Dear Shareholders:

In the annual review we produced a year ago at Jones Lang Wootton, I stated that our major priority for 1998 would be to complete the worldwide integration of our four geographic regions and the national businesses within them. I envisaged a single holding company that would be characterised by improved business synergies and more coordinated research, marketing, information technology and human resources capabilities, and in which the interests of individual shareholders would be aligned with those of our clients and the global business as a whole. I also proposed that, with the continued globalisation of the property business, we needed to consider mergers and acquisitions as a means of accelerating our growth, particularly in North America. The consequent need for increased access to external capital would require us to weigh several options carefully, including remaining an integrated private company, taking a capital partner or becoming a publicly quoted company.

Our recently completed merger with LaSalle Partners achieves all these objectives in a single step. It provides the ideal platform for offering clients the global services they have been increasingly demanding. It substantially expands and extends our presence in North America. And now that we are a public company, it improves our access to capital sources.

But, however compelling the strategic and financial arguments for the merger, we would not have pursued it had we not identified a partner whose values mirrored and complemented our own. We sensed a cultural kinship early on in our discussions with LaSalle, and as the merger process progressed and contact expanded, we gained growing respect for our future colleagues and for the LaSalle organisation. Speaking for Jones Lang Wootton, I am confident that Jones Lang LaSalle will fulfill its promise. My confidence is echoed by the fact that there was unanimous acceptance of the merger terms by Jones Lang Wootton owners worldwide.

I also wrote a year ago that the further internationalisation of our business would not come at the expense of our local and regional operations, whose ability to stay close to their markets and responsive to their local clients' needs would be pivotal to continued success. The Jones Lang LaSalle structure fully meets this requirement by incorporating the regional structure that has served us well over many years.

Finally we set ourselves the target of achieving double-digit revenue growth in 1998 over our 1997 record year, and improved profit margins as well. I am pleased to report success here too.

Offering Thanks where thanks are due

None of the above would have been achieved during the year were it not for the tireless dedication and skill of our people. Wherever they worked around the world, and whatever tasks they accepted and accomplished, they drove our success. As we contemplated and then worked toward completing the merger, many individuals made selfless contributions to keep the process focused and on track. Many more kept the Jones Lang Wootton engine running smoothly and powerfully, delivering the results and service levels that our clients have come to expect of us. We thank them all.

Financial Highlights

Worldwide revenue of Jones Lang Wootton companies in 1998 was $482.5 million, an increase of 11% on the previous year's total of $436.0 million. Operating expenses before merger related non-recurring charges rose by 10% to $437.5 million. Operating profit before merger related non-recurring charges was $45.0 million, an increase of 22% on the previous year's total of $36.9 million. Adjusted EBITDA (earnings before interest, tax, depreciation, amortisation and merger related non-recurring changes) totalled $57.6 million in 1998, an increase of 18% on 1997's $48.7 million.

As the partners of the English firm owned the continental European and the North American businesses, all these businesses have been treated together for statutory accounting purposes. After adding the separate partnerships of JLW Ireland and JLW Scotland, the combined total of our European and North American businesses represented approximately 75% of worldwide revenue in 1998, up from approximately 63% in 1997. In achieving this, the combined revenues of these businesses increased by 31%, while operating expenses increased by 25%.

The Jones Lang Wootton Asia Group accounted for approximately 15% of worldwide revenue in 1998, down from approximately 22% in 1997. Performance was inevitably affected throughout the year by Asia's financial and economic crisis that began in 1997 but did not reach our major markets early enough to affect our 1997 results significantly. Revenue declined by 25% compared with the previous year, and thanks to timely cost-cutting measures, operating expenses were reduced by 24%. Our Asian businesses remain in good shape to weather the current downturn and benefit from the region's future recovery.

The companies of Australia and New Zealand, which formed Jones Lang Wootton's Australasian region, accounted for approximately 13% of worldwide revenue in 1998, down from approximately 15% in 1997. Australasia felt some effects of the Asian crisis, and our 1998 US dollar results were significantly impacted by weakening local currencies. Revenue declined by 5% compared with the previous year, while operating expenses were reduced by 7%.

Business highlights: A Year of Client Strength and Employee Dedication

Jones Lang Wootton's successful 1998 financial results reflected the strength of our clients and the individual dedication and teamwork of approximately 4,000 personnel operating from 74 commercial centres in 32 countries across four regions. The following figures provide some measure of our 1998 worldwide business achievements that can most readily be quantified.

International Corporate Real Estate Services: A Record of Significant Growth

Our corporate services professionals, serving clients in international, regional and national teams, have established long-term relationships and strategic alliances with some 50 multinational corporations based in North America, Europe, Asia and Australasia, adding several more during 1998. We saw significant growth in demand for asset sales, financing, sale-leasebacks, portfolio strategies and total facility management, and gained from increased merger and acquisition activity across the world, securing broad advisory business as well as specific master planning and transaction assignments.

