Real estate

1 Very Attractive Industrial Real Estate Park

Despite two years of malaise in the real estate sector, industrial deer (STAG -0.49%) has been a regular performer. In this music video for “Ask Us Anything” on Motley Fool live, recorded on June contributor Tyler Crowe explains how attractive the industrial REIT is to investors.

Tyler Crowe: Right now, their comparable store sales growth is 4.8%, which doesn’t sound like a lot, but in the real estate business, where you can grow your comparable store portfolio by 4%, it’s pretty huge. But the ones that really tell me are at the bottom of this chart here where you have the cash rent change.

It’s basically like when they renew a lease, it’s how much more they get than the old lease. Right now, the variations in their cash rents are around 15%. In the real estate industry, it’s crazy. If you can get a 7% lease rate increase, that’s really good. But 15% in the first quarter, accelerating to 16% throughout the year.

If you’ve also noticed, the lease terms are around 5 to 6 years, and so what’s happening there is you’re getting this huge buildup of years of leases that are going to renew each year in year. So probably for the next 5 to 6 years we’re going to see significant growth in leases because you have right now at this point things that were signed in 2018, 2017 just starting to get to that exit point .

So the chances of increased cash rent for those are increasing, and a lot of people want to stay where they are. For the year, they expect 68% of their tenants to stay, which is usually 50-55%, which is pretty good. So all of these things really point to an incredibly tight market for industrial real estate, and for a company that’s showing these numbers to be trading at pre-pandemic levels and currently with a 4.7% dividend yield, that seems awfully attractive.