Top 3 Industrial REITs: An Overview of the 2Q17 Results


Aug. 25 2017, Published 11:19 a.m. ET

The sector as a whole

Industrial REITs (real estate investment trusts) are currently experiencing a boom, and many anticipate future growth backed by the value-added policies expected to be taken up by the Trump administration. Many believe that Trump has instigated a sense of optimism within the economy, which has triggered growth.

To be sure, the rise in GDP, the continued low unemployment, and industrial growth have all boosted momentum for industrial REITs since the beginning of 2017.

Although the rising interest rate has posed a threat for REITs by increasing cost of debt, economic growth has offset the negative impact of hawkish interest rates across the industry.

Below, we’ll consider three key industrial REITs—Prologis (PLD), Duke Realty (DRE), and DCT Industrial Trust (DCT)—and analyze their performances in 2Q17.

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Prologis’s stock price movement in 1H17

Logistics and distribution REIT Prologis (PLD) has seen its stock soar 30.7% YTD (year-to-date) in 2017. This stock price rally was backed by better-than-expected results in 1H17. Prologis also reported higher YoY (year-over-year) results backed by strong rent growth, higher margins, and stable occupancy during the quarter.

PLD’s management is optimistic about business momentum and has enhanced its guidance for fiscal 2017, which has boosted investor confidence all the more.

Duke Realty in 1H17

Duke Realty stock has seen a 21.4% gain in the first seven months of 2017 backed by upbeat 1H17 results, and its enhanced fiscal 2017 guidance and strategic initiatives to boost industry presence appear to be encouraging investors.

DCT Industrial Trust stock in 1H17

DCT Industrial stock has surged 29.3% YTD. The company’s solid growth momentum and upbeat results in 1H17 increased investor confidence, and DCT enhanced its fiscal 2017 net earnings guidance following its 1H17 results.

Notably, PLD, DRE, DCT, and Simon Property Group (SPG) make up ~16% of the SPDR Dow Jones REIT ETF (RWR), which has a beta of 0.55, reflecting low volatility to market conditions.

In the next part of this series (below), we’ll take a closer look at the 2Q17 results of the above three stocks.


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