International Hotels: Creating a Global Power

In 1998, we completed the integration of our three regional hotel businesses into one global unit. A dedicated team of 100 hotel specialists generated revenue of over $16 million from transactional services, appraisals, consulting and asset management assignments. Transactions included the sale of the Sheraton Frankfurt, the Ritz-Carlton Pentagon City, VA, and the Hayman Island luxury resort on Australia's Great Barrier Reef. The year also saw the creation of Sandalwood in Singapore, which is the first Asian-based luxury hotel opportunity fund, a joint venture with US-based Host Marriott.

Regional highlights: Responding to Changing Market Dynamics

Overall performance of an international business such as ours reflects the changing market conditions in the geographic regions in which it operates and is not reliant on a single region. 1998 illustrated that rule.

In Europe, the solid recovery that had begun in the UK continued and spread across the Continent, recently benefiting Germany. Our investment professionals sold almost $8 billion of property in 1998, including the Broadgate headquarters of the European Bank of Reconstruction and Development in London for a German fund, the Wilson Building in La Dˇfense, Paris for a Dutch fund, and the Cascada office complex in Neu-Perlach, Munich. Acquisitions for investment clients exceeded $4 billion and featured substantial retail properties, including the Luisencarree shopping centre in Darmstadt, Germany; La Rondinelle shopping centre in Brescia, Italy; and a portfolio of 28 retail warehouses in Belgium. Sales and purchases on behalf of owner-occupiers, including sale-and-leasebacks and asset disposals, exceeded $1.5 billion. The total value of 1998 capital transactions exceeded $13.5 billion, an increase of 25% on the previous year's record. Valuation professionals across Europe appraised a record $118 billion of property in 1998. The London-based team advised on the largest ever mortgage debenture issue by a British property company, the acquisition of a property company by a US investor and the UK's second largest ever property-backed securitisation.

Asia suffered in 1998 from the financial and economic problems that had surfaced the previous year, but except for a collapse in capital transactions, our business and client relationships proved reassuringly resilient. Economic conditions, not our client base or capabilities, are the factors limiting our business in Asia now. Our leasing professionals leased nearly one million square metres (10.7 million square feet) of space, surpassing their 1997 figure. A fifth of this total was leased on behalf of tenants. The Hong Kong team achieved one of the largest single leasing deals ever in the city's central business district: 18,000 square metres (191,000 square feet) in the Cheung Kong Center. Acting as sole agent, the tenant representation team of Greater China acquired 28,000 square metres (302,000 square feet) of space in central Hong Kong for a major international bank, plus a lease option for an additional 23,400 square metres (252,000 square feet). And we established a new business, Corporate Residential Services, to help multinational companies solve their executives' residential property problems, attracting an impressive number of blue-chip clients.

In Australasia, although affected by the Asian crisis, our business demonstrated its continued strength by achieving substantial growth in strategically important sectors. Our leasing professionals leased 1.4 million square metres (15.1 million square feet) of industrial, office and retail space, an increase of 22% on 1997. Among the major leasing assignments won in Sydney in 1998 were Citibank Centre, 2 Park Plaza and 363 George Street. Total property under management at the end of 1998 was 5.5 million square metres (59 million square feet), an increase of 7.5% on the previous year. Among the contracts won by Global Property Solutions, a facility management joint venture established in 1997 with P&O Australia, were one from the Victoria State government, and one from the ANZ Banking Group with 2,700 properties throughout Australia and New Zealand, including a $670 million portfolio of owned properties. At the end of 1998, our facility management business had 676,000 square metres (7.3 million square feet) under management.

Finally, our North American business grew in a generally favourable market. Our investment professionals sold $2.2 billion of real estate during the year. The Investment Sales and Finance team in Dallas won the sale assignment for the 1.85 million square foot (172,000 square metre) NationsBank Plaza, the largest office building in the Southwest, as well as portfolio sales assignments for another 1.8 million square feet (167,000 square metres) of property. And our North American valuation specialists appraised more than $12 billion of commercial real estate during 1998, more than double the total value appraised in 1997.

Looking Forward: Maximising the Benefits of Our New Enterprise

When we report our 1999 results, we shall report as one merged entity forged from two geographically complementary, culturally compatible and successful businesses. In the remaining months of 1999 and beyond, we are resolved to maximise the benefits of the new enterprise for the benefit of our clients, our staff and consequently for our shareholders.

Yours sincerely,

Christopher A. Peacock
President and Deputy Chief Executive Officer
March 1999