Colin Dyer - Chief Executive Officer Christie Kelly - Chief Financial Officer.

Mitch Germain - JMP Securities Brad Burke - Goldman Sachs Michael Mueller - JP Morgan David Ridley-Lane - Bank of America Merrill Lynch.

Welcome to the Third Quarter 2015 Earnings Conference Call for Jones Lang LaSalle Incorporated. As a reminder, today's call is being recorded. A transcript will be posted in the Investor Relations section at jll.com. 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, 2014 and in our other reports filed with the SEC.

The company disclaims any undertaking to publicly update or revise any forward-looking statements. Now we'll turn to Colin Dyer, Chief Executive Officer, for opening remarks..

Good morning, everyone and welcome to this review of our results for the third quarter and first nine months of 2015. Christie Kelly, our Chief Financial Officer joins me on the call today and we will discuss details of our performance in a few minutes.

To summarize our results, we completed another record third quarter with fee revenue of $1.3 billion, up 17% in local currency from the third quarter of 2014 which is up 9% in U.S. dollars. Year-to-date fee revenue totaled $3.5 billion, 20% year-over-year on increase in local currency, 11% in U.S. dollars.

Adjusted earnings per share reached $2.52 in the quarter, 11% above the third quarter 2014 levels and this despite a 23% negative foreign exchange impact. For the first nine months, adjusted earnings per share totaled $5.47 per share, 27% above the same period a year ago.

To put our current performance in context, the quarter's revenue and adjusted earnings per share match the double-digit compound annual growth rates we have maintained since 2010. That is to say 12% on revenue and 21% on adjusted EPS. We have also maintained our focus on disciplined strategic acquisitions.

To date this year we have announced or closed 15 transactions with a combined value of more than $420 million. Our new business pipeline remains strong in the fourth quarter which is typically our most active and finally our board of directors increased our semi-annual dividend to $0.29 per share.

So a very strong quarter in what continues to be active and very healthy global real estate markets. Revenue growth was broad-based across service lines and geographies and LaSalle Investment Management delivered excellent performance for its clients earning significant incentive fees and equity earnings in the process.

These results came in an environment of steady economic progress. Global GDP is projected to grow by 3% this year, rising to 3.4% in 2016. We have posted slides in the investor relations section of jll.com which summarizes current conditions in global real estate markets. Slide 2 shows trends in capital markets and leasing volumes.

In general, leasing market growth rates continue to catch up to strong and active capital markets. In the capital markets, real estate investment continued to move higher during first three quarters of 2015.

Third quarter market volumes reached $173 billion, roughly in line with the third quarter a year ago, but currency fluctuations continue to understate the true level of activity by about 10%. Year-to-date transactional volumes were 3% higher than last year at $497 billion but up 13% if you use fixed exchange rates. In the Americas, U.S.

capital market volume stood out with 18% growth in the first three quarters even as the third quarter itself was flat versus a year ago. Other markets in north and Latin America declined however. Germany had a very strong quarter and China recorded a 45% increase in transaction volumes compared with the first nine months of 2014.

High investor demand for real estate continued to compress yields or cap rates for core office assets in primary markets. Brussels, Paris, Stockholm and Sydney, all saw yields reduce by 25 basis points in the quarter. Capital value appreciation on prime assets across 26 markets stood at an annualized rate of 7.9% in the quarter.

The strongest growth came in Madrid, Paris and London while Los Angeles, San Francisco and Boston also outperformed. In global office leasing markets, momentum continued to build with volumes up 12% in the quarter and 7% year-to-date compared with the same periods a year ago.

Worldwide, corporate occupiers are generally optimistic about near term prospects and many are actively planning for growth. European office leasing volumes continued to strengthen during the quarter, up 29% year-on-year. Asia Pacific volumes increased 27% compared to the third quarter of last year and were up a third, year-to-date. And while U.S.

Q3 volumes increased by only 2%, pent up demand in the market has yet to be satisfied. Vacancy rates also continued to trend lower to 12.3% across 98 key global markets. Rents on prime office assets in 26 major markets grew by 2.5% with particularly strong growth in Hong Kong, London and Sydney.

So globally with very few exceptions, we see sustained investment sales trends and increasingly robust demand for lease space. These trends are well entrenched with no signs of any break in market momentum. So to discuss our performance in these positive markets, I will turn the call over to Christie..

Thank you, Colin and welcome to everyone on our call. As Colin shared, our firm reported another quarter of excellent performance. We delivered double-digits third quarter fee revenue growth over last year.

Our performance continues to reflect the broad strength and diversity of our platform which starts with our brand and is realized each day by our people who remain focused on delivering results to our clients and investors.

