To Our Fellow Shareholders:

Nineteen ninety-eight, and the opening months of 1999, proved to be a period of remarkable activity and accomplishment for our company.

In my letter in last year's annual report, I envisioned 1998 as a year when, in addition to achieving demanding financial objectives, we would also make substantial progress toward the strategic goal of building The Real Estate Firm of the Future^TM. I characterized that organization as a global, vertically integrated company whose range of products and service - and whose presence in, and knowledge of, the world's real estate and capital markets - would allow us to serve clients as a single source of solutions for all their real estate needs.

Thanks to my colleagues, old and new, in the company we now call Jones Lang LaSalle Incorporated (NYSE: JLL), I am very pleased to report success on both fronts. We have achieved the goals we set out to accomplish.

Our employees worked tirelessly last year. Most focused their talents and energy on moving our existing businesses forward by anticipating and attending to the needs of our clients. Others helped build our company by merger or acquisition. Success may have started with a strategy or objective, but it was achieved only through the skill and dedication of our people working together to attain common goals. We consider our employees to be our most valuable resource, and, again last year, they proved the case.

The 1998 acquisitions of COMPASS Management and Leasing, of the U.S. retail property management business of Lend Lease Corporation and of the project management operations of Satulah Group Inc. reinforced our position as the leading real estate management services company in North America. The completion of our merger with Jones Lang Wootton in March 1999 establishes Jones Lang LaSalle as the predominant global real estate firm. In essence, we have drawn together all the elements necessary to be The Real Estate Firm of the Future^TM.

Finally, and equally important, throughout the year our existing businesses continued to achieve superior results for our clients and create substantial growth and profitability for our shareholders.

Financial Highlights

LaSalle Partners had an extremely successful year in 1998, both in terms of the progress we made toward the goals we outlined during our initial public offering in mid-1997 and from a financial perspective. As reflected in our selected financial data, revenue for the year increased 31% to $304.5 million, up from $233.0 million in 1997 on a pro forma basis. Operating income and EBITDA, adjusted for merger related non-recurring expense, rose 38% to $47.9 million and $61.3 million, respectively, from $34.7 million and $44.4 million, respectively, in 1997, also on a pro forma basis. 1998 adjusted net earnings reached a record $26.6 million, or $1.62 per diluted share based on 16,387,721 shares outstanding - up from $1.27 per diluted share on a pro forma basis for 1997.

As we reported at the time of the COMPASS acquisition, we anticipated approximately $10.3 million in after-tax merger related non-recurring charges associated with the acquisition, slightly over half of which would be incurred in 1998 with the remainder being incurred in the first half of 1999. In fact, we incurred merger related non-recurring charges associated with the COMPASS acquisition totaling $5.2 million in 1998 on an after-tax basis, in line with our original estimates, and we incurred an additional $.9 million in after-tax charges associated with the pending merger with Jones Lang Wootton.

Inclusive of merger related non-recurring charges, actual net earnings totaled $20.5 million, or $1.25 per diluted share, compared with actual net earnings of $25.8 million, or $1.49 per diluted share in 1997. Given our commitment to realize maximum value from acquisitions by fully integrating them with our existing operations, Management believes that operating results, exclusive of merger related charges, offer a more meaningful measure of performance for our shareholders.

Business Highlights

LaSalle Partners' impressive 1998 financial results were the product of successful business activity and major achievements in all three core business segments.

Financial and Corporate Services. In our Financial and Corporate Services segment, 1998 revenues were up by one-third over 1997 levels. Operating income increased 25% from the previous year.

Professionals in our Tenant Representation business enjoyed a record year, completing 9.1 million square feet (845,400 square meters) of transactions for our clients. Productivity continued to be strong in this business, with revenue-per-professional figures achieving record levels. Underscoring the firm's commitment to long-term client relationships, 82% of Tenant Representation revenues in 1998 came from the strategic alliances and preferred vendor relationships we maintain with such clients as Aon Corporation, PricewaterhouseCoopers and Sun Microsystems, Inc. During the year, new strategic alliances were established with BankOne Corporation, McDonald's Corporation, Teligent, WPP Group and Xerox Corporation.

