Duke Realty (DRE) often seems overshadowed. While it's the second-largest real estate investment trust (REIT) focused on industrial properties, its market cap is $100 billion less than sector behemoth Prologis (PLD -1.57%). Further, some of its smaller rivals seem to get more attention from investors due to their faster growth rates or market focus.
While Duke Realty might not be the first name investors think of in industrial real estate, they won't want to miss what it has to offer. Here are two charts showing that it provides one of the most attractive investment opportunities in the sector.
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Attractive growth in a red-hot sector
Duke Realty has grown at an impressive clip over the past three years. Its same-property net operating income (NOI) growth rate of 4.9% is second only to Rexford Industrial Realty's (REXR -2.72%) 7.2% rate over that period. A big driver has been the 31% growth in second-generation rents as existing leases expire and roll over to higher market rates. Again, that's second only to Rexford, which has captured a 36% rental increase.
Meanwhile, the industrial REIT has complimented rental growth with one of the biggest development pipelines in the sector. The company ended last year with development projects accounting for 12% of its total assets. That's second only to First Industrial's (FR -0.95%) 13%.
Those factors have Duke Realty poised to deliver strong FFO growth in 2022:
Data source: Duke Realty. NOTE: Chart by the author.
As that chart shows, Duke Realty is on track to deliver the second-fastest growth rate in funds from operations (FFO) in its peer group, only slightly trailing industry leader Prologis' (PLD -1.57%). Growth drivers include high levels of occupancy, continued strong rent growth, and its development program.
Trading at an attractive price
Typically, fast-growing REITs trade at premium valuations. However, that's not the case with Duke Realty:
Data source: Duke Realty. NOTE Chart by the author.
As the chart shows, it trades at the lowest valuation multiple in its peer group. The REIT also sells at a 7% discount to its net asset value (NAV). That's the second-lowest behind First Industrial's 15% discount to its NAV and well below Prologis, which sells at a 7% premium to its NAV.
A fast-growing REIT trading at an attractive price
Investors often overlook Duke Realty among logistics REITs. Because of that, they are missing out on a company that's delivering above-average growth while trading at a more attractive valuation. This compelling combination could enable Duke to produce peer-leading total returns in the coming years. That makes it stand out as an excellent investment opportunity these days.
