Colin Dyer - Global Chief Executive Officer, President and Director Christie B. Kelly - Chief Financial Officer and Executive Vice President.

David Gold - Sidoti & Company, Inc. Bradley K. Burke - Goldman Sachs Group Inc., Research Division David Ridley-Lane - BofA Merrill Lynch, Research Division Brandon Burke Dobell - William Blair & Company L.L.C., Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division.

Good day, and welcome to the Third Quarter 2014 Earnings Release Conference Call for Jones Lang LaSalle Incorporated. Today's call is being recorded. Any statements made about future results and performance or about plans, expectations and objectives are forward-looking statements.

Actual results and performance may differ from those included in the forward-looking statements as a result of factors discussed in the company's annual report on Form 10-K for the fiscal year ended December 31, 2013, and in our other reports filed with the SEC.

The company disclaims any undertaking to publicly update or revise any forward-looking statements. A transcript of this call will be posted and available on the company's website. A web audio replay will also be available for download. Information and the link can be found on the company's website. At this time, I would like to turn the call over to Mr.

Colin Dyer, Chief Executive Officer, for opening remarks. Please go ahead, sir..

Thank you, operator. Hello, everybody, and welcome to this review of our results for the third quarter and the first 9 months of 2014. Our Chief Financial Officer, Christie Kelly, joins me on today's call and will discuss the details of our performance in a few minutes. I'll begin by summarizing our results.

We completed record third quarter with fee revenue of $1.2 billion, a 19% increase on the third quarter of 2013. Year-to-date fee revenue increased 17% to $3.1 billion. Adjusted net income was $105 million in the quarter or $2.31 a share, up 55% from the year ago quarter.

Adjusted net income totaled $198 million for the first 9 months of the year or $4.38 a share compared with $135 million or $2.99 a share in the same period a year ago. And finally, our Board of Directors declared a semiannual dividend of $0.25 a share, a 9% increase. So all in all, we had a very strong quarter in active global real estate markets.

We saw broad-based revenue growth across all service lines and geographies, and LaSalle Investment Management gained further momentum and delivered outstanding results with a superior capital raise and acquisition activity plus significant equity earnings and incentive fees.

The market backdrop to this is an -- a global economy projected to grow by 3.1% this year, up marginally from 2013. And despite concerns about some economies, overall growth is expected to increase next year to 3.6%. To look at world real estate markets, please see the slides that we posted in the Investor Relations section of jll.com.

Slide 3 summarizes trends in capital markets and leasing volumes. Investor sentiment remains strong, and world investment sales volumes continue to rise in the quarter, up 15% from the third quarter of 2013 and 24% on a year-to-date basis, bringing year-to-date activity to $468 billion.

The regional divergence we've seen throughout 2014 continued, with the Americas and EMEA outperforming Asia Pacific. As you'll see on the slide, overall transactional volumes in Asia Pacific were marginally higher than in the third quarter of 2013, but below 2013 levels on a year-to-date basis.

There was a significant divergence within this with Australia up 23% and China down 33% year-to-date. Expanding investor interest in the European market produced a double-digit increase in market volumes for both the quarter and year-to-date.

Growth was widespread from the core markets of UK, France and Germany to markets in Central and Eastern Europe, Benelux, the Nordics and Southern Europe. And in the Americas, investment volumes grew 25% in the quarter and 36% year-to-date, with the U.S. continuing to surge and Brazil and Mexico were considerably higher than the same period a year ago.

Prime yields continue to compress in the third quarter due to continued high demand by 10 to 20 basis points in U.S. gateway cities, for example, 25 basis points in Madrid and 10 basis points in Tokyo. Annual capital value growth on prime office assets across 25 major world markets remained stable at between 8% and 9% during the quarter.

World leasing markets showed greater divergence in activity and sentiment. While gross absorption declined in the Americas and EMEA in the quarter, the sense in the marketplace is one of continued momentum. Many U.S.

tenants renewed and extended leases earlier in the cycle to lock-in lower rents, for example, and in the third quarter, nearly 45% of U.S. leases reflected growth in tenants footprint. In Europe, London saw near record takeup volumes, while activity was more subdued in Continental Europe amid renewed economic concern.

