Real Assets Adviser

July 1, 2017: Vol. 4, Number 7

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From the Current Issue

Texas Tea Runneth Over: As underscored at the Mick Law energy conference, Mother Earth is far from done with fossil fuels

After decades of predictions that “peak oil” had been reached (the hypothetical point in time when the global production of oil reaches its maximum rate), the earth is now gushing fossil fuels more bountifully than ever. There is much more oil trapped in the earth’s crust than many had believed — or than we could get to in years past. Now, with hydraulic fracturing technology, the earth is surrendering its oil and gas in record amounts.

Climate Change and Commercial Real Estate: How resilient is your portfolio?

Commercial real estate assets are developed and owned with the expectation of providing steady income and value increases over the course of decades. Wise owners invest in areas where governments are stable, the rule of law prevails, the economy is growing, and the infrastructure is well funded and maintained. But today, a wise investor also needs to assess the environmental resilience of investment locations, especially in light of climate change, which threatens to upend the stability of environmental conditions throughout the globe. To understand and quantify the risk our portfolios are exposed to on an absolute basis and relative to other institutional investors, National Real Estate Advisors created an analytical tool to help us assess catastrophic risk related to climate change. In addition, we evaluated individual markets’ climate resilience — in particular focusing on Miami and South Florida, where we believe the outsized risk from climate change ought to preclude institutional investment.

How to Invest in Industrial Real Estate

Industrial properties have become the new darling of real estate investors. Significant global capital is pouring into the buildings where goods are created, stored and shipped. Take a look at the numbers and it is not hard to understand why: record rental income, strong demand and mass disruption from e-commerce calling for new product.

Real Estate’s Triple Play: Single-tenant, triple-net leased assets are a relatively safe way for investors to access real estate without taking on management and operating costs

Despite its many benefits, real estate is well known for a few specific characteristics that give private investors pause. Its illiquidity, management fees and high cost to diversify are a few of the most-often cited hurdles. Single-tenant, triple-net leased (NNN) assets, however, can mitigate many of these objections. These investments are stable, income-producing, low-maintenance, bond-like investments that also retain the growth and tax advantages of real estate.

Bankruptcies by the Truckload: Retail faces challenging headwinds in 2017

The 1978 film Dawn of the Dead, and the 2004 remake of the same name, both set their action inside a shopping mall, with plucky heroes setting up camp inside retail centers as zombies gather outside. The scenario might sound familiar to investors in traditional retail properties in 2017. One sign of increased distress: More retailers filed for bankruptcy in first quarter 2017 than in all of 2016. It gets even more grisly. Credit Suisse predicted in a new research report than as many as 25 percent of U.S. malls will close by 2022.

The Demographic Imperative: Commodities are the basis of all we use; yet direct exposure to agriculture and grains is often overlooked

Demographics are interesting. The fact that the human population of planet Earth is growing at a rate of about 78 million people per year is something that can make a portfolio manager’s brain shout “Opportunity!” But how does one grasp the significance of so many additional souls being added to the population each and every year, and how does one determine how to deploy resources to benefit from this understanding?

Investing in Undeveloped Land: A question and answer session with Jim McAlister IV of Rockspring Capital

Why do investors tend to be averse to investing in undeveloped land? What are the advantages and disadvantages of investing in raw land? What are some of the factors that need to be taken into consideration when assessing whether an undeveloped parcel is a good investment? Jim McAlister IV, CEO of Rockspring Capital, takes us through the paces in this Q&A excerpted from a podcast interview he recently did with Real Assets Adviser.

Man vs. Malthus: The search is on for a second Green Revolution

Unfortunately, the time has come for another round in the fight between Mankind and Thomas Malthus. Malthus, a patron saint of pessimists, is an 18th century English philosopher who famously predicted in 1798 that mankind’s exponential population growth will always outpace its ability to grow more food — limiting both absolute population growth and advances in standard of living.

The Rise of Interval Funds: Institutional-style alternative investments for the retail client

For astute investors seeking higher yielding assets, their greatest challenge may be finding ways to buy and sell them. Then came a structure called the “interval fund.” Typically available only to institutional investors — who get paid a premium for holding illiquid assets such as private loans, structured credit or commercial real estate debt — regulations from the Securities and Exchange Commission make significant allocations to such asset classes impossible in ordinary mutual funds.

Captaining His Own Ship: After his first employer’s culture ran aground, Marty Bicknell took the helm of Mariner Wealth Advisors and now it is full steam ahead

In some regards, Marty Bicknell became the founder and chief executive of Kansas City–based Mariner Wealth Advisors due to a now obscure change to federal securities law in 1975, the so-called May Day deregulation of stockbroker commissions. From that date and change, major U.S. securities firms would largely migrate from a stockbroker-and-client-centric industry to an investment-banker or corporate-finance focus. The eventual emergence of Charles Schwab and other “discount brokerages,” and ever-cheaper online trading platforms such as E*Trade, knifed and then buried the old stockbroker model.

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