STUART SCOTT - JONES LANG LASALLE INC (JLL)
CEO Interview - published 08/13/2001

DOCUMENT # MAW621

STUART L. SCOTT is Chairman & Chief Executive Officer of Jones Lang
LaSalle, Inc., the world's leading real estate services and investment
management firm. As CEO, Mr. Scott also oversees the Board of Directors
of Jones Lang LaSalle and is responsible for the development and
expansion of the company's business segments, which include LaSalle
Investment Management and the three regions of Owner and Occupier
Services: the Americas, Europe and Asia Pacific. He is a member of the
Jones Lang LaSalle Management Executive Committee and is an advisor to
the firm's Investment Committee. Mr. Scott was honored by his North
American peers with the distinguished 'Real Estate Executive of the
Year' award in early 1999 during the Commercial Property World real
estate conference in New York. Throughout his tenure, Mr. Scott served
in numerous executive positions and is recognized for defining the
character and client-focused tone of today's real estate services
industry. Mr. Scott served LaSalle Partners as Chief Executive Officer,
where he led the firm's rapid growth, its initial public offering in
1997, and its aggressive merger and acquisition approach from 1992 to
1999. Before his career began with Jones Lang LaSalle in 1973, Mr. Scott
worked with Arthur Rubloff & Company and served on its Board of
Directors. His career as an Attorney began with the Securities and
Exchange Commission in 1966. Mr. Scott is a graduate of Hamilton College
and Northwestern University School of Law. 

Sector: real estate

TWST: Could we start with a history and overview of Jones Lang LaSalle?

Mr. Scott: Our company is the result of a merger of two companies in
early 1999. LaSalle Partners was a 30-plus-year-old American company
with international operations, and Jones Lang Wootton was a 215-year-old
British firm which became a multinational firm. The resulting merger
produced Jones Lang LaSalle, the company that we're talking to you about
today.

TWST: How would you describe the business that you're in today after the
combination?

Mr. Scott: We are a fully integrated global real estate services and
investment management company. By fully integrated, we mean that we use
our research capabilities and our people in 100 markets on five
continents to provide real estate services and advice to benefit two
categories of clients: occupiers and users of real estate and investors
of real estate. It is very efficient to use our people and our network
to serve both kinds of clients. Despite the current global slowdown, we
are a company with a commanding growth story and an opportunity to
provide long-term earnings growth for our shareholders.

TWST: Is there anybody else in the business that has that broad
capability at this point?

Mr. Scott: A number of our competitors see the wisdom of being fully
integrated and describe such a future for themselves. We already have a
tremendous global investment management capability with more than $23
billion in capital under management for clients. And we have a great
ability to continue growing, particularly outside of the United States.

TWST: What is the benefit of being on the ground worldwide? It always
seems that real estate is kind of a local business.

Mr. Scott: Real estate is a local business. However, the people who use
real estate are increasingly global. Individuals and institutions that
invest in real estate are increasingly interested in the best
opportunities in the important commercial centers of the world. We have
capital clients who want us to tell them where the best opportunities
are without limitations on borders. We have multinational corporate
clients with occupancy issues all over the world that need consistent
advice from a reliable trusted advisor. So, although each market must
have people on the ground with strong local knowledge, the service
itself has to be consistent, delivered with the same quality and format
everywhere in the world. That's why we put this company together in the
way we did.

TWST: Did the combination put all the pieces together you need or are
there still some parts that you have to add to the portfolio?

Mr. Scott: We have our people and operations in place. From time to
time, we may need to add a place in order to serve our multinational
clients. Although we may on occasion do a tiny acquisition, 90% of the
time we will grow organically.

TWST: Other than geography, do you have all the business parts that you
need now?

Mr. Scott: Yes, I believe we do. In my view, the two big growth targets
for our company are the increasing interests of capital in global real
estate investing and the increasing desire of our corporate clients to
outsource their real estate portfolios. We offer clients globally the
full spectrum of real estate services in our investment management
offering and in our Corporate Solutions package, including project
management, facilities management and tenant representation.

TWST: What kind of impact will this economic slowdown that we're going
through, seemingly both here and in Europe, have on you?

Mr. Scott: This current global economic slowdown is impacting everyone
in our industry and our clients as well. We have some clients delaying
plans or even some canceling plans for real estate expansion. Other
clients have excess space, so we help them find other users or sell it
on their behalf. Every real estate market produces opportunities for us
to help clients.  Notwithstanding that though, this is a tough climate
worldwide because the US slowdown has spread to Europe and is worsening
the economic situation in Asia. As we reported recently, we are not
expecting the level of activity that we had hoped for at the beginning
of the year. In fact, in the face of the current global economy, we have
adjusted our full year operating EPS target to at least match last
year's adjusted earnings of $1.31 per share (after implementation of SAB
101). While we hope to achieve more, we believe matching last year's
outstanding results will underscore the resilience and strength of the
platform we have built to serve our clients.

