National real estate deal with N.J. implications: JLL to acquire HFF for $2B

Commercial real estate company JLL will acquire another real estate firm, HFF, in a cash-and-stock transaction valued at approximately $2 billion, JLL announced Tuesday.

The transaction, which has been unanimously approved by the boards of directors of both companies, will help JLL increase its role as one of the leading capital market firms in the industry, the firm said.

The transaction is expected to close in the third quarter of 2019, subject to HFF shareholder approval and customary closing conditions, including regulatory review. The transaction is not contingent upon receipt of financing.

JLL officials called HFF, also known as Holliday Fenoglio Fowler, one of the largest and most successful commercial real estate capital markets intermediaries in the U.S. — one that has closed more than $800 billion in over 27,000 transactions and achieved record revenue in 2018 of more than $650 million.

And while JLL, also known as Jones Lang LaSalle, is headquartered in Chicago and HFF is headquartered in Dallas, both companies have significant presences in New Jersey. The firms combined to have seven members on the 2018 ROI Influencers: Real Estate list (JLL’s Rob Kossar, David Knee, Dan Loughlin, Tim Greiner and Frank Recine joined HFF’s Jose Cruz and Jon Mikula).

Christian Ulbrich, global CEO of JLL, said the acquisition plays into the firm’s long-term plans.

“Increasing the scale of our Capital Markets business is one of the key priorities in our ‘Beyond’ strategic vision to drive long-term sustainable and profitable growth,” he said in a release. “The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities.

“We have long admired HFF for its expertise and leading reputation in the industry, as well as its client-first culture of teamwork, ethics and excellence, which aligns with our own. I believe that combining our organizations will deliver a range of compelling benefits for our clients, employees and shareholders.”

Mark Gibson, CEO of HFF, will join JLL as CEO, Capital Markets, Americas and co-chair of its Global Capital Markets Board.

“This is a terrific transaction for our shareholders, providing them with an immediate cash payment and the opportunity to participate in the long-term value of the combined company,” Gibson said in a release.

“In addition, we believe the combination with JLL will create a superior platform for our shareholders, clients and employees than either company would have independent of the other and will significantly accelerate our firm’s strategic plan.

“JLL’s team-oriented culture with the additional standards of high character and integrity are an excellent match with the HFF culture, which has been HFF’s fundamental differentiator since its inception.”

Under the terms of the agreement, HFF shareholders will receive $24.63 in cash and 0.1505 JLL shares for each HFF share.

Based on the closing price of JLL stock of $163.02 on March 18, 2019, the cash and stock consideration to be received by HFF shareholders at closing is valued at $49.16 per HFF share.

JLL intends to fund the cash portion of the purchase price consideration with a combination of cash reserves and its existing syndicated credit facility. The combination is expected to deliver significant run-rate synergies, estimated at approximately $60 million over two to three years, the firm said.