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Don’t Miss Summit 2018!

Don’t Miss Summit 2018!

January 24, 2018 | Beth Glavosek | Blue Vault

 

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Blue Vault’s fourth annual Broker Dealer Educational Summit will be held Monday, March 12, 2018 – Wednesday, March 14, 2018 at The Alfond Inn, Winter Park, Florida.

The Summit gives leading alternative investment product sponsors, including those offering nontraded REITs, BDCs, and Closed-End Funds, Interval Funds and Private Offerings, a platform to demonstrate their investment strategy and expertise for the products they offer and answer questions posed by the industry’s leading Broker Dealers. 

“As always, our goal for the Summit is transparency, education, and due diligence,” says Stacy Chitty, Managing Partner for Blue Vault.

The Blue Vault Summit offers multiple opportunities to share valuable information. Sponsors have a forum in which to educate the Broker Dealer community about their current open offerings. Broker Dealers have the opportunity to stay informed on the strategy and performance of those open offerings, as well as offerings already closed to investors. In today’s post-DOL environment, sponsors are becoming more creative in how they address challenges like fees and liquidity, and the Summit provides a great opportunity to explain how they’re structuring new products.

Chitty says that Blue Vault brings together these leading players at the Summit in an effort to create robust dialogue. The agenda will include sponsor presentations, private Broker Dealer discussion time, panel discussions, and dine arounds. “We believe it’s fundamentally important to create an environment where serious information can be exchanged, hard questions can be asked and discussed, and healthy conversation can be facilitated,” Chitty says. “That’s what the Blue Vault Summit is all about.”

Summit 2018

How the New Tax Law Impacts Commercial Real Estate Investment

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How the New Tax Law Impacts Commercial Real Estate Investment

January 16, 2018 | James Sprow | Blue Vault

United States Capitol Building, Washington, DC

We can parse the impacts of the new tax law that President Trump signed recently into first effects and secondary effects. Put simply, some provisions are likely to directly affect the cash flows to investors from commercial real estate, while other provisions have more complicated effects via their long-term impacts on the supply and demand for different categories of commercial real estate.

First, the 1031 tax-deferred exchange, the mortgage interest deduction for real estate investment, and depreciation allowed for real estate changed very little. This means that some of the more obvious and important tax law provisions remain unchanged, and investors will not need to adjust their thinking or investment decisions to account for them.

One major positive effect of the tax law passage for both the economy in general and commercial real estate investment specifically is the removal of uncertainty. Investment decisions are always made in an environment of uncertainty and risk. When uncertainty is high, investment decision models are adjusted to require higher expected returns to compensate. When the tax bill passed, investors could more accurately forecast future after-tax cash flows, reducing the need to add an “uncertainty premium” to their models.

The 20% reduction of taxes on pass-through entities such as Limited Liability Companies (LLCs) in 2018 that will apply to 2019 tax filings could mean that, on an after-tax basis, commercial real estate could provide better risk-adjusted returns relative to dividend-paying stocks and bonds. More passive capital may be invested in the sector via syndications, partnerships and other pass-through funds.

The secondary or indirect effects of the tax law changes could be just as important as the direct effects. By increasing the standard deduction and capping the deductions for local property taxes and state income taxes, the demand for housing could be affected in higher-taxed states. 

By dropping the maximum corporate tax rate from 35 percent to 21 percent and granting businesses generous expensing and depreciation rules, we can expect increased capital expenditures by corporations, some of which will increase demand for industrial and office space. On the other hand, the elimination of the personal mandate in the Affordable Care Act could dampen long-term demand for healthcare-related real estate.

Marcus & Millichap estimate that the tax law, by raising the standard deduction and capping property and local and state income tax deductions for homeowners, raises the threshold home price that benefits from itemized deductions from the $200,000 range to $400,000 for married couples. This could reduce demand from first-time home buyers and raise demand for apartments.

The elimination of the personal mandate in the ACA is estimated to reduce the number of persons with health insurance by 5 percent, modestly reducing the demand for healthcare and inducing a slight downshift in demand for healthcare real estate. Still, the aging population will increase demand for healthcare services, but the net effect on demand will be less than it would have been with the personal mandate in place.

Marcus & Millichap also highlight single-tenant net-lease properties as a sector that could receive a disproportionate share of new investment. This asset class is often occupied by credit-worthy tenants on long leases and could give passive investors yields that fit well in investment funds that are structured to benefit from the new pass-through rules.

The newly expanded expensing rules that will allow business owners to fully expense up to $1 million of depreciable tangible personal property used to furnish lodgings will allow investors in hospitality, student housing, and seniors housing to deduct the full cost of furniture placed in service rather than depreciating them over multiple years. The rules will also apply to roofs, heating, ventilation and security systems in non-residential property, benefitting small businesses primarily as the deductions are phased out as business investment purchases exceed $2.5 million. 

Along with these other direct impacts, the secondary macroeconomic effects of the tax bill can be important as well. Consider:
•   Job creation has been positive for a record 86 months. Unemployment is in the low 4 percent range and wage growth may accelerate. Consumer and business confidence is high. Tax law changes will reinforce these trends.
•   Increased corporate investment due to the lower corporate tax rate and changes to depreciation and expensing rules will support higher rates of economic growth. Repatriation of overseas earnings will increase U.S. corporate liquidity and economic growth.
•   Most individuals will see a reduction in personal income taxes, boosting consumption, the main component of economic growth in the U.S.
•   The housing sector will likely be negatively impacted, more in high-tax jurisdictions, reducing the demand by first-time buyers.
•   The Fed will likely raise its benchmark interest rate three times in 2018 and reduce its balance sheet, keeping its eye on inflation and attempting to increase long-term rates.
   

Bottom line, the first major tax bill to be signed into law in decades will have many direct and indirect impacts on commercial real estate values and investors, mostly positive.

More on Interval Funds

More on Interval Funds

January 15, 2018 | Beth Glavosek | Blue Vault

Interval Funds

In recent weeks, we looked at the characteristics of closed-end interval funds. Like mutual funds, interval funds offer shares continuously that are priced daily based on net asset value (NAV). While open-end mutual funds can be redeemed daily, interval funds only offer redemptions, as the name implies, at specific intervals such as quarterly or monthly. 

Interval funds also share characteristics with closed-end funds (CEF), such as unlimited allocations to illiquid assets, daily pricing (CEF are traded on exchanges), and unrestricted access to both private and public investments.

