In the U.S.:
- President Trump announced that travel from Europe to the US would be suspended for 30 days starting Friday. The administration later clarified that this was for foreign nationals traveling to the US and that the UK was exempt from this suspension.
- On Friday, President Trump declared a state of emergency, releasing approximately $50B in additional funding to combat the coronavirus. In the same address, Mr. Trump stated that new testing methods would be implemented to rapidly increase the access and speed of test results.
American Campus Communities (ACC) provided an updated regarding the impact of the coronavirus as some Universities shutter campuses and student housing for an online curriculum to stem the spread of the virus among students and faculty. ACC stated that they had not yet seen any definitive impacts at the universities they serve and that they had assembled a task force charged with monitoring the evolving situation and coordinating ACC’s actions and communications with employees, residents and university partners.
- The BOJ announced it would buy ¥200B ($1.9B) of JGBs with maturities of five to ten years. The central bank was not expected to further cut rates since they were already negative.
Reuters reported that Blackstone is in exclusive talks to take property developer, SOHO China private in a $4 billion deal. The deal would be one of Blackstone’s largest in the region to date.
- The PBOC announced (RRR) cuts that would release 550 billion yuan ($79B) of liquidity. The move was expected as central banks around the globe announce similar measures to combat the economic effect of the ongoing coronavirus pandemic.
- The Italian industry minister said Rome would approve measures worth ~€10B and the deputy economy minister stated that mortgage payments would be suspended in order to combat the coronavirus outbreak. Italy was forced to implement aggressive quarantine measures this week as the outbreak continued to grow.
- Russia dismissed Saudi Arabia’s proposed oil production cuts setting up a price war between the nations. The move sent oil prices tanking and was widely viewed as a method to cripple U.S. shale-oil producers.
- The BoE announced an emergency rate cut of 50 bps to 0.25%, reduced counter-cyclical capital buffer for banks by 1% to 0% and announced new four-year lending scheme for SMEs. The BoE said measures will help to support firms and people and prevent temporary disruption from coronavirus having a longer-lasting impact.
German residential property company LEG Immobilien reported its FY19 results this week with FFO of €340 mn (€5.27/sh) that was largely in line with expectations. Full year guidance for 2020 remained unchanged at €370 mn – €380 mn (€5.43/sh at the MP). Amidst a volatile and uncertain macro-economic environment due to growing worries over the coronavirus, German residential may offer investors some stability given its defensive characteristics and the fundament shortage of rental housing in Germany. Like-for-like rental growth was +2.9% in 2019 with guidance for 2020 at +2.8%. The EPRA vacancy rate ended the year at 3.0% The portfolio valuation increased 8.3% YOY, leaving the year end LTV at 38%. Management indicated that it has secured the acquisition of 1,500 units since the start of the year with a further 1,200 units at an advanced stage of negotiations, providing them with a good start to their full year goal of 7,000 units.
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.