We continue to see the benefits of increased recurring revenue, investments, acquisition, our productivity focus and financial strength.

As Colin also noted in this introduction, we closed the third quarter with record consolidated fee revenue of $1.3 billion, up 17% over last year and adjusted earnings per share of $2.52 on adjusted net income of $114 million, up 11% over last year despite a $0.23 or 10% negative impact due to currency translation.

It is worth noting that we achieved approximately a 26% increase in adjusted EPS growth for the quarter when normalizing for business performance for outside LaSalle incentive fees and equity earnings. All of our geographic segments and service lines delivered year-over-year double-digit increases in revenue for the quarter and year-to-date.

LaSalle also performed well against a similarly outstanding quarter last year. In capital markets and hotels, we had outperformed the market across all geographic segments year-to-date. Focusing on the third quarter fee revenue increased 26% on a local currency basis led by strong results again in EMEA and in Asia Pacific.

Our leasing business has also outperformed the market year-to-date and for the third quarter during which fee revenue increased 19% on a local currency basis led primarily by the America. Project and development services fee revenue increased 21% on a local currency basis led by EMEA and Asia Pacific.

Our annuity based property and facility management business revenue grew steadily at 14% for the third quarter and 12% year-to-date in local currency over a strong comparable last year. Our corporate solutions business continued to demonstrate strong progress in the quarter with an 18% increase in fee revenue on a local currency basis.

LaSalle Investment Management grew advisory fees, recorded excellent incentive fees and generated substantial equity earnings from performance on behalf of our clients.

LaSalle also continued its successful capital raising track record in the third quarter raising an additional $838 million of equity commitments, bringing year-to-date capital raised to $3.8 billion and ending the quarter with $57 billion of assets under management.

Overall, the continued impressive and steady, broad-based growth is a result of sustained investments aligned with our 2020 strategic goals as well as a focus on cross-selling.

Adjusted operating income margin calculated on a fee revenue basis was 10.8%, up 50 basis points on an exchange adjusted basis compared to 2014, driven by broad-based performance across our platform.

Additionally, year-to-date adjusted operating income margin calculated on a fee revenue basis increased 100 basis points to 8.5% on an exchange adjusted basis. As we continuously focus on capturing margin enhancing opportunities by driving profitable revenue growth and productivity initiative.

Productivity ideas are sourced internally by our people who work to deliver superior results to our clients. We continued to advance over 100 productivity initiatives that focus on people, process and pricing goals to deliver enhanced revenue and margin performance as well as client experience.

We will begin our review of the segment results with the Americas where third quarter fee revenue increased 16% in local currency over 2014 as momentum from the first half of the year continued.

Revenue growth was driven by gains in leasing which had a 17% fee revenue increase, property and facility management with a 16% fee revenue increase, as well as a 15% fee revenue increase in projects and development services.

Our capital markets business grew revenue moderately year-over-year for the quarter against a strong comparable last year and has maintained robust activity that has again outperformed the market.

We continue to expand our leasing business organically with 74% of the growth originating with brokers who have been with the firm at least three years while investing in new hires in both our leasing and capital markets businesses. The growth in our business was driven again by strong leasing performance in a majority of our U.S.

markets including New York, Los Angeles and Atlanta. We also doubled our capital markets revenue in the Northwest, DC and Boston. Our 15% revenue growth this quarter in our corporate solutions business was driven by notable wins and expansion across our platform which Colin will discuss in a moment.

In addition to the financial results, our Americas team continues to demonstrate strong engagement. One recent example is our Americas' Women's Summit, led by our Women's Business Network. Our annual gathering again welcomed 60 of our women leaders including our Chairman, Sheila Penrose.

They addressed such topics as winning in business through inclusion and diversity, business principles of success and examples of leading men and women in our workplace. We are focused on continuing momentum created by our talented people.

From an investment perspective, the Americas' continued to capitalized on industry disruption to attract and develop top talent. We also invested in our capital markets platform as announced earlier this quarter with the acquisition of Oak Grove Capital, which is anticipated to close within the next week.

Operating margins in the Americas were up in the quarter 120 basis points to 10.4%. Operating margins year-to-date increased 80 basis points to 8.7% and adjusted EBITDA margin increased 100 basis points to 11.6%. We continue to plan for future growth in the Americas by capitalizing on our strong brand and market momentum.

Our pipeline of activity remains robust across all of our businesses as we move towards the end of the year. In our EMEA business, third quarter fee revenue increased 25% in local currency over 2014 and was broad-based across service lines and country.

