When it comes to hot sectors, industrial real estate is a poster child for riding the wave of investor interest. That includes those real estate investment trusts (REITs) that are growing their portfolios and profits while serving as a profitable sluice in the burgeoning global supply chain driven by e-commerce.
Nareit lists 13 companies as industrial REITs. Through July 31, that group was yielding 2.11%, with a year-to-date total return of 27.26%. Below, we choose three to focus on that are among leaders in total return, that important metric that includes capital appreciation and dividend return.
EastGroup Properties (NYSE: EGP) has delivered a one-year total return of 32.55% with a closing price of $175.20 on Friday, Aug. 27. That was good for a yield of 2.05% based on an annual payout of $3.60. Its market cap was $7.1 billion.
Based in Jackson, Mississippi, EastGroup focuses primarily on distribution space in the 15,000-to-70,000-square-foot range in supply-constrained markets near major transportation infrastructure in Florida, Texas, Arizona, California, and the Carolinas.
In August, the company grew its portfolio with the acquisition of four business distribution buildings totaling 611,000 totally leased square feet adjacent to Dallas-Fort Worth Airport, for $89.7 million. In July, it bought 27 acres in Austin, Texas, and began building a $26.2 million, 176,500-square foot distribution building.
It also recently paid $1.4 million for 59 acres of undeveloped land in Greenville, South Carolina, with plans to develop three buildings totaling about 400,000 square feet.
Meanwhile, EastGroup announced on Aug. 26 that it was increasing its dividend by 13.9%, from $0.79 a share to $0.90 a share payable on Oct. 15.
That marks 167 straight quarterly distributions, and EastGroup has increased or maintained its dividend for 29 consecutive years, including increasing it in each of the past 10 years. (That’s within a stone’s throw of making this stock a Dividend Aristocrat.)
Plymouth Industrial REIT
Plymouth Industrial REIT (NYSE: PLYM) has delivered a one-year total return of 70.79% based on a high of $23.37 per share on Aug. 2. That was good for a yield of 3.70% based on an annual payout of $0.84. Its market cap was $723.5 million.
As of 2Q21, Boston-based Plymouth Industrial REIT has a portfolio of 147 industrial buildings totaling 24.8 million square feet and 96.2% occupied, with a focus on distribution centers, warehouses, light industrial, and small-bay industrial properties in the country’s major logistics corridors. During the quarter, the company added four new buildings: three in Memphis, Tennessee, and one in St. Louis.
While reporting a second-quarter net loss of $7.4 million, the company did report positive core funds from operations (FFO) of $0.41 per share and raised its dividend by 5% to $0.21 per share. And, like many other industrial REITs, it says it was able to raise its rents, in this case 7% for leases longer than six months.
Rexford Industrial Realty
Rexford Industrial Realty (NYSE: RXR) has delivered a one-year total return of 33.04% as of Aug. 27. The stock closed that Friday at $60.80 a share, good for a yield of 1.58% based on an annual payout of $0.96 per share. Its market cap was $8.4 billion.
This Los Angeles-based REIT keeps it close to home. It owns and operates 268 industrial properties and manages another 20 across Southern California infill markets. In the second quarter, the company added 12 properties to that portfolio and sold one.
And a good three months it was. "Rexford's second-quarter results continued at exceptional levels, producing core FFO growth of 36% and 22% on a per-share basis, fueled by consolidated NOI growth of 31% compared to the prior year quarter. Our team executed 2.2 million square feet of leasing activity at extraordinary GAAP and cash releasing spreads of 34% and 21%, respectively," the company’s co-CEOs, Michael Frankel and Howard Schwimmer, said in Rexford’s earnings announcement.
To spread that wealth, the company’s board declared a dividend in the amount of $0.24 per share payable on Oct. 15, the second straight quarter at that level after raising it from $0.215 for all of 2020.
The Millionacres bottom line
While total return is just one way of looking at a potential investment, combine that with how these three industrial REITs are adding to their revenue-generating portfolio and the niches they’re leveraging for themselves, and each can make a good case for a buy now for this month and beyond.