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Jones Lang LaSalle's Subsidiary Bags Bridge Lender for $1.2B

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LaSalle Investment Management, the real estate subsidiary of Jones Lang LaSalle Inc. JLL, better known as JLL, recently entered into a majority buyout agreement with Latitude Management Real Estate Investors for the buyout of the $1.2-billion debt fund business of the latter.

This transaction is subject to customary closing norms and will likely be completed in first-quarter 2019. Through this acquisition, LaSalle will leverage on the relationships and reputation that the Latitude has established over the years to set foot in the U.S. debt market for real estate.

Notably, Latitude’s credit business will be merged into LaSalle's North American Private Equity practice that accounts for $21 billion of the company’s total $60 billion of assets under management. Post acquisition, Latitude’s senior management will continue to oversee the company’s business and retain their minority ownership.  

Latitude's business, which focuses on short-term, floating-rate loans to finance middle market commercial real estate projects, is in line with LaSalle’s aim to target mezzanine financing and preferred equity transactions.

Per LaSalle’s management, the transaction will enable the company to gain “market-leading capability and track record” in the U.S. debt market.

Notably, per LaSalle’s management, there are substantial opportunities for debt financing in the U.S. commercial real estate market. Amid this, Latitude's debt strategy that targets financing of value-additive and transitional asset projects has enabled it to differentiate itself and solidify its position in U.S. debt markets. This also complements LaSalle’s U.S. private equity offerings and the company’s European debt platform.

The acquisition will enable JLL to expand its range of real estate product and services, and diversify the company’s revenue source across another profitable market. Nonetheless, hike in interest rates may lower the commercial real estate sector’s growth tempo and negatively impact JLL’s business activities in the near term.

Currently, the stock carries a Zacks Rank #3 (Hold).

Shares of JLL have underperformed its industry in the past six months.  Shares of the company have declined 19.2%, while the industry has incurred loss of 10.4% during the same time period.

Key Picks

Some better-ranked stocks from the same space are Colliers International Group Inc. CIGI, CBRE Group, Inc. CBRE and HFF, Inc. HF. While Colliers International and CBRE Group sport a Zacks Rank of 1 (Strong Buy), HFF carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Colliers International’s Zacks Consensus Estimate for 2018 earnings moved 6.7% north to $3.99 in a week’s time. Its shares have returned 13.5% over the past year.

CBRE Group’s 2018 Zacks Consensus Estimate for earnings has been marginally revised upward to $3.17 in a month’s time. Its shares have returned 2.4% over the past year.

HFF’s Zacks Consensus Estimate for current-year earnings has been revised 1.5% upward to $2.67 over the past week. Its shares have gained 6.3% in a year’s time.

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