Here are some other things to know about interval funds.

What can they invest in?

Like mutual funds, interval funds can serve as a “basket” for holding a variety of assets, including:

  • Insurance and credit holdings
  • Listed common and preferred stocks
  • Covered calls
  • Institutional private equity real estate
  • Nontraded REITs, BDCs, and energy companies
  • Residential mortgages

What are their expenses like?

Expense ratios are generally lower than 2%. However, like mutual funds, they charge a management fee, shareholder servicing fees, and other administrative/O&O expenses. Redemption fees are generally zero, and shares may or may not be sold without a sales load.

What are their redemption policies?

Interval funds regularly notify shareholders of opportunities to sell their shares back to the sponsor. These opportunities are offered at specified intervals and dates. Shareholders are notified about repurchase offers generally 30 days (legally, sponsors can provide 21-42 days’ notice) prior to the repurchase request deadline in order to give them ample opportunity to consider if they want to sell their shares back to the sponsor.

Each fund has a cap on how many shares can be repurchased during each interval. Depending on the volume of requests, each request will be handled pro-rata in a democratic fashion.

Our thanks to Bluerock for contributing material to this article.

 

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Learn more about Bluerock Real Estate on the Blue Vault Sponsor Focus page.

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Bluerock Residential Growth REIT Beats FFO Estimates

Bluerock Hires Two More of Griffin’s Former Top Producers

Bluerock Value Exchange Announces Successful Sell-Out of Class A, Multifamily Big Creek DST 1031 Exchange Offering

Preferred Stocks: Quick Read

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Preferred Stocks: Quick Read

January 4, 2018 | Beth Glavosek | Blue Vault

Full-length confident person in formal suit. A sketch of New York city and forex chart on the background. A concept of the asset management.

Preferred stock shares have been around for a long time, but what are they and why are they relevant to investors in alternative investments?

Capital stack

  • • Holders of preferred stocks have a higher claim on a company’s assets and earnings than common stock, including the payment of dividends
  • • In a typical capital stack, preferred shares are considered higher risk than senior and subordinate debt on a company’s balance sheet, but less risky than common stock
  • • Preferred stockholders usually don’t have voting rights

Earnings potential

  • • They have the potential to appreciate in price
  • • They receive regular dividend payments from the issuing company
  • • They’re paid a fixed or, in some cases, an adjustable rate dividend

Preferred stock shares can be traded on a public stock exchange. Call features and sinking fund provisions, if applicable, can affect pricing when shares are sold.

Read more about callable and sinking options.

Several life cycle REIT sponsors are using preferred shares as a way of raising additional capital. In upcoming posts, we’ll take a look at how they’re using this particular method of fund raising.

Our thanks to Bluerock for contributing material to this article.

 

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Learn more about Bluerock Real Estate on the Blue Vault Sponsor Focus page.

Click Here

 

Bluerock Residential Growth REIT Beats FFO Estimates

Bluerock Hires Two More of Griffin’s Former Top Producers

Bluerock Value Exchange Announces Successful Sell-Out of Class A, Multifamily Big Creek DST 1031 Exchange Offering

 

Will Real Estate Investors Benefit from Tax Changes?

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Will Real Estate Investors Benefit from Tax Changes?

December 20, 2017 | Beth Glavosek | Blue Vault

closeup money in male hands

Now that the “Tax Cuts and Jobs Act” has been passed by Congress and signed by President Trump, investors in real estate investment trusts (REITs) and other alternative real estate investments may stand to benefit.

Tax benefits are part of REITs’ appeal, so it’s fair to wonder how any changes in tax code would affect these investments. Here’s a short list of some of the implications.

Reduction in taxes on dividends/distributions

REIT shareholders who now pay the top income tax rate of 39.6% on dividends they receive would see that rate drop to 29.6%, according to Nareit, formerly the National Association of Real Estate Investment Trusts. “Clearly this is a deduction that will lower the overall tax rate for individuals who invest in REITs,” said Dianne Umberger, REIT lead for Ernst & Young’s National Tax Department, as quoted in the Wall Street Journal this week. Note: the tax rate on any capital gains remains unchanged.

Like-Kind Exchanges Remain for Real Estate

The bill in its current form preserves the tax advantages of 1031 (like kind) exchanges for real estate properties. This is good news for those who need to relocate or upgrade into assets that better meet their business needs. However, 1031 benefits have been eliminated for other categories of investments like art and collectibles.

Asset Depreciation Schedules May Spur New Construction

According to Reis, businesses will be able to immediately expense many asset purchases; after five years of 100% expensing, the rate will phase out at 80%/60%/40%/20% rates over the ensuing four years.

As the implications from this tax bill unfold, Blue Vault will report updates as we receive them.

How an Attack on a Nontraded REIT Sponsor Made a Hedge Fund Manager $60 Million

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How an Attack on a Nontraded REIT Sponsor Made a Hedge Fund Manager $60 Million

Full-length confident person in formal suit. A sketch of New York city and forex chart on the background. A concept of the asset management.

December 18, 2017 | James Sprow | Blue Vault

When Blue Vault began seeing signs that United Development Funding V (UDF V), a nontraded REIT program sponsored by United Development Funding, L.P. (UDF) in Dallas, Texas, was not able to file the 10-K for 2015, it naturally raised suspicions that all was not right with the REIT or the REIT’s sponsor.  A previous nontraded REIT program from UDF, United Development Funding IV (UDF IV) had listed its common shares on the NASDAQ in June 2014, trading in the range of $16 to $20 per share.  When the news broke that the FBI had executed search warrants at UDF’s corporate offices on February 18, 2016, it seemed to confirm that where there was smoke, there was fire, and that rumors and web postings that had accused UDF of being a “Ponzi scheme” might have some merit.  On February 18, 2016, the day of the FBI raid, UDF IV traded below $4 per share, and trading was halted on the NASDAQ. 

On November 28, 2017, United Development Funding, L.P. and its related companies filed a lawsuit in Dallas County, Texas, accusing hedge fund manager J. Kyle Bass and his closely held company Hayman Capital Management, L.P., of perpetrating a “short-and-distort” scheme by spreading false and damaging information about UDF in order to drive down the company’s stock price and profit by covering their short positions by buying shorted shares at much lower prices. 

