The Internet of Everything

How to make money when your refrigerator orders milk

The U.S. Department of Transportation (DOT) wants cars to talk to nearby cars to aid in safety and maybe target traffic congestion.  As of the end of 2011, according to DOT, there were 253 million registered vehicles in the U.S. – that’s a lot!  My Nike Fuel Band talks to my phone and my laptop and one of my friends has a smart house where basically every piece of information that’s even remotely relevant gets measured, transmitted and stored.  So his refrigerator is complaining to his microwave that the embedded music system never plays Perry Como, because it’s fixated on Katy Perry.

When we look to make investments in real estate stocks we are drawn to companies that possess certain characteristics.  We look for businesses that operate in sectors that have but a few competitors, where the real estate they own is in markets with very high barriers to entry, where the tenants have practical, locational or physical issues that prevent them from moving, and lastly where the tenants or users are experiencing strong secular growth.  Data centers and cell phone tower operators fit the bill for these characteristics and are part of our portfolio.

But in particular, the internet of everything, in our opinion, is a massive secular demand driver for these companies.  The possibilities are nearly endless. Some trivial, like my Nike Fuel Band or my refrigerator telling me I am out of soy milk (don’t even ask) and some really important, like medical devices chatting with one another and updating the health status of the population of a nursing home or hospital.  Wearable computing.  Google Glass for instance, is likely to be as ubiquitous as cell phones are today and the sheer amount of data these items will gather, store, share and access boggles the mind.

While this is in some ways a blinding glimpse of the obvious, we don’t think it’s actually baked in to the numbers.  Each time available bandwidth has increased, previously unimagined applications pop up to absorb that bandwidth.  No one would have predicted five years ago that kids would have Facebook’s mobile app open on a smartphone 14 hours a day running in the background.

You take this to its logical conclusion and huge quantities of what is now inert stuff becomes talking, communicating, bandwidth-eating stuff.   All this stuff stores its stuff in data centers and transmits that stuff to data centers through cell towers and other wireless networks.    Cisco’s expectation for wireless bandwidth is that global mobile traffic will grow 11 fold between 2013 and 2018.  We like this.


White Papers: Interest Rates & REIT Performance

A look at how REIT prices historically performed during periods of rising rates.

How do REIT share prices perform while interest rates are increasing? This is a logical question, as the returns associated with traditional fixed income oriented products, like bonds, are strongly correlated with rate changes. Many looking for income oriented products wonder if REITs behave the same way. After examining seven distinct periods of rising Federal Funds rate, we believe the simple answer is no.

Download the Interest Rates & REIT Performance White Paper



Burland East Interview at NAREIT

Burland East at NAREIT on the state of the REIT Industry. Watch AACA’s CEO, discuss why REITs continue to be sound advice.

Burland East recently gave an interview to during the “REITWorld 2012: NAREIT’s Annual Convention for All Things REIT” at the Manchester Grand Hyatt in San Diego. During this interview, Mr. East said that investors should feel confident about the REIT sector and its future prospects. He pointed to the sector’s outperformance as a positive factor influencing investors.

“REITs have been well rewarded over a long period of time,” he said. “We believe that most institutional and retail investors are best served by seeking an allocation in real estate through REITs, largely because most REITs have transparency, liquidity and governance.”