In the U.S.:
- Louis President Bullard, a voting member, stated that the FOMC needs to tread carefully on policy. Mr. Bullard also stated that the Fed might miss its 2% inflation target.
The Washington Post reported that Amazon is reconsidering building one of its headquarters in New York City, citing local opposition. Both Office and Apartment REITs with New York City exposure are likely to be negatively impacted if Amazon scraps its plans.
- The trade talks with the US seem to have taken a step backward as it was announced that President Xi Jinping and US President Trump would not meet till after the early March trade deadline. The WSJ reported that US negotiators lacked the usual essentials for a deal and that both sides had not yet drafted accords.
- Following reports of flawed polling data regarding wage growth, the labor ministry is expected to recalculate real wage data from January to November 2018. According to officials close to the labor ministry, the recalculation is expected to show that wages fell on average around 0.5% from the previous year, further delaying the likelihood that inflation will hit the 2% target.
Japanese tech giant NTT Data has sold two of its American properties to California-based private investment company GI Partners. The first property is a ~1M sq. ft. Plano, TX, campus and the second is a 180K sq. ft. Quincy, WA property with 14MW of power capacity. Both properties have been leased back to NTT Data on a long term basis.
- UK PM May and EU leaders have agreed to reopen talks to resolve the Brexit impasse. However, EU leaders rejected attempts to renegotiate the backstop and instead focused talks on the future relationship.
- The US-EU trade truce struck last summer, which has helped keep punitive tariffs at bay, is at risk of unraveling due to lack of progress. To complicate matters, the US Commerce Department is set to release a report on the national-security implications of auto imports and is considering its EU auto tariff options.
Pan European shopping center operator Klepierre reported its full year 2018 results this week with Net Current Cash Flow of €2.65/sh coming in slightly better than expected. The company also provided its initial outlook for 2019 with Net Current Cash Flow expected to be in the range of €2.72/sh – €2.75/sh, roughly in line with expectations. While retailers continue to face a more challenging operating environment and shopping center property companies have been relative underperformers in the listed property market over the past year, Klepierre’s results did manage to show some resiliency in a tough market. Like-for-like rental growth was +3.4% for the year, sales growth was slightly positive at +0.9%, EPRA vacancy was stable at 3.2% and leasing for the year had positive reversions of 11.1%. The portfolio valuation increased 1.5% for the year, however, it declined 0.2% over the 2H18 as valuation yields experienced some expansion. Disposals for the year totaled €539.2M at Klepierre’s share and were completed slightly above appraised values with an average yield of 5.7%.
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.