Cushman & Wakefield Ltd. · NYSE:CWK
Cushman & Wakefield — Corporate Update (March 2020)
24 slides from Cushman & Wakefield's corporate update, Mar 23, 2020
Slide 1: COVID-19: Implications for Real Estate Investors and Occupiers
WEBCAST COVID-19: IMPLICATIONS FOR REAL ESTATE INVESTORS AND OCCUPIERS MARCH 2020
Slide 2: Speakers
SPEAKERS BRETT WHITE KEVIN THORPE CARLO BAREL DOUG HARMON STEVE QUICK Executive Chairman Chief Economist DI SANT'ALBANO Chairman Chief Executive & CEO Chief Executive Capital Markets Global Occupier Global Capital Markets Services & Investor Services, Chairman, EMEA
Slide 3: Global Coronavirus Tracker
GLOBAL CORONAVIRUS TRACKER As of 3/16/20 NUMBER OF GLOBAL INFECTIONS NUMBER OF INFECTIONS, 200,000 SELECT COUNTRIES 30,000 160,000 25,000 120,000 20,000 15,000 80,000 New testing standard in China 10,000 40,000 5,000 0 0 Deaths Recoveries Active Cases Italy Iran Korea, South France Spain Germany USA
Slide 4: Flattening the Pandemic Curve
FLATTENING THE PANDEMIC CURVE GLOBAL KEY MEASURES BEING TAKEN: • Governments, businesses and communities taking action • Travel restrictions • Social distancing (voluntary and enforced) o 56+ countries have closed schools nationally • Testing • Scientific/medical community responding • Medical trial
Slide 5: Reasons for Optimism
2,000 4,000 6,000 8,000 0 10,000 12,000 14,000 16,000 1/23/2020 1/25/2020 1/27/2020 Source: Johns Hopkins University 1/29/2020 1/31/2020 2/2/2020 2/4/2020 2/6/2020 China 2/8/2020 2/10/2020 Change in test requirements 2/12/2020 REASONS FOR OPTIMISM South Korea 2/14/2020 2/16/2020 Japan 2/18/2020 2/20
Slide 6: Economic Impact
ECONOMIC IMPACT Forecasts are being revised sharply downwards. Consensus still assuming second half rebound, but increasingly tenuous.
Slide 7: Equity Markets Enter Bear Territory
EQUITY MARKETS ENTER BEAR TERRITORY WILSHIRE 5000, $ TRIL. 35,000 GLOBAL STOCK INDICES WAS* IS** % CHG 33,000 DJIA 28,538.44 20,188.52 -29.3% S&P 500 3,230.78 2,386.13 -26.1% 31,000 FTSE 100 7,542.4 5,151.08 -31.7 29,000 DAX 13,249.01 8,742.25 -34.0% Nikkei 225 23,656.62 17,002.04 -28.1% 27,000 Heng
Slide 8: GDP Forecasts Revised Down Sharply
GDP FORECASTS REVISED DOWN SHARPLY 2020 Real GDP Forecasts GLOBAL SUMMARY JANUARY LATEST DIFFERENCE Average probability of the U.S. economy being in FORECASTS FORECASTS (BPS) recession within the next 12 months: 60 Global 2.5 0.5 March 49% 50 APAC Region 4.2 0.8 -340 40 China 6.0 1.0 -500 India 6.0
Slide 9: Jobless Claims Signal Recession Is Here
JOBLESS CLAIMS SIGNAL RECESSION IS HERE 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 March 14th reading 281,000 300,000 250,000 Spike above 240,000 signals recession 200,000 5-Jan-08 5-Jan-09 5-Jan-10 5-Jan-11 5-Jan-12 5-Jan-13 5-Jan-14 5-Jan-15 5-Jan-16 5-Jan-17 5-Jan-18 5-Jan-19
Slide 10: Key Indicators: High Frequency Data
KEY INDICATORS: HIGH FREQUENCY DATA OPEN TABLE RESERVATIONS BUSINESS CONFIDENCE (DIFFUSION) INDEX 40% 40 20% 30 0% 20 -20% 10 -40% 0 -60% -10 -80% -20 2/18/20 2/20/20 2/22/20 2/24/20 2/26/20 2/28/20 3/11/20 3/13/20 3/15/20 3/1/20 3/3/20 3/5/20 3/7/20 3/9/20 10/7/18 11/7/18 12/7/18 10/7/19 11/7/19 12
Slide 11: Not Like GFC or 2001 – Something in Between
NOT LIKE GFC OR 2001 – SOMETHING IN BETWEEN Real Annual GDP Growth In Previous U.S. Recessions 10 8 6 4 2 0 -2 -4 -6 United States Euro Area Japan United Kingdom Canada Australia China India South Korea 2001 2009 OE Forecast for 2020 Oxford Economics, Cushman & Wakefield Research, Goldman Sachs
Slide 12: Consensus Calling for Second Half Rebound
CONSENSUS CALLING FOR SECOND HALF REBOUND U.S. Real GDP, Annualized Growth 2019Q1 2019Q2 2019Q3 2019Q4 Brutal Q2 -0.5 2020Q1 -10.8 2020Q2 3.2 Second Half Rebound 2020Q3 14.5 2020Q4 5.1 2021Q1 1.6 2021Q2 1.4 2021Q3 1.2 2021Q4 -12 -9 -6 -3 0 3 6 9 12 15 Oxford Moody's Source: Moody’s Analytics, Oxford
