In the U.S.:
- December headline CPI increased 0.1% m/m versus 0.4% m/m increase in November. The report pushed the y/y rate of growth down to 2.1% from 2.2%.
- December headline retail sales increased 0.4% m/m versus an upwardly revised 0.9% gain in November. Despite the headline miss, the result was consistent with a fairly upbeat holiday shopping season.
Industrial Logistics Properties Trust (ILPT) priced 20M shares at $24/share, at the low end of the offering range, raising gross proceeds of $480M. Industrial Logistics Properties Trust owns 226 industrial properties in Hawaii and 40 industrial properties located in 24 other states. Shares at Friday’s close were lower at $23.35.
- The December trade balance was a strong $54.69B versus November’s $40.2B reading. The surplus was mainly led by a 13.2% drop in imports, mainly from Japan and the EU.
- The BOJ decided that it would trim purchases of long-term Japanese government bonds with maturities of 10 to 25 years by ¥10 billion. The move was seen as significant as foreign investors hold 44% of the outstanding Treasury bonds and analysts see the bond purchases by the ECB and the BOJ as factors driving overseas demand for higher-yielding Treasury debt.
The South China Morning Post reported that Sun Hung Kai Properties, Hong Kong’s largest developer by market value, has called on the Hong Kong Mortgage Corporation to ease its lending scheme for mass market flats. The announcement came two days after the city’s financial secretary indicated that a relaxation was being considered by the government.
- Angela Merkel’s conservative bloc and its rivals, the Social Democratic Party (SPD), advanced exploratory talks on forming a new “grand coalition”, which would put an end to the political gridlock in Germany. The agreed blueprint must be approved by the SPD during the party’s congress on January 21.
- Takeaways from the ECB minutes highlighted that the ECB could consider a gradual shift in its policy guidance from early 2018 if the economic expansion continued and inflation picked up. Following the minutes, the Eurozone interest rate market was pricing in a 70% risk of a rate hike in December 2018.
U.K. student housing operator Unite Group provided and interim update on it operations this week. Occupancy for the current 2017/18 academic year is at 99%, of which 59% are university nomination agreements. The preleasing cycle for the 2018/19 academic year is well underway with 66% of all rooms already leased compared to 64% at the same time last year. The company commented that the current level of preleasing for the 2018/19 year is supportive of its outlook for 3.0% – 3.5% rental growth on a like-for-like basis. Unite also provided a quarterly valuation update for the U.K. Student Accommodation Fund (USAF) and London Student Accommodation Fund JV (LSAV). The property portfolio value increased 5.6% for USAF and +9.2% for LSAV on a like-for-like basis y/y.
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.