Gravis’ Norris points to reassuring signs in the high-quality REITS market

by | May 16, 2023

Despite near term uncertainty in the banking sector, the long-term demand for best-in-class next generation infrastructure assets is likely to persist, according to Matthew Norris (pictured), investment adviser at Gravis, adviser to the VT Gravis Digital Infrastructure Income Fund.

“Although individual corporate bond yields fluctuated during March there are many examples of bonds issued by high quality digital infrastructure companies that traded better,” said Norris.

Within logistics the yield to maturity on Prologis’ $430m A rated (S&P bond rating) 2028 bond ended the month at 4.3%. and within communication towers, the YTM on American Tower’s newly issued $700m BBB rated (SPP bond rating) 2028 bond ended the month at 4.99% versus 5.69% at the beginning of March.

“These are reassuring signs for high quality REITs,” said Norris. “And then dividend events in the first quarter of 2023 highlighted that selecting the right digital infrastructure stocks supports growth income.”

In the mobile communication tower sun-sector, American Tower, the world’s largest owner and operator of wireless infrastructure cell sites declared an interim dividend of $1.56, an annual increase of 11.4%.

Within the logistics sub-sector EastGroup Properties, the US listed owner and developer of approximately 55.6 m square feet of distribution space in the US declared an interim dividend of $1.25 per share, equivalent to a 13.6% annual increase.

Equinix the global owner of colocation data centres paid a quarterly dividend representing a 10% annual increase.

Matthew Norris said: “This growth is underpinned by profitable development of towers and increases in property revenue, where contractual rent increases are generally incorporated on an annual basis and typically linked to inflation.”

Related articles

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!