In Asia Pacific, year-to-date gross volumes increased 10%. Office vacancy rates across 98 global markets fell below 13% for the first time in the current cycle, down to 12.9%. U.S. vacancies closed the quarter at a 6-year low, dipping below 16% while Asia Pacific fell to 11% -- 11.2%, its lowest rate in 18 months.

European office vacancy remained steady at 9.7%. And finally, rental rates continue to increase at a steady pace during the third quarter, showing a 3% annual growth rate across 25 major world markets. So for a sense of how we performed in this environment, I'll turn the call over to Christie..

Thank you, Colin, and welcome to everyone on our call. I'm pleased to report another quarter of strong performance for JLL. As Colin mentioned, we had a record third quarter with consolidated fee revenue of $1.2 billion, up 19% over last year and adjusted EPS of $2.31, up 55% over last year. Real estate services fee revenue increased 12% overall.

LaSalle Investment Management grew advisory fees and generated significant incentive fees and equity earnings from performance for clients. Our results were delivered in a steadily improving market environment in which the economic recovery remains on track for the medium term and for real estate as reflected in our strong pipeline.

As Colin mentioned for the quarter, overall global market leasing activity was uneven, less active than forecasted and continued to trail the more buoyant capital markets. Our strong broad-based performance continued to demonstrate the strength of our globally diverse and growth-oriented firm.

Our revenue increase of 10% in Leasing was driven throughout our businesses and outperformed the overall market, where growth absorption decreased 5% for the quarter versus third quarter last year.

We also delivered a 13% increase in our annuity businesses, including Property & Facility Management and Project and Development Services, led by our Asia Pacific and Americas businesses. Capital Markets & Hotels revenue increased 15% led by a strong quarter in the Americas and EMEA.

Our LaSalle Investment Management business again delivered an outstanding quarter. We delivered these results while continuing to selectively invest and profitably grow our Real Estate Services business as well as LaSalle in alignment with our strategic plan.

Adjusted operating income margin calculated on a fee revenue basis increased 140 basis points to 10.8% for the quarter compared with 9.4% for the third quarter last year. Adjusted EBITDA margin on a fee revenue basis increased 230 basis points to 14.3%.

Our performance was primarily driven by LaSalle, both in strong incentive fees and higher advisory fees, offset slightly by timing of client-facing investments such as IT and data as well as variable cost increases of 21% to convert our solid pipeline.

On a trailing 12-month basis, operating margin expanded 70 basis points in the third quarter to 9.9%, with margin improvement in all 3 regions and at LaSalle, even as we continued to invest in our business.

For example, over the last 12 months, we selectively expanded staff in more than 11% in the case of Capital Markets and 7% for Leasing, executed through both hiring and acquisition, while increasing revenue per producer in the process. Implementing productivity initiatives and identifying new opportunities to increase revenue remain a priority.

Our consolidated results, which demonstrate our dedication to excellence and the strength of our brand, the talent of our local team and our focus on clients and investors, set us up for a strong fourth quarter finish to 2014 and a solid base for 2015.

We will begin our look at the segment results with the Americas, where third quarter fee revenue increased 16% over third quarter 2013. Leasing revenues for the quarter was up 10% and Capital Markets & Hotels revenue was up 55%, both significantly outpacing the changes to overall market volume.

Our Hotels business delivered excellent growth in the third quarter in the Americas. Office investment sales revenue was also strong, as our people executed on the healthy pipelines we discussed in previous quarters.

Growth was also robust in our annuity businesses in the Americas, with Property & Facility Management revenue up 9% and Project and Development Services up 19% on a fee revenue basis.

Operating margins were down in the third quarter and flat on a year-to-date basis versus last year, including the impact of timing of specific transactions and investments. From a longer-term perspective, our Americas operating margins are up 10 basis points on a trailing 12-month basis to 9.9%.

We continued to recruit, develop and retain top talent to drive continued performance in both Leasing and Capital Markets as well as our annuity-based businesses. Our pipeline remains strong for the remainder of the year, and our Americas team is driving both revenue and profitability for the seasonably strong fourth quarter.

