In the U.S.:
- As expected, the US started to impose additional 25% tariffs on 279 Chinese import products worth $16B, which includes semiconductors, chemicals, and plastics. China quickly retaliated with its own new tariffs on $16B worth of imports from the US, including fuel, steel products, autos and medical equipment.
- Fed Chairman Jerome Powell stated that the current path of gradual rate hikes is likely appropriate if strong economic growth continues. He added that the economy is “strong” and can handle more normalization of policy.
Pebblebrook Hotel Trust (PEB) increased the terms of their offer for Lasalle Hotel Properties (LHO). The new proposal increases the number of LHO shares that can receive cash to 30%, a 50% increase from the previously offered 20%. This enhanced PEB offer will remain outstanding assuming the Blackstone Proposal is voted down by LHO Shareholders on September 6th.
- As expected, little progress was made during this week’s trade talks with the U.S. Both parties maintained that the talks were constructive and that communication remained open.
- August flash manufacturing PMI pushed up to 52.5 versus July’s 52.3 reading. Stronger output and new orders drove improvement, while depressed external sales was highlighted as the key risk to the outlook.
- July core CPI rose 0.8% y/y which was unchanged from June’s reading. The reading missed the consensus estimate of a 0.9% increase with slight increases in non-fresh food and household durable goods being largely offset by overseas travel packages.
Blackstone Group raised its offer for Australia’s Investa Office Fund to A$5.45 per unit making the potential deal worth over A$3.2B. Blackstone crossed a significant hurdle on Friday, winning the support of the unlisted Investa Fund, which controls approx. 20% of the stock.
- UK Brexit Secretary Raab released the first batch of papers outlining contingencies if the UK fails to reach a withdrawal agreement with the EU. Raab stated that the government had duty to plan for every eventuality, but remained confident it would reach a deal.
- August Eurozone flash manufacturing PMI fell to 54.6 versus July’s 55.1 reading, while flash services PMI remained unchanged at 54.4. Although the readings remained in expansion territory, new manufacturing orders and the future growth outlook dropped to their lowest points in nearly two years.
- London commercial real estate attracted the most international capital in the first half of 2018, totaling £5.6 billion of investment according to consulting firm Knight Frank. Investment from Asia accounted for £4.4 billion of the half-year total, led by Greater China at £2.6 billion. Investors continue to be attracted to the stability, transparency, and liquidity of the London commercial real estate market, despite the lingering uncertainties surrounding Brexit.
- European logistics yields compressed 14 basis points to 5.95% in the second quarter 2018, the first time below 6% since at least 1992 according to Cushman & Wakefield’s DNA of Real Estate. Logistics markets in Germany, Italy, Sweden and some UK locations contributed to this yield decline. At the same time, overall office prime yields fell to 4.42% (from 4.49%) while European high street retail prime yields increased slightly (1 basis point higher to 4.19%).
Hammerson and Ballymore Properties, 50/50 joint venture partners at the proposed Goodsyard mixed-use development at the former Bishopsgate Goods Yard in Shoreditch, London, will no longer build the 38- and 48-story towers, both of which were strongly opposed by the community when initially proposed in 2015. The updated plan also includes 350 homes, down from the original 1,350 proposed. Hammerson expects to submit the updated scheme to the Greater London Authority by year 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.