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Here's Why You Should Hold On to Duke Realty (DRE) Stock Now
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Amid e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, demand for logistics infrastructure and efficient distribution networks has been shooting up. This is aiding the industrial real estate market to prosper. Apart from the fast adoption of e-commerce, logistics real estate is poised to benefit from an increase in inventory levels post the global health crisis, opening up possibilities to industrial landlords.
Duke Realty Corp. — which has emerged as a domestic pure-play industrial real estate investment trust — is well positioned to bank on the favorable environment on the back of its solid operating platform and robust scale. The company, which enjoys a strong footing in this asset category, is witnessing solid demand for industrial real estates, as reflected by the leasing levels of the properties.
The industrial REIT leased 7.6 million square feet of space during the June-end quarter. Tenant retention was 77.5% for the reported quarter and 93.9% after considering immediate backfills. The company’s reported overall cash and annualized net effective rent growth on new and renewal leases of 19.2% and 36.2%, respectively, during the second quarter. Stabilized in-service portfolio was 98.2% leased as of Jun 30, 2021, up 10 basis points, sequentially, and 90 bps from the prior-year quarter end.
Duke Realty is making efforts to improve its portfolio on development and acquisitions in strategic markets with solid growth potential. Recently, it announced the acquisition of a 766,235-square-foot logistics facility in Southern California’s Inland Empire West sub-market, which is fully leased to Toyo Tire Holdings of America. Moreover, 97% of its undeveloped land inventory was concentrated in coastal Tier 1 markets as of Jun 30, 2021. Most of the company’s future speculative developments will take place there. With a robust pipeline of development, both build-to-suit and speculative, as well as an active pipeline of build-to-suit prospects, Duke Realty is well poised to enhance its presence in Tier 1 markets.
Duke Realty enjoys a strong balance sheet, ample liquidity and easy access to capital. It has no significant debt maturities until late 2024 and its leverage metrics looks healthy. The company focuses on disciplined use of $1.2-billion credit facility and maintains high unencumbered asset pool. Given its balance-sheet strength and prudent financial management, the company is well poised to bank on growth opportunities.
Shares of Duke Realty have gained 10.6% over the past three months, outperforming the industry’s 8.3% growth. The recent trends in estimate revisions for 2021 funds from operations (FFO) per share indicate a favorable outlook for the company. The Zacks Consensus Estimate for the full-year FFO per share has been revised 1.8% upward to $1.72 over the past month.
However, with the asset category being attractive in these challenging times, there is a development boom in a number of markets. This high supply might fuel competition and curb pricing power. New supply is expected to put pressure on vacancy level, which might increase to some extent in the upcoming quarters.
Furthermore, recovery in the industrial market has prevailed for long and also growth of e-commerce sales is likely to stabilize to some extent in the upcoming quarters. Therefore, any robust performance is unlikely in the near term. In fact, with comparatively more modest demand, coupled with new supply, the pace of overall growth in rent will likely moderate in the upcoming period.
Stocks to Consider
Public Storage’s (PSA - Free Report) FFO per share estimate for the current year moved up 1.7% to $12.22 in the past week. The company presently carries a Zacks Rank of 2 (Buy).
OUTFRONT Media Inc.’s (OUT - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved 3.4% north to 90 cents over the past month. The company holds a Zacks Rank of 2, currently.
Extra Space Storage Inc. (EXR - Free Report) carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 2.4% upward to $6.52 over the past week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Here's Why You Should Hold On to Duke Realty (DRE) Stock Now
Amid e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, demand for logistics infrastructure and efficient distribution networks has been shooting up. This is aiding the industrial real estate market to prosper. Apart from the fast adoption of e-commerce, logistics real estate is poised to benefit from an increase in inventory levels post the global health crisis, opening up possibilities to industrial landlords.
Duke Realty Corp. — which has emerged as a domestic pure-play industrial real estate investment trust — is well positioned to bank on the favorable environment on the back of its solid operating platform and robust scale. The company, which enjoys a strong footing in this asset category, is witnessing solid demand for industrial real estates, as reflected by the leasing levels of the properties.
The industrial REIT leased 7.6 million square feet of space during the June-end quarter. Tenant retention was 77.5% for the reported quarter and 93.9% after considering immediate backfills. The company’s reported overall cash and annualized net effective rent growth on new and renewal leases of 19.2% and 36.2%, respectively, during the second quarter. Stabilized in-service portfolio was 98.2% leased as of Jun 30, 2021, up 10 basis points, sequentially, and 90 bps from the prior-year quarter end.
Duke Realty is making efforts to improve its portfolio on development and acquisitions in strategic markets with solid growth potential. Recently, it announced the acquisition of a 766,235-square-foot logistics facility in Southern California’s Inland Empire West sub-market, which is fully leased to Toyo Tire Holdings of America. Moreover, 97% of its undeveloped land inventory was concentrated in coastal Tier 1 markets as of Jun 30, 2021. Most of the company’s future speculative developments will take place there. With a robust pipeline of development, both build-to-suit and speculative, as well as an active pipeline of build-to-suit prospects, Duke Realty is well poised to enhance its presence in Tier 1 markets.
Duke Realty enjoys a strong balance sheet, ample liquidity and easy access to capital. It has no significant debt maturities until late 2024 and its leverage metrics looks healthy. The company focuses on disciplined use of $1.2-billion credit facility and maintains high unencumbered asset pool. Given its balance-sheet strength and prudent financial management, the company is well poised to bank on growth opportunities.
Shares of Duke Realty have gained 10.6% over the past three months, outperforming the industry’s 8.3% growth. The recent trends in estimate revisions for 2021 funds from operations (FFO) per share indicate a favorable outlook for the company. The Zacks Consensus Estimate for the full-year FFO per share has been revised 1.8% upward to $1.72 over the past month.
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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, with the asset category being attractive in these challenging times, there is a development boom in a number of markets. This high supply might fuel competition and curb pricing power. New supply is expected to put pressure on vacancy level, which might increase to some extent in the upcoming quarters.
Furthermore, recovery in the industrial market has prevailed for long and also growth of e-commerce sales is likely to stabilize to some extent in the upcoming quarters. Therefore, any robust performance is unlikely in the near term. In fact, with comparatively more modest demand, coupled with new supply, the pace of overall growth in rent will likely moderate in the upcoming period.
Stocks to Consider
Public Storage’s (PSA - Free Report) FFO per share estimate for the current year moved up 1.7% to $12.22 in the past week. The company presently carries a Zacks Rank of 2 (Buy).
OUTFRONT Media Inc.’s (OUT - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved 3.4% north to 90 cents over the past month. The company holds a Zacks Rank of 2, currently.
Extra Space Storage Inc. (EXR - Free Report) carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 2.4% upward to $6.52 over the past week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.