The commercial real estate (CRE) industry has been rocked by the COVID-19 pandemic. Real estate as a whole has experienced extreme volatility and record demand over the past year and a half, creating unique outcomes for individual sectors of real estate.
Most investors would expect companies like Jones Lang LaSalle (NYSE: JLL) -- which specializes in the acquisition, development, leasing, advisory services, and management of commercial and residential properties across the globe -- to be struggling like some other real estate investment trusts and real estate stocks are. But the company is doing surprisingly well.
Here's a closer look at where the company is today and whether they are a buy in the given market.
Pandemic woes are long gone
Jones Lang LaSalle has a global reach, with more than 92,000 employees in over 80 countries across three continents. In 2020, the company had annual revenues of $16.6 billion, earning money from a wide range of services and products, including:
- Transactional revenue from leasing or selling property.
- Capital market services.
- Property management.
- Project development services.
- Advisory services.
Pandemic setbacks and uncertainty definitely hurt revenues initially. Still, the company's latest earnings for the second quarter of 2021 reports that business is back and doing even better than pre-pandemic levels. Consolidated revenues for Q2 was $4.5 billion, a 22% increase from 2020 and a 4.6% increase from 2019. Adjusted diluted earnings per share (EPS) climbed an impressive 492% year over year (YOY) and is 43% above pre-pandemic levels (Q2 2019).
Leasing and capital markets have rebounded aggressively, so far doubling 2021 earnings when compared to 2020, giving the company the confidence to boost expected adjusted EBITDA to 16% to 19% for 2021.
Net debt for the company has also decreased YOY, now at $648.5 million. In Q2 2019, net debt was $937.4 million. As of the end of Q2 2021, the company had $246.1 million of cash and cash equivalents, with a super-low net debt to adjusted EBITDA of 0.6x.
Is Jones Lang LaSalle a buy right now?
Share prices have bounced back during the pandemic crash and are now trading at the highest levels in the company's history -- up 48% from its February 2019 high. Historically speaking, the company has produced consistent and reliable returns for investors, with an average annualized return of just over 16% for the past 10 years. Personally, I think JLL is a strong company in a great financial position, riding a very positive momentum for growth across the globe.