In the 61-page lawsuit filing, UDF lays out their case in great detail, documenting how, allegedly, J. Kyle Bass conspired to create a false narrative, using false identities, creating websites that purported to uncover negative facts about UDF, and accumulating a huge short position in UDF IV’s shares to profit as the false narratives shook investor confidence and caused panic selling.  Bass’ short position reached over 4 million shares prior to December 10, 2015.  By December 15, 2015, UDF IV’s share price had dropped almost 50% in five days.  By February 12, 2016, UDF IV’s shares were down to $6.67, and trading was halted on the NASDAQ on February 18 with the price below $4 per share.  Bass and his company closed out their massive short position by October 27, 2016, after posting a continual flurry of negative articles about UDF on a website they had created at “udfexposed.com.” 

The lawsuit filing by UDF vs. J. Kyle Bass makes fascinating reading, almost like a novel.  Blue Vault will continue to follow the case as it proceeds, but for now, it can be said that there are definitely two sides to the United Development Funding story, and there may indeed be a strong case made that an unscrupulous hedge fund manager perpetrated a fraud against a legitimate REIT in order to profit from their fall, harming many investors in the process.    

The full lawsuit document is available at:

 https://courtsportal.dallascounty.org/DALLASPROD, using the Case No. CC-17-06253-B.

It will make fascinating holiday reading!

How Interval Funds Compare with Traditional Closed-End Funds

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How Interval Funds Compare with Traditional Closed-End Funds

December 7, 2017 | Beth Glavosek | Blue Vault

Balance concept

Last week, we looked at the similarities between closed-end interval funds and mutual funds. Like mutual funds, interval funds offer the transparency, regular valuations, and investor protection elements of the 1940 Act.

As a recap, both interval funds and mutual funds offer shares continuously that are priced daily based on net asset value (NAV). While open-end mutual funds can be redeemed daily, interval funds offer redemptions, as the name implies, at specific intervals such as quarterly or monthly. 

So, what are closed-end funds, and how are they similar and different from interval funds? Closed-end funds first became available in 1893, 30 years before open-ended mutual funds were created. Brought under federal regulation by the 1933 Securities Act, closed-end fund rules were further formalized under the Investment Company Act of 1940. Unlike open-ended funds, closed-end funds have a fixed number of shares to sell. Once the initial public offering is complete, shares may be bought and sold on public exchanges (like the NYSE). Share pricing may be above or below actual underlying NAV, depending upon market demand.

Similarities Between Closed-End Funds and Interval Funds

  • Allocations to illiquid holdings. Both closed-end funds and interval funds may allocate in unlimited amounts to illiquid assets.
  • Daily valuations. Unlike some unlisted securities that don’t provide more frequent valuations, both of these offer transparency through daily pricing.
  • Unrestricted access to both private and public investments. Open-ended funds are only allowed limited access to private investments, whereas closed-end funds and interval funds may allocate freely to private investments.

Differences Between Closed-End Funds and Interval Funds

  • Offering of shares. Interval funds make a continuous offering of shares, while closed-end funds offer shares one time through an initial public offering (IPO).
  • Exchange trading and pricing. Interval funds sell their shares directly to the public with direct redemptions available at NAV. Closed-end fund shares may be bought and sold on an exchange only at market pricing that may be more or less than NAV.
  • Frequency of redemptions. Closed-end fund holders may buy and sell shares at any time based on trading volume. Interval funds usually restrict redemptions typically to quarterly intervals.

In upcoming posts, we’ll continue to look more closely at interval funds and what they have to offer.

SEC Filings Part 1: What are All of Those Forms?

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SEC Filings: What are All of Those Forms? 

November 10, 2017 | Beth Glavosek | Blue Vault

The U.S. Securities and Exchange Commission (SEC) logo hangs on a wall at the SEC headquarters in Washington, in this June 24, 2011, file photo.  As the U.S. Securities and Exchange Commission seeks to become a more formidable force in the courtroom, a string of trial defeats in the past six months has exposed a weak spot: witness testimony. In four of the five trials that the securities regulator recently lost, the jury or judge were not convinced by the witnesses brought in by SEC litigators, according to court transcripts, rulings and interviews with defense lawyers. While there were also other factors influencing the verdicts, some legal experts said the issues with witness credibility were significant and reflect the need for SEC litigators to better vet and prepare their witnesses - or drop cases where they aren't strong enough. To match story Insight USA-SEC/COURT     REUTERS/Jonathan Ernst/Files    (UNITED STATES - Tags: CRIME LAW POLITICS BUSINESS LOGO)

Reading companies’ Securities and Exchange Commission filings probably doesn’t rank as high on the fun factor as say, watching a good movie or going to a concert. However, they do serve an important purpose.

Finding valuable information

The SEC requires public companies, “to disclose meaningful financial and other information to the public, which provides a public source for all investors to use to judge for themselves if a company’s securities are a good investment.”

Common reports that provide clues to a company’s health include:

  • Form 10-Q (contains unaudited quarterly financial statements)
  • Form 10-K (contains audited annual financial statements)
  • Form 8-K (current information including preliminary earnings announcements)
  • Registration statements, including Form S-1. A registration statement is required for new issuers under the Securities Act of 1933. This form number can vary according to the type of company. Nontraded REITs file S-11 statements, while Business Development Companies and Interval Funds file N-2s.

Offering documents – also known as prospectuses – are also filed with the SEC. Prospectuses are usually part of the registration statement or may be filed as supplemental documents or “supplements.” 

Other common filings

A post-effective amendment is required if a continuous offering makes fundamental or material changes after the effective date of the registration statement.

Companies are required to send proxy statements prior to any shareholder meeting, whether an annual or special meeting. The information contained in the statement must be filed with the SEC before soliciting a shareholder vote on any matter related to company business and must disclose all important facts that shareholders need to know in order to vote.

For more information

For additional guidance from the SEC on how to read company filings, check out their Beginner’s Guide to Financial Statements.

In future posts, we’ll look at how you can use SEC filings to find answers to specific questions and concerns you may have before or after investing in a company.

SEC Filings Part 2: A Closer Look at Some Key Issues

The Impact of Amazon on Grocery Sector and Phillips Edison Grocery Center NTRs

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The Impact of Amazon on Grocery Sector and Phillips Edison Grocery Center NTRs

October 20, 2017 | James Sprow | Blue Vault

 

Vegetables at a market stall

The June 16, 2017 announcement of the acquisition of Whole Foods by Amazon sent shock waves through the grocery industry. From June 1 through June 16, Kroger (KR), a grocery chain with 2,460 stores in the U.S., lost 26% in the value of its common stock. SuperValu Inc. (SVU), with 2,000 stores in the U.S., lost 20% in the value of its common stock over that same period. Even Wal-Mart (WMT), not nearly as dependent upon the grocery business, lost 6% in the value of its common stock over those 15 days. Was this attributable to the Amazon announcement? By comparison, the S&P 500 Index was up 0.1% for the same period, indicating that yes, indeed, Amazon’s entry into the grocery business was perceived by investors as damaging to the prospects for several large, publicly traded grocery chains.

