To Our Stakeholders

(from the 2014 Annual Report)

JLL achieved another year of record revenue and profitability in 2014.

Leasing activity globally, which had been weak in prior years, started to catch up with continued strength in real estate investment sales, corporate outsourcing and institutional investment management to create healthy conditions in most of the world’s major real estate markets.

Two groups ensured our success in this encouraging environment: the clients who entrusted us with their business, and our own staff, who earned that trust by delivering superior service, advice and results.

We strengthened our balance sheet in 2014, which Standard & Poor’s acknowledged in December by upgrading our investment-grade credit rating to “BBB”. Early in 2015, we amended our bank credit facility, increasing our borrowing capacity to $2 billion from $1.2 billion. The new facility further strengthens our operating flexibility and aligns with our strategy for focused growth across service lines.

We accelerated last year through organic growth, ten strategic acquisitions, and by market share gains. We became more productive to become more profitable. We continued to make JLL a diverse and inclusive place to work. Throughout the year, we were guided by our shared values of client focus, teamwork and integrity. And we extended JLL’s position as a sustainable company in the broadest sense of the term: a firm that all our stakeholders can trust and rely on over the long term.

Early in 2014, we announced the use of JLL as our principal trading name, while maintaining Jones Lang LaSalle as our legal name. The new JLL identity, a natural progression for our brand, recognizes our position as a global company located in multiple markets around the world. The new name supports different communication styles in different countries, languages and channels. It has proven to be especially useful in the digital and online channels we increasingly rely on for sales, marketing and communications activities.

Another year of record financial results

Our 2014 financial results speak to our ability to create long-term value. Fee revenue increased to $4.7 billion for the year, 18 percent above 2013 levels. Adjusted net income reached $393 million, or $8.69 a share, up 38 percent from the previous year. We maintained our record of 10 years of 17 percent compound annual adjusted EBITDA growth. We improved our adjusted EBITDA margin to 13.8 percent for the year, compared with 12.4 percent in 2013. And, as we continued to invest in growth throughout 2014, our total net debt declined to $163 million at year-end, 63 percent lower than in the previous year.

10 years of investing in our G5 global growth priorities

2014 marked the 10th year in which we have invested in five priorities for global growth. Together they have helped us achieve long-term sustainable growth in a period that included the great financial crisis. They have made our culture a clear differentiator within our industry, enhancing value for our clients, shareholders, employees and other stakeholders. And they have made us a leader in the areas where we choose to compete. We call these priorities the G5.

G1 sees us continually building our local and regional service operations. G2 through G4 target global growth opportunities in outsourcing, real estate investment sales and institutional funds management. Our fifth G helps us sustain and leverage growth across the first four by improving connections between our employees, business lines, technologies and market positions. Taken together, all five Gs help us serve clients more effectively, grow our business more aggressively, increase productivity more actively, manage enterprise risk more efficiently and, overall, promote the long-term sustainability of the organization.

G1 | Build our leading local and regional market positions

Our position as a leading global provider of real estate services depends on our position and capabilities in key local and regional real estate markets around the world. As a result, we continually assess strategic opportunities to strengthen our presence, both in key geographical markets and in key client and industry sectors within those markets.

With that in mind, we completed 10 targeted acquisitions in 2014:

  • GCL Europe, a top logistics and supply-chain firm in France.
  • Tenzing AB, a Swedish leader in property investment advice. More recently, we extended our leadership position in Sweden with the March 2015 acquisition of Nextport, a tenant representation and relocation management firm based in Stockholm.
  • YY Property Solutions, which provides real estate agency and investment services in Malaysia.
  • CLEO Construction Management, a California-based construction project management services firm specializing in medical facilities.
  • Tasaciones Hipotecarias, the real estate valuation subsidiary of BNP Paribas Real Estate Spain.
  • W.A. Ellis, a UK-based firm which strengthens our residential capabilities in central London.
  • CRESA Portland LLC, a leading tenant representation and corporate services provider that expands our presence in the U.S. Pacific Northwest.
  • Coverpoint Foodservice Consultants, a UK-based specialist in food and beverage advice, which strengthens our European Retail & Leisure Consulting group.
  • The international residential project sales business of Henry Butcher, a leading real estate advisory firm in Malaysia.
  • Novo Interior, which expands our Tetris project management business in Portugal.

To all our new colleagues, welcome to JLL.

