10 Best Dividend Stocks For 2021

Insider Monkey
by Fahad Saleem –

8. Realty Income Corporation (NYSE: O)
Dividend Yield: 4.55% –
Number of Hedge Fund Holders: 24 –

Realty Income Corporation is one of the best dividend stocks to for 2021. The REIT buys and sells properties, and offers services like portfolio management, asset management, credit and real estate research. The company in February said that it expects strong acquisition volume of more than $3.25 billion, or $3.44-$3.49 per share in terms of FFO, in 2021, above the average analyst estimate of $3.43. The company recently bought a 21-asset gas station and convenience store portfolio in Hawaii from Par Pacific Holdings for $109.4 million.

With a $61.4 million stake in Realty Income Corp., Two Sigma Advisors owns 987,364 shares of the company as of the end of the fourth quarter of 2020. Our database shows that 24 hedge funds held stakes in Realty Income Corp. as of the end of the fourth quarter.

American Assets Trust Inc (AAT) Chairman, CEO & President Ernest S Rady Bought $1.5 million of Shares


Chairman, CEO & President of American Assets Trust Inc (30-Year Financial, Insider Trades) Ernest S Rady (insider trades) bought 50,089 shares of AAT on 12/01/2020 at an average price of $28.99 a share. The total cost of this purchase was $1.5 million.

American Assets Trust Inc is a self-administered real estate investment trust based in the United States. The company mainly invests in, operates, and develops retail, office, residential, and mixed-use properties in California, Oregon, and Hawaii. American Assets Trust Inc has a market cap of $1.79 billion; its shares were traded at around $29.67 with a P/E ratio of 47.09 and P/S ratio of 6.23. The dividend yield of American Assets Trust Inc stocks is 3.55%. American Assets Trust Inc had annual average EBITDA growth of 4.80% over the past ten years.

CEO Recent Trades:

Chairman, CEO & President, 10% Owner Ernest S Rady bought 50,089 shares of AAT stock on 12/01/2020 at the average price of $28.99. The price of the stock has increased by 2.35% since.
Chairman, CEO & President, 10% Owner Ernest S Rady bought 2,194 shares of AAT stock on 11/20/2020 at the average price of $28.77. The price of the stock has increased by 3.13% since.
Chairman, CEO & President, 10% Owner Ernest S Rady bought 54,994 shares of AAT stock on 11/11/2020 at the average price of $25.72. The price of the stock has increased by 15.36% since.
Chairman, CEO & President, 10% Owner Ernest S Rady bought 130,000 shares of AAT stock on 11/06/2020 at the average price of $21.49. The price of the stock has increased by 38.06% since.
Chairman, CEO & President, 10% Owner Ernest S Rady bought 175,739 shares of AAT stock on 11/04/2020 at the average price of $21.64. The price of the stock has increased by 37.11% since.

Industrial Logistics Properties Trust: You Can Relax With This Income REIT

Seeking Alpha


  • Occupancy in the company’s Hawaii properties has not fallen below 98% since 2003. Hawaii’s land development is limited by its geography.
  • E-commerce will act as a tailwind for the company’s properties. The company has been pretty aggressive having acquired over $1 billion worth of properties since 2019.
  • The company currently has a forward yield of 5.9% which is great in this low-interest-rate environment.

I wanted to explore income-generating REITs to add more cash flow into my portfolio. I wanted REITs that could do well in the new post-COVID environment so I have purposefully stayed away from retail and offices in certain geographies. I think Industrial Logistics Properties Trust (ILPT) with its decent yield and solid business is one to consider.

