On Mar 25, 2014, we issued an updated research report on
industrial real estate investment trust (REIT),
COUSIN PROP INC (CUZ): Free Stock Analysis
PROLOGIS INC (PLD): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
STAG INDUSTRIAL (STAG): Free Stock Analysis
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On Jan 30, Prologis reported its fourth-quarter 2013 financial
results. The company's core FFO per share of 43 cents in the
fourth quarter was a penny ahead of both the Zacks Consensus
Estimate and the year-ago quarter figure. Though total revenue
declined from the year-ago quarter, it managed to beat the Zacks
Furthermore, in February, the company ushered in good news for
its shareholders by announcing an 18% increase in its quarterly
dividend rate to 33 cents per share. With its capacity to offer
modern distribution facilities in strategic infill locations
around the globe, Prologis stands to benefit from the demand
supply imbalance. In fact, efficiencies from enhanced scale,
development initiatives and recovering rents set the ground for
growth for this REIT.
However, with the Fed tapering its stimulus program, interest
rates are expected to rise in the long term. This is a growing
concern as it would adversely affect the company's financing
costs, its margin and FFO. This in turn has the capacity to
negatively impact the company's dividend payout, which we believe
is arguably one of the most important attractions of investing in
REITs. Moreover, competition is intensifying and economic growth
is not yet robust, thus not making us overtly optimistic on the
Over the last 30 days, the Zacks Consensus Estimate for FFO per
share has remained stable at $1.77 for 2014 and $1.95 for 2015.
The stock currently has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Investors interested in REIT industry may consider stocks like
Cousins Properties Inc.
STAG Industrial, Inc.
). All these stocks have a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.