In the U.S.:
- Strong rhetoric and demonstrations of military capabilities are increasing the hostilities between the US and Iran. President Trump told the defense secretary that he did not want to go to war, which will hopefully lead his staff to try and diffuse the situation. Earlier this week, Iran was accused of sabotaging four oil tankers in the Persian Gulf.
Senior Housing Properties Trust (SNH) announced that it has sold four properties for an aggregate sales price of $24.1M. One property is located in Colorado, and the other three in Southern California. The sales were part of SNH’s previously announced disposition plan of up to $900M of assets.
- Trade tensions continued this week with Beijing announcing retaliatory tariff hikes on $60B of US products. China state media labeled the US as a “bully” and reiterated the country’s determination to protect its rights and interests.
- BOJ Governor Haruhiko Kuroda stated that low rates would continue at least through spring 2020. Mr. Kuroda added that the main scenario assumed a pickup in overseas economies.
Sun Hung Kai Properties was sent a summons for allegedly failing to provide sufficient information when selling Hong Kong flats by tender. The move comes as the Hong Kong government is starting to crack down on residential sales practices.
- The European auto sector was helped by the US delaying tariffs on imported autos for 180 days. The delay is said to be due to timing given the breakdown in trade talks between the US and China.
- Brexit talks collapsed this week. PM Theresa May plans to put the original agreement back on the floor for a vote in early June, which will most likely fail, and set the stage for ongoing uncertainty.
Deutsche Wohnen, a Berlin focused German residential property company, reported 1Q19 results this week with FFO I of €0.40/sh, slightly ahead of consensus. Like-for-like rental growth was +3.4% for the quarter. Management pointed to a continued strong rental market given the continued undersupply of rental housing in Berlin and Germany overall. At period end, the vacancy for the portfolio stood at 2%, while the rental reversionary potential of the portfolio was at 31% (i.e. in place rents 31% below market) and 33% within its biggest market of Berlin. The company left its full year guidance for FFO I unchanged, as well as its guidance for like-for-like rental growth of +3.0%. With the debate over rising rents in Berlin, the potential for further rental regulation and other ideas continuing to grab the local headlines, management highlighted the importance of continued dialogue between tenants, politicians and owners (both public and private) to address the housing challenges in Germany.
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.