Just a brief background on the company, Industrial Logistics Properties Trust is a REIT that, as it’s named, focuses on industrial and logistics properties. The company owns 301 properties (43.8 million square feet) in Hawaii and 75 properties (27 million square feet) in 30 other states. Given the current economic uncertainty, I typically check the distribution of lease expirations of a REIT’s customer base. The good news is that the bulk of the company’s shorter-term lease, roughly 17% of revenue, is expiring all the way to 2024. Only 5.1%, 8.2%, and 6.4% of the company’s leases in terms of annualized rental revenue are expiring in 2021, 2022, and 2023 respectively. As of September 2020, the company’s properties were 98.8% leased with an average remaining lease term of 9 years. This is good news for the company as it would not have to negotiate and set lease in the middle of the coronavirus induced recession. The company currently has a vacancy rate of 1.2% which is impressive given the impact the coronavirus pandemic had on retail establishments.

The company’s properties are typically service/distribution centers and warehouses. Examining the company’s client exposure risk, we can see that its properties are rented out to 264 clients. Amazon (AMZN), FedEx (FDX), and P&G (PG) being the largest at 15.9%, 3.7%, and 3.7% of annualized 2020 revenues. Investment-grade tenants make up 64.4% of annualized rental revenues from the company’s mainland properties ensuring the credit safety of the company’s revenue stream. The company’s customer list is pretty impressive as it has the logistics departments of several well-known corporations. The company is also well-diversified as its top 25 clients only make up 53.6% of the company’s annualized 2020 revenue. This means that the loss of a single client would have minimal impact on the firm.

As of September 2020, the company’s non-Hawaii based properties made up 59.3% of annualized rental revenue. The remaining amount 40.7% of revenue is from the company’s Hawaii properties. Surprisingly, the company’s Hawaii footprint is actually an asset for the company. My initial worry was that rents could be unstable as the Hawaiian economy is very dependent on tourism which tends to be cyclical. The reverse is true actually as occupancy in these properties has not fallen below 98% since 2003. The reason I believe is that Hawaii’s land development is limited by its geography. Regardless of the current economic situation, industrial and logistic properties are still needed to move goods to the people who live there. It just so happens that there is limited ability to relocate to an alternative location.

The Hawaii properties are interesting as the company doesn’t really own the land but rather the company leases it from the state. In fact, 90.6% of Hawaiian properties based on annualized revenues are from lease lands. These leases are reset every 10 years or so and the increases are based on fair market values. The company generally is able to pass on those increases to its customers but given the economic situation, this assumption could be at risk.

With regard to short-term results, Industrial Logistics Properties Trust had a decent quarter. Revenue (i.e. Rental Income) for Q3 2020 vs. Q3 2019 increased by 4.3% on a comparable property level. Year to date results were similar to comparable property. Rental income grew by 4.4% compared to the same time last year. Overall, YTD revenues were up by 16.4% to $194.5 million due to some property acquisitions the company had done for the year. Comparable property operating income only rose by 2.6% YTD due to an increase in Real Estate taxes. Net income for the nine months ended September 2020 was $41.8 million, or $0.64 per share, which is more or less the same compared to $40.8 million or $0.63 per share earned for the same time last year. Normalized FFO was $1.40 per share.

These results demonstrate the resiliency of the company’s business model. This is not particularly surprising as even during the height of the coronavirus lockdowns industrial activity and logistics never stopped. In fact, the company believes that e-commerce, which has been boosted by the coronavirus lockdowns, will increase demand for industrial and logistics space up to 3x when compared to retail sales from brick and mortar stores. This will stimulate demand for the company’s properties and create a favorable investment environment. The company has been pretty aggressive investing in this space as well having acquired over $1 billion worth of properties since 2019.

Financial Analysis and Conclusion

In terms of valuation, for REITs, I check the leverage and coverage measures as those are important indicators of a company’s financial flexibility and long-term viability. The total liabilities/total assets percentage is an indicator of debt serviceability and leverage. Industrial Logistics Properties Trust has total liabilities/total assets of 56.8% and a Net Debt level to annualized EBITDA of 7.3x. These measures indicate an above-average level of debt.

