JHU 2014 Global Economy-LR

John Reardon – COO Facchina Development LLC

Johns Hopkins Global MSRE

3.24.2014

As the World Turns – The Recession and RecoveryPresentation by John Reardon

Reardon and Associates

Johns Hopkins University MSRE Advisory Council Member 2006 – 2011; Guest Lecturer Corporate Real Estate & Capital Movements Worldwide – The New Evolving Global Community 06-Present

30 yrs. Economic Development Professional at CEO/COO levels for Local, State, National and Global Programs including (2) state level cabinet secretary positions

COO for Prestigious IDRC/CoreNet Global and Holding Company COO for Facchina Development LLC Resides in Colorado

IDRC/CoreNet Global AssnA Global Learning Organization

www.corenetglobal.org

• 7000 Corporate Real Estate Executives Worldwide

– Members In 27 Countries on five continents Overseeing 40 Billion sf of facilities worldwide– The Average Corporate member has a minimum of 1.6 Billion USD in Assets with

annual sales exceeding 1 Billion USD per year– Individual Corporate members employed from 5000 to 400,000 workers worldwide and undertake

on average 200 real estate transactions each year– Largest number of TransNational Corporate (TNC) members - TNCs 69 million employees worldwide– 2006 TNCs reached $31 Trillion USD in Sales Worldwide - 57% of the Worlds’ GDP – 70% of Global

Growth

• CoreNet Global As A CRE Worldwide Think Tank

– Operates full time offices in the United States, Europe, Asia, Australia and the Americas. The World Wide Global Offices are headquartered in Atlanta Georgia.

– Manages active Corporate Real Estate Research on five continents and with members in 27 countries working with senior level corporate executives, governments and key universities within each region.

– Provides professional training to senior executives of corporate real estate departments, service industry support firms and not for profit public facilitators of the industry groups.

FACCHINA FOUNDED IN 1989In a Maryland/D.C. Garage

Construction and Development – The Pentagon, Dulles, National Harbor, Corporate, Science & Technology Parks

FacchinaG R O U P O F C O M PA N I E S , L . L . C .

Construction and Development – The Pentagon, Dulles, National Harbor, Corporate, Science & Technology Parks

FacchinaG R O U P O F C O M PA N I E S , L . L . C .

Partners COPTHINES, TURNBERRY..

One man who worked for Pirelli Construction Co left at age 42 to start his own firm in his garage. Joined by five others they built a $450 million/yr operations over twenty years

S.E. U.S., Florida & Miami

Washington D.C. Metro

www.Facchina.com


This generation of real estate professionals will be highly qualified thinking professionals that, not only advance best practices

in the traditional real estate development process, but also are capable of transforming real estate into a value added platform for human creativity and functionality in the context of the 21st century

global knowledge society.

The New Global Community Networked – Sharing Ideas – Resources - Wealth – Knowledge and Wellbeing

A World Community Greater Than Any That Came Before It…

John Reardon

GLOBAL MSRE


THE NEW WORLD ORDER Organized or the Wild, Wild West

The New Global Community

• The New World Order

• $Trillions in the Balance

• Billions of People

• The Earth & The Environment• Health Care• Housing & Services• Culture Richness & Human Rights• Resources• Knowledge & Creating • Governance

BASEDON REAL LIFE

…….So How Is It Going So Far….???

This Is A Race


The Creation of A Global CommunityPlanet Earth

Core Foundation Items• Land• Natural Resources• Livability• People• Government• Laws & Regulations

Enabling Infrastructure• Transportation• Food & Shelter• Health & Education• Communication• Financial System• Business Products &

Services

Structures and Society Moving Towards a Global Community As a Tapestry of People, Cultures

and Opportunities Yet To Be Fully Realized

Our Focus Today


THE GLOBAL COMMUNITY EVOLVINGSETTING THE FRAMEWORK IN PLACE

• 1990’s Global Transportation – 24hrs Anywhere FedX UPS• 1990’s Global DOT COMS – Customers Worldwide in 48 Hrs• 1990’s Global Corporations – Begin Transition to TNCs 70% of W Growth• 2000’s Global Financing – Leveraging Cross Borders Value Creation….• 2000’s Global Cities - 21st Century City -Nations – Now 69% World GDP• 2000’s Global Communications - Social Networks – Without Borders• 2020’s Global Governments – Sub Global Regions, GTax, G Regs….

