Duke Realty Exhibits Strong Fundamentals

INDIANAPOLIS—All three main sectors in the portfolio of Duke Realty, one of the major REITs in the Midwest and Southeast, exhibited a great deal of strength in the first quarter, leading Cowen and Company, an international equity research firm, to reiterate its Outperform rating on the company’s shares.

The rising US industrial economy, especially the continuing expansion of e-commerce, for example, should drive up rents and push SSNOI growth within the Indianapolis-based DRE’s industrial portfolio, the researchers wrote in a just-published analysis. Industrials comprise 59% of its NOI. Occupancy in DRE’s industrial properties was 95.2% at the end of the quarter, and tenants occupy 97.2% of the buildings with more than 500,000-square-feet, which comprise 41% of its industrial portfolio. “At this level, DRE can prioritize rents over occupancy, and 1Q14 leasing spreads of 8.3% were the highest since the financial crisis,” the researchers note.