Prologis (PLD-N)

Been hammered this year because Amazon overbuilt their centres' capacity. Down 33% this year. Meanwhile, PLD bought another logistics company. Shares are down because of this macro, but the actual company results have been solid, a 97.7% occupancy rate now. A long-term winner. Cheap at 22x 2023 funds from operations.

Shares have been hammered since April when Amazon revealed it had built too many warehouses and wanted to get out of some leases. PLD got hit way too much. PLD has the best spaces and Amazon makes up less than 5% of their business. Last week they delivered a blow-out quarter: 98% occupancy rate and raised their full-year forecast. Only 2 properties were up for renegotiation with Amazon and that number is now 0. Shares are up, but still down $50 from April highs.

Down 30% from its peak and not it's worth buying. Has long owned and liked this. They do B2B transaction, which thrived during the pandemic. The stock held up even when the world was moving back to normal, like last April. They reported a strong beat and raised their forecast on April 19. A week lower, shares slid for 9 sessions at 28%, because Amazon at that reported that it built too much warehouse space. So Amazon slashed their capex. Amazon accounts for 5% of PLD's net effective rent, their biggest customer. The sell-off in PLD was a huge over-reaction. Then, PLD offered to buy a key competitor on May 10 when the market was selling off (bad timing). Then, the macro view is pessimistic--recession fears. In contrast, he argues that Amazon can't strong-arm PLD on rent. PLD doesn't lack demand. They had a 98% occupancy rate in March. Also, the Duke Realty merger (key competitor) will be accretive. PLD has long-term leases with clients, so a wider economic slowdown won't hurt them. It's one of the best secular growth stories of the past 15 years.

Staying long. Freight equates to rising inventories, so stuff has to be stored somewhere.

First name that comes to mind in industrial storage space. He doesn't own it, but would consider it more for growth instead of yield.

(A Top Pick Oct 30/20, Up 52%) Great name in real estate. Nice way to play e-commerce. Massive demand for these properties, and it takes a while to catch up. Good room for continued rent growth.

They own warehouses and fulfillment centres all over the world then leases to companies like Amazon and FedEx. He's long loved this. It's up 45% in the past year, including 15% since the start of October. They reported a super quarter a few weeks ago. Today, they just held a logistics conference to fix the supply chain crisis.

PLD-N vs. EQIX-Q. PLD is the largest operator of industrial warehouse space globally. It is a fantastic company. It has benefitted so much from everyone going online and buying goods. EQIX-Q is focused on data center space. A great operator. The largest in its space. He prefers industrial space over data center space. The supply side is the big question and there is little supply of industrial space but there is lots of data center space. He prefers PLD-N.

A REIT that holds fulfillment centres including Amazon, Home Depot, FedEx and others. A fine e-commerce play. It pays only a 1.9% dividend because shares keep rising to pay a great total return. It's pulled back 7% from highs.

(A Top Pick Oct 30/20, Up 0%) Second biggest REIT in the world. Backdoor way to play e-commerce. Great company. Expecting industry-leading growth. Payout ratio relatively low, expects continued dividend growth.

(A Top Pick Oct 31/19, Up 15%) Global leader in logistics real estate. Largest industrial REIT play you can get. She'd buy on any weakness. Accelerating demand for e-commerce is generating more need for industrial space.

Industrial real estate play. An e-commerce play. It is the second largest REIT in the world and the top industrial REIT. (Analysts’ price target is $112.24)

They are the dominant owner of industrial space globally. At any given point in time a stock might look expensive so you have to look forward. If you think rents and occupancies are going higher as he thinks it will here, then it is attractive.

Commercial property REITS' outlook Careful with them, like Allied Properties REIT. He prefers the logistics REITS like PLD-N. No one knows what things will be like. Some retail REITs are rebounding. Some REITs are a trade. But office and commercial REITs are hard to forecast; he owns none.