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Jones Lang LaSalle expects HFF deal to bolster CRE debt advisory business

Jones Lang LaSalle Inc. expects its acquisition of real estate capital markets adviser HFF Inc. to generate $60 million in annual synergies within two to three years, while speeding the firm's efforts to double the size of its capital markets business.

In particular, Jones Lang LaSalle expects the move to strengthen its debt advisory business in the U.S., in part by uniting the companies' agency lending platforms, while positioning the combined firm to become a leading debt adviser in Europe and the Asia-Pacific region, executives said on a conference call.

In the Americas, the combined firm plans to focus on broadening its client base across product types and deal sizes, advising clients in the multifamily, retail, office, industrial and lodging real estate subsectors, said Jay Koster, group head of Americas capital markets and investor services.

Christian Ulbrich, Jones Lang LaSalle's chairman and CEO, said the firm had been wary of increasing the size of its U.S. capital markets business through hiring individual teams because the industry in the U.S. is driven by a "star culture," in which high-profile brokers draw their own business. In contrast, he said, HFF shares what he described as Jones Lang LaSalle's collaborative, team-oriented approach — a similarity that makes the two companies a good cultural fit.

HFF's CEO, Mark Gibson, is joining Jones Lang LaSalle as CEO of the firm's Americas capital markets business, and several "key senior leaders and producers" at HFF have signed three- to four-year employment agreements, Ulbrich said.

The companies expect to achieve about $28 million of the synergies within the first 12 months after the deal closes in the third quarter. About $40 million of the total synergies within two to three years will stem from the elimination of overlapping infrastructure costs, including the consolidation of offices and public-company expenses.