Where it all comes together!
The RMZ was up (+1.5%) last week, outperforming the S&P 500 (+0.5%), as the 10 Year Treasury yield decreased 3 bps to 1.60%. Industrial (+2.7%) Office (+2.6%), and Infrastructure (+2.2%) outperformed. Prisons (-6.8%) underperformed on more negative sector news (see below). Lodging (-2.0%) and Retail - Malls (+1.1%) also underperformed.
First View: Cash Box for Development Funding [Mike Prew, Andrew Gill]
SGRO 9.9% cash box placing of 74.8m new ords to raise c. £340m to fund near-term development and capture the pick-up in pre-leasing activity in core markets with £6m net rent signed since 30 June. Accompanying trading update reaffirms continuing pick-up in UK tenant demand post BREXIT vote. £456m of cap ex has been identified over the next 2yrs of which £199m is committed to the current pipeline and a further £140m on the potential pipeline which are either pre-let or agreed subject to planning approval.There are further speculative, urban warehouse development projects totaling £117m, of which management expects most to commence within the next 6 to 12mths subject to continuing favourable occupier markets. The shares have bounced to a -3% discount to NAV and yield 3.6% after the sector fillip on GICS reclassification of REITs as a separate S&P/MSCI sector (1/9/16). Should have been debt financed and confirms our suspicion that the sector is expensive post the BREXIT currency bounce.