Although real estate investment trusts (REITs) in general have fared pretty well over the past month, the industrial sector has lagged behind REITs in other property sectors. Rising interest rates and recessionary fears continue to hit this segment of REITs hard.
Still, three industrial REITs managed to outperform the rest of the group, and two of them had quite positive results. Take a look at the best-performing industrial REITs over the past four weeks:
Indus Realty Trust Inc. INDT is a New York-based industrial REIT that focuses on select high-growth, supply-constrained markets. Its portfolio contains over 6 million square feet in 42 properties in Connecticut, Pennsylvania, North Carolina, South Carolina and Florida.
Indus Realty Trust led all industrial REITs with a 12.54% gain over the past four weeks. There were clear reasons for its double-digit gain. On Nov. 28, Indus Realty Trust announced it had received an unsolicited nonbinding acquisition proposal from Centerbridge Partners L.P. and GIC Real Estate Inc.. Centerbridge currently owns about 14.8% of Indus Realty Trust stock. Shares gapped up on the news from $57.28 to $63.98.
Another reason for the strong performance was that the board of directors announced a quarterly dividend increase of 12.5%, from $0.16 to $0.18 per share of common stock for the fourth quarter of 2022. At its recent closing price of $63.63, this brings the annual dividend yield to 1.13%.
Industrial REITs do not typically have very high yields compared with other REITs, but Indus Realty Trust’s dividend yield is still one of the lowest among all industrial REITs.
Industrial Logistics Properties Trust ILPT is a Newton, Massachusetts-based REIT that owns and leases 60 million square feet in 413 industrial and logistics properties throughout the United States. Of those properties, 54% are located in Hawaii. Its present overall occupancy rate is an outstanding 99.2%, and many of its tenants, such as Amazon.com Inc., The Home Depot Inc. and FedEx Corp. are investment grade.
Over the past four weeks, Industrial Logistics Properties Trust gained 6.07%, making it the second-leading industrial REIT performer. But its 52-week performance is -84.26%, making it one of the worst performers in the total universe of REIT stocks. The 52-week range is $3.32 to $25.73, and it recently closed at $3.67.
The main reason for its dismal 2022 performance was its acquisition of Monmouth Real Estate for $4 billion in cash in March. This added a huge amount of debt to the balance sheet, and despite substantial increases in revenue, the funds from operations (FFO) fell by 50% in its most recent quarter, disappointing analysts’ expectations as well.
To make matters worse, in July, Industrial Logistics Properties Trust cut its quarterly dividend from $0.33 to $0.01, sending shares skidding almost 30% over the next several weeks.
Given all of that, its recent four-week gain looks like nothing more than an oversold bounce.
Innovative Industrial Properties Inc. IIPR is an industrial REIT that specializes in commercial properties that it triple-net leases or initiates lease-backs to cannabis companies.
As of Sept. 30, Innovative Industrial Properties owned 109 properties in 19 states, with two more presently undergoing construction. Its average lease length is 15.5 years.
Over the last five years, strong revenue growth and earnings have propelled Innovative Industrial Properties to a 433% total return. While the past four-week return was a negative $0.11%, Innovative Industrial Properties was still the third-best-performing industrial REIT, and with its track record, it could continue to be among the best-performing industrial REITs.
Watch: "Has the curtain been lifted on private REITs?" Benzinga's Kevin Vandenboss talks with Armada ETF Advisors CEO Phil Bak about the limited liquidity in Blackstone's REIT.
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