Outlook for Industrial REITs Remains Positive

NEW YORK CITY-The average FFO per share for seven industrial REITs tracked by Bear Stearns rose 7.3% in the second quarter of the year, according to the firm’s quarterly publication, Industrial REIT Performance Monitor. Bear Stearns had projected a 6.6% increase excluding nonrecurring charges. Average same-store NOI growth came in at 3.9%, down from 4.3% in the Q1, but in line with the firm’s expectations.

The Monitor’s editors maintain their belief that industrial REITs are attractive investments on a risk-adjusted basis with total returns estimated in the mid teens. Currently, they are at 90.9% of net asset value and 8.7x estimated 2002 funds from operations on average, while office REITs now trade at 9.5x and apartment REITs at 9.8x.