The fixed charge coverage ratio is an indicator of a firm’s ability to pay interest from its operating performance and is defined as net operating income divided by interest expense, preferred dividends, and other required distributions. The company had YTD interest expense of $40.6 million and no other required distributions. Using the company’s YTD adjusted EBITDA of $137.2 million, we can calculate an interest coverage ratio of 3.38x. This ratio is about average for a REIT.

REITs are required to distribute most of their taxable net income to shareholders through dividend payments. The dividend payout ratio (“Dividends/FFO”) is calculated in order to check if the REIT can meet this obligation moving forward. Based on the company’s financials, for the nine-month YTD, the company had an FFO per share of $1.40 and paid a quarterly dividend of $0.33, implying a payout of the ratio of 70% which is on the high side.

In conclusion, I like the overall business of the company and I believe its revenue streams are relatively safe. The company’s Hawaii portfolio acts as a solid base as it pursues aggressive expansion. While its financial ratios are not the best, I believe these are a consequence of the company’s growth strategy. The company currently has a forward yield of 5.9% which is great in this low-interest-rate environment. Income-focused investors should consider Industrial Logistics Properties Trust.

Alexander & Baldwin Inc. REIT Holding Company (ALEX) Soars 15.51% on November 09


Alexander & Baldwin Inc. REIT Holding Company (ALEX) had a good day on the market for Monday November 09 as shares jumped 15.51% to close at $14.97. About 755,180 shares traded hands on 6,513 trades for the day, compared with an average daily volume of n/a shares out of a total float of 72.35 million. After opening the trading day at $14.10, shares of Alexander & Baldwin Inc. REIT Holding Company stayed within a range of $15.45 to $14.10.

With today’s gains, Alexander & Baldwin Inc. REIT Holding Company now has a market cap of $1.08 billion. Shares of Alexander & Baldwin Inc. REIT Holding Company have been trading within a range of $23.32 and $8.32 over the last year, and it had a 50-day SMA of $n/a and a 200-day SMA of $n/a.

Alexander & Baldwin Inc operates in the real estate sector. It functions through three segments namely Commercial Real Estate, Land Operations, and Construction. The Commercial Real Estate segment owns and manages retail, industrial and office properties in Hawaii and on the Mainland, thereby accounting for most of the company’s revenue. The Land Operations segment actively manages the company’s land and real estate-related assets and makes optimum utilization of these assets. The construction segment represents the company’s sale of asphalt and concrete. It also manages asphalt related construction services on a contract basis. Geographically, the activities are carried out across the United States.

Alexander & Baldwin Inc. REIT Holding Company is based out of Honolulu, HI and has some 793 employees. Its CEO is Christopher J. Benjamin.

Here Are The Hottest Housing Markets, Real Estate Stocks In Surprise Covid Boom

Investors Business DailyJust six months ago, the idea of a housing boom would have seemed ridiculous as millions of Americans were losing their jobs. But low interest rates and the work-from-home trend are stoking real estate stocks and home sales in smaller housing markets.

The flip side is that once-sky-high markets have come crashing down, especially in the San Francisco Bay Area. But overall, both new and existing-home sales have reached levels last seen before the Great Recession.

Real estate stocks are rebounding strongly. The triple-leveraged Direxion Daily Homebuilders & Suppliers (NAIL) ETF has shot up 900% from its coronavirus crash lows. Homebuilders like LGI Homes (LGIH) and D.R. Horton (DHI) have broken out into buy zones.

Low mortgage rates spurred longtime fence-sitters to jump into the market, Realtor.com Chief Economist Danielle Hale says. But she acknowledges the housing boom is uneven.

“Among a lot of key homebuyer demographics, high-income folks, we haven’t seen the same level of job losses that we have among lower-income workers,” she told IBD. “So that has helped the market from a homebuyer perspective.”

Demographics are a factor too as more millennials — the nation’s largest adult generation — are starting families and driving demand for single-family homes. And the leading edge of Generation Z, an even larger cohort that straddles young adults and adolescents, is just starting to buy homes.