In our EMEA business, third quarter fee revenue increased 9% over last year. This solid growth was over a third quarter 2013 that was 24% higher than 2012. Revenue growth was particularly strong in Leasing, up 11%; Property & Facility Management, up 16%; and Project and Development Services, which was up 18%, driven by our Tetris business.

Capital Markets & Hotels revenue was up 5% on a tough prior year comparable, led by strong performances in the U.K. and Germany. Overall, the U.K., Spain and MENA had strong quarters with respect to year-over-year profitability.

Operating margins in EMEA were lower in the quarter due to timing of transactions that moved to the fourth quarter and our ongoing investments, but remain up on a year-to-date and trailing 12-month basis. Operating margins on a trailing 12-month basis are 7.9%, up 30 basis points from last year.

Our EMEA leadership is upbeat about our prospects for the fourth quarter and beyond, with opportunities to advise our clients on large transactions outweighing concerns about slower economic recovery and ongoing Russia/Ukraine situation. In our Asia Pacific business, third quarter fee revenue increased 7% over 2013.

Asia Pacific leasing revenue for the quarter was up 9%, with leasing markets in Asia Pacific recovering, albeit slowly. Capital Markets & Hotels revenue for the quarter was down 16%, after being up 56% in third quarter 2013 versus 2012.

Our expectation for Capital Markets growth is to return, partly due to older vintage private equity funds entering their disposition stages and our work-in-hand expected to convert for the fourth quarter.

Our annuity businesses continue to perform well, as Property & Facility Management fee revenue for the third quarter increased 10%, and Project and Development Services fee revenue increased 14%. Our advisory business in Asia Pacific has been bolstered by the growth in Australia's valuations business as a result of investments and key hires.

Operating margins were lower in the quarter and year-to-date, where performance was primarily driven by a change in mix to higher annuity revenue, lower capital markets revenue against a tough comparable and investment timing.

Operating margins on a trailing 12-month basis are up 30 basis points to 8.5%, while we continue to invest in top talent and long-term initiatives. LaSalle Investment Management, as I mentioned before, had an outstanding quarter.

The measurement of LaSalle's current health is evidenced by a number of key indicators, including acquisition and takeover activity within their client funds, growth in assets under management and related advisory fees and incentive fees driven by performance for our investors.

LaSalle is delivering on all of these fronts, with acquisitions reaching nearly $3 billion in the quarter, assets under management growing to $53 billion with advisory fees up 8% and as we indicated last quarter, significant incentive fees earned as mature funds continued to liquidate.

While incentive fees are influenced by both our investment performance and the real estate cycle, we are reverting to a period similar to prefinancial crisis, when we averaged $40 million to $50 million of incentive fees per year.

Since we are currently liquidating funds, we have the potential to exceed that average over the near term if markets remain stable. Investor capital flows remain strong in all regions and across most strategies.

LaSalle's track record for performance, research-driven client relationship focus and global platform have all contributed to a record capital raise in the third quarter. Regarding the state of our investment-grade balance sheet, total net debt was $517 million at the end of the quarter, a reduction of $248 million from the third quarter last year.

We continue to benefit from a lower cost of debt, which resulted in the reduction of net interest expense from $9.6 million in the third quarter of last year to $7.4 million this year. We continue to review M&A opportunities, closing 3 transactions since last quarter.

We also increased our semiannual dividend by 9% to $0.25 per share, reflecting our confidence in cash generation and profitable long-term growth on behalf of our shareholders. To sum up, we had a great third quarter, and we are well-positioned heading into the seasonally strong fourth quarter. I'll now turn the call back over to Colin..

Asia, Germany and Japan. Beyond the normal course of business, we also continue to invest in future growth, by attracting top individuals and teams to JLL.

We have also completed 6 targeted acquisitions this year, including 3 announced recently, W.A.Ellis, specialist agency in high-end residential property in London, as we continue to expand our leading presence in that active and growing segment; CLEO Construction Management, a California-based construction and project management services firm that specializes in medical facilities; and in Spain, the regulated valuations business of BNP Paribas Real Estate.