EMEA's leasing revenue for the quarter was up 23% in local currency and capital markets and hotels increased 35%. Capital markets and hotels performance was supported by continued momentum across European investment markets, particularly in the U.K., Germany and France. Product and development services fee revenue for the third quarter increased 27%.

We see opportunity for growth in our Tetris business enhanced by acquisitions this quarter to acquire Bluu in the U.K. and CMM in Germany as Colin will touch on. Russia also showed year-over-year improvement in a challenging economic environment.

EMEA's fee-based operating income margin improved 240 basis points for the quarter to 7.9% and 180 basis points for the year to 6.1%, excluding over 50 basis points of currency impact. Adjusted EBITDA margin also improved 170 basis points for the year to 8.1%.

We continue to invest selectively for profitable growth and welcome people from our acquisition across the region in the quarter. Our EMEA business is also driving solid organic growth supported by our strong brand, market-leading position, engagement and focused productivity initiative.

For the quarter, our engagement agenda included a luncheon with over 15 leaders focused on delivering diversity and real estate for our firm, and clients in order to attract and retain top talent. Productivity measures continued as we progressed on our shared services capability to support profitable growth.

The sentiment across our EMEA business remains positive and pipelines are strong as we look forward to the remainder of the year. Moving on to Asia Pacific. Third quarter fee revenue increased 20% in local currency over 2014.

Our annuity business is growing steadily and the broad recovery in corporate confidence is demonstrated across the business despite uncertainty arising from the slowdown in China. Leasing revenue for the quarter was up 19% in local currency.

Overall, domestic demand for high quality space in Asia Pacific remains strong, especially in Australia, China, India and Hong Kong, while demand for second tier space continues to lag.

Capital markets and hotels revenue for the quarter increased 48% in local currency with market activity levels in the region expected to remain steady through the remainder of the year and where we continue to capture share. Operating margins in Asia Pacific were lower in the quarter primarily due to 60 basis points of negative currency impact.

Excluding this impact, operating margins on a year-to-date basis increased 20 basis points to 5.1% and adjusted EBITDA margin increased 30 basis points to 6.8%. We continued to invest in technology and to recruit, develop and retain top talent to drive continued profitable growth across our business.

Our Asia Pacific team has a strong pipeline going into the remainder of the year and remains confident in realizing the momentum created. LaSalle Investment Management had an outstanding quarter with local currency growth in advisory and incentive fees that performed well compared to a strong 2014, as well as significant equity earning.

Capital values are rising in most areas which drives accelerated and higher sale prices that generate incentive fees and equity earnings. The business generated $69 million of incentive fees during the quarter as a result of strong investment performance across all geographies, particularly in Asia Pacific.

If markets remain stable and the pace of asset sales continues, we see potential for additional incentive fees as mature funds continued to liquidate over the next several quarters.

Assets under management expanded $1.3 billion for the quarter and $4.2 billion year-over-year despite higher than average asset sales that have driven excellent returns for LaSalle's client and our firm.

Over the past five years, our team has built an increasingly stabilized platform based upon annuity advisor fee with assets under management for core and core plus strategies has increased from 37% to 62% of our total assets under management, complemented by opportunistic pipeline strategies primarily within Asia Pacific.

We continue to deploy capital in a market where demand for quality assets outweighs supply and the momentum in our LaSalle business remains strong. Regarding our investment grade balance sheet, we decreased total net debt $87 million from the second quarter of 2015 to $435 million, while we also continued to invest in the business.

There have been no changes to our plans to finance recently announced acquisitions using our bank facility capacity while maintaining our leverage profile over the long-term at two times debt to EBITDA or less.

We remain focused on retaining our investment grade ratings of Baa2 and BBB+ from Moody's and Standard and Poor's respectively, which recognize our operating discipline as well as the increasing strength of our annuity businesses and overall global platform.

The increase in our semi-annual dividend to $0.29 per share payable on December 15 represents a 7% increase from the June 2015 dividend and reflects our confidence in cash generation and profitable long-term growth on behalf of our shareholders.

In summary, we had an excellent third quarter and feel that our strong platform and pipeline position us well for the seasonally strong fourth quarter. While the momentum continues in 2015, it's worth noting, we could see roughly an 8% negative currency translation impact for the full year compared with 2014 if the strength of the U.S.

dollar continues. As we look forward, our outlook remains positive. And before turning the call over to Colin, I would like to express my sincere appreciation to my JLL colleagues around the world for their values, collaboration and continued contribution. I will now turn the call back over to Colin..

Thank you, Christie. To provide a sense of how we produced these results, Slide 3 in our deck offers a sample of recent business wins across service lines and geographies. Across our corporate solutions and services businesses, we have won 93 new assignments this year, expanded existing relationships with another 44 clients and renewed 21 contracts.

