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DCT Strengthens Phoenix Presence

Zacks Equity Research

In order to expand its presence and improve its portfolio quality, DCT Industrial Trust Inc. (DCT), a real estate investment trust (:REIT), purchased a 3 building portfolio in the Tempe/Airport submarket of Phoenix.

Spanning 308,000 square feet, the Class-A buildings have 100% occupancy. It enjoys easy accessibility to Sky Harbor International Airport as well as other important transportation systems. With this portfolio acquisition in the high-barrier-to-entry submarkets of Phoenix, DCT Industrial’s total Phoenix portfolio aggregates 2.1 million square feet.

We believe that the acquisition will further help DCT Industrial to capitalize on the growing Phoenix market. This market is expected to experience a decline in vacancy rates going forward with the rate of absorption exceeding the construction pace.

DCT Industrial focuses on acquiring, developing, leasing and managing high-quality bulk distribution and light industrial properties in key distribution markets in the U.S. and Mexico. As of Jun 30, 2013, the company owned about 74.9 million square feet of properties, including 12.3 million square feet managed on behalf of 4 institutional management partners.

With a larger customer base, an increase in e-Commerce application and supply chain consolidation, the demand for logistics infrastructure and efficient distribution networks has risen. DCT Industrial is poised to benefit from its proficiency in offering modern distribution facilities through acquisitions and development projects in strategic infill locations.

The company has a strong customer base of over 800 industry-leading companies such as ConAgra Foods, Inc. (CAG), Ford Motor Co. (F) and Xerox Corporation (XRX). Such a diversified tenant base provides the company a significant competitive edge over its peers. However, rising rates remain a concern for its adverse effect on funding cost.

DCT Industrial currently carries a Zacks Rank #4 (Sell).

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