Two new REITs form amidst e-commerce boom

Select Income REIT and Spirit Realty Capital are forming two new REITs. The retail sector’s booming e-commerce has changed the way businesses operate and is now affecting real estate. Fewer retail stores are needed while the demand for industrial real estate space increases.

Select Income’s subsidiary, Industrial Logistics Properties Trust, recently filed for an IPO.  Hawaii is a hub for Select Income’s properties and now 226 properties along with 40 industrial and logistics properties in 24 states will be owned by Industrial Trust.  They plan to list their shares for trading on the Nasdaq Stock Market under ILPT. A spin-off of this size may seem like an overshot but Select Income believes that the demand for e-commerce will only increase from here.

Spirit Realty Capital creates Spirit MTA REIT to keep up with new e-commerce demands. The new REIT will own 925 properties with a $2.7 billion asset value. ShopKo, a chain of retail stores based in Wisconsin, leases a significant fraction of Spirit’s assets. Recently ShopKo has been underperforming due to the popularity of online shopping.  Switching them over to the new REIT is expected to benefit both parties.

Spirit will now own over 1,540 properties, with a gross real estate investment of $5.4 billion and investment grade equivalent tenancy of 45%.