Real Assets Adviser

September 1, 2016; Vol. 3, Number 9

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From the Current Issue

Good Prognosis for Medical Office REITs: Hospitals have been selling off and leasing back their facilities, creating opportunities for real estate investors

This article was originally published in the May/June 2016 issue of REIT magazine and has been republished with the magazine’s permission.

Shifting dynamics in healthcare services are driving healthcare REITs to the doctor — or the doctor’s office, at least. While less than 15 percent of the more than $350 billion worth of medical office buildings (MOBs) in the United States are owned by REITs, the property sector is increasingly attracting investors looking for a stable asset to offset some of the operating issues confronting healthcare REITs.

Real Estate and Infrastructure: The case for income-producing real assets

Real estate and infrastructure enjoy a symbiotic relationship. Real estate comprises the structures in which life and work take place, and infrastructure connects and powers that life and work. Both are familiar and recognizable asset classes for both retail and institutional investors. If we reflect on an average day, our economic and social activities are intertwined with the use of both real estate and infrastructure assets.

Cross-Pollinating Agriculture: How technologies developed for other industries are revolutionizing food production

When our team meets entrepreneurs we almost always ask, What’s your story? to better understand both the history of the startup and its technology. After nearly a decade of venture investing in the food and agriculture sector, we have heard more than 2,000 such stories. In the past few years, we have noticed some interesting plot twists. More and more companies are leveraging technologies first developed and commercialized to serve the military, energy and healthcare sectors for application to the food and agriculture sector. We believe funding these types of pivots with the right team may yield outsized returns for investors.

Headwinds in Commodities: Declining farmland values present new opportunities for investment managers

In the past decade a growing amount of capital has targeted farmland investments. This period of growth for the asset class has been accompanied by land values appreciating faster than the long-run trend. Despite increased popularity, farmland investments remain a small asset class in terms of invested capital. Net farm income reached record highs in 2013 and then fell by 38 percent in 2015, causing land values to decrease 3 percent. Land values are expected to continue their decline in 2016.

The Energy Ultimatum: In a world of low oil prices investors are faced with few options

For more than a year now, the prices of both West Texas Intermediate and Brent Crude oil have been bumping along in the range of $30–$60 per barrel, currently hovering just above the $40 per barrel mark. Between 2012 and 2014, prices reached as high as $125 per barrel and never fell below $90 per barrel until they began their steady decline toward the end of 2014.

Campaign Promises: Clinton and Trump promise huge infrastructure plans, but either would face an uphill battle

Presidential candidate Hillary Clinton has proposed to invest $275 billion over five years in a broad range of infrastructure projects including highway, rail, sea, air and broadband expansion. Her plan would directly invest $250 billion in projects and would provide $25 billion in seed money to create a National Infrastructure Bank, plus another $225 billion in loans and loan-guarantee programs to encourage investors to back national infrastructure projects.

Harvesting the Farm: Strong returns, improved transparency and expanded product offerings are reasons for optimism among farmland investors

Mark Twain is purported to have said, “Buy land, they’re not making it anymore.” Despite this sage advice, agricultural investments account for only a small proportion of investor portfolios. Those who invested in the sector have been rewarded handsomely. The National Council of Real Estate Investment Fiduciaries (NCREIF) reports farmland investments returned 11.7 percent on an annualized basis since records began in January 1991. Comparable annualized S&P 500 returns for the same period were 9.8 percent. The farmland lending environment has also been favorable, with better risk-adjusted returns than most fixed-income sectors in recent decades. 

Tough Times for Nontraded REITs: New regulations and declining investor participation has industry players consolidating and reflagging themselves

On the heels of new regulatory decrees and financial reporting requirements, the nontraded REIT industry is going through a period of transition. Sponsors in the industry recognize that changes need to be made to the old model in order to thrive under the new regulatory regime. However, with transition comes uncertainty, and as financial markets well know, investors do not like uncertainty. The result has been a significant decline in fundraising volume for nontraded REITs. 

Rise of the NextGen Adviser: Developing the next generation of talent solves demographic issues and is a strategy for growth

Over the last several years there has been a significant and well-chronicled movement in the financial advice industry to develop a “next generation” of talent and leaders.

With just 21 percent of the current population of financial advisers under the age of 40, the need for new entrants — and the long-term implications on the business of providing advice — has become a priority item.

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