Investment Banking revenues increased 36% in 1998. The group's investment sales business continued to grow: Volume ran 25% ahead of last year's level, with more than $2.5 billion of investment transactions completed, including the Amoco Building in Chicago, Park Avenue Tower in New York, and Library Tower in Los Angeles, as well as the sale of the note secured by Mellon Bank Center in Philadelphia. We also expanded our capital markets business, completing more than $2.1 billion of corporate and real estate finance transactions, including three private equity placements.

Land Services also enjoyed a record year in 1998, reporting a 58% increase in revenues and recording profits that were nearly three times 1997 levels. The group completed 99 transactions in 1998 with underlying asset values of more than $1 billion. Land specialists accounted for 40 acquisitions and dispositions, 47 advisory assignments and six major land investments during 1998. We raised and committed $325 million of debt and equity capital for land development projects. The group attracted 17 new clients during the year, including Lockheed Martin Corporation, RiteAid, First Merit Corporation and DLJ Real Estate Capital Partners Inc., while continuing to serve such long-term clients as DreamWorks SKG, Amtrak and Nippon Landic, Ltd.

Leasing and Management Services. The Leasing and Management Services segment recorded 1998 revenues that rose 57% above the previous year's totals, with about 40% of the increase from the COMPASS acquisition completed in the fourth quarter. At the same time, revenues that were not related to the COMPASS transaction increased by one-third during the year.

In our core Leasing and Management business, we achieved new leasing performance records, earning more than $40 million of leasing commissions, a significant increase over our record 1997 results, and three times our 1996 level. We secured the highest rental rates for our clients in many of the nation's top markets.

We earned 135 new assignments during the year, which we anticipate will generate annualized revenue of approximately $20 million a year.

Our Facility Services business exceeded its revenue and gross margin targets in 1998, attracting nine new U.S. clients during the year including BankOne Corporation, Western Bancorp and Security Link from Ameritech. As a result of the COMPASS merger, we also gained a new international facility services client during the year, Lucent Technologies-Mexico, and established a facility services relationship with The Coca-Cola Company.

Our Development Services business secured approximately 4.4 million square feet (409,000 square meters) of new business in 1998. New development assignments won in 1998 included Millenia, a 450-acre mixed-use development in Orlando, and Navistar International Corporation headquarters at Cantera, in suburban Chicago.

Our Project Management business increased its revenues by 126% over 1997 levels. New clients served last year included DreamWorks SKG, Wellpoint, Xerox Corporation, Paging Network, Inc. and Home Savings Bank.

LaSalle Investment Management. The LaSalle Investment Management segment reported 1998 revenues that exceeded 1997 levels by 14%. Operating income increased 64% over the previous year's totals. These encouraging results were caused, in part, by incentive fees generated by the initial public offering of LaSalle Hotel Properties, our publicly traded hotel REIT (NYSE: LHO). Since these were one-time fees, they will not contribute to future revenue and income streams, but do reflect a trend in our business toward a more performance-based pricing environment. We anticipate that a growing proportion of future earnings will result from incentive fees earned at the end of planned investment periods.

Assets under management totaled $14.2 billion at the end of 1998, a 3% decrease from the beginning of the year. The decline was due principally to strategic asset sales and the downsizing of a large separate account portfolio. It masked the underlying strength of our investment management business where, in 1998, we raised $2.6 billion of new investment and takeover capital, the highest annual total in our history.

We completed $790 million of direct investments in U.S. assets in 23 separate transactions, and we assumed management responsibility for $100 million of additional assets. Our international private equity base increased markedly during the year, with new investments and takeovers totaling more than $900 million. In our U.S. and international public equity business, we invested $.9 billion of new capital commitments.

