Investing.com -- S&P Global Ratings has revised its outlook on Jones Lang LaSalle Inc . (NYSE: JLL ) to stable from negative, citing stronger commercial real estate (CRE) transaction activity and a decline in leverage. The ratings agency also confirmed its long-term ’BBB+’ and short-term ’A-2’ issuer credit ratings for the company.

JLL’s operating performance improved in 2024, with a rise in recurring revenue businesses and increased CRE transaction activity. The company’s leverage, as measured by net debt to adjusted EBITDA, dropped to 1.2x in 2024, down from 2.0x the previous year.

The stable outlook for the next 18-24 months is based on the expectation that JLL will maintain leverage of 1.5x-2.0x. The outlook also takes into account the company’s market position, expectations for steady operating performance, and the absence of large-scale, debt-funded acquisitions.

The revised outlook reflects JLL’s effective balance sheet deleveraging over the past year and improved CRE transactional activity. In 2024, JLL’s adjusted EBITDA increased approximately 30% to $1.45 billion, up from $1.10 billion in 2023. This increase was largely due to a significant recovery of capital markets and leasing businesses in the second half of 2024, along with steady growth in recurring revenue businesses, particularly in workplace management.

JLL’s adjusted net debt stood at $1.8 billion at the end of 2024, down from $2.2 billion a year earlier, primarily due to a lower drawdown of the revolving credit facility, partially offset by higher borrowings under the commercial paper program.

S&P Global Ratings expects JLL to operate with leverage of 1.5x-2.0x in the next 18-24 months, reflecting the cyclicality and seasonality of the CRE servicing sector and JLL’s business mix, which leans more towards transactional revenue.

The agency’s base-case forecast assumes JLL’s fee revenue will increase by high-single digits in 2025 and 2026, led by capital markets, leasing, and work dynamics businesses. Adjusted EBITDA margin is expected to rise to 18%-20% in 2025 and 2026, up from 18% in 2024, primarily due to the company’s operating leverage in higher-margin transactional revenue businesses.

The stable outlook also factors in JLL’s strong liquidity position, with access to $3.3 billion on its unsecured revolving credit facility. As of December 31, 2024, the company had $416 million in cash and cash equivalents and about $3.2 billion of undrawn capacity on the revolver.

The ratings could be lowered if net debt to adjusted EBITDA rises above 2.0x without a clear plan to reduce it, or if the company’s market position significantly weakens due to increased competition. An upgrade is considered unlikely in the next 18-24 months.

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