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U.S. and China resume trade talks in standoff over tech policy

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The U.S. and China resumed high-levels talks Thursday aimed at easing a trade standoff that has unnerved global investors and clouded the outlook for the world economy.

The talks opened as a Chinese delegation led by Vice Premier Liu sat down with a U.S. team led by Trade Representative Robert Lighthizer and including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, Larry Kudlow, a key White House economic adviser, and Peter Navarro, a White House trade adviser.

The delegations faced each other from opposite sides of a long table in the ornate Indian Treaty Room in the Eisenhower Executive Office Building on the White House grounds. None of the officials commented publicly before journalists were led out of the room.

The world’s two biggest economies are locked in a trade war that U.S. President Donald Trump started over allegations that China deploys predatory tactics to try to overtake U.S. technological dominance. Beijing’s tactics, trade analysts agree, include pressuring American companies to hand over trade secrets and in some cases stealing them outright.

To try to force China to change its ways, Trump has imposed tariffs on hundreds of billions in Chinese goods. Beijing has retaliated with tariffs of its own. China rejects the allegations and complains that Washington’s goal is simply to cripple a rising economic competitor.

U.S. Treasury Secretary Steve Mnuchin is seen at the meeting Thursday. (Jacquelyn Martin/Associated Press)

The Trump administration has warned it will escalate its import taxes on $200 billion US in Chinese goods from 10 per cent to 25 per cent if the two sides haven’t reached a resolution by March 2. But Trump in recent days has signalled a willingness to extend the deadline if negotiators are making progress.

The conflict has rattled markets. It’s also fanned uncertainty among businesses that must decide where to invest and whether Trump’s tariffs — which raise the cost of the affected imports — will be in effect long enough to justify replacing Chinese suppliers with those from countries not subject to the tariffs.

The International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development have all downgraded their forecasts for the global economy, citing the heightened trade tensions.

After meetings last week in Beijing, Lighthizer said the two countries had “made headway.” And citing upbeat comments from the two countries, Xingdong Chen, chief China economist at BNP Paribas, said the negotiators are “likely to make progress, convincing Trump it is worth extending the tariff truce if necessary.”

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Hong Kong protests create potential problems for Ottawa, says academic

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There are four or five flights a day from Vancouver to Hong Kong during the summer season. When they land this weekend, passengers will be met by a sea of protesters staging a three-day occupation of the Hong Kong airport’s arrivals hall.

The protesters are seeking international attention as the city enters its tenth straight weekend of political demonstrations that have, at times, been chaotic and violent.

Airport authorities are taking extra security measures and the Canadian government has raised its travel advisory.

Aside from monitoring local media and avoiding areas where large protests are unfolding, there are several issues for Canadians and Ottawa to consider.

“It’s a perfect storm of domestic tensions playing into international views on Beijing’s intentions and policies,” said Paul Evans, a global affairs professor at the University of B.C. “The dissatisfaction fuelling the protests is, in part, about feelings about freedom, democracy and Hong Kong’s autonomy. But it is also about material concerns related to housing, social services and career prospects.”

The oft-quoted number of Canadian passport holders in Hong Kong is about 300,000. This is an estimate made in 2011 by the Asia Pacific Foundation, which, at the time, said it was based on “conservative assumptions” and that a higher estimate would be over half a million.

There are concerns that, should the situation spiral out of control, there would be protection issues for the federal government to manage. After the Tiananmen Square massacre in Beijing in June 1989, several thousand Canadians were airlifted out of China. But the large number of Canadians in Hong Kong would make evacuation and consular protection much more challenging.

A more immediate issue is Ottawa’s response to the prospect of protesters fleeing arrest by Hong Kong authorities and seeking refuge in Canada.

“Vancouver is already in the global spotlight as a result of the (Huawei executive) Meng Wanzhou arrest and hearings,” said Evans. “Considering the huge number of connections between the two cities, managing requests for political asylum has the potential to put Vancouver in the spotlight in an even bigger way.”

