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Jones Lang LaSalle Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 8, 2012 04:36PM
Jones Lang LaSalle Inc. (JLL) filed Quarterly Report for the period ended 2012-03-31. Jones Lang Lasl has a market cap of $3.56 billion; its shares were traded at around $78.34 with a P/E ratio of 16.9 and P/S ratio of 1. The dividend yield of Jones Lang Lasl stocks is 0.4%. Jones Lang Lasl had an annual average earning growth of 8.7% over the past 10 years.
Highlight of Business Operations:Construction management fees, which are gross construction services revenue net of subcontract costs, were $1.6 million and $2.3 million for the three months ended March 31, 2012 and 2011, respectively. Gross construction services revenue totaled $31.7 million and $43.3 million for the three months ended March 31, 2012 and 2011, respectively. Subcontract costs totaled $30.1 million and $41.0 million for the three months ended March 31, 2012 and 2011, respectively.
The majority of our service contracts are accounted for on a net basis. Total costs incurred and reimbursed by our clients for service contracts that were accounted for on a net basis were $415.7 million and $370.6 million for the three months ended March 31, 2012 and 2011, respectively. Contracts accounted for on a gross basis resulted in revenue and operating expenses of $69.1 million and $46.8 million for the three months ended March 31, 2012 and 2011, respectively. The presentation of expenses pursuant to these arrangements under either a gross or net basis has no impact on operating income, net income or cash flows.
We review our investments in real estate ventures that are accounted for under the equity method of accounting on a quarterly basis for indications of (1) whether the carrying value of the real estate assets underlying our investments in real estate ventures may not be recoverable or (2) whether our equity in these investments is other than temporarily impaired. When events or changes in circumstances indicate that the carrying amount of a real estate asset underlying one of our investments in real estate ventures may be impaired, we review the recoverability of the carrying amount of the real estate asset in comparison to an estimate of the future undiscounted cash flows expected to be generated by the underlying asset. When the carrying amount of the real estate asset is in excess of the future undiscounted cash flows, we use a discounted cash flow approach to determine the fair value of the asset in computing the amount of the impairment. Equity in earnings (losses) from real estate ventures included impairment charges of $1.7 million and $1.8 million, for the three months ended March 31, 2012 and 2011, respectively, representing our share of the impairment charges against individual assets held by our real estate ventures.
Starting in 2011, we elected the fair value option for certain investments in real estate ventures because we believe the fair value accounting method more accurately represents the value and performance of these investments. At March 31, 2012 and December 31, 2011, we had $34.1 million and $34.5 million, respectively, of investments that were accounted for under the fair value method. For investments in real estate ventures for which the fair value option has been elected, we increase or decrease our investment each reporting period by the change in the fair value of the investment. These fair value adjustments are reflected as gains or losses in our consolidated statements of comprehensive income within Equity in earnings (losses) from real estate ventures. For the three months ended March 31, 2012 we recognized a fair value gain of $0.4 million, and no fair value adjustment was recognized for the three months ended March 31, 2011. The fair value of these investments is based discounted cash flow models and other assumptions that reflect our outlook for the commercial real estate market relative to these real estate assets and is primarily based on inputs that are Level 3 inputs in fair value hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”
LaSalle Investment Management s first-quarter Advisory fees were $57 million, compared with $61 million in 2011. The business recognized $8 million of incentive fees resulting from investment performance for clients in the first three months of 2012. The business also recognized nearly $12 million of equity earnings in the quarter driven by the sale of a fund in Japan during the quarter with incentive fees from the sale expected later in the year. Although the sale took place during the quarter, the associated incentive fees are expected to be recognized later in the year when all contingencies are satisfied.
Stocks Discussed: JLL,