These “Own Forever” Assets Are the Best Way to Profit in a Constantly Changing Sector

The real estate landscape is changing, and as we all know, change creates opportunity. The real estate markets have, for the most part, recovered nicely since the crisis, and investors and developers alike have made tons of money.

Of course, during that decade, even as the profits piled up, the world changed – a lot. What was profitable in 2016 or 2017 could be a loser in 2019 or 2020.

It’s my job to help get you out in front of the moneymaking trends that we’ll see accelerate in the short and long term, to make sure your fair share of the gains ends up in your pocket.

So I want to show you an investment that will do just that…

Here Are the Trends That Will Mint the Next Millionaires
One of the biggest trends here in the United States is the move away from high-tax states – particularly in the Midwest and Northeast – to lower-tax states… that enjoy better weather.

The Sun Belt is seeing population gains from folks tired of taxes and snow.

Millennials are also looking for a better quality of life as they start families.

Being in the “24/7” city center is fantastic when you’re single or in the “double income, no kids” phase of life.

But that environment leaves something to be desired when the bundles of joy begin showing up.

That inevitable fact is going to drive demand for real estate investment trusts (REITs) that provide housing, office space, and other needs of the newly arriving residents.

Cousins Properties Inc. (NYSE: CUZ) is buying TIER REIT Inc. (NYSE: TIER) in a transaction that will, at a stroke, create the largest Sun Belt provider of office properties. These are primarily Class A office buildings in high-demand center city locations – markets like Atlanta, Ga.; Austin and Dallas, Texas; Charlotte, N.C.; Phoenix, Ariz.; and Tampa, Fla. – that will see even higher demand as people and companies move in over the next few years.

Their properties are concentrated in some of the strongest markets in the country right now.

Retail, of course, is another sector undergoing earth-shaking changes.

We’ve all seen Amazon.com Inc. (NASDAQ: AMZN) and other e-commerce companies change the game, as we know, almost entirely at the expense of brick-and-mortar retailers. We’ve seen stores closing all over the country; formerly dominant retailers have folded.

It’s no surprise this has hit shopping malls like a ton of bricks. Mall owners have scrambled to replace lost tenants and repurpose properties. Mall REITs have been hit hard, and most analysts have a gloomy outlook for retail real estate over the next several years.

Me? I’m not so sure “gloomy” is the right outlook. I’m thinking more along the lines of “unreasonably cheap bargain buffet.”

Bruce Flatt of Brookfield Asset Management Inc. (NYSE: BAM) is taking a contrarian view of the real estate market. His firm, with its $300 billion in assets under management, isn’t convinced the retail real estate market is going to die.

It’ll change, no doubt, but opportunities exist, especially at current valuations. While some of the Class B and C malls may disappear from the landscape, upscale Class A malls should be just fine, and Brookfield has been a buyer at the current bargain valuations

As patient-aggressive investors, we should be buying as well.

I’m a fan of Taubman Centers Inc. (NYSE: TCO) at the current prices. This REIT owns malls and super regional malls across the United States and Asia. Eighty-nine percent of these properties are in the top 50 markets, so they attract a lot of higher-end tenants anxious to sell to the upscale clientele that visit upscale malls.

Taubman is also starting to attract formerly all-digital companies like Amazon that want to burnish their image and boost their mental and physical footprint with a brick-and-mortar location in high-income ZIP codes.

Know what else I like about it? Insiders have a lot of skin in the game at Taubman. Collectively, officers and directors own 31% of the shares of the REIT. That’s more than $1 billion of their own scratch invested in Taubman, so it’s in their best interest to perform. So far, they’ve been doing that and then some. For them to protect and increase their own wealth, they have no choice but to do the same for us.

Here’s Some All-in-One Exposure to These High-Profit Trends
So big profits are coming from the public’s desire to live in sunny, warm, low-tax states – and the tenacity of high-end shopping.

You can buy shares in just one investment to cash in: the Whitestone REIT (NYSE: WSR). I love the fact that there’s plenty of insider skin in the game in this Sun Belt–focused REIT. Officers own more than 5% of the shares, some 2.2 million of them.

This REIT owns and develops what it calls “Internet-resistant” shopping centers. These centers feature tenants that offer services that really can’t be provided online, like groceries, entertainment centers, healthcare, fitness centers, and personal services like dry cleaning.

These community-based centers aren’t feeling the same sting other malls and shopping centers are feeling from the “retail apocalypse.”

They also focus on business-friendly low-tax states.

Their centers are primarily in Phoenix, Ariz., and the Austin, Dallas-Fort Worth, Houston, and San Antonio, Texas, metro areas in affluent, well-educated ZIP codes.

These areas are where people want to live, giving Whitestone an ever-growing, increasingly affluent customer base that benefits its tenants. That should keep occupancy high and rents increasing, at least until taxes and weather stop being an issue for people, which should be on the 12th of Never.

Whitestone has the potential to be an “own forever” collection of assets in the ever-changing real estate sector. Knowing which trends we can ride to huge profits is one of the keys to building the type of wealth that allows you to live where and how you want.

— Tim Melvin

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Source: Money Morning