Slide 13: Government's Stepping Up Support
GOVERNMENT’S STEPPING UP SUPPORT ASIA PACIFIC AMERICAS 1. Coordinated easing across most central banks, including BOJ, 1. Fed actions: ZIRP, up to $5.4T+ in liquidity, dollar swap Reserve Bank of India, Reserve Bank of Australia and the PBOC lines, credit facilities. 2. Japan announces two packages
Slide 14: Impact of COVID-19 on Property Markets
Given that most CRE metrics are reported quarterly, there is not a lot of official data to gauge the impact of COVID-19 on property markets yet, but here’s what we know…
Slide 15: Interpreting REITs
INTERPRETING REITS Year-to-Date Total Return Performance: U.S. REITs (%) -67.5 Hotels Hotel Sector: Occupancy has fallen by 70% globally, Revpar down ~60%. -55.2 Retail Retail: Social distancing – massive disruption. Strength in spots (e.g. grocery & pharma). Hardest Hit -55 *Coworking Coworking: Mi
Slide 16: Hot Off the Press: Preliminary U.S. Office Snapshot
HOT OFF THE PRESS Preliminary U.S. Office Snapshot DEMAND (NET ABSORPTION) SUPPLY (VACANCY) AS OF MARCH 20, 2020 AS OF MARCH 20, 2020 2019Q1 2020Q1 Direction 2019Q1 2020Q1 Direction United States 4,301,989 -3,199,574 United States 14.3 14.5 Houston 244,475 -238,851 Houston 20.9 23.5 Washington, DC 5
Slide 17: Office Leasing Fundamentals Enter Crisis in Good Shape
OFFICE LEASING FUNDAMENTALS ENTER CRISIS IN GOOD SHAPE UNITED STATES EUROPE ASIA PACIFIC Vacancy below historical Vacancy balanced and average Vacancy elevated given 18% 11% 15% below historical average supply boom 13% 15% 9% 11% 12% 7% 9% 9% 5% Vacancy 7% Vacancy Vacancy 6% 3% 5% 2001 2003 2005 200
Slide 18: Office Vacancy Around the World
OFFICE VACANCY AROUND THE WORLD Ranked lowest to highest, select cities AMERICAS EMEA APAC METRO HISTORICAL METRO HISTORICAL METRO HISTORICAL 2019 2019 2019 AREA AVERAGE* AREA AVERAGE* AREA AVERAGE** 1 Vancouver 3.6% 7.2% 1 Berlin 1.6% 6.6% 1 Tokyo 1.9% 4.7% 2 San Francisco 5.5% 10.5% 2 Vienna 1.8%
Slide 19: With Few Signs of Excessive Risk Taking
WITH FEW SIGNS OF EXCESSIVE RISK TAKING Distribution of LTV’s on U.S. Property Financings 2019 2016 2007 35% 30% Share of Transaction Volume 25% 20% 15% 10% 5% 0% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Loan-to-value (LTV) Source: RCA, Cushman & Wakefield Research
Slide 20: Early Assessment - Summary
EARLY ASSESSMENT - SUMMARY As of March 2020 ECONOMY PROPERTY The trajectory of COVID-19 and its impact is uncertain. CRE enters crisis in better shape than past downturns, No one knows precisely how this will play out. but not immune to COVID-19 impact High probability of global recession in 2
Slide 21: Hierarchy of Pandemic Response - Investor
HIERARCHY OF PANDEMIC RESPONSE - INVESTOR ACTIVELY EVALUATE INVESTMENT STRATEGY Phase 3: Determining risk profile and allocation DETERMINE RISK APPETITE ADAPT/RE-EVALUATE PORTFOLIO: NEWS & GOVERNMENT ACTIONS Phase 2: Managing / Mitigating risk DECISION ON ACTIVE TRANSACTIONS / DIALOGUE WITH TENANTS
Slide 22: Hierarchy of Pandemic Response - Occupier
HIERARCHY OF PANDEMIC RESPONSE - OCCUPIER PROACTIVE STRATEGIES SUPPLY CHAIN HEALTH ALTERNATIVE WORKING CRITICAL PROCESSES & ROLES EMPLOYEE WELL BEING
Slide 23: Q&A
Q&A PLEASE USE THE CHAT BOX ON YOUR SCREEN TO POST QUESTIONS
Slide 24: Thank You
THANK YOU We are publishing regular updates at https://www.cushmanwakefield.com Beginning this week, a podcast series on keeping employees engaged during remote work Plans for regular webcasts like the one today Feedback and opportunity to continue the dialog via email immediately after this