Real Assets Adviser

April 1, 2016; Vol. 3, Number 4

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From the Current Issue

The 100-Year Promise: Pathstone Federal Street co-CEOs Steve Braverman and Allan Zachariah are doing their best to walk the talk

Rule number one: Don’t mess with success.

That maxim might have been fixed pretty tightly in the minds of Steve Braverman and Allan Zachariah, after doubling the size of Pathstone Family Office in just five years. The growth came organically. Still, a February 2014 client advisory board meeting themed “Pathstone 2.0, The Next Generation” pondered where leadership was going to take the firm as a next stage. That question was unexpectedly answered roughly one year later when agents representing Federal Street Advisors, another multifamily office, came calling.

Technology in Agriculture: A surge of new farmland-focused innovation is promising another Green Revolution

To call Brian Martin a pig farmer would be technically correct, but vastly misleading. Martin is president and owner of Williamsport, Ind.-based Martin Family Farms LLC, which raises about 350,000 pigs per year and boasts $15 million in sales. To raise so many pigs, the company holds 14,000 sows, which may seem like a lot but the corporate behemoths in the business might have more than 1 million sows.

Women in REITs: There are a growing number of women holding influential positions in the industry

This article was originally published in the January/February 2016 issue of REIT magazine and has been republished with the magazine’s permission.

Real estate companies were often formed as family-run businesses where the patriarch would eventually pass down the operation to his sons, points out Anna Chew, vice president and CFO of UMH Properties. Those men networked with engineers, construction workers, contractors and others in the business, further solidifying the prevalence of testosterone within the industry. Real estate was the old boys’ club.

Investing in the Global Airline Business: The five Cs have changed the game and given long-disappointed investors a chance to gain altitude

As a shiny new industry with huge growth potential, airlines initially made many investors excited. Over time, however, they became wary, as financial returns fell far short of expectations. A few investment professionals, most notably Warren Buffett, considered airlines difficult to invest in, claiming they have historically operated irrationally and have always been at the mercy of oil prices, unions and new competition. 

The Case for Fish Farming: Aquaculture is the answer to a looming global food crisis

In the past 50 years, global meat consumption has more than quadrupled, from 71 million tons to 310 million tons. Something similar has been going on with milk and eggs. In every society where incomes have risen, so has protein consumption. While middle classes are on the rise, so is the global population, from 7 billion of us today to 9.7 billion by 2050, which means that by 2050, we are going to need at least 70 percent more protein than what is available today. The United Nations’ latest forecast puts population at 11 billion by the end of this century, which means that we are going to need a lot more protein.

The Endgame for Oil: Today

In the fourth quarter of 2014, I asserted that a barrel of oil would average $45 during 2015 and 2016. Given the nature of the growing supply glut and OPEC’s unwillingness to cooperate on reducing output, I also projected that there was risk of a spike down to $25 per barrel before prices would stabilize. While far from consensus, my pessimism at the time now smacks of optimism. Today, looking at the market fundamentals in place, I believe we have reached a new point in the global energy story: The endgame in the decline of the price of oil.

Quiet, Please: Blocking out the noise of financial media

All too often, we see investors who are underperforming because they let fear and greed drive their decisions. Because of this psychological entrapment, they are buying when prices are too high and selling when prices are too low. One of the main reasons for this phenomenon is that they are focusing too much on the noise of financial news. In our current technological age, where everyone has a voice, and every fact and opinion is just a click away, can it be that we have too much access to information?

Airbnb on the Rise: Research shows the most at-risk city is New York

Airbnb Inc.’s presence in key markets throughout the United States is growing at a rapid pace, with users spending $2.4 billion on lodging in the United States over the past year, according to analysis of the room-sharing company from CBRE Hotels’ Americas Research.

Consequences of Low Grain Prices: High inventories highlight the need to reduce supply

While the rise of the middle class continues to support the long-term demand for grains, short-term challenges on the supply side need to be addressed. With global grain production outpacing demand and resulting in record high inventories and low prices, crop farmers around the world have more incentives than ever to pull back from record output levels. We expect a supply response to start materializing in 2016, leading to lower global output within the next two years. This will be the first step toward improving prices for major crops since grain demand has already posted a near-term high.

Jaw of the Bear: Infrastructure investors are taking their time before committing to funds

As the world has bounced back from the recession, most asset classes have seen their fundraising times steadily decline. Infrastructure, however, is living a different story. A graph showing the average time infrastructure funds have taken to close each year since 2012 looks something like the mouth of the bear in The Revenant. The average marketing time is up one year, down the next, up again, down again and so on.

Landmark Year for Renewables: Clean energy grows as CO2 emissions fall and power prices stay flat

New U.S. energy technologies made further advances and locked in long-term gains in 2015, according to a new study from Bloomberg New Energy Finance and the Business Council for Sustainable Energy. Among other achievements, energy efficiency continued to rise, renewable power generation set new records, and natural gas consumption and production surged as CO2 emissions fell to levels not seen since the 1990s, while power prices remained flat.

Taxes by the Letter: A conversation with Paul Buckley and Caroline James about FIRPTA and PATH

Foreign investors in U.S. real estate have been stymied by the Foreign Investment in Real Property Tax Act, or FIRPTA, since 1980. At the end of 2015, changes to the law were introduced that could significantly affect U.S. property markets. Paul Buckley is managing partner with First Avenue Partners, a private funds placement agent, and Caroline James serves as principal and head of real estate with the firm. Buckley and James recently spoke by phone from London with Loretta Clodfelter, editor of Institutional Real Estate Americas(a sister publication to Real Assets Adviser), on the implications for U.S. and non-U.S. investors following the recent FIRPTA reforms.

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