Demand for Energy, Food and Housing Creates Opportunity for Investors, Says
U.S. Trust in 2014 Outlook on Non-financial Assets
NEW YORK -- March 12, 2014
The booming U.S. energy market, robust housing recovery and strengthening
economy are creating growth opportunities for investors of non-financial
specialty assets, including farmland, timberland, real estate, private
businesses, and oil and gas, according to U.S. Trust. In a report published
today on its 2014 outlook for non-financial assets, U.S. Trust’s Specialty
Asset Management group said it expects strong performance from the asset class
and that it is a market poised for long-term growth.
“When you factor in long-term market trends – population growth, economic
development in emerging markets and the correlating demands on energy, food
and housing – we see a strong growth opportunity emerging for non-financial
assets,” said Dennis Moon, national executive of U.S. Trust’s Specialty Asset
Management group that manage separate accounts for high net worth investors in
“Furthermore, the factors that drive the value of these assets are unique and
independent of the volatile forces often at play in the broader market, making
these investments highly attractive and an important consideration in the
construction of a balanced portfolio.”
In its outlook for 2014, U.S. Trust takes an in-depth look at the
opportunities for five key non-financial asset categories:
*Timberland: Demand for timber is expected to grow as the U.S. housing
recovery moves into high gear and competition for resources heats up
between pulp and paper mills and renewable energy plants fueling the
fast-growing woody biomass market. Timber pricing is rebounding from
historic lows and will likely continue to rise as supplies tighten and
demand accelerates. These market fundamentals, combined with low return
volatility and tax efficiency, suggests a strong 2014 for timberland
*Farm and ranch land: With a 4 percent, or in some cases higher, cash yield
expected in 2014, farmland remains a favorable investment opportunity. In
2014, farm and ranch land prices are expected to level off as more normal
slow growth is anticipated for commodities including corn, soybeans and
wheat, spurred by macro-trends such as global population growth. As
farmer-investors become more conservative and land prices level off, more
opportunities for farmland deals are expected to emerge for long-term
*Oil and gas properties: As demand for energy accelerates and the U.S.
moves ever closer to energy independence, oil and gas investment
activities will continue to be a big area of focus. With the apparent
worldwide economic improvement, in conjunction with the transforming
energy efficiencies and correlating demands, the stage is set for
investment opportunities in energy over the long term.
*Commercial real estate: Economic improvements in 2013, both domestic and
abroad, translated into stronger demand in the U.S. commercial real estate
market, with the office, retail, multi-family and industrial segments all
posting improvements for the year in vacancy, rents and valuation. The
outlook remains positive overall for commercial real estate investors in
2014; however, there will be variances by product type and market. In the
year ahead, multi-housing rent growth is expected to moderate and vacancy
rates may slightly rise. Office and industrial properties are seeing
continued rent growth but also shifts in tenant preferences for more
functional space and amenities. Renovation will likely be the dominant
focus of investments in retail properties as many markets continue to deal
with “dead centers.”
*Private businesses: As an investment class, private businesses are
expected to offer a breadth of opportunities both for domestic and foreign
acquirers in the year ahead, along with an increase in the inventory for
buyers and the number of interested sellers. Positive balance sheet growth
should continue to strengthen in 2014, and business owners are benefitting
from strong credit opportunities at favorable rates, which should spur M&A
activity. However, the pace of private company investment activity may be
slowed as business owners face the still unknown impact of the Affordable
Care Act on their cost of doing business.
“Non-financial assets can be an effective diversifier to a portfolio of
financial assets, and we’re seeing this asset class become an increasing focus
for many of our clients, both individual and institutional investors with
access to the amount of capital needed for direct investments^1,” added Moon.
“By their nature, these are unique investments, and the assets themselves need
to be managed to maximize the value of the deal and the investment’s
The Specialty Asset Management team at U.S. Trust offers strategic insight and
specialized experience required to manage and maximize the potential of these
investments. Led by Dennis Moon, the executive team includes:
*Doug Donnell, national Timberland executive.
*John Taylor, national Farm and Ranch executive.
*Dick Sadler, national Oil and Gas executive.
*Andrew Tanner, national Private Business and Real Estate Services
A copy of U.S. Trust’s 2014 Outlook on non-financial assets is available at
www.ustrust.com/sam along with additional whitepapers from the specialty asset
management group at U.S. Trust.
^1Note: Oil, gas and mineral interests are not available for direct investment
through U.S. Trust.
U.S. Trust, Bank of America Private Wealth Management is a leading private
wealth management organization providing vast resources and customized
solutions to help meet clients' wealth structuring, investment management,
banking and credit needs. Clients are served by teams of experienced advisors
offering a range of financial services, including investment management,
financial and succession planning, philanthropic and specialty asset
management, family office services, custom credit solutions, financial
administration and family trust stewardship.
U.S. Trust is part of the Global Wealth and Investment Management unit of Bank
of America, N.A., which is a global leader in wealth management, private
banking and retail brokerage. U.S. Trust employs more than 4,000 professionals
and maintains 140 offices in 32 states.
As part of Bank of America, U.S. Trust can provide access to a broad range of
banking solutions for individuals and businesses, and an extensive retail
Bank of America
Bank of America is one of the world's largest financial institutions, serving
individual consumers, small- and middle-market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk management products and services. The company
provides unmatched convenience in the United States, serving approximately 50
million consumer and small business relationships with approximately 5,100
retail banking offices and approximately 16,300 ATMs and award-winning online
banking with 30 million active users and more than 14 million mobile users.
Bank of America is among the world's leading wealth management companies and
is a global leader in corporate and investment banking and trading across a
broad range of asset classes, serving corporations, governments, institutions
and individuals around the world. Bank of America offers industry-leading
support to approximately 3 million small business owners through a suite of
innovative, easy-to-use online products and services. The company serves
clients through operations in more than 40 countries. Bank of America
Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Non-financial assets, such as closely-held businesses, real estate, oil, gas
and mineral properties, and timber, farm and ranch land, are complex in nature
and involve risks including total loss of value. Special risk considerations
include natural events (for example, earthquakes or fires), complex tax
considerations, and lack of liquidity. Nonfinancial assets are not suitable
for all investors. Always consult with your independent attorney, tax advisor,
investment manager, and insurance agent for final recommendations and before
changing or implementing any financial, tax, or estate planning strategy.
Energy and natural resources stocks have been volatile. They may be affected
by rising interest rates and inflation and can also be affected by factors
such as natural events (for example, earthquakes or fires) and international
Diversification does not ensure a profit or protect against loss in declining
U.S. Trust operates through Bank of America, N.A., and other subsidiaries of
Bank of America Corporation. Bank of America, N.A., Member FDIC.
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2014 Bank of America Corporation. All rights reserved.
Visit the Bank of America newsroom for more Bank of America news.
Reporters May Contact:
Julia Ehrenfeld, Bank of America, 1.646.855.3267
Press spacebar to pause and continue. Press esc to stop.