To gain a picture of how commercial real estate will fare in the fourth quarter, it’s helpful to look at the biggest REITs in their respective sectors.
This week, we’ll examine the retail and industrial real estate sectors.
SIMON PROPERTY GROUP
Simon Property Group (SPG) is the largest retail real estate owner in the country, with roughly 325 malls and other shopping centers internationally. For the first nine months of the year, Simon’s FFO (funds from operations) and net income rose from the same year-ago period, as did its rents and sales per square foot.
Simon expects more of the same for the remainder of 2014. It raised both its FFO and net income guidance for the year, making a case for a strong and ever-important fourth quarter for retailers during the holiday shopping season.
Stock-analysis site Bezinga sees Simon’s third-quarter report as an upside to the overall retail real estate landscape. Despite strong performances from online retailers, the company’s brick-and-mortar malls are still considered attractive destinations to consumers.
Prologis (PLD) is at the head of the industrial-REIT pack, owning over 585 million square feet in 21 countries. The firm’s FFO increased 18 percent during the third quarter, and occupancy in its assets came in at 95 percent. The firm also acquired over $880 million in assets during the quarter.
Investment site Zacks.com continues to rate Prologis as a “buy”, citing confidence in the industrial market with the continued demand for industrial space due to the rise of e-commerce.
For the retail and industrial sectors, using these two mega firms as a benchmark, it is clear that the market is moving in a positive direction. We’ll see how their predictions play out in the next few months.
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