Real Assets Adviser

November 1, 2023: Vol. 10, Number 10

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From the Current Issue

Navigating the coming great wealth transfer: RIAs need to be prepared

Over the next 20 years, an estimated $70 trillion will be passed down to the next generation. In preparation for the coming wave of wealth transfer, it is imperative that RIAs offer the widest breadth of services to their clients. Wealth transfer is a complex process involving financial, legal, emotional and interpersonal aspects. A staggering 88 percent of heirs do not retain their parents’ financial advisers, meaning RIAs need to play a vital role in educating and preparing both clients and their heirs for successful wealth transfers.

The time is right for investing in the energy transition

The transition to a low-carbon economy is producing myriad productive ways to put capital to work. Considerable capital will be needed to fund the massive investment required over coming decades. Investors looking to maximize impact should invest in strategies that lean into recent policy initiatives (e.g., the Inflation Reduction Act) and specialized climate tech funds seeking to solve difficult challenges. Those looking for more stable returns will find an abundance of opportunity in infrastructure funds.

Regulation Update: Opportunity zone legislation gets a bipartisan update

Opportunity zones (OZs) were created by the Tax Cuts and Jobs Act of 2017 and designed primarily to foster economic redevelopment in impoverished areas across the United States. OZs offer investors a significant incentive to invest in these neighborhoods: defer capital gains taxes or, if held for 10 years, eliminate most if not all of the tax. Both the tax deferral aspects and the potential tax-free nature of the investments together make the OZ program particularly attractive.

Microgrids and the future of reliable energy

The soaring temperatures of summer 2023 plagued the American Midwest, testing electrical utilities from Michigan to the Lone Star State. “Can Texas Stave Off its Next Grid Emergency?” inquired Energy and Environment News in September. This query was prompted after the Texas electrical grid infamously collapsed in the winter of 2021. But the rest of the nation was not spared close calls either. In July, PJM Interconnection, the largest U.S. electric grid operator with a whopping 65 million customers, issued an “energy emergency alert level 1” as residents in 13 states, including Illinois, New Jersey and Pennsylvania, went indoors and switched on air conditioners. The sprawling regional transmission organization skirted summer without rolling blackouts, but barely.

Investing in the finance instruments that bring workforce and affordable housing to fruition

News today paints a fairly dismal picture about the state of commercial real estate, and the plot points of most articles are the same. Elevated interest rates have led to disagreements between buyers and sellers about pricing and, in turn, sales transactions have plummeted. At the same time, the rates have also negatively impacted lending. Loans are now harder to get and significantly more expensive when they are available. Like other issues within the general economy today, inflation is a primary culprit.

King coal: Fossil fuels prove stubbornly hard to supplant

Even as the world’s nations have become signatories to the Paris Agreement with promises to gradually move their economies to renewable sources of energy, 2022 showed the planet is still being dominantly powered by fossil fuels. What’s more, coal, the dirtiest of the fossil fuels, is still king, accounting for 34.5 percent of global power generation, followed by natural gas at 22.7 percent, hydroelectric at 14.9 percent, and oil at 2.5 percent, according to the Statistical Review of World Energy.

Tax Update: Gas taxes in the age of EVs

It is estimated that the average American driver pays approximately $300 through road and gas taxes each year, generating critical revenue from each driver that goes toward helping to pay for infrastructure maintenance and other important needs in each region and community. While it may appear that this is yet another unnecessary tax on Americans, it is actually a tactic that each state employs to find new sources of revenue each year. All drivers, including light vehicle car drivers, and those from rental and business fleets all fill up their gas tanks, and therefore each pays roughly this amount on an annual basis.

Talking Points: Quotations from people in the news

Steve Eisman, the Big Short investor who predicted and profited from the subprime mortgage crisis: “At this point, there is no evidence that a recession is coming at all. Inflation’s coming down, the economy is strong, and people are getting hysterical because the Fed is saying rates are going to be higher for longer. I’m not so hysterical.”

Streamlining and automating the investment process

Ask financial advisers about what they deplore about their jobs and “paperwork” will inevitably be near the top of that list. It’s time consuming. It’s inefficient. It’s error prone. It’s limiting in a host of ways. And yet, there are paperless systems available to eradicate those issues and facilitate the adoption of alternative asset classes in client portfolios, though they have yet to be widely adopted by RIAs and other financial service organizations. We asked Eric Satz, founder and CEO of Alto, and Bill Robbins, CEO of Altigo and WealthForge, to address the capabilities available and the impediments to their adoption.

