Prologis JV With NBIM Seals $2B Logistics Portfolio Deal

Prologis Inc.’s (NYSE:PLD) joint venture (JV) with Norges Bank Investment Management (NBIM) recently signed a deal to acquire a logistics real estate portfolio worth $1.99 billion. The move comes as part of Prologis’ definitive merger agreement to acquire Industrial Property Trust, Inc.

The 19-million-square-foot logistics real estate portfolio comprises 127 properties positioned across multiple U.S. markets. These include Southern (NYSE:SO) California, San Francisco Bay Area, Seattle and Dallas.

NBIM, which is in charge of management of the Norwegian Government Pension Fund, is shelling out $896 million to own 45% stake in the portfolio. Prologis will own the remaining 55% and manage the properties on behalf of the JV. The agreement was signed last week and its completion is expected in next January.

In a rising e-commerce market, the industrial real estate asset category has grabbed headlines and continues to play a pivotal role, transforming the way how consumers shop and receive their goods. Services like same-day delivery are gaining traction and last-mile properties in high-income urban areas are witnessing solid pricing, occupancy and growth in rentals.

Furthermore, demand for distribution space has been rising, as e-commerce continues to expand to sectors like grocery and furniture. Also apart from e-retail, food & beverage and home improvement companies are helping drive leasing activities.

This is spurring demand for industrial/warehouse spaces, enabling industrial landlords like Prologis, Duke Realty Corp. (NYSE:DRE) , Terreno Realty Corporation (NYSE:TRNO) and Rexford Industrial Realty, Inc. (NYSE:REXR) , among others, to enjoy a favorable market environment.

Amid this, Prologis remains well poised to grow, backed by its balance-sheet strength and prudent financial management. The company has been actively banking on its growth opportunities through acquisitions and developments.

In fact, after completing the acquisition of DCT Industrial Trust for $8.5 billion in a stock-for-stock deal last year, in July 2019, the company announced signing a definitive merger agreement to acquire warehouse owner Industrial Property Trust Inc. (IPT) in an all-cash deal valued at about $3.99 billion, including debt, from Black Creek Group. The transaction is likely to close in fourth-quarter 2019 or early 2020.

Further, in October, Prologis announced that it has entered into a definitive merger agreement with Liberty Property Trust to acquire the latter in an all-stock transaction, valued at roughly $12.6 billion, including the assumption of debt. The acquisition, which is anticipated to close in first-quarter 2020, will strengthen Prologis’ presence in target regions such as Chicago, Lehigh Valley, New Jersey, Houston, Central PA, and Southern California.

Shares of Prologis have outperformed the industry it belongs to in the past six months. This Zacks Rank #1 (Strong Buy) company’s shares have gained 24.2%, while the industry has recorded 3.2% growth during the same time frame. You can see the complete list of today’s Zacks #1 Rank stocks here.



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