Christian Ulbrich : Well, thank you for that challenging question early in the morning. A very good one. Listen, we have to take, obviously, different time horizons for the different areas of our business. So if we do tech investments, the time horizon is more between five to 10 years than if we were to make investments into our traditional service lines where we can take a much shorter time horizon. We have had historically — if you just take the average of the last couple of years, we have had historically an average of $100 million of equity earnings contributing to our results. Last year was the lowest over many years. But you have to take that in the very long average because, obviously, we cannot influence those equity earnings and incentive fees on a quarter basis on an annual basis.
And therefore, on those, we unfortunately have a lot of volatility, which we have to digest and which makes it hard for the market to make estimates. But it is a very important and lucrative part of our business. And therefore, we will continue to work on that and embed that in our strategy.
Karen Brennan : And I would just add that from a — we just look at return on invested capital on a risk-adjusted basis and across a portfolio of different things we can pursue. So obviously, a variety of factors go into that analysis. And can I go back to your comment, just also, Jade, on the size of the movement from peak to current levels of cap rates? If you go back and you look at where cap rates were at the end of 2019, the movement is not as great, particularly if you look at a sector like industrial, they’re kind of right in that same zone. Same for retail. Housing was — multi-housing was a little bit lower, and office was certainly lower. But it’s easy to look at the most recent history and kind of pricing at the end of 2021, whether it’s for cap rates or for debt cost and say, “Wow, look how far we’ve moved.” But if you go back to our time horizon of 2018, 2019, the movement doesn’t — is not as great, and people were certainly transacting at those price points not so long ago, although it might feel like a long time ago now, given what’s transpired over the last few years.
Jade Rahmani : Just again on the capital allocation decisions. So if hypothetically, you were deciding whether to merge with a peer or whether to acquire a business, just say, a capital markets type of business, then you’re comparing that decision versus buying back the stock. Are you looking at the stock valuation relative to the average adjusted earnings or adjusted EBITDA over the last few years? I mean, it wouldn’t make sense to use this year because it’s a down year. But in that calculation, are you stripping out any of the equity income say, on the JLL Technology side?
Karen Brennan : Yes. I mean, we’re looking — we look at our adjusted EBITDA, including, excluding equity earnings, obviously, because of the fluctuation in equity earnings.
Jade Rahmani : Okay. And then on the adjusted EPS calculation, I saw a line item I haven’t — I don’t think I’ve seen with JLL, which is a subtraction for interest on employee loans net of forgiveness. Can you just give any color on what that relates to and why this new disclosure is here?
Karen Brennan : Yes, very good reading the footnotes, I’m impressed. So that was an addition this quarter. Previously, the interest amounts — so first of all, let me take a step back. Those are related to interest amounts on certain employee contracts that we put in place with producers in our business. And the interest that is accruing on those and then gets paid back over time based on the conditions for those contracts to be burned off. And so it’s really a noncash item as it relates to us because it’s simply increasing the period of time over which that amount needs to be earned back. And we are, therefore, excluding it.
