In the U.S.:
- Bloomberg reported Qassem Suleimani, general who led Iran Revolutionary Guards’ Quds force, was killed in a US airstrike near Baghdad international airport on Friday. Iranian leader Khamenei vowed ‘harsh retaliation.’ US strike comes after demonstrators attacked US embassy in Iraq last week, protesting earlier American airstrikes on Hezbollah militia bases.
Four Corners Property Trust announced the acquisition of five properties from Washington Prime Group for $8.6M. Four of the five properties are leased to the brand’s corporate entity in addition to a Taco Bell leased to a franchisee.
- December Caixin manufacturing PMI fell to 51.5 versus November’s 51.8 reading. New order growth fell to a three-month low, offsetting gains in production.
- As expected, the PBOC announced that it will cut required reserve ratios (RRR) for small and large banks by 50 bp, effective 6-Jan. The move ensures adequate liquidity before the Lunar New Year celebrations later this month.
- Leaders from Japan, China, and South Korea met last week in Chengdu to find common ground in ending some of the trade tensions in the region. Tensions remained high when Japan challenged China’s claims to the South China Sea.
Wharf Real Estate Investment Trust lost its luxury retail tenant, Louis Vuitton, in Causeway Bay Hong Kong following the company’s reluctance to lower its rent during the protests. Other Hong Kong REITs have been lowering rents to retail tenants as protests continue to disrupt sales.
- December Eurozone final manufacturing PMI was 46.3 versus the flash reading of 45.9. Both production and new orders continued to deteriorate in December.
News flow from European property companies was fairly limited in the final week of the year, but there were a few property transactions worth noting. Derwent London announced that it had agreed to sell its long leasehold interest in 40 Chanchery Lane to Deka Immobilien for £121.3 mn. The 103,700 sf London building was completed in 2015 with 100% of the office portion leased to Publicis Groupe until July 2035 with a tenant break option in July 2033. The sales price is 3.8% above June 2019 book value and represents a net yield to the buyer of 4.25%. Investments sales closings in London did appear to pick up in the weeks following the Conservative Party’s decisive victory in the UK’s December snap election. In another transaction of note, Intu Properties announced that it had agreed together with its JV partner (Canada Pension Plan Investment Board) has agreed to sell the Puerto Venecia Shopping Centre in Zaragoza, Spain for €475.3 mn. Puerto Venecia, which has partially opened with full completion expected in early 2020, is Spain’s largest retail and leisure destination with 2.2 mn sf of retail space, cinemas and restaurants. The price is 15% below the reported June 2019 book value, suggesting weakness in pricing for even the most prime of retail shopping centers in Spain.
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.