Back to top

Image: Bigstock

STAG Industrial Boosts Capital Position With Portfolio Sale

Read MoreHide Full Article

STAG Industrial, Inc. (STAG - Free Report) is focused on non-core and opportunistic dispositions, and redeploying the proceeds on higher cap rates. As part of such measures, the company recently completed sale of 1.8 million square feet industrial portfolio to Exeter Property Group and reaped around $113.5 million in gross proceeds.

Comprising seven industrial real estate properties in six states, the disposed portfolio was fully leased to seven tenants. The sale helped the company unlock value and per management, it “achieved significant cap rate compression through the aggregation of individual industrial assets.”

Notably, this industrial REIT, which focuses on the acquisition and operation of single-tenant industrial properties throughout the United States, is well poised to gain from strategic portfolio construction. In fact, the domestic industrial real estate market offers alluring features for the granular aggregation of???single-tenant assets.

This is because, there is a vast, stable and developed market, with nearly a trillion-dollar worth of fungible assets and there is highly fragmented ownership. The assets require low capex while have high retention relative to other real estate asset categories. Moreover, with e-commerce projected to grow at a rapid pace in the years ahead, the industrial real estate sector is expected to experience a considerable boost in demand.

As such, amid mispricing of individual single-tenant properties and with the ability to acquire individual assets and aggregate a portfolio the company has solid scope to create value and excel. In the first nine months of 2018, the company acquired 36 buildings for $458.7 million, while it disposed 11 buildings for $92.1 million.

Of late, fundamentals of the industrial market remain solid as high consumer spending, strengthening e-commerce market, and a healthy manufacturing environment amid recovering economy and job market are spurring demand for this real estate category. This is significantly driving growth of industrial REITs like Liberty Property Trust , Prologis Inc. (PLD - Free Report) , STAG Industrialand Duke Realty Corp. .

Nevertheless, there is rising supply of industrial real estate space and this will partly dampen the robust growth momentum in rents. Also, trade tensions and rate hike add to REITs’ woes.

STAG Industrial currently has a Zacks Rank #3 (Hold). The company’s shares have lost 7.8% of its value in the past month compared with its industry’s decline of 7.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

Will You Make a Fortune on the Shift to Electric Cars?                                                                                                                                                           

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Prologis, Inc. (PLD) - free report >>

Stag Industrial, Inc. (STAG) - free report >>

Published in