Q: In a recent answer about DIR.UN you mentioned reports of inventory buildups in the US in anticipation of potential tariffs with the incoming administration. Would PLD be a good way to take advantage of this possible trend? Between PLD and DIR, which REIT do you prefer for the long-term (5+ years)?
5i Research Answer:
Yes, we think PLD should benefit from the theme, if it continues. Note however that once tariffs start, the incentive to ship inventory lessens. Also, there is a cost of owning more inventory. Still, the warehouse sector itself we think should continue to do well. We would be fine owning PLD. The comparison is tough, though. PLD is 30X larger than DIR, and more diversified by business line. DIR though is significantly cheaper. DIR has slightly outperfomed this year. We could buy both, but would lean to PLD for a more conservative investor.