With our president threatening “annihilation” at the United Nations it is easy to become downcast, despondent.
However, if you look hard enough there is a silver lining in the war clouds he gathers round himself.
What might that be you ask? A global energy realignment we answer.
Following Trump’s Iran blitz, we doubt the mid-east will ever be the same again.
Iran won’t give in. Trump won’t go in. Therefore, the war is likely to go on.
No modern war has ever been won by air power alone. Boots must be on the ground to seize and hold territory.
Trump’s military advisors told him this. He chose to disregard it.
Therefore, once Trump leaves office, this poisoned chalice will likely be passed to another.
At some point, things may begin to normalize. However, they are unlikely ever to be the same.
If I were a betting man, de facto control over the Strait of Hormuz by Iran and Oman may be in the cards.
As this narrow passage controls roughly one out of every five barrels of oil coming to market, the idea of a continuing Iranian veto over its movement is deeply disconcerting.
This is exacerbated by the Saudis’ seeming inability to control the Houthis in Yemen and their move to strangle oil movement out of the Red Sea.
This should be of major and lasting concern to countries like Japan, South Korea, the Philippines, Taiwan, Singapore, India, China and Pakistan, who all import over half their energy needs.
As such, they are likely to hedge their bets in favor of more stable and reliable energy producing nations such as the U.S., Canada, Mexico, and Venezuela.
Heretofore, a lid of sorts has been kept on energy prices by consumption of inventory already at sea, and strategic reserve selling.
However, this is done. Oil afloat went first, now strategic reserves have been drawn down to dangerously low levels.
If this self-induced quagmire continues it may shift energy demand to the west and have a salutary effect on those communities that produce it.
Whether it is the Texas oil-patch or shale fields in the Dakotas and Pennsylvania, greater energy demand from abroad should put a bid under the market, thereby creating more jobs.
More jobs have the potential to translate into greater housing demand.
CRE investors may be able to capitalize on this via multi-family properties in these communities.
Not everyone lives and breathes energy. This is where DSTs come in. The shared, institutional ownership-management structure allows you to diversify out of your own backyard and attempt to capitalize on growth opportunities that may not otherwise be available.
The world is changing rapidly and radically. CRE investors can no longer afford to sit in the same old place doing the same old thing, hoping the local economy will ‘come back around.’
The global economy is increasingly dynamic, the United States particularly so.
The map of economic opportunity is constantly being redrawn with money, going other places.
The highly selective nature of individual DST properties as offered through the independent broker-dealer network gives CRE investors access to these opportunities. The collectivist nature of 721 UPREITs as currently peddled by registered investment advisors (RIAs) does not.
Given the high idiosyncratic nature of CRE your best opportunities lie with a specialist.
After all, would you consult your GP for brain surgery?