Our record of strong performance continued in 1998, as returns in our private equity portfolios consistently outperformed industry benchmarks. Returns on the $2.1 billion of new investments we have made in the U.S. private equity market since 1993 consistently exceeded NCREIF benchmarks: a 22.0% return in office investments versus the 12.4% benchmark; a 14.4% return in industrial compared to the 11.6% benchmark; and a 10.1% return in retail investments versus the 8.6% benchmark. Our international private equity portfolio exceeded the Investment Property Databank benchmark by 300 basis points for the year. Reflecting difficult conditions in REIT markets, the value of our U.S. public equity portfolio declined by 19.2%, compared to a 17.5% decline in the NAREIT Index, but our three-, five- and 10-year returns exceeded these same benchmarks.

Completing the COMPASS Acquisition and Integration

As we made substantial progress on multiple fronts within our existing organization during the year, we also looked outside the company for additional ways to expand our business and serve our clients more effectively. As I mentioned in the introduction to this letter, 1998's most significant initiative on this front was the acquisition of two real estate services businesses from Lend Lease Corporation: COMPASS Management and Leasing, and Lend Lease's U.S. retail property management business. The transaction closed on October 1, and we are well on our way to a successful integration of the COMPASS organization into our own, welcoming 900 new employees, establishing an active presence in 19 new markets and bringing 100 COMPASS client relationships to our firm.

The acquisition significantly expanded our management services presence in the United States, increasing our portfolio to approximately 400 million square feet (37.2 million square meters) of office, retail and industrial assets under management. We nearly doubled the size of our facility services portfolio to 9,000 facilities, and we increased our retail business substantially with the addition of more than 30 million square feet (2.8 million square meters) of retail property in 36 regional malls, shopping centers and community centers in 19 states.

COMPASS contributed to improved performance in our leasing and management business almost immediately. Finally, the transaction strengthened our business relationship with Lend Lease Corporation, creating an important source of potential new business assignments, not only in Leasing and Management Services, but also in areas ranging from Investment Banking and Development Services to Land Services.

A Merger Driven by Global Opportunity

More recently, the completion of the LaSalle Partners/Jones Lang Wootton merger in March 1999 confirmed our status as a world leader in terms of global reach and range of services. But size per se was never a central force driving the transaction. Neither company was interested in assembling an international network of affiliates whose capabilities might differ or even deteriorate from one market to the next. Both were intent on harnessing the global resources developed by each company over the years to provide clients with a single, uncompromising standard of quality service wherever their real estate needs might take them.

Both companies were fortunate to identify a merger partner focused on attaining just that goal. In terms of geography, products and professional skills, we were ideally matched. LaSalle benefits from Jones Lang Wootton's strength in Europe and Asia Pacific, while Jones Lang Wootton gains LaSalle's depth in North America and its position as a leader in real estate investment management. Both firms possessed - and jealously protected - reputations as leaders in their markets and businesses. As both built their companies, they were guided by a determination to create and maintain long-term client relationships. Neither would be deflected from that goal by the lure of immediate gains associated with individual transactions.

Still, while the merger made eminent sense from the dual perspectives of business synergy and corporate culture, completing it was a lengthy and demanding process. But in the end, we had grown more convinced than at the start that merging was the optimum route, strategically and financially, for establishing the truly global company that our clients were increasingly demanding.

In addition, the complexity of the transaction and the duration of the process laid bare the character of each organization to the other. Speaking from the perspective of LaSalle Partners, I can confirm that we were quickly impressed with the quality, integrity and principled values of our future colleagues in a negotiating atmosphere where no attribute, good or bad, could stay hidden for long. That sense of comfort and respect is allowing our new organization to move forward quickly and confidently as we integrate our services and operations.

Realizing Our Potential

It is one thing to envision the promise of a merger and quite another to realize that potential. During 1999 and into the year 2000, we will be working hard to complete the development, implementation and fine-tuning of a set of overarching structures to ensure that all aspects of our far-flung operations work - and interact - at the best-in-class levels we have set for ourselves. Our new Global Services Management organization has been charged with the responsibility of assuring that clients receive the consistent, high-quality service they have come to expect from both organizations over the years.