These 158 wins totaled nearly 520 million square feet across all regions and our overall win rate increased to 74% in the third quarter. In Europe, we won a global contract from the Thales Group, the French defense and heavy manufacturing company, to provide a range of services across 15 million square feet in 56 countries.

Nokia appointed us for project and portfolio management services globally while Aon retained us for facility management of its 2.6 million square foot European portfolio. Other global wins include providing services for the Harris Corporation's 13 million square feet and for Matthews International's 5 million square feet of space.

Brookdale Senior Living selected us to provide integrated facility management services for 95 million square feet in the Americas while IBM reappointed us to provide facility management for its 17 million square foot Asia Pacific portfolio, and Telstra renewed our contract with 7.5 million square feet Australian footprint complementing another major contract for the Australian government.

Across our corporate business, clients are demanding increasingly sophisticated data management and analytics capabilities, which are becoming key drivers for outsourcing decisions.

In this environment, we are receiving very enthusiastic responses for our new integrated data and analytics platform, both from existing clients and in successful new business pursuits. Turning now to the capital markets. In New York we secured $725 million in construction financing for 111 West 57th Street.

In Ireland's largest ever acquisition, we advised Allianz Real Estate on the €1.9 billion joint venture acquisition of a major retail portfolio. And we advised on the $940 million sale of the Intercontinental Hong Kong, the largest single asset hotel transaction on record in Asia Pacific.

In leasing, highlights for the third quarter included a 15-year lease for the 660,000 square foot, built to suit National Science Foundation headquarters in Alexandria, Virginia. In Moscow, a 215,000 square foot lease for the Adidas Group, the market's largest Class A office lease in more than a year.

And in Beijing we represented Hyundai Motor Finance on 167,000 square foot relocation. As Christie noted in her comments, LaSalle Investment Management delivered another strong quarter for its clients and for our firm.

But in addition to good current performance, we continue to build sustainability, improve productivity and high value ongoing earnings into LaSalle's business. As Christie mentioned, most of LaSalle's recent capital raise has been in core open ended products that produce sticky and profitable annuity like long-term advisory feed.

Hence we have already completed the platform investments to drive them. The incremental AUM these products generate is highly accretive to margins.

The quality of LaSalle's earnings is excellent today and with continued strong investment markets, significant valuation increases virtually across the board, and steady momentum in capital raise, we see LaSalle continuing to outperform over the next several years.

During the quarter we continued to invest in businesses that complement and extend our comprehensive position globally. We announced or completed five acquisitions. Christie mentioned two, which strengthened our European Tetris design and build out footprint. Bluu is a leading U.K. based design and fit out company making our U.K.

business the country's market leader. And CMM Project and Office Solutions strengthens Tetris in Germany. Additionally, we bought AGL, a highly regarded real estate financial services business in Sweden. We added Propell National Advisors, Australia's largest privately-owned and integrated national valuation firm.

And importantly, Oak Grove Capital, a top provider of debt financing for multifamily and seniors housing real estate in the U.S., who will play a very important role in driving our strategic priority of building our Americas capital markets business.

Since 2014, we have announced or closed 25 transactions with a total valuation of more than $500 million. Our approach in every case has been to acquire selectively and with rigorous due diligence. We are examining finances, operating risk and strategic and cultural fit and importantly, client fit.

We maintain pricing discipline and focus on high profit, high margin opportunities. We minimize operational overlap that can destroy value and we plan for and manage integration very carefully. This approach has served us well.

Small and medium-sized transactions add new capabilities which we use to create additional long-term growth across the company. They have the additional benefit of low risk and as a measure of our success, we have taken no write-offs for the 78 transactions valued at more than $2.2 billion that we have announced or closed over the last decade.

We have the industry's strongest investment grade balance sheet plus ample unused borrowing capacity and the full confidence of our partner banks. So we can move quickly and confidently when we identify opportunities, large or small, that meet our criteria. With a robust forward pipeline we anticipate continued M&A activity throughout 2016.

So looking ahead, our research projections for investment sales and leasing volumes show current trends continuing through the year-end and on into 2016. For 2015, we are maintaining our full year forecast for overall investment market volumes at $750 billion and the market could surpass that to set new records.

2016 should be another very active year for investment activity with volumes above this year's levels with very large amounts of capital continuing to chase property and further quantitative easing projected for the euro zone and Japan.

In global leasing markets, total 2015 gross volumes will be up 5% to 10% on 2014 levels with the greatest increase in select Asia Pacific markets. This trend too will continue into 2016 with 5% growth and upside potential. Demand is increasingly being driven by growth plans rather than cost containment consolidation and just lease renewals.