A NEW WORLD COMMUNITYTHE CURRENT FRONTIER

Handy Curve – Each New Idea Creates Change and Change Brings New Ideas, Some Good and Some Bad

Green indicates processes and structures going in place

HANDY CURVE


Key Areas To Watch

1. Inflation

TNCs – Up to 70% of Past Global Growth 69 million employees - 8% average Growth

even during downturn (acquisitions/Mergers)

Public DebtWho’s In Trouble Brown/Tan Areas

Country Debt Reduction Required By IMF to Stabilize Global Financial Crises & Bring Sovereign Expenditures into Compliance

2. Public Debt

Current account imbalances (1997–2013)

3. Business - Jobs & Revenues

4. WGDP Income

NEW VERY IMPORTANT ITEM

$84.97 trillion Global GDP (12)


“The World RECESSION STATUS “Moody’s Analytics

2011

http://www.economy.com/dismal/map/default.asp

2008

2013

You can use this site to look up individual country Projections


GLOBAL PUBLIC SOVERIEGN DEBT Sovereigns accounted for nearly 80% of net new borrowing, or $4.4 trillion, in 2010 – Mckinsey

IMF HAS DEFINED TO WHAT EXTENT EACH COUNTRY MUST BRING THEIR DEBT INTO COMPLIANCE

…..


GLOBAL SOVEREIGN DEBT BALLONS INDIVIDUAL COUNTRY STATUS

IMF 2012 Report Table Change in 2013 to % of GDP rather than real amounts


New Sovereign Debt and Corporate Borrowing Covers $27 Trillion in Recession Losses – Now Will The Growth Engine Restart or Will

The Recession Deepen Under New Debt?“Without The Sovereign Debt the World Financial Asset Values Would Be At the

2006 Levels ….

Global financial assets, including India's, Projected to be worth $317 trillion by 2020: McKinsey

July 30, 2011:The stock of all debt and equityacross the globe increased by 5% in 2010 to$212 trillion, surpassing its previous peak of$202 trillion in 2007 before the Recession andup from $175 Trillion in 2008, According toMcKinsey Global Institute. Half of the growthcame from rising stock markets, which accountfor a quarter of all financial assets. Global debtincreased by 3% to $158 trillion, reaching266% of GDP. On-balance-sheet lending inChina added $1.2 trillion to the debt stock, andits share of non-securitized loans now exceedsAmerica's or Japan's. China also led the way ininitial public offerings, with 45% of the total.

Further fiscal deterioration in therich world meant that global government debtincreased to $41 trillion, equivalent to 69% ofGDP among the 79 countries covered in thereport. $212 Trillion Value – Debt of $158Trillion = $54 Trillion Net Value of WorldsAssets

2006


• World Reaches $212 Trillion USD In Financial Asset up from||$197 Trillion before Crash…..

• World Gross Domestic Product Reached USD $54.62 Trillion in (07) , $69.97 Trillion in (10 )and $84.97 Trillion in (12) but Take Out New Sovereign Debt and the numbers are quite different.

• World Average Value Gain Thru 2006 - $7 Trillion USD/Yr (World Float to reinvest globally) – The Gain Skyrockets In 2007 To - $19 Trillion/Yr just before the crash - World Value Gain in 2010 - $10 Trillion USD with public debt injection but % annual growth shrinking since 2010 and on its current path will hit “0%” in 3 yrs and go negative.

• 2000 – 2010 On Average 40% of The World’s New Value Float was Invested In United States, 20% in United Kingdom 6% in Emerging Economies. 2011 – 2012 This Trend Continues however shifts Heavily to Key Global Cities Investment Focus in Key Countries 2011 – 2015, London, NY,…see slide #30 the New City Nations

• Game Changers IMF Sets Rules for Countries to Cut Sovereign Debt Holdings…outside their Countries

• Safe Money Moving Out of Bonds/Treasuries To Real Estate even empty R.E. in the Cities

• TNCs now 57% of the World GDP continue investing in Emerging Markets and Cross Borders government partnerships.

• SWF _ Sovereign Wealth Funds for 2013 reported $5.8 Trillion in funds. in 2007 the SW Funds reflected over $9 trillion in total member funds but as reporting was adjusted the list settled around $5 trillion plus. The Focus of those reported has been financial institutions,real estate and global infrastructure. www.swfinstitute.org/tag/real-estate/

•

KEY POINTS RECAP

Lets Look At The TNCs & Then Capital to The Cities

IMF Sets New Rules , 50% U.S. Debt held outside US. Impacted

If Global Governments are going to hold others Sovereign debt there are new rules..

