementing that. The start up negatives on that will kick in, in the early part of 2014. Those are the big contracts that are around at the moment and in the implementation phase.

I'd like to add, David, the one contract that Colin was referring to is --

David, could you go on mute, please?

Absolutely.

Christie.

The one contract that Colin was referring to, David, is Canadian Post.

Perfect. Thank you both.

Thanks, David. Please go back on mute.

Your next question comes from the line of David [Ridley-Lane] with Bank of America.

Quick one on cap rates. In the US, they largely shrugged off rising interest rates in 2013. We got up about 100 basis points, rise in the 10-years but cap rates were pretty flat to down across the property types. embedded in your expectations for Capital Markets volumes, do you think the next 50 to 100 basis points increase in interest rate is going to have a pretty negligible impact on cap rates and investment sales volumes as well?

Not to be cavalier about it, but yes, 50 to 100 basis points shouldn't impact the momentum. If it gets into 2015 and we're looking at from here a 100 to 200 basis point rise or 150 to 200 basis points, then we might have a different story to tell. But our perspective at the moment is this year, that rise in interest rates has actually been compensated more or less by a cut in the margins that the banks take all the credit, so you've seen one almost compensating for the other. So banks margins have gone through the US for example 250 to 110 basis points. Not good for the banks, but it's fine for the property investment community.

Looking forward, there won't be much compensation for that, but what we do see is rental rates rising. And so when people are underwriting their acquisitions, they can now put much more certainty behind increases in rental rate to wind up in cash flows. If you add to that the sheer weight of equity that's looking to invest in the market and the increasing availability of debt and easing of the bank's covenant requirements and easing of the bank's underwriting standards, you've got we think pretty robust market prospects again for 2014.

Okay. Great. And then what are some of the puts and takes that could drive the incremental margin up or down from the 12.8% you did in 2013?

Hi, David, this is Christie. I think just in terms of some of the puts, I think first of all, as Colin mentioned, the increasing momentum in Leasing volume. I think as well, the productivity initiatives that have been going on strong in the business, and in that regard, we're focused on price, process and people, ensuring we've got the right mix across those three elements and balancing revenue growth.

I think in terms of some of the takes, specifically it will relate to if we see any volatility out there in the global economic environment that causes momentum from a Capital Markets position to pause and Leasing and volumes to retract further. And overall, although it's less than 5% of our total business, challenges in BRIC countries as I mentioned remain. And so that is also something that over and above the core business could cause us to have a bit of a stumble. Nothing significant, though, that we see on the horizon.

Okay. Got it. Thank you very much.

Your next --

Thanks, David.

Sorry. Your next question comes from the line of Mitch Germain with JMP Securities.

Great quarter.

Thanks, Mitch.

Just, I think Christie, you mentioned pruning some underperforming businesses in Europe, and I would appreciate if you could elaborate some of the things that you did there.

Sure. We had a couple of different activities there. We first of all closed some of our offices in the UK, and as well, we pruned one of our Swedish businesses in the PAM space that for a number of years had -- we'd been focused on driving, but just realized after some time that it was best that we sell it.

PAM is property management, by the way.

Oh, thank you. Thanks, Colin.

Thanks. And will we see a slowdown in dispositions within LaSalle in 2014?

No, I think that -- what they're going to be doing for their clients is with these strong markets, they will be obviously active conversation for clients that are focused on value-add strategies. They will be talking probably quite actively about yielding capital gains into strong and rising markets with fulsome demand. For clients that want longer term holds and particularly some of the individual mandated clients that we have, they might choose to stay with what they've acquired and just yield the cash through the cycle.

The issue for people who are in the open ended mindset, i.e. long-term investors, is if you sell an asset in this market, that's great and you can yield a capital gain. There are real challenges in reinvesting it, particularly if your existing asset is a core asset, that's to say a secure asset with strong cash flows. As we said in our remarks, in order to reinvest that, investors are having to move away from the security of core into non-core or into non-core cities and regions. So there's a real headwind if you like or counter to sales; on the one hand, attractive market pricing, on the other hand the reinvestment challenge.

If on the other hand you're a short-term investor looking to yield and churn -- sorry, to sell and churn the investment into another sector or if it concerns a fund with a closed life to it, then this is obviously a good market to be selling. But against that, we've as we've said a very strong in-flow of funds, so any sales which take place in 2014 are going to be more than compensated by the investment process on the money that's flowed in, in 2013.

Great. And I think Colin, you mentioned with regards to acquisition sourcing deals directly from the people in those regions, LaSalle, you also mentioned culture as being a pretty important piece of the puzzle. Should I imply that, that's going to be -- your strategy's going to be more tuck-in deals, looking to strengthen capabilities, that thing and nothing major on the horizon?

