Right off the bat: I’m a firm believer and committed investor in vital infrastructure. Railroads, ports, pipelines, wireless towers, gas stations, airports, roads, electricity transmission lines and stations, you name it. For clarity – while the land that carries it, is not technically infrastructure itself, usually they’re bound together by decades-long leases (or short term leases that give more power to the landowner) that effectively make the ground underneath a senior tranche in the asset. More on that below. The majority of my portfolio is invested in land with infrastructure, but my appetite is insatiable.
During my intermittent career in commercial real estate investing, i’ve found that entry yield is important, but lease rates and the price level relative to market value are occasionally even more so. Especially important in sale and leaseback (SLB) deals. The pitfall is, that frequently the deal being offered is not so much a real estate deal as a structured financing deal with inadequate collateral.