Jones Lang LaSalle Incorporated

Good morning, ladies and gentlemen. Welcome to the Q4 2022 Jones Lane LaSalle fourth quarter earnings conference call. My name is Jaquita. I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to your host, Scott Ian Burke, Berger with JLL. Scott, please go ahead.

Thank you, and good morning. Welcome to the fourth quarter and full year 2022 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release, along with a slide presentation and Excel file intended to supplement our prepared remarks. These materials are available on the investor relations section of our website. Please visit ir.jll.com. During the call and in our slide presentation and accompanying Excel file, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. 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 but the fiscal years ended December 31st, 2021 and December 31st, 2022, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Thank you, Scott. Hello, and thank you all for joining our fourth quarter 2022 earnings call. Before we begin today's call, I would like to take a moment to express our thanks to the people of Turkey and Syria who have been impacted by multiple earthquakes. We are focused on supporting our people, clients, and suppliers in the region. Over the past 12 months, rising interest rates currency headwinds, and geopolitical events have continued to put downward pressure on the macroeconomic environment. For real estate markets, a rapid rise in interest rates has led to a slowdown in investment sales activity. According to JLL research, global commercial real estate investments totaled $203 billion in the fourth quarter, a year-over-year decline of 56%. bid-ask spreads across asset classes remain wider than normal and reflect the need for continued price discovery to occur. A lack of transactions is limiting liquidity in some markets, with investors expected to remain patient as prices settle, at which point liquidity will improve. Dry powder is at near record levels with $386 billion sitting on the sidelines, down slightly from the end of 2021. We expect this dry powder to be deployed once interest rates stabilize and bid-ask spreads normalize. The macroeconomic pressures are also being felt in the global office leasing market. while volume was down 19% year-over-year in the fourth quarter, according to JLL research. Tenants are delaying decisions or taking short-term actions in light of the macroeconomic uncertainty. Global office vacancy rates picked up modestly to 14.9% in the fourth quarter. In most markets, high-quality premium assets continue to significantly outperform the rest of the market, as occupiers focus on upgrading space. In the industrial space, occupiers are taking a more cautious approach with demand slowing across all three regions in the fourth quarter. However, market fundamentals remain strong in the industrial space with low vacancy rates and healthy rental growth in many markets. The retail and hotel sectors outperformed on a relative basis in the fourth quarter. Retail demand picked up in the U.S. after a slow third quarter, and in Asia Pacific, retail continues to perform well in many major markets. Hotels continued the recovery that began early in 2022 as consumer spending on travel persists. JLL's financial results for the fourth quarter reflect the points I just discussed. We saw a decline in our investment sales business as inflation and rising interest rates continued to slow the transaction market. Our leasing business also saw a slowdown, both in volume and average deal size. As we have spoken about in the past, the magnitude of a slowdown is more pronounced in our investment sales business than in our leasing business, as our leasing business has a more resilient revenue basis. This dynamic is reflected in our fourth quarter results. Both investment sales and leasing were lapping record results from the fourth quarter of 2021, impacting the year-over-year decline on a percentage basis. In contrast, our more resilient business lines, such as property management, workplace management, valuation advisory, loan servicing, and JLL technologies, in total delivered positive fee revenue growth during the quarter despite the economic headwinds. We have worked hard over the last decade to diversify our business lines and add more resilient revenue streams to our portfolio. Finally, LaSalle grew advisory fee revenue during the quarter, highlighting the annuity-like nature of this revenue stream. We remain focused on our adjusted EBITDA margin and will continue to make targeted investments to drive future growth. In addition, we have taken steps to drive operational efficiencies across our business and reduce our cost base. The cost actions we have taken to date occurred across business segments and have been focused on non-revenue generating roles. Our change to a segment reporting structure has allowed us to quickly identify and take action to remove these costs. As a result of these actions, we have removed approximately $140 million of cost on an annualized basis. Some of the cost actions have an immediate impact while others take time to materialize. Based on the timing of these actions, we expect to realize $125 million of the cost savings in 2023. We have carefully balanced the need to reduce our costs without impacting our ability to immediately return to gross mode as conditions improve and will continue to identify further opportunities to drive efficiencies in 2023. I will now turn the call over to Karen, who will provide more detail on our results for the quarter.