Nonprofits are increasingly turning to investments in infrastructure, particularly as a means of hedging inflation and diversifying their real asset buckets. FEMM Contributing Reporter Joe D’Allegro recently spoke with Joyce Shapiro, managing director of infrastructure and real resources at Franklin Templeton Real Assets Advisors; Eric Haskel, managing director at Perella Weinberg Partners; and Arthur Rakowski, executive director of Macquarie Infrastructure and Real Assets, about this asset class.
FEMM: Should endowments and foundations invest in infrastructure?
Shapiro: Infrastructure assets’ historical ability to generate stable and recurring long-term cash flows make them well matched to the financial objectives of endowments and foundations. Universities require fiscal security to support their operational needs, and foundations have statutory distribution requirements. Infrastructure’s economic characteristics of inflation linkage and contracted revenue streams can play an important role in foundations’ and endowments’ portfolios. Revenue models with inflation escalators are used in regulated utilities, transportation assets, independent power ....