For nontraded REIT investors, the two NTRs that are most closely associated with the grocery business are Phillips Edison Grocery Center REITs I (PEGCR I) and II (PEGCR II). These companies have investment strategies that focus on grocery-anchored, neighborhood and community shopping centers “that have a mix of creditworthy national and regional retailers that sell necessity-based goods and services in strong demographic markets throughout the United States” according to their annual reports.

How dependent are the two NTRs advised by Phillips Edison NTR and sponsored by Phillips Edison Limited Partnership on the lease revenues from large grocery chains such as Kroger? The following table gives an overview of the NTR portfolios and their tenant concentrations.

Screen Shot 2017-10-20 at 7.38.15 AM
Source:  SNL

 

The Phillips Edison NTRs are well-diversified in their tenant mix, with no single tenant contributing more than 8.8% of the REIT’s lease revenues. PEGCR I has 52.9% of its leased square feet in the grocery industry as of June 30, 2017, and that percentage was 52.7% for PEGCR II. The weighted average remaining lease terms for PEGCR I and PEGCR II were 5.4 and 5.8 years, respectively as of Q2 2017. As with other shopping centers, however, the economic success of the anchor stores has spill-over effects on other tenants.

The most recent analyst ratings for Kroger according to www.finance.yahoo.com were upgrades, but Kroger’s stock is down 32% from June to October 17. Clearly, investor confidence in the long-term prospects for Kroger and other grocery chains has been shaken.

Necessity-based retailing, such as the grocery-anchored properties in the Phillips Edison NTR portfolios, has been one bright spot in the retail sector over the last several years. While other retailers have been reeling from the impacts of e-commerce in general and Amazon specifically, the grocery business has been spared some of the worst effects due to the nature of its products and their customers’ preferences for in-store shopping. However, most grocery retailers are also responding to the e-commerce trend by adding on-line shopping and pick-up and delivery options to their platforms. Amazon’s entry into the sector through its acquisition of Whole Foods will likely accelerate this trend.

On May 9, 2017, the board of directors of PEGC REIT I reaffirmed its estimated value per share of common stock of $10.20 based substantially on the estimated market value of its portfolio of real estate properties as of March 31, 2017, up from its $10.00 offering price. The board of directors of PEGC REIT II established an estimated NAV per share of $22.75 on May 9, 2017. The stock was originally offered at $25.00 per share.

On September 1, 2017, Phillips Edison Grocery Center REITs I and II entered into agreements that terminated all remaining contractual and economic relationships with American Realty Capital.

 

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recent-news

Phillips Edison Grocery Center REIT I Internalizes Management

Phillips Edison Grocery Center REIT I Shareholders Approve Internalization

Phillips Edison Expands Holdings With Illinois Retail Buy

 

America’s Data Centers Deliver Results

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America’s Data Centers Deliver Results

October 13, 2017 | Beth Glavosek | Blue Vault

Data Center with 4 rows of servers

Given the destruction caused by recent hurricanes, it’s impressive to learn that internet service and the cloud remained intact and resilient, even as millions of people lost power or saw their homes and businesses flooded.[1]

What makes this connectivity possible, even after catastrophic storms, is the humble data center. Data centers house and maintain back-end information technology (IT) systems and data stores—mainframes, servers and databases – on behalf of major enterprises. As one technology executive puts it, “Data centers, to me, are 362 days of boredom [each year].” But, when they’re needed most is when they really shine.

Where are America’s data centers?

According to Data Center Knowledge, data centers historically have been located in remote locations because of cities’ expensive land and energy costs. However, they have been moving closer to end users in order to reduce ‘lag time’ in connectivity. After a push to build data centers closer to metro areas such as New York City, Los Angeles and San Francisco where there is a large concentration of customers – known as the ‘data center clustering effect’ – cloud computing gained momentum and data centers moved to locations where their tenants’ businesses were located, often outside of large cities. Today, data centers are increasingly being built in secondary and tertiary markets.[2]

How data centers weather disaster

Data centers are specifically designed to withstand external forces like storms or ice. In order to maintain industry certification through the Seattle-based Uptime Institute, they must demonstrate that they can keep running after a “plug is pulled.” When electricity is lost, data centers have powerful diesel generators that kick into gear. Other important considerations are building above the 500-year floodplain and having staff who are prepared to shelter in place. Sites are frequently stocked with thousands of gallons of diesel fuel for their generators, food and water, emergency medical kits, showers, bunkrooms and flares.[3]

Investing in data centers

According to the National Association of Real Estate Investment Trusts (NAREIT), there are six REITs that are currently focused on data center holdings. According to NAREIT, data centers led the entire REIT market’s performance in the first four months of 2017 with an 18.03% total return. Forbes reported in September that the average year-to-date total return for all Data Center REITs was 29.1%. Among nontraded REITs, Carter Validus Mission Critical REITs I and II have focused their property investments in data centers as well as health care facilities. The two nontraded REITs own 20 data centers each.

As e-commerce and other driving factors continue to fuel the demand for data, it’s clear that data centers will continue to play a very important role in business continuity and keeping America running even through challenging circumstances.

[1] James Glanz, “How the Internet Kept Humming During 2 Hurricanes,” The New York Times, September 18, 2017.

[2] Loudon Blair, “Finding Strength in Numbers: The Data Center Clustering Effect,” Data Center Knowledge, October 11, 2017.

[3] James Glanz, “How the Internet Kept Humming During 2 Hurricanes,” The New York Times, September 18, 2017.

Do We Need to Re-Think Inflation Expectations?

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Do We Need to Re-Think Inflation Expectations?

October 12, 2017 | James Sprow | Blue Vault

Growth Rise Up Chart

One big question that Fed officials and economists generally are grappling with is “What’s happened to inflation?” The standard benchmark that Federal Reserve policy makers have used is an annual consumer price index rising at 2%. The persistence of inflation rates below the 2% target has observers scratching their heads and considering the possibility that fundamental changes in the U.S. economy, and indeed in the world economy, have rendered the 2% expectation obsolete.

