GlobeSt.com: The report identifies a number of secular changes, including some that are a few years in the future. Would it be fair to say that they're going to impact the broad spectrum of the REIT sector?

Iman Brivanlou: Yes, that's fair. Real estate is perceived as a stagnant asset class. And really, that's part of the draw. You're supposed to have visibility into cash flows for many years out, and you know you have these real assets—hence, the premium valuation relative to the rest of the market. But the flip side is that we're living in unprecedented times; the adoption of technology has never been faster. We're in an increasingly interconnected world; information flows very freely. When you look at potential disruptions, you don't even need to go to the future. You can look at what's already happened.

Take the impact of e-commerce on retail and the industrial subcategory. Many analysts perhaps outside of real estate would have been able to call the impact that e-commerce was going to have on brick and mortar, and all that was missing for industrial to outperform retail REITs was for people to more assertively put two and two together. And it's only been in the past two or three years that you've seen a significant divergence in performance, although the e-commerce market share gain was already visible much earlier to those outside of real estate.

Data centers and towers—all of that is ongoing. Technology analysts have been calling on big data for years now. Our view is that there will be a number of other things occurring, where we're in early days right now—AI, autonomous fleets—and that the real estate market will begin to discern the effects of this a little bit later than other sectors.

Part of this is because when you sit with management teams and analysts, the discussions aren't focused on those longer-term secular factors that may be impacting the industry. They're focused on “what's the incremental yield that I'm getting on my investment dollar today?” “If I develop this mall, how many dollars do I have to put in, and am I going to get a 10% or 10.5% return?” It's not really “am I going to build parking structures at the same level as my retail, so when the shift to autonomous does occur, I can use that parking structure as part of an expanded retail footprint?” There are going to be winners and losers, as there were with e-commerce, and our task is try to identify those today based on trends that are highly visible to us.

GlobeSt.com: Will some sectors have to adapt more fundamentally than others to some of these changes?

Brivanlou: That's going to be very clearly the case. Again, to draw on the retail REIT analogy, B- and C-quality malls are essentially obsolete at this point, because no retailer is going to want to extend a brick-and-mortar footprint that far out. Take autonomous driving and fast forward 10 or 15 years: we're going to need far fewer gas stations; it's just a matter of fact. So for the triple-net companies that own gas stations as part of their portfolio, that part will need to be repurposed. It's not clear to me what other usage that size lot on a well-frequented corner could have. It's too small to be repurposed for residential. Is it going to turn into another strip mall? There's already too much retail.

So triple-net is one vulnerable area; our thesis is that as those B and C malls are eliminated, the higher-quality malls become even more of a destination. To the extent that they currently have large acreage dedicated to parking, that's acreage that could easily be repurposed to residential, office and so on.

GlobeSt.com: As you and your team at TCW are looking out over the horizon of 10 or 15 years, what are some of the themes that you're emphasizing from an investment standpoint?

Brivanlou: There's always the tradeoff that the more identifiable a theme is, the more it's already beginning to get priced in, and so there's always a tradeoff of looking at current valuations and seeing whether the risk-reward is still positive. Our experience has been that most of the dislocations that we have identified have been due to some time-value arbitrage. It's generally because we're looking out five or 10 years that we're seeing current value today. For us, it's almost always the case that if you get the secular theme really right, the premium you're paying is still justified as long as you're waiting the three to five years. We think that's an easier way of making money than trying to get the 80 cents at 65 cents.

The themes that we're still writing are very much the same: we're seeing industrial capturing market share over retail, data centers and towers, autonomous vehicles, the aging of the population and consolidation of healthcare real estate. Despite the uncertainty with regards to ACA and all of the regulatory changes that the space is undergoing, over the long run it's hard to imagine that we're not going to need more healthcare properties and that the current winners in the space will not be the ultimate winners. To us, those are long-term buys, and it's kind of an interesting overlap of value and secular theme.