Research Roundup: November 2023

Juniper Square has published new reports on the state of private equity and venture capital, as experienced during second quarter 2023. The private equity report can be read here:, and the VC report here.

Quality real estate markets of the future

Institutional real estate investment has long been associated with prestigious properties in major gateway cities. However, as the landscape of the real estate market continues to evolve and expand, investors are increasingly turning their attention to secondary markets. These “lifestyle” markets, often characterized by lower cost of living, an educated population and untapped potential, offer unique opportunities for investors seeking attractive returns and diversification. But how do you choose among a multitude of secondary or even tertiary markets? Real estate isn’t day trading. Investors can’t easily jump in and out of an investment if they choose wrong. So, what differentiates sustainable quality markets from those that are merely an interesting bet in the short term?

High-speed rail finally rolls: Investors fund first private rail line in a century

The first big test of whether privately owned high-speed passenger train service can prosper in the United States has launched in Florida, with trains running between Miami and Orlando at speeds reaching 125 miles per hour. Florida-based Brightline, owned by Fortress Investment Group, has begun operation using the fastest American trains outside the Northeast Corridor to become the first privately owned passenger operator to connect two major U.S. metropolitan areas in decades.

The Gatling gun: The challenges of adopting new technology

While industries such as finance and healthcare have embraced digital technologies to streamline processes and improve customer experience, the real estate industry has been slow on the uptake. Why? Several reasons are likely. First, apart from a handful of large firms, the real estate business looks more like a cottage industry than a mature industry. It is highly fragmented, with many small players and little in the way of standardized practices, policies and procedures. It lacks a killer solution.

‘Wow’ factors in the alternative investment space: A Q&A with Kevin Gannon

Kevin Gannon is on the stage, pacing and speaking loudly through the amplification system, as if using the power of his oratory to raise the roof of the resort ballroom, to create more room for himself and the Star Wars financial numbers he has come to present. The presentation slides tell the tale of private assets growing ability to attract major investment managers and investor commitments. One member of the audience leans to another and says that Gannon’s firm, Robert A. Stanger & Co., is “the Morningstar of private wealth.”

EV charging plan and how will you profit from it?

The United States is in the midst of a national mobilization that will transform our communities and roadways, not to mention the vehicles we drive. The federal government has set an aggressive goal of having half of all new vehicle sales be electric by 2030, and the auto industry has responded forcefully. General Motors plans to produce only EVs by 2035 and Volvo plans to be fully electric by 2030.

Flash droughts: Farmers face a soaring risk as the planet warms

Flash droughts develop fast, and when they hit at the wrong time, they can devastate a region’s agriculture. They’re also becoming increasingly common as the planet warms. In a new study published May 25, 2023, we found that the risk of flash droughts, which can develop in the span of a few weeks, is on pace to rise in every major agricultural region around the world in the coming decades.

Dead and dying downtowns: What’s next for declining urban cores in U.S. cities?

The hollowing out of U.S. cities’ office and commercial cores is a national trend with serious consequences for millions of Americans. As more people have stayed home following the COVID-19 pandemic, foot traffic has fallen. Major retail chains are closing stores, and even prestigious properties are having a hard time retaining tenants.

A tale of two office markets

The office sector is facing more than its share of tough challenges in a new era of hybrid work that has altered basic supply and demand fundamentals. The story of surplus office space creating a drag on the office sector appears pretty straightforward. Vacancies have increased as demand has decreased. The national office vacancy rate has climbed into the high teens, which will take years to absorb given the tepid demand and downsizing still under way. However, it’s tough to paint office with the same brush; certain geographic markets have been less affected, and strong assets are outperforming weaker peers.

5 Questions: Artificial intelligence comes to investment analysis

Investment analysts are critical for accurately assessing potential investment opportunities. But these professionals don’t come cheap, and they are prone to bias and erratic performance. AI bots and platforms have no such issues, and they are also inexhaustible in terms of collecting and cross-referencing data, and they don’t get bored with repetitive tasks. Those are some of the reasons why AI is furrowing its way into so many different professions and tasks. Ahmed AlNomany is founder and CEO of Batonics, a company that has created a “universal AI analyst” that he envisions replacing junior analysts in various industries, including the investment business.

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