The deal pipeline is full, particularly in the U.S. And what had previously been a technology-led story, 2016 will see demand across a much broader spectrum of industry sectors, finance, professional services and insurance, just a few examples. We expect robust space demand in the U.S., U.K., Continental Europe, India , Australia and China.

Let me make a few comments about China since it's captured a lot of headlines recently. Despite currency and stock market volatility, commercial real estate activity has remained steady in the country's tier one cities.

Third quarter capital markets volumes increased 81% year-on-year to $7.3 billion and leasing in both Shanghai and Beijing recorded double-digit increases in the quarter. In addition, the shift from a manufacturing to a consumer and services-based economy plays to our strength in the service sector and our strength in tier one cities.

The shift in growth to services is producing some challenges in tier 2 and more so tier 3 cities. We, however, continue to do well in China as a whole, where we remain clear market leaders with fee revenue growth in Mainland China of 17% for the quarter and 20% year-to-date.

Our view on China is that the government overshot as it worked to slow the country's economy in 2013-14 and then responded by re-stimulating it this year.

We see the effects of those moves kicking in next year and finally with 2016 GDP growth projected to be near 6%, second only to India's 7.5%, we see continued long-term growth both in China itself and in our position there. As a result, we will keep to your plans to open one JLL office in one new China city each year.

At JLL and LaSalle we will continue to build on our performance through the fourth quarter on into 2016. Our outlook remains very positive. Our pipelines are deep and strong across geographies and service lines and or balance sheet enables continued investments in our platform.

Finally, we see solid confidence and momentum across our firm and in most markets around the world. So before Christie and I take your questions, I would like to mention some representative awards our colleagues have received from industry groups and independent third parties during the quarter.

They underscore our industry-leading position in real estate services and investment management globally. The India Institute for Directors awarded JLL its 2015 global award for Excellence in Corporate Governance. In the annual Euromoney awards, we came first in 45 categories including 21 wins within EMEA.

They included being named best overall real estate advisor in Central and Eastern Europe, Italy, Poland, Russia, the U.K. and Turkey. Euromoney also voted us the number one overall real estate advisor in Asia. LaSalle Investment Management was named Euromoney's Investment Manager of the Year globally. And in the U.S.

in California alone, we earned Best Place to Work awards in the Bay area, Los Angeles, Orange County and San Diego. So with that, let's now take your questions. Operator, could you please explain the process..

[Operator Instructions] Our first question or comment comes from the line of Mitch Germain from JMP Securities. Your line is open..

Colin, I know your research team puts out that market volume and outlook report and I'm just curious about the U.S. capital markets. It declined from last quarter which was 20%, to 10% to 15%.

Is that, in your mind, is that just a function of the third quarter or is there a bit of a carry-forward about your expectations in the fourth quarter as well?.

I think the third quarter was slightly more muted than they had expected and so they just downed their numbers slightly because of that. And, of course, now we are in November they are giving a clearer view of [like the] [ph] full-year numbers. So nothing but....

But pipeline still seemed pretty....

Nothing dramatic and no implied trends there or flattening of market activity..

Great. So your pipeline still remained pretty robust in the Americas, in your mind..

As they do across the world. Yes..

Great. Great. In the capital raising in LaSalle, $800 million or so. Was that a function -- what was that a function of? Is it maybe just lesser product offered this past quarter? I know that you guys have seen pretty robust activity there..

No. The quarter one numbers were $2 billion, quarter two, $1 billion. So in line with the quarter two picture. Again, nothing sinister. We are still seeing large volumes of capital come into the firm, both separate accounts and into the funds we have been raising. We closed during the quarter one of our U.S. opportunistic value-add funds.

The prior quarter we had a closing on our Asia Opportunity Fund. So it's just a steady progress in capital raise and broadly across the business geographies as well..

Great. Last one from me. I would love to just get some insight in the Oak Grove transaction. I know it's probably one of the bigger deals that you guys have announced over the last couple of years. Was that a space that you wanted specifically focus to expand on? I'd love to just kind of get some insight from you, please..

Yes. We've had a strategic priority to build our U.S. capital markets business, and as a measure over the last six years it's grown from $30 million to over $300 million of revenue. So it's been a successful growth both at adding organic individual teams but also by acquisition including Oak Grove.

We been talking to them for something like 18 months before the transaction concluded. So we have got to know each other well.

We see that area of multi-family finance across the broad sweep of activity both with the semi-government related guarantee organizations, but also independently through banking organizations as an important and integral part of building a balanced U.S. capital markets business.

