Real Assets Adviser

June 1, 2022: Vol. 9, Number 6

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From the Current Issue

The ever-evolving definition of infrastructure investing

In an inflationary era, with rising interest rates and a war in Europe, investors can be forgiven for questioning their conventional methods and definitions of investments within their portfolios. Many investors, even before the economic turmoil of a pandemic, were already anticipating market corrections and, according to a McKinsey & Co. article titled “Institutional Investing in the Time of COVID-19,” they were embracing risk-factor approaches to portfolio construction. The article notes, “Those who implement these approaches do so largely because they believe that the promise of diversification failed in the last crisis, and that diversification across macro risk factors — equity risk, inflation and rates, for example — is the right way to diversify.”

The yellow flare: In every bear market, gold and gold mining stocks outperformed

The U.S. economy contracted 1.4 percent in the first quarter, leading some investors and analysts to raise the specter of the dreaded “R” word: recession. This, combined with historically high inflation and expectations that the Federal Reserve will raise rates faster than anticipated, could point to trouble ahead for a market already trying to grapple with war in Eastern Europe, ongoing COVID lockdowns, and more.

Roundtable: Private wealth executives on real estate property types

What real estate property type do you expect to perform best over the next five years? Josh Schuster, managing principal, Silverback Development: "Multifamily housing has proven resilient over the past two years, further underscoring the desirability of this asset class. The multifamily market made a remarkable comeback, especially in metropolitan areas such as New York City, and continues to perform exceedingly well — a trend we don’t anticipate slowing over the next several years. Despite rising costs, there is growing demand for ..."

Bridging the gap: Modernizing industrial assets to meet ongoing demand

The United States industrial market has weathered an unpredictable, unprecedented two years. The social restrictions implemented in response to COVID-19 led to a significant increase in both ecommerce users and activity, subsequently driving a boom in demand for real estate to support last-mile and logistics operations. As such, this time has been marked by an extreme imbalance in supply and demand, resulting in an environment of space scarcity. Hitting a new record-low vacancy rate of 4.0 percent in the first quarter of 2022, the national industrial market is starved for space, and numerous major markets have little to no immediate occupancy opportunity for prospective tenants.

Metaverse property grab: Who says they aren’t making any more land?

The term “metaverse” was first coined in the 1980s by novelist Neal Stephenson. In his novel titled Snow Crash, he describes the metaverse as a virtual place where people could escape the current reality, which was a totalitarian apocalypse. Fast-forwarding a few decades to the announcement that Facebook would be changing its name to Meta Platforms Inc. (doing business as Meta), and the question that comes up is what, exactly, is the metaverse?

5 Questions: How BlackRock invests in alts and real assets

Who better to speak about investing in alternatives and real assets than Anne Valentine Andrews, one of the executives in charge of committing billions of dollars to those classifications on behalf of BlackRock, one of the world’s largest asset managers?

The capital controversy around stock buybacks

Stock buybacks have become a major force in the capital markets, despite the fact that they were illegal prior to 1982. In 2021, companies in the S&P 500 repurchased $882 billion of their outstanding stock, which represents just under 3 percent of the market value of that index at the end of 2020. In the fourth quarter of 2021, buybacks reached an annualized rate of $1.08 trillion. While 2021 recorded a large number of IPOs, net issuance of stock was still a negative $600 billion, according to Yardeni Research.

Profile: Brent Brodeski, co-founder and CEO of Savant Wealth Management

Brent Brodeski, co-founder and CEO of Savant Wealth Management, made a practice of attending the Harvard Business School executive education program each year. The 2021 sessions, though, were especially poignant, highlighted by a finance professor conducting a class titled, “Is the World Upside Down or Not?” The professor’s conclusion: The world may be upside down based on the availability of equity capital, low interest rates and outside investors looking to buy companies for aggressive multiples, giving owners an opportunity to sell their businesses or raise capital to accelerate the growth of their companies.

3D printing and the future of manufacturing

The 3D printing industry, no stranger to the angst of growing pains, seems on the brink of maturity. In the past few years alone, 3D-printer-parts have become vital components in cars, airplanes and even your running shoes. The technology is used to make prosthetic limbs, hearing aids and dental guards. Specialized 3D -printing construction companies are building houses in the United States and overseas. It even helped make nasal swabs, face masks and critical care ventilators to ease pandemic supply shortages.

How oil could hit $200-plus per barrel

Vladimir Putin threw a spark into the powder keg of the global oil market. The Russian invasion of Ukraine has sent oil prices soaring above $100 per barrel, and we could see even more explosive gains ahead. While the geopolitical situation is complex, the market impact distills down to basic supply and demand. Even before the Ukraine conflict, the world was running short of oil – evidenced by prices rallying above $90 per barrel at the start of this year. Now, the market risks losing millions of barrels of Russian exports at the worst possible time.

One thousand podcasts later: From humble beginnings comes an audience

We started podcasting nine years ago. Why not? Everyone else was doing it. There are millions of podcasts the world over. Literally millions of them. Some have gotten enormously popular and valuable. The most popular in the nation is The Daily by The New York Times, followed by NPR News Now. Good to see news programming in the top slots. Spotify paid Joe Rogan at least $200 million, according to Forbes, to host The Joe Rogan Experience exclusively on its platform. But those are the rarest of exceptions. Most podcasts draw flies in terms of listeners.

Microsoft and Finnish utility to capture and recycle heat from data centers

Data centers are energy pigs. We know this. The numbers tell the story. Data storage facilities alone consume 1 percent of the planet’s electricity demand. Some 40 percent of that total is committed to simply cooling the millions of servers humming nonstop to store, process and retrieve the rocketing amounts of data and video we create hourly, daily and yearly. Overheat a server and it will go down, and data will likely be lost.

‘Big A’ affordable housing: what it is, and what investors need to know

Interest in affordable housing has continued to increase over the past several years, especially amongst institutional investors. Capital is increasingly flowing to the sector, and at a rapid rate, making the term “affordable” somewhat of a buzzword. But what does “affordable housing” actually mean, and how does it differ from other multifamily assets, including workforce, attainable and essential housing? The fact is, important and significant distinctions exist among these different subsectors, yet they are often referred to under the same umbrella of “affordable.”

Power to the plains: Grain Belt showcases problems facing transmission lines

The United States desperately needs new power lines. To get an idea of U.S. transmission development stagnation, consider this fact pointed out in an Atlantic article last year: “Since 2009, China has built more than 18,000 miles of ultrahigh-voltage transmission lines. The U.S. has built zero.” 

Energy simplified: Let’s end crisis management-based policies

Energy policy doesn’t have to be as complex and confusing as Washington sometimes makes it sound. Not when America is the world’s leading producer of natural gas and oil. Abundant oil and natural gas are the foundation for all kinds of solutions — if policymakers would simply see them as the strategic American assets they are. Conversely, when some talk as though America faces intractable challenges, and suggest that answers to higher energy prices, inflation and security concerns are hard to find, they’re missing the obvious solutions in front of them in U.S. oil and gas.

Electric trucks are reaching a tipping point

Popular passenger pickup trucks like the Ford F-150 aren’t the only thing going electric, a large portion of medium- and heavy-duty (MHD) trucks in California and New York are currently electrifiable, meaning that today’s fossil-fuel-powered rigs could be replaced with EVs available now or expected in the coming year.

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