In an article in Wired.com, Zachary Karabell states, “The economic truths of the past may or may not be true anymore.” As the economy improves and companies start hiring, unemployment falls and wages are supposed to go up, pushing up prices and increasing inflation. The Federal Reserve has recently been assuming that some economic conditions were simply taking longer to “return to normal.” Both Karabell and members of the Federal Reserve’s Open Market Committee are asking, “What if the stubborn lack of inflation is not just a short-term blip?”  

The minutes of the Federal Open Market Committee’s September meeting reveal much discussion and even some disagreement about the long-term trajectory of expected inflation:

“Based on the available data, PCE price inflation over the 12 months ending in August was estimated to be about 1-1/2 percent, remaining below the Committee’s longer-run objective. In their review of the recent data and the outlook for inflation, participants discussed a number of factors that could be contributing to the low readings on consumer prices this year and weighed the extent to which those factors might be transitory or could prove more persistent.”

“Some participants discussed the possibility that secular trends, such as the influence of technological innovations on competition and business pricing, also might have been muting inflationary pressures and could be intensifying. It was noted that other advanced economies were also experiencing low inflation, which might suggest that common global factors could be contributing to persistence of below-target inflation in the United States and abroad.”

For now, the Fed will continue to watch their two key indicators, the unemployment rate and inflation, and they expect economic conditions to “evolve in a manner that would warrant gradual increases in the federal funds rate and that the federal funds rate was likely to remain, for some time, below levels that were expected to prevail in the longer run.” 

Clearly, if the fundamental forces that influence the rate of long-term inflation, both in the U.S. and globally, have changed, then the conventional thinking of the Fed and the financial markets may need to adjust to a new reality of lower long-term trends in inflation.

SEC Working Toward a Proposal on a New Fiduciary Rule

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SEC Working Toward a Proposal on a New Fiduciary Rule

October 4, 2107 | Beth Glavosek | Blue Vault

United States Capitol Building, Washington, DC

On Wednesday, October 4, in a Capitol Hill appearance, Securities and Exchange Commission (SEC) Chairman Jay Clayton told lawmakers that the agency is drafting its own proposal for a fiduciary rule, according to Investment News.

The commission has been accepting comments, and Clayton told the House Financial Services committee that, “We’re going to work with the Department of Labor. However, if this were easy, it would already have been fixed.”

According to Investment News and Barron’s, Clayton reiterated past comments insisting that such a rule must preserve investors’ choice to use a broker or advisor, be clear, apply to retirement and non-retirement accounts, and involve cooperation between the SEC and the Labor Department.

Clayton said that he’s confident that the SEC can create a rule that meets those standards and protects investors in a way which they understand. While not providing a timeframe, he reassured Republican lawmakers that opponents’ concerns about the DOL fiduciary rule will be addressed.

 

recent-news

Delay in Fiduciary Rule Implementation Causing Issues

ALERT: DOL Fiduciary Rule Delay Published

House committees ready two assaults on DOL fiduciary rule this week

 

The Art of Wholesaling

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The Art of Wholesaling

September 28, 2017 | Beth Glavosek | Blue Vault

Euro coins. Euro money. Euro currency.Coins stacked on each othe

In an upcoming blog series, Blue Vault is going to examine the role of the wholesaler in the financial services industry.

It’s been said that wholesalers are the ‘muscle’ behind the billions of dollars of fund shares sold through advisors and bought by investors each year. A wholesaler is someone who represents a product sponsor and its offerings. Known for being ‘road warriors’ who travel the country, wholesalers visit advisors and Broker Dealers to educate them about the benefits of the sponsor’s offerings and the unique value they bring to the marketplace of investments.

According to Evan Cooper of Investment News, “knocking on advisors’ doors is a tough (although potentially very lucrative) job that typically gets little attention and not as much respect as it deserves.”

So, what does a wholesaler do, in addition to convincing advisors and Broker Dealers to add an offering to their sales platforms? Because they’re on the front lines of representing product sponsors, wholesalers also must:

  • Understand the offering thoroughly and how it can benefit investor clients
  • Have thorough knowledge of competing products and how their offering stacks up against them
  • Provide value-added knowledge about the marketplace and what it takes for an advisor to meet client needs
  • Collaborate and share educational content, including offering opportunities for advisors of all kinds to get together and share ideas

In the coming weeks, we’ll talk with some successful wholesalers and learn more about their habits, what their typical days are like, how they stay at the top of their game, and what it takes to succeed in the world of financial wholesaling.

How Are Markets Rebounding from Harvey?

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How Are Markets Rebounding from Harvey?

September 22, 2017 | Beth Glavosek | Blue Vault

Houston-Flood-adobe

As the city of Houston continues its recovery after Hurricane Harvey and its catastrophic flooding, analysts are starting to size up the long-term implications on the real estate market, real estate investments, and the overall economy.

Here are a couple of areas to watch:

CMBS Offerings and Office Sector
Last month, Bloomberg Markets reported some key findings on the hurricane’s impact on commercial mortgage-backed securities (CMBS). Morgan Stanley estimates that Houston-area offices, malls, and hotels support nearly $9 billion of the loans packaged since the financial crisis. Flood damage could jeopardize the payoff of about $1.13 billion in loans maturing in the next 12 months, according to the Bloomberg article and analysts at Morningstar Credit Ratings.

In the immediate term, there are elevated expenses for office owners and landlords related to cleanup and any damage not covered by insurance, according to Bloomberg Intelligence analyst Jeffrey Langbaum. There shouldn’t, however, be any near-term impact on revenue for buildings if they are leased but, “if companies end up moving, or go under, there will be longer-term disruption,” he says. Large office buildings could struggle if they aren’t able to show or renovate their spaces in preparation for lease expirations.

REITs
REITs with significant exposure to Houston could see some effects if there are near-term tenant and lease risks related to the above issues. However, according to Blue Vault’s research, only one nontraded REIT has suffered a casualty loss due to a hurricane, and that was a relatively minor insurance claim of just a few million dollars for a large portfolio. Because most nontraded REITs have portfolios that span the nation and even the world, Blue Vault believes that the diversification available in these portfolios offers great protection against localized disasters. 

