On Tuesday, Deutsche Bank (ETR:DBKGn) initiated coverage on shares of First Industrial Realty Trust (NYSE:NYSE:FR) with a Hold rating.
The firm's analysis highlighted the company's geographic and tenant diversification as positive factors in the current market. The exposure to various sub-markets was also deemed favorable compared to peers.
The analyst noted concerns regarding the national slowdown in demand, which could impact First Industrial Realty Trust despite its diverse portfolio. Specifically, the company's significant presence in Southern California and its speculative development strategy were cited as potential risks in the face of a challenging demand environment for the Industrial Real Estate Investment Trusts (REITs) sector.
The firm established a price target of $52.00 and noted First Industrial Realty Trust's development strategy has so far met expectations in terms of lease-up periods. However, there is apprehension about the possibility of these periods extending and development yields decreasing due to the difficult demand conditions.
The company's development portfolio is increasingly focused on the Inland Empire, which adds to the uncertainty. Furthermore, the current valuation of First Industrial Realty Trust may pose difficulties for the company's external growth prospects.
Despite these challenges, Deutsche Bank believes that the company could still exhibit one of the stronger earnings growth profiles within its peer group in 2025, largely due to its better sub-market exposure.
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