Despite the advisory, many in Hong Kong report a sense of order now that they have adjusted and life is continuing around the protests.

“Local social media is providing good updates regarding the locations and times of the protests,” said Eric Li, a professor of marketing at the University of B.C. Okanagan who is visiting family in Hong Kong and doing some research.

He added that some visitors might be getting limited information if they are only relying on official announcements from government channels.

Li said he feels safe, but “there has been more tension and conflict between the government and police and citizens as well as businesses. The pro-(Beijing) camp and protesters are criticizing each other and there are also (arguments) within families and between friends and colleagues.”

Li has been trying to be “neutral” as a “personal choice. As a person who calls Canada ‘home,’ and Hong Kong ‘my hometown,’ I should say the young protesters are very well-organized and disciplined. The government should actively engage youth in their planning rather than excluding them in the process or putting them in an opposition position.”

“It’s crucial for the Hong Kong government to take a few steps to resolve conflicts through providing open conversation with key stakeholders and young leaders. And protesters should remind themselves the purpose of the (protests) as well as the consequences of their (actions).

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PROREIT buying office, industrial buildings in Ottawa, Halifax

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(PROREIT) will use some of the proceeds from its latest, and largest, share offering to help it purchase two office and industrial properties in Ottawa, and five industrial properties in Halifax for $97.8 million.

(PROREIT) will use some of the proceeds from its latest, and largest, share offering to help it purchase two office and industrial properties in Ottawa, and five industrial properties in Halifax for $97.8 million.

“These acquisitions provide meaningful increases in our industrial sectors and expand our presence in Ontario and the strengthening Halifax market,” president and chief executive officer James Beckerleg told RENX.

PROREIT (PRV-UN-T) is acquiring a fully occupied boutique office building in Ottawa’s central business district. It’s surrounded by tourist sites, multiple restaurants and retail offerings.

PROREIT is also purchasing a class-A mixed-use, multi-tenant flex industrial property in the west-end Ottawa suburb of Kanata. It includes an office and a research and lab facility with what the trust calls exceptional power, air handling and cooling specifications.

The building is fully leased and its tenants are in the material sciences, defence, communications and medical technology fields.

The two Ottawa properties have a combined gross leasable area of 338,000 square feet and a weighted average lease term of 6.6 years. Many of the leases include contracted rent steps.

While the property addresses and additional details are confidential until the deals close, which is expected this quarter, Beckerleg said they’re both institutionally owned and have been maintained to high standards.

The addition of the Ottawa properties will increase PROREIT’s portfolio exposure to the Ontario market to 29.1 per cent by gross leasable area and 29.3 per cent by base rent, making it the REIT’s largest provincial market. It increases the Ottawa portfolio to approximately 620,000 square feet.

“We entered the Ottawa market with our $52-million portfolio acquisition of five office properties last year,” said Beckerleg. “This fits our strategy of investing in strong markets where we can increase our exposure to both of these industry sectors.

“Ottawa is seeing significant growth in office and industrial properties.”


PROREIT’s new Halifax acquisitions

PROREIT has a contract to acquire five light industrial buildings with clear heights of between 18 and 24 feet in Halifax’s Burnside Industrial Park. The portfolio represents 358,000 square feet of gross leasable area.

The buildings are 93 per cent occupied with a weighted average lease term of 4.1 years. Many of the leases include contractual rent steps.

While more details won’t be made available until the deals close, which is expected this quarter, Beckerleg said the condition of the buildings is similar to its Ottawa office purchases. The five buildings have been institutionally owned and maintained at a high level.

“The Halifax industrial market has enjoyed declining vacancies in line with the expanding Halifax economy,” said Beckerleg. “There has been a marked increase in institutional interest in the Halifax industrial sector.

“We like this market. Again, it fits our strategy of focusing on mid-size cities with strong investment metrics.”

PROREIT’s $50-million offering

As part of its funding for the purchases, PROREIT will issue 7.15 million shares on a bought-deal basis at a price of seven dollars per unit, for gross proceeds of approximately $50 million, to a syndicate of underwriters.

