Industrial logistics is REIT sub-sector that is enjoying strong growth from the secular expansion of e-commerce distribution from the Internet economy, explains Bryan Perry, editor of Cash Machine.
Consumers and businesses alike continue to ship their shopping experience to online platforms where “just-in-time” delivery of goods is paramount to executing competitive strategies in today’s market place. Within this space, there are 15 publicly traded REITs.
The purest play is Industrial Logistics Properties Trust (ILPT), which pays a very attractive dividend yield of 5.62%. The company owns 300 properties, encompassing 42.8 million square feet.
ILPT has a unique Hawaiian footprint in that the company owns vast land holdings on the island of Oahu, all of which sit between downtown Honolulu and the airport.
The company leases out the land and buildings that account for roughly 60.8% of total leased space where long-term rent increases have a good history of being recession resistant.
Mainland properties are located in 29 states with Amazon as its largest tenant, followed by FedEx and Proctor & Gamble. Other tenants include BJ’s Wholesale Clubs, Restoration Hardware, Subaru of America and Safeway.
The firm posted a better-than-expected fourth quarter set of results. Funds from operations (FFO) of $0.46 beat estimates by a penny on a 47.8% year-over-year jump in revenue of $62.2 million that topped estimates by $0.73 million.
As of Dec. 31, ILPT’s total rentable space of 42.9 million square feet is 99.3% occupied. Shares of IPLT are holding up well within the defensive REIT sector and now sport a yield of 5.8%.