In the U.S.:
- As of midday Friday, the GOP’s tax overhaul seems to have the votes necessary to pass. Of note, Senator Bob Corker’s plan to include tax increases to offset the deficit impact was rejected, while a $10,000 deduction for state and local property taxes was added to the bill.
- Former Trump national security advisor, Michael Flynn, plead guilty to making false statements to the FBI about conversations he had with Russian ambassador Sergei Kislyak, and that he would cooperate fully with the investigation led by Special Counsel Robert Mueller. Of note, the court released statement named “senior transition officials” as part of Flynn’s communications with the Russian government, which contradicts the White House’s previous statements.
Alexandria Real Estate Equities Inc. (ARE) announced a stake in the Menlo Gateway project, a three-building 773K-square-foot office complex. Alexandria will spend $78M for an initial 18% stake with plans to grow that stake to 49% by Q1 2019.The offices are already 100% leased by Facebook.
- November PMIs unexpectedly rose to 51.8 versus October’s 51.6 reading. Economists widely expected a slowdown as the government cracked down on air pollution, corporate and financial-sector debt, and the property market.
- October core CPI was up 0.8% y/y versus October’s 0.7% y/y reading. CPI excluding fresh food and energy was unchanged at 0.2% y/y.
Link REIT announced that it would sell a portfolio of 17 Hong Kong shopping malls to a consortium of Gaw Capital Partners and Goldman Sachs for between HK$20B and HK$25B. Link stated that the sale represented a 52% premium to the appraised value of the 17 properties for a net disposal gain of HK$7.4B.
- November UK manufacturing PMI was 58.2 versus October’s upwardly revised 56.6 reading. November’s PMI marked the best manufacturing month in four years.
- The UK agreed to EU demands to fully honor its financial commitments. The move removed one of the biggest obstacles to the Brexit negotiations.
- The BOE stated that Britain’s biggest banks can handle a hard Brexit. The stress tests were conducted using a 33% drop in house prices, the doubling of unemployment, 4% interest rates and a 4.7% plunge in UK GDP, as the parameters for the test.
Shaftesbury, a London property specialist focused on retail and leisure within the West End, reported its 2017 full year results this week. Notwithstanding the ongoing uncertainty associated with Brexit negotiations and a more challenging retail environment, Shaftesbury’s results demonstrated the continued resilience of their unique blend of retail shops, restaurants, pubs, small office and residential holdings within London’s West End. Overall results were positive with management highlighting “healthy occupied demand and resilient West End economy”. EPRA EPS was 16.2 pence/sh (+15.7% YoY) and in line with estimates, while EPRA NAV came in at £9.52/sh (+7.2% YoY). The portfolio valuation was at £3.64B, an increase of 7% on a like-for-like basis. The total dividend for the year of 16.0 pence/sh represented a y/y increase of 7.2%. At period end, the LTV stood at 26.7% with a weighted average maturity of debt of 10.3 years and an average blended cost of 3.3%. Separately, Hong Kong Investor Samual Tak Lee’s holding in the company stood at ≈ 25% as of the most recent filings.
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.