During the year, we also expanded our global platform by opening new offices in Lagos, Nigeria; Nanjing, China; and Kuala Lumpur, Malaysia.

In 2014 we represented tenant and landlord clients to complete 33,500 transactions representing 662 million square feet of space. The total represented a 16 percent increase on 2013 levels. Our leasing revenue increased 17 percent during the year.

G2 | Strengthen our leading position in Corporate Solutions

Throughout 2014, we continued to expand our leading position delivering integrated real estate outsourcing services to corporate clients in all parts of the world.

Global leasing markets showed corporate occupier activity increasing around the world by the end of the year, which closed with surprising strength. Corporate clients who had been focused on cost reduction re-focused on portfolio restructuring and, to attract and retain top talent in a very competitive marketplace, a preference for modern, accessible office space.

We won 58 new outsourcing assignments in 2014, expanded our existing relationships with another 53 clients and renewed 22 contracts. In our local market Corporate Solutions business, which serves corporate occupiers who purchase real estate services locally, we won 61 assignments during the year.

All told, we provided corporate facility management services for approximately 1.1 billion square feet of client real estate, a 5 percent increase from 2013. Adding the space we manage for property investors to this figure, our total property and facility management portfolio reached 3.4 billion square feet at the end of the year. Property and Facility Management fee revenue increased 15 percent in 2014 compared with the prior year.

G3 | Capture the leading share of global real estate capital flow for investment sales

Our strategic priority of delivering capital markets services globally is driven by two related forces: the increasingly international, cross-border flows of capital into real estate, and the global marketing of prime real estate assets. Few competitors can match our expertise and global reach in this market environment.

We provided capital markets services for $118 billion of client transactions in 2014, a 19 percent increase from the previous year. Our Capital Markets and Hotels revenues increased 15 percent year on year.

Our real estate investment banking professionals continued to serve clients looking for capital and other financial resources to increase the value of their real estate holdings.

G4 | Strengthen LaSalle Investment Management’s leadership position

LaSalle’s integrated global platform continued to deliver superior performance to its clients, and to our firm, in 2014. LaSalle’s operating revenue increased 45 percent for the year, resulting primarily from high levels of incentive and advisory fees.

LaSalle raised $8.9 billion of new capital during the year to reach its highest level since 2007. At year-end, assets under management totaled $53.6 billion, a 13 percent increase on 2013 levels.

These results indicate that investors are maintaining, and in many cases increasing, their allocations to real estate and specifically to advisors they have come to trust over time.

G5 | Differentiate and sustain the organization by connecting across the firm and with clients and other stakeholders

To leverage and accelerate our investments in the first four Gs, we have a need – and a powerful opportunity – to continue to link together different parts of our business ever more efficiently. Not only does connecting across the organization differentiate JLL from competitors, but it also helps us sustain the company over time.

Clients increasingly demand services that are both specialized and integrated. They seek faster, better and cheaper ways to create and unlock value in their real estate. And they want to be assured that the service partners representing them always act with the highest levels of integrity and transparency. As we connect our people, service lines, geographies, systems and technologies more effectively, we improve our client-service capabilities significantly.

Connecting operations effectively also improves our productivity and, as a result, our profitability. And it helps us manage the enterprise risk that is inherent in our business. Both contribute to the firm’s long-term success.

We also recognize the responsibilities we have to our own people and to the communities we live and work in. Taking an active role as a good corporate citizen contributes to our ability to maintain a sustainable, long-term presence as a leader in our industry.

The JLL culture supports sustainable connections. Superior client service, teamwork and collaboration, and high ethical standards frame our culture, drawing us closer to each other and to our clients.

Our 2020 strategy for focused growth

Three years ago, to accelerate progress in our G5 priorities, we identified and launched an interrelated set of business and operational strategies to promote focused growth to 2020.

Beyond confirming the continued relevance of the G5 as ongoing priorities, the strategy focuses on how best to support them. That involves identifying and investing in resources that will enable the strategy to succeed:

  • Diverse talent and human capital equipped to accomplish our strategic objectives
  • Productivity measures to expand margins
  • Investments in data and technology tools to help clients maximize the value of their real estate
  • Governance processes to identify and control enterprise risk
  • Strong brands to differentiate JLL and LaSalle in the marketplace

Finally, the strength of our balance sheet will allow us to drive revenue growth and fund capital expenditures between now and 2020.

