San Francicso-Based REIT to Acquire 71 Million SF in Largest Offer Considering That 2011 AMB Property Merger
Prologis Inc., the world’s biggest logistics homeowner, has actually agreed to purchase Denver-based DCT Industrial Trust Inc. for $8.4 billion in stock and assumed debt.
The boards of directors of both business all approved the all-stock definitive merger contract in which Prologis will include DCT’s existing 71 million-square-foot portfolio plus 7.1 million square feet of development and redevelopment jobs and 195 acres of land, primarily in Seattle, Atlanta, South Florida and Southern California, with advancement capacity of 2.9 million square feet.
The merger likewise consists of 215 acres of jobs under agreement or option for sale in New york city and New Jersey, Southern California, Northern California and Chicago with build-out capacity of more than 3.3 million square feet.
The portfolio strengthens Prologis’ (NYSE: PLD)existence in such high-growth markets as Southern California, the San Francisco Bay Location, New York City and New Jersey, Seattle and South Florida. Prologis Chairman and President Hamid Moghadam said the San Francisco-based REIT has for some time thought about DCT’s portfolio to be complementary in quality, market position and development potential.
“This high level of tactical fit will allow us to record considerable scale economies immediately,” Moghadam said.
Logistics has been among the most popular residential or commercial property sectors as e-commerce development has fueled need for more warehouse, consisting of locations near population centers to ship online purchases rapidly to customers in the final link of the supply chain. The deal of Prologis’s largest given that the $8.4 billlion acquisition of AMB Property Corp. in 2011, at the time the second-largest industrial REIT behind Prologis.
Under the terms of the offer expected to close in the 3rd quarter, DCT investors will get 1.02 Prologis shares for each DCT share. The price represents an approximately 16% premium for DCT investors. Prologis expects DCT President and CEO Philip Hawkins to sign up with the Prologis board of directors.
Matt Kopsky, REIT expert with Edward Jones, stated the merger is a great strategic fit as DCT owns storage facilities in high-growth markets which overlap perfectly with Prologis’s portfolio.
“DCT has a robust development pipeline in core markets,” Kopsky said. “While a lot of [the pipeline] is speculative, we believe there is strong demand in these markets to fill them rapidly.”
While the economic cycle is in its later stages, Kopsky stated industrial home markets have strong remaining power offered the growth in e-commerce demand and the modernization of supply chains to accommodate that development.
“Well-located industrial real estate has rates power and we believe that Prologis paid a reasonable price to get more of this,” Kopsky stated.
J.P. Morgan is functioning as financial advisor and Mayer Brown LLP serving as legal advisor to Prologis. BofA Merrill Lynch is serving as monetary advisor and Goodwin Procter LLP as legal advisor to DCT.
Prologis and DCT (NYSE: DCT) will go over the transaction in conference call Monday at 9 a.m. Eastern time.