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EastGroup (EGP) Strong on Industrial Real Estate Market

DRE CLI EGP CUBE

Trades from $3

EastGroup Properties (EGP - Free Report) is trying to well capitalize on the growth opportunities in the industrial real estate market. The company, which came up with its recent solid investment activity, announced that it has shelled out $27 million for the acquisition of 61 acres of development land in Miami Gardens, FL (Dade County).

The company is planning to develop an industrial park in this parcel, with around 850,000 square feet on the site. Being strategically located in the fast growing, land constrained Dade County market, and adjacent to the Calder Casino and Race Course and Hard Rock Stadium, this acquisition seems a strategic fit for the company.

Moreover, the company acquired a 134,000 square foot Weston Commerce Park in Weston, Florida (Southwest Broward County) for $14 million. Developed in 1998, Weston is presently 29% leased and the property will experience renovation for transforming to multi-tenant use.

Further, EastGroup is under agreement to acquire Jones Corporate Park for $42 million in Las Vegas, NV. Completed earlier in 2016, this property has two buildings and has 416,000 square feet of space in total, leased 50%. The transaction is expected to close in mid-November.

Notably, in the industrial real estate market, demand for space has been quite high. This is because amid economic expansion, e-commerce boom and heightened urbanization, companies have been shifting their strategy toward services like same-day delivery and other such options, propelling demand for warehouse distribution facilities. With a larger customer base, companies are opting for supply-chain consolidation, resulting in greater demand for logistics infrastructure and efficient distribution networks, creating scope for industrial REITs to flourish.

Particularly, focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the U.S., EastGroup Properties stands well to capitalize on this trend. Its growth strategy is hinged upon the ownership of high-quality distribution facilities, concentrated near major transportation features in supply-constrained submarkets.

EastGroup Properties currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the REIT industry may consider stocks like CubeSmart (CUBE - Free Report) , Duke Realty Corp. (DRE - Free Report) and Mack-Cali Realty Corp. (CLI - Free Report) . Each of these stocks carries a Zacks Rank #2.

CubeSmart has a long-term expected growth rate of 6.1% against the industry average of 5.9%. Duke Realty has experienced upward revision in full-year 2016 estimates over the past two months, while Mack-Cali has long-term expected growth rate of 6.4%.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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