Can Industrial REITs Make the Most of This Cyber Monday?

If Thanksgiving Day celebrates nature’s bounty, Black Friday and Cyber Monday as well as the month thereafter are for retailers to indulge in abundant sales. And even if the year has been a particularly difficult, with the pandemic creating chaos both in terms of health and finances, people are setting […]

If Thanksgiving Day celebrates nature’s bounty, Black Friday and Cyber Monday as well as the month thereafter are for retailers to indulge in abundant sales. And even if the year has been a particularly difficult, with the pandemic creating chaos both in terms of health and finances, people are setting aside their worries with vaccine hopes and buying things, at least online, which is, undoubtedly, encouraging.

Obviously, the pandemic has been fueling online orders and substantially boosting e-commerce’s share of total retail sales. Even the reluctant ones, who once favored in-store purchases, now prefer online purchases in order to avoid physical contact and spread of infection. As a result, the Black Friday, which is essentially a day for visits to physical stores, turned online this year with a whopping number of consumers preferring the virtual channel of retailing amid the pandemic.

Black Friday Sales Skyrocket, Cyber Monday Likely to be the Biggest Ever

In fact, according to data from Adobe Analytics, after Thanksgiving, American consumers spent $9 billion online on Black Friday. This not only denotes a surge of nearly 22% year on year, but also makes Black Friday 2020 the second-largest online spending day in the nation’s history and just behind last year’s Cyber Monday.

What’s more encouraging is that the Cyber Monday 2020 is expected to emerge as the largest online shopping fiesta of all times, with spending projected to reach a whopping $10.8- $12.7 billion, suggesting 15-35% year-over-year growth, per a CNBC report.

Industrial REITs to Benefit

Now, it’s no secret how the industrial real estate asset category has been playing a crucial role for the past couple of years in this growing e-commerce market, transforming the way how consumers shop and receive their goods.

Services like same-day delivery are gaining traction, and last-mile properties in high-income urban areas have been witnessing solid pricing, occupancy and growth in rentals. And the social-distancing wave amid this pandemic has been the icing on the cake, fueling online orders, and opening up opportunities for industrial landlords to flourish.

This asset category has, in fact, proved to be one of the few resilient real estate types amid the pandemic, with solid chances to progress in the years ahead. Specifically, apart from the fast adoption of e-retail, the industrial real estate space is anticipated to benefit over the long run from a likely increase in inventory levels. This is because, in response to the pandemic along with trade disruptions, there is a sound possibility of a shift from a lean supply-chain strategy to a more resilient one. This is also ensuring more certainty as well as the fuel for investments in this sector.

Here are the Stocks to Keep an Eye On:

Prologis PLD is a leading industrial REIT that acquires, develops, operates and manages industrial properties in the United States and worldwide. The company continues to benefit from the scale of its platform. Along with the fast adoption of e-commerce, logistics real estate is anticipated to gain from a likely increase in inventory levels and given Prologis’ capacity and solid balance-sheet strength, it is well poised to capitalize on this. This Zacks Rank #3 (Hold) company has a long-term growth rate of 7.9%. The Zacks Consensus Estimate for the current-year funds from operations (FFO) per share moved 1.1% north over the past two months to $3.77. It also indicates an increase of 13.9% year on year.

Duke Realty Corp. DRE is a domestic pure-play industrial REIT engaged in owning, managing and developing industrial properties across the United States. With approximately 159 million rentable square feet of industrial assets in 20 major logistics markets, this industrial REIT, currently carrying a Zacks Rank # 3, is likely to keep witnessing solid demand from e-commerce and traditional customers. The Zacks Consensus Estimate for 2020 and 2021 FFO per share moved 1.3% and 2.5% upward, respectively, over the past months to $1.52 and $1.63. The figures also call for 5.6% and 6.8% year-over-year growth, respectively.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Rexford Industrial Realty REXR is focused on acquisition, ownership and operation of industrial properties situated in Southern California in-fill markets. The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2020 and 2021 FFO per share has been revised 1.6% and 3% upward over the past 60 days to $1.30 and $1.38, respectively. This also indicates a year-on-year improvement of 5.7% and 6.2%, respectively.

EastGroup Properties, Inc. EGP is focused on developing, acquiring and operating of industrial properties in key Sunbelt markets throughout the United States. The company specifically gives weightage to states like Florida, Texas, Arizona, California and North Carolina. It is well poised to benefit from the likely shift toward carrying more inventory, faster population growth in the Sunbelt markets and the increased e-retail demand. Over the past month, the Zacks Consensus Estimate for this Zacks Rank #3 company’s FFO per share for 2020 and 2021 witnessed upward revisions to $5.36 and $5.60, respectively, calling for year-over-year growth of 7.6% and 4.4%.

Here’s the share-price performance of the above-mentioned REITs in the past six months.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Prologis, Inc. (PLD) : Free Stock Analysis Report
 
Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
 
Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
 
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