Thought Leadership in Real Asset Investing

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The Inflation Reduction Act (IRA) is an historic landmark in U.S. law-making that is estimated to grow the U.S. renewables market from $64 billion in 2022 to nearly $114 billion by 2031. In turn, many other industries are being indirectly and positively impacted by the passing of that law. We feel it's critical that investors take advantage of this opportunity and capitalize and pursue investments in renewable energy production and infrastructure deployment as well as opportunities in the energy transition, digital transformation and enhancement/asset improvement of aging infrastructure. 

ADISA President Michael Underhill welcomed conference attendees in the opening session with an unveiling of a partnership with The Milken Institute.  

"ADISA believes in building, developing and retaining a diverse talent pipeline and fostering a connected culture within a welcoming, inclusive and equitable environment, and has partnered with the Milken Institute HBCU Strategic Initiative and Fellows Program for our 2023 Spring Conference, April 24-26.

HBCUs generate 25% of all bachelor’s degrees in STEM fields for African Americans and award 14% of all African American engineering degrees. Through our partnership with Milken, ADISA hosted students from this program to foster the next generation of leadership in the alternative investment industry. We look forward to continuing the partnership at our Annual Conference in Las Vegas, October 9-11."

There is a deep and varied opportunity set of attractive investment opportunities in the renewable and sustainable energy sector.  We are focused on investments that address the renewable and sustainable energy opportunity, including energy transition, to potentially capture value-creation and drive investment returns. While the energy transition is expected to unfold over several decades, there is a clear trend towards decarbonization at a global level. The push for decarbonization was originally driven by national and regional policies but continues to accelerate as renewable energy economics become increasingly favorable. Recent improvements in, and de-risking of, renewable energy generation and storage technologies have led to cost parity with traditional generation resources in many markets. The costs of renewable energy have continued to decline over the past decade with the global levelized cost of energy (LCOE) of utility-scale solar PV and on-shore wind falling 85% and 56% respectively between 2010 and 2020. (IRENA, Global Energy Transformation 2021) Additionally, battery technology has made significant progress over the same period, with costs declining approximately 90%. (IRENA, Global Energy Transformation 2021)  

The Global ESG Disclosure Standards for Investment Products are the first global voluntary standards for disclosing how an investment product considers ESG issues in its objectives, investment strategy, and stewardship activities.

There are challenges galore in the ESG investment space worldwide, even today.  While there are definitional discrepancies where many of the terms are used synonymously or interchangeably, there are also challenges to the traditional risk modelling practices.  ESG accounting practices requiring accurate quantification of the ESG indicators. is another area needing largescale improvements.  This panel, consisting of who’s who of the ESG Investment world, would help us cut through the modelling challenges and taxonomy complications and tell us about creating business value through the right funding & investment instruments 

  If we are to collectively limit global warming to 1.5°, the next 30 years will herald an unprecedented global transformation of the real economy and investment markets. This transformation will result in an even stronger focus on ESG integration, climate risk management and stewardship, to both fulfill fiduciary responsibilities and to accelerate the transition to a low carbon economy.

Beyond the Biden Administration’s $1.2 trillion infrastructure bill, it is estimated that the world needs over $100 trillion in infrastructure investment through 2040. What does this mean for investors?

“This is the first order of business when capital providers start their screening process for companies with the concern around climate change and with the U.S. rejoining the Paris Agreement,” he said. Underhill said oil and gas companies must demonstrate that they are efficient in managing their use of energy. “The ability to use less energy and deploy it in a more efficient manner and reduce their carbon footprint is important,” he said. “There are 50 billion tons of greenhouse emissions contributing annually to climate change right now.” Energy producers and providers must also demonstrate that they are addressing social issues, including cybersecurity concerns such as the hack and ransomware of the Colonial Pipeline and the product quality and safety of wells and their employees, Underhill said.

Webinar regarding Environmental, Social, and Governance (ESG) and how these factors are becoming a business priority for alternatives fund managers; 36% of the $10.8tn in alternatives industry AUM is now managed by ESG-committed firms. Top experts share ESG latest trends. Gains insights into investment sourcing, screening and analyzing and how to effectively incorporate ESG Alts into your portfolio asset allocation.

Panelists: Christopher Merker, Director, Robert W. Baird & Co. & Michael Underhill, Chief Investment Officer/CEO Capital Innovations, LLC 

 (Webinar Replay Passcode: @pJ0Pai8)

Michael Underhill appearance on TD Ameritrade with Oliver Renick breaks down why the current macro backdrop has created the “perfect environment” for investors with an active management style and explains where he sees investors getting the best bang for their buck over the next 6 months: 

Multifamily and industrial have become increasingly popular in light of disruption that has hit other areas of real estate, adds Michael D. Underhill, chief investment officer at Capital Innovations LLC in Pewaukee, Wis. “Physical distancing has directly changed the way people inhabit and interact with physical space, and the knock-on effects of the virus outbreak have made the demand for many types of space go down, perhaps for the first time in modern memory,” he says. In contrast, housing remains a necessity, and HNWIs also have discovered the positive impact e-commerce has had on industrial. Affordable housing in particular offers compelling investment and return opportunities because affordable housing in high-cost cities remains drastically undersupplied, notes Underhill. 

ESG implementation in real estate strategies, throughout 2019, emerged as a new trend with LPs switching their focus towards impact & sustainable investments, which resulted in 2020 starting off with the largest investment volume for real estate impact investment strategies to date. But with the pandemic outbreak, tenants are increasingly concerned with the impact of buildings on their wellbeing, while investors are trying to minimize risk exposure to climate change related issues, such as fires, droughts and floods, through impact and socially responsible investments. 

Barron's interview with Michael Underhill CIO of Capital Innovations regarding the growing allure of Data Center REIT investing.