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Liberty's Latest Buyouts to Aid Industrial Portfolio's Growth

Zacks Equity Research
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Liberty Property Trust LPT is making concerted efforts to grow its industrial portfolio. The company recently announced expansion of its New Jersey portfolio with acquisitions in Edison and Meadowlands, leading to addition of 270,254 square feet to its portfolio.

Specifically, the company added a sale leaseback acquisition of 75 Ethel Road in Edison, NJ, for $12.2 million, to its Central New Jersey portfolio. The property involves a 101,454-square-foot building located along I-287 near Exit 10 of the New Jersey Turnpike. Liberty also shelled out $39.6 million for the acquisition of a last-mile property — 115 Moonachie Avenue — in the Meadowlands. This 168,800-square-foot multi-tenant building, fully leased, is positioned just next to the three buildings previously acquired by the company.

The expansion of industrial real estate portfolio is a strategic fit for Liberty Property. The region enjoys solid demand for industrial real estate space and therefore, the company has strategically enhanced its portfolio in the region with the addition of seven well-located properties over the last year and a half. With the New Jersey Turnpike corridor emerging as a high-growth region, the company is aimed at banking on investment opportunities throughout this year.

Notably, Liberty has a solid presence in New Jersey, owning and managing more than 7.7 million square feet of industrial space. It has properties along the NJ Turnpike corridor from Southern New Jersey’s Pureland Industrial Park and Commodore 295 Business Center (Exit2). Its presence runs up through northern Burlington County (Exit 6); Exit 8A in Cranbury; Exit 10 in Edison and Exit 16W in the Meadowlands.

Moreover, on an overall basis, the fundamentals of the U.S. industrial market remain solid, backed by growing demand for such properties amid economic recovery, job-market improvements, high-consumer spending and e-commerce boom, which has led to strong rent growth, high occupancy and development opportunities. Therefore, given its premium quality industrial portfolio located in upscale locations, pro-business environment and continued e-commerce demand, Liberty is poised to gain.

Apart from Liberty, other REITs, including Prologis Inc. PLD and Duke Realty DRE, are expected to benefit from the same. Per a study by the commercial real estate services firm — CBRE Group CBRE — availability fell for 34 straight quarters to 7% for the U.S. industrial market in fourth-quarter 2018, denoting the lowest point since 2000.

Nonetheless, any protectionist trade policies might impede economic growth, as well as affect industrial REITs’ businesses. Particularly, fears related to trade policy have the capability to distort supply chains and impact market fundamentals.

Liberty Property currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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