Monmouth (MNR) Buys Class A Distribution Center In Kenton

Monmouth Real Estate Investment Corporation (NYSE:MNR) recently announced the acquisition of a new class A distribution center in Kenton, OH. The company shelled out nearly $18.3 million as purchase price for this property.

The acquired property is a new 298,472-square-foot industrial building located at 2465 Fontaine Street in Kenton. It is situated on around 46 acres and is net-leased for 10 years to the New York Corporation — International Paper Company (NYSE:IP). Notably International Paper is already a tenant of Monmouth Real Estate at another facility, per the company’s press release.

For Monmouth Real Estate, which specializes in single tenant, net-leased industrial properties, subject to long-term leases, mainly to investment-grade tenants, the buyout offers a good scope to enjoy steady cash flow from this property. The property not only enjoys full access to rail, but is also near to one of International Paper’s largest manufacturing plants in the country.

In fact, in the industrial real estate market, demand for space remains fairly strong. Going by numbers, per a study by the commercial real estate services’ firm — CBRE Group Inc. (NYSE:CBG) — the overall U.S. industrial real estate market remained upbeat in the second quarter, with the industrial availability rate declining 10 basis points to 7.8%.

This marked not only the market’s 27th decline in the past 28 quarters, but also the lowest level since first-quarter 2001. Obviously, a recovering economy and job market gains aided this improvement, but the e-commerce boom and a healthy manufacturing environment were the chief drivers. Also, lower-than-expected completion of construction kept supply numbers at check. This is expected to provide enough scope to Monmouth Real Estate to grow.

Shares of Monmouth Real Estate have outperformed the industry it belongs to, year to date. This Zacks Rank #3 (Hold) company’s shares have ascended 7.9%, while the industry recorded growth of 4% during this time frame.



Stocks to Consider

Better-ranked stocks in the REIT space include PS Business Parks, Inc. (NYSE:PSB) , InfraREIT Inc. (NYSE:HIFR) and Regency Centers Corporation (NYSE:REG) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While PS Business Parks and InfraREIT have expected long-term growth rates of 5% and 8%, respectively, the expected long-term growth rate for Regency Centers is currently pegged at 8.2%.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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