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Invest in the asset class that has historically outperformed inflation. NOYACK is leveraging a data centric acquisition model to handpick the best properties in the rapidly evolving US market.

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Commercial Real Estate is Effective Wealth Protection against Inflation

Supply chain real estate assets are now deemed essential because they enable the storage or delivery of a good or a service; Making this asset class undervalued relative to the market maturity of e-commerce. In the past 5 years, digital commerce has grown 140% to a $2.4 trillion market opportunity yet the supply of real estate infrastructure to meet that demand has increased only 25% driving increasing revenue in these assets classes for the next decade. — So far, industrial rents have kept pace with inflation, according to the most recent data from CBRE, with rents advancing 11.8% year-over-year during Q1.

5 Ways Real Estate Hedges Against Inflation

Triple-Net Leases (NNN)

Triple-net leases shift the operating costs of a property to the tenants, including real estate taxes, building insurance, utilities, and maintenance costs. So as the price of these inputs rises with inflation, property owners are able to protect their cash flow by passing along the increased costs.

CPI Indexation

Real estate leases may include negotiated annual rent escalations to keep up with inflation by contractually tying rent increases to upward movements in the CPI. This was standard practice in the 70s and 80s during periods of high inflation, and it remains an excellent way to protect investor returns.

Lease Duration

Shorter leases allow property owners to increase rents more frequently to keep pace with rising inflation. Shorter leases protect the real value of cash flows and shareholder returns.

Periodic Rent Reviews

Particularly important for longer-term leases or when only one tenant occupies the property, periodic rent reviews create preset opportunities to adjust rents over the course of a lease.

Long-Term, Fixed-Rate Debt

For properties with loans negotiated during periods of low interest rates, when rents go up, net cash flows increase, all else equal.

Logistics infrastructure is undervalued relative to the demand of eCommerce.

We define supply chain & logistics real estate as any asset that supports the storage or delivery of a good or a service. Diversification is a critical component of our success.
Protect your wealth

Gus Ackley

Director of Accredited Equity Sales

gus@noyackcapital.com

+1 646 653 3481

This data has led many market watchers to believe that real estate could outperform the broader market in the near term. “Inflation and Real Estate Investments,” a 2017 study published by NAREIT and Wharton, substantiates this claim. A portfolio with a 39% allocation to real estate investment trusts (REITs) has a 78% chance of exceeding inflation.

Inflation is here; What Next?

Consumer Price Index (CPI) and Producer Price Index (PPI), two important indicators of inflation, rose to 9.1% and 11.3% in June 2022, some of the most dramatic yearly increases since the 1980s. As the world continues to recover from the impact of COVID-19, the global economy is experiencing the highest inflation in 40 years.

Searching for an Alternative?

Investors are seeking to protect their wealth by re-assessing their portfolio’s ratio of stocks, bonds, and private real estate, a greater exposure to commercial real estate will provide an effective hedge to inflation for investors, individual and institutional alike.

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