In the U.S.:
- As expected, Fed officials voted to leave interest rates unchanged and would likely keep rates on hold in 2020. Fed Chairman Jerome Powell told reporters afterward that “in order to move rates up, I would want to see inflation that’s persistent and that’s significant.”
Rexford Industrial Realty, Inc. (REXR) acquired the Pomona Distribution Center in Pomona and 2757 E. Del Amo Boulevard in Rancho Dominguez for $99.7M. Rexford plans to perform value add upgrades and increase rents of existing tenants once the existing leases expire.
- It looks like the US and China have agreed on a phase one trade deal. As expected, the deal focuses on tariff decreases in exchange for increased agricultural purchase commitments. In addition, phase two negotiations are to start immediately rather than after the general election in 2020.
- Headline December business conditions index for large manufacturers came in at a weak 0 versus the consensus estimate of +2. The reading provided further indication that deteriorating global demand continues to weigh on Japan’s manufacturing growth.
As the ongoing Hong Kong protests persist, Swire Properties has decided to lower rent for some shops at its City Plaza and Harbour City malls. This follows similar rent decreases by other Hong Kong mall operators in the area as retail sales continue to fall.
- The overwhelming victory this week by Boris Johnson’s Conservative Party gives them the clear majority in parliament to enable the UK’s exit from the EU on January 31, 2020. The victory provides at least some near-term relief for UK equities, including property stocks, which have been caught up in the uncertainty of Brexit since the June 2016 referendum. Stocks had already rallied some in recent months on improved prospects of a Brexit deal, but the election victory provides an added level of certainty that Brexit will indeed happen. In the near term, the outcome should help to attract some capital into London and the UK that had been on the sidelines as a result of the political gridlock. What it means in the long term for the UK economy and UK property stocks will ultimately be dependent upon the trade deals and other negotiations that will take place in the coming years following their formal withdrawal on January 31st.
- October Eurozone industrial production fell 0.5% m/m versus September’s revised 0.1% m/m decrease. Factory activity shrank in Germany, Italy and Spain, three of the zone’s four largest economies.
UK logistics REIT SEGRO Plc has agreed to sell a portfolio of UK big box logistics warehouses totaling 203,400 sq meters to a fund advised by Morgan Stanley Real Estate. The company indicated that pricing of £241 mn was in line with June 2019 book values. The portfolio had a current combined vacancy rate of 18.5% with a weighted average unexpired lease term of 6 years. Based upon the current rents in the portfolio, the price reflects a gross initial yield of 4.2%.
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.