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Cushman & Wakefield Shares Rise in First Day of Trading

Global Real Estate Company's Stock Gain May Reflect Optimism for Industry
August 2, 2018
Cushman & Wakefield executives and employees ring the opening bell of the New York Stock Exchange as the company’s shares began trading Thursday.

Cushman & Wakefield's shares rose 4.9 percent in the first day of trading on the New York Stock Exchange, a performance that may indicate a positive outlook for the 101-year-old real estate services company and the commercial property brokerage industry.

The company's shares opened more than 6 percent above the $17 per share initial pricing, reaching a high of $18.18 before closing at $17.83 per share. That means the stock priced near the top of the $16 to $18 per share range projected by the company, which chose to open the shares at the midpoint of $17. The share increase comes as the S&P 500 stock index rose only 0.5 percent on Thursday.

"The success of the IPO so far is a reflection of investors’ confidence in the growth narrative of the brokerage industry," said Hara Perkins, real estate attorney and director of law firm Goulston & Storrs PC.

It was one of the most closely watched initial public offerings for a real estate services provider since rival CBRE Group's offering in 2004 and Jones Lang LaSalle had its IPO in 1997.

Cushman & Wakefield may be looking to increase its capital to boost its spending on technology and other efficiencies that are disrupting the commercial real estate market, Perkins said.

Cushman & Wakefield has recorded losses and racked up $3.1 billion in debt, mostly because it’s growing quickly and investing in talent, said Evan Hudson, a real estate attorney for Stroock LLP in New York City.

"The IPO shows Cushman's shares are trading up despite net losses, and that seems to be the theme of the year," Hudson said. "Investors are looking for growth."

Shares of Cushman & Wakefield's major publicly traded rivals declined in trading on Thursday. CBRE Group, the largest commercial real estate services firm, closed at $49.32, down 1 percent. Jones Lang LaSalle, the second-largest publicly traded brokerage, declined about 1.7 percent, to $167.33 per share.

The share gain by Cushman & Wakefield stands in contrast to the initial stock sale in December of Newmark Group, which includes real estate brokerage Newmark Knight Frank. It began selling stock in early December with plans to sell 30 million shares at a price range of $19 to $22 each.

But lukewarm response from investors to Newmark Group shares caused parent company BGC Partners Inc. to cut the offering size to 20 million shares at a cost of $14 to $15 in the days leading up to the stock sale.

Newmark Group officially went public at $14 a share, with some analysts saying economic concerns may have weighed on the price.

Cushman & Wakefield had anticipated selling at least 45 million shares on the New York Stock Exchange under the symbol CWK, raising at least $765 million before commissions, expenses and underwriter discounts.

Cushman & Wakefield granted its underwriters a 30-day option to buy as many as an additional 6.75 million shares at the public offering price, minus underwriting discounts and commissions.

The company expects to use the funds to repay its $460 million second-lien loans related to its acquisition of Cassidy Turley, part of the company's $3.1 billion in total debt. Cushman & Wakefield said it would use any remaining net proceeds to fund corporate operations.

Morgan Stanley, J.P. Morgan, Goldman Sachs & Co. LLC and UBS Investment Bank are joint book-running managers and representatives of the underwriters for the offering.

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