Institutional Investing in Infrastructure

August 1, 2016: Vol. 9 Number 7

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Infrastructure

The money talks: Takeaways from the i3 Editorial Advisory Board meeting and i3 conference

In June, IREI held its annual i3 conference and Editorial Advisory Board meeting for the i3 publication, and this year the events were in Boston, home to one of the country’s largest, most expensive and controversial public works — the Big Dig. The transportation project along the Boston waterfront consisted of roads and tunnels and was completed in 2007, and despite many serious setbacks, with hindsight it’s earning respect. As the Boston Globe put it in December, “Here we are, 10 years after the official completion in 2006. How are we feeling now? Maybe there’s room for some grudging appreciation.” 

Infrastructure

The energy ultimatum: In a world of low oil prices investors are faced with three options: accept lower returns; take on some commodity price risk, or reject this price risk altogether

When it comes to the state of the global oil and gas market, the often misquoted line by Mark Twain springs to mind: “Reports of my death have been greatly exaggerated.”

For more than a year now, the prices of both West Texas Intermediate and Brent Crude oil have been bumping along in the range of $30–$60 per barrel, currently hovering just above the $40 per barrel mark. Between 2012 and 2014, prices reached as high as $125 per barrel and never fell below $90 per barrel until they began their steady decline toward the end of 2014. 

Infrastructure

Los Angeles: A fragmented metropolis in transition

Transportation linkages have significant influence on surrounding land uses and property values. Car-centric Los Angeles is poised to undergo important changes in its transportation infrastructure. I believe this will result in certain areas becoming more valuable and others becoming less so. Astute real estate investors will capitalize on the changes before the impact on land use becomes manifest.

Infrastructure

Second quarter fundraising

Early numbers are in for infrastructure investment funds closing in second quarter 2016 — and it appears that the mega-mega-funds waiting in the wings to close have vacuumed up nearly all the available capital in the market.

Seven funds held final closings in the second quarter, which is the same number closing in first quarter 2016, and close to the number closing in second quarter 2015 (nine). The amount of capital raised, however, fell significantly.

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