PROREIT has also granted the underwriters an over-allotment option to purchase up to an additional 1,072,500 units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the offering. It’s expected to close on or about Aug. 16.

“This capital raise, our first since graduating to the TSX, is the largest in PROREIT’s six-year history,” said Beckerleg. “We believe listing on the TSX and consolidating our units to trade in the seven-dollar range has substantially broadened our potential investor base. We believe the success of this capital raise confirms that.”

The Ottawa and Halifax acquisitions will be funded with approximately $30.8 million in cash from the offering and approximately $67 million in new mortgage financing at a weighted average interest rate of 3.4 per cent.

PROREIT intends to use $13 million from the offering to repay debt.

Impact of acquisitions on PROREIT’s portfolio

Upon completion of the acquisitions, PROREIT will own 91 income-producing commercial properties representing approximately 4.4 million square feet of gross leasable area and $625 million of gross book value, with a weighted average lease term of 5.7 years.

The acquisitions will also increase PROREIT’s industrial and mixed-use exposure by another 636,726 square feet to more than 2.8 million square feet. That represents 64 per cent of its total gross leasable area and 46 per cent of its total base rent.

While PROREIT has no other immediate acquisition plans, Beckerleg said opportunities are always being reviewed.

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Moncton Airport Receives $8.34-Million From Ottawa To Boost Cargo Export Capacity

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MONCTON – The federal government is investing $8.34-million and creating 140 temporary construction jobs to expand the cargo operational infrastructure at the Greater Moncton Roméo LeBlanc International Airport.

The airport’s cargo business has been quickly expanding in recent years, mostly because of the demand for live and fresh seafood products in China. In 2018, it posted a record for the shipment of cargo abroad, with 16 flights carrying over 1,000 tonnes of live seafood to Asia and Europe. It was the first time the airport saw a steady flow of local products being exported to international markets on large, dedicated cargo flights.

Airport CEO Bernard LeBlanc says the rapid growth makes new investments necessary. Passenger and cargo planes share runway space, he says, which restricted flights in and out of the airport for both types of traffic. The new investments will “eliminate bottlenecks” for cargo and passenger travel.

“We’ll be able handle cargo traffic 24 hours a day, seven days a week,” said LeBlanc in a phone interview with Huddle. “It opens up possibilities for more growth.”

The federally funded project includes the following upgrades:

  • Expanding Apron 8 to accommodate more cargo flights without affecting passenger aircraft traffic.
  • Expanding the de-icing pad to allow for de-icing of cargo aircraft and passenger aircraft.
  • A new de-icing fluid management system to comply with environmental regulations.
  • Overhauling and reconstructing the road connecting the airport apron to cold storage and cargo staging facilities.

The new investments will help grow the live and fresh seafood exports with more regularly scheduled flights to places like China. But LeBlanc says it will also open up opportunities for other products too. For example, the airport recently received a call from Malley Industries about shipping an ambulance to Israel.

Accommodating these kinds of requests is harder when the airport has mostly chartered flights that have to work around passenger travel services, he says.

“Once you get more regularly scheduled cargo flight services, it makes it easier to ship other products as well,” said Leblanc.

LeBlanc says work could begin next spring and be completed by October of the next year.

The federal government is making these types of investments in airports that are seeing increased economic activity from cargo exports. Last November, the Halifax Stanfield International Airport received $23-million in government funding to expand its cargo facilities to reduce congestion, among other things. As in Moncton, the investment was driven by strong demand for fresh seafood in China and Europe.

Ginette Petitpas Taylor, Minister of Health and Member of Parliament for Moncton-Riverview-Dieppe, sayS the airport drives export growth by opening up new opportunities for local businesses.

“The Greater Moncton Roméo LeBlanc International Airport is a key factor in the growth of the Moncton economy,” said Petitpas Taylor in a release. “The improvements will create more options for cargo aircraft and help businesses get more products to market.”

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