In the U.S.:
- The Treasury Department noted that the final FY19 federal budget deficit came in at $984B, up ~26% y/y. The increased deficit was driven wider by higher spending on defense, debt, and healthcare.
- In earnings, 200 companies in the S&P 500 Index have reported, 80.9% beat, 0.5% were in-line, and 18.6% missed estimates.
Kilroy Realty (KRC) announced that it had executed a 12-year lease with Stripe, Inc. for approximately 421,000 square feet of space at Phase I of the company’s approximately 656,000 square foot South San Francisco development project. KRC acquired the approximately 40-acre, fully entitled, waterfront site in June of 2018 and started construction on the first of four phases in March 2019.
In REIT earnings, 23 companies in the Wilshire U.S. REIT Index have reported, 16 beat, and 7 missed estimates.
- A Reuters article highlighted that Beijing will request that the White House scrap plans to implement tariffs on $156B worth of Chinese goods, including cellphones, laptop computers and toys, on 15-Dec. The move comes as tensions soar due to a statement that US Vice President Mike Pence made, showing support for the Hong Kong protest.
- October preliminary manufacturing PMI was 48.5 versus September’s 48.9 reading. The lackluster result is putting pressure on Japan to improve the strained trade relationship with South Korea.
Sun Hung Kai Properties, which has been struggling lately due to the ongoing protests in Hong Kong, expects to sell 3,500 homes for HK$40b in 2019. The company plans to sell 10 projects in the fourth quarter.
- EU ambassadors meet to consider the UK request to delay Brexit voted by parliament earlier in the week. Bloomberg said UK PM Johnson’s announcement that he will push for 12-Dec election could delay decision until Monday or Tuesday.
- Eurozone October preliminary PMI data was unchanged from September at 45.7. The reading continued to show that the Eurozone was in a manufacturing downturn likely led by the ongoing trade war.
Gecina SA, which is focused on the Paris office and residential market, provided a business updated for the third quarter ending September 30th. Like-for-like gross rental income increased 2.4% for the period with both offices and traditional residential up by a similar amount. The company noted an improvement in the preleasing rate for the portion of its committed office pipeline scheduled to deliver in 2019 and 2020 with the pipeline low 64% preleased versus 50% at June 30th. Occupancy at the end of the period was 94.2% for office and 97.7% for traditional residential. Disposals completed or covered by preliminary agreements totaled €482 mn year-to-date, up slightly from €376 mn at the end of the second quarter. Gecina also reconfirmed its 2019 guidance for recurrent net income to be in the range of €5.80/sh – €5.85/sh. Separately, shopping center operator Unibail-Rodamco-Westfield took advantage of the favorable interest rate environment in Europe to place a 12-year €750 mn bond with a fixed coupon of 0.875%. Strong investor demand led them in increase the size of the offering from the initial €500 mn level that was announced.
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.