If it's about acquiring buildings, we're not too bothered about the culture side of things. Certainly when we're buying people or companies, it's just critical. As to what we do going forward, I mean, the tactical acquisitions we referred to, it's a continuous production line process of deals that are sourced from local markets. At the moment, we haven't seen any large deals which we like around our sector; we're obviously constantly reviewing, and we have an open mind.

Thanks so much. Great quarter.

Thank you.

(Operator Instructions)

Your next question comes from the line of Brandon Dobell with William Blair.

Thanks. A couple quick ones. Maybe a better sense of how the property management business -- it saw pretty good acceleration of revenue growth I think across all the geographies, comparing Q3 revenue growth rates to Q4 revenue growth rates. the drivers behind that acceleration, or some color there.

And also how I'd think about the sustainability of a high 20%s or even a low 20%s growth rate versus maybe a low double-digit growth rate. I'm just trying to get a better idea on how to model that line over the long run, from a pure recurring point of view versus stuff that may come in and out quarter to quarter.

Well, firstly, Brandon, we focused on it. We've put a push behind Real Estate, certainly the property management activities and indeed our facilities management work on the corporate side. Why? Not everywhere, but in most places, it's good margin business. Christie referred to one particular geography where we got out of it because it wasn't good margin business. But where it is acceptable margin, we've been -- we've put a push behind it, and we're doing that because it's a very good counter cyclical -- or let's call it annuity based income which doesn't subject us to the cyclicality of Capital Markets in particular and of course Leasing as well.

The other aspect to it is that it's often driven -- acquisition of new business is often driven by Capital Markets activities, so where we sell a building either because we're representing the buyer or the seller, where we're involved in a transaction, that gives us the opportunity to have the dialogue about picking up the property management. And so with the level of investment sales that you've heard us talk about, that's given us the opportunity to get into more discussions with more owners.

So a couple of factors there. Our own push, market dynamics, and our own then willingness to get in and have dialogues with people we're representing on the buy or sell side.

As we think about sustainability of revenue growth, do you think in the near term, the growth rates in that segment are a little more collated with just global Capital Markets activity that you have in the past? Or is that overstating how fast that business can grow looking out through 2014 and 2015?

I think it's correlated in the sense that one is up strongly, the Capital Markets business, and so the property management is up. So it's not a one on one correlation, 20% of one drives 20% of the other. It's maybe 20% growth in Capital Markets drives a 10% or just sub 10% growth in property. But if we keep up the same approach and pressure, we should see healthy growth in that area too.

Okay. And then turning to margins to finish out the year, but also expectations, good incremental margins in the fourth quarter. Given how strong the transaction businesses were, it wasn't too surprising. Maybe Christie, should we expect the same kind of incremental margins that we saw in the back half of the year to persist through 2014, or is there maybe a change in the pace of investment that would dilute that, or maybe it's the opposite way where incremental margins could be better than we saw in the back half of 2013. Trying to get a better sense of how the pacing of expenses will drive margins the next 12 months.

Sure, Brandon. Thanks so much and happy new year, by the way.

Likewise.

I wanted to first from a margin perspective just emphasize to everybody on the phones that we are very focused on striking the right balance in our business between revenue growth and investments in the business and driving incremental margin improvement.

And as you look at Jones Lang LaSalle today and going forward, you can expect from us as we always are to be very focused on driving incremental margin improvement. When you look forward, I think you can expect more of the same from us. It's what Colin expects, and it's what we're focused on delivering for our shareholders.

If you look at the different regions, is there maybe one of the regions where you feel you've got more momentum in keeping the cost structure low, or maybe it's one region where you feel -- you know what, we're generating a lot of revenue growth beyond expectations and it gives us a little more room to go after some qualified people, some talented guys that we've been looking at for a while or to push harder into different property types. Or is it just not like that, that all three are kind of acting the same these days?

I'd struggle to pull out one region as having dominant opportunities over another in either revenue growth or margin growth. But since you've given us the opportunity to talk about what we're seeing with that question, it's interesting that the Asia region has grown slower in this year, significantly slower than in prior years, whereas Europe has grown significantly more quickly. It's clear that as Europe -- as the economy in Europe begins to pick up, I mean, from negative to anemic growth, that's producing a tremendous amount of activity in the corporate and the investor sector. And I think in terms of top line growth, that's likely to continue, and it could well continue to be the strongest region next year.

Asia has got still some challenges which it's working through, and that means China, with betting in the government, it's almost happened, but they've got some shifts away from manufacturing towards internal service and domestic consumption, demand which is process rather than event. That's going to take them a number of years to work through, and they've got this unknown but spooky liquidity challenge -- sorry, shadow debt challenge which the government is clearly trying to get grips on, to grips with as well. So there's some issues there.