Looking forward, Slide 3 shows our research group's full year projections for global investment sales and leasing activity. We continue to expect total investment sales market volumes to reach $700 billion this year, 15% to 20% above 2013. We see volumes increasing significantly in the Americas and EMEA, but declining in Asia Pacific by about 5%.

Asia Pac is coming off a record 2013, however, and we expect volumes to -- in the region to hit a new record in 2015. Looking ahead to next year, we expect a continued high level of global demand for direct real estate investment.

We project further transactional volume growth of 10% to 15% globally, with a further 5% growth in capital values in the year with Tokyo, Beijing, Sydney and U.S. gateway markets showing the strongest capital appreciation.

Global leasing volumes are likely to finish this year at levels similar to strong 2013 levels, with gross absorption flat year-on-year in the Americas and EMEA and up in Asia Pacific. In 2015, we project gross leasing volumes to improve steadily by 5%, as sustained world economic growth drives increased business headcount and capital spend.

In funds management, we expect the continuation of current trends with capital flows growing as investors increase their allocations to real estate and seek enhanced returns further along the risk curve. As a major investment manager, LaSalle will continue to attract significant volumes of this investment capital flow.

For the fourth quarter of 2014, our outlook remains positive. Our pipelines are strong, as Christie mentioned, in what is traditionally our busiest quarter. And our business strategy is delivering superior results across the range of our operations.

So before we open the call for your questions, I'd like just to close my remarks by mentioning a few more representative awards which our colleagues have received from industry groups and independent third parties during the quarter, and which demonstrates our position as an industry leader in real estate services and investment management.

In addition to the LaSalle awards I mentioned earlier, JLL also won Euromoney Real Estate Awards across multiple markets in Europe, Middle East, Asia and Latin America.

Our global research team was named real estate Best in Class in London's Interactive Media Awards for our online, ongoing Cities Research Center, and we were awarded Cross-border Investment Deal of the Year in the AsiaProperty Awards in Hong Kong for the sale of Grand Park Orchard Hotel in Singapore.

And in the U.S, during the quarter, we added Dallas, Orlando and Philadelphia to our list of Best Places to Work awards. So with that, let's now turn to your questions.

Operator, could you please explain the Q&A process?.

[Operator Instructions] Your first question comes from David Gold with Sidoti..

Couple of quick questions. First, on the incentive fees and equity earnings. Earlier in the year, I think the -- just what the commentary was, we could see some significant wins and presumably in the third quarter we did.

Beyond that, as we think about fourth quarter, and presumably your visibility is a lot better today than it was, say, 3 or 4 months ago.

How should we think about that? Are there still some significant ones that are possible in the fourth quarter?.

David, I'll jump in there. As we look to the fourth quarter, just based on where we are with the funds, we'll see, we believe, some healthy performance in keeping with historical norms, prefinancial crisis. So to answer your question, yes, and for the foreseeable future to the medium term..

Christie's remarks on the numbers she quoted on incentive fees will guide to next year rather than the back end of this year. The Q4 numbers will be -- there will be some incentive but nothing like the level we saw in this quarter..

Got you. Perfect. And then second piece. Just as a reminder, back some years, I know we've chatted about the incremental margin potential that you have on those fees. Presumably you have to bonus or pay incentive comp.

But sort of other than that, what's -- how should we think about the incremental margin potential there? Or is it still order of magnitude 50-ish percent?.

I think that when you take a look at the incremental margin percent, David, historically, for the past, I don't know, 10-, 15-years, as far back as I could look, outside of '06, '07, we delivered around 12%, and we're expecting to deliver above that.

And when you take a look at the margin growth that we have experienced, we're not running our business just for the quarter..

So are you referring to the incentive fees, this margin on incentive fees alone?.

Yes, yes..

Okay. So there, we are slightly above the 12%, but they vary by fund, but the range is sort of 20% to 40%..

Yes, and I would agree with that, David. When we take a look at incentive fees, we're in that ballpark..

Perfect. And then a broader question. When you look at the numbers that you have in your market overview, essentially, in the Capital Markets side presumably you're expecting slower growth next year, broadly, and Leasing to be up a touch.