TWST: How does your business break down between US, Europe and Asia?

Mr. Scott: The Americas and Europe each provide more than 40% of our
revenues, and the remaining 15% comes from Asia Pacific, which includes
Australia.

TWST: So it's a good spread of business then?

Mr. Scott: It's a great spread of business, and the fact that Asia is
only 15% represents another growth opportunity. We believe that despite
the current economic environment in Asia, it will be a tiger again and
grow tremendously over the next decade. So I expect that in a few years
our mix will equalize among the three regions.

TWST: How sensitive is your business to changing interest rates?

Mr. Scott: Changing interest rates impact our various businesses in
different ways. When interest rates are low, returns available for real
estate investments seem attractive by comparison. And I think that the
lack of good returns available in the debt market and growing concerns
about the equity market over the next five years cause many investors to
think that they need a larger real estate component in their portfolio,
which is good for our business. On the other hand, the fact that
interest rates are low stems in large part from the Federal Reserve's
efforts to stimulate the US economy and the very fact that it needs
stimulating is a problem because our clients invest in their futures
through expanding their real estate needs in a good economy.

TWST: What kind of goals have you set for the company for the next two
or three years?

Mr. Scott: We think our company can grow its earnings per share over the
long-term at an average rate of 15% per year. The current economic
environment will prevent us from achieving that rate in 2001, but I will
note that this year follows one in which we grew EPS by 32%. I wish we
could achieve this 15% growth rate incrementally, smoothly, quarter-by-
quarter and year-by-year. Although I am confident that Jones Lang
LaSalle can grow at an average rate of 15%, it is not as even and
predictable as Peter and I would like it to be. And he might want to
comment on that.

Mr. Roberts: One of our goals is to increase the predictability and
smoothness of our revenue and net income streams over time. We will
achieve that by expanding our geographic spread and our annuity-driven
businesses, like investment management and corporate outsourcing.

TWST: Are acquisitions going to play much of a role in the future?

Mr. Roberts: No. Our strategy now is to build on our existing platform.
To illustrate, with a new investment management client based in Europe,
the US or Asia, we can expand our relationship to serve that client's
investment needs globally. And the same dynamic would occur with multi-
national corporate users of real estate. When we can leverage our global
platform to provide consistent service for their occupancy needs around
the world, our existing client base and targeted clients easily provide
innate growth opportunities simply by expanding our service for them in
different regions.

TWST: What has been the reaction of the clients to you offering that
broader array of services?

Mr. Scott: It has been very positive. We have numerous corporate clients
that have chosen to outsource their real estate to us, either globally
or entirely within a region. And one of the reasons they give for
choosing us is, first, the quality of the service itself, and second,
because of our truly global network. No other company has the size
across all the regions as our spread of revenue demonstrates.

TWST: What's the risk here that investors should be aware of? What keeps
you up at night?

Mr. Scott: I would not like to think that we're going to get into a
serious recession that might last more than a few more months. However,
if it happens, it happens to everybody, and those are tough times that
call for tough decisions in running a business.

TWST: It seems to be dragging on longer than we all hoped.

Mr. Scott: Yes. And that thought is probably the one that keeps me awake
at night the most.

TWST: You put two companies together, one US, one European. How did the
combination go? Was it a smooth integration of these two businesses?

Mr. Scott: I think the integration was smooth because we had a common
vision and approach to the business. Both companies saw the need to
provide a global platform to meet clients' needs. Each company saw the
other as providing for reciprocal needs. When we put them together, we
had a full global real estate services and investment management
platform. The other primary reason was our similar approach to the
business, which was, in each company, unique in its part of the world.
By that I mean, neither one was a brokerage house with commissioned
independent contractors. Both companies focused hard on building long-
term relationships, compensated people on salary and bonus, and didn't
have brokers.

TWST: How about from a cultural point of view? Do they fit together
fairly well?

Mr. Scott: They did fit well. Both companies had a very strong client-
first culture and both pursued long-term relationships. We have learned
to pursue repeat business from clients who think we're great. One, it's
more efficient and provides better margins to the firm because we spend
the vast majority of our time executing business for people who like our
service and the results we achieve on their behalf, and less time
looking for new clients.

Mr. Roberts: In addition, a critical aspect of the two cultures that
were similar and, again, unique in the industry was a very strong sense
of teamwork. The strategic focus on clients and teamwork is what has
made this combination a success.

TWST: What is your operating margin today and where would you like it to
be?

