In the U.S.:
- Headline July PPI was 0.2% versus June’s 0.1% reading. The continued weak inflation readings will raise the pressure on the Fed for additional rate cuts.
- In earnings, 447 companies in the S&P 500 Index have reported, 76.7% beat, 0.7% were in-line, and 22.6% missed estimates.
JBG Smith Properties (JBGS) announced the sale of 1600 K Street building in Washington DC for $43M. As of June 30, 2019, the 82K sq. ft. building was 92% leased to several tenants.
In REIT earnings, 105 companies in the Wilshire U.S. REIT Index have reported, 65 beat, 2 were in-line, and 38 missed estimates.
- July PPI fell 0.3% y/y versus June’s flat reading. The decrease, driven by a sharper decrease in production materials, marked the first decrease since August 2016.
- Hopes of a trade deal took a step backwards this week, with US President Trump stating that the US is not ready to make a deal with China, and that the US may or may not go ahead with expected September trade meeting.
- Q2 GDP expanded 1.8% q/q annualized versus Q1’s revised 2.8% q/q reading. The better than expected reading, with consensus estimates only calling for 0.5% growth, benefited from lower than expected drag from external demand and firmer domestic demand.
City Developments bought 62.5% stake from investors of Profit Participation Securities 1 structure for S$393 million to get full control of W Singapore and Quayside Isle. City Developments plans to renovate some portions of the public area and some of the food and beverage outlets.
- UK preliminary Q2 GDP was down 0.2% y/y versus Q1’s 0.5% increase. Breakdown showed bigger than expected fall construction output, and business investment.
- Italy’s leader of the League Party, Matteo Salvini, called for a snap election as confidence for the ruling Five Star Movement has waned following the failed attempt to derail plans for a high speed rail link between Turin and the French city of Lyon. Mr. Salvini also is running on proposed tax cuts which, if executed, may derail EU support.
London office specialist Derwent London (DLN) reported its half year results this week for the six-months ended June 30. EPRA EPS of 51.34 pence/sh were down slightly due to disposals and higher EPS in 1H18 due to some nonrecurring property income. Like for like net rental income increased 5.2% YOY, while the overall vacancy rate in the portfolio stood at 1.6%. Despite the continuing saga and uncertainty surrounding Brexit, management noted continued good demand for their space as demonstrated by the portfolio performance. EPRA NAV ended the period at 3,852 pence/sh, an increase of +2.0% from December 31 and + 3.7% since a year ago. DLN has 790,000 sf of development in process in three projects that are 59% pre-let. The balance sheet is in sound position to meet future capital needs with a LTV of only 17.6% at quarter end.
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.