Energy and Fuels
According to IHS Markit, an information and analytics company whose data includes the energy industry, 15 of the 20 affected refineries in the Gulf Coast energy complex were at or near normal operating rates as of September 19. While around 1.0 million b/d of distillation capacity (5% of US total) is estimated to still be offline, steady progress appears to have been made to be operating normally in the near future. IHS Markit has observed that refined product markets have calmed considerably and that the NYMEX RBOB spot price was essentially back to its pre-Harvey level.

 

How Commercial Real Estate Mitigates Disasters

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How Commercial Real Estate Mitigates Disasters

September 15, 2017 | Beth Glavosek | Blue Vault

AdobeStock_58169264

Whenever a natural disaster strikes, investors in commercial properties may wonder how their assets are being managed and protected. According to the Whole Building Design Guide, a program of the National Institute of Building Sciences, “the most successful way to mitigate losses of life, property, and function is to design buildings that are disaster-resistant.”

Ideally, a building’s resistance to disaster should be incorporated into the project planning, design, and development at the earliest possible stage so that design and material decisions can be based on an integrated “whole building approach,” according to the guide. Later in the building’s life cycle, risks from natural hazards may be addressed when renovation projects and repairs of the existing structure occur.

The term ‘building resilience’ describes a commercial building’s ability to withstand the rigors of nature and possibly man-made stresses. According to the Building Owners and Managers Association International, “Resiliency begins with ensuring that newly constructed buildings, alterations, additions and major renovations to existing buildings are constructed in accordance with applicable modern building codes, with the design focusing on the adaptability of the building over its life cycle to evolve with changes occurring in both the built and natural environment. Proper planning and design can significantly reduce the amount of damage sustained during a disaster, which in turn will lead to shorter recovery periods, increase business continuity and expedite the community’s return to normal.”

In other words, investors in commercial properties can take heart in knowing that today’s best practices include continuous attention to upgrades and standards that will allow buildings to better withstand the challenges that may come along due to weather or other hazards.

Emergency Preparedness: Some Best Practices for Property Managers

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Emergency Preparedness: Some Best Practices for Property Managers

September 6, 2017 | Beth Glavosek | Blue Vault

DISASTER

 

As we saw last week with Hurricane Harvey and now with Irma headed toward south Florida, Mother Nature can be relentless. When it comes to protecting property – whether personal or business-related – having a current emergency preparedness plan in place helps preserve human life and minimize damage as much as possible.

When it comes to protecting commercial real estate (CRE), property managers usually have the responsibility for preparing emergency plans. Such plans protect the safety of employees who work in the buildings as well as the buildings themselves as much as possible.

According to the Institute of Real Estate Management (IREM), the following are just some of the key components for CRE disaster planning:

Use all of Modes of Crisis Communications

When there is a disaster of any kind, one of the most important things to do is communicate with tenants, residents, staff, and clients to ensure everyone’s safety and security. IREM says that crisis responders should maximize use of the variety of options available for providing immediate notifications and ongoing updates. These options include: automated mass notifications that include text messages, phone messages (mobile, home, work or other phones), and e-mail; toll-free phone numbers with pre-recorded messages; online options (like Twitter, Facebook, or other social media); and backup phone systems that include mobile and satellite options.

Follow Business Continuity Plans

Effective business continuity plans contain multiple facets, but perhaps the most critical are protecting IT systems with adequate backups, hard copies, and vendor arrangements, as well as protecting the business’s contents, inventory, and production processes with adequate insurance. The Insurance Institute for Business and Home Safety provides a free toolkit that covers the array of components that a business continuity plan should have.

Take Protective Actions for Life Safety

An emergency plan should include detailed instructions on how to carry out protective actions to keep peoples’ lives safe. According to Ready.gov, protective actions for life safety include Evacuation, Sheltering, Shelter-In-Place, and Lockdown. Some actions will be more appropriate for certain situations than others. For example, in the case of hazards like fire, chemical spills, bomb threats, or suspicious packages, building occupants should be evacuated or relocated to safety. Other incidents like tornadoes would require that everyone be moved to the strongest part of the building and away from exterior glass. If a transportation accident nearby causes a release of chemicals, the fire department may warn to “shelter-in-place.” Lockdowns are appropriate when dealing with human intruders.

In future posts, we’ll look at how property managers get damaged buildings up and running again, as well as ways to protect investors’ assets.

What’s Next for Houston’s Downtown Business District?

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What’s Next for Houston’s Downtown Business District?

August 31, 2017 | Beth Glavosek | Blue Vault

Houston Flood adobe

As the nation witnesses the historic and catastrophic flooding in the city of Houston, one question on the minds of many is, “What will it take to recover and rebuild?”

According to the Houston Downtown Management District (HDMD), the city’s downtown area is headquarters to several prominent firms, including nine Fortune 500 companies, as well as more than 3,000 businesses housed in over 50 million square feet of office space. Houston’s downtown is one of the 10 largest CBDs in the nation with 150,000 people employed there.

While Hurricane Harvey created conditions that are impossible to fully prepare for, fortunately, and not surprisingly, it appears that the city has kept a detailed and current emergency response plan in place for quite some time. The plan, updated in April 2017, details specific steps for property managers and building owners to take in the event of a rapidly evolving storm and flooding.

A representative for HDMD issued a statement on August 30 saying, ”Over the next days, weeks and months, we will be working with our Downtown stakeholders to support the recovery of our great City. Overall, Downtown has fared well and is stable. While conditions are improving, we realize that many areas of Houston still have high water and/or no power.”

From a tactical standpoint, after the rain diminishes, key personnel will be expected to survey property damage and report their findings immediately to the HDMD, even if there is no damage. The HDMD will continue to issue advisories of roadway conditions for employees. Once properties are secured from hazards like falling glass and impassable sidewalks, and adequate water pressure and power are available, property managers can immediately proceed with repair work to be done in off-peak hours. Permits to ensure compliance with city standards are mandatory.

In future blog posts, we’ll look at disaster preparedness best practices for commercial property owners, as well as information that investors in commercial real estate might want to know when disaster strikes.

Ways to Help

Our hearts go out to our fellow citizens in the great state of Texas. We are praying for them! Donations to help with their relief and recovery may be made at one of the following:

Samaritan’s Purse International Relief 
Southern Baptists of Texas Convention
 

Have You Been Tracking Sales Lately?

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Have You Been Tracking Sales Lately?

August 23, 2017 | Beth Glavosek | Blue Vault

Growth Rise Up Chart

If you’ve been following sales trends in alternative investments, you’ve likely noticed that sales are down. After reporting sales of $350.9 million in June, nontraded REIT (NTR) sponsors’ monthly total for July fell to $245.8 million – a difference of 30%.