Best Housing Markets
As living within commuting distance to work becomes less important, the housing boom is elevating some surprising markets.

According to Realtor.com data for September, the hottest metro areas include Fresno, Calif.; Columbus, Ohio; Rochester, N.Y.; Colorado Springs, Colo.; Bakersfield, Calif.; Portland-South Portland, Maine; Worcester, Mass.; Stockton-Lodi, Calif.; Harrisburg-Carlisle, Pa.; and Allentown-Bethlehem, Pa.

Under this definition, “hotness” reflects a combination of factors like how quickly properties sell and the number of views per property.

In January, before the coronavirus forced millions to work from home, the San Francisco-Oakland area was the hottest metro market. Fresno was No. 9.

Bakersfield was No. 10. It moved up to No. 5 last month even as the collapse in oil prices slowed its energy sector. But the biggest gainers include Allentown, Pa. (No. 65 in January), Portland, Maine (56), and Harrisburg, Pa. (54).

Outside the top 10, others have made big leaps too, such as the Riverside-San Bernardino-Ontario, Calif., area about two hours’ drive from Los Angeles. Before the pandemic, it was already growing as a major distribution hub for Amazon and other e-commerce companies. It’s now the No. 39 market, up from No. 68 in January.

Regional differences could also determine which real estate stocks outperform. Of the 30 hottest housing markets, 20 are in the West and Northeast.

Worst Housing Markets
The San Francisco-Oakland area plunged to No. 45 in September as Bay Area tech giants like Facebook (FB) and Twitter (TWTR) allowed employees to work from home indefinitely.

The San Jose-Sunnyvale-Santa Clara area — in the heart of Silicon Valley — plunged to No. 62 in September from No. 3 at the start of the year.

Housing markets outside high-cost, high-tax California felt the pain too. The Dallas-Fort Worth metro area, which has been drawing businesses and residents from California, saw its rank tumble to No. 41 from No. 19 in January.

The crash in oil prices may also be slowing the Dallas housing market. Many companies that serve the Permian Basin farther west have headquarters there.

At the very bottom, the coldest large metro areas last month included Miami-Fort Lauderdale-West Palm Beach, Fla.; Baton Rouge, La.; Honolulu, Hawaii; McAllen-Edinburg-Mission, Texas; Cape Coral-Fort Myers, Fla.; and New York, N.Y.-Newark-Jersey City, N.J. Most of those markets were already near the bottom in January.

American Assets Trust (NYSE:AAT) Rating Lowered to Sell at Zacks Investment Research


American Assets Trust (NYSE:AAT) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a note issued to investors on Tuesday, Zacks.com reports.

According to Zacks, “American Assets, Inc. is a real estate investment trust, or REIT, that owns, operates, acquires and develops retail and office properties primarily in Southern California, Northern California and Hawaii. The trusts assets include retail properties, office properties, Waikiki Beach Walk property and multifamily properties. American Assets, Inc. is based in San Diego, California. ”

Several other brokerages have also commented on AAT. ValuEngine lowered American Assets Trust from a “hold” rating to a “sell” rating in a report on Tuesday, August 4th. Wells Fargo & Company lifted their price target on American Assets Trust from $30.00 to $33.00 and gave the stock an “overweight” rating in a research note on Thursday, June 4th. Two analysts have rated the stock with a sell rating, one has assigned a hold rating and one has assigned a buy rating to the company’s stock. The stock has a consensus rating of “Hold” and an average price target of $39.50.

American Assets Trust stock traded down $0.57 during midday trading on Tuesday, hitting $23.91. 9,320 shares of the company were exchanged, compared to its average volume of 379,620. The firm has a market capitalization of $1.47 billion, a PE ratio of 31.05, a price-to-earnings-growth ratio of 3.73 and a beta of 0.88. American Assets Trust has a fifty-two week low of $20.15 and a fifty-two week high of $49.26. The business has a fifty day simple moving average of $25.60 and a two-hundred day simple moving average of $26.68. The company has a debt-to-equity ratio of 1.11, a quick ratio of 3.45 and a current ratio of 3.45.