And indeed if you look at our major competitors in that area, they will have significant service lines doing the same thing..

Thanks. Great quarter. Oh, go ahead, please..

No, the only thing I was going to add in, when you take a look at all of our acquisitions together with Oak Grove. I mean it really ticks off all of the things that Colin had mentioned in terms of cultural fit, accretion to our shareholders as well as overall in alignment with our growth objectives and our strategy..

Thank you. Our next question or comment comes from the line of Brad Burke from Goldman Sachs. Your line is open..

I wanted to ask a follow-up question, just looking at the macro picture in EMEA and Asia Pacific, follow up your comments, Colin. The comments that you made on China, obviously, were positive. Russia, I think you said, was up in the third quarter and to say that those results are exceeding the macro news flow would be a bit of an understatement.

And I think that what's even more surprising is that I generally think about your capital markets businesses as having the most macro sensitivity and those are the businesses that seem to be performing the best. So I was hoping that you could help me close that disconnect.

Is there not as much macro sensitivity in this capital markets businesses as maybe we had anticipated? Or is the macro picture in EMEA and Asia Pacific maybe better than what the headlines would indicate? And I think you touched on this with your comments on pipeline but is there any reason that we would expect it to be a big drop off in capital markets activity within your businesses in the near-term?.

Well, you have put a lot of questions in there, Brad, so I'll just talk for a while and if I don't address any one of them you come back at me..

Yes. I'll do that..

First of all, I think of Europe as paradox of Europe. And within that you have the paradox of France. Because both Europe as a whole and France have been performing particularly well, even in an environment where economic growth is 1%, tops. And so it didn’t ought to be but it is.

And I think what's going on in Europe is that actually within the business environment and in particular within the real estate environment, activity is actually much more intense than the overall GDP numbers would suggest. We've been seeing that. You look at our numbers, we've been seeing that for the past few years.

So the demand across Europe with the exception of Russia, I'd have to say, is strong in both the fundamental areas for leased space where people are beginning to expand, they are certainly upgrading their space. And there is a lot of demand in Paris -- sorry, London in particular, Paris, German cities, for quality space.

And that's why we're seeing against a relatively limited new products supply pipeline, but that's why we're seeing rents now beginning to increase with increasing momentum. So the fundamental demand is good across the office, industrial and to a lesser extent, retail throughout Europe.

The capital markets picture which was I think the focus of your question, again has been anomalous to what you might expect from the market, the overall economic growth picture, again, since 2010.

And the reason is that the European environment as a whole and in particular the major gateway cities, are seen as being safe havens for international capital and offering solid returns and generally deep liquid markets should investors wish to sell their assets at sometime in the future.

And against that background of attractive investment markets we've seen then this global upwelling of investment of equity capital trying to find its way into quality real estate.

So you've got a huge volume of equity, adequate debt availability at sensible levels of underwriting against a relatively limited supply of quality space in the major European cities. And the two together have just driven these year-after-year record levels of activity. To close out where is it all going, fundamental space demand is good.

So that will help to drive up rents. Pricing in the major markets for quality assets is probably somewhere near its peak. We didn't see much cap rate compression in London, last quarter for example, where we've seen it consistently through prior quarters. So that probably is coming to an end.

So what drives demand and value from here on in? Well, with less capital appreciation for cap rate compression, the next driver will be this increasing level of rentals in the office markets in particular.

So put it all together, lots of capital, adequate levels of sensible debt, well underwritten, no drop-off in the capital availability, both sovereign wealth and private equity funds all continuing to look to invest across Europe. The trend is, sort of away from some of the major cities where pricing is full and perhaps to lesser cities.

So Birmingham, Lyons, Stuttgart, maybe instead of the capitals in each country. And we have seen some move toward, let's say, peripheral B Class assets in the major cities. Close on Russia, I think the story there is that activity levels are quite low in the market as a whole. But the news flow isn't getting any worse.

In other words, the situation in the Ukraine has stabilized and Russia's sanction situation has stabilized. But there is still not a lot of confidence. I spoke yesterday to former head of Moscow who has just moved to Paris to run our French business.

And he was saying that the general sense is that both local and international business are beginning to lift their heads above the ground and begin to get on with activity again. But it's muted, it's hesitant. But nobody is leaving. The international business is there.

Like I think as we mentioned in our exposé of taking more space and taking commitments for the medium term, nobody is leaving. It's just that the level of activity is slow and GDP will continue to decline this year, around 4%..

Okay. That's helpful.

