Warehouse Demand Is Heating Up. These 4 REITs Pay Investors to Own the Space

EastGroup Properties (NYSE:EGP) reported third-quarter results on October 21. Funds from operations (FFO) came in at $2.45 per diluted share, up 7.9% year over year, and the quarterly dividend went up 12.9% to $1.75. Warehouse landlords are setting the price again, and three things are driving demand. The first is e-commerce. The second is advanced manufacturing moving back to the U.S. The third is inventory: Prologis (NYSE:PLD) says its customers are running lean on inventory and have mostly used up spare capacity, so as their business grows, they need more space. All four REITs below are equity REITs, meaning they own warehouses and collect rent. Mortgage REITs lend against property and take on interest rate and credit risk, so they don’t belong on this list. The safety check for each dividend is FFO coverage: how much of a REIT’s cash earnings (net income with real estate depreciation added back) goes out as dividends.

EastGroup Properties Raised Its Dividend After Beating Its Own Forecast

EastGroup owns smaller warehouses (shallow-bay, last-mile buildings) in fast-growing U.S. markets, mostly in the Sunbelt. California makes up 14% of total NOI. As of September 30, the operating portfolio was 97.3% leased and 96.5% occupied. Rents on new and renewal leases rose 36.3% on a straight-line basis, same-property cash NOI grew 7.1%, and tenant retention was 78.8%. Leasing tied to data centers made up about 15% of new-lease activity so far this year. Chief executive Marshall Loeb said Phoenix is “100% leased.”

Yield and coverage: The annualized dividend is $7.00. With shares at $200.61, that works out to about 3.5%. The new $1.75 payout used about 71% of third-quarter FFO. The $7.00 annual rate equals about 73% of the $9.65 full-year FFO guidance midpoint. Debt is modest: 3.2 times annualized EBITDA, with interest and fixed charges covered 14.7 times.

Bull case: This was EastGroup’s 187th consecutive quarterly dividend. Management also said quarterly FFO per share has exceeded the same quarter of the prior year “for over a decade.” Full-year guidance rose to $9.62-$9.68 per share, up from $8.98 in 2025. “The leasing environment has been much more stable than headlines would lead one to expect,” Loeb said.

Risk: EastGroup pays for much of its growth by selling new shares. It has $695 million in forward equity agreements outstanding at roughly $202 per share, and its capital plan assumes issuing about 3 million shares in Q4 2026. If the new buildings and acquisitions earn less than expected, the larger share count will pull down per-share growth.

Prologis Has Years of Rent Increases Built Into Its Leases, Plus a Data Center Business

Prologis owns or has stakes in about 1.3 billion square feet across 20 countries, rented to roughly 6,500 customers. In the third quarter, Core FFO was $1.60 per diluted share, up 7.4% from a year earlier. Occupancy ended the quarter at 95.6%. The company signed 55.9 million square feet of new leases at a 38.0% net effective rent increase (23.4% on a cash basis). Cash same-store NOI grew 5.9%. The data center pipeline has reached 5.8 gigawatts of power.

Yield and coverage: The annualized dividend is $4.28. With shares at $126.05, the yield is about 3.4%. The third-quarter dividend of $1.07 used about 67% of Core FFO. The annual rate equals about 68% of the $6.25 to $6.29 full-year guidance. The quarterly dividend has grown from $0.79 in 2022 to $1.07 in 2026. About 95% of debt carries fixed rates, with an average of roughly 8 years left before it comes due.

Bull case: Prologis’s leases are on average 16% below current market rents. That gap adds up to roughly $780 million of extra annual NOI it can collect as old leases roll over. Management also says market rents would need to rise 27% before new construction pays off, which holds back new supply. Customers in the data center supply chain made up 17% of new U.S. leasing.

Risk: The pending SEGRO combination could close on different terms or a different timeline than proposed. Closing is expected in the first half of 2027, and Prologis has already raised $2.4 billion of new common equity toward the deal. The stock has slipped from $131.29 at the time of the report to $126.05.

First Industrial Has the Lowest Payout Ratio of the Four, and Its Shares Fell on Results

First Industrial Realty Trust (NYSE:FR) owns about 72.9 million square feet of large distribution buildings, all in the U.S. and focused on 15 target metro areas. It also develops new warehouses. Cash rents on new and renewal leases rose 52% in the third quarter, and cash same-store NOI grew 5.6%. In-service occupancy slipped to 94.1% from 94.9%, though that beat the 93.5% the company had forecast. The shares fell 6.91% to $55.30 on the day of the earnings call.

Yield and coverage: The annualized dividend is $2.00, for a yield of about 3.6%. The quarterly dividend went up from $0.445 to $0.50 this year. The third-quarter payout used about 63% of FFO of $0.80 per share. The annual rate equals about 64% of the NAREIT FFO guidance range of $3.11 to $3.15. That is the widest margin of any REIT here.

Bull case: First Industrial has already handled 94% of the leases expiring in 2026, at a 38% cash rent increase. It has also handled 45% of 2027 expirations at a 16% increase. Chief executive Peter Baccile said the company isn’t cutting rents to keep tenants: “We definitely are not buying leases.”

Risk: Occupancy is heading the wrong way. Lower average occupancy partially offset rental rate growth this quarter, and a 324,000-square-foot building in the Inland Empire is still empty.

Rexford Industrial Pays the Highest Yield, but Southern California Rents Are Still Falling

Rexford Industrial Realty (NYSE:REXR) owns only infill Southern California industrial property, meaning buildings inside built-up urban areas. It has not yet reported third-quarter results. Its latest second-quarter results showed Core FFO of $0.63 per diluted share and a GAAP net loss of $506.9 million. The loss came from a $624.75 million non-cash write-down on assets the company plans to sell sooner than intended. Average same-property occupancy was 95.7% and same-property cash NOI rose 1.5%.

Yield and coverage: The annualized dividend is $1.74. With shares at $36.03, the yield is about 4.8%, making Rexford the group’s high-yield option. The $0.435 quarterly dividend used about 69% of second-quarter Core FFO, and management said the dividend is safe. Dividend growth has slowed sharply, though: the quarterly payout went from $0.38 in 2023 to $0.4175 in 2024, $0.43 in 2025, and $0.435 in 2026. Debt is 99.6% fixed at a weighted average effective rate of 3.725%. Rexford also has $1.019 billion coming due in 2027.

Bull case: New construction in Southern California is at multi-decade lows. Prologis and EastGroup both reported positive net absorption in the region, meaning more space was leased than vacated. A new $1.0 billion buyback program, funded by asset sales, could lift FFO per share.

Risk: Rents are still rolling down. Cash rents on releases fell 11.3%, and new-lease cash rents dropped 19.5% as leases signed at the market peak expired.

Rent Check Scorecard

EastGroup ranks first for its decade-long FFO growth run, fresh dividend increase, and modest debt. Prologis is second, with comfortable Core FFO coverage and years of rent increases built into its leases. First Industrial is third: its payout margin is the widest, but occupancy has to stop falling. Rexford is last because its higher yield comes from shrinking rents, and its third-quarter report will record whether Southern California has stopped dragging on results.

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