Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Industrial REITs: Don't Bite The Hand That Feeds You

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  • Industrial REITs remain the unstoppable force in the real estate sector, delivering another stellar second quarter. Investors have systematically under-owned this sector, waiting for the pull-back that never came.

  • Industrial REITs are a case-study in why an investor’s time should be allocated to understanding supply and demand dynamics and long-term macroeconomic trends ahead of static valuation metrics.

  • Powered by the “need for speed”, fundamentals remain stellar. Market rents are poised to grow by roughly 6% in 2019 after rising 8% in 2018 and 9% in 2017.

  • What trade war? Industrial REITs have seen minimal impact from the elevating tensions between the US and China. Ironically the more worrying trends are related to a Retail Apocalypse 2.0.

  • A concern we raised last quarter, while the sector has benefited more than any from e-commerce, an intensification of retailer bankruptcies would concentrate more power in their largest tenant: Amazon.

Within the Hoya Capital Industrial REIT Index, we track the thirteen largest industrial REITs, which account for roughly $105 billion in market value: Prologis (PLD), Duke Realty (DRE), Liberty Property (LPT), Americold (COLD), First Industrial (FR), PS Business Parks (PSB), EastGroup (EGP), Rexford ( REXR), STAG Industrial (STAG), Terreno (TRNO), Monmouth (MNR), Industrial Logistics (ILPT), and Innovative Industrials (IIPR). Industrial REITs comprise roughly 10% of the broad-based Real Estate ETFs (VNQ and IYR).

To continue reading, click to visit SeekingAlpha. If you enjoyed this report, be sure to "Follow" our page to stay up-to-date on the latest developments in the housing and commercial real estate sectors. For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.


Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.

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Hoya Capital Real Estate, LLC

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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