Real Assets Adviser

March 1, 2021: Vol. 8, Number 3

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From the Current Issue

The hotel fire sale that never happened

Expecting a tidal wave of distressed selling and recapitalizations at 30 percent to 50 percent discounts to pre-COVID values, the private equity industry raised an unprecedented amount of capital in the early months of the pandemic. Fund after fund reported breathlessly the size of their newest, distressed real estate offering and the ease and speed with which they attracted capital. In the second quarter of 2020, new funds dedicated to real estate investing raised $45.5 billion, the largest second quarter amount in each of the past five years and 24.4 percent higher than the $36.5 billion raised in second quarter 2019.

Hyperscale operators account for majority of data centers worldwide, and the segment is growing fast

The number of large data centers operated by hyperscale providers has more than doubled in the past five years, according to new data from Synergy Research Group. A hyperscale data center is a facility owned and operated by the company it supports, including cloud services such as AWS (Amazon) and Azure (Microsoft). They offer robust, scalable applications and storage portfolio of services to client individuals and businesses. According to AFL Hyperscale, they usually have a minimum of 5,000 servers linked with an ultra-high-speed and high-fiber-count network. 

2021 housing inventories facing shortages

After months of record lows last year, 2021 housing inventories are under the microscope. In real estate terms, normal market conditions see about six months’ worth of homes listed for sale at any given time. That means that at the current sales pace, it would take six months to sell all of the resale houses currently on the market. But, as we all know, these are not normal times.

The good, the bad and the promising in the hotel sector

The hotel business, firmly in the grip of the COVID-19 crisis and trying to stare down the loss of nearly 4 million jobs, will begin seeing modest signs of recovery this year, according to JLL Hotels & Hospitality’s annual Hotel Investment Outlook. Helping fuel the recovery will be private equity groups and high-net-worth individuals, who are expected to become active investors in the space during 2021.

Gold advocates: When investors become disenchanted with the stock market, the yellow metal will be there

The fate of the stock market and the outlook for gold are more intertwined than most realize. A major headwind for gold has been the consensus comfort level with potential returns from mainstream investment strategies. While gold has performed well over the past few years, gold’s outperformance is still a well-kept secret. If a general bear market sets in, many more individual and institutional investors will look toward gold and related mining stocks. In the meantime, macroeconomic and valuation factors continue to build in gold’s favor.

Sunny forecast: Solar cheapest way to add power in many markets — and getting cheaper

The dramatic decline in the cost of solar power — a 90 percent cost reduction over the past two decades — has become a fairly old story. Less well known and perhaps more relevant is that power derived from sunlight has become the least expensive option for adding new power in every U.S. state, as well as in Canada, China and 14 other countries.

Here come the drones and a revolution in transportation

Name a new and emerging technology that has more uses than drones. One would be hard pressed. CB Insights did a report that illustrated 38 different ways drones would impact business and society. Dronegnuity came up with a list of 128 commercial uses for drones. Impressive but unwieldy.

Farmer Bill: Seeking to diversify and innovate, Bill Gates goes big on U.S. farmland

Bill Gates is now the runaway leader as the largest private owner of farmland in the United States. According to an article published by The Land Report, the Microsoft co-founder, whose net worth now stands at $129 billion, has acquired the acreage through Cascade Investment, the investment vehicle and family office run by Michael Larson.

The o-zone imbalance: The overlooked opportunity in opportunity zones

When they introduced the Investing in Opportunity Act in 2017, Sens. Cory Booker (D-NJ) and Tim Scott (R-SC) described their opportunity zones program as “a new approach to connecting struggling communities with the private investment they need to thrive.” They indicated they hoped qualified opportunity funds formed to invest in OZs would prioritize investment in “local infrastructure projects” as well as businesses and real estate.

5 Questions: The growing ranks of single-family rentals

Investor interest in single-family rental housing has been increasing for the past several years, but the category’s strong performance amid the COVID-19 pandemic has cemented SFRs as an asset class that is here to stay. One of the property type’s close observers is Michael Carey of Altus Group, an organization that recently completed a detailed research report on SFRs.

Senior housing, post-COVID

Senior housing has long been considered a defensive sector, in other words one in which demand holds up relatively well during times of economic stress. The coronavirus pandemic has turned that assumption on its head.

Roundtable: What are the hottest categories in impact investing and why?

Impact investing has grown in popularity because a growing segment of the population wants the companies with whom they work to reflect their individual values. It will be interesting to see over time, as people’s life experiences and perspectives change, if their investment philosophies adapt as well. Topics like social justice, environmental sustainability and financial inclusion are top of mind because of passionate citizens, current events and the network effect of social media. If performance in impact investing is strong, it’s a win-win. If returns lag, it will be fascinating to observe whether performance or values win out.

The real estate reset: Eight core truths guiding the future of work and office space

Despite significant uncertainty, corporate real estate leaders must now embrace the unknown and confront the new realities of business, according to a CBRE report that outline eight “core truths” that its researchers believe are guiding companies today. The report also contains key considerations corporate real estate leaders must examine when evaluating long- and short-term business decisions that will determine the future of work.

Profile: Beth Bosworth, managing director, Lakeview Capital Partners

If you have ever doubted the power of using the right words, consider the LinkedIn message received by Beth Bosworth from the original founder of Lakeview Capital Partners. It read: Hey, I saw your profile. You have an interesting career path. I would love to get together and swap stories.

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