U.S. Will need to Cut Debt and Reduce QEs to meet IMF Guidance


WORLD GDP REACHES USD $ 84.97 TRILLION But Annual Rate of Growth Continues To Decline

http://chartsbin.com/view/7398

World GDP Projected Growth rates 2013 – 2020

Interactive Maps & charts for Countries

2013 Country GDP Growth Rate IMF – Link for Individual Countries on Map

World Overall GDP Growth Rate 2000– 2013 dropping Economist

Note dramatic up ticks in GDP Rate 2009, 2010 from New Sovereign Debt injection but slowly declining down from there

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx

Link

Next 7 yrs

Why PeopleAre Still Worried

Sovereign Debt Ejected in Systems

http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate


GLOBAL INFLATION THREAT

CPI

FOOD

Fuel

GlobalVulnerability

2010

2013


WORLD INFLATION RATES 2013


IMF 2011 - Reports The Top 100 MNC/TNC Sales Reach $ 28 Trillion with 69 million Employees and a 2011 Growth rate of 8% or 33.4% of $71.83 Trillion Global GDP for 2011

TNCs were just 11% of world GDP of $37.7 Trillion in 2001, by 2003 with $17.5 Trillion revenues they reached 42% of the WGDP of $40.9 Trillion. Today with the WGDP at $84.97 Trillion in 2012 the World’s

Top 2000 firms Generated $38 trillion in Revenues (Forbes)/44.7% of the WGDP

The Private Global Wave - TNCs put their money to work

– First Positioning for sales and production costs

– Second Round Re-Investing In Country “Not By Choice by Country Rules”

– Third Round Staying Off Shore Penetrating Emerging Markets JVs and Acquisitions

• 2011 – 2012 Now Re-Positioning - Coming Home, Consolidating Gains – At the same time expanding New Emerging Markets Expansions

2012 TNCs continued to expand their production abroad in response to the rise in market opportunities in emerging markets. Globally, foreign affiliates accounted for 69 million jobs in 2011, with an 8 per cent growth in jobs over the previous year. This stands in stark contrast to the 2 per cent increase in employment projected globally for 2011 (ILO, 2012). Now driven by EM JVs and less with mergers and acquisitions - UN 2012 Report

http://www.economist.com/blogs/graphicdetail/2012/07/focus-1


TNC

CORPORATIONS EVOLVING INTO TNC GLOBAL MODEL

New Mergers Acquisition &Localized JVs

2015

CoreNet Global - IDRC: Corporate Members Own and Lease 40 Billion SF Worldwide

Now Lets Look At The SWF Next…..


TNC LARGEST COMPANIES IN WORLD2012 Top 100 Non-Financial TNC, & Top Financial TNCs Reports

http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx

2006 – See 2012 Reports Link at Top for TNC changes Post Recession


Sovereign Wealth FundsSWF INVESTMENTSFOCUS 2012 - 2013

2012

2013

Now Lets Look At Pension & Equity Funds Next…


EQUITY FUNDS INCREASING 2011 – 2012 INVESTMENTS IN REAL ESTATE

October 15, 2012 – Pensions & Investments

Boosted by new acquisitions and property appreciation,the top real estate money managers' total worldwideassets under management increased 11.7% to $811billion in the year ended June 30, 3011 according toPensions & Investments' annual survey of the largestreal estate managers.

Real estate assets managed for U.S. institutional tax-exempt investors grew 8.9% to $377 billion, while realestate equity managed for those investors rose 7.3% to$293.4 billion.

19,000 Real Estate ProfessionalsMIPIM 2012 Report

The 2012 survey of 50 professionalinstitutional property investors mainlypension funds and insurers by GermanBased VERIANOS Found some NewTrend changes in the real estateinvestment vehicles being used. Theirfindings were similar to changes foundin many 2012 surveys and reports

Top 200 funds; assets are in billions for years ended Sept. 30, 2011http://www.pionline.com/specialreports/plan-sponsors/20120206?view=rankings

http://www.mipim.com/RM/RM_MIPIM_v2/documents/pdf/mipim/mipim2012-re-invest-thought-starter.pdf


GLOBAL FINANCIAL ASSETSNext Sovereign Wealth Funds As Players

SWF $5 Trillion - The Shadow Wave of Government Capital -The Sovereign Wealth Funds become Players. The First Wave -Strategic Positioning thru cross border investments – Natural Resources – Global Transportation Ports – Global Production –Secured Debt Instruments, Second Wave -Energy/ Commodities and Equities, Third Wave – To Be Discussed


