Home News Prologis to Buy Duke Realty in $26 Billion Deal, Including Debt

Prologis to Buy Duke Realty in $26 Billion Deal, Including Debt

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Prologis Ltd.

PLD -8.69%

I’m buying

Dew Cleary Ltd.

DRE -0.08%

With $ 26 billion worth of transactions, it provides a significant footprint for the world’s largest warehouse operators, even when the e-commerce sector faces headwinds from slowing demand.

The two real estate companies announced the deal on Monday after several months of follow-up by Prologis and Duke Rarty. First rejection of $ 24 billion offer last month. All equity transactions, including debt, are expected to close later this year.It adds to the vast footprint of Prologis Warehouse and distribution center Serve the online shopping ecosystem.

Prologis operates a network of billions of square feet of industrial facilities around the world to help companies store, process and ship online orders, including:

Amazon.com Ltd,

AMZN -5.26%

FedEx Ltd.

others. Duke Rarty adds an additional 160 million square feet of space to the Prologis Empire in 19 major US logistics markets.

This transaction is in the midst of a slowdown in e-commerce, especially following rapid growth during a pandemic, as investors have begun to worry that the industrial real estate market is showing signs of overbuilding. It holds.

Currently, some online operators are beginning to reassess their industrial space and are considering shrinking their footprint, which has exploded over the last two years.

Amazon.com is one example. In April, online retail giants reported a quarterly loss for the first time in seven years, after which shoppers avoided stores during a pandemic, admitting that they overbuilt businesses that were under tension in large-scale demand. I did.

Amazon Looking for a sublet With at least 10 million square feet of warehouse space, we are looking for options to terminate or renegotiate rental contracts with outside owners.

Amazon’s results quivered industrial real estate companies as companies such as Prologis and Duke’s share was slumping and Amazon said it would delay the addition of new space.

It does not discourage Prologis from pursuing Duo Clearty. The acquisition of Duke Clearty adds quality properties to Prologis’ portfolio in key regions such as Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta.

The respective boards of Prologis and Duke Rarty have unanimously approved a transaction to receive 0.475 times the shares of Prologis for each Duke Rarty stake owned by Duke Rarty shareholders. This is an improvement over Prologis’ previous exchange offer of 0.466x.

Prologis First offered to buy Duke Rarty is $ 61.68 per share, which is equivalent to a 29% premium on Duke Rarty’s share price at the time.

Prologis owns 94% of Duke Rarty’s assets and plans to withdraw from one market.

According to Prologis, the transaction is expected to grow immediately from $ 310 million to $ 370 million due to corporate general and administrative savings and operating leverage, as well as leasing and debt market value adjustments. This transaction in the first year is expected to increase annual core funds from the business by 20 to 25 cents.

Prologis shares fell 8.5% in early Monday trading. Duke Larty shares have fallen slightly.

Write to Dean seal [email protected]

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