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SEC Filings

S-1/A
JONES LANG LASALLE INC filed this Form S-1/A on 07/03/1997
Entire Document
 
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                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
  LaSalle Partners is a leading full service real estate firm that provides
management services, corporate and financial services and investment
management services to corporations and other real estate owners, users and
investors worldwide. The Management Services segment provides three primary
service capabilities: (i) property management and leasing for property owners;
(ii) facility management for properties occupied by corporate owners and
users; and (iii) development management for both investors and real estate
users seeking to develop new buildings or renovate existing facilities. The
Corporate and Financial Services segment provides transaction and advisory
services through three primary service capabilities: (i) tenant representation
for corporations and professional service firms; (ii) investment banking
services to address the financing, acquisition and disposition needs of real
estate owners; and (iii) land acquisition and development services for owners,
users and developers of land. The Investment Management segment provides real
estate investment management services to institutional investors, corporations
and high net worth individuals.
 
  The Company has benefited from the recovery in real estate markets which
began in 1993. Specifically, rising rental and occupancy rates have positively
affected revenue for the Company's property management and leasing and tenant
representation businesses. In addition, improving real estate property values
and improved trading values for public real estate securities have resulted in
higher revenue for the Company's Investment Management segment.
 
  Although a significant portion of the Company's revenue is transactional in
nature, 87% of the Company's 1996 revenue was derived from clients for which
the Company provided services in previous years. The Company believes that its
strong client-service orientation, its focus on cross-selling its products and
services, and its development of strategic alliances with major users and
owners of real estate strengthen its client relationships and create recurring
revenue sources. The Company's revenue has increased at a compound rate of
17.7%, 12.4% and 14.2% for the three year, five year and ten year periods
ended December 31, 1996, respectively. In addition, the Company's wide range
of product and service offerings enabled the Company to maintain a stable
level of revenue from 1990 to 1993, the sharpest downturn in the real estate
markets in recent decades. None of the Company's clients accounted for 10% or
more of the Company's total revenue for 1994, 1995 or 1996.
 
  The Company's operating expenses consist of compensation and benefits, other
operating and administrative expenses and depreciation and amortization.
Compensation and benefits tend to be relatively constant as a percentage of
revenue on an annual basis. Other operating and administrative expenses
consist principally of overhead costs and to a lesser extent business
development expenses, professional fees and employee training and development.
Overhead generally consists of occupancy costs and other routine business
expenses (i.e., office equipment, supplies and telecommunications) necessary
to conduct the Company's day-to-day operations. Overhead costs tend to be
relatively fixed, with increases occurring as the Company expands into new
geographic markets and as significant changes occur in staffing levels. The
remaining components of other operating and administrative expenses are
relatively variable. Depreciation and amortization has increased in recent
years due to the acquisitions of ABKB and CIN Property Management, increased
investment in technology and the Company's relocation of its Chicago
headquarters. Depreciation and amortization expenses will increase as a result
of the merger of Galbreath with the Company.
       
  The Company receives investment advisory, property management and leasing
and investment banking fees for services provided in connection with four
multiple investor funds ("commingled funds") formed by the Company in the
1980s to hold real estate investments on behalf of numerous tax-exempt
institutional investors. Revenue derived from, or in connection with, these
funds represented 11.5% of the Company's total revenue in 1996 compared to
12.8% and 20.1% in 1995 and 1994, respectively. The Company expects that such
revenue
 
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