American Assets Trust (NYSE:AAT) last issued its quarterly earnings data on Tuesday, July 28th. The real estate investment trust reported $0.13 EPS for the quarter, missing the consensus estimate of $0.37 by ($0.24). American Assets Trust had a net margin of 12.08% and a return on equity of 3.53%. The business had revenue of $82.11 million during the quarter. As a group, equities analysts expect that American Assets Trust will post 1.98 earnings per share for the current year.

In related news, CEO Ernest S. Rady acquired 20,000 shares of American Assets Trust stock in a transaction that occurred on Friday, September 11th. The shares were purchased at an average price of $24.69 per share, for a total transaction of $493,800.00. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. Also, CEO Ernest S. Rady acquired 25,412 shares of American Assets Trust stock in a transaction that occurred on Monday, September 14th. The shares were bought at an average price of $25.32 per share, for a total transaction of $643,431.84. The disclosure for this purchase can be found here. In the last quarter, insiders have purchased 56,317 shares of company stock worth $1,410,574. 32.76% of the stock is currently owned by company insiders.

A number of institutional investors have recently made changes to their positions in AAT. Vanguard Group Inc. raised its position in American Assets Trust by 0.9% in the second quarter. Vanguard Group Inc. now owns 7,926,096 shares of the real estate investment trust’s stock valued at $220,664,000 after purchasing an additional 72,683 shares during the period. Invesco Ltd. raised its position in American Assets Trust by 36.2% in the first quarter. Invesco Ltd. now owns 2,732,288 shares of the real estate investment trust’s stock valued at $68,307,000 after purchasing an additional 726,740 shares during the period. State Street Corp raised its position in American Assets Trust by 6.9% in the first quarter. State Street Corp now owns 2,591,919 shares of the real estate investment trust’s stock valued at $64,798,000 after purchasing an additional 167,372 shares during the period. Principal Financial Group Inc. raised its position in American Assets Trust by 366.1% in the second quarter. Principal Financial Group Inc. now owns 1,698,504 shares of the real estate investment trust’s stock valued at $47,287,000 after purchasing an additional 1,334,111 shares during the period. Finally, Macquarie Group Ltd. raised its position in American Assets Trust by 7.6% in the second quarter. Macquarie Group Ltd. now owns 1,330,379 shares of the real estate investment trust’s stock valued at $37,038,000 after purchasing an additional 93,670 shares during the period. Hedge funds and other institutional investors own 94.34% of the company’s stock.

About American Assets Trust

American Assets Trust, Inc (the “company”) is a full service, vertically integrated and self-administered real estate investment trust, or REIT, headquartered in San Diego, California. The company has over 50 years of experience in acquiring, improving, developing and managing premier retail, office and residential properties throughout the United States in some of the nation’s most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Oregon, Washington, Texas and Hawaii.

REITs: Own A Piece Of Hawaiian Paradise

Seeking Alpha

We believe that some of the unique challenges for the market are exactly what makes Hawaii an attractive place to invest.

In particular, the difficulty of developing new commercial real estate and housing keeps a lid on new commercial real estate supply, thus giving an advantage to current landlords.

While tourism can present a level of unpredictability, the long term supply and demand dynamics present an attractive risk-adjusted return, especially relative to other mainland markets.

Since becoming a state in 1959, Hawaii has been portrayed as a sunny beach vacation spot with palm trees and a rich cultural history. As with most things, reality is much more complicated. While it does boast some of the most beautiful beaches in the world (with top notch surfing), the rich cultural ‘history’ is not all in the past. As the most recent state added to the union, native Hawaiians have the shortest history as part of the USA. Similarly, their culture was independent of American culture more recently than any other state, exacerbated even further by geographical distance. As such, investing in Hawaii presents some of the most unique opportunities and risks relative to the other 49 states.

