If you’ve ever toured a manufacturing facility, industrial real estate is necessary for modern manufacturers. Companies that make everything from cars to cell phones need factories, warehouses, and other industrial buildings to produce goods. The problem is that these properties are often costly. Investing in industrial real estate can be challenging because there isn’t an equity REIT that focuses on this sector specifically. However, some companies invest heavily in industrial properties. These companies pay dividends and offer value to investors seeking exposure to the industrial real estate market without buying individual properties directly.
Equity LifeStyle Properties (ELS) is a REIT that provides developable land for industrial properties. The company has a strong balance sheet, which makes it easier for them to buy land for future development. ELS has a $13.5 billion market cap, and the company pays a 2.5% dividend yield. Industrial real estate is a capital-heavy business, so it’s not surprising that larger companies dominate this sector. Eagle Materials (EXP) is another industrial real estate stock worth looking at. Like ELS, EXP is a large company focused on buying land for future development. However, the company is only focused on cement and limestone mining, which makes them less attractive as an industrial real estate player. The company also has a more aggressive growth strategy, making it riskier for investors.
Ball Corporation (BALL) is a packaging company that owns a large amount of industrial real estate. The company is best known for its cans but also manufactures bottles and other industrial products. Ball Corporation has a $35 billion market cap, and the company pays a 2.1% dividend yield. The Ball is a tremendous industrial real estate investment because the company is highly diversified. This allows the company to reduce risk and provides Ball to expand by buying other industrial real estate companies. The company already owns a large amount of industrial real estate, so it can use its existing portfolio to generate more cash flow. The Ball is a solid industrial real estate investment because it’s a large company that can continue to buy assets in the future. Ball’s most significant risk is that it’s heavily concentrated in packaging, which means economic shifts can impact the company. However, the packaging is a necessary product for all companies, so Ball has stable demand for its industrial real estate. Ball also has substantial cash flow and a strong balance sheet, making it easier for the company to buy industrial real estate.
WestRock Company (WRK) is a manufacturer that owns a large amount of industrial real estate. The company owns over 40 million square feet of industrial real estate, which makes up about one-fourth of WestRock’s total assets. The company has a $36 billion market cap and pays a 2% dividend yield. WestRock’s dividend yield is lower than Ball’s, but the company has a more robust growth strategy.WestRock is a tremendous industrial real estate investment because the company has a strong cash flow and balance sheet. This makes it easier for the company to acquire new industrial real estate. Like Ball, WestRock also already owns a large amount of industrial real estate, so the company can use its existing portfolio to generate more cash flow.
Griffin (GEF) is a REIT that invests in industrial properties, logistics properties, and self-storage facilities. The company has a strong track record of acquiring high-quality properties and has a lower risk of interest rate increases than most other REITs. GEF has a $12 billion market cap, and the company pays a 1.8% dividend yield.GEF is a smaller company than Ball and WestRock. However, the company has a lower risk of interest rate increases and also owns fewer non-industrial properties. This makes GEF a safer investment than Ball and WestRock, which can be helpful in a volatile real estate market.
Industrial real estate is an exciting asset class because it’s necessary for modern manufacturers. However, industrial properties can be costly, which makes it challenging for individual investors to enter the market. Industrial real estate is dominated by large companies, which makes it easier for individual investors to access the sector. These three stocks are worth keeping an eye on if you’re interested in the industrial real estate sector. Industrial real estate is more stable than other sectors because it’s less affected by changes in sentiment. All sectors of the economy use industrial properties, which are necessary for manufacturers to make goods. These stocks can provide steady income and are less likely to be impacted by a recession.
Roberto holds a Master's Degree in Communication and proudly wears his 15 years of direct and managerial experience in intensive Digital Marketing and Financial Analytics. He was the founder of Good Noon, a Digital Marketing Agency awarded by Expertise among the top 10 best marketing agencies in San Francisco in 2020.
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