In this email, PSRS Executive Vice President Michael Tanner shares two “hot money” trends and an insider tip:

1. Industrial is the “new retail”
Today, everyone shops online. Products now comes from a warehouse versus a brick-and-mortar store, so it’s driving demand for warehouse space to store and ship out these products. Industrial is also popular because it’s easy to manage. The challenge is that there just hasn’t been enough industrial space built, so what exists is in high demand across the country. For these reasons, industrial real estate is currently the preferred investment for our life companies.

2. Life companies are focusing long-term
The way life companies are doing their accounting, they are matching off liabilities – which can be life insurance policies or annuities. These liabilities tend to be long-term in nature and so they are matching debt against those long-term liabilities. Mortgages are a good place to find longer durations which they can’t find it in the bond market.

Insider Tip: Move fast if you’re a borrower, before the money is gone!
If you are a borrower, it’s important to know that life insurance companies get their allocations at the start of each year. When that money is gone, they stop lending. The best thing to do as a borrower is to do as much as you can early in the year. By the last quarter there may be no money available or what money is available is at a higher price. It’s May, so now is the time to act.