When we think about next year, with that sort of backdrop, looking for growth, where -- what are the potential drivers of, say, real upside next year given some potential slowdown on both of those fronts?.

I think the areas where we might see some -- if you're talking just Capital Markets, I mean, we're projecting quite a robust picture in Europe and U.S. I think the potential for upside could come in Asia.

What we've seen in Asia in the Capital Markets this year is something of a hesitant period, as buyers have been kind of waiting and a little bit sensitive to geopolitical issues and currency swings. And our sense is that if momentum comes back into those markets, we should -- could see some upside there..

Your next question comes from Brad Burke with Goldman Sachs..

Christie , I know you already touched on this. I wanted to go back to EBITDA margins. And since you saw most of the growth in Capital Markets, which is one of your higher-margin businesses, I would have expected some margin expansion. Actually saw some margin compression within Real Estate Services instead.

So I'm trying to understand what would be driving that? Specifically, Americas, in particular, were surprising given the strong result that you had in Q3 for Capital Markets..

Yes. I think, Brad, specifically, if you take a look overall, there are a couple of things going on in Real Estate Services. We have accelerated the funding on IT and data, and as well, given the very strong pipelines, our T&E and marketing expenses are up over revenues, which bodes very well for the fourth quarter.

And specifically, if you look at the Americas and we level set for IT and data and some of the innovation activities that we have going on in the region, together with the strong pipeline, the performance on a quarterly basis would be up as well as on a year-to-date basis, which was down slightly for the quarter and flat on a year-to-date basis.

So we're very optimistic in terms of our outlook for the fourth quarter and beyond. The team is doing very well..

Okay. So if I....

Yes, so then I was just going to say too, if you look at EMEA, also investments in the quarter, but we had a couple of transactions that slipped from the third quarter to fourth quarter. The team is doing exceedingly well and as I mentioned, very upbeat, for the fourth quarter and beyond.

And then APAC, we saw some slowing in the market in terms of our momentum, and we had a tough comp last year, together with the fact that we had a mix differential. So Cap Markets in that region are down. But overall, I'm very pleased with the performance and how we're positioned going into the fourth quarter and 2015..

Okay.

And just to confirm, if I heard you right, in the Americas, if we were to normalize for those IT and data expenditures, you would have seen a sequential improvement quarter-over-quarter on EBITDA margins as well as a year-over-year improvement versus 2013?.

Yes, that's right..

Brad, one point to make about the Americas Capital Market, it's the region where Capital Markets represents the lowest proportion of overall revenue so it has less of an impact. And on those numbers, the increases are impressive in percentage terms, it's off a smaller base than we have in Europe and in Asia Pacific.

It's also lower margin than those other 2 regions..

Okay, I appreciate that. I wanted to ask, as we head into the fourth quarter, which is your strongest cash flow quarter, what you're thinking about in terms of uses for all of your free cash flow.

And I'm interested in the decision to increase the dividend in the current quarter, which is what we normally would expect in the first quarter, whether there's any specific reason to take it up earlier than what we've typically seen you do..

Brad, when we take a look at uses of cash, we are very focused on M&A, together with the investment in our platform, IT, co-investment.

And from a dividend perspective, as I mentioned, we feel very strongly about our ability to generate cash with the growth in our annuity businesses and the drive for profitability, together with the fact that we're at a very good point in the cycle here from a real estate perspective.

So we thought, on behalf of our shareholders, obviously, it was the appropriate thing to do. And we look forward to more performance going forward..

Okay, that's helpful. And then the last one, just looking at your assets under management. It's been a pretty tremendous increase over the past couple of quarters.

How much of that do you think is attributable to LaSalle taking an outsized share of an increasing allocation to commercial real estate? And how much of that is just LaSalle benefiting from increased interest in the overall allocation in commercial real estate?.

That's real difficult to answer, but we'll go away and do some homework on it because it's a good question. We can split it back. As we said, we've given you the amounts that we've taken in over the past 12 and -- 12 -- 3 and 12 months, which are truly impressive numbers, $11 million in this year-to-date.