We believe that some of the unique challenges for the market are exactly what makes Hawaii an attractive place to invest. In particular, the difficulty of developing new commercial real estate and housing keeps a lid on new commercial real estate supply, thus giving an advantage to current landlords. While the contribution of tourism to the local economy makes it slightly more difficult to predict short term demand growth, the relative stability to other ‘island destinations’, solid infrastructure, and temperate climate give us confidence in long term growth. The Chilton REIT Composite has an overweight position to Hawaii as of February 29, 2020.

Hawaii Economic Overview
With about 1.4 million residents as of 2018, Hawaii is the 39th most populous state. However, it has established itself as one of the top tourist destinations in the world, boasting almost 10.0 million visitors in 2018. These visitors spent $17.6 billion, which comprised about 18.5% of Hawaii’s gross domestic product (or GDP). This compares to the national average of 2.9%, and ranks Hawaii as the highest state for tourism spending as a percent of GDP. On the back of strong tourism, Hawaii’s GDP growth has outpaced the national average since 2000, which is especially remarkable considering that tourism’s worst years occurred following the September 2001 terrorist attacks and the 2008-2009 recession.

Local population growth has also outpaced the national average going back to 1960, owing most of it to in-migration. However, population growth turned negative in 2017 and has been negative for 2018 and 2019 as well. Job growth to support tourism has flourished, but it has not been enough to keep up with the national average. Hawaii’s median per capita personal income of over $53,000 on the surface is positive relative to the national median of $52,000, but it doesn’t tell the whole story. According to the Tax Foundation, $100 is actually only worth $84.39 in Hawaii as of 2017, which is the lowest in the country, below even New York ($86.36) and California ($87.11). As a result, as shown in Figure 1, when adjusting per capita median personal income for cost of living (using ‘regional cost disparities’), Hawaii’s income as adjusted is much lower than the US average. Similarly, Hawaii’s 2.9% unemployment rate as of 12/31/19 is below the national average of 3.6%, but the workforce participation in Hawaii is well below the national average at only 60.9% versus 63.4%.

In summary, the state of Hawaii has certainly benefited from becoming a popular tourist destination. However, the locals may not have benefited as much as they would’ve thought, contributing to a cultural insulation against visitors, particularly those looking to invest.

Hawaiian Culture
Notwithstanding the effects of tourism on the island, the insulated (and isolated) location of Hawaii generated a uniquely independent and proud culture that rivals many sovereign nations. Rightfully so after the experience that the Native Americans had with visitors looking to buy land and impart new customs, Hawaiians have been somewhat resistant to outside investment from the start. Infamously, the Delaware Indians sold Manhattan to Peter Minuit for $24 in 1626, which is equivalent to less than $2,000 today. In contrast, a study in 2018 estimated that the total value of Manhattan land was almost $2 trillion. Instead of outright sales to visitors, Hawaiians have shrewdly favored leasing the land for them to build hotels, condos, retail, and office properties. Thus, they are protecting themselves from losing out of the potential appreciation in the land, while also allowing investment to stimulate the economy (and hopefully make the land more valuable).

Despite the ground leases, the investment in housing has not been enough. Similar to California where regulations on development and rent control have created a mismatch in housing supply and demand, the lack of new housing has caused rents and home prices to explode well above the national average. According to one estimate, it can take 9 to 15 years to get entitlements approved. Approximately 95% of the state is reserved for agriculture and conservation, which further limits development, and increases the value of permitted land. As a result, the average Hawaii home transaction price was $780,000 as of September 30, 2019, which compares to the national average of $227,000. Similarly, the average rent for a 900 square foot (or sqft) apartment was $2,400 per month, which compares to the national average of $1,700, according to Zillow.