India will remain a difficult trading environment. We struggled all last year just to stand still. The elections come up in May, and that country will be hesitant through May and perhaps beyond that if there's no clear-cut government. And you've got issues in Australia where Leasing market in Australia was the worst since we've been keeping records in terms of year-on-year activity, down more than 20% on prior years. And it's got all the challenges and the demand from China and primary material prices, so there's some significant challenges in Asia which should give us still growth because that whole region is growing quite healthily by world standards, but it's still struggling to get back to the levels of activity that we saw in 2011.

And then you've got the US where momentum is clearly building, GDP I think will be well above 3% this year, against 3% last year. We can see it in our client base, where they're much more confident and there's much more activity and much more pipeline than we saw a year ago. So if you want to differentiate between the regions from those remarks, I'd say Europe has better prospects, America next, then Asia will continue along growth, but it may struggle to get above 10% into double-digit figures.

Okay. One final one from me. As we think about the Investment Management business, the capital you raised during 2013, the fee structure there, the pricing on that capital compared to prior years, flat, down, down a lot? I'm trying to get a feel for how I should think about the incremental capital there and the impact it has on the average fee structure. Thanks.

Thanks. Well, yes it's down. We've said that on prior calls. What we're doing is replacing [effectively] capital raised in 2006, 2007 with very healthy margins with quantitative capital raised at lower margin levels -- sorry, lower fee levels. That will vary by type of client, and it will vary by type of investment style. But it is lower in overall fee rate, and so as we've explained in prior quarters, just holding the revenue and therefore the profitability flat in LaSalle during this period of transition has been a great achievement. It's been a challenge [we've] met, and it's been a great achievement.

We are somewhere near the bottom of that cycle of revenue and earnings decline. We believe that 2014 should see a flat to up year in both numbers, but it won't be spectacular as we work through this process -- this trough if you like. Remember, Investment Management business is also cyclical, but it lags the investment sales and Leasing markets by a matter of years, not months as institutional investors react to market cycles.

Thanks a lot Colin. Appreciate it.

Your next question comes from the line of Todd Lukasik with Morningstar.

Yes, thanks. Just a follow-on question with the acceleration in revenue growth in the properties and facilities management business, particularly in the Americas and EMEA regions. Is that solely a reflection of recent client wins, or is there anything that's one time in nature in the there, or is there any seasonality to that, that might have boosted the numbers this quarter?

I will jump in there really quickly because I think it's a factor of wins, expansions and renewals. And one of the things I just wanted to comment upon is that when you take a look at our produced results, year-over-year the business grew 14%. And with that, I just want to make sure I turn it over here to Colin.

Yes, there's nothing one-time in there. Todd, it's a steady evolution from the point that I made earlier of our focus on it and market activity. I mean, it helps in both of the geographies that you mentioned. It helps in Europe, we're the market leader in investment sales, and therefore, if we focus on capturing the churn, then that helps a lot. It helps also that we're very significant in the Leasing markets from a landlord side, which also gives us access to new business if we win Leasing mandates.

In the Americas, we're not by any means leaders in the investment sales market. We're number three or four, depending on how you measure it. But we are growing very rapidly, and you heard from Christie's numbers the spectacular growth rates we've seen in Capital Markets. And with that comes the opportunity as we described to tap the property management opportunities, and we plan to continue growing by the way rapidly in Capital Markets in the Americas. It's been a policy for the last five years, and we think we're delivering it very effectively, and we're continuing to invest in that area.

Okay. And then I think on prior calls, you've talked about the impact of some of these large deals. You highlighted three this quarter where it can be negative profitability when you start, before they ramp up over time. I was wondering, Christie, if you had an estimate that you could provide about the impact on margins in terms of basis points maybe that, that may have had in the year?

I think if you take a look at the margin loss that I have in front of me, Todd, it's not featured anymore. So the team's done an exceptional job of, first of all making up for actually a great news story, which was we had a lot of business that we needed to on-board, and the team's been making great progress at that. I think going forward, we will be very focused on making sure that we don't have necessarily the same impact. I think that too, one of the ways to think about it is when we had the three big wins for example that Colin talked about, together with HSBC, it's like on-boarding IT systems.

So as you're working through the planning and then bringing everything online, sometimes you end up in a situation where you're driving those productivity results and driving everything for the customer, but that is before we're recognizing revenue. So again, it's not featured in my margin [walk]. Happy to report.

Okay. Thanks a lot for the commentary.

Thanks, Todd.

There are no further questions at this time. Mr. Dyer, do you have any closing remarks?

Only to thank everybody for your interest in the Company. We will end the call there, and we hope to hear all of you again at the end of the first quarter. So thank you very much and have a good evening, everyone.

Good night, everyone.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.