1 REIT Stands Out in a Booming Industry

WPT Industrial Real Estate Investment Trust (TSX:WIR.U) is on track to take advantage of new trends shaping the industrial warehouse space industry as well as the massive growth of the industry projected in the next few years.

edit Real Estate Investment Trust REIT on double exsposure business background.

Image source: Getty Images

The overall market for public storage and warehouse facilities is projected to rise to over $28 billion in the next four years. One REIT, WPT Industrial REIT (TSX:WIR.U), which owns 70 warehouse and distribution facilities throughout 16 U.S. states, is well positioned to profit from this explosive growth as well as new trends in the industry.

On-demand warehouses

WPT is poised to take advantage of a new trend: pop-up warehouses. These on-demand warehouses allow retail companies to rent facilities that are closer to their customer base without the burden of long-term rental contracts. Specifically suited for the growing number of e-commerce businesses, these warehouses can fetch a premium during busy retail cycles such as November and December.

These pop-up warehouses are attractive for smaller businesses that can’t afford to enter long-term lease agreements. The warehouses also appeal to larger retailers, especially those centrally located near large populations, where the retailers can set up temporary distribution sites.

The convenience of on-demand warehouses makes it easier for companies to adjust to the growing demands of customers. Thanks to companies like Amazon, consumers are becoming accustomed to fast and reliable shipping of products and won’t stand for out-of-stock or hard-to-locate merchandise. Pop-up distribution warehouses can improve the shipping flexibility of its tenants.

These warehouses have also benefited from the continued uncertainty of international trade, which has made it difficult for retail companies to accurately forecast supply and demand of their products. When temporary warehouse space is available, companies do not need to build their own distribution networks.

The good news for WPT is that these on-demand warehouses can bring a higher-than-average rental fee.

Retail space hard to find

The availability rate of U.S. industrial real estate is at its lowest level in almost 20 years, hovering around 7%. According to real estate brokerage CBRE Group, which reported the latest data, retailers, logistics providers, and manufacturers face a continual struggle to find available warehouse space, particularly in high-demand areas near urban centres.

This is also good news for WPT with over 21 million square feet of leasable space.

Stock at an attractive entry point

WPT is trading at $13.76 as of this writing. In the first quarter, the company reported an 11% year-over-year increase in net operating income. Net income per unit rose 13%. The company also reported an occupancy rate of over 99%, highlighting the strong demand for industrial properties. WPT has a market cap of $784 million. The company currently pays a dividend of 5.49%, which represents 8.6% growth in its dividend yield during the last five years.

The stock price has shown very little movement during the past five years. However, with the astronomical growth expected in the overall industry and the flexibility of the company’s real estate offerings, WPT has the potential for massive growth over the next few years. Consider the company’s hefty dividend as icing on the cake.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Cindy Dye owns shares of Amazon. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon.

More on Investing

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »