In the U.S.:
- The US has blamed Iran for the “unprovoked attacks” on two tankers in the Gulf of Oman. Although Iran has denied the attacks, the US released a video showing an Iranian patrol boat pulling alongside one of the tankers and removing an unexploded device from its hull. The new attacks escalate tensions between the US and Iran and may affect how commerce flows through the gulf going forward.
Retail Value Inc., (RVI) closed on the sale of Beaver Creek Crossings (Apex, NC) for $52.8M. Net proceeds were used to repay mortgage debt.
- May industrial production rose 5.0% y/y versus April’s 5.4% y/y growth. The drop in production marked the slowest rate of growth in 17 years and will likely lead the PBoC to implement additional stimulus measures if the trade war with the US escalates.
- In a Bloomberg interview, Governor Haruhiko Kuroda rejected the view that the BOJ is running low on tools to help boost the economy. Governor Kuroda outlined the following viable options: cutting short-term rates from (0.1%), lowering the bond yield target from around 0%, expanding asset purchases including ETFs, and accelerating monetary base expansion.
CapitaLand Mall Trust announced that it will sell its entire stakes in three shopping malls in China for S$589.2M to CapitaLand Retail China Trust (CRCT).The sales will generate proceeds of around S$239.9M and a net gain of about S$37.6M for CapitaLand, which is CRCT’s sponsor.
- April Eurozone industrial production fell 0.5% m/m versus March’s 0.4% m/m drop. The sluggish production reading will likely apply pressure on the ECB to ease further.
- The Guardian reported that Tory leadership rivals in talks about joining force to provide strongest challenge to frontrunner Boris Johnson. Mr. Johnson holds a considerable lead with 114 votes versus his closest challenger, Jeremy Hunt, getting 43 votes.
In an effort to win the support of voters who believe rents in Berlin have increased too much in recent years, Berlin’s Social Democratic Party is seeking to introduce a proposal to freeze residential rents in Berlin for five years. The possibility of such a proposal has shocked owners (both private and public) and sent the shares prices of German residential property companies sharply down over the past week, with Berlin focused ADO Properties and Deutsche Wohnen suffering the most significant declines. While some legal experts and owners have questioned whether such a move is constitutional, the mere prospect of such a proposal becoming law is just another example of the populist movements occurring in many countries around the globe. Although rising residential rents has initiated much public debate in Berlin and other major metro markets around the world such as New York and San Francisco, the concept of a rent freeze or overly restrictive rental increases does little to solve the underlying problem in many of those markets, which is the need for more supply. Deutsche Wohnen has yet to publicly comment on the proposal, but some member of management and the Board of Directors have been buyers of the stock on the recent weakness with the stock.
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.