In the U.S.:
- Headline April durable goods orders were down 2.1% m/m versus March’s revised 1.7% m/m increase. Analysts noted that the metric was particularly disappointing given that the reading was before the most recent US-China trade war tensions.
Alexander & Baldwin, Inc. (ALEX) completed a $90M off-market acquisition of the Queens’ MarketPlace, a grocery-anchored resort retail center in the Waikoloa Beach Resort on the island of Hawaii. The 135,000 square-foot center features retail, restaurant and office space along with amenities such as a three-screen luxury cinema, food court and event pavilion.
- The trade war continued this week with the US adding five additional Chinese companies to the blacklist in order to safeguard intellectual property. Although both sides seem to agree that talks are progressing, details have been light on how to move forward on the main barriers of a deal. Of note, President Xi, when speaking about the trade war, stated that his citizens should prepare for a long road ahead.
- May flash PMI fell to 49.6 versus April’s 50.2 reading. The drop in PMI was primarily due falling export orders caused by the ongoing China-US trade war.
Scentre Group announced that it has sold its 50% stake in Westfield Burwood to Perron Group for A$575M. The proceeds from the sale will be initially used to repay debt.
- EU flash manufacturing PMI fell to 47.7 versus April’s 47.9 reading. The drop in PMI was mainly attributed to a general slowdown in the region and lackluster data out of Germany.
- UK Prime Minister Theresa May will resign on June 7th following her latest defeat in Parliament. PM May emphasized that the only way through the Brexit stalemate was for both political sides to compromise.
London office specialist Great Portland Estates (GPOR) reported its second half and full year FY’2019 results this week. GPOR’s results continued to demonstrate resilience despite the ongoing uncertain political and economic climate associated with Brexit. Like-for-like Net Rental Income increased +3.2% for the year, while the portfolio valuation increased +0.2%. Leasing activity within GPOR’s portfolio remained healthy with period end EPRA vacancy of 4.8% and leasing in the period completed at rents +6.9% above March 2018 ERV (estimated rental value). The growth in ERV for the FY was +1.2%, +1.9% for office and -0.6% for retail. EPRA NAV at period end was £8.53/sh., an increase of +1.0% YOY. The balance sheet remains in solid position with a LTV of 8.7% at period end, providing significant capacity to complete its three on-site developments and opportunistically buyback shares pursuant to the £200M share repurchase program announced in November 2018. GPOR has bought back ≈ £74M shares to date under the program. Management commented that while political and possible economic turbulence could occur in the year ahead, they are well prepared and ready to exploit any market dislocation should it occur given a favorable long term view of the London market.
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.