Jones Lang LaSalle Incorporated

Good morning. My name is Christy and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2023 JLL Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. Scott Einberger, Investor Relations Officer. You may begin your conference.

Thank you and good morning. Welcome to the first quarter 2023 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. Please note that we are now providing an enhanced version of the supplemental Excel file that includes a historical view of JLL's financial results by segment, including a view of fee-based comp and benefits and total operating expenses. In addition, the Excel file now includes a full balance sheet, statement of cash flows, and other relevant operating metrics. We hope this enhanced Excel file will make modeling our business easier. 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 in an accompanying Excel file, we referenced certain non-GAAP financial measures, which we believe provide useful information for investors. We will 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 for the fiscal year December 31, 2022, and 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 first quarter 2023 earnings call. I'm pleased with our first quarter as we were able to deliver results broadly in line with our plan despite the further deteriorating operating environment. At the beginning of the quarter, several green shoots emerged in the commercial real estate market, highlighting investors' willingness to deploy capital when market conditions weren't. Rising interest rates and turmoil in the banking sector had a dampening effect on sentiment in the second half of the quarter. For real estate markets, elevated borrowing costs and the continuation of the tightening in lending standards limited investment sales activity in the first quarter. According to JLL research, global commercial real estate investments totaled $128 billion in the first quarter, a year-over-year decline of 54%. Institutional investors remain cautious, while private capital has been slightly more active with an increased focus on sponsor, sector, and asset quality. Although global fundraising has slowed, elevated levels of capital remain on the sideline, with dry powder and closed-end funds now at $389 billion globally. Looking ahead. It appears that debt costs will become more predictable and bid-ask spreads can begin to compress. This process is already underway with global real estate asset prices declining around 20% on average from their 2022 peak. Additional price adjustments are likely needed to bring bid-ask spreads back to more normal levels. Capital remains available and lenders are active in appropriately priced assets, especially in growth sectors such as industrials and multifamily. Macroeconomic pressures are also being felt in the global office leasing market, where volume was down 18% year-over-year in the first quarter, according to JLL research. Return-to-office assets are driving an uptick in attendance rates across much of the U.S. But this trend was offset by softening labor markets in certain sectors and delays in decision-making amid macroeconomic uncertainty. Global office vacancy rates ticked up modestly to 15.3% in the first quarter. In most markets, high-quality premium assets continue to significantly outperform the rest of the market as occupiers focus on upgrading space. These types of best-in-class sustainable assets continue to be a focus area for JLL. In the industrial sector, demand slowed in many markets during the first quarter. It declines in the US and Europe as a result of limited supply and occupiers desire to take a more cautious approach given the macroeconomic environment. In Asia Pacific, Net absorption was positive compared to both the fourth quarter and prior year. Overall, market fundamentals remain strong in the industrial sector, with low vacancy rates and healthy rental growth in many markets. In the retail and hotel sectors, high-quality retail space is in demand from growth-orientated retailers, and hotels are benefiting from pent-up leisure travel and growing group and corporate demand. JLL's first quarter financial results reflect the continued slowdown in our capital markets business as the tightening in lending standards and rising debt costs impacted the transaction market. Similarly, our leasing business saw declines both in volume and average deal size. In contrast, our resilient business lines collectively delivered positive fee revenue growth during the quarter despite economic headwinds. Our web dynamics business continues to show underlying strengths, and we have recently won several new mandates that will take effect later this year. JLL Technologies also demonstrated an acceleration in fee revenue growth in the quarter. As we talked about at our November 2022 investor briefing, JLL uses a built-by-partner invest technology strategy, both for the benefit of our clients and to create a material differentiation for our overall business. For example, our capital markets team is now leveraging our new AI-powered platform to identify, analyze, and source pipeline opportunities. In the first quarter, one in five of all capital markets pipeline opportunities globally was enabled by our AI-powered platform. Lastly, LaSalle grew advisory fee revenue during the quarter highlighting the resilient nature of this revenue stream. I will now turn the call over to Karen, who will provide more detail on our results for the quarter.