Real Assets Adviser

February 1, 2023: Vol. 10, Number 2

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From the Current Issue

The ‘R’ word: Global property denizens ponder recession in 2023

Across the world, property developers and investors in the 2020s are living history large: pandemic, then war in Eastern Europe attended by nuclear saber-rattling and continental energy crunches. Add epic international supply-chain snags, then worldwide inflation and rising interest rates.

Power down under: An energy source for all seasons and times of day

Geothermal is a lesser-known type of renewable energy that uses heat from the Earth’s molten core to produce electricity. While this unique feature gives it key benefits over solar and wind, geothermal also suffers from high costs and geographic restrictions. Because of this, few countries have managed to produce geothermal energy at scale.

Debt funds' time has come

Investors have discovered private debt. Precise numbers are hard to come by, but it is generally accepted that the private debt market cap stood at approximately $300 billion in 2008 and is now approaching $1.25 trillion at the end of 2022. We can point to three prime reasons for this exponential growth: returns, diversification and being in the right place at the right time.

Talking Points: Quotations from people in the news

Bob Iger, CEO of Walt Disney Co., on the decision to bring employees back to the office four days a week: “As you’ve heard me say many times, creativity is the heart and soul of who we are and what we do at Disney. And in a creative business like ours, nothing can replace the ability to connect, observe and create with peers that comes from being physically together.”

Senior housing bounces back

The COVID years hit several real estate sectors hard. Lodging and retail immediately jump to mind. But maybe the hardest hit sector was senior housing, especially the long-term care facility (LTCF) or skilled nursing home and assisted-living subsectors. Instead of a safe harbor for frail or ill seniors, LTCFs and assisted-living facilities became Petri dishes of infection. In the early days of the pandemic, nearly half of all COVID deaths were in LTCFs, according to the Kaiser Family Foundation. By the end of January 2022, that percentage had dropped to about 23 percent, which is still an unprecedented amount of death.

Tax Update: The import of tax-efficient investing

Making tax-efficiency part of your investing strategy can help lower your tax bill, and yet taxes are such a normal part of life that people may overlook them until it’s time to file their returns. Unfortunately, by that point it, may be too late to implement an efficient investment strategy for minimizing their tax bill.

Cities and regions with the highest concentration of data centers

Surging demand for data consumption and storage is driving a rapid expansion of data centers in the United States. These U.S. data centers are located in areas with abundant electricity for their intense power demands, copious amounts of water for cooling, access to fiber connectivity, affordable real estate, tax incentives and away from regions that are prone to natural disasters.

The replication game: Innovative products lead to a boom in imitation and often a bust

Buried in a dusty landfill in Alamogordo, N.M., are more than 700,000 discarded Atari game cartridges, including E.T., the 1982 Atari game based on the blockbuster film. This bleak trove of artifacts symbolizes the video game crash of 1983, when consumer demand plummeted and companies like Atari literally dumped their cartridges in the trash.

The blockchain and global commerce

While the Sam Bankman-Fried and FTX cryptocurrency exchange implosion has given the blockchain world a black eye heading into 2023, there is little doubt the technology will find increasing applications all across global commercial and financial markets.

Report: Plenty of nontraded REIT liquidity

Despite recent roadblocks encountered by some investors looking to cash in shares of certain giant nontraded real estate investment trusts, the managers of illiquid REITs have sufficient reserves to meet client demands to redeem shares at the moment, according to a report by Robert A. Stanger & Co., an investment bank that tracks sales of illiquid alternative investments.

Powershift: How Putin’s war and small islands are accelerating the global shift to clean energy

The year 2022 was a tough one for the growing number of people living in food insecurity and energy poverty around the world, and the beginning of 2023 is looking bleak. Russia’s war on Ukraine, one of the world’s largest grain and fertilizer feedstock suppliers, tightened global food and energy supplies, which in turn helped spur inflation. Drought, exacerbated in some places by warring groups blocking food aid, pushed parts of the Horn of Africa toward famine. Extreme weather disasters have left trails of destruction with mounting costs on nearly every continent. More countries found themselves in debt distress.

5 Questions: The forgotten tertiary real estate markets

Institutional and large private investors have long concentrated their real estate investments in primary markets (such as Chicago, Los Angeles, New York and San Francisco), and in hot secondary markets (such as Austin, Charlotte, Denver and Phoenix). While they have done well with those locales over the years, those and similar markets have gotten crowded and expensive when real estate assets are performing well, begging the questions: How much money is being left on the table in tertiary markets? What are the challenges to investing in these markets, and how are they best evaluated and accessed?

Real estate and construction industries’ growing cyber threat

In the past few years, real estate and construction leaders have made great strides to implement new technologies into their regular practices. While these advances have uncovered additional efficiencies, their adoption has created a critical vulnerability: data security.

Profile: Anthony Scaramucci, founder and managing partner of SkyBridge Capital

Anthony Scaramucci is a guy who knows how to make headlines. Not the kind of self-induced headlines his former boss, Donald Trump, is fond of generating. In Scaramucci’s case, they just seem to happen, the byproduct of his vigorous professional lifestyle. Some of them are financial in nature, others political. Some are good news, others bad news. But even his misfortunes seem to eventually be parlayed into good fortunes.

Notes and Trends: Billions come and billions go, even for the redoubtable Cathie Wood

It was just a couple of years ago that Cathie Wood was being hailed by some as the world’s greatest investor. Her actively managed disruptive technology ETFs were producing astounding returns of 100 percent or more, boosted enormously by large positions in Tesla and Zoom. Billions in investor dollars flooded her ETFs in hopes that past performance would be evidence of future returns. That was then. Now, her firm, ARK Investment Management has lost almost ...

The elusive spark: Nuclear fusion technology could be a $40 trillion market

Scientists at the Energy Department’s Lawrence Livermore National Laboratory in California announced the first-ever demonstration of fusion “ignition.” This means that more energy was generated from fusion than was needed to operate the high-powered lasers that triggered the reaction. More than 2 megajoules (MJ) of laser light were directed onto a tiny gold-plated capsule, resulting in the production of a little over 3 MJ of energy, the equivalent of three sticks of dynamite.

Common pitfalls when investing in self-storage

Self-storage, once an alternative real estate category, has been an investor favorite for years, growing rapidly over the past decade. Today, it remains a valuable niche property type because it performs well even in a recessionary environment. Indeed, self-storage is known to perform well in good times and bad.

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