Real Assets Adviser

March 1, 2022: Vol. 9, Number 3

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From the Current Issue

5 Questions: Democratizing commercial real estate through tokenization

In abstract terms, tokenization takes a tangible or intangible object and converts its value into a token that is stored on the blockchain. As such, tokenization can turn basically any asset, whether real or virtual, into a digital token that enables digital transfer, ownership and storage without the necessity of a centralized third party or intermediary. But why tokenize real estate?

Roundtable: Are opportunity zones living up to expectations and, if not, what needs to change to improve their outcomes?

Janet Souk, senior vice president, Clarion Partners: It’s probably a little early to say whether opportunity zones are living up to expectations. Has the program worked out perfectly bringing capital to the most underserved areas? Probably not. Has it brought capital to areas that otherwise would not have seen as much investment? I think so. Has it created jobs and affordable housing that otherwise would not exist? Yes. The intent of the program is good, but there are ways it can be improved. One obvious way is to better track the social and economic benefits of opportunity zone investments. The only way to tell if the program is effective is by measuring and evaluating the long-term impact. This requires an additional effort from as many groups in the industry as possible and an important step we should all consider.

REITs outperformed in 2021 — will they do so again in 2022?

Despite a few jitters in late 2021 with the emergence of the Omicron variant of COVID-19, U.S. REITs performed very well in the past year, with a total return of 43 percent in 2021, according to the Nareit Equity REITs Index. And listed real estate performed well across property types, led by regional malls and self-storage, up 92 percent and 79 percent, respectively.

2022’s hottest housing markets: The Sun Belt again dominates Zillow’s list, with Tampa ranked No. 1

Tampa is predicted to be the hottest U.S. housing market during the current year, with Jacksonville, Raleigh, San Antonio and Charlotte rounding out the top five — each buoyed by a combination of strong forecasted home value growth, high job growth, fast-moving inventory and plentiful likely buyers, according to Zillow’s annual ranking. Additionally, these markets have historically not been particularly sensitive to rising mortgage interest rates or a slowing stock market, two risk factors for housing.

Investing in Mexico: Post-pandemic demand for industrial real estate offers opportunities

To understand Mexico’s emergence in the global economy, one must consider the country’s economic relationship with the United States, which has blossomed over the past three decades. In 1994, the United States, Canada and Mexico enacted the North American Free Trade Agreement (NAFTA). Lawmakers pursued this deal in an effort to reduce trading costs and increase business investment among the three countries, creating an environment in which their products can be more competitive against export-driven nations (e.g., the European Union and China). NAFTA was instrumental in solidifying and growing commercial relations between the United States and Mexico, and the relationship has been further enhanced with the implementation of the USMCA as of July 1, 2020. The USMCA provides improved ground rules surrounding intellectual property protections, free market guarantees, and lower costs for trade between the two countries.

A blueprint for individuals aiming to boost their positions in infrastructure

Within global private markets, infrastructure assets under management are estimated to be $726 billion, or about 7 percent of the $10 trillion in private markets and 14 percent of the market size for private equity. There is positive momentum in fundraising, with more than $300 billion raised for the period 2018-2020, keeping pace with private equity and debt as the fastest growing asset classes among private markets.

Impact real estate: Aiming to bridge investor and public policy goals

The idea of achieving impact through real estate investments has taken many iterations or “flavors” over the years, from public-policy aligned opportunity zone investing to green real estate and more, all touting sustainability and community and economic development. However, “impact real estate” only accounts for about 10 percent to 15 percent ($27 billion to $40 billion) of total reported impact investing assets under management despite the progress in this sector. Many investors remain unaware of its full potential.

Navigating the energy transition

As scientists, government officials, multinational corporations, Wall Street investors and environmental activists scramble to foster a viable “energy transition” and reach net-zero carbon emissions by 2050, it seems fitting to look back at some key events that got us where we are today.

Profile: Jason Wenk, founder and CEO of Altruist

A day in the life of Altruist founder and CEO Jason Wenk is a study in lifestyle management and efficiency. He calculated long ago that a daily morning shave can add up to 40 lost hours per year, so he chooses instead to use a beard trimmer only once per week. Similarly, he gets just two haircuts per year, choosing to allow his hair to grow long and gathering it into a man-bun, not as a fashion statement but to ensure he doesn’t waste time with hair product and styling.

Here come the drones and the drugs

The revolution in commuting is only beginning to take flight — as in drones that takeoff and land vertically. AutoFlight, a Chinese firm, is working on getting its electrically powered air taxi approved by Europe’s air-safety regulators. That is but one of 200 such projects around the world that attracted $5.1 billion in investment during 2021. The idea: drones capable of vertical takeoffs and landing will be well suited to operate passenger services across large urban areas, such as flying people between airports and city centers. Airbus and Boeing have joined the fray with investment dollars, as has Google co-founder Larry Page.

Consider the shipping container: A humble innovation that has touched millions of lives

Malcolm McLean may be the most important person you’ve never heard of. His claim to fame? Inventing a box. But not just any box. McLean — a high school educated truck driver from North Carolina — came up with the idea of creating a series of standardized, intermodal steel containers that could neatly be stacked on ships as well as trains and trucks. That was in 1937. It would be another two decades before the first container ship voyage occurred, from Newark to Houston. Ten years after that, in 1966, container shipping expanded to international routes.

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