Plymouth Industrial's Ohio Play: A Recipe for Industrial REIT Outperformance

The industrial real estate sector has long been a bastion of stability for investors, but few plays in recent years have combined embedded rent upside, operational scalability, and geographic focus as compellingly as Plymouth Industrial's $193 million Ohio acquisition. This deal, which added 1.95 million square feet of industrial space across Columbus, Cincinnati, and Cleveland, is a masterclass in value creation. By acquiring below-market leases and below-replacement-cost assets, Plymouth has positioned itself to capitalize on a dual tailwind: rising rents and a logistics boom in a strategically critical market. For income-focused investors seeking both growth and defensive resilience, this is a high-conviction opportunity.

The Embedded Upside: 22% Rent Discount Meets 2.47-Year WALT

The Ohio portfolio's weighted average remaining lease term (WALT) of just 2.47 years is a critical lever for Plymouth. With in-place rents 22% below current market rates, this short-term horizon creates a clear path to re-leasing space at significantly higher rates as leases expire. Unlike long-leased assets that lock in suboptimal terms, Plymouth's Ohio properties are primed for near-term rent resets.

Consider this: in Columbus, Plymouth recently secured a 64.5% rental increase on a renewal lease—a stark illustration of its ability to exploit below-market contracts. With 75 tenants across 21 buildings, the portfolio's staggered lease expirations ensure a steady stream of upside opportunities. The math is straightforward: every expiring lease is a chance to reset rates to current market levels, boosting net operating income (NOI) and cash flow.

Below-Replacement-Cost Pricing: A 25% Discount on Future-Proof Assets

The $193 million price tag for the Ohio portfolio represents more than a 25% discount to replacement cost, a metric that underscores Plymouth's acumen in asset selection. Industrial construction costs are rising, and replicating these warehouses today would cost over $250 million—a gap that widens as inflation pressures build.

This discount isn't just a one-time advantage. By acquiring functional, well-located assets at a fraction of their rebuild cost, Plymouth insulates itself from supply-side risks. Even if occupancy dips, the portfolio's intrinsic value remains anchored by its irreplaceable nature. For investors, this creates a defensive moat in a sector already benefiting from secular tailwinds like reshoring and e-commerce growth.

Operational Scalability: Local Expertise and Market Dominance

Plymouth's success hinges on its operational playbook, which combines local market knowledge with a hands-on asset management strategy. The company's teams in Ohio aren't just leasing space—they're cultivating relationships with tenants in a region where warehouse demand is surging.

The Midwest's logistics advantage can't be understated. Ohio's central location makes it a critical node for last-mile delivery networks, while reshoring trends are driving manufacturers to the region. Plymouth's focus on small-bay, flex-space warehouses—ideal for e-commerce and light manufacturing—aligns perfectly with these dynamics.

The Investment Thesis: Growth, Dividends, and Resilience

Plymouth's Ohio acquisition isn't just a single deal—it's a catalyst for broader outperformance. The portfolio's 6.8% initial NOI yield sets a high bar for returns, while the 22% rent discount and 25% replacement cost gap create a “double bottom” of value. Factor in Plymouth's 5.8% dividend yield (above peer averages) and a balance sheet with $415 million in liquidity, and the case for conviction grows stronger.

The 2.47-year WALT is a tactical advantage. Short leases mean Plymouth can quickly reposition assets to higher-margin tenants, reducing long-term occupancy risk. Meanwhile, the company's full-year 2025 guidance for 6%+ same-store NOI growth is achievable through its active leasing strategy.

Risks and Considerations

No investment is without risk. Ohio's industrial market could face a slowdown if e-commerce demand cools or interest rates spike further. However, Plymouth's below-market leases and below-replacement-cost pricing act as a buffer. Even in a downturn, warehouses remain essential, and Plymouth's assets would retain intrinsic value.

Final Verdict: A Buy for Income and Growth

Plymouth Industrial's Ohio play is a textbook example of how to exploit mispriced assets in a resilient sector. The combination of embedded rent upside, operational scalability, and strategic geographic focus creates a multi-year growth story. For investors seeking both income and capital appreciation, this is a rare opportunity to own a portfolio of industrial assets that are undervalued today but poised to thrive tomorrow.

Action Item: Consider adding Plymouth Industrial (PLYM) to your portfolio. With a dividend yield of 5.8% and a path to consistent NOI growth, it offers a compelling risk/reward profile in an underappreciated corner of the industrial REIT space.