Our growth oriented investments in our people and platform over the past several years provide a strong foundation for the eventual rebound in our transactional business lines. As well as continued growth of our more cyclically resilient business lines. We remain focused on delivering a high level of client service and capturing the significant market opportunities to drive both near term and long term growth, profitability and cash flow. JLL Technologies also demonstrated an acceleration fee revenue growth in the quarter.
Additionally, over the past six quarters, we have been investing in our capital markets and other businesses, which has an amplified headwind effect on the quarters profitability when combined with the decline in fee revenue. We expect the investments to help accelerate growth as a recovery unfolds. We continue to actively manage our business to drive further long term improvements in efficiency.
In addition, borrowers have a more diverse set of debt sources. While there will be pockets of distress due to declining property values, and the rising cost of debt will likely be contained to lower quality assets in select markets. Recent turmoil in the banking sector has created an opportunity for our industry leading debt and equity advisory business loans. As banks pull back on lending to commercial real estate, we’re well positioned to help clients find alternative sources of capital. With an estimated 15% to 20% of commercial real estate debt maturing over the next 12 months, our debt and equity advisory services will be needed more than ever. Putting the first quarter results in perspective, our investment sales, debt and equity advisory fee revenues were the lowest since the second quarter of 2020.
- The Capital Markets adjusted EBITDA margin contraction was predominantly driven by lower fee revenue, and the impact of the growth oriented headcount additions we made an early to mid-2022.
- Adjusted EPS of $0.65 declined 84% driven in part by higher interest on top of the lower adjusted EBITDA, partially offset by a 5% reduction in the average share count.
- Well, first of all, we tend to be very conservative, and we wouldn’t reinstate our 14% to 16% margin guidance if we weren’t believing in it.
- I kick it from a high level and then I’ll hand it over to Karen for more detail.
The underlying growth of the servicing fees was driven by the growth in our Fannie Mae portfolio. The Capital Markets adjusted EBITDA margin contraction was predominantly driven by lower fee revenue, and the impact of the growth oriented headcount additions we made an early to westernfx mid-2022. With our investments and our capital markets talent and platform over the past several years, we are well prepared for a strong recovery when transaction volumes return. For its part, LaSalle Partners entered the 1990s with ambitious plans to expand its operations.
And so we shouldn’t run into the mistake that we think oh, wow, it’s only 50% to 60% of pre-COVID levels. And that means that transaction levels will stay that low, not in the area where we are playing. We have seen real appetite from various easymarkets review sorts of lenders, which the majority is non-banking lenders. But over the last couple of weeks, we also saw the banks now coming back in and also those banks, which have been very absence, for the first three months have come back now.
- Returned to office assets are driving an uptick in attendance rates across much of the US.
- It carries out an investment management business as LaSalle Investment Management.
- This trust is demonstrated by the new client engagements we have won since the beginning of the year.
- And so they want to transact at some point, they want to liquidate those funds.
- Recently, JLL’s shares have performed poorly on both absolute and relative terms.
- Of all banks are well capitalized, balance sheets are strong and lending standards in recent years have been much more conservative.
And so that is down at the moment by 50%, frankly, means nothing going forward, because first things have to be invested, which are already sitting at the sidelines. I will now turn the call over to Karen, who will provide more detail on our results for the quarter. Any statements made about future results and performance, plans, expectations and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in our annual report on Form 10-K for the fiscal years ended December 31, 2022, and in other reports filed with the SEC.
In the industrial sector, the revenue declined 14% which compares favorably with a 37% decrease in global industrial market activity, according to JLL research. The contraction in industrial sector leasing activity is directionally consistent with expectations given a tight supply and significant growth seen over the past several years. As Christian described, we’re seeing more sustained leasing demand for high quality assets despite softer demand more broadly.
JLL Pittsburgh elevates Retail team with addition of new Senior Vice President
Those in lower socio-economic brackets often are unable to withstand these low base salaries due to other financial responsibilities. Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers. That wasn’t the case last year for the reasons you all know; this year will be particularly pronounced on relying on that fourth quarter performance. But for the time being, we have no reason to believe that it will not come because our working hand in the different business lines give us the confidence that we can still hold up to that 14% to 16%. Sure, let’s start with APAC, APAC is generally speaking back to pre-COVID levels.
UK estate agents build up lettings as homes sales boom ends
We made a very thorough review of our LaSalle business and the portfolio where we have equity in there. And even if we have to take some write-downs on a quarter basis, we are very confident that we will recover that over the coming years. And on the JLL T side, it’s a pretty similar picture, there may be some smaller investments, which will face some challenges over the coming quarters. But more importantly, some of our very large investments have a really strong medium term outlook.
IT Client Prospector provides intelligence on Jones Lang LaSalle Inc’s likely spend across technology areas enabling you to understand the digital strategy. JLL’s Value and Risk Advisory platform hired Bart Sobieralski as a Vice President in the firm’s New York office. JLL Capital Markets announced today that Samantha Kupersmith has joined the firm’s multi-housing team as a Senior Director in the Philadelphia office. Discover the surge of celebrity-backed brands expanding to malls globally, as detailed in JLL’s The Rise of Celebrity Retail report.
Jones Lang LaSalle profit rises to more than triple expectations, as estimates of real estate investments increased
In specific terms, the sell-side’s consensus current year normalized EPS estimate for Jones Lang LaSalle was lowered by -25.7% in the same time frame. In other words, JLL’s earnings are expected to contract by -41.2% for this year. I kick it from a high level and then I’ll hand it over to Karen for more detail. As we said, we had a couple of pretty significant wins over the last weeks.
And so the relativity has shifted, that will change very quickly again, because we have at the moment a devaluation of their real estate assets. But if we see the same kind of devaluation, which we have roughly seen in the US in the portfolios of those investors of 20%, they will be in line without selling a single asset. Now we have these short term shifts, which we just discussed, but once we are back to normality around that, then they are still under invested. And then you will see fundraising being very vibrant again and there are still exceptions to the rule, you have seen what Blackstone’s ability was to raise a new record number for the new private equity fund in real estate.
So that is exactly what you want to achieve that you have a competitive environment again, and not only one or two who are offering a proposal. To help address the unique career obstacles diverse candidates often face, JLL offers development opportunities through mentoring, as well as partnering with external organizations to expand its impact. Last summer, the company launched a reverse mentoring program, which pairs diverse employees with executive team members to share their experiences related how to become a successful java developer to topics of strategic and cultural relevance. The program aims to provide transparency, help leaders gain insights into the real experiences of JLL employees, drive cultural change and improve leadership’s understanding of issues facing employees. According to the Mortgage Brokers Association, JLL has the top US debt origination platform by a factor of two, as well as the leading equity placement platform, which makes us uniquely positioned to manage this upcoming wave of debt maturities.