Real Assets Adviser

January 1, 2021: Vol. 8, Number 1

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From the Current Issue

Why some retailers are thriving rather than dying from COVID-19

The potential demise of retail has been a topic of discussion ever since the Sears catalog took aim at brick-and-mortar stores in the 1890s. One hundred years later, ecommerce came along with another business model that challenged traditional retail. But we have never seen anything with the same impact — sudden, rapid and harsh — on the sector as COVID-19. That said, while COVID-19 impacted the sector swiftly, we don’t believe it has materially changed the longer-term trajectory of retail. Instead, it has simply accelerated the evolution of the industry. While the pandemic has had widely divergent effects across the different retail subsectors, overall retailers that have continued to adapt and innovate are proving most resilient.

REITs to get boost from Dollar General

Dollar General plans on hitting the growth accelerator in 2021. The discount retailer unveiled plans to open 1,050 new stores while renovating another 1,750 locations and relocating 100 other stores. That’s an increase from its game plan to open 1,000 new stores, remodel 1,670 sites, and relocate 110 stores by Jan. 29, 2021. The revised plan would enable the retailer to increase and enhance its current footprint of nearly 17,000 locations.

The three-screen fan: Why so many stadiums are racing to install 5G

Stadiums across the country are empty, thanks to the ongoing coronavirus pandemic. Still, the temporary emptiness has not stopped stadium owners from investing on behalf of their fans, namely, in equipping their spaces with 5G technology in venues such as SoFi Stadium in Los Angeles and AT&T Stadium in Dallas.

Puerto Rico playing key role in U.S. plans for reshoring vital supply lines

Let’s agree that the past 10 months, and the collective worldwide effort to understand and defeat COVID-19, has changed everything. Within that framework, it’s clear that Puerto Rico’s 60-year legacy in the business of biosciences makes the island well positioned for what’s needed now. The desirable features of Puerto Rico are acknowledged and embraced by a growing group of real estate investors and both large pharmaceutical companies and high-growth bioscience startups looking to ramp up operations quickly. In fact, the institutional knowledge on the island and sound foundational infrastructure is helping the United States better manage public health. Puerto Rico is already hard at work on this, as the U.S. territory has been for decades.

One billion Americans: Expanding the U.S. economy through strategic population growth

Think about what makes the United States truly powerful. One could argue it’s the millions of people the world over who want to emigrate here. That is among the most powerful elements of so-called soft power that makes the United States influential beyond all other nations, and what has attracted the world’s brightest and most ambitious minds to our country, people who played huge roles in building American industry, not the least of which is the formation and innovations of Silicon Valley. Witness the recent study by the National Foundation for American Policy that found 55 percent, or 50 of 91, of the country’s $1 billion startup companies, had at least one immigrant founder. Another study concluded one-quarter of new businesses are founded by immigrants.

The growing divergence between gateway and secondary markets for multifamily performance

When the multifamily market’s history is written, the year 2020 will shape up to be a tale of two cities — or at least a tale of two types of cities. Gateway markets (Boston, Chicago, Los Angeles, New York, San Francisco, Washington, D.C., specifically their urban cores) have seen some of the worst performance and sharpest declines in fundamentals in recent history. COVID-19 has forced businesses, restaurants and cultural gathering locations to close, and thus keep individuals at home for long stretches of time.

Apartments today and tomorrow: COVID-19 and a new generation tests the resiliency of multifamily

Historically, commercial real estate has provided the strongest risk-adjusted returns over other investment products, including stocks and bonds, and the real standout performer among the asset classes, in recent years, has been multifamily. Unlike the office, retail and industrial sectors that rely heavily on job growth to support demand, multifamily demand is largely derived from population growth. Additionally, unlike the other asset classes, multifamily fulfills a fundamental human need: shelter. It’s a utility that is immune to the vagaries of the stock market and the economy, which is why, even at the height of the global financial crisis, overall multifamily occupancies never dipped below 92 percent.

De-urbanization trend supports homebuilding industry

Homebuilding has fared well during the pandemic, driven in part by a de-urbanization amid the COVID-19 pandemic. “Homebuilding in general has been one of the unexpected beneficiaries of the pandemic, but it certainly varies by market,” says Richard Whiteley, co-president and COO of IHP Capital Partners. “There are several factors at play that affect each area differently. For example, the initial de-urbanization of major cities like San Francisco, where people fled a crowded and congested environment, has benefited secondary markets like Sacramento, Calif., and Reno, Nev.”

The gigawatt economy: U.S. energy storage market shatters records in Q3 2020

Some 476 megawatts of storage were deployed in third-quarter 2020, an increase of 240 percent over the previous high set during the previous quarter. What’s more, the U.S. battery energy storage market is set to grow from 1.2 gigawatts in 2020 to nearly 7.5 gigawatts in 2025, driven primarily by large-scale utility procurements, and solar-paired storage will account for a large majority of these installations, according to the U.S. Energy Storage Association.

Blackstone REIT crosses another threshold

Back in the early days of the “tablet market,” some consumer electronics analysts would say, “What tablet market? There is no tablet market, there’s just the iPad.” That eventually changed when companies such as Amazon and Samsung jumped into the space with both feet. Similarly, one can imagine the real estate and financial analysts of today saying, “What nonlisted REIT market? There’s just Blackstone.” Hopefully, like the tablet market, nonlisted REITs will eventually become a bona fide market. In the meantime, for all practical purposes, there’s just Blackstone.

Billionaire bitcoin proponents make play for gold 2.0

Not only is bitcoin the best-performing asset of the past decade, it will be the best-performing asset of the current decade and is poised to replace gold as the inflation hedge of choice among smart investors. That’s the forecast from Cameron and Tyler Winklevoss, the so-called Winklevoss twins, who were among the first adopters of cryptocurrency, buying $11 million of crypto in 2013 and later starting their own cryptocurrency exchange named Gemini, a regulated digital currency exchange wallet and custodian that has partnered with the likes of Samsung and State Street, has a banking relationship with J.P. Morgan, and business relationships with Deloitte and Marsh McLennan.

Tokenizing real estate assets: The purpose, the promise and the path ahead

Digital securities address many of the barriers that have long plagued investing in assets such as commercial real estate. Historically, investments in private, nonlisted REITs have had virtually no liquidity because of complex regulations, a fragmented marketplace and inherent market inefficiencies. Tokenizing these investments allows for fractional ownership, widening the base of potential investors and improving liquidity in the secondary market. The tokenized format also harnesses distributed ledger technology to eliminate manual, redundant trading processes, reducing settlement times and capital costs while automatically enforcing relevant regulations.

5 Questions: Opportunities in real estate lending

During the past decade, individual investors, wealth mangers and institutional investors have all sought to participate in private debt because of the attractive risk/return profile, consistent income and short durations. The current commercial real estate environment is considered a tremendous opportunity for lenders and investors alike.

A new exit opportunity for investors: SPACs (special purpose acquisition companies) could be good news for organizations seeking liquidity events

People like to say “you don’t invest in a company, you invest in the management.” When it comes to special purpose acquisition companies (SPACs), you don’t have a choice. Unlike a standard corporation — which comes with assets, personnel, products, revenues and other accoutrements of a viable entity — SPACs are a publicly traded corporate shell whose entire purpose is to raise capital to eventually buy an ongoing enterprise. The SPAC goes through the IPO process before it purchases a fully formed business, which is how it raises capital. This public listing is possibly the SPAC’s most important asset, because after it acquires or merges with a target company, the acquired firm takes over the SPAC’s listing on the exchange. It is a method for the acquired firm to go public without the cost or time involved in a traditional IPO.

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