EastGroup Properties, Inc. (EGP)

EastGroup builds and leases small warehouses in southern cities — not giant distribution centres.

The bet is on the format: several small buildings near a city, with tenants that are local companies, distributors and service firms. Such a tenant takes little space, but there are many of them, and losing one does not decide the result — unlike a giant warehouse with a single occupant.

Land near growing cities is appreciating while building new warehouses there gets harder because of zoning limits — supply lags demand. The company develops itself, which in a favourable cycle costs less than buying a finished asset. Risks: a wave of new construction, interest rates and land costs. The trust form obliges distributing profit.