Real Assets Adviser

December 1, 2015: Vol. 2, Number 12

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From the Current Issue

Red Flags: Social and structural problems keep piling up in Beijing

The Chinese Communist Party has got to be beside itself these days. It has plotted and triangulated its ascension to the lead player on the world stage, but not all is working according to plan. As an organization committed to controlling events of all kinds, the National People’s Congress is suddenly finding there are forces at play it cannot control.

Why Sports Stars Go Broke: A former financial planner for the NFL Players Association offers some observations on the matter

Bankrupt seems to be the most common word to describe professional athletes.

Seventy-eight percent of NFL players are broke or under some kind of financial stress within two years of retirement, according to a 2009 Sports Illustrated survey. Fifty percent of NBA players have no money five years after leaving the league. These statistics are similar to people who win the lottery. Nearly 70 percent of all lottery winners go broke or file for bankruptcy. These statistics are far from coincidence.

Forecast 2016: Real assets are poised to continue performing well during 2016, though investors must be choosy

In a nutshell, the business outlook remains one of relatively low interest rates and slow growth in 2016.

A tepid view for some, but for those who compete for real estate there will be heightened competition for limited prime properties. That is good news for well-situated investors and sellers. There are growing piles of treasure in the hunt for property of all kinds, and moneylenders are eager to extend secured funds where they can.

On the Bubble: Investors can take steps to avoid the worst when a bubble pops

Real estate investors may still wake up sweating from nightmares in which they hear the “pop” of the 2008 bubble bursting. Looking at the current market, those same investors may be fearing a repeat after seeing record sales prices this year. Jeff Sutton and General Growth Properties’ purchase of Manhattan’s Crown Building in April for a reported $4,564 per square foot was the highest price per square foot ever paid for an entire office building, and Ivanhoé Cambridge and Callahan Capital Properties’ acquisition of 3 Bryant Park, also in Manhattan, for a reported $2.2 billion was the most money paid for a single office building since 2008.

Greener Pastures: Why core infrastructure investors should consider greenfield projects

Many investors have grown more comfortable with the risk/return attributes of newly constructed infrastructure; other investors, not so much. Operating brownfield investments will always be the core of infrastructure portfolios. But many infrastructure managers are frustrated by some basic misunderstanding — and mispricing — of certain greenfield risk.

Next Stages: Africa commodities slump is a potential goldmine for investors

The recent downturn in Africa’s commodities markets might seem to signal dark times for the continent’s emerging economies. The slump in global oil prices prompted Angola’s government to end fuel subsidies; weak copper rates dramatically reduced the value of Zambia’s currency; and J.P. Morgan delisted the Nigerian naira from the Emerging Markets Bond Index.

Daily Pricing: New index represents big step toward inclusion of private real estate in broader array of investment portfolios

In August of this year, the National Council of Real Estate Investment Fiduciaries (NCREIF) introduced the Daily Priced NCREIF Fund Index (NFI-DP), the first daily pricing index for private real estate. The launch of this index represented a major step forward in facilitating the inclusion of private real estate investment options into a broader array of investment portfolios, which historically were largely unavailable to high-net-worth advisers and defined contribution plan sponsors. With the NFI-DP, these investors now have access to an index with daily data points and monthly reporting on the overall performance and valuation of this unique set of funds, which is more consistent with these investors’ needs.

Investors Welcome: Mexico rolls out the welcome mat to infrastructure investors

With its $1.3 trillion nominal GDP, Mexico is the second-largest economy in Latin America and the 15th largest in the world. But you would not know that from the state of its infrastructure. According to the World Economic Forum’s Global Competitiveness Index 2015–2016, Mexico’s infrastructure ranks 59th out of 140 countries.

Inside the Numbers: Are real estate tech platforms growing with or ahead of the industry at large?

In October the SEC finally approved crowdfunding rules. Every real estate professional can now raise up to $1 million annually from non-accredited investors. The average private deal that my company tracks is $12 million. Is it reasonable to assume that a sponsor could put together three to five middle-market deals a year? Then would a $1 million crowdfunding cap make any sense for a $50 million annual deal flow? Would this new rule approval make any difference for the commercial real estate industry? Let’s take a closer look at the data.

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