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Online retail giant Amazon.com, Inc. (NASDAQ:AMZN) is searching for a second headquarters. With the company expected to pick a location from a list of 20 finalists, D.A. Davidson analyst Kevin Reevey looked at likely winners and some potential beneficiaries from what's known as "HQ2."
The Thesis
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The potential winner could be Washington D.C., given its large number of highly skilled IT workers servicing the U.S. government and the possibility of a bicoastal presence for Amazon, Reevey said in a Thursday note, quoting D.A. Davidson's Amazon analyst Tom Forte. (See Reevey's track record here.)
Other strong contenders include Dallas, Indianapolis and Denver, the analyst said. These regions' already positive economic and demographic prospects, favorable business climate and educated workforces were cited by Reevey as the reasons behind the speculation.
D.A. Davidson projects an "economic windfall" for the prospective Amazon HQ2 city due to increased demand for office and apartment properties. Amazon could create 50,000 new jobs in the chosen city, with every dollar invested adding $1.40 to the local economy, the analyst said.
Companies servicing Amazon could drive increased office space demand, Reevey said.
The financial prospects for banks in the selected city should be positive, as the demand for commercial and residential real estate on bank balance sheets should drive stronger CRE, C&I and residential mortgage loan growth, according to D.A. Davidson. These institutions could also see an influx of deposits from commercial and retail customers, the firm said.
Reevey projects a rise in loan fees, service charges and ancillary fees from treasury and wealth management products and services.
See also: How to Start Investing In Real Estate
Likely Bank Beneficiaries
- United Bankshares, Inc. (NASDAQ:UBSI)
- Texas Capital Bancshares Inc (NASDAQ:TCBI)
- First Merchants Corporation (NASDAQ:FRME)
- National Bank Holdings Corp (NYSE:NBHC)
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These banks benefit from Amazon's HQ2 due to their leading respective market positions, scale and broad array of products and services to capitalize on such opportunities, Reevey said.
Likely REIT Benficiaries
Office REITs
- Boston Properties, Inc. (NYSE:BXP)
- Brandywine Realty Trust (NYSE:BDN)
- City Office REIT Inc (NYSE:CIO)
- Piedmont Office Realty Trust, Inc. (NYSE:PDM)
Apartment REITs
- Mid-America Apartment Communities Inc (NYSE:MAA)
- Camden Property Trust (NYSE:CPT)
The Price Action
Amazon shares are up about 59 percent over the past year.
SELECT SECTOR S/RL EST SELECT SECTO (NYSE:XLRE) is down about 1 percent.
SPDR KBW Regional Banking (ETF) (NYSE:KRE) is up about 14 percent.
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The Washington, D.C. Metro. Photo from Pixabay.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.