In the U.S.:

• As expected, the Fed left rates unchanged and struck a more dovish tone as it pivoted with an emphasis on patience, bigger balance sheet and normalization optionality.
• January nonfarm payrolls increased 304K versus December’s revised 222K reading. The strong result quelled fears regarding the effects of the government shutdown but also raised the likelihood that the Fed may stray from the dovish tone it took earlier in the week.

REIT Focus:

Rexford Industrial Realty, Inc. (REXR) announced the acquisition of the nine building Conejo Spectrum Business Park, located in Thousand Oaks, CA, for $106.3M. The complex is 72% leased and allows Rexford to tap into the San Fernando Valley and Ventura County population centers.

In China:

• January’s official manufacturing PMI was 49.5 versus December’s 49.4 reading. While the reading was better than expected, activity remained in contraction for second month.
• The trade talks seemed to go well in Washington this week. The Wall Street Journal reported that China offered modest concessions, including purchases of US farm and energy products and promised to invite more US capital into the manufacturing and financial-services sectors.

In Japan:

• January manufacturing PMI weakened to the 29-month low of 50.3 versus December’s 52.6 reading. Export orders fell sharply on weakened demand from China.

REIT Focus:

The Hong Kong Government rejected all nine tenders for the next non-industrial Kai Tak Site up for sale. Developers including Sun Hung Kai Properties, CK Asset, Sino Land and Wharf Real Estate all failed to snag the 9,480 sq. meter property, which was estimated to fetch HK$8.9B to HK$9.5B.

In Europe:

• As the chances of a no deal Brexit have started to rise, UK manufacturers have begun to stockpile supplies at a record pace and create contingency plans to mitigate any potential supply-chain disruptions.
• January Eurozone manufacturing PMI fell to 50.5 versus December’s 51.4 reading. The reading may force the ECB to rethink its tightening trajectory as the falling PMI figures are close to contractionary territory.

REIT Focus:

Vonovia, Germany’s largest listed residential landlord, announced plans this week to sell its ≈  4.7% stake in German peer Deutsche Wohnen via an accelerated book build at €41.50/sh. Vonovia accumulated the stake in late 2015/early 2016 at an average price of €24.10/sh. Vonovia made a hostile bid for Deutsche Wohnen in 2016 that was not successful. The sale puts an end to any potential speculation of another bid for Deutsche Wohnen. Vonovia indicated that it plans to use the proceeds from the sale to reduce leverage.

The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.