Real Assets Adviser

April 1, 2020: Vol. 7, Number 4

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From the Current Issue

The rough road ahead for infrastructure: A multitude of issues have impeded progress in rebuilding the country’s backbone

While there are sharp divisions in the United States with regard to almost every political, social and economic question, there is one issue on which there is virtually universal agreement and that is the sorry state of America’s infrastructure and the pressing need to do something about it. Both political parties actively discuss the need to modernize our bridges, roads, airports, dams and so on. And because there is a steady stream of articles in the media warning of the dire consequences of not doing so, the public is at least peripherally aware of this issue. Yet, for a variety of reasons, we seem unable to actually get off the schneid. It’s like going to a disaster movie when you know what is about to happen but feel powerless to do anything about it.

Where’s the beef? Meat substitutes now a $4.6b business and growing fast

In the age of ubiquitous tech startups, the relative importance of a trend is often determined by the level of interest shown by venture capitalists — and by that measure, meat substitutes have hit the big time. That’s the word from a new report from Cushman & Wakefield about technology trends that are shaping real estate in the food and beverage industry.

After the oil price collapse: $30 per-barrel prices will create new opportunities for direct energy investors

As fears surrounding the spread of coronavirus (COVID-19) and what it could mean to the global economy reached new highs, financial markets across the world have been in decline. Adding to the stress of an already fragile global economy on March 6, OPEC+ talks of reducing the supply of oil between the second-and-third largest producers in the world — Russia and Saudi Arabia — collapsed. Russia refused to cut its production and Saudi Arabia announced its plans to increase production by as much as 3 million additional barrels per day beginning in April.

21st century timberland investing: Forests can wait patiently through market downturns, trade wars and elections, with low holding costs

If you think forests are only about construction products, think again. Timberland investing has changed and in today’s market requires a differentiated approach to investing, one that includes the kind of climate-smart forestry that creates value for investors, stores carbon and helps mitigate the impact of climate change. Bettina von Hagen, co-founder and CEO of Ecotrust Forest Management explains.

Under a microscope: As coronavirus cases rise, property markets react

Over the years, it has been impossible to escape the growth story, draw and influence of China — for real estate investors and the global economy. Now, that growth story is being disrupted by a black swan event, which in this case is a microscopic, highly contagious novel coronavirus — officially known as Coronavirus Disease 2019 (COVID-19) — that originated in the Chinese city of Wuhan in Hubei provence in December 2019. As of Feb. 28, the World Health Organization increased its assessment of the risk of spread and risk of impact of COVID-19 to “very high” at the global level.

No good way out: Many of those invested in nontraded REITs are awaiting a profitable liquidity event

The optics aren’t good and too often neither is the return on investment. The problem is there might not be a good alternative. That’s the situation for older nontraded real estate investment trusts. Going back about four years, a popular strategy for nontraded REITs facing a liquidity event was to merge with affiliated REITs, meaning one or more REITs under the same management umbrella. It has not been the optimal solution and, on the surface, it appears to be a bit of self-dealing.

E-commerce, consumer demand and last-mile deliveries

The warehouse business has become hyper-localized because of the e-commerce revolution and consumer expectations that instant gratification comes to those who refuse to wait. A study by Deloitte found 64 percent of consumers were not willing pay extra for two-day shipping, and that study dates back to 2017. Three years later the percentage of consumers insisting they will give no-extra-pay-for-anything-but-first-day deliveries has only grown.

Profile: Pepper Anderson, CEO, Chilton Trust Co.

Yes, Pepper is her real name — not a stage or professional name, or even a nickname. She was Pepper Lindsley at the time of her birth, named in remembrance of her grandmother, who had passed away a few years prior, and whose surname was Pepper. She never thought Pepper was an unusual name because she grew up in rural Philadelphia with many family members whose surnames were Pepper.

Investor confidence in proptech remains high

Investor confidence continues to ride high behind robust deal flow, increasing M&A expectations and strong portfolio performance, according to the Global PropTech Confidence Index from MetaProp, a proptech venture firm. The fallout from the failed WeWork Cos. IPO, as well as the move into an election year, brings some uncertainty to the space, which may explain the drop from six months ago.

The EIA forecast: Oil and natural gas remain integral to the United States

The federal government’s latest energy projections are out, and they portray a U.S. energy future that continues to be driven by natural gas and oil. It’s a future noteworthy for continued production growth, greater efficiency, the United States as a net energy exporter and emissions progress. All are connected in various ways to shale reserves and safe, modern hydraulic fracturing — and at risk if fracking were banned as some have advocated.

From traditional to technological: Infrastructure is changing rapidly due to advances in technology

Infrastructure investment is, perhaps, one of the easiest assets to understand. There are different financing models and ways to acquire the assets, but as stand-alone investments, one-word descriptions such as roads, bridges, airport and grids, paint a pretty vivid picture. That picture, however, is being complicated by the growth of technological needs in everyday life, which has changed the nature of what infrastructure is and what it can be. Broadband, fiber-optic, 5G, hyperloop and smart-city needs are becoming more commonplace — and so has the investment needed to build the 21st century’s infrastructure.

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