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Inside 3 Key Industrial REITs in 2Q17: Top- and Bottom-Line Results

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2Q17 performance

Industrial REITs (real estate investment trusts) reported robust top-line and bottom-line results in 2Q17 backed by industrial growth, which has boosted demand for leased properties. At the same time, top industrial REITs have placed their properties in high-demand commercial areas, which have helped the companies maintain decent occupancy levels.

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Surpassing FFO estimates

Prologis’s (PLD) 2Q17 adjusted FFO (funds from operation) of $0.84 beat Wall Street’s estimate by 9.1% and topped its 2Q16 adjusted FFO by 40%. The upswing in profit was aided by higher margins and strong rent growth.

By comparison, Duke Realty (DRE) reported FFO of $0.32 per share in 2Q17, beating the analysts’ estimates by ~2.8%. DRE also surpassed its FFO of $0.30 in 2Q16 backed by higher rent and net operating income.

DCT Industry Trust’s (DCT) 2Q17 adjusted FFO of $0.60 per share was 11.1% YoY (year-over-year), marginally beating Wall Street’s estimate by 1%. Higher NOI (net operating income) and rent growth backed profit growth.

New leasing activities

Although PLD’s rental revenue of $576.4 million missed the analysts’ estimates in 2Q17, it rose 5.5% YoY backed by higher occupancy and new leasing activities. Although DRE’s revenue of ~$165.8 million missed the analysts’ estimates in 2Q17 by 14%, it beat its 2Q16 revenues by 5.2% backed by higher leasing activities.

Similarly, DCT’s revenue also rose 9% YoY despite missing the analysts’ estimates (by 2%) in 2Q17. Higher occupancy and renewed leases drove top-line growth during the period.

These three stocks and Simon Property Group (SPG) together make up ~16% of the SPDR Dow Jones REIT ETF (RWR), which has an average traded volume of 156,048 shares.

In the next part, we’ll assess the fiscal 2017 outlooks of the above three stocks.

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