Real Assets Adviser

October 1, 2017: Vol. 4, Number 10

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From the Current Issue

Houston Real Estate After Harvey: With property damage estimates upward of $100 billion, the storm might end up the most expensive natural disaster in U.S. history

Hurricane Harvey slammed into Houston on Aug. 25 and dropped more than 50 inches of rain over the next few days, producing a swath of flooding in low-lying developments and areas near rivers, lakes and reservoirs. The flooding damaged tens of thousands of single-family residences and apartments, commercial properties, vehicles and infrastructure. The storm might end up as the most expensive natural disaster in U.S. history, with property damage estimates upward of $100 billion.

How to Invest in Farmland

Agriculture encompasses a broad swath of economic activities — from providing grower inputs and equipment, to operating farmland, to processing raw commodities and distributing food products. Investment in farmland is a relatively recent phenomenon, and early investors have generally reaped meaningful returns thanks to increasing acceptance. Future return prospects are promising due to supply growth slowing and effective demand growth increasing. The influx of capital into the sector has led to a proliferation of investment products for investors that vary based on their risk and return characteristics, exposures and cost.

The Silver Tsunami Meets the Robo-Adviser: Fintech could help the wealth advisory business serve many more clients

As widely chronicled, those unruly college kids of the 1960s, the visible spear-point of a post-World War II baby boom that has defined U.S. popular culture and macroeconomics for decades, are now on the doorsteps of retirement. Through life, baby boomers have swamped institutions and markets, from elementary schools, to universities, to jobs and housing situations, and soon will become the golden-year habitués of cruise ships, retirement homes and hospices.

The Outdated U.S. Power Backbone: Private investors pouring millions into space to increase output

American consumers’ growing energy appetite means greater demands on our nation’s energy infrastructure, including pipelines, railroads, highways, waterways and ports. A robust infrastructure system that is safe, efficient and properly maintained can help lower the costs of supplying oil and gas and its products for consumers, by reducing congestion, maximizing efficiency and preventing accidents.

Building a Dynasty: The rags-to-riches story of Shirl Penney, founder and CEO of Dynasty Financial Partners

Though just 40 years old, Shirl Penney has already lived a life of extremes. Nothing is any more integral to his identity than having grown up in extreme poverty and rising above those early years of privation. There was also the extreme success he achieved in his 20s and 30s while quickly climbing the corporate ranks at Salomon Smith Barney and Citigroup, where he ran the VIP meetings between the companies’ senior executives (including Wall Street legend Sanford “Sandy” Weill) and their wealthiest clients. When he decided to walk away from a traditional Wall Street career to become an entrepreneur by starting his own financial services firm in the midst of the financial crisis, he was beset by a work schedule more extreme than even Penney had anticipated.

Down But Not Out: There is an investment case for down-and-out commodities

With virtually every major asset class around the globe having risen, it seems that even a dart-throwing monkey would have prospered so far this year from his investment picks. Global equities (as measured by the MSCI All-Country World Index), for example, were up 15 percent as of Aug. 7, and the S&P 500 Index gained 12 percent during the same time frame. The outlier here is commodities, down 7 percent (S&P GSCI index of commodities) for the year as of the same date.

The Forgotten Factor: How property tax liabilities can kill a real estate deal

Today, only 25 percent of commercial real estate firms are managing their property tax liabilities using enhanced technology and analysis, and yet almost three-quarters of them believe they could make better investment decisions with better tax planning. Why would an industry that invested more than $500 billion in 2016 in the United States and Canada alone be leaving such a large expense item to chance?

Transforming Real Estate for the New Economy: The art of being sensitive to changes in underlying demand trends

In every aspect of our economy, advancing technology and evolving demographics are fueling significant changes in demand patterns. How we live and work is increasingly “amenitized” and connected, which influences consumer and business decisions. By its very nature, our physical infrastructure lags changes in underlying demand, and today there is a need for much of our existing real estate to be transformed to meet the demands of the new economy. This need is providing attractive return opportunities for investors through value-add real estate investment in select markets.

Three Years and Counting: Fresh off a high-octane meeting with our Editorial Advisory Board, we assess our progress

The publishing of this edition of Real Assets Adviser marks three years of operation for this magazine. Ron Carson, one of the industry’s extraordinary entrepreneurs and advisers, was on our first cover, and since then our covers have been home to extensive profiles featuring Kevin O’Leary of Shark Tank and O’Leary Financial Group, Pablo Sanchez of HSBC private wealth, Jim Steiner of Abbot Downing, Alexandra Lebenthal of Lebenthal & Co., Mike Perry of Nuveen and many other leaders of the private wealth advisory business.

Blockchain Comes to Real Estate: San Diego company uses the technology to launch trading platform that facilitates investments in illiquid real estate securities

Blockchain may be the hottest buzzword in finance right now. Also known as distributed ledger technology, it is the structure underlying crypto-currencies such as Bitcoin and Ether. But the technology has much wider applications in the world of finance. Because every new trade or sale (a “block”) is recorded throughout a network of computers (creating a “chain” of such blocks), it can authenticate and track transactions in real time.

Miami in the Age of Climate Change: City seeks to protect its status as real estate mecca by building one of the world’s most resilient coastal communities

Miami’s robust real estate market has proven to be a sound opportunity for conservative and aggressive investors alike. All indications point to continued growth in the coming decade, driven by above-average population growth and the insatiable demand for market-rate housing in the region. However, the shine of Miami’s real estate market is at risk of being tarnished by the impact of climate change and resulting sea-level rise. Past rhetoric on the subject has slanted toward sensationalism in order to grab headlines, but the content commonly excludes the important facts that an investor would need to effectively evaluate the risk and potential of Miami real estate. Exploring the groundswell of action on resilience and climate adaptation led by local governments and private-sector influencers is necessary if the real estate investment community wants to evolve beyond the inflammatory headlines and understand the opportunities a future with climate change will hold.

Meanwhile, Back in the ’Burbs: Are suburban real estate markets hidden gems or fool’s gold?

Only a few years ago, investors avoided suburban real estate in favor of urban locations. Today, the industry is trumpeting the merits of suburban assets. What caused this dramatic reversal in how suburban markets are viewed? And, is the current view valid? Let’s consider traditional suburban locations (as opposed to close-in urban locations or secondary business nodes). Submarkets such as Buckhead in Atlanta, Kendall Square and Cambridge in Boston, Cherry Creek in Denver, and Santa Monica in Los Angeles, among other submarkets, were excluded from this suburban analysis. Those submarkets, although technically suburban, replicate urban characteristics and typically do not track the growth patterns of the more traditional suburban submarkets developed after World War II.

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