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Liberty (LPT) Expands Industrial Portfolio Amid High Demand

Liberty Property Trust LPT is making concerted efforts to grow its industrial portfolio. The company recently announced expansion of its Southern California portfolio with the ground breaking on two new industrial buildings in Ontario and Rialto. The company has also made two acquisitions which helped it expand its portfolio to 5.3 million square feet of industrial space in the region.

Specifically, the new developments, which are expected to be delivered in the third quarter of this year, include developing of 1385 S. Cucamonga Avenue, a 94,911-square-foot industrial building on 4.67 acres of land in Ontario, and 855 W. Valley Blvd., a 401,106-square-foot building on 16.9 acres of land in Rialto.

On the other hand, the acquisitions involved purchase of 520 E. Orange Show Road in San Bernardino, a newly-developed 318,989-square-foot industrial building currently available for lease. Also, the company acquired 15025 Proctor Avenue in City of Industry, a 128,581-square-foot building, which is located close to the 60 Freeway, I-605 and I-10, fully leased and marks the first for the company in the sub-market.

In addition, Liberty is experiencing decent demand for its properties and fully leased 19 Crows Mill Road in Keasbey, NJ. This is mainly a vacant property which the company had acquired in late September of 2018. A long-term 302,500-square-foot lease has been signed by the Gilbert Company for the 25 acre property that is located near Exit 10 of the New Jersey Turnpike, with access to Port Newark/Elizabeth and New York City.

Moreover, the company had acquired a 7 acre site at 357 Wilson Avenue in Newark for redevelopment last August. The site is less than five miles from Port Newark and has an existing building, which the company plans to demolish and replace with a 142,972-square-foot industrial building.

Notably, Liberty has a solid presence in New Jersey, owning and managing more than 7.1 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.

The expansion of industrial real estate portfolio is a strategic fit for Liberty Property. This is because fundamentals of the 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 Property is poised to gain.

In addition to Liberty Property, other REITs, including Prologis Inc. PLD, Duke Realty DRE and Terreno Realty Corp. TRNO, are expected to benefit from the same. In fact, per a study by the commercial real estate services firm — CBRE Group CBRE — availability fell for 34 straight quarters to 7.0% for the U.S. industrial market in fourth-quarter 2018, denoting the lowest point since 2000.

Nevertheless, there is rising supply of industrial real estate space and this will partly dampen the robust growth momentum in rents. Also, trade tensions and rate hike add to REITs’ woes.

Liberty Property currently has a Zacks Rank #3 (Hold). The company’s shares have gained 7.4%, in the past three months, while its industry inched up 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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