In the U.S.:
- The U.S. and Mexico reached new trade agreement that would scrap the NAFTA name and call it the US-Mexico trade agreement. Although Mexican President Enrique Peña Nieto urged the U.S. to work on a trade deal with Canada, the White House and Canadian leaders were unable to come to an agreement.
Brookfield Property Partners LP (BPY) announced the completion of its acquisition of General Growth Properties (GGP). In connection with the closing, Brookfield Property REIT (BPR) was created as a public security that is intended to offer economic equivalence to an investment in BPY.
- Following a week of little progress on the trade front, S. President Donald Trump has stated that he wants to move forward with the next round of tariffs on $200B of Chinese imports. The move was widely expected and China’s foreign ministry responded by saying putting pressure on Beijing over trade will not work.
- August official manufacturing PMI was 51.3 versus July’s 51.2 reading. The main driver was production narrowly outweighing a decline in demand for new orders.
- July unemployment rate was 2.5% versus June’s 2.4% reading. Details indicated a moderate bounce in labor force participation
- July industrial production declined 0.1% m/m versus June’s 1.8% drop. The weakness was led by transportation equipment, general purpose manufacturing equipment, and iron & steel.
CapitaLand Ltd. acquired a land plot of approx.60K sq. m in Ho Chi Minh City, Vietnam for roughly S$81.4M. CapitaLand stated that they will carry out a residential development on the land and highlighted that the acquisition was consistent with CapitaLand’s strategy to diversify its real estate portfolio and strengthen its foothold in Vietnam.
- Britain and the EU have agreed to push back the hard deadline for a Brexit deal to mid-November. Prime Minister Theresa May’s office is said to be concerned that if the deal is voted down then MPs in Parliament could amend the legislation to approve the Chequers deal to keep Britain in the EU.
- La Stampa reported that Italian Finance Minister Tria will target a minimum deficit-to-GDP of 1.5% for 2019, representing an additional €10B of spending. The EU commission for economic affairs warned that the 3% deficit limit was “not a target but a roof”.
- An EU offer to lower car tariffs to zero was turned down by U.S. President Donald Trump. Trump stated that “It’s not good enough” when speaking to Bloomberg News.
Unibail-Rodamco-Westfield (URW) reported half year results for the six months ended June 30, 2018 this week, the first reported results for URW since Unibail-Rodamco’s acquisition of Westfield Corporation was completed in early June of this year to create URW. URW’s portfolio going forward is now approximately 78% in the UK and Continental Europe and 22% in the US. Recurring EPS grew by 7.3% YOY to €6.61/sh, which was in line with expectations. Net Rental Income grew by 4.7% overall on a like-for-like basis (i.e. excluding Westfield) versus 1H17 with the Shopping Center segment +4.3%, Offices +14.4% and the Convention & Exhibition segment -1.3%. EPRA NAV increased 2.4% to €216.10/sh for the six month period since 12/31/17. While various key operating metrics in Europe looked reasonably solid for the period, the more limited metrics provided for the U.S. shopping centers acquired in the Westfield transactions appeared a bit softer than expectations. Analysts and investors were somewhat disappointed by the limited recurring EPS guidance update provided by management that essentially left its original 2018 EPS guidance of €12.75/sh – €12.90/sh unchanged despite the fact that had excluded the impact of the pending Westfield acquisition.
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.