The Focus of R.E. Capital – 2012/20152013 R.E. Volume Record set to exceed US$500 billion with2014 estimated to add another 10% GrowthAfter months of speculation regarding the end of quantitative easing inthe United States, the lack of action has provided further impetus forcommercial transactional volumes. Third quarter results are 16%ahead of the second quarter, and year-to-date activity is 21% up onthis time last year (US$366 billion v US$301 billion). While we don'tnecessarily expect Q4 2013 to match the exceptional final quarter of2012 (at US$163 billion), We are confident that there is sufficientactivity and deals in the pipeline for the full-year total to surpassUS$500 billion (est 25% in U.S. market) Transaction volumes havebeen robust overall in offices, retail and industrial real estate in majorglobal markets. Investors have been placing capital in the major citiesin these safer markets. These larger markets have more liquidity andlower risks….and more transparency than emerging markets and nonglobal cities. JLL 2012 and 2013 4th Quarter Global R.E. Report

Close 2013


The GLOBAL 21st Century Cities Receiving Investment Focus


GLOBAL COMMERCIAL REAL ESTATE 2014 Report

Shortages of quality space, but high structuralvacancy

The global office vacancy rate (across 98 markets) edgeddown in Q3 to 13.2%, having fluctuated within the 13.0-13.5% range for the last two years. Persistently highstructural vacancy in the advanced markets, ascorporates shed excess space, is preventing vacanciesfrom declining at a rate that would be typical at this pointin the cycle. Despite high vacancy, shortages of high-quality space will be an increasing feature of manymarkets over the coming year, with new constructionremaining well below the historic average.


Out Of The Global Recession Comes ChangeNew Interconnected Global Systems in Information transparency, governments, corporations and business, capital and capital flows, population growth - migration and wellbeing, and new centralized global guidelines for individual Country governments to create stability and sustainability

A New paradigm added to the mix The advancements of the social networks which bring change, promote views, sell services and products and affects election outcomes. This new paradigm like the Dot coms before them has far reaching impacts as they evolve shaping a social global community beyond borders and governments.

The World Comes Apart and Together At The Same TimeMoney Flows To Global Cities To Avoid Risk continues, Sovereign Debt continues to Balloons To Cover Economic Losses, and The Evolving Global Community Continues To Advance The New World Order in Global Structures Even In The Downturn…What is new in Real Estate “See Global but Act Local”

“ In Both Success and Failure New Opportunities Reside”

The New Global Community Networked – Sharing Ideas – Resources - Wealth – Knowledge and Wellbeing

A World Community Greater Than Any That Came Before It…

John Reardon

2013


Is The Current Economy Reflective of A Tsunami Building a 2nd Waveor Is There New Opportunity & Can The Risk Be Managed

Do We Have a Choice

The New Global Model Is Evolving – The 20% Rule Will Survives


THINGS TO WATCH2013 –2015

• There is Always (3) Economies in play at a real estate location; – The Local economy driven by vacancies, pricing and local supply and demand, – The Regional/Nat’l economy driven by policies, capital flows and competitive growth initiatives, – The Global economy which can create unforeseen waves of growth or loss of growth.

Current R.E. Drivers - Flight To Safety - Capital and People creating momentum in local and regional markets. Growth in key 1st Tier and some 2nd Tier Global Cities. Capital Coming out of Bonds and Treasuries as well,,,Watch and Track

• Sovereign Debt: Sovereign Debt and How It Will Be Paid For or Forgiven - Close In $49 Trillion –IMF requirements for refunding offshore debt placement…U.S. to cut Budget expenditures by 10% to get in line with global stability goals. See IMF 2012 Report

• TNCs: Growth of the TransNational Corporations (TNC) As Global Entities - Annual Revenues $38Trillion – 3000 firms with the large core being U.S. firms or their operating units. Growing at 8%+/yr.

• SWF: Growth of the Sovereign Wealth Funds As Global Game Changers - Current $5 Trillion • World Players Holding debt instruments public and private and major global natural resource

positions that can drive the direction of political and economic change..”The New World Order”


Real Estate Is Simple - RightPlay To Your Strengths – Create Value,

Manage risk

CAPITAL IN

VALUE ADDED

VALUE LOST

CAPITAL Out

YOU

You & Your Investors


“WHO ARE YOU - THE CHOSEN ONES”MSRE – Global Real Estate

• Real estate development is a process requiringfuture professionals to be trained from diversedisciplinary perspectives in order to takeleadership positions in the industry. ,PPOW!!

• The interdisciplinary nature of the MSRErequires the thinking of an MBA, creativefinancial models of a world banker, a reserve ofattorneys and the knowledge of the lawtempered by the concepts of realizing a socialvision reflected in city and regional planningthat when designed by an architecture can bebuilt, and the economics are profitable undergood management practices….ZZZZZAP!!