Business Development Companies (BDCs), nonlisted Interval Funds, and nonlisted Closed-End Funds were also down in the month of July. Private Placement sales declined as well, albeit only by a very modest -0.7%.

 

Sales in Millions June 2017 July 2017 % Change
NTRs $350.9 $245.8 -30%
BDCs $74.3 $42.2 -43%
Nonlisted Interval Funds and nonlisted Closed-End Funds $133.3 $111.8 -16%
Private Placements $150.5 $149.4 -0.7%

 

The trailing six-month average for NTR sales was $371 million as of June 30, 2017, while BDCs’ trailing six-month average was $66 million.

So, what accounts for the decline in sales? Blue Vault’s Director of Research James Sprow notes that a drop in sales during the summer is not unusual for the industry and was also observed in 2016. “Average monthly NTR sales in 2016 for June, July and August dropped 29% from the NTR sales for the previous three months. So far in 2017, the average sales in June and July were 29% below the average for the previous three months, so it’s pretty consistent to see a drop in the summer months.”

Does anyone know what’s on the horizon for alternative investment sales? “The industry is continuing to evolve, just like every other industry. We’re seeing new products like nontraded interval funds and nontraded closed end funds. There’s also the latest nontraded REIT that just broke escrow in January and has dominated the NTR sales numbers since then, the Blackstone REIT. We’re seeing lower fees and multiple share classes as sponsors adapt to the latest regulatory issues, so it’s a challenge just to keep up with all of the changes,” Sprow says.

Who’s Who in Alternative Investment Offerings?

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Who’s Who in Alternative Investment Offerings?

August 16, 2017 | Beth Glavosek | Blue Vault

Stock market abstract background

Investors looking at prospectuses for nontraded REITs (NTRs), Business Development Companies (BDCs), and other alternative investments might see a diagram, organization chart, or other explanation of the entities involved in the offering. But, how can the reader make sense of their roles, especially if some of those entities have the same name or are the same company?

Blue Vault looked at a sampling of organization charts from five NTR offerings, noting that the Sponsor, Advisor, Property Manager and Dealer Managers are in almost all cases (4 of 5) totally owned by the Sponsor. In other words, the same people who run the Sponsor are also running the Advisor, Property Manager and Dealer Manager in those cases. 

We wondered if the definitions of these roles are uniform across the industry, so we asked the Head of Due Diligence for a major NTR sponsor for some basic descriptions. The following is a “cheat sheet” of terms that he identified that might help untangle some of these legal relationships.

Sponsor: The sponsor is essentially the owner of an NTR’s External Advisor, Property Manager, and Dealer Manager. “In our case, the sponsor is a trade name (not a legal entity itself) to identify a group of affiliated companies that are involved with different activities related to our NTRs. The companies within this umbrella are all separate legal entities,” he says. He notes that most sponsors are private companies owned by individual stakeholders.

Advisor: Unless an internalization transaction has occurred, the NTR itself does not have any employees and is managed by an “external” advisor. Here are some important points to remember about the advisor:

  • It’s a separate legal entity responsible for managing the NTR’s day-to-day affairs. It’s owned by the sponsor and not by the NTR itself.
  • Its officers and key personnel are typically employees of the sponsor.
  • It’s connected to the NTR through an advisory agreement, which can usually be terminated by either party under certain conditions.
  • The fees earned by the advisor for managing the NTR (i.e., advisory, acquisition, financing, property management, leasing, disposition, performance, etc.) roll up to the sponsor since it owns the advisor. 

Property Manager: NTRs acquire real estate properties that require some degree of management in order to properly maintain them. Most, if not all, NTRs have a separate legal entity responsible for managing the NTR’s properties. Some NTRs pay a separate property management fee for these services, while others receive property management services under the advisory agreement. In addition, the affiliated property manager for a few sponsors’ NTRs may contract out property management responsibilities to an unaffiliated third-party, but the affiliated manager still charges an “oversight fee” for overseeing the activities of the unaffiliated manager. The NTR compensates the unaffiliated manager for its services, as well as the affiliated property manager for its oversight.     

Dealer Manager: Raising capital for an NTR requires selling registered securities through FINRA-licensed salespeople who are associated with a FINRA-registered broker/dealer. The FINRA-registered broker/dealer is referred to as the dealer manager. The dealer manager employs the people in the organization whose job requires them to discuss NTR programs (i.e., internal/external sales, National Accounts, Due Diligence, etc.) and holds their requisite securities licenses. “Most sponsors own their own broker/dealer, but some sponsors contract with an unaffiliated dealer manager for those services,” our due diligence expert notes. “In those cases, the salespeople are not in any way employees of the sponsor’s dealer manager, but are compensated by the sponsor for raising capital through the NTR’s dealer manager fee.”  

Taxable REIT Subsidiary (TRS): A TRS is sometimes used to manage properties or contract out the management of properties. If the IRS deems some of its activities taxable, the NTR can create a subsidiary to carry out those activities. Through a TRS, the NTR may enter into management agreements with third-party management companies in order to maintain REIT qualification status

 

The Latest on the DOL Fiduciary Rule

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The Latest on the DOL Fiduciary Rule

August 10, 2017 | Beth Glavosek | Blue Vault

United States Capitol Building, Washington, DC

It looks like there’s yet another reprieve on the final implementation of the Department of Labor (DOL) Fiduciary Rule. After sitting on the back burner while President Trump called for a reassessment of the ruling, the DOL earlier this year said that it wouldn’t start full enforcement until January 1, 2018. Now the date has moved to July 1, 2019 – a full 18 months later. Investment News reported on August 9 that the DOL submitted this proposal to the Office of Management and Budget (OMB), and the OMB must review and approve the proposal before it can go into effect. The delay itself could require its own rule making process, according to the article.[1]

Industry groups are lauding the proposal. Dale Brown, President & CEO of the Financial Services Institute, says, “This proposed delay represents an important step in protecting Main Street Americans’ access to retirement planning advice, products and services. While the delay is significant, it is critical that the DOL uses the 18 months to coordinate with regulators, in particular the SEC, to simplify and streamline the rule.” He goes on to say, “We are already seeing the effects of the rule limiting investor choice and pushing retirement savings advice out of those who need it most. We stand ready to work with the DOL, SEC and others to put in place a best interest standard that protects investors, while not denying quality, affordable financial advice to hard-working Americans.”[2]

Other financial industry groups concur with Brown’s assessment about the effect of the rule so far. The Insured Retirement Institute (IRI), a trade association of insurance companies, asset managers, and brokerage firms, estimates that approximately 155,000 accounts have been ‘orphaned’ (accounts are no longer serviced by an advisor, leaving investors on their own) since parts of the rule went into effect on June 9, 2017.[3]

The American Council of Life Insurers (ACLI) stated that the regulation has caused “significant market changes that now deny consumers access to advice” and that the rule’s overly broad definition of a fiduciary constrains education and information about retirement planning options, and causes a bias against commission-based compensation. This bias restricts access to annuities, the only product available in the marketplace that provides guaranteed lifetime income, according to the ACLI.[4]

Blue Vault will continue to report on the latest information and perspectives available as this issue continues to evolve.

