In the U.S.:
- The WSJ discussed how the market has gone from debating whether Fed will lower rates in July to if it would be a 25bps or 50bps change. Expectations for the more aggressive 50bps move surged following the dovish commentary from NY Fed President John Williams.
Prologis, Inc. (PLD) announced that it would acquire Industrial Property Trust (IDDP) for $4.0B in cash. The deal, which is expected to close in 4Q19/1Q20, will expand PLD’s position in Southern California, the San Francisco Bay Area, Chicago, Atlanta, Dallas, Seattle and New Jersey.
- Q2 GDP slowed to 6.2% from Q1’s 6.4% reading. Although the GDP reading hit a 27 year low, the reaction was positive given that the economy was still on track to reach the government’s 6.0-6.5% growth target while headwinds from the trade war with the US continued to mount.
- June core CPI rose 0.6% y/y versus May’s 0.8% y/y reading. The lackluster core CPI reading is expected to put pressure on the BoJ to increase stimulus measures even further.
CapitaLand Commercial entered into a 7-year lease agreement with WeWork Singapore for a 21-storey prime office building at 21 Collyer Quay. CapitaLand Commercial plans to upgrade the building at an estimated cost of S$45M.
- Iran’s Revolutionary Guard has publicly announced the seizure of a UK tanker, the Stena Impero, and a Liberian tanker. The move, which could be seen as retaliatory after the UK seized an Iranian tanker earlier this month, will further escalate tensions in the region.
- Analysts are expecting the ECB to lower rates in September as economic data has been mixed since ECB President Mario Draghi stated that the central bank would add stimulus if the economic outlook did not improve.
Gecina, Europe’s largest office REIT whose portfolio is primarily located in the Paris region, reported first half 2019 earnings including EPRA NAV up 5.1% from year-end to €169.8 per share and recurring net income up 2.5% to €2.96 per share, excluding the impact on non-strategic asset sales following the acquisition peer Eurosic in 2017. The company increased recurrent net income per share guidance by 3.0%, excluding the aforementioned non-strategic asset sales, to €5.80-5.85 from €5.70-5.75 previously. Underlying first half results was life-for-like rental growth of +2.0%, including +1.9% for offices (~80% of gross rental income), +2.5% for residential and +1.8% for student housing. Like-for-like office rental income growth is now expected to be over 2.0% in 2019, from 1.7-2.0% previously, driven by offices +1.9% and traditional residential +2.5%. The loan-to-value ratio fell to 35.3% from 39.0% a year ago, with the average debt maturity extended to 7.7 years and the cost of debt unchanged at 1.1%. The development pipeline stood at €3.0 billion at mid-year, which is expected to yield roughly 5.8%.
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.