With fears that e-commerce markets are cooling while the pandemic continues, commercial landlords are worried about the massive expansion of warehousing that sprouted like kudzu over the past couple of years.
Now, Duke Realty has accepted the bid from Prologis (NYSE: PLD) of $26 billion, or 0.475x shares of PLD stock, for their portfolio of properties. Prologis made a previous bid of $24 billion, but that bid was rejected.
The accepted price is considered a 34% premium for Duke Realty’s 165 million square feet of property space. The offer was unanimously accepted by both boards of directors, although it must still receive shareholder approval and closing procedures. Duke Realty will gain a seat on the Prologis board and a number of personnel would transition over.
“We have admired the disciplined repositioning strategy the Duke Realty team has completed over the last decade. They have built an exceptional portfolio in the U.S. located in geographies we believe will outperform in the future. That will be fueled by Prologis’ proven track record as a value creator in the logistics space.”
Hamid Moghadam, Prologis co-founder, CEO and Chairman
Prologis adds premium warehousing space
The acquisition will also add 557 customers to the Prologis customer base. It will also add about $375 to $400 million in annual earning and value creation. Prior to the acquisition Prologis had over 1.17 billion square feet of warehouse space following the close of its fourth quarter.
The Duke Realty acquisition on an owned and managed basis comprises:
- 153 million square feet of operating properties in 19 major U.S. logistics geographies.
- 11 million square feet of development in progress – about $1.6 billion in total expected investment.
- 1,228 acres of land owned and under option with a build-out of approximately 21 million square feet.
Prologis has been on a buying spree recently
In recent years, Prologis has bulked up its real estate footprint through acquisitions. It bought Liberty Property Trust in 2020 and DCT Industrial Trust in 2018.
“This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth. In addition to generating significant synergies, the combination of these portfolios will help us deliver more services to our customers and drive incremental long-term earnings growth.”
Tim Arndt, Prologis CFO
Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) are serving as financial advisers to Prologis. Morgan Stanley (NYSE: MS) is the lead adviser for Duke Realty.
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