3 Real Estate Investments to Profit from E-Commerce
- - Prologis
Prologis is likely the first stock people think of when they hear "real estate + e-commerce." With a market capitalization of $70 billion and a property footprint of 964 million square feet, the real estate investment trust (REIT) is far and away the biggest player in the industrial real estate market. Typically, being the largest in any industry also means being a slow-growth company relative to smaller peers. That certainly isn't the case here, though, as Prologis has been able to grow its funds from operations (FFO) per share at a staggering annual rate of 12% and has increased its dividend at an 11% annual rate, all while maintaining a stellar balance sheet. One of the keys to Prologis' success goes beyond riding the coattails of e-commerce growth.
- - Terreno Realty Corporation
From a bird's-eye view, Terreno Realty Corporation looks like every other industrial REIT that's trying to capitalize on the surge of demand for distribution and logistics warehouses. Also, similar to Prologis, Terreno focuses largely on properties in urban areas that serve as last touch facilities. These are all fine traits for a REIT looking to capture growth from e-commerce, but what sets Terreno apart from many other REITs in this space is its focused, disciplined investment strategy and a management team that has an incentive structure that lines up very well with equity investors.
- - Equinix
Equinix isn't what you would call a direct investment in e-commerce, and Equinix even admits that retail is a relatively small portion of its overall client base. That said, this data storage REIT is a business that benefits from the digitization of our everyday lives, e-commerce included. While data storage is by no means conventional real estate, several aspects of it make it suitable to be a real estate investment trust. Rather than charging rent for space in a building, Equinix charges rent for use of data centers that can meet mission-critical demands like customer data privacy compliance and digital security. Customers use Equinix because it allows them to gradually scale their business without large capital costs to build their own data centers, and Equiniix benefits because it can rent out space at any given data center to multiple clients.
Topics: Real Estate Investment, E-Commerce
Work cited: Tyler Crowe, Million Acres, July 10, 2020
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