Furthermore, energy costs, gasoline prices, and even basics such as toilet paper are among the highest in the country. Gasoline prices are the second highest in the country, while electricity prices are almost triple the national average, and groceries are the highest. Some of this is due to the transportation costs to get goods to Hawaii, which must be brought via plane or ship. Due to a 100 year old law called the Jones Act, shipping goods between US ports is much more expensive than a ship from a foreign port to a US port. The Jones Act stipulates that all goods delivered from a domestic port to a domestic port must be carried on a ship that is built in America by Americans, at least 75% owned by Americans, and at least 75% of the crew must be American. While the purpose was to preserve the US shipbuilding industry (0.3% of global shipbuilding), it disproportionately punishes Hawaii (and Puerto Rico) which do not have the option of rail or truck. By some estimates, allowing foreign ships to deliver US goods from US ports could cut prices in half.

In addition, Hawaii has a state income tax with a top rate of 11%, which is second only to California with a top state tax rate of 12.3%. Adding more ‘SALT’ to the wound of high state taxes, the Tax Cut and Jobs Act of 2017 limited deductions of state taxes (property and income taxes) to only $10,000 which disproportionately hurt residents in Hawaii, among other states. These factors help to explain why population growth has turned negative. However, this is not all bad for commercial real estate.

Almost the entirety of the state’s office market is located on Oahu, and specifically Honolulu (including Waikiki). With about ten million sqft, Honolulu’s office market (downtown plus surrounding areas) compares to the downtowns (excluding surrounding area) of Nashville or Baltimore. Due to the high contribution of tourism, the office-using employment of Hawaii ranks quite low, with demand being driven mostly by local business and the government sector. As such, we expect demand growth to be muted. However, supply is tight, and the small denominator can make small absorption numbers have outsized effects on the market statistics. For example, the downtown Honolulu market absorbed 200,000 sqft in 2019, the largest year of positive absorption since 2006, though still only 2% of the total inventory. However, several office buildings are being converted to residential buildings, which reduced the supply. As a result, the office vacancy rate on Oahu declined from 13.7% in 2018 to 9.5% in 2019 according to CBRE. This should help office rent growth to continue to grow steadily in the face of low demand.

The REIT with the most Hawaii office exposure is Douglas Emmett (NYSE: DEI), which owns four buildings in Honolulu totaling 1.6 million sqft. As of December 31, 2019, these buildings were 94% leased with an averaged annualized rent of $34.96 per sqft, which compares to DEI portfolio averages of $44.80 per sqft. Annualized rent of $48.7 million at these Hawaii properties comprises about 7% of DEI’s office portfolio, or 6% of DEI’s total portfolio. The balance of DEI’s portfolio is located in West Los Angeles.

Hawaii-based REIT Alexander and Baldwin (NYSE: ALEX) also derives about 4% of its cash net operating income from office. As of December 31, 2019, the company owned 143,000 sqft spread between Oahu and Maui, which were 90.9% occupied generating annualized base rent of $32.93 per sqft.

DEI is the only publicly traded REIT with multifamily ownership in the state. Coincidentally, DEI is converting one of its office buildings to multifamily. 1132 Bishop Street is a 25 story, 490,000 sqft office tower that will be converted into 500 multifamily units. The conversion will be done in phases so that multifamily rent will replace office rent as office tenants vacate. The first units are expected to be delivered in late 2020. DEI owns three other multifamily properties in Honolulu, which were 98% leased at an average rent of $1,850 per month as of December 31, 2019. Annualized rent of $44.3 million comprises about 36% of DEI’s multifamily portfolio, or 4% of DEI’s total portfolio. When combining the Honolulu multifamily and office properties, DEI generates about 11% of its annual rent from the state.

