The Case For Industrial Logistics Properties Trust (REIT)

Supply chain problems have been plaguing manufacturers since the covid pandemic began and the problems are expected to last well into 2022 and beyond. Many companies are now starting to take matters into their own hands and the array of solutions vary greatly.

Politicians are exploring laws to fix the supply chain problems such as the Supply Chain Solution Agenda which among other things would “protect agriculture by prohibiting ocean carriers from not picking up U.S. exports address the driver shortage in trucking and logistics, and establish a nonpartisan commission that identifies the weaknesses in the U.S. supply chain.”

International companies are snatching up warehouses to help improve their supply chain logistics. And others are investing hundreds of millions in updating supply chain models.

Ford Motor Company recently announced it would source chips directly from local chip manufacturers in a bid to fix supply chain woes.

To solve their supply chain woes, Clorox has a different solution utilizing contractors for inventory.

From farms in Iowa to cars in Michigan to cleaning supply manufacturer in California and all the way to India there is a reconstitution and realignment of sourcing raw materials to manufacturing to distribution and retailing it all.

So how do we potentially profit from these recent moves?

After conducting some research, we came across an industrial real estate investment trust named Industrial Logistics Properties Trust (ILPT). We liked the companies financials even though there have been a few misses this year and we love the 5% dividend and the stock price has been relatively stable and the P/E seems reasonable at the time of this writing considering the recent potential shifts in the entire supply chain ecosystem.

The company has a map of their properties on their website and we like that it has very broad portfolio but would be happier if it expanded fully onto the west coast and Texas but that could come over time.

Disclosure: We have positions in ILPT and will likely continue to add to our position over the next 12 months.