Why invest in industrial REITs?
One of the benefits of industrial REITs is that they are adaptable to meet the demands at any time during an economic cycle. Unlike commercial properties REITs, where units are built according to each tenant's preferences, industrial REITs are built in a way that they can be customized to different uses.
Overview of Industrial REITs
Industrial REITs have become a compelling investment option in the real estate market. These specialized REITs focus on owning, operating and investing in income-generating industrial properties, making them attractive to investors interested in the dynamic industrial sector.
Their strategic locations and high demand contribute to a consistent rental income stream, making them a reliable investment choice. The rise of e-commerce and the need for efficient logistics further amplify the demand for industrial spaces, ensuring a steady flow of revenue.
Benefits of REITs
REITs typically pay higher dividends than common equities. REITs are able to generate higher yields due in part to the favorable tax structure. These trusts own cash-generating real estate properties. REITs are typically listed on a national exchange and provide investors considerable liquidity.
Prologis is the largest industrial REIT by a wide margin and one of the largest REITs overall.
Industrial REITs own and manage industrial facilities and rent space in those properties to tenants. Some industrial REITs focus on specific types of properties, such as warehouses and distribution centers. Industrial REITs play an important part in e-commerce and are helping to meet the rapid delivery demand.
One of the benefits of industrial REITs is that they are adaptable to meet the demands at any time during an economic cycle. Unlike commercial properties REITs, where units are built according to each tenant's preferences, industrial REITs are built in a way that they can be customized to different uses.
- Growth of industries leads to increase in production of goods and services which are available to people at cheaper rates.
- It reduces dependence on other countries and improves economy.
- It results in rising the standard of living.
- It creates new job opportunities helping in the removal of unemployment.
- A Eradicates poverty and unemployment.
- B Helps in developing cities.
- C Promotes economic growth of the country. Industrialisation helps in eradicating unemployment and poverty. When multiple factories are established in a region, it creates a high demand for workers. Industries pave way for the development of cities.
Ways to Invest in Industrial Goods
Investors can invest in individual industrial goods stocks or look to mutual funds and exchange-traded funds (ETFs). Fund offerings cover the entire industrial goods sector and some cover subsectors of the industry as well, such as aerospace.
Are REITs a good investment in 2023?
In 2023, more institutional investors will likely consider REITs as part of portfolio completion strategies to gain geographic diversification or sector diversification, or to enhance their portfolios' ESG attributes. Our 2023 outlook wouldn't be complete without a deep dive into the institutional investor space.
| Symbol | Company | REIT performance (1-year total return) |
|---|---|---|
| AOMR | Angel Oak Mortgage Inc. | 60.92% |
| SKT | Tanger Outlets | 55.01% |
| MDV | Modiv Industrial Inc. | 44.80% |
| SEVN | Seven Hills Realty Trust | 41.52% |
Nine Reasons Not to Invest in REITs
But, REITs are not risk free. They may have highly variable returns, are sensitive to changes in interest rates, have income tax implications, may not be liquid, and fees can impact total returns.
The REIT - Industrial industry has a total of 17 stocks, with a combined market cap of $274.19 billion, total revenue of $23.74 billion and a weighted average PE ratio of 37.80.
Camden Property, Prologis, and Realty Income have some of the safest dividends in the REIT industry. All three companies have top-tier financial profiles, enabling them to sustain their dividends even during tough times. They're great options for investors seeking rock-solid passive income streams.
| # | Name | C. |
|---|---|---|
| 1 | Prologis 1PLD | 🇺🇸 |
| 2 | American Tower 2AMT | 🇺🇸 |
| 3 | Equinix 3EQIX | 🇺🇸 |
| 4 | Simon Property Group 4SPG | 🇺🇸 |
Industrial REITs own and manage industrial facilities such as warehouses and distribution centres and lease these spaces out to tenants. Retail REITs own and manage retail real estate and lease these spaces out to tenants. *Dasin Retail Trust is a Property Trust.
Innovative Industrial Properties, Inc. (NYSE IIPR) is an internally managed real estate investment trust (REIT) focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities.
Also, a real estate presence can be good for a portfolio because it provides diversification and dividend-based income—and the dividends are often higher than you can achieve with other investments. On the downside, REITs don't offer much in terms of capital appreciation.
The most common types of REITs are mortgage REITs, equity REITs, and hybrid REITs. These assets are also either traded publicly or non-publicly.
What is the difference between industrial and commercial?
Industrial construction refers to the construction of a business that deals with manufacturing goods, like manufacturing plants, power plants, refineries, and solar wind farms. Commercial construction refers to the construction of a business or venture that is done with the sole motive of gaining profit.
Industrial companies include factories and construction sites; on the other hand, commercial properties develop businesses like restaurants and retail stores.
The Industrial Revolution had both positive and negative societal effects. The advantages include lower-cost clothing, more job opportunities, and improved transportation. And the negatives would include women and children being exploited, working long hours, and environmental damage.
Typical incomes in a field are one good indicator: high-paying fields like finance and insurance or professional, scientific, and technical services both have among the highest rates of access to benefits. But other industries like utilities and manufacturing also rank highly for benefits.
In summary, the Industrial Revolution brought about significant benefits in terms of economic growth, job creation, technological advancements, and transportation. However, it also had drawbacks, including poor working conditions, environmental degradation, social inequality, and exploitation.
