Real Assets Adviser

August 1, 2016; Vol. 3, Number 8

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Institution to Individual: Michael Forman and Franklin Square aim to create more alternatives for the common investor

Find an underserved market, and you find an opportunity. That business adage might not have formed quite that way in the mind of Michael Forman, but it applies nicely to his thinking during 2006, when he had an inspiration to deliver institutional-style investment options to individual investors — private debt and equity investments, as well as other alternatives. Add to that the vast U.S. middle market suffering from a post-financial-crisis credit crunch, and Forman had the makings of a two-headed strategy for a new investment management firm aimed squarely at high-net-worth individuals and the financial advisers that serve them.

Is Water the New Oil? And what are the investment opportunities for high-net-worth investors?

If oil were to supernaturally disappear from planet, human beings would find themselves enormously inconvenienced. If the same happened to water, life on planet earth would very quickly cease to exist.

That is the stark reality of a world facing rapidly diminishing supplies of drinking water. If you think nations are quick to go to war over oil, wait until fresh water supplies begin to run dry.

Niche Collecting and Investing in Real Assets

Hardly a week goes by that one new record or another is not breathlessly announced in the art world, as in late June when it was reported an all-time high had been set at a Sotheby’s auction for a cubist painting, daubed by Pablo Picasso in 1909. The tidy sum of $63.7 million was paid for a canvas entitled “Femme Assise” that last traded hands in 1973 for about $500,000, adjusted for inflation.

REIT Respect: The unprecedented addition of the real estate sector to GICS should have far-reaching implications

Circle Aug. 31, 2016, on the calendar, REIT enthusiasts, because what many consider the biggest development to hit the sector in 15 years is quickly approaching. After the market closes, stock exchange-listed Equity REITs and other listed real estate companies will be elevated to a new Real Estate Sector in the closely watched Global Industry Classification Standard (GICS), making it the 11th Headline-level sector under GICS.

An iPhone You Can Live Inside: The dumpster meets the Internet of Things

For most people, the terms “dumpster” and “home” are not often used in the same sentence. For Jeff Wilson, aka Professor Dumpster, this combination led him to something that could breathe new life into the ever-growing trends of multifamily housing, tiny homes and the Internet of Things.

Toward a Smokeless Tomorrow: Former energy CEO envisions a future without fossil fuels

No one is actually making money from coal-fired power plants in the United States right now, according to David Crane, former CEO of NRG Energy, one of America’s biggest power companies. That may seem a strange sentiment coming from a man who led a Fortune 200 company owning more than a dozen coal-fired power plants. But then again, Crane is far from your typical energy executive.

Going Down: Fewer funds launched and closed thus far in 2016

Infrastructure fundraising during the past few years has been difficult to characterize. The asset class closed on $55.5 billion in capital during 2013, saw only $48.7 billion raised in 2014, then bounced back to $55.4 billion by the end of 2015. During that time, the number of funds closed per year fell steadily, with 35 funds closed in 2013, 34 in 2014 and 29 in 2015.

Farm to Portfolio: Investor appetite is growing for agricultural assets

Real assets of all stripes are getting noticed by investors these days; with returns under pressure across all asset classes, the appeal of investments that can provide steady cash yields is growing. One of the real assets getting attention more recently from institutional investors is agriculture.

Why Invest in Real Estate: New options are available for client portfolios

Many individual investors’ portfolios don’t include any real estate investments. Usually this is not by design. Rather, it reflects the lack of attractive options for investing in real estate, as well as a bias toward stocks and bonds because they are readily available and easier to research. New, online real estate fund investment platforms and real estate crowdfunding sites are changing this and creating new opportunities for individual investors, family offices and their advisers.

Less Than Zero: The world experiments with negative interest rates

As of mid-July 2016, six central banks in Europe and Asia have adopted negative interest rates in an effort to stimulate their national economies. The experiment began in Denmark in 2012, but the big step came in June 2014, when the European Central Bank dropped its benchmark rate below zero. Sweden and Switzerland soon followed, and Japan and Hungary went negative in early 2016. Taken together, these economies represent about one-fourth of global economic output.

On Balance: New accounting standards require leases be recorded on balance sheets, which has implications for real estate owners

With perhaps less fanfare than it deserves, the Financial Accounting Standards Board (FASB, which regulates accounting within the United States) earlier this year issued a new accounting standard for the treatment of leases under Generally Accepted Accounting Principles, or GAAP. The International Accounting Standards Board (IASB, which regulates accounting outside the United States) did the same for International Financial Reporting Standards, or IFRS. The upshot is, when the change takes effect, every single lease will need to be recorded on balance sheets.

City Limits: Silicon Valley entrepreneurs aim to create a prototype municipality of the future

Entrepreneurs keep getting more ambitious, especially those in the technology space. It seems there is a pending technological solution for all that ails humanity and the environment the surrounds us.

Now a pair of Silicon Valley entrepreneurs is aiming to tackle the most essential component of a functional society — the city, the very locus of economic activity and job and wealth creation. They are the places where real estate, infrastructure, energy and other investment opportunities are concentrated.

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