Mr. Roberts: In 2000, our adjusted EBITDA margin was 14%. Our target for
2001 is to improve that figure to 15% at least, even in this challenging
environment. We plan to do that through cutting discretionary costs in
every area of our business. Beyond this year, we believe that we can
continue to improve that figure significantly.

TWST: Can you improve it from that level over time?

Mr. Roberts: Yes. Our goal is to continuously improve it. In fact, just
to give you an example, our EBITDA margin on an adjusted basis the year
before was about 13.8%. And so we saw improvement in 2000 and we're
looking for improvement in 2001. Our goal is to continue to grow our
margins in the years ahead.

TWST: From a balance-sheet point of view, do you have the strength that
you need to carry out your program?

Mr. Roberts: We do. It's a combination of both our balance sheet and the
cash flow-generating ability of our business. Right now, our debt to
capitalization stands at less than 50%. Our goal is to continue to
reduce that leverage factor. As we announced when we conducted our bond
road show last summer, we plan to pay down debt on average $30 million a
year over the next five years. In the first year of that process, we
actually paid down over $70 million of debt. And so we have publicly
announced this year that we would like to pay down at least $10 million
additional, to give us a two-year average debt reduction of $40 million
a year, significantly ahead of our $30 million a year goal.  We think we
have the financial flexibility and the cash flow-generating ability to
achieve this plan. We have our business in place, so we don't need a lot
of capital for acquisitions. We need capital for two things. One, to
invest in our technology infrastructure, which enables the global
service and consistent approach necessary to serve clients seamlessly
around the world. The other is to co-invest with our investment clients
in the various fund vehicles we establish for them around the globe.
Again, both are consistent with our strategy to align our interests with
our clients.

TWST: So it's not really that capital-intensive.

Mr. Roberts: That's correct.

TWST: How do you feel about the value the market is currently putting on
the company?

Mr. Scott: I feel that Jones Lang LaSalle and the commercial real estate
sector are undervalued. I guess we suffer from a number of things. We
are real estate services companies, and real estate is still not
regarded as a business line by most investors. Secondly, we are all
small cap companies, which take us off the screen of a number of
investors.  So considering the year we had last year and the year we're
striving for in this global slowdown, we don't believe the market is
recognizing the value of our business. I believe that the only way to
get the market to see who we are and where we're going is to achieve the
goal we have set for ourselves to match 2000's performance during a
dreadful business cycle. I think that if we do that we may get their
attention, and we'll see the kind of response we deserve, which is a
stock that's trading well above the current level.

TWST: If you were sitting down with some potential longer-term
investors, what two or three reasons would you give them to take a look
at the company today?

Mr. Scott: I would point out that increasingly we see the investment
community embracing opportunistic international real estate investing as
a sensible allocation for some of their investment portfolios. This view
is spreading constantly, and real estate is becoming a very acceptable,
conventional investment category. And as global real estate gains
acceptance, very few companies have the good track record and size in
investment management that we have. We have strong people on the ground
and research capabilities around the world to provide full global
coverage. Our clients can choose any market and get help from one
advisor who is not married to a single region or continent. Our global
real estate advisors are indifferent as to where those opportunities
are. We are one of very few who can provide that coverage and track
record, so there is huge opportunity there. The other big opportunity is
that companies constantly seek ways to become more efficient, especially
in economic slowdowns. Consequently, outsourcing of real estate by
corporate clients will actually increase if this economy is tough over
the next year or two. Again, Jones Lang LaSalle is one of the very few
companies that can provide outsourcing services on a consistent basis
anywhere in the world. And we see a lot of business coming down the
pipeline.  Remember, real estate is under everything. Everybody needs
it. Real estate is the largest industry in the world. As successful as
we are and as large as we have become, Jones Lang LaSalle, along with
our competitors, has a tiny market share, so there is incredible room
for growth.

TWST: So it's still highly fragmented and subject to consolidation?

Mr. Scott: Right. The opportunities here are tremendous. We are in a
position to take advantage of them in a way that we think few, if any
others, are. I see a great future for our company.

TWST: Thank you. (TM)

STUART L. SCOTT
 Chairman & CEO
PETER ROBERTS
 Executive Vice President & CFO
 Jones Lang LaSalle, Inc.
 200 East Randolph Drive
 Chicago, IL 60601
 (312) 782-5800
 (312) 782-4339 FAX
 www.joneslanglasalle.com

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company. This
Interview with Stuart L. Scott, Chairman & CEO, and Peter Roberts,
Executive Vice President & CFO, Jones Lang LaSalle, Inc., is accompanied
by an Investors Brief containing corporate information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs may include include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 1999 Wall Street Transcript Corporation. All Rights Reserved.