In the U.S.:
- The Fed left rates unchanged but struck a more dovish tone. The markets rallied as the tone signaled that there will be an accommodative stance going forward.
- Tensions between the US and Iran were escalated this week following the shooting down of a US reconnaissance drone by the Iranian Revolutionary Guard. US President Donald Trump was said to have called back a retaliatory strike and has not issued any statement on how the US plans to respond.
Corporate Office Properties Trust (OFC) announced the formation of a joint venture with Blackstone Real Estate Income Trust, Inc. to acquire seven of COPT’s existing, single-tenant, data center shell properties. The properties contain 1.2M square feet of warehouse space, for a total value of approximately $265M. COPT received $238.5M in proceeds and will retain a 10% stake in the joint venture.
- Both USTR Lighthizer and US Treasury Secretary Mnuchin are expected to meet Vice Premier Liu in Osaka as early as next Tuesday, ahead of the Trump-Xi meeting at the G20. However, it is expected that there will be no significant breakthrough in the trade talks as the underlying issues that caused the last talks to breakdown have not been resolved.
- June IHS Markit Flash Manufacturing PMI edged down to 49.5 versus May’s 49.8 reading. The falling PMI reading can be attributed to weak new orders as a result of the muted demand from China.
- As expected, the BOJ left policy unchanged. However, BOJ Governor Haruhiko Kuroda signaled readiness to ramp up stimulus if needed.
The WSJ reported that Chinese conglomerate Dalian Wanda Group is planning to list a real-estate business in Singapore. The deal could value the collection of properties at more than $1 billion.
- ECB President Mario Draghi stated that Europe’s central bank could cut interest rates again or conduct more asset purchases if inflation doesn’t meet its target. The statement sent global bond yields tumbling and may have factored into the Fed’s decision to strike a more dovish tone.
Safestore Holdings Plc, one of the UK’s largest self-storage operators, reported half year results this week for the six-months ended April 30, 2019 with Adjusted EPRA EPS increasing 7.1% YOY to 13.5 pence/sh. While Safestore is primarily a UK operator, they also have a sizable presence in the Paris metro (≈20%). Operational performance remained solid across its portfolio with like-for-like revenue +5.9% YOY or +6.1% on a Constant Exchange Rate (CER) basis. Performance was good in both the UK and Paris with like-for-like revenues +5.6% in the UK and +6.1% in Paris, both on a CER basis. Like-for-like EBITDA was +6.5% YOY, +6.7% on a CER basis. The balance sheet remains strong and flexible with an LTV of 31% at period end. Safestore’s shares are up over 20% year-to-date.
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.