We don't see any reason, as we said, why there wouldn't be a continuation of flow -- funds flowing into the sector and to LaSalle as a predominant players in the sector. What level LaSalle will pick up over the coming quarters is very hard to estimate..

Okay.

I just should assume the strong capital raise that you had in the quarter, that should layer in over the next few quarters and continue to support AUM growth?.

Exactly..

Your next question comes from David Ridley-Lane with Merrill Lynch..

So there are several large U.S. retailers that are facing particularly difficult conditions and they may start widespread store closing programs. They are in the restructuring procedures -- proceedings. If we do see something along those lines, a lot of malls that could be losing anchor tenants, there could be some pretty sizable follow-on impacts.

So first, how much exposure does JLL have to U.S.

retail and leasing market? And then, second, how has your experience been with large-scale bankruptcies in the past, as Circuit City or Borders, something along those lines?.

Yes, our retail activity, including management leasing and capital markets work in the U.S is less than 5% of our U.S. revenues, David.

What generally happens when you have bankruptcies is that the properties get recycled, obviously, sometimes back into retail use or if they're particularly off pitch sites, then they'll be converted into -- redeveloped or converted into other uses.

We haven't had a huge amount of historical experience with them, but it's not a huge part of our business either..

Yes, I would agree with that, David..

If you go to Europe, we do have a significant mall sale and leasing business across the continent. And so the general pressure on retailers in Europe would work to our benefit if we have those sorts of scenarios that you've described, much more strongly than in the U.S..

Got it.

And then when you look at the request for proposals and deals you're working on in the Property & Facilities Management service line, do you think you're more likely to accelerate from the third quarter pace that we've seen here? Or is kind of a double-digit rate a good run rate for you over the next couple of quarters?.

No, I think, I mean, we get a strong sense of our performance being above market. We -- of the bids that we actually respond to, the RFPs we respond to, we're winning at a 60%-plus rate, so that's very healthy.

Now we're very selective about what we bid for because we are trying to ensure that we keep a strong margin in both our Facilities and Property Management business, so we do deselect some bids on price and move forward with those where we think we can sustain a good margin.

But we believe we can continue to pick up market share in a market that feels active and is coming our way..

Got it. And then in terms -- thank you for sharing the headcount growth in both Capital Markets and Leasing.

Is it sort of too early to ask if you've put together some plans around what you're expecting for 2015 headcount growth?.

Well, we've put our budgets together for the kind of incentive we typically pay to hire people, and those will be sort of similar levels to 2014. How many people we then succeed in hiring is something else. The markets internationally have got pretty competitive.

People are generally in a part of the cycle where they're earning well, where they're comfortable with the place they're at, generally, and so pulling them into our organization, hiring them into our organization becomes harder. Conversely, people now are more reluctant to leave us as well because of the same considerations that I just mentioned.

So it's getting more difficult to spend that money and we do see spend it wisely. We don't go into excesses in the sorts of hiring bonuses we pay people. So hard to predict what it will be. We'll aim for the sorts of numbers we've had this year, but it's a more competitive market..

[Operator Instructions] Your next question comes from Brandon Dobell with William Blair..

Maybe, Colin, first for you.

As you think about the market expectations in -- or for volumes in Capital Markets, how much does your own, I guess, internal pipeline or the look you have into future deals inform how you guys think about market growth for next year? And I guess maybe a broader question is so the assumptions behind those market volume expectations for '15.

Just trying to get a better idea of what key things you're looking at to get comfortable with those kind of volume assumptions..

So what drives them?.

Yes..

Well, if you start with the static where we are now, what we see in Europe and the U.S. and it's sort of variable across Asian Pacific, but you -- in anything we're marketing, we've generally got a rule of thumb, which is that for the final dollar that ends up making the purchase, there's sort of $10 have come in and they bid at credible level.

So the weight of money that we're currently seeing, making offers for particularly high-quality assets, is still very strong. The indications we get from LaSalle, which is sort of one step removed, is that the institutional investors are still very interested in real assets as a sector and within that, real estate as a whole.