A positive market environment in 2015

One-third of the way into 2015, we continue to see positive momentum in global capital markets and world leasing markets.

High demand continues to drive direct investment in commercial real estate. Our Research team’s projections show sales increasing by 5 to 10 percent above 2014 levels. This will bring the year’s investment sales market volumes to about $750 billion, matching the record levels of 2007.

Corporate occupier activity is also continuing to strengthen, with healthy global economic growth, portfolio restructuring and a preference for efficient, modern space contributing to growth. We project that gross absorption will increase about 5 percent above 2014 levels, with the greatest growth in Asia Pacific.

In institutional funds management, we project current trends to continue. Strong performers like LaSalle will attract significant investment capital in this environment. We also see increased appetite for risk among investors, who continue to move into value-add and opportunistic investments in search of higher returns. The main challenge this year will be deploying capital successfully.

Changes on our Board of Directors

There are three pending changes on our Board of Directors this year.

Kate S. Lavelle, has decided not to stand for re-election at this year’s Annual Meeting in order to devote additional time to a new business venture. We appreciate her valued service on our Board and wish her well in her future endeavors. All of the other current directors are standing for re-election.

We are very pleased that Ann Marie Petach and Samuel A. Di Piazza, Jr.have been nominated to stand for election at the 2015 Annual Meeting. Both have served in senior positions at some of the largest and most sophisticated global business organizations, and we feel very fortunate to have them as nominees.

Ann Marie most recently served in several senior positions with BlackRock, Inc., the world’s largest investment management firm, including as its Chief Financial Officer. Before that, she had a 23-year career with Ford Motor Company culminating in her serving as its Treasurer.

Sam retired as Global Chief Executive Officer of PricewaterhouseCoopers, concluding a 36-year career at the world’s largest professional services firm. Most recently, he served as Vice Chairman of the Institutional Clients Group and Member of the Senior Strategic Advisory Group at Citigroup, Inc.

 Both will add significant financial, strategic and operational expertise to an already strong Board, and we look forward to welcoming them to JLL.

A year of continued confidence at JLL

In this positive market environment, confidence and optimism continue to build among clients and our own staff. We anticipate positive momentum across business lines and geographies as a result. The strength of our client relationships and the JLL and LaSalle brands, the extent of our professionals’ skills and experience, and the depth and flexibility of our financial resources position us for continued growth and success in 2015 and beyond.

I want to close this letter with a final round of thanks to our people for the contributions they made in 2014 – and continue to make this year – to our clients, to their colleagues and to our firm. To illustrate their success, here are a few of the awards they helped JLL earn from industry associations and independent groups in 2014:

  • One of the World’s Most Ethical Companies for the seventh consecutive year, Ethisphere Institute
  • 2015 Corporate Equality Index, Human Rights Campaign Foundation, achieving a perfect score
  • One of America’s Best Managed Companies, Forbes magazine
  • #1 Global Investment Manager, 2014 Euromoney Real Estate Poll
  • Global Outsourcing 100 for the sixth consecutive year, International Association of Outsourcing Professionals
  • 2014 Energy Star Partner of the Year Sustained Excellence Awards, U.S. Environmental Protection Agency
  • Winning ‘W’ Company, 2020 Honor Roll, 2020 Women on the Board
  • Top Ten Most Innovative Law Departments, InsideCounsel
  • Best-in-Class - Real Estate Interactive Media Award for Cities Research Centre
  • Best of the Best, Top Diversity Employer and Top Supplier Diversity Program, Black EOE Journal
  • Best Performing Property Brand, Managing Partners’ Forum Awards for Management Excellence
  • Best Property Consultancy Awards across seven markets, International Property Awards for Asia Pacific
  • Best Place to Work in Money Management, Pensions & Investments
  • Real Estate Investment Management Firm of the Year, Germany, International Funds Awards
  • Best Performing Fund in Pan-European Property Fund Index, IPD European Property Investment Awards
  • Investment Agency Team of the Year, UK Property Awards
  • Best Real Estate Employer in Germany for the third consecutive year, Immobilien Zeitung

Early this year, we were selected as one of the World’s Most Ethical Companies for the eighth straight year, and we were also named to FORTUNE magazine’s 2015 Most Admired Companies list.

Thank you for your continued interest in JLL.

Colin Dyer
Chief Executive Officer and President
April 2015

Colin Dyer
Chief Executive Officer and President

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