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Jones Lang to Buy Capital Realty in Kansas - Analyst Blog

Posted
8/6/2013 5:40:00 PM
By: Zacks.com
Referenced Stocks:CBG;FSRV;HF;JLL

Jones Lang LaSalle Inc. ( JLL ) has penned a deal to acquire the Kansas City-area commercial real estate firm Capital Realty. The financial terms were not disclosed. Slated to close by next week, the acquisition would help Jones Lang broaden its platform, deepen its reach and enhance its growth in the region.

Jones Lang can leverage on Capital Realty's strong presence in the area. It deals in leasing, property management and sales of industrial, office and retail properties; land sales; and project management and development services.Currently, approximately 90 properties (5.4 million square feet) across the Kansas City area are managed by Capital Realty for regional and local institutional owners.

Moreover, the deal brings on board Capital Realty's local expertise. These include the joining of Kevin Wilkerson, Capital Realty's President, together with 24 real estate experts and staff members in Jones Lang. Wilkerson will become the Managing Regional Director in Jones Lang while both the Senior Vice Presidents at Capital Realty - Jeffrey Kembel and Phillip Algrim - will join as Senior Vice Presidents.

The business expansion efforts in Kansas City are a strategic fit for Jones Lang. Serving as a center for transportation, freight and rail industries and playing a key role in the national supply chain, Kansas City is a prime industrial market that Jones Lang plans to capitalize on.

In fact, Kansas City ranks among the top 15 national markets for total inventory and is one of the 10 markets with lowest vacancy, thereby providing stupendous growth prospects to Jones Lang. Sites that are attracting auto plant reinvestments, rail intermodal development and data centers as well as distribution sites for the e-Commerce industry, are particularly driving this industrial sector boom.

We expect the purchase to bring in market consolidation benefits for Jones Lang, which currently has a Zacks Rank #4 (Sell), following lower-than-expected second-quarter results.

Leveraging its superior operating platform and market share expansion, the company already achieved five-fold growth in its adjusted operating income over the last 10 years. Alongside, we believe such opportunistic deals would aid the positive trend to continue going forward.

A number of companies that are performing better and are worth a look in the same industry include FirstService Corpo. ( FSRV ), that carries a Zacks Rank #1 (Strong Buy) as well as CBRE Group, Inc. ( CBG ) and HFF Inc. ( HF ), both carrying a Zacks Rank #2 (Buy).



CBRE GROUP INC (CBG): Free Stock Analysis Report

FIRSTSERVICE CP (FSRV): Free Stock Analysis Report

HFF INC-A (HF): Free Stock Analysis Report

JONES LANG LASL (JLL): Free Stock Analysis Report

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