And so the -- out of the conversations that they're having and the amount of money that's being allocated and reallocated to real estate, the indications there are strong as well. So there's some sort of "where's the money"-type indicators. When you look at the markets themselves, we can see pipelines, as we mentioned, which are full.

Those generally give us an indication 3- to 6-months ahead, and there's no slacking up in that picture either. And then after that, the general sense we have or our forecasters have, of continued, steady, economic recovery with, as I mentioned in my comments, forecast GDP growth next year globally, which is up further on this year.

So all those factors together give us confidence in the numbers that we forecast..

Okay. And looking at the Project and Development Services business, what's a better metric to look to from a correlation point of view? Is it gross absorption in the Leasing markets? Or is it -- I guess, maybe this is more about the U.S, is it kind of U.S.

commercial construction activity? What's the better thing to track to try and figure out how that business grows looking out the next handful of quarters?.

Yes, it's the Leasing, gross absorption in Leasing which is the clearest guide short term. And then after that, and it's linked to the gross absorption number, general corporate confidence. And again, you can see that steady or rising across most economies..

Okay.

And then Christie, going back to the margin question -- margin discussion, I think, from Brad's question, seems like the expectations for fourth quarter margins year-on-year in all the segments should be for an improvement? Or is there enough noise in the Asia Pac mix to keep the year-on-year margin flat to down versus last year's fourth quarter?.

The -- we don't give forward-looking guidance, Brandon, specifically, but I will tell you that the pipelines remain strong. The team's upbeat and from the perspective of the mix differential, it may weigh somewhat in terms of momentum of Capital Markets versus our annuity-based income. But overall, will be a very strong performance..

Okay. And then final one for me.

Looking at LaSalle, when you guys make dispositions, I would imagine of, especially, of separate accounts, how often or maybe the frequency of that money coming back into LaSalle? So separate account gets closed out, but then that customer comes right back and says, "Great, you did a good job for us and now here's the money back and go do it again." Or is that kind of all new money and no kind of recycled money that came in this quarter?.

It's a mixture of everything that was -- increased allocations from existing investors and I can think of a $400 million number from one account in Europe. We mentioned 2 new sets of money which came in, one from a European institutional investor, for example, that was new to us.

And we get re-ups as well, where money has been cycled through value-added opportunities. So it's a mixture of all of the above really..

And I would absolutely agree with that, Brandon. The only thing I would also mention is just based on our historical performance on behalf of our investors, we do have very high retention. So the team, not only has retention, as Colin mentioned, but we're also attracting new sources of capital..

Your next question comes from Michael Mueller with JPMorgan..

Just one quick question. Christie, on your comments about incentive fees going back to predownturn levels, safe to assume that, that comment, it's little bit broader than just incentive fees.

It touches on the equity gains as well, and do you think some of the transactional income? Or is it really just you're talking about incentive fees?.

I was primarily focused on incentive fees, Michael. I went back to the 2001 time period and then we analyzed where we were in the fund specifically. So my comment was really along the lines of incentive fees..

Okay.

I mean, if you expand that comment a little bit and think about the gains, is it unreasonable to assume that they would be a little more elevated as well?.

Could you just give a bit more flavor to that question?.

Yes. I mean, the incentive fees that are coming off liquidating funds, are they getting -- earning performance fees on that? It seems to imply that the gains as well that are tied to that would ramp up as well over that time period, so there's a correlation between the two.

Is that the right way to think about that?.

The issue in incentive fees, yes, and it's really tough for you to model. That's why we gave you a guidance number. But the issue -- they come in all sorts of different flavors depending on the way funds are put together, their vintage and the way the limited partners have influenced the discussions on the fund.

So they can be -- so typically, they can be at a performance level where we will be gained -- taking a percentage of the gain above a particular threshold. And the percentage which we take will vary once above that threshold. So they're hard for us to predict, and they're hard for you to model..

[Operator Instructions] There are no further questions at this time. I'll turn the call back to the presenters..

Well, thank you very much, operator. So with no further questions, we'll end today's call. Thank you, all, for participating and for your continued interest in JLL, and we'll look forward to speaking you again -- to you again following the fourth quarter. Thank you very much..

This concludes today's conference call. You may now disconnect..