[1] Mark Schoeff Jr., “DOL seeks to delay fiduciary rule until July 2019,” Investment News, August 9, 2017.

[2] FSI Statement on DOL Proposal of Further Delay of Fiduciary Rule,” FSI, August 9, 2017.

[3] “IRI Submits New Data Exposing Detrimental Impact of DOL Fiduciary Rule,” Insured Retirement Institute, August 7, 2017.

[4] “ACLI Urges Labor Department to Revoke and Replace Regulation Harmful to Retirement Savers,” ACLI, August 7, 2017.

 

Sector Focus: Necessity Retail

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Sector Focus: Necessity Retail

Passage in multilevel shopping mall

 

August 1, 2017 | Beth Glavosek | Blue Vault

Despite the huge rise and popularity of online shopping, there’s still a need for bricks and mortar stores. According to a recent study, by 2025, the share of online grocery spending could reach 20% of the total market, representing $100 billion in sales. However, as one supermarket executive puts it, “You can’t forsake the 80% of consumers who are shopping in your physical stores.”[1]

Thus, the need for what is known necessity-based real estate, or necessity retail, persists.

Population growth means consumer growth

On May 7, 2017, the U.S. population clock was projected to cross the 325 million threshold. By 2060, the total population is expected to reach nearly 417 million.[2]

A growth in the population means growth in both current and future consumers. While economic conditions may dictate how much people have available to spend on luxury or nonessential items, there will always be a need for everyday goods and services, whether it’s food, apparel, appliances, or personal care items.

Bricks and mortar still relevant

While major grocery chains frequently provide the ideal anchor for a desirable retail asset, other popular retailers include discount clothing and shoe stores, warehouse stores (bulk shopping), sporting goods, and specialty or organic food stores.

According to the National Retail Foundation, despite the dot-com boom of 20 years ago and scales tipping slightly toward e-commerce, the impact is not readily noticeable in STORES Magazine’s annual list of the Top 100 retailers.[3] According to the report, the nation’s largest mass market retailers all still rank in the top 10, including Walmart, Costco, and Target. “The remaining top 10 retailers are arranged in pairs: two traditional supermarket operators (#2 Kroger and #10 Albertsons); two home improvement retailers (#4 The Home Depot and # 9 Lowe’s); and two drugstore chains (# 5 CVS and #6 Walgreens/Boots Alliance),” the report says.

Their success points to the fact that consumers are still pushing shopping carts and not just filling them online. Kiplinger has also reported that six mega retailers are still standing up to online giants like Amazon.

In conclusion, the need for destination-based, necessity-driven real estate will likely persist even in the age of point-and-click. After all, it’s difficult to try on those pants you’ve been eyeing or sniff the freshness of the produce from the comfort of your living room.

[1] Becky Schilling, “Are you ready for the digitally engaged shopper?” Supermarket News, January 30, 2017.

[2] U.S. Census Bureau, May 5, 2017.

[3] STORES Magazine, June 26, 2017.

Sector Focus: A Look at Senior Adult Housing

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Sector Focus: A Look at Senior Adult Housing

July 26, 2017 | Beth Glavosek | Blue Vault

An attractive senior couple at home on the couch together. Isolated on white.

It’s no secret that Baby Boomers make up a significant portion of the U.S. population. Born between 1946 and 1964, Baby Boomers are now reaching the ages of 53 to 71. As this group continues to age, the number of Americans ages 65 and older is projected to more than double from 46 million today to over 98 million by 2060, and the 65-and-older age group’s share of the total population will rise to nearly 24% from 15%.[1]

As this segment of society continues to expand, a corresponding need for senior adult housing will increase. In fact, senior housing has been a hot sector in real estate in recent years.

Outlook for the industry

Despite concerns about over-building in certain markets, there’s still an appetite for senior housing among many investors. In its annual U.S. Seniors Housing & Care Investor Survey and Trends Report that polls investors, real estate giant CBRE found that nearly 60% of survey respondents expected to increase the size of their senior living portfolios in 2017 compared with 47% polled in 2016.

In the report, CBRE professionals said that they expect valuations to remain stable in 2017 with a strong long-term outlook. “The industry’s fundamentals suggest the necessity for more capacity over the long term, with short-term oversupply in select markets becoming more likely as a result of recent record-setting construction levels,” according to the report.

Performance

Senior housing has been a solid performer. In fact, when looking back over one-, three-, five-, and 10-year periods, performance is in the double digits. NCREIF reports that at the end of the first quarter of 2017, one-year total returns were 12.05%; three-year returns were 14.87%; five-year returns were 14.78%; and 10-year returns were 11.13%.

Hot trends

CBRE notes that Investor interest seems to be gravitating to more lifestyle-focused segments of senior housing, with 40% of its survey respondents preferring independent living investment opportunities over assisted living or more health care-focused properties.

Hospitality is a major trend in senior living communities. Residents are often seeking concierge-style services including room service, car service, personal shoppers and one-on-one educational and cultural experiences.[2] Dining has gone beyond the traditional cafeteria-style meal. Seniors today want an appealing range of choices – whether it’s chef inspired meals, gelato, gourmet coffee, or even food trucks.

Providing memory care is more important than ever as diagnoses of Alzheimer’s disease and dementia are becoming more common. Industry experts say that memory care must be a component of senior living facilities if they are to meet a complete range of seniors’ needs.

Flik Lifestyles explains some other hot trends to watch in its Super Trends in Senior Living report.

[1] Mark Mather, “Fact Sheet: Aging in the United States,” Population Reference Bureau.
[2] Super Trends in Senior Living, Flik Lifestyles.