In the U.S.:
- A Reuters poll showed that most economists expect the Fed to cut the fed funds rate by 25bp at the next FOMC meeting. Also, nearly 80% of over 60 economists said US-China trade relations would either worsen or stay the same by the end of next year.
- President Trump floated two financial reforms this week. The first was the idea of indexing capital gains to inflation and the second was to be a “very substantial” middle class tax cut. As usual, there was no concrete details surrounding these two ideas.
HCP, Inc. (HCP) announced the acquisition of 224K sq. ft. LEED Gold Laboratory building in West Cambridge for $332.5M. The building is 100% leased and the deal is set to close in December.
- Lot of trade war rhetoric this week with multiple reports of the possibility of the US agreeing to delay or even roll back some tariffs in exchange for some IP-related commitments and purchases of American farm products from Beijing. Although US President Donald Trump reiterated his preference for a complete deal, he left the door open to a partial deal.
- The Minister of the Environment, Yoshiaki Harada, told reporters that Tokyo Electric Power Company (TEPCO) will have to dump radioactive water from its crippled Fukushima nuclear power plants into the Pacific Ocean. The statement comes as Japan is running out of storage space for the contaminated water and has run out of options for how to dispose of it.
The occupancy rate of Sun Hung Kai Properties-owned hotels fell 30% to 50% due to the impact of the Hong Kong protests, Chairman Raymond Kwok says at post-earnings briefing. Chairman Kwok reiterated his firm belief that the government could restore order quickly.
- The ECB cut rates and announced a strong package of bond purchases to help spur on stagnating growth. President Mario Draghi emphasized fiscal policy would be the main tool going forward.
- July UK industrial production rose 0.10% m/m versus June’s 0.10% m/m decline. The reading beat the consensus estimates for a 0.30% m/m drop and helped quell fears the UK may slip into a recession in Q3.
Self-storage REIT Safestore Holdings provided a brief third quarter (May 1, 2019 – July 31, 2019) trading update earlier this week that continued to show evidence of good operational performance. Group like-for-like revenues increased 4.8% for the period on a constant exchange rate basis (CER). Like-for-like revenues increased 4.0% in the UK and 6.1% in the Paris metro. On a year-to-date basis, revenues have increased 5.3%. Closing occupancy increased 210 bps for the period on a like-for-like basis to 78.6%, while the average storage unit rate increased 1.6%. Safestore has continued to be opportunistic with external growth opportunities with a new joint venture announced in the period with Carlyle in which it will take a 20% interest in a portfolio of six self-storage facilities in the Netherlands that the JV is acquiring. While the Netherlands is a new market for Safestore, management has indicated that the UK and Paris will continue to be the major markets that it will continue to focus on. Safestore has been one of the top performing REITs in the listed market in Europe and is up over 27% 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.