Hannon Armstrong Is A 'Yuuuuuuge' Infrastructure Bet

I’m glad I got on the “Trump Train” early as shares in Infrastructure REIT, Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI) have soared, up almost 40% year to date.

Summary

  • “I want to get the taxes first. I want to get health care. We’re doing a big infrastructure bill, which will be a very positive thing". - President Trump.
  • The president's target of $1 trillion in infrastructure investment will be funded through a combination of new Federal funding, incentivized non-Federal funding, and newly prioritized and expedited projects.
  • Hannon Armstrong’s flexibility in deal size and tenor is one of its competitive advantages, as well as the low-cost advantage (compared to BDCs, hedge funds, etc.).
  • I’m glad I got on the “Trump Train” early, as shares in Hannon Armstrong have soared, up almost 40% year to date.

In the upcoming (November) edition of my newsletter, Forbes Real Estate Investor, I plan to publish “an essential guide to Infrastructure REITs”. In a research paper, Cohen & Steers writes:

“Allocations to listed infrastructure have been on the rise in recent years amid growing demand for real assets offering relatively predictable cash flows and the potential for attractive real returns…As cash-strapped governments increasingly turn to private markets to fill a capital void, new security structures have been introduced globally, including those focused on income delivery.”

This weekend, President Trump explained:

“I want to get the taxes first. I want to get health care. We’re doing a big infrastructure bill which will be a very positive thing. But we’re going to have tremendous growth.”

Although President Trump’s Infrastructure plan has not been flushed out (to the public), the Administration has provided a six-page fact sheet packaged with the president's $4.1 trillion proposed 2018 budget.

As expected, it laid out a vision for $200 billion in direct federal spending over the next decade on needs such as roads, bridges, tunnels, railroads, and expanded broadband, along with incentives for states, cities, and private investors and efforts to reduce the burdens of regulations. The fact sheet cites:

“The President’s target of $1 trillion in infrastructure investment will be funded through a combination of new Federal funding, incentivized non-Federal funding, and newly prioritized and expedited projects. While this Administration proposes additional funding for infrastructure, we will structure that funding to incentivize additional non-Federal funding, reduce the cost associated with accepting Federal dollars, and ensure Federal funds are leveraged such that the end result is at least $1 trillion in total infrastructure spending.”

I’m glad I got on the “Trump Train” early as shares in Infrastructure REIT, Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI) have soared, up almost 40% year to date...

Of course, as you can imagine, HASI’s performance compares very favorably to its peers:

While certain analysts were running from fear, I stuck by HASI and continued to put the “pedal to the metal”, as I explained (in February 2017):

“I am convinced that HASI is building a business that allows investors to participate in attractive yielding assets, generated by an increasingly diverse portfolio. Also, keep in mind that HASI’s management team owns 5% of the business, so there’s an alignment of interests. I am maintaining my BUY recommendation.”

Discipline pays off, and that’s why I am proclaiming Hannon Armstrong to be one "Yuuuuuuge" Infrastructure Bet.

HASI Enters REIT-dom

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