In the U.S.:
- November nonfarm payrolls increased 228K versus October’s downwardly revised 241K increase. The unemployment rate remained unchanged at 4.1% and wages disappointed with average hourly earnings increasing only 0.2% m/m versus the 0.3% m/m expected.
RLJ Lodging Trust (RLJ) announced the expansion of its relationship with Interstate Hotels and Resorts. Once the transaction is completed, RLJ will have 73 management contracts with Interstate, including 62 hotel contracts acquired from White Lodging. Once the transaction closes in January 2018, Interstate will be RLJ’s largest management company.
- November’s trade surplus was $40.2B versus the consensus forecast of $36.5B. The trade surplus was led by dollar-denominated exports which rose 12.3% y/y. Economists noted that the strong result suggested that the downside risks for Q4 were limited.
- Q3 GDP was revised up to 2.5% q/q versus the preliminary 1.4% q/q reading. A rise in capital spending and strong results from private sector inventories were cited as the main catalysts to the revision.
- As a result of the intensifying North Korean nuclear threat, the Nikkei reported that officials put missile defense spending on the fast track. Originally scheduled for FY18, the defense spending will now take place in the current fiscal year.
H.K. Mass Transit Railway Awarded the Wong Chuk Hang residential site to Kerry Property, and Sino Land for an undisclosed amount. Previously an industrial site, the area will be converted into a new upmarket residential district.
- UK Prime Minister Theresa May stated that the UK and EU had reached an agreement in principle on protecting the rights of citizens, the framework for addressing the Irish border issue, and on the financial settlement. These were three of the main hurdles in the Brexit negotiations and should clear the way for a softer Brexit.
- Greek Prime Minister Alexis Tsipras stated that Greece would leave the bailout program in 2018 due to the ability to reach a staff-level agreement with creditors without the need to raise new funds.
U.K. listed shopping center owner Hammerson Plc (HMSO) has made an all share offer for Intu Properties Plc (Intu). The proposed transaction would more than double HMSO’s GAV to ≈ $21B and create the third second largest listed European retail platform that would operate in 14 European countries. The offer of 0.475 HMSO shares for each Intu share equated to £2.539 per Intu share, a 26.9% premium to Intu’s previous day closing price but a 37% discount to the latest reported EPRA NAV of £4.03/sh. HMSO’s prior day closing price was at a 30.7% discount to its last reported NAV/sh of £7.71/sh. The deal would result in HMSO shareholders owning ≈ 55% of the combined companies with Intu shareholders owning the remaining 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.