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Monmouth Buys Industrial Asset Net-Leased to Federal Express

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Monmouth Real Estate Investment Corporation (MNR - Free Report) recently shelled out $12.9 million for the acquisition of an industrial property in the Salt Lake City, UT, MSA. The company purchased a new 69,734-square-foot LEED-certified industrial building on 7.52 acres at 985 W. Kershaw Street, Ogden, UT.

The fourth high-quality acquisition so far in fiscal 2020 is a strategic fit for the company, with the property being net-leased for 15 years to Federal Express Corporation. According to Michael P. Landy, president and CEO, the “business-friendly state of Utah is a new territory” for Monmouth, and the company and is seeking to grow its presence there.

Only last week, the company announced the purchase of a new 286,281-square-foot industrial building on 39.3 acres at 6538 Judge Adams Road, Whitsett, NC, for $47.6 million. This industrial property in the Greensboro, NC, MSA, is net-leased for 15 years to FedEx Ground Packaging System, Inc. Logistics companies are playing a key role in keeping supply chains moving and delivery of critically-needed goods across the globe amid the coronavirus crisis.

In a rising e-commerce market, the industrial real estate asset category has grabbed headlines and continues to play a pivotal role, transforming the way how consumers shop and receive their goods. Companies are making efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and enabling industrial landlords to enjoy a favorable market environment.

Further, warehouse operations have become more essential with higher number of e-commerce customers, in light of the coronavirus pandemic. Over the long term, apart from the fast adoption of e-commerce, the logistics real estate is anticipated to benefit from a likely increase in inventory levels post crisis.

Amid these, with focus on single-tenant, net-leased industrial properties on long-term leases, to investment-grade tenants, Monmouth Real Estate seems well poised to grow. In sync with business strategy, the latest acquisitions have all been brand new built-to-suit properties leased to high-quality tenants.

The company’s portfolio consists of 118 properties, geographically diversified across 31 states and containing 23.4 million rentable square feet of area in total. Its tenant roster includes names like Anheuser-Busch, Beam Suntory, Cardinal Health (CAH - Free Report) , Coca-Cola (KO - Free Report) , FedEx (FDX - Free Report) , and several others.

Nevertheless, recovery in the industrial market has continued for long and market rents are expected to remain flat for the rest of 2020. Moreover, though industrial real estate fundamentals seem more resilient than other asset categories, are not immune. As such, the pandemic’s adverse impact on the economy will likely hinder demand for space in the near term.

Shares of Monmouth Real Estate have depreciated 10.1%, narrower than the 15.3% decline of its industry in the year-to-date period.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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