Our global marketing organization will work to introduce existing clients to new services and markets that the merger makes available, and to acquaint companies and institutions that we have not served in the past with our expanded global capabilities. With these rich sources of prospective new business, I anticipate that, for the foreseeable future, our continued expansion will be fueled primarily by organic growth. We will, however, continue to seek, and where appropriate pursue, additional acquisitions to fill relevant geographical or functional niches in our organization.

Building the Jones Lang LaSalle Brand

With the merger complete, we now enjoy a unique opportunity: to brand Jones Lang LaSalle Incorporated among clients as the preeminent global real estate firm. Able to provide comprehensive real estate services locally, regionally and internationally, we can establish our identity so that when clients - current or potential - identify a real estate need, they will think first of Jones Lang LaSalle.

The WorldMark and logotype that comprise our new corporate "signature" offer the most visible representation of the branding initiative. Using the Jones Lang Wootton world map and the LaSalle Partners logo as points of departure, the signature communicates the message of two strong companies joining forces to create a professional, clearly focused and even more powerful force in global real estate. Our brand represents more than visual images, however, incorporating our worldwide presence, range of specialized services, relationship focus and commitment to quality to shape a distinguishing identity for our new company.

Harnessing the Power of Technology

We intend to be no less than the technology leader in real estate. Developing superior information technology is an essential component of ensuring world-class service throughout our global network. This is an area in which our size offers us an advantage: the ability to spread development costs across our global organization. As a public company and industry leader, we possess the scale and resources to afford the considerable investments that these efforts will demand.

Our recent growth is already paying technological dividends. In our property management business, for example, we have linked LaSalle's new J.D. Edwards technology platform to the award-winning MAGNET^TM performance measurement and analysis system developed by COMPASS to increase productivity and provide improved access to information for our clients. CREDO, a sophisticated database that helps corporate owners and occupiers track and manage their real estate operations, and JLWeb, Jones Lang Wootton's innovative intranet site, are only two examples of the technological benefits resulting from our recent merger.

Creating a Global Presence in Investment Management When we began to pursue the strategy of global expansion nearly a decade ago, we identified its primary attraction in terms of fashioning a delivery mechanism that would provide multinational clients with a range of corporate and financial real estate services. We identified another, equally attractive opportunity more recently: the ability to build our industry-leading investment management service into the world's leading global real estate investment manager.

Our worldwide presence offers us a rich and deep source of global market information. Challenging our network of real estate professionals to identify market inefficiencies and sources of capital in their markets, we can create new investment vehicles wherever these opportunities arise. Armed with sufficient co-investment capital to make our ideas credible with clients, we can take advantage of such situations quickly to gain the greatest opportunity for securing the highest returns. We do not believe that any other company possesses the depth of investment management expertise and breadth of market knowledge needed to take advantage of this opportunity.

A Word of Thanks

We owe one group of our colleagues a very special word of thanks. With the merger of LaSalle Partners and Jones Lang Wootton, we have consolidated two boards of directors into one. A logistical and operational necessity, it has nevertheless meant losing the valuable contributions, and valued counsel and companionship, of several inside directors from both companies. These individuals made the creation of our combined firm possible, and we owe them our thanks and a debt of gratitude for their board service. We count ourselves - and our company - fortunate that we can continue to rely on their skills and experience as trusted Jones Lang LaSalle colleagues.

Looking Forward

Now we turn our attention to the challenges and opportunities that lie before us. I am convinced that the strength of the relationships we maintain - with the people we work for, and the people we work with - will continue to represent the ultimate key to success for Jones Lang LaSalle. This year, as we bring together the clients and employees of LaSalle Partners, Jones Lang Wootton, COMPASS and Satulah in our vital new organization, we are determined to protect and extend those relationships.

Sincerely,

Stuart L. Scott
Chairman and Chief Executive Officer
March 1999