The Hottest (Frozen?!) Segment In Real Estate Today
When does the stock market give you great clues to investing in real estate? It happens when a stock chart looks as beautiful as this newly-public real estate company’s chart looks. It’s a beauty.
Back in January of 2018, an Atlanta-based company went public on the New York Stock Exchange. There wasn’t a huge pop on the IPO day. In fact, the share price started at $16 never got higher than about $18 bucks and change for nearly 3 full months. Then that company’s stock went on a tear that continues to this day. Now trading in the low $30’s range — about twice it’s IPO level of just 18 months ago — this stock is turning some heads.
If you’ve read my work before on SelfDirected.org, Forbes, TheStreet.com or nearly anywhere else, you know my focus is rather exclusively on using non-Wall Street assets (particularly real estate) to build retirement wealth. As such, I can practically hear some of you wondering, “Why, oh why, Bryan, do you fill my ears with tales from Wall Street when you know I am focused on real estate or other alternative assets?” Well, my friends, simmer down. There’s a very good reason, so read on.
What is the company to which I refer? This isn’t just any company, it is a real estate investment trust, also known as a REIT for short. In case you’re unfamiliar, a REIT is a special type of entity that can trade on public markets and which is designed for businesses whose income is almost entirely generated from the ownership and monetization of real estate.
There are many publicly-traded REITs, but the one upon which we focus right now is quite distinct because of the specific kind of real estate upon which they focus. This company is called AmeriCold Realty Trust, and as you might guess from the name, their specialty is cold storage warehousing, the kind of commercial space required primary by food delivery companies.
I learned about this from an unusual source. Every now and again — and with decreasing frequency, frankly — the people over at CNBC push past their political agenda and actually cover financial news. This is one of those days, as there’s an interesting article on their website about the very topic of our discussion, offering a glowing analysis of the cold storage sector.
The rationale offered for CNBC’s high praise of this sector is simple: There’s not a lot of cold storage warehousing available, and the demand for it is skyrocketing because of food delivery companies like Peapod, Blue Apron and Amazon Fresh.
That information is little more than anecdotal, but substantial enough to warrant a look into cold storage facilities as a way to invest one’s portfolio. And should you deem the business of frigid commercial space to be worthy of your investment capital — and in particular your retirement savings — what are you to do?
One alternative — likely the simplest — is to direct your stock broker to buy shares of AmeriCold. I’m not recommending for or against that. What we know is that so far the stock has done very well, and that’s positive.
But investing via publicly-traded assets, while very simple, represents a different risk: The risk of the lack of choice and control.
So a second alternative is to find a private syndication or partnership that focuses on cold storage into which you can invest. This will allow you to use the resources and expertise of the investment partner to run the investment so you can passively provide the capital, while having a fine degree of control due to investing only in a project that you’ve specifically approved.
Your final alternative sacrifices the simplicity of investing in either publicly-traded stocks or privately-held syndications, but what you get in return is absolute control and absolute choice. That alternative is, of course, to invest directly into the acquisition or construction of a cold storage facility of your own. This is a big commitment, of course, but is a very legitimate option which should not be ignored.
What’s best for you? That’s a decision only you can make, with appropriate input from your advisers, of course. But here’s the bigger point relevant to you no matter whether you care anything about Cold Storage or not:
If you happen to be investing your retirement funds, chances are very good that two of those three options are totally off the table for you! Unless you have already transferred some of your retirement savings into a self-directed IRA or 401(k), your retirement portfolio will be handcuffed to Wall Street, wholly denying you the opportunity to work with an expert partner through a syndication and further denying you the alternative to acquire or construct a cold storage warehouse of your own.
You must ALWAYS be ready to make investments — whether in cold storage facilities or anything else — by having your capital in an accessible situation, because all too often, opportunity requires quick movement. So to the extent that your portfolio is held within retirement accounts such as IRA’s or 401(k)’s, do not delay in moving your money into a self-directed retirement account. You will still be able to hold investments in publicly-traded securities like you do now, but you’ll also be able to invest in nearly anything else that meets your criteria.
This is a “do it today” kind of idea. If you wait until an off-Wall Street opportunity presents itself to you to make this change, the days or weeks required for the transition may just mean you’re too late.
Originally published at https://sditalk.com.