But there's no reason that we would think that the capital markets businesses may be just acting with a delayed reaction to some of the negative news flow that we have seen and that would manifest itself in weaker results over the next few quarters?.

No. It's just that there is so much capital that still is keen to invest and it's not skittish.

Let's call the international geopolitical issues and security issues, some of the noise around what was in the Chinese domestic markets, do not seem to have impacted this tremendous, people call it a wall of equity, this tremendous level of demand for capital.

And if you look at the inflows into private equity this year, by quarter in Q2 they rose from $80 billion last year to something like $130 billion this year. And that money hasn't yet been put to work. So that will be going into the markets in 2016 and beyond.

Then again, nothing that suggests that this is about to -- I mean we are watching it very carefully, obviously. We're watching the velocity of transactions, we're watching the speed of transactions and the number of bidders. But nothing yet suggests that any of this is slowing up..

Okay, that's helpful. And staying with capital markets, may be touching on share gains. You are up 25% over the past three quarters in EMEA in U.S. dollars. Up 29% in Asia Pacific. And your own research would say that these markets are going to be flat to down in 2015. So it looks like you're taking an incredible amount of shares.

So I was hoping that you could elaborate on what would be driving the share gains..

Well, as I mentioned in the long answer I gave to your last question, the real equity, the real large sums have been looking for major assets in major cities. And that's our sweet spot. We are strong along with some of the other global brands at just those sorts of assets. And so that's then where the bulk of transaction activity has taken place.

Put that together with the fact that the first three quarters of this year, over 45% of investment in commercial real estate globally has been cross-border money. And that's again our sweet spot. We have dedicated people who spend their whole time helping capital to find its way across borders in both the services business but also within LaSalle.

So it's about concentration of large assets and quality buildings. It's about using people buying and selling those buildings using reliable brands to do that work for them. And it's about our global network helping with this increasing levels of international capital flow..

Okay. And then one last one for Christie, on your equity income from real estate investments. You've earned about, over $70 million over the past four quarters and obviously had a very strong result this quarter. If I look at the GAAP asset value of your investments in real estate ventures, it's just over $300 million in the third quarter.

So it looks like over a 20% yield on the value of those real estate investments. So I wanted to get your thoughts on how you're thinking about the outlook for your real estate investment income and what we might be thinking about as a reasonable long-term run rate for equity income..

I think. Brad, if you take a look at the long term, you can really expect our business to revert to the steady stream of historical performance. We've had some outside equity earnings here in the past six quarters and we're expecting that to continue here for the near-term as I mentioned in my remarks.

But after the next couple of quarters, I think you can expect that to revert more to historical performance..

Thank you. Our next question or comment comes from the line of Mike Mueller from JP Morgan. Your line is open..

I guess following up on the last question, Christie, what would you say is that long-term historical level for the gains?.

We've historically had, Mike, about $20 million of equity earnings. So we can take you through that if you need a little help carving through that offline..

Okay.

And then thinking about the incentives, anything you can point us to, specifically for the fourth quarter, and then how should we be thinking about that trending in 2016 as well? Is there anything you could point us to in terms of, I guess, the number of funds where they come up where you can potentially get an incentive fee from that? How that compares in '16 to pull those funds versus what we're seeing in '15 or vintages, or just anything to help us get a little more visibility on that?.

Will I think, Mike, probably the best way to answer your question is that from an incentive fee perspective, we have been experiencing outside incentive fees given where we are in terms of lifecycle of various funds. And we are expecting to continue to experience a higher incentive fees here over the next couple of quarters.

As you know, timing is really difficult to pinpoint and we have tried to give everybody an indication of the fact that we do expect this to continue here for the next couple of quarters and then revert again to historical averages which have been over the past 10 years around $40 million. The specific timing I can't really help you with.

I'm not trying to be vague, it's just we can't call specifically when assets are going to be sold..

Got it. Okay. And then in the Americas you had a $4 million to $5 million equity gain.

What did that relate to?.

You know the $4 million to $5 million equity gain, we'll take that offline, I think, Mike. Nobody has really got that top of mind here..

Got it. And one last question.

Thinking about Oak Grove, can you talk a little bit about maybe some of the high level economics and then just the seasonality of that business?.

So high level economics, you know Oak Grove we said is accretive. From the perspective of the business you can expect it to perform better than some of the publicly traded companies who are in similar space. Because of the fact that it is a more local, regionalized player with very strong pricing and credit underwriting discipline.

And from the viewpoint of the growth going forward, you know it's had healthy growth through the cycles, including during the great financial crisis. And you can expect that to grow similarly going forward in keeping with the agency-related businesses. So strong growth, strong margin profile.

