In the U.S.:
- The Fed enacted an emergency 50 bp rate cut on Tuesday to combat the increasing Global threat of the coronavirus. The Fed’s swift cut is expected to put pressure on other central banks to implement easing measures.
- February nonfarm payrolls of 273K were above the consensus estimate of 174K and the upwardly revised 222K January reading. The unemployment rate ticked back down to 3.5%.
- In earnings, 494 companies in the S&P 500 Index have reported, 74.4% beat, 0.8% were in-line, and 24.8% missed estimates.
Rexford Industrial Realty, Inc. (REXR) announced the acquisition of a ten-building industrial property portfolio for $203.2M, including assumed debt. The portfolio consists of three single-tenant and seven multi-tenant industrial properties containing a total of 867,242 square feet on 43.06 acres of land.
In REIT earnings, 103 companies in the Wilshire U.S. REIT Index have reported, 66 beat, 5 were inline, and 32 missed estimates.
- February official manufacturing PMI hit a record low of 35.7 versus January’s 50.0 reading. With the coronavirus largely to blame and fewer cases of the virus in mainland China, the reading is expected to tick back up as manufacturing operations get back online.
- Reuters said another poll showed that the BoJ is expected to ease policy at the next meeting. The BoJ is not expected to take rates further into negative territory and will likely rely on expanding asset purchases to cushion the impact from the coronavirus.
A tender offer by Tokyo Disneyland’s operator to buy back shares was oversubscribed by more than three times. The tender offer was motivated by Mitsui Fudosan, Oriental Land’s third-largest shareholder.
- February Eurozone final manufacturing PMI was at a one-year high of 49.2 versus January’s 47.9 reading. However, fears that supply constraints from coronavirus-related shutdowns in China and domestic virus infections may weigh on manufacturing going forward.
- Post-Brexit trade talks between the UK and EU resumed this week with key red lines appearing to jeopardize the chances of an April deal. Of note, state aid and cross-channel fishing/trade seemed to be in focus.
Germany’s largest listed residential property company, Vonovia, reported its FY19 results this week with Group FFO/sh of €2.25/sh that was broadly in line with expectations. Like-for-like (LFL) rental growth was +3.9% for the year and the year end vacancy rate ended at 2.6%, roughly flat YOY. Adjusted EPRA NAV/sh ended the year at €51.93/sh, +15.7% YOY with LFL values increasing 11.8% and the LTV ending the year a 43.1%. The company also adjusted its guidance for 2020 LFL rental growth to 3.5% – 4.0% versus 4.0% with its 9-month results. While worries over tighter German rent regulation and the Berlin rent freeze dominated investor worries in the second half of 2019, the German residential sector’s stability appears to be a potential “safe haven” in the short term amidst the sea of worries over the coronavirus.
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.