REITs Beat 2012 Pace with Industrial Buys

CHARLOTTESVILLE, VA-Publicly traded REITs have picked up the pace on industrial acquisitions compared to last year, SNL Financial said in a report Wednesday. The year-to-date tally of 349 assets totaling 62.3 million square feet exceeds the 12-month total of 255 properties and 60.8 million square feet acquired in 2012.

However, the industrial buying pace still lags that of 2011, when public REITs added 425 assets and more than 90 million square feet to their portfolios. And it's unclear whether they'll end up matching the buying pace that was set two years, senior analyst James Mathieu tells GlobeSt.com.

“With only a little more than two months left in the year, they would need to acquire another 30 million square feet of space,” says Mathieu. Based on the YTD numbers, “we probably won't see” 2013's numbers beat those from '11, unless there's another large merger on the scale of Liberty Property Trust's purchase of Cabot Industrial Value Fund III's operating partnership this past summer.

In that $1.5-billion deal, which GlobeSt.com first reported in August and which closed earlier this month, LRY added 23 million square feet of industrial space to its portfolio. It accounted for the lion's share of the REIT's chart-topping 179 property acquisitions thus far this year.

“With approximately 58% of this portfolio located in Liberty's current markets and approximately 21% in the target markets of Atlanta, Dallas and Southern California, we are expanding into three of the top five national industrial markets,” LRY CEO William Hankowsky said when the deal was announced. “So with one transaction we significantly deepen our current industrial presence while extending our footprint to a national level.”

As of Oct. 14, Duke Realty Corp. had run up the second-largest acquisition tally with 6.1 million square feet. Eight of the 11 industrial assets Duke added to its holdings were acquired in a $312-million portfolio acquisition shortly after Memorial Day.

Third on the list of acquisitive REITs in the industrial space was Realty Income Corp., which added nearly 5.4 million square feet to its industrial portfolio when it acquired American Realty Capital Trust Inc. this past January. Ironically, Realty Income, currently the largest publicly traded net lease REIT, will cede that title to American Realty Capital Properties when the latter's merger with Cole Real Estate Investments is finalized.