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