Earnings accretive to our shareholders and from the perspective, does it complement to our capital markets business, you know quite strong..

Okay.

And then just the seasonality? Anything we should be cognizant of there?.

Nothing really. Nothing really, Mike, of note. And we also posted a lot of information on our investor Web site in regards to Oak Grove. So I think you'll find a lot of what you need there as well..

Thank you. Our next question or comment comes from the line of David Ridley-Lane from Bank of America Merrill Lynch. Your line is open..

Sure. Colin, you mentioned pent up leasing demand in the U.S. Could you expand a little bit on that, particularly since we did see a slowdown in U.S.

leasing in the third quarter?.

Yes, a sense of a little bit of seasonality there that as you look at our own pipeline there is an awful lot to close in Q4 sort of above prior year levels. So our sense is that maybe for whatever reason, stuff shifted from Q3 to Q4.

So the expression is really to say that there's no drop-off in demand there and we're expecting to see, as our own forecast show, continued buildup in activity. What's the dynamics are also quite important. The U.S. cities in general, and it actually goes across Europe and U.S.

cities, are projecting to deliver not much more than about 2% to 3% of their existing stock over the coming two years. So the level of development work, speculative or built for purpose, is very low by historical and indeed global standards.

So against that relatively low level of supply, you've got increasing levels of demand as companies clearly are ramping up their expansion plans. And so that suggests that there will be sustained rental increases across large swaths of the U.S. office market.

And that again is going to put some pressure on corporations to get moving with their space needs, to think them through and actually act swiftly because the balance of strength here is shifting clearly towards the landlord side..

Got it. And then within property and facilities, your wins and expansions year-to-date are about double what they were this time last year. That may not be the best metric to sort of track it. So I'm wondering just how much....

There is reason for it, which is particularly in the U.S. We've heightened the collaboration between our various departments. So with the property and facility management people into the broader areas of our investor services in the individual markets, has helped the property management business.

And in the facility management area, we've been reporting seeing sustained wins of new space and that's beginning to come through in the pipeline. That's been throughout late last year and early this. And as we look forward we are expecting a similar picture to repeat itself..

Okay. I guess just in terms of the contracts you've signed.

Is your visibility today better than what you had in the signed contracts a year ago?.

Yes. And the forward picture of what we have coming along to bid on we think is also robust. And As I mentioned in my comments, we're seeing great success by deploying our technology platform. It can play a competitive advantage, particularly in the banking and financial services sector.

We've worked hard and invested a lot of money over the last 2 to 3 years and it's now bearing fruit..

Got it. And then if we do see cap rates start to stabilize for the tier 1 cities in 2016; if you had to disaggregate your year-to-date performance and capital markets between price action and units or some sort of unit -- number of buildings sold.

What's that rough split this year?.

I'm sorry, could you make that a little bit clearer, David?.

Sure.

So in your capital markets business, what percentage of the fee revenue growth is the result of cap rate compression and pricing action versus philosophy?.

Yes. I can't give you the split. But this year and last year, this year in particular, we've earned very healthy incentive fees. In other words, where we have taken a mandate for sales, when we hit a particular price in that sales process, our fee increases if we surpass that level, and there are potentially also tier increases beyond that.

So we've had a very good year for incentive fees. The likelihood is, as you've indicated, that that will moderate next year both because cap rates -- the reason you kick through those fees, of course, is that in the course of the six months sale process, the pricing just goes up because the cap rates have come in. Going forward, you're right.

That cap rate compression across places like London, perhaps, will not be as pronounced as it has been because there won't be that automatic uplift in the markets. But also the sellers are getting used to this dynamic and they are beginning to put caps on the incentives that pay us for these investment sales deals..

[Operator Instructions] Our next question or comment comes from the line of Mitch Germain from JMP Securities. Your line is open..

It's Peter on for Mitch. Christie, if you could comment on current hiring trends over the last year. Kind of what you're seeing and how should we look at that going forward? That would be great, thanks..

Sure, Peter. Over the last year we have added to our capital markets and leasing teams 10% year-over-year on average and we have been doing that consistently throughout the year.

And together with that, which I think is really important to understand, is because of our focus on driving productivity, best practices, the value of our business on really driving collaboration as well.

We've been able to also improve, while adding folks, our revenue per head, which has shown very nice productivity both on the leasing and capital markets from a leasing and capital markets perspective..

Thank you. Showing no additional questions in the queue. I would like to turn the conference back over to management for any closing remarks..

Thank you, operator. And I would like to just thank everybody who has taken the time today to listen to our call. Thank you for participating and thank you for your continued interest in our company. We look forward to speaking with you again after the fourth quarter..

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day..