- Alex Pettee, CFA
Industrial REITs: Virus Exposes Frail Supply Chains
The "hub of e-commerce" and the hottest property sector of the last half-decade, Industrial REITs have been unfazed by the coronavirus-induced pain that has encumbered much of the REIT sector.
The dramatic acceleration in e-commerce adoption has pulled forward the "retail apocalypse" trends as retailers divert more of their capital away from malls and into distribution supply chains.
While much of the REIT sector was slashing dividends this year, nearly half of industrial REITs have raised dividends in 2020. Rent collection has averaged more than 97% since April.
Underscoring the sector's favorable supply/demand conditions, Amazon's rumored interest in converting malls into last-mile distribution hubs has turned some heads, but the impact on industrial REITs will be immaterial.
Recent earnings reports confirmed that fundamentals are back in-line with pre-pandemic expectations with positive growth expected in 2020. With the pandemic exposing deficiencies in supply chains, we believe the logistics-boom is back in the early-innings.