Hawaii’s industrial market finished the year at only 2.0% vacancy, which is essentially full given a 1.5% ‘structural baseline vacancy’, according to Colliers, a global real estate research firm. According to CBRE, 2019 was the first full calendar year where all four quarters had positive net absorption since 2013, which drove steady rent growth. 2020 is expected to produce more of the same results, with Colliers projecting 2020 to have the highest net absorption in over a decade. ALEX owns a 1.2 million sqft industrial portfolio in Hawaii that was 95.3% occupied as of December 31, 2019. Net operating income of the industrial portfolio comprised approximately 16% of ALEX’s total portfolio as of the same date. An externally-advised REIT (which presents extreme conflicts of interest), Industrial Logistics Properties Trust (NYSE: ILPT), has the largest Hawaii industrial exposure with approximately 39% of its cash net operating income coming from the state.

Retail vacancy was 6.9% at the end of 2019 for all of Hawaii, which compared to 5.5% as of the same period in 2018 driven by slightly negative absorption of -145,000 sqft. Most of this occurred in the mall space, which was affected by the Sears bankruptcy in particular. 2020 may face similar bankruptcy headwinds due to announced closures of Pier One and the bankruptcy filing by Forever 21. Notably, Forever 21 is going to keep two stores open, and they are both at REIT-owned centers (Pearlridge, owned by Washington Prime Group (NYSE: WPG) and Ala Moana Center, owned by Brookfield Property Partners (NYSE: BPY)). American Assets Trust (NYSE: AAT) owns three properties in Hawaii, including a hotel and street retail property in Waikiki, and a grocery anchored center adjacent to a Premium Outlets (owned by Simon Property Group (NYSE: SPG)). AAT derives approximately 17% of its cash net operating income from Hawaii.

Ala Moana Center holds the crown as the most valuable US mall, estimated to be worth $6 billion. It comprises 2.4 million sqft and boasts 350 stores averaging sales of $1,500 per sqft. Brookfield Property Partners recently added a 300,000 sqft expansion, and plans to spend $153 million on a residential tower to be delivered in 2025. Publicly traded Howard Hughes Corp (NYSE: HHC, not a REIT) has capitalized on the “place” of Ala Moana, building five residential towers adjacent to the mall generating $2.2 billion in proceeds from condominium sales. HHC currently has plans for 11 more towers over the next eight years, as shown in Figure 2.

We believe it is important to delineate between the local and tourism-based retail markets in Hawaii. While Waikiki street retail and Ala Moana Center are driven by tourism spending which can be influenced by the strength of the US Dollar, grocery anchored centers are much more dependent upon the local economy. ALEX owns mostly grocery-anchored shopping centers that cater to locals. ALEX derives 77.3% of its cash net operating income as of December 31, 2019 from such centers spread between Oahu, Maui, and Kauai. The centers comprise 2.5 million sqft and were 93.3% leased with an average base rent of $33.12 per sqft as of December 31, 2019. This business should be much more resilient to the e-commerce threat than mainland shopping centers given the expensive and prolonged delivery times. For example, instead of Amazon Prime delivery times of one or two hours in many mainland cities, Hawaii Amazon Prime customers have delivery times of 3-7 days, which increases the reliance on brick-and-mortar shopping. In particular, grocery delivery is especially difficult on the island, which will keep the grocery brick-and-mortar stores as strong anchors for the foreseeable future.

In 2019, Hawaii’s lodging market logged Revenue per available room (or RevPAR) growth of 3.6%, which compared to the national average of 0.9% and the top 25 lodging markets at -0.2%. Two luxury developments were announced in 2019, which will carry the Rosewood and Auberge flags.

Host Hotels (NYSE: HST) owns the highest EBITDA-producing hotel among publicly traded REITs in the Hyatt Regency Maui, which produced $54.7 million in EBITDA in 2019 from 806 rooms. HST also owns the Andaz Maui and the Fairmont Kea Lani. Park Hotels (NYSE: PK), a spinoff from Hilton (NYSE: HLT) in 2017, owns the hotel with the largest number of rooms, the Hilton Hawaiian Village Waikiki Beach with 2,860 rooms. Rounding out exposure, RLJ Lodging (NYSE: RLJ) owns the Courtyard Waikiki Beach, and Sunstone Hotels (NYSE: SHO) owns the Wailea Beach Resort.