Fair enough, but once again I don't consider either of them to be much of a concern in the scheme of things. Management have demonstrated over many years that they are excellent at investing in office space so it is unlikely that they are all of a sudden signing leases for offices that clients don't want or spending too much on them. I would think that instead, the lower occupancy rate might reflect one of the following two things.
1) A jump in the number of like-for-like offices since new offices are included after 1 year whereas they take many years to reach "true" maturity. This effect is particularly pronounced with the very large floors that have been opened recently.
2) Cyclical factors related to the drop in resource prices and the weakening Chinese economy. Management mention that UAE, China, Australia and Singapore are the culprits so this ties in nicely.
I agree that long-term things look good and that is all I really care about. I accept that the business is cyclical but am not going to pretend I am capable of timing those cycles.
SRV Price at posting:
$7.09 Sentiment: Hold Disclosure: Held
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