• The MSRE program focuses on the “masterbuilder” concept, with the methodology thatpromotes an entire vision for a communitythrough sustainable economic and livabledesigns, applying sustainable legal financingmethods; creating, building and maintainingplace-making and healthy Livable communities.AAAAAMEN!!.

MSRE Students As James Graaskamp, said … Real estate should be taught as a process of dynamic interactionsrather than functional and historical facts… The results should be a real estate entrepreneur...andthat goes triple for this current market.

YOU


Lets Get Started

Who’sThe Risk Management

HeroI’ll Get It

!!!!!

OurEQUITY

Where Do We Invest Our Capital & That of Our Clients !!!!!

You & Your Clients

Sovereign Debt Impacts

InflationImpacts TNC Corporate

Impacts

Transparency By

Governments

What Is Our Exit Strategy


Where Will You Manage Your GLOBAL INVESTMENT FOCUS?

MSRE Exercise

Tweaking Your Position

Going For The Gold

Important The Handy Curve – Each New Idea Creates Change and Change Brings New Ideas, Some Good and Some Bad ……

• LOOKING AT IN COUNTRY –FOR OPPORTUNITIES

• LOOKING AT THE COASTALS –FOR OPPORTUNITIES

• LOOKING AT GLOBAL CITIES OR EMERGING FUTURE MARKETS

– Existing Economies– New Future Economies– MSRE Project Focus

• What does opportunity look like and can you finance it and more importantly can you make money on it and can you get it back home?

See You In The Market Place…JJReardon


• United Nation – World Investment Report - Transnational Corporations & Transnational Investments General UN Library All Reports: http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx

• International Monetary Fund – World Economic Outlook & Financial Stability ReportsWorldwide Capital, Debt, GDP and Economic Performance www.imf.org/external/pubs/ft/fmu/eng/2012/02/index.htm

World Economic Forum - The Global Competitiveness Report 2011-2012Competitiveness of Individual countries - Report on Future Global Financial Systemshttp://www.weforum.org/issues/global-competitivenesswww.weforum.org/en/initiatives/Scenarios/GlobalFinancialSystem/index.htm

• Global Property Guide – Individual Country Current Real Estate Activity and StatisticsLocal RE Activity, Cost of RE Transactions, Values and Projected Trends 1 – 10 yrs Globallywww.globalpropertyguide.com

• Sovereign Wealth Fund InstituteTM – SWF Annual 2012 Investment ReportIndividual SWFs, Location, Size, Portfolio and Policieswww.swfinstitute.org http://www.swfinstitute.org/wp-content/uploads/2012/04/SWF-asset-allocation-2012sample_1.pdf

• Global Recession and Recovery - Wealth – Credit Suisse 2012 Report https://infocus.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=368967&lang=EN

• McKinsey Report on Global Cities -http://www.mckinsey.com/insights/mgi/research/urbanization/urban_world_cities_and_the_rise_of_the_consuming_class

• CoreNet Global – Annual Corporate Investments and strategies www.corenetglobal.org

• Largest Real Estate Investment Funds – http://www.pionline.com/specialreports/plan-sponsors/20120206?view=rankings

CHINA-http://www.forbes.com/2010/04/20/oil-energy-minerals-business-global-2000-10-china-investment-tracker.html

http://www.cnbc.com/id/100349194/Chinese_Investment_in_US_May_Break_Record_in_2013?goback=%2Egde_1036337_member_200726585

KEY GLOBAL RESEARCH RESOURCES


CONTACT INFORMATION

John ReardonReardon and Associateswww.Reardon-Associates.com

LinkedIn: John Reardonwww.linkedin.com/pub/john-reardon/13/a19/366

1112 Oakridge Dr., Suite 104 # 218Fort Collins, Colorado 80525Tel: 240-320-2415

Academic Personal Contact email:[email protected]/Fort Collins Colorado

Bio:

Nevada Cabinet Secretary – CEO – State Economic Development Commission

Wyoming Cabinet Secretary – CEO –State Economic Development Council

President/CEO Denver World Trade Center

Global Director/COO – Int’l Development Research Council - CoreNet Global

Johns Hopkins University - Carey Business School MSRE Advisory Council/ Guest Lecturer

Georgetown UniversityMSRE Corporate Real Estate Advisor / Guest Lecturer

Colorado State University – Executive MBA Program Director

Adjunct and Guest Faculty on Global Real Estate and Capital Movements Worldwide

Over 4 decades of Business, Academic and Economic Development Work